Federal Register, Volume 75 Issue 228 (Monday, November 29, 2010)

[Federal Register Volume 75, Number 228 (Monday, November 29, 2010)]
[Rules and Regulations]
[Pages 73170-73860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27969]

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Part II

Department of Health and Human Services

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Center for Medicare & Medicaid Services

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42 CFR Parts 405, 409, 410 et al.

Medicare Program; Payment Policies Under the Physician Fee Schedule and
Other Revisions to Part B for CY 2011; Final Rule

Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 /
Rules and Regulations

[[Page 73170]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 409, 410, 411, 413, 414, 415, and 424

[CMS-1503-FC]
RIN 0938-AP79

Medicare Program; Payment Policies Under the Physician Fee
Schedule and Other Revisions to Part B for CY 2011

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 changes to the
physician fee schedule and other Medicare Part B payment policies to
ensure that our payment systems are updated to reflect changes in
medical practice and the relative value of services. It finalizes the
calendar year (CY) 2010 interim relative value units (RVUs) and issues
interim RVUs for new and revised procedure codes for CY 2011. It also
addresses, implements, or discusses certain provisions of both the
Affordable Care Act (ACA) and the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA). In addition, this final rule with
comment period discusses payments under the Ambulance Fee Schedule
(AFS), the Ambulatory Surgical Center (ASC) payment system, and the
Clinical Laboratory Fee Schedule (CLFS), payments to end-stage renal
disease (ESRD) facilities, and payments for Part B drugs. Finally, this
final rule with comment period also includes a discussion regarding the
Chiropractic Services Demonstration program, the Competitive Bidding
Program for durable medical equipment, prosthetics, orthotics, and
supplies (CBP DMEPOS), and provider and supplier enrollment issues
associated with air ambulances.

DATES: Effective date: These regulations are effective on January 1,
2011. Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on January 3, 2011.

ADDRESSES: In commenting, please refer to file code CMS-1503-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``submitting a comment.''
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1503-FC, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1503-FC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses: a. For delivery in Washington,
DC--Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue, SW., Washington, DC 20201
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.

FOR FURTHER INFORMATION CONTACT:

Sara Vitolo, (410) 786-5714, for issues related to malpractice RVUs.
Erin Smith, (410) 786-0763, for issues related to end-stage renal
disease-related services for home dialysis.
Michael Moore, (410) 786-6830, for issues related to geographic
practice cost indices.
Ken Marsalek, (410) 786-4502, for issues related to the physician
practice information survey, the multiple procedure payment reduction,
and payment for the technical component of pathology services.
Regina Walker-Wren, (410) 786-9160, for issues related to outpatient
mental health add-on provision and increased payment for certified
nurse-midwife services.
Elizabeth Truong, (410) 786-6005, or Sara Vitolo, (410) 786-5714, for
issues related to potentially misvalued services.
Elizabeth Truong, (410) 786-6005, for issues related to the sustainable
growth rate or anesthesia or physician fee schedule conversion factors.
Dorothy Shannon, (410) 786-3396, for issues related to outpatient
therapy services.
Pamela West, (410) 786-2302, for issues related to payment for diabetes
self-management training programs and kidney disease education
services.
Ryan Howe, (410) 786-3355, for issues related to direct practice
expense inputs and telehealth services.
Sara Vitolo, (410) 786-5714, for issues related to pulmonary
rehabilitation services, application of skin substitutes, canalith
repositioning, intranasal/oral immunization, and the refinement panel.
Roberta Epps, (410) 786-4503, for issues related to portable x-ray and
bone density tests.
Chava Sheffield, (410) 786-2298, for issues related to equipment
utilization rate assumption for advanced imaging services.
Chava Sheffield, (410) 786-2298, or Larry Chan, (410) 786-6864, for
issues related the physician fee schedule practice expense methodology.
Stephanie Frilling, (410) 786-4507, or Erin Smith, (410) 786-0763, for
issues related to the incentive payment programs for primary care and
general surgery services, and payment for the annual wellness visit and
preventive services.
Cheryl Gilbreath, (410) 786-5919, for issues related to payment for
covered outpatient drugs and biologicals.
Roechel Kujawa, (410) 786-9111, for issues related to ambulance
services.
Glenn McGuirk, (410) 786-5723, for clinical laboratory issues.
Randall Ricktor, (410) 786-4632, for Federally Qualified Health Center
Issues.
Pauline Lapin, (410) 786-6883, for issues related to the chiropractic
services demonstration BN issue.
Troy Barsky, (410) 786-8873, or Kristin Bohl, (410) 786-8680, for
issues related to physician self-referral.

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Troy Barsky, (410) 786-8873, or Fred Grabau (410) 786-0206, for issues
related to timely filing rules.
Henry Richter, (410) 786-4562, or Lisa Hubbard, (410) 786-5472, for
issues related to renal dialysis provisions and payments for end-stage
renal disease facilities.
Diane Stern, (410) 786-1133, for issues related to the physician
quality reporting initiative and incentives for e-prescribing.
Sheila Roman, (410) 786-6004, or Pamela Cheetham, 410-786-2259, for
issues related to the Physician Resource Use Feedback Program and
value-based purchasing.
Joel Kaiser, (410) 786-4499, for issues related to the DME provisions.
Sandra Bastinelli, (410) 786-3630, for issues related to provider and
supplier enrollment issues.
Rebecca Cole, (410) 786-4497, for issues related to physician payment
not identified above.

SUPPLEMENTARY INFORMATION: Comment Subject Areas: We will consider
comments on the following subject areas discussed in this final rule
with comment period that are received by the date and time indicated in
the DATES section of this final rule with comment period:
(1) The interim final work, practice expense, and malpractice RVUs
(including the direct practice expense (PE) inputs and the equipment
utilization rate assumption, and the applicability of a multiple
procedure payment reduction (MPPR)), for new and revised CY 2011 HCPCS
codes. These codes and their CY 2011 interim final RVUs are listed in
Addendum C to this final rule with comment period.
(2) The physician self-referral designated health services codes
listed in Tables 98 and 99.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.

Table of Contents

To assist readers in referencing sections contained in this
preamble, we are providing a 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
(CFR). Information on the regulations impact appears throughout the
preamble and, therefore, is not discussed exclusively in section XI. of
this final rule with comment period.
I. Background
A. Development of the Relative Value System
1. Work RVUs
2. Practice Expense Relative Value Units (PE RVUs)
3. Resource-Based Malpractice (MP) RVUs
4. Refinements to the RVUs
5. Adjustments to RVUs Are Budget Neutral
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to Fee Schedule
D. Public Comments Received in Response to the CY 2011 PFS
Proposed Rule
II. Provisions of the Final Rule for the Physician Fee Schedule
A. Resource-Based Practice Expense (PE) Relative Value Units
(RVUs)
1. Overview
2. Practice Expense Methodology
a. Direct Practice Expense
b. Indirect Practice Expense per Hour Data
c. Allocation of PE to Services
(i) Direct costs
(ii) Indirect costs
d. Facility and Nonfacility Costs
e. Services with Technical Components (TCs) and Professional
Components (PCs)
f. Alternative Data Sources and Public Comments on Final Rule
for 2010
g. PE RVU Methodology
(1) Setup File
(2) Calculate the Direct Cost PE RVUs
(3) Create the Indirect Cost PE RVUs
(4) Calculate the Final PE RVUs
(5) Setup File Information
(6) Equipment Cost per Minute
3. PE Revisions for CY 2011
a. Equipment Utilization Rate
b. HCPCS Code-Specific PE Issues
(1) Biohazard Bags
(2) PE Inputs for Professional Component (PC) Only and Technical
Component (TC) Only Codes Summing to Global Only Codes
(3) Equipment Time Inputs for Certain Diagnostic Tests
(4) Cobalt-57 Flood Source
(5) Venom Immunotherapy
(6) Equipment Redundancy
(7) Equipment Duplication
(8) Establishing Overall Direct PE Supply Price Inputs Based on
Unit Prices and Quantities
c. AMA RUC Recommendations in CY 2010 for Changes to Direct PE
Inputs
(1) Electrogastrography and Esophageal Function Test
(2) 64-Slice CT Scanner and Software
(3) Breath Hydrogen Test
(4) Radiographic Fluoroscopic Room
(5) Cystometrogram
d. Referral of Existing CPT Codes for AMA RUC Review
e. Updating Equipment and Supply Price Inputs for Existing Codes
f. Other Issues
B. Malpractice Relative Value Units (RVUs)
1. Background
2. Malpractice RVUs for New and Revised Services Effective
Before the Next 5-Year Review
3. Revised Malpractice RVUs for Selected Disc Arthroplasty
Services
C. Potentially Misvalued Services Under the Physician Fee
Schedule
1. Valuing Services Under the PFS
2. Identifying, Reviewing, and Validating the RVUs of
Potentially Misvalued Services Under the PFS
a. Background
b. Progress in Identifying and Reviewing Potentially Misvalued
Codes
c. Validating RVUs of Potentially Misvalued Codes
3. CY 2011 Identification and Review of Potentially Misvalued
Services
a. Codes on the Multispecialty Points of Comparison List
b. Codes with Low Work RVUs Commonly Billed in Multiple Units
Per Single Encounter
c. Codes with High Volume and Low Work RVUs
d. Codes with Site-of-Service-Anomalies
e. Codes with ``23-hour'' Stays
4. Expanding the Multiple Procedure Payment Reduction (MPPR)
Policy to Additional Nonsurgical Services
a. Background
b. CY 2011 Expansion of the Imaging Technical Component MPPR
Policy to Additional Combinations of Imaging Services
c. CY 2011 Expansion of the MPPR Policy to Therapy Services
5. High Cost Supplies
a. Background
b. Future Updates to the Prices of High-Cost Supplies
D. Geographic Practice Cost Indices (GPCIs)
1. Background
2. GPCI Update
a. Physician Work GPCIs
b. Practice Expense GPCIs
(1) The Affordable Care Act Requirements for PE GPCIs
(A) General Methodology for the CY 2011 GPCIs
(B) Phase-In of PE GPCIs
(C) Data Analysis
(D) Determining the PE GPCI Cost Share Weights
(E) PE GPCI Floor for Frontier States
(2) Summary of CY 2011 PE GPCIs
c. Malpractice GPCIs
d. Public Comments and CMS Responses on the Proposed 6th GPCI
Update
e. Summary of Final CY 2011 GPCIs

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3. Payment Localities
E. PFS Update for CY 2010: Rebasing and Revising of the Medicare
Economic Index (MEI)
1. Background
2. Use of More Current Data
3. Rebasing and Revising Expense Categories in the MEI
a. Developing the Weights for Use in the MEI
b. Physician's Own Time
c. Physician's Practice Expenses
(1) Nonphysician Employee Compensation
(2) Office Expenses
(3) Professional Liability Insurance (PLI) Expense
(4) Medical Equipment Expenses
(5) Medical Supplies Expenses
(6) Other Professional Expenses
4. Selection of Price Proxies for Use in the MEI
a. Cost (Expense) Categories in the MEI
(1) Physician's Own Time (Physician Compensation)
(2) Nonphysician Employee Compensation
(3) Utilities
(4) Chemicals
(5) Paper
(6) Rubber and Plastics
(7) Telephone
(8) Postage
(9) All Other Services
(10) All Other Products
(11) Fixed Capital
(12) Moveable Capital
(13) Professional Liability Insurance (PLI)
(14) Medical Equipment
(15) Medical Materials and Supplies
(16) Other Professional Expenses
(b) Productivity Adjustment to the MEI
5. Results of Rebasing
6. Medicare Economic Index Technical Advisory Panel
7. Summaries of Comments and the Associated Responses
a. Timing of Rebasing and Revising the MEI
b. PPIS Data
c. Office Expenses
d. Purpose of the MEI
e. Technical Panel
f. Other
8. Adjustments to the RVU Shares To Match the Proposed Rebased
MEI Weights
F. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate
1. Medicare Sustainable Growth Rate
2. Physicians' Services
3. Preliminary Estimate of the SGR for 2011
4. Revised Sustainable Growth Rate for 2010
5. Final Sustainable Growth Rate for 2009
6. Calculation of 2011, 2010, and 2009 Sustainable Growth Rates
a. Detail on the CY 2011 SGR
(1) Factor 1 Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for CY 2011
(2) Factor 2 The Percentage Change in the Average Number of Part
B Enrollees From CY 2010 to CY 2011
(3) Factor 3 Estimated Real Gross Domestic Product Per Capita
Growth in 2011
(4) Factor 4 Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2011
Compared With CY 2010
b. Detail on the CY 2010 SGR
(1) Factor 1 Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for 2010
(2) Factor 2 The Percentage Change in the Average Number of Part
B Enrollees from CY 2009 to CY 2010
(3) Factor 3 Estimated Real Gross Domestic Product Per Capita
Growth in CY 2010
(4) Factor 4 Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2010
Compared With CY 2009
c. Detail on the CY 2009 SGR
(1) Factor 1 Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for 2009
(2) Factor 2 The Percentage Change in the Average Number of Part
B Enrollees from CY 2008 to CY 2009
(3) Factor 3 Estimated Real Gross Domestic Product Per Capita
Growth in CY 2009
(4) Factor 4 Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2009
Compared With CY 2008
G. The Update Adjustment Factor (UAF)
1. Calculation under Current Law
H. Physician and Anesthesia Fee Schedule Conversion Factors for
CY 2011
1. Physician Fee Schedule Update and Conversion Factor
a. CY 2011 PFS Update
b. CY 2011 PFS Conversion Factor
2. Anesthesia Conversion Factor
III. Code-Specific Issues for the PFS
A. Therapy Services
1. Outpatient Therapy Caps for CY 2011
2. Alternatives to Therapy Caps
a. Background
b. Current Activities
c. Potential Short-Term Approaches to Therapy Caps
B. Diabetes Self-Management Training (DSMT) Services (HCPCS
Codes G0108 and G0109)
1. Background
2. Payment for DSMT Services
C. End-Stage Renal Disease Related Services for Home Dialysis
(CPT code 90963, 90964, 90965, and 90966)
1. End-Stage Renal Disease Home Dialysis Monthly Capitation
Payment Services (CPT codes 90963, 90964, 90965, and 90966)
2. Daily and Monthly ESRD-Related Services (CPT Codes 90951
through 90970)
D. Portable X-Ray Set-Up (HCPCS code Q0092)
E. Pulmonary Rehabilitation Services (HCPCS Code G0424)
F. Application of Tissue Cultured Skin Substitutes to Lower
Extremities (HCPCS Codes G0440 and G0441)
G. Canalith Repositioning (CPT code 95992)
H. Intranasal/Oral Immunization Codes (CPT codes 90467, 90468,
90473, and 90474)
I. Refinement Panel Process
J. Remote Cardiac Monitoring Services (CPT codes 93012, 93229,
93268, and 93271)
IV. Medicare Telehealth Services for the Physician Fee Schedule
A. Billing and Payment for Telehealth Services
1. History
2. Current Telehealth Billing and Payment Policies
B. Requests for Adding Services to the List of Medicare
Telehealth Services
C. Submitted Requests for Addition to the List of Telehealth
Services for CY 2011
1. Individual KDE Services
2. Individual DSMT Services
3. Group KDE, MNT, DSMT, and HBAI Services
4. Initial, Subsequent, and Discharge Day Management Hospital
Care Services
5. Initial, Subsequent, Discharge Day Management, and Other
Nursing Facility Care Services
6. Neuropsychological Testing Services
7. Speech-Language Pathology Services
8. Home Wound Care Services
9. Other Issues
D. Summary of CY 2011 Telehealth Policies
E. Telehealth Originating Site Facility Fee Payment Amount
Update
V. Addressing Interim Final Relative Value Units from CY 2010 and
Establishing Interim Relative Value Units for CY 2011
A. Background
B. Addressing Interim Final RVUs from CY 2010
1. CY 2010 Interim Final Work RVUs Referred to the Refinement
Panel
2. CY 2010 Interim Final RVUs for which Public Comments Were
Received
a. Insertion of Breast Prosthesis (CPT code 19340)
b. Computed Tomographic Colonography (CPT code 74261)
c. Myocardial Perfusion Imaging (CPT codes 78451, 78452, 78453,
and 78454)
d. Nerve Conduction Test (CPT code 95905)
e. Kidney Disease Education Services (HCPCS codes G0420 and
G0421)
f. Excision of Soft Tissue and Bone Tumors (CPT codes 21011
through 21016, 21552, 21554 through 21558, 21930 through 21933,
21395, 21936, 22900 through 22905, 23071, 23073, 23075 through
23078, 23200, 23210, 23220, 24071, 24073, 24075 through 24077,
24079, 24150 through 24153, 25071, 25073, 25075 through 25078,
25170, 26111, 26113, 26115 through 26118, 26250, 26255, 26260,
26262, 27043, 27045, 27047 through 27049, 27059, 27075 through
27078, 27327 through 27329, 27337, 27339, 27364, 27365, 27615,
27616, 27618, 27619, 27632, 27634, 27619, 27645 through 27647,
28039, 28041, 28043, 28045 through 28047, 28171, 28173, and 28175)
g. Cryoablation of Prostate (CPT code 55873)
h. Urodynamics Studies (CPT Codes 51728 and 51729)
i. Coronary Computed Tomographic Angiography (CPT codes 75571,
75572, 75573, and 75574)

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j. Adjacent Tissue Transfer or Rearrangement (CPT codes 14301
and 14302)
k. Insertion of a Temporary Prostatic Urethral Stent (CPT code
53855)
l. High Dose Rate Brachytherapy (CPT codes 77785, 77786, and
77787)
m. Injection of Facet Joint (CPT codes 64490, 64491, 64492,
64493, 64494, and 64495)
n. Knee Arthroscopy (CPT code 29870)
3. Status of Interim Final Work RVUs for Potentially Misvalued
Site-of-Service Anomaly Codes from CY 2009 and CY 2010
4. Other New, Revised, or Potentially Misvalued Codes with CY
2010 Interim Final RVUs Not Specifically Discussed in the CY 2011
Final Rule with Comment Period
C. Establishment of Interim Final RVUs for CY 2011
1. Establishment of Interim Final Work RVUs for CY 2011
a. Background
b. CY 2011 Interim Final Work RVUs for New and Revised Codes
(i) CY 2011 New and Revised Codes that Do Not Represent Major
New Comprehensive Services
(1) Excision and Debridement (CPT codes 11010, 11011, 11012,
11042, 11043, 11044, 11045, 11046, 11047, and 97598)
(2) Arthrodesis Including Discectomy (CPT code 22551)
(3) Strapping Lower Extremity (CPT codes 29540 and 29550)
(4) Paraesophageal Hernia Procedures (CPT codes 43333 and 43335)
(5) Vaginal Radiation Afterloading Apparatus for Clinical
Brachytherapy (CPT codes 57155 and 57156)
(6) Vagus Nerve Stimulator (CPT codes 61885, 64568, 64569, and
64570)
(7) Ultrasound of Extremity (CPT codes 76881 and 76882)
(8) Evaluation of Fine Needle Aspirate (CPT code 88172)
(9) Immunization Administration (CPT code 90460 and 90461)
(10) Diabetic Retinopathy Imaging (CPT code 92228)
(11) Speech-Language Pathology Services (CPT codes 92508 and
92606)
(12) Sleep Testing (CPT codes 95806 and 95807)
(13) Subsequent Hospital Observation Care
(ii) Comprehensive Codes for a Bundle of Existing Component
Services
(iii) Work Budget Neutrality for Clinical Categories of CPT
Codes
c. CY 2011 Interim Final Work RVUs for Potentially Misvalued
Codes
(1) Excision and Debridement (CPT codes 11043 and 11044)
(2) Strapping Lower Extremity (CPT code 29540)
(3) Control Nasal Hemorrhage (CPT code 30901)
(4) Cystourethroscopy (CPT codes 52281 and 52332)
(5) Vaginal Radiation Afterloading Apparatus for Clinical
Brachytherapy (CPT code 51755)
(6) Obstetrical Care Codes (CPT codes 59440, 59410, 59510,
59515, 59610, 59614, 59618, and 59622)
(7) Vagus Nerve Stimulator (CPT code 61885)
(8) Transforaminal Epidural Injection (CPT code 64483)
(9) CT Thorax (CPT code 71250)
(10) CT Spine (CPT code 72125)
(11) CT Upper and CT Lower Extremity (CPT code 73200 and 73700)
(12) Radiation Treatment Management (CPT code 77427)
2. Establishment of Interim Final Direct PE Inputs for CY 2011
a. Background
b. CY 2011 Interim Final Direct PE Inputs for New, Revised, and
Potentially Misvalued Codes
(1) General Equipment Time
(2) Equipment Time and Clinical Labor for Conscious Sedation
(3) Equipment Time for Add-On Codes
(4) Changes in Standard Uses of Certain Supplies
(5) New Supply and Equipment Items
(6) Endovascular Revascularization Stents
(7) Nasal/Sinus Endoscopy Supply and Equipment Items
3. Establishment of Interim Final Malpractice RVUs for CY 2011
VI. Provisions of the Affordable Care Act
A. Section 3002: Improvements to the Physician Quality Reporting
System
B. Section 3003: Improvements to the Physician Feedback Program
and Section 3007: Value-based payment modifier under the physician
fee schedule
1. Background
2. Effect of the ACA of 2010 on the Program
3. Phase II Proposed Changes
4. Implementation of Sections 3003 and 3007 of ACA
5. Comments Sought on Specific Statistical Issues Related to ACA
Sections 3003 and 3007
a. Risk Adjustment
b. Attribution
c. Benchmarking and Peer Groups
d. Cost and Quality Measures and Compositing Methods
C. Section 3102: Extension of the Work Geographic Index Floor
and Revisions to the Practice Expense Geographic Adjustment under
the Medicare Physician Fee Schedule, and Protections for Frontier
States as amended by Section 10324
D. Section 3103: Extension of Exceptions Process for Medicare
Therapy Caps
E. Section 3104: Extension of Payment for Technical Component of
Certain Physician Pathology Services
F. Section 3105 and 10311: Extension of Ambulance Add-Ons
1. Amendment to Section 1834(l)(13) of the Act
2. Amendment to Section 146(b)(1) of MIPAA
3. Amendment to Section 1834(l)(12) of the Act
G. Section 3107: Extension of Physician Fee Schedule Mental
Health Add-On
H. Section 3108: Permitting Physician Assistants to Order Post-
Hospital Extended Care Services
I. Section 3111: Payment for Bone Density Tests
J. Section 3114: Improved Access for Certified Nurse-Midwife
Services
K. Section 3122: Extension of Medicare Reasonable Costs Payments
for Certain Clinical Diagnostic Laboratory Tests Furnished to
Hospital Patients in Certain Rural Areas
L. Section 3134: Misvalued Codes Under the Physician Fee
Schedule
M. Section 3135: Modification of Equipment Utilization Factor
for Advanced Imaging Services
1. Adjustment in Practice Expense to Reflect Higher Presumed
Utilization
2. Adjustment in Technical Component ``Discount'' on Single-
Session Imaging to Consecutive Body Parts
N. Section 3136: Revision for Payment for Power-Driven
Wheelchairs
1. Payment Rules for Power Wheelchairs
2. Revision of Payment Amounts for Power Wheelchairs
3. Elimination of Lump Sum Payment for Standard Power
Wheelchairs
O. Section 3139: Payment for Biosimilar Biological Products
P. Section 3401: Revision of Certain Market Basket Updates and
Incorporation of Productivity Improvements into Market Basket
Updates That Do Not Already Incorporate Such Improvements
1. ESRD Market Basket Discussion
2. Productivity Adjustment regarding Ambulatory Surgical Center,
Ambulance, Clinical Laboratory and DMEPOS Fee Schedules
a. Ambulatory Surgery Centers (ASCs)
b. Ambulance Fee Schedule (AFS)
c. Clinical Lab Fee Schedule
d. DMEPOS Fee Schedule
Q. Section 4103: Medicare Coverage of Annual Wellness Visit
Providing a Personalized Prevention Plan
1. Background and Statutory Authority
a. Medicare Coverage of Preventive Physical Examinations and
Routine Checkups
b. Requirements for Coverage of an Annual Wellness Visit
2. Regulatory Revisions--Summary of Proposed Rule and Comments
a. Revisions to Sec. 411.15, Particular Services Excluded from
Coverage
b. Revisions to Part 410, Subpart B--Medical and Other Health
Services
(1) Definitions
(2) Requirements of the First Annual Wellness Visit Providing
Personalized Prevention Plan Services
(3) Requirements of Subsequent Annual Wellness Visits Providing
Personalized Prevention Plan Services
3. Payment for the Annual Wellness Visit Providing Personalized
Prevention Plan Services (PPPS)
R. Section 4104: Removal of Barriers to Preventive Services in
Medicare
1. Definition of ``Preventive Services''
2. Deductible and Coinsurance for Preventive Services
3. Extension of Waiver of Deductible to Services Furnished in
Connection With or in Relation to a Colorectal Cancer Screening Test
that Becomes Diagnostic or Therapeutic

[[Page 73174]]

S. Section 5501: Expanding Access to Primary Care Services and
General Surgery Services
1. Section 5501(a): Incentive Payment Program for Primary Care
Services
a. Background
b. Primary Care Incentive Payment Program (PCIP)
(1) Primary Specialty Designation
(2) Primary Care Percentage Calculation
(3) Period of Claims Data for Primary Care Percentage
Calculation
(4) PCIP Payment
(5) Summary of Final PCIP Policies
2. Section 5501(b): Incentive Payment Program for Major Surgical
Procedures Furnished in Health Professional Shortage Areas
a. Background
b. HPSA Surgical Incentive Payment Program (HSIP)
3. Sections 5501(a) and (b) of the Affordable Care Act and
Payment for Critical Access Hospital Professional Services Under the
Optional Method
T. Section 6003: Disclosure Requirements for In-Office Ancillary
Services Exception to the Prohibition on Physician Self-Referral for
Certain Imaging Services
1. Background
2. Disclosure Requirement
a. Services the Trigger the Disclosure Requirement
b. General Disclosure Requirements
c. List of Alternate Suppliers
d. Documentation of Disclosure
e. Effective Date
f. Other comments
U. Section 6404: Maximum Period for Submission of Medicare
Claims Reduced to Not More than 12 Months
1. Background
2. Provisions of ACA
V. Section 6410 of the Affordable Care Act and Section 154 of
MIPPA: Adjustments to the Metropolitan Statistical Areas (MSA) for
Medicare Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies Competitive Acquisition Program
1. Background
2. Subdividing Large MSAs under Round 2
3. Exclusions of Certain Areas after Round 2 and Prior to 2015
4. Expansion of Round 2
W. Section 10501(i)(3): Collection of HCPCS data for Development
and Implementation of a Prospective Payment System for the Medicare
Federally Qualified Health Center Program
VII. Other Provisions of the Final Rule
A. Part B Drug Payment: Average Sales Price (ASP) Issues
1. ``Carry Over'' ASP
2. Partial Quarter ASP Data
3. Determining the Payment Amount for Drugs and Biologicals
Which Include Intentional Overfill
4. WAMP/AMP
5. AMP Threshold and Price Substitutions
6. Out of Scope Comments
B. Ambulance Fee Schedule: Policy for Reporting Units when
Billing for Ambulance Fractional Mileage
1. History of Medicare Ambulance Services
a. Statutory Coverage of Ambulance Services
b. Medicare Regulations for Ambulance Services
2. Mileage Reporting--Summary of the Provisions of the CY 2011
Proposed Rule
a. Background and Current Process for Reporting Ambulance
Mileage
b. Concerns Regarding the Potential for Inaccuracies in
Reporting Units and Associated Considerations
c. Billing of Fractional Units for Mileage
3. Analysis of and Responses to Public Comments
a. Basis for Reconsideration of the Ambulance Mileage Reporting
Requirements
b. Appropriateness of Fractional Mileage Reporting Policy
(1) Financial Impact of Fractional Mileage Policy
c. Administrative Impact
(2) Technical and Other Considerations
(A) Ability to Measure Fractional Miles
(B) Ambulance Provider versus Supplier Billing
(C) Billing Software
(D) Enforcement and Compliance
(E) Air Ambulance
(F) Miscellaneous Comments
4. Applicability of the Fractional Billing Policy to Other
Services
5. Final Fractional Mileage Billing Policy
C. Clinical Laboratory Fee Schedule: Signature on Requisition
D. Discussion of Budget Neutrality for the Chiropractic Services
Demonstration
E. Provisions Related to Payment for Renal Dialysis Services
Furnished by End-Stage Renal Disease (ESRD) Facilities
(1) Update to the Drug Add-on Adjustment to the Composite Rate
(2) Estimating Per Patient Growth
(3) Update to the Drug Add-on Adjustment
(4) Update to the Geographic Adjustments to the Composite Rate
(5) Updates to Core-Based Statistical Area (CBSA) Definitions
(6) Updated Wage Index Values
(7) Wage index Values for Areas With No Hospital Data
(8) Reduction to the ESRD Wage Index Floor
(9) Budget Neutrality Adjustment
(10) ESRD Wage Index Tables
F. Issues Related to the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA)
1. Section 131: Physician Payment, Efficiency, and Quality
Improvements--Physician Quality Reporting System
a. Program Background and Statutory Authority
b. Incentive Payments for the 2011 Physician Quality Reporting
System
c. 2011 Reporting Periods for Individual Eligible Professionals
d. 2011 Physician Quality Reporting System Reporting Mechanisms
for Individual Eligible Professionals
(1) Final Requirements for Individual Eligible Professionals Who
Choose the Claims-based Reporting Mechanism
(2) Final Requirements for Individual Eligible Professionals Who
Choose the Registry-based Reporting Mechanism
(3) Final Requirements for Individual Eligible Professionals Who
Choose the EHR based Reporting Mechanism
(4) Final Qualification Requirements for Registries
(5) Final Qualification Requirements for EHR Vendors and Their
Products
e. Criteria for Satisfactory Reporting of Individual Quality
Measures for Individual Eligible Professionals
f. Criteria for Satisfactory Reporting Measures Groups for
Individual Eligible Professionals
g. Reporting Option for Satisfactory Reporting on Quality
Measures by Group Practices
(1) Background and Authority
(2) Definition of ``Group Practice''
(3) Process for Physician Group Practices to Participate as
Group Practices and Criteria for Satisfactory Reporting
A. Group Practice Reporting Option for Physician Group Practices
with 200 or More NPIs GPRO I
B. Group Practice Reporting Option for Group Practices of 2-199
NPIs--GPRO-II
h. Statutory Requirements and Other Considerations for 2011
Physician Quality Reporting System Measures
(1) Statutory Requirements for 2011 Physician Quality Reporting
System Measures
(2) Other Considerations for 2011 Physician Quality Reporting
System Measures
(3) Summary of Comments and Responses
i. The Final 2011 Physician Quality Reporting System Quality
Measures for Individual Eligible Professionals
(1) 2011 Individual Quality Measures Selected From the 2010
Physician Quality Reporting System Quality Measures Set Available
for Claims based Reporting and Registry-based Reporting
(2) 2011 Individual Quality Measures Selected From the 2010
Physician Quality Reporting System Quality Measures Set Available
for Registry-based Reporting Only
(3) New Individual Quality Measures for 2011
(4) 2011 Measures Available for EHR-based Reporting
(5) Measures Proposed for Inclusion in 2011 Measures Groups
j. 2011 Physician Quality Reporting System Quality Measures for
Group Practices Selected to Participate in the Group Practice
Reporting Option (GPRO I)
k. Public Reporting of Physician Quality Reporting System Data
l. Other Relevant ACA Provisions
(1) Section 3002 (b)--Incentive Payment Adjustment for Quality
Reporting
(2) Section 3002(c)--Maintenance of Certification Programs and
Section 10327 Improvements to the Physician Quality Reporting System
(3) Section 3002(d)--Integration of Physician Quality Reporting
and EHR Reporting
(4) Section 3002(e)--Feedback
(5) Section 3002(f)--Appeals
2. Section 132: Incentives for Electronic Prescribing (eRx)- The
Electronic Prescribing Incentive Program

[[Page 73175]]

a. Program Background and Statutory Authority
b. The 2011 eRx Incentive
(1) The 2011 Reporting Period for the eRx Incentive Program
(2) Criteria for Determination of Successful Electronic
Prescriber for Eligible Professionals
(A) Reporting the Electronic Prescribing Measure
(B) The Reporting Denominator for the Electronic Prescribing
Measure
(C) Qualified Electronic Prescribing System--Required
Functionalities and Part D eRx Standards
(D) The Reporting Numerator for the Electronic Prescribing
Measure
(E) Criteria for Successful Reporting of the Electronic
Prescribing Measure
(3) Determination of the 2011 Incentive Payment Amount for
Individual Eligible Professionals Who Are Successful Electronic
Prescribers
(4) Reporting Option for Satisfactory Reporting of the
Electronic Prescribing Measure by Group Practices
(A) Definition of ``Group Practice''
(B) Process for Group Practices to Participate as Group
Practices and Criteria for Successful Reporting of the Electronic
Prescribing Measure by Group Practices
c. The 2012 eRx Payment Adjustment
(1) The eRx Payment Adjustment Reporting Period
(2) Criteria for Determining Applicability of the 2012 eRx
Payment Adjustment to Individual Eligible Professionals
(3) Criteria for Determining Applicability of the 2012 eRx
Payment Adjustment to Group Practices
(4) Significant Hardship Exemption
d. The 2013 eRx Payment Adjustment
e. Public Reporting of Names of Successful Electronic
Prescribers
G. DMEPOS Provisions
1. Medicare Durable Medical Equipment, Prosthetics, Orthotics,
and Supplies (DMEPOS) Competitive Bidding Program (CBP)
a. Legislative and Regulatory History of DMEPOS CBP
b. Implementation of a National Mail Order DMEPOS Competitive
Bidding Program (CBP) for Diabetic Testing Supplies
(1) Future Competitions for Diabetic Testing Supplies
(2) Definition of Mail Order Item
(3) Special Rule in Case of Competition for Diabetic Testing
Strips
(4) Anti-switching Rule in Case of Competition for Diabetic Test
Strips
c. Off-the-Shelf (OTS) Orthotics Exemption
d. Grandfathering Rules Resulting in Additional Payments to
Contract Suppliers under the DMEPOS Competitive Bidding Program
(CBP)
e. Appeals Process
(1) Purpose and Definitions: (Sec. 414.402)
(2) Applicability
(3) Contract Termination
(4) Notice of Termination
(5) Corrective Action Plan
(6) Right to Request a Hearing by the CBIC Hearing Officer (HO)
(7) Scheduling of the Hearing
(8) Burden of Proof
(9) Role of the Hearing Officer (HO)
(10) CMS's Final Determination
(11) Effective Date of the Contract Termination
(12) Effect of Contract Termination
2. Changes to Payment Rules for Oxygen and Oxygen Equipment
a. Background
b. Furnishing Oxygen Equipment after the 36-Month Rental Period
(CAP)
c. Furnishing Oxygen Equipment during the 36-Month Rental Period
(CAP)
H. Provider and Supplier Enrollment Issue: Air Ambulance
Provision
I. Technical Corrections
1. Physical Therapy, Occupational Therapy and Speech-language
Pathology
2. Scope of Benefits
J. Physician Self-Referral Prohibition: Annual Update to the
List of CPT/HCPCS Codes
1. General
2. Annual Update to the Code List
a. Background
b. Response to Comments
c. Revisions Effective for 2011
VIII. Waiver of Proposed Rulemaking and Delay in Effective Date
IX. Collection of Information Requirements
A. ICRs Regarding Diagnostic X-ray Tests, Diagnostic Laboratory
Tests, and Other Diagnostic Tests: Conditions (Sec. 410.32)
B. ICRs Regarding General Exceptions to the Referral Prohibition
Related to Both Ownership/Investment and Compensation (Sec.
411.355)
C. ICRs Regarding Appeals Process for Termination of Competitive
Bidding Contract (Sec. 414.423)
D. ICRs Regarding Additional Provider and Supplier Requirements
for Enrolling and Maintaining Active Enrollment status in the
Medicare Program (Sec. 424.516)
E. Additional Information Collection Requirements
1. Part B Drug Payment
2. Physician Quality Reporting Initiative (PQRI)
3. Electronic Prescribing (eRx) Incentive Program
X. Response to Comments
XI. Regulatory Impact Analysis
A. RVU Impacts
1. Resource Based Work, PE, and Malpractice RVUs
2. CY 2011 PFS Impact Discussion
a. Changes in RVUs
b. Combined Impact
B. Geographic Practice Cost Indices (GPCIs)
C. Rebasing and Revising of the MEI
D. The Affordable Care Act Provisions
1. Section 3002: Improvements to the Physician Quality Reporting
System
2. Sections 3003 and 3007: Improvements to the Physician
Feedback Program and Value-Based Payment Under the Physician Fee
Schedule
2. Section 3103: Extension of Exceptions Process for Medicare
Therapy Caps
3. Section 3102: Extension of the Work Geographic Index Floor
and Revisions to the Practice Expense Geographic Adjustment under
the Medicare Physician Fee Schedule, and Protections for Frontier
States as amended by Section 10324
4. Section 3103: Extension of Exceptions Process for Medicare
Therapy Caps
5. Section 3104: Extension of Payment for Technical Component of
Certain Physician Pathology Services
6. Sections 3105 and 10311: Extension of Ambulance Add-Ons
7. Section 3107: Extension of Physician Fee Schedule Mental
Health Add-On
8. Section 3108: Permitting Physician Assistants to Order Post-
Hospital Extended Care Services
9. Section 3111: Payment for Bone Density Tests
10. Section 3114: Improved Access for Certified Nurse-Midwife
Services
11. Section 3122: Extension of Medicare Reasonable Costs
Payments for Certain Clinical Diagnostic Laboratory Tests Furnished
to Hospital Patients in Certain Rural Areas
12. Section 3134: Misvalued Codes Under the PFS
13. Section 3135: Modification of Equipment Utilization Factor
For Advanced Imaging Services
14. Section 3136: Revisions in Payments for Power Wheelchairs
15. Section 3139: Payment for Biosimilar Biological Products
16. Section 3401: Revisions of Certain Market Basket Updates and
Incorporation of Productivity Adjustments
17. Section 4103: Medicare Coverage of Annual Wellness Visit
Providing a Personalized Prevention Plan
18. Section 4104: Removal of Barriers to Preventive Services in
Medicare
19. Section 5501: Expanding Access to Primary Care Services and
General Surgery Services
20. Section 6003: Disclosure Requirements for In-office
Ancillary Services Exception to the Prohibition of Physician Self-
referral for Certain Imaging Services
21. Section 6404: Maximum Period for Submission of Medicare
Claims Reduced to Not More Than 12 Months
22. Section 6410 of Patient Accountability and Affordable Care
Act and Section 154 of MIPPA: Adjustments to the Metropolitan
Statistical Areas (MSA) for Medicare Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies Competitive Acquisition Program
23. Section 10501(i)(3): Collection of HCPCS Data for the
Development and Implementation of a Prospective Payment System for
the Medicare FQHC Program
E. Other Provisions of the Proposed Regulation
1. Part B Drug Payment: ASP Issues
2. Ambulance Fee Schedule: Proposed Policy for Reporting Units
when Billing for Ambulance Fractional Mileage
3. Chiropractic Services Demonstration
4. Renal Dialysis Services Furnished by ESRD Facilities
5. Section 131(b) of the MIPPA: Physician Payment, Efficiency,
and Quality Improvements--Physician Quality Reporting System
6. Section 132 of the MIPPA: Incentives for Electronic
Prescribing (eRx)--The eRx Incentive Program

[[Page 73176]]

7. Durable Medical Equipment-Related Issues
a. Off-the-Shelf (OTS) Orthotics Exemption
b. Changes to Payment for Oxygen Equipment
c. Diabetic Testing Supplies
d. Metropolitan Statistical Areas
8. Air Ambulance
F. Alternatives Considered
G. Impact on Beneficiaries
H. Accounting Statement

Regulations Text

Addendum A--Explanation and Use of Addendum B
Addendum B--Relative Value Units and Related Information Used In
Determining Medicare Payments for CY 2011
Addendum C--Codes With Interim RVUS
Addendum D--Final 2011 Geographic Adjustment Factors (GAFS)
Addendum E--Final 2011****Geographic Practice Cost Indicies (GPCIS)
By State and Medicare Locality
Addendum F--CY 2011 Diagnostic Imaging Services Subject To The
Multiple Procedure Payment Reduction
Addendum G--CPT/HCPCS Imaging Codes Defined By Section 5102(B) of
the DRA
Addendum H--CY 2011 ``Always Therapy'' Services* Subject to the
Multiple Procedure Payment Reduction
Addendum I--[Reserved]
Addendum J--List of CPT1/HCPCS Codes Used to Define Certain
Designated Health Service Categories \2\ Under Section 1877 of the
Social Security Act Effective January 1, 2011
Addendum K--CY 2011 ESRD Wage Index For Urban Areas Based On CBSA
Labor Market Areas
Addendum L-- CY 2011 Wage Index For Rural Areas Based On CBSA Labor
Market Areas

Acronyms

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

AA Anesthesiologist assistant
AACVPR American Association of Cardiovascular and Pulmonary
Rehabilitation
AANA American Association of Nurse Anesthetists
ABMS American Board of Medical Specialties
ABN Advanced Beneficiary Notice
ACA ``Affordable Care Act''
ACC American College of Cardiology
ACGME Accreditation Council on Graduate Medical Education
ACLS Advanced cardiac life support
ACP American College of Physicians
ACR American College of Radiology
ACS American Community Survey
AED Automated external defibrillator
AFROC Association of Freestanding Radiation Oncology Centers
AFS Ambulance Fee Schedule
AHA American Heart Association
AHFS-DI American Hospital Formulary Service-Drug Information
AHRQ [HHS] Agency for Healthcare Research and Quality
AMA American Medical Association
AMA-DE American Medical Association Drug Evaluations
AACE American Association of Clinical Endocrinologists
AADE American Association of Diabetes Educators
AMP Average manufacturer price
AO Accreditation organization
AOA American Osteopathic Association
APA American Psychological Association
APC Administrative Procedures Act
APTA American Physical Therapy Association
ARRA American Recovery and Reinvestment Act (Pub. L. 111-5)
ASC Ambulatory surgical center
ASP Average sales price
ASRT American Society of Radiologic Technologists
ASTRO American Society for Therapeutic Radiology and Oncology
ATA American Telemedicine Association
AWP Average wholesale price
AWV Annual Wellness Visit
BBA Balanced Budget Act of 1997 (Pub. L. 105-33)
BBRA [Medicare, Medicaid and State Child Health Insurance Program]
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BPM Benefit Policy Manual
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection
Act of 2000 (Pub. L. 106-554)
BLS Bureau of Labor Statistics
BN Budget neutrality
BPM Benefit Policy Manual
CABG Coronary artery bypass graft
CAD Coronary artery disease
CAH Critical access hospital
CAHEA Committee on Allied Health Education and Accreditation
CAP Competitive acquisition program
CARE Continuity Assessment Record and Evaluation
CBIC Competitive Bidding Implementation Contractor
CBP Competitive Bidding Program
CBSA Core-Based Statistical Area
CDC Centers for Disease Control and Prevention
CEM Cardiac Event Monitoring
CF Conversion factor
CFC Conditions for Coverage
CFR Code of Federal Regulations
CKD Chronic kidney disease
CLFS Clinical laboratory fee schedule
CMA California Medical Association
CMD Contractor Medical Director
CMHC Community mental health center
CMP Civil money penalty
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CoP Condition of participation
COPD Chronic obstructive pulmonary disease
CORF Comprehensive Outpatient Rehabilitation Facility
COS Cost of service
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPI-U Consumer price index for urban consumers
CPR Cardiopulmonary resuscitation
CPT [Physicians] Current Procedural Terminology (4th Edition, 2002,
copyrighted by the American Medical Association)
CR Cardiac rehabilitation
CRNA Certified registered nurse anesthetist
CRP Canalith repositioning
CRT Certified respiratory therapist
CSW Clinical social worker
CT Computed Tomography
CTA Computed Tomography Angography
CSC Computer Sciences Corporation
CWF Common Working File
CY Calendar year
DEA Drug Enforcement Agency
DOTPA Development of Outpatient Therapy Alternatives
DHS Designated health services
DHHS Department of Health and Human Services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DOQ Doctors Office Quality
DOS Date of service
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
DSMT Diabetes self-management training
EGC Electrocardiogram
E/M Evaluation and management
EDI Electronic data interchange
EEG Electroencephalogram
EHR Electronic health record
EKG Electrocardiogram
EMG Electromyogram
EMTALA Emergency Medical Treatment and Active Labor Act
EOG Electro-oculogram
EPO Erythopoeitin
eRx Electronic Prescribing
ESO Endoscopy Supplies
ESRD End-stage renal disease
FAA Federal Aviation Administration
FAX Facsimile
FDA Food and Drug Administration (HHS)
FFS Fee-for-service
FOTO Focus On Therapeutic Outcomes
FQHC Federally Qualified Health Center
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GEM Generating Medicare [Physician Quality Performance Measurement
Results]
GFR Glomerular filtration rate
GPRO Group Practice Reporting Option
GPO Group purchasing organization
GPCI Geographic practice cost index
GPS Geographic Positioning System
GSA General Services Administration
HAC Hospital-acquired conditions
HBAI Health and behavior assessment and intervention
HCC Hierarchal Condition Category
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HEMS Helicopter Emergency Medical Services
HDRT High dose radiation therapy

[[Page 73177]]

HH PPS Home Health Prospective Payment System
HHA Home health agency
HHRG Home health resource group
HHS [Department of] Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HIT Health information technology
HITECH Health Information Technology for Economic and Clinical
Health Act (Title IV of Division B of the Recovery Act, together
with Title XIII of Division A of the Recovery Act)
HITSP Healthcare Information Technology Standards Panel
HIV Human immunodeficiency virus
HOPD Hospital outpatient department
HPSA Health Professional Shortage Area
HRA Health Risk Assessment
HRSA Health Resources Services Administration (HHS)
HSIP HPSA Surgical Incentive Program
HUD Housing and Urban Development
IACS Individuals Access to CMS Systems
ICD International Classification of Diseases
ICF Intermediate care facilities
ICF International Classification of Functioning, Disability and
Health
ICR Intensive cardiac rehabilitation
ICR Information collection requirement
IDTF Independent diagnostic testing facility
IGI IHS Global Insight, Inc.
IFC Interim final rule with comment period
IMRT Intensity-Modulated Radiation Therapy
IOM Internet Only Manual
IPCI indirect practice cost index
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IRS Internal Revenue Service
ISO Insurance services office
IVD Ischemic Vascular Disease
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
TJC Joint Commission
JRCERT Joint Review Committee on Education in Radiologic Technology
KDE Kidney disease education
LCD Local coverage determination
MA Medicare Advantage
MA-PD Medicare Advantage-Prescription Drug Plans
MAC Medicare Administrative Contractor
MAV Measure Applicability Validation
MCMP Medicare Care Management Performance
MCP Monthly Capitation Payment
MDRD Modification of Diet in Renal Disease
MedCAC Medicare Evidence Development and Coverage Advisory
Committee (formerly the Medicare Coverage Advisory Committee (MCAC))
MedPAC Medicare Payment Advisory Commission
MGMA Medical Group Management Association
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)
(Pub. L. 109-432)
MIPPA Medicare Improvements for Patients and Providers Act of 2008
(Pub. L. 110-275)
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173)
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L.
110-173)
MNT Medical nutrition therapy
MOC Maintenance of certification
MP Malpractice
MPC Mulitspecialty Points of Comparison
MPPR Multiple procedure payment reduction
MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)
MRA Magnetic Resonance Angiography
MRI Magnetic Resonance Imaging
MSA Metropolitan Statistical Area
MSP Medicare Secondary Payer
MUE Medically Unlikely Edit
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NCQA National Committee for Quality Assurance
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NF Nursing facility
NISTA National Institute of Standards and Technology Act
NP Nurse practitioner
NPI National Provider Identifier
NPP Nonphysician practitioner
NQF National Quality Forum
NBRC National Board for Respiratory Care
NRC Nuclear Regulatory Commission
NTSB National Transportation Safety Board
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
OCR Optical Character Recognition
ODF Open door forum
OES Occupational Employment Statistics
OGPE Oxygen generating portable equipment
OIG Office of Inspector General
OMB Office of Management and Budget
ONC [HHS] Office of the National Coordinator for Health IT
OPPS Outpatient prospective payment system
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PACE Program of All-inclusive Care for the Elderly
PAT Performance assessment tool
PC Professional component
PCI Percutaneous coronary intervention
PCIP Primary Care Incentive Payment Program
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
PFS Physician Fee Schedule
PGP [Medicare] Physician Group Practice
PHI Protected health information
PHP Partial hospitalization program
PIM [Medicare] Program Integrity Manual
PLI Professional liability insurance
POA Present on admission
POC Plan of care
PPI Producer price index
PPIS Physician Practice Information Survey
PPPS Personalized Prevention Plan Services
PPS Prospective payment system
PPTA Plasma Protein Therapeutics Association
PQRI Physician Quality Reporting Initiative
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PT Physical therapy
PTCA Percutaneous transluminal coronary angioplasty
PTA Physical therapy assistant
PVBP Physician and Other Health Professional Value-Based Purchasing
Workgroup
QDCs (Physician Quality Reporting System) Quality Data Codes
RA Radiology assistant
RAC Medicare Recovery Audit Contractor
RBMA Radiology Business Management Association
RFA Regulatory Flexibility Act
RHC Rural health clinic
RHQDAPU Reporting Hospital Quality Data Annual Payment Update
Program
RIA Regulatory impact analysis
RN Registered nurse
RNAC Reasonable net acquisition cost
RPA Radiology practitioner assistant
RRT Registered respiratory therapist
RUC [AMAs Specialty Society] Relative (Value) Update Committee
RVRBS Resource-Based Relative Value Scale
RVU Relative value unit
SBA Small Business Administration
SCHIP State Children's Health Insurance Programs
SDW Special Disability Workload
SGR Sustainable growth rate
STATS Short Term Alternatives for Therapy Services
SLP Speech-language pathology
SMS [AMAs] Socioeconomic Monitoring System
SNF Skilled nursing facility
SOR System of record
SRS Stereotactic radiosurgery
SSA Social Security Administration
SSI Social Security Income
STARS Services Tracking and Reporting System
STATS Short Term Alternative Therapy Services
TC Technical Component
TIN Tax identification number
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
TTO Transtracheal oxygen
UAF Update Adjustment Factor
UPMC University of Pittsburgh Medical Center
URAC Utilization Review Accreditation Committee
USDE United States Department of Education
USP-DI United States Pharmacopoeia-Drug Information
VA Veterans Administration
VBP Value-based purchasing
WAC Wholesale Acquisition Cost

[[Page 73178]]

WAMP Widely available market price
WHO World Health Organization

CPT (Current Procedural Terminology) Copyright Notice

Throughout this final rule with comment period, we use CPT codes
and descriptions to refer to a variety of services. We note that CPT
codes and descriptions are copyright 2010 American Medical Association.
All Rights Reserved. CPT is a registered trademark of the American
Medical Association (AMA). Applicable FARS/DFARS apply.

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) are based on national uniform relative
value units (RVUs) based on the relative 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. We note that throughout this final rule with
comment period, unless otherwise noted, the term ``practitioner'' is
used to describe both physicians and eligible nonphysician
practitioners (such as physician assistants, nurse practitioners,
clinical nurse specialists, certified nurse-midwives, psychologists, or
social workers) that are permitted to furnish and bill Medicare under
the PFS for the services under discussion.

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
on 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 (DHHS). 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, with appropriate adjustment of the conversion factor (CF), in a
manner to assure that fee schedule amounts for anesthesia services are
consistent with those for other services of comparable value. We
established a separate 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 payment methodology for
anesthesia services.
We establish physician work RVUs for new and revised codes based on
our review of recommendations received from the American Medical
Association's (AMA) Specialty Society Relative Value Update Committee
(RUC).
2. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-432), enacted on October 31, 1994, amended section
1848(c)(2)(C)(ii) of the Act and required us to develop resource-based
PE RVUs for each physicians' service beginning in 1998. We were 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 physicians'
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 physicians' 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
(HOPD). 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 calendar year (CY) 2007 PFS final rule with comment period
(71 FR 69624), we revised the methodology for calculating direct PE
RVUs from the top-down to the bottom-up methodology beginning in CY
2007 and provided for a 4-year transition for the new PE RVUs under
this new methodology. This transition ended in CY 2010 and direct PE
RVUs are calculated in CY 2011 using this methodology, unless otherwise
noted.
In the CY 2010 PFS final rule with comment period, we updated the
PE/hour (HR) data that are used in the

[[Page 73179]]

calculation of PE RVUs for most specialties (74 FR 61749). For this
update, we used the Physician Practice Information Survey (PPIS)
conducted by the AMA. The PPIS is a multispecialty, nationally
representative, PE survey of both physicians and nonphysician
practitioners (NPPs) using a survey instrument and methods highly
consistent with those of the SMS and the supplemental surveys used
prior to CY 2010. We note that in CY 2010, for oncology, clinical
laboratories, and independent diagnostic testing facilities (IDTFs), we
continued to use the supplemental survey data to determine PE/HR values
(74 FR 61752).
3. Resource-Based Malpractice (MP) RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act
requiring us to implement resource-based malpractice (MP) RVUs for
services furnished on or after CY 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 all
RVUs no less often than every 5 years. The first Five-Year Review of
the physician work RVUs was published on November 22, 1996 (61 FR
59489) and was effective in 1997. The second Five-Year Review was
published in the CY 2002 PFS final rule with comment period (66 FR
55246) and was effective in 2002. The third Five-Year Review of
physician work RVUs was published in the CY 2007 PFS final rule with
comment period (71 FR 69624) and was effective on January 1, 2007.
(Note: Additional codes relating to the third Five-Year Review of
physician work RVUs were addressed in the CY 2008 PFS final rule with
comment period (72 FR 66360).) The fourth Five-Year Review of physician
work RVUs was initiated in the CY 2010 PFS final rule with comment
period where we solicited candidate codes from the public for this
review (74 FR 61941). Changes due to the fourth Five-Year Review of
physician work RVUs will be effective January 1, 2012.
In 1999, the AMA 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
AMAs Current Procedural Terminology (CPT) codes). As part of the CY
2007 PFS final rule with comment period (71 FR 69624), we implemented a
new bottom-up methodology for determining resource-based PE RVUs and
transitioned the new methodology over a 4-year period. A comprehensive
review of PE was undertaken prior to the 4-year transition period for
the new PE methodology from the top-down to the bottom-up methodology,
and this transition was completed in CY 2010. In CY 2010, we also
incorporated the new PPIS data to update the specialty-specific PE/HR
data used to develop PE RVUs. Therefore, the next Five-Year Review of
PE RVUs will be addressed in CY 2014.
In the CY 2005 PFS final rule with comment period (69 FR 66236), we
implemented the first Five-Year Review of the MP RVUs (69 FR 66263).
Minor modifications to the methodology were addressed in the CY 2006
PFS final rule with comment period (70 FR 70153). The second Five-Year
Review and update of resource-based malpractice RVUs was published in
the CY 2010 PFS final rule with comment period (74 FR 61758) and was
effective in CY 2010.
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 revisions to the 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.
For CY 2010, we adopted a number of new payment policies for which
we estimated the potential for a redistributive effect under the PFS,
including the use of the new PPIS data to develop the specialty-
specific PE/HR used for the PE RVUs (74 FR 61749 through 61752) and the
elimination of the reporting of all CPT consultation codes in order to
allow for correct and consistent coding and appropriate payment for
evaluation and management services under the PFS (74 FR 61767 through
61775). In the CY 2011 PFS proposed rule (75 FR 40047), we acknowledged
that clinical experience with these new PFS policies has been growing
over the first 6 months of CY 2010 and noted that as we seek to improve
future PFS payment accuracy for services, we were interested in public
comments on the perspectives of physicians and nonphysician
practitioners caring for Medicare beneficiaries under the current PFS
coding and payment methodologies for physicians' services.
Comment: Many commenters expressed various concerns regarding new
Medicare coding and payment methodologies adopted for CY 2010 and
continuing in CY 2011. Some commenters indicated that the effects of
using PPIS data to develop the specialty-specific practice expense per
hour (PE/HR) significantly reduced the payment for certain services and
procedures. Commenters were concerned that the reductions in practice
costs reflected in the PPIS data were inaccurate and that CMS reliance
on the PPIS data caused undue hardship to certain specialties. Some
commenters requested that CMS utilize new PE survey data for specific
specialties.
A number of commenters were also particularly concerned with the
decision by CMS to no longer recognize the CPT consultation codes for
Part B payment of evaluation and management (E/M) services beginning in
CY 2010. Many commenters recommended resuming payment for consultation
codes under the PFS to recognize the unique physician work and practice
expenses when consultation services are furnished at the request of
other practitioners. Several commenters argued that consultation
services were especially important to ensuring high-quality,
coordinated care for complex patients and to prevent unnecessary,
expensive tests. Based on findings from a survey of affected
specialties, these commenters expressed concern that CMS policy
decision to no longer recognize the CPT consultation codes for PFS
payment purposes resulted in: (1) A reduction in the number of new
Medicare patients seen by specialists; (2) a reduction in overall
specialist time spent with individual Medicare patients; (3) a
reduction in the number of consultations provided to hospital
inpatients; (4) diminished continuity and coordination of care; and (5)
the elimination of physicians' office staff and postponement of
physicians purchasing new equipment because of practice cost concerns.
Finally, other commenters requested that, in the absence of recognition
of the CPT consultation codes for PFS payment, CMS should revise the
current prolonged services and new patient definitions in order to
allow for higher payments for services that, prior to CY 2010, would
have been billed using the CPT consultation codes. Specifically,

[[Page 73180]]

the commenters believe that CMS should adopt the current CPT policy of
identifying patients seen by physicians in a different subspecialty
within a group practice as ``new'' patients, rather than continuing to
use the same physician specialty as the decision point. In addition,
some commenters encouraged CMS to adopt the CPT inpatient setting
guidelines for determining whether a service meets the prolonged
service criteria, which allow physicians to include time spent on a
patients floor or unit performing tasked related to the patients care,
rather than just face-to-face time as specified under current CMS
policy.
Response: We appreciate the concerns of the commenters regarding
current PFS coding and payment methodologies. We welcome the
perspective of physicians and nonphysician practitioners caring for
Medicare beneficiaries. We understand that in some cases, recent policy
changes under the PFS reduced payments for certain professional
services, albeit with the goal of providing payment for services that
appropriately reflects their relative value in the context of PFS
payment for all other services. It is in the nature of any budget
neutral payment system for changes, such as the use of PPIS data and
the elimination of PFS payment for the CPT consultation codes, to have
a somewhat differential impact on various groups of physicians and/or
nonphysician practitioners. Furthermore, we note that all physicians
benefited from the budget neutral increase in the payment levels for
the other evaluation and management (E/M) CPT codes that resulted from
the consultation code policy change.
For CY 2010, we adopted the PPIS data for developing the PE RVUs as
the most recent data on physicians office practice expenses that used a
consistent survey instrument across all specialty and healthcare
professional groups. The PPIS was a nationally representative survey
providing the most up-to-date and comprehensive data available from 51
specialties, using a survey instrument that was carefully designed,
tested, and implemented. As discussed in the CY 2010 PFS final rule
with comment period (75 FR 61751), because we recognized that some
specialties would likely experience significant payment reductions with
the use of the PPIS data, we adopted a 4-year transition from the
previous PE RVUs to the PE RVUs developed using the new PPIS data in
order to allow physicians and others time to adjust to the payment
changes. We note that CY 2010 was the first year of the transition,
with payment based upon 75 percent of the previous PE RVUs and 25
percent of the PE RVUs using the new PPIS data. This blend will move to
50/50 in CY 2011, and we intend to continue to closely monitor Medicare
PFS utilization data to detect any emerging issues that may be of
concern during this transition period, such as access problems for
Medicare beneficiaries. To date, we have identified no specific
problems that would warrant our proposal of a change with respect to
the final CY 2010 policy regarding development of the PE RVUs based on
the PPIS data. Going forward, as discussed further in section II.A.2.f.
of this final rule with comment period, we remain interested in the
thoughts of stakeholders regarding the MedPAC comment that ``CMS should
consider alternatives to collecting specialty-specific cost data or
options to decrease the reliance on such data.'' We encourage
interested parties to contact us at any time if they have information
to share or discuss in this regard.
In response to extensive public comment on the CY 2010 PFS proposal
to eliminate payment for the CPT consultation codes, we explained our
rationale in detail in the CY 2010 PFS final rule with comment period
(75 FR 61767 through 61775). Prior to the CY 2010 PFS rulemaking cycle,
we had made numerous attempts to resolve issues related to the
reporting of the CPT consultation codes, including developing and
implementing relevant guidance and educating physicians regarding
documentation, transfer of care, and consultation policy. Despite these
efforts, there was still substantial disagreement and inconsistency
within the physician community regarding these issues. In addition, we
believe that in most cases there is no substantial difference in
physician work between E/M visits and services that would otherwise be
reported with CPT consultation codes. Therefore, we continue to believe
that E/M services that could previously have been reported using the
CPT consultation codes may now be appropriately reported and paid using
other E/M codes, specifically office and other outpatient, initial
hospital and nursing facility care, and subsequent hospital and nursing
facility care E/M codes. This policy allows for correct and consistent
coding for E/M services furnished by physicians and nonphysician
practitioners, as well as provides for appropriate payment for the
specific services that were previously billed using the CPT
consultation codes.
While we continue to believe that promoting effective coordination
of care must be an essential goal of our payment systems, we are
currently not aware of any evidence that the CY 2010 policy change to
no longer recognize the CPT consultation codes is creating problems
regarding care coordination and communication among physicians that
negatively impact the health of Medicare beneficiaries. As we stated in
the CY 2010 PFS final rule with comment period in response to similar
hypothetical concerns expressed by some commenters (75 FR 61774), if we
become aware of such evidence in the future, we would certainly
consider whether there is an appropriate policy response to promote
more effective coordination of care. However, we continue to believe it
is premature to consider what the appropriate responses might be unless
specific evidence of an issue affecting the health of Medicare
beneficiaries comes to our attention. We will continue to be attentive
to any concerns that develop about the effects of the policy on the
goal of promoting effective coordination of care.
In the CY 2010 PFS final rule with comment period (75 FR 61772), we
explained that, although we estimated that there would be
redistributional effects among specialties, we did not believe the
estimated impacts of the change in consultation code policy were
disproportionate to the goals we sought to achieve in finalizing the
proposal. While we understand that commenters are concerned with the
effects of this policy change and that these comments were submitted
after only a half year's experience with the revised policy, the
commenters on the CY 2011 proposed rule did not fundamentally address
the underlying issues that led to our decision to no longer recognize
the consultation codes for PFS payment purposes.
We appreciate the suggestions of the commenters regarding policy
changes to the definitions of new patients and prolonged services.
Regarding the definition of ``new'' patient, we note that we continue
to consider requests on an ongoing basis for new Medicare physician
specialty codes and may establish new codes upon evaluating the
submissions based on the criteria listed in the Medicare Claims
Processing Manual, Pub. 100-04, chapter 26, section 10.8. In fact, we
have approved four new Medicare physician specialty codes in the past 2
years. These additions allow more patients of those subspecialties to
be considered new based on the narrower range of services provided by
the subspecialty within a broader specialty group practice. We
encourage interested stakeholders to submit requests for new specialty
codes

[[Page 73181]]

if they desire a specific code for a different medical specialty or
subspecialty. We do not believe it is necessary to change our current
policy to one that would routinely adopt the CPT policy of identifying
patients seen by physicians in a different subspecialty as ``new''
patients because our current criteria for establishing new Medicare
physician specialty codes already accounts for many of these scenarios.
Medicare physician specialty codes describe the unique types of
medicine that physicians practice. Therefore, we believe our current
definition of ``new'' for reporting office visits to a group practice
appropriately relies upon the Medicare definition of a different
specialty so that that the differential physician resources required to
care for a patient who is truly new to the physician's unique type of
medical practice are appropriately recognized.
Finally, we note that our prolonged service criterion that allows
counting only of face-to-face time for inpatients, as it does for
outpatients, is longstanding. Given that the highest level initial
hospital care E/M visit by a physician typically extends for 70
minutes, in order to report the prolonged physician service CPT code in
the inpatient setting, a physician would need to spend at least an
additional 30 minutes caring for the patient. We are uncertain whether
many inpatient E/M services that would otherwise be reported as CPT
consultation codes extend beyond 100 minutes, even if we were to
consider adopting a policy change to allow counting of unit/floor time
in addition to face-to-face time. If we were to consider such a policy
change in the counting of physician time, we are also concerned that
available documentation in the medical record could make evaluating the
medical necessity of a prolonged service especially problematic.
Therefore, we do not believe it would be appropriate to modify our
interpretation of the counting of time for purposes of reporting the
prolonged service inpatient codes. In most cases, we believe that the
additional time that may be required for an E/M visit to a hospital
inpatient that would otherwise be reported by a CPT consultation code
may be appropriately paid through the Medicare payment for the level of
initial or subsequent hospital care E/M code that is reported that
takes into consideration the face-to-face time the consulting physician
spends with the patient.
We appreciate the commenters' varied perspectives on caring for
Medicare beneficiaries under the recent PFS coding and payment changes
adopted for CY 2010 and continuing in CY 2011. While we did not make CY
2011 proposals to modify our established policies regarding the use of
the PPIS data to calculate the PE RVUs or the reporting of E/M visits
that would otherwise be reported under the CPT consultation codes, and
we are not modifying them for CY 2011, we will continue to monitor the
impact of these policies. We look forward to continuing our dialogue
with stakeholders regarding these and future policy changes under the
PFS.

B. Components of the Fee Schedule Payment Amounts

To calculate the payment for every physician's 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 expense in an
area compared to the national average costs for each component.
RVUs are converted to dollar amounts through the application of a
CF, which is calculated by CMS Office of the Actuary (OACT).
The formula for calculating the Medicare fee schedule payment
amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.

C. Most Recent Changes to the Fee Schedule

The CY 2010 PFS final rule with comment period (74 FR 61738)
implemented changes to the PFS and other Medicare Part B payment
policies. It also finalized some of the CY 2009 interim RVUs and
implemented interim RVUs for new and revised codes for CY 2010 to
ensure that our payment systems are updated to reflect changes in
medical practice and the relative value of services. The CY 2010 PFS
final rule with comment period also addressed other policies, as well
as certain provisions of the MIPPA.
As required by the statute at the time of its issuance on October
30, 2009, the CY 2010 PFS final rule with comment period announced the
following for CY 2010: The PFS update of -21.2 percent; the initial
estimate for the sustainable growth rate of -8.8 percent; and the CF of
$28.4061.
On December 10, 2009, we published a correction notice (74 FR
65449) to correct several technical and typographical errors that
occurred in the CY 2010 PFS final rule with comment period. This
correction notice announced a revised CF for CY 2010 of $28.3895.
On December 19, 2009, the Department of Defense Appropriations Act,
2010 (Pub. L. 111-118) was signed into law. Section 1011 of Public Law
111-118 provided a 2-month zero percent update to the CY 2010 PFS
effective only for dates of service from January 1, 2010 through
February 28, 2010.
On March 2, 2010, the Temporary Extension Act of 2010 (Pub. L. 111-
144) was signed into law. Section 2 of Public Law 111-144 extended
through March 31, 2010 the zero percent update to the PFS that was in
effect for claims with dates of service from January 1, 2010 through
February 28, 2010.
In addition, on April 15, 2010, the Continuing Extension Act of
2010 (Pub. L. 111-157) was signed into law. Section 4 of Public Law
111-157 extended through May 31, 2010 the zero percent update to the
PFS that was in effect for claims with dates of services from January
1, 2010 through March 31, 2010. The provision was retroactive to April
1, 2010.
In the May 11, 2010 Federal Register (75 FR 26350), we published a
subsequent correction notice to correct several technical and
typographical errors that occurred in the CY 2010 PFS final rule with
comment period and the December 10, 2009 correction notice. The May 11,
2010 correction notice announced a revised CF for CY 2010 of $28.3868.
On June 25, 2010, the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010 (Pub. L. 111-192) was
signed into law. This law required application of a 2.2 percent update
to the PFS for claims with dates of services from June 1, 2010 through
November 30, 2010. As a result of this change, the PFS conversion
factor was revised to $36.8729 for services furnished during this time
period.
On March 23, 2010 the Patient Protection and Affordable Care Act
(Pub. L. 111-148) was signed into law. Shortly thereafter, on March 30,
2010, the Health Care and Education Reconciliation Act of 2010 (Pub. L.
111-152) was signed into law. These two laws are discussed in this
final rule with comment period and are collectively referred to as the
``Affordable Care Act'' (ACA) throughout this final rule with comment
period.

[[Page 73182]]

D. Public Comments Received in Response to the CY 2011 PFS Proposed
Rule

We received approximately 8,500 timely pieces of correspondence
containing multiple comments on the CY 2011 PFS proposed rule. We note
that we received some comments that were outside the scope of the CY
2011 PFS proposed rule, including public comments on new CY 2011 HCPCS
codes that were not presented in the CY 2011 PFS proposed rule and
existing CY 2010 HCPCS codes with final values for which we made no
proposals for CY 2011. These comments are not addressed in this CY 2011
PFS final rule with comment period. New and revised CY 2011 HCPCS codes
and their CY 2011 interim PFS work, malpractice, and PE RVUs are
displayed in Addendum C to this final rule with comment period, and
these values are open to public comment on this final rule with comment
period. Summaries of the public comments that are within the scope of
the proposals and our responses to those comments are set for the in
the various sections of this final rule with comment period under the
appropriate headings.

II. Provisions of the Final Rule for the Physician Fee Schedule

A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)

1. Overview
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. We develop PE RVUs by looking at the
direct and indirect physician practice resources involved in furnishing
each service. Direct expense categories include clinical labor, medical
supplies, and medical equipment. Indirect expenses include
administrative labor, office expense, and all other expenses. The
sections that follow provide more detailed information about the
methodology for translating the resources involved in furnishing each
service into service-specific PE RVUs. In addition, we note that
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. Therefore, if revisions to the 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. We
refer readers to the CY 2010 PFS final rule with comment period (74 FR
61743 through 61748) for a more detailed history of the PE methodology.
2. Practice Expense Methodology
a. Direct Practice Expense
We use a bottom-up approach to determine the direct PE by adding
the costs of the resources (that is, the clinical staff, equipment, and
supplies) typically required to provide 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 American Medical Association's
(AMA's) Relative Value Update Committee (RUC). For a detailed
explanation of the bottom-up direct PE methodology, including examples,
we refer readers to the Five-Year Review of Work Relative Value Units
Under the PFS and Proposed Changes to the Practice Expense Methodology
proposed notice (71 FR 37242) and the CY 2007 PFS final rule with
comment period (71 FR 69629).
b. Indirect Practice Expense per Hour Data
We use survey data on indirect practice expenses incurred per hour
worked (PE/HR) in developing the indirect portion of the PE RVUs. Prior
to CY 2010, we primarily used the practice expense per hour (PE/HR) by
specialty that was obtained from the AMA's Socioeconomic Monitoring
Surveys (SMS). These surveys were conducted from 1995 through 1999. For
several specialties that collected additional PE/HR data through
supplemental surveys, we incorporated these data in developing the PE/
HR values used annually.
While the SMS was not specifically designed for the purpose of
establishing PE RVUs, we found these data to be the best available at
the time. The SMS was a multispecialty survey effort conducted using a
consistent survey instrument and method across specialties. The survey
sample was randomly drawn from the AMA Physician Master file to ensure
national representativeness. The AMA discontinued the SMS survey in
1999.
As required by the Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113), we also established a process by which specialty
groups could submit supplemental PE data. In the May 3, 2000 Federal
Register, we issued the Medicare Program; Criteria for Submitting
Supplemental Practice Expense Survey Data interim final rule (65 FR
25664) in which we established criteria for acceptance of supplemental
data. The criteria were modified in the CY 2001 and CY 2003 PFS final
rules with comment period (65 FR 65380 and 67 FR 79971, respectively).
In addition to the SMS, we previously used supplemental survey data for
the following specialties: Cardiology; dermatology; gastroenterology;
radiology; cardiothoracic surgery; vascular surgery; physical and
occupational therapy; independent laboratories; allergy/immunology;
independent diagnostic testing facilities (IDTFs); radiation oncology;
medical oncology; and urology.
Because the SMS data and the supplemental survey data were from
different time periods, we historically inflated them by the Medicare
Economic Index (MEI) to put them on as comparable a time basis as we
could when calculating the PE RVUs. This MEI proxy was necessary in the
past due to the lack of contemporaneous, consistently collected, and
comprehensive multispecialty survey data.
The AMA administered a new survey in CY 2007 and CY 2008, the
Physician Practice Expense Information Survey (PPIS), which was
expanded (relative to the SMS) to include nonphysician practitioners
(NPPs) paid under the PFS. The PPIS was designed to update the
specialty-specific PE/HR data used to develop PE RVUs. The AMA and the
CMS contractor, The Lewin Group (Lewin), analyzed the PPIS data and
calculated the PE/HR for physician and nonphysician specialties,
respectively. The AMA's summary worksheets and Lewin's final report are
available on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=4&sortOrder=descending&itemID=CMS1223902&intNumPerPage=10.
(See downloads labeled AMA PPIS Worksheets 1-3 and Physician Practice
Expense non MDDO Final Report)
The PPIS is a multispecialty, nationally representative, PE survey
of both physicians and NPPs using a consistent survey instrument and
methods highly consistent with those used for the SMS and the
supplemental surveys. The PPIS gathered information

[[Page 73183]]

from 3,656 respondents across 51 physician specialty and healthcare
professional groups.
We believe the PPIS is the most comprehensive source of PE survey
information available to date. Therefore, we used the PPIS data to
update the PE/HR data for almost all of the Medicare-recognized
specialties that participated in the survey for the CY 2010 PFS. When
we changed over to the PPIS data beginning in CY 2010, we did not
change the PE RVU methodology itself or the manner in which the PE/HR
data are used in that methodology. We only updated the PE/HR data based
on the new survey. Furthermore, as we explained in the CY 2010 PFS
final rule with comment period (74 FR 61751), because of the magnitude
of payment reductions for some specialties resulting from the use of
the PPIS data, we finalized a 4-year transition (75/25 for CY 2010, 50/
50 for CY 2011, 25/75 for CY 2012, and 0/100 for CY 2013) from the
previous PE RVUs to the PE RVUs developed using the new PPIS data.
Section 303 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) added section
1848(c)(2)(H)(i) of the Act, which requires us to use the medical
oncology supplemental survey data submitted in 2003 for oncology drug
administration services. Therefore, the PE/HR for medical oncology,
hematology, and hematology/oncology reflects the continued use of these
supplemental survey data.
We do not use the PPIS data for reproductive endocrinology, sleep
medicine, and spine surgery since these specialties are not separately
recognized by Medicare, and we do not know how to blend these data with
Medicare-recognized specialty data.
Supplemental survey data on independent labs, from the College of
American Pathologists, were implemented for payments in CY 2005.
Supplemental survey data from the National Coalition of Quality
Diagnostic Imaging Services (NCQDIS), representing IDTFs, were blended
with supplementary survey data from the American College of Radiology
(ACR) and implemented for payments in CY 2007. Neither IDTFs nor
independent labs participated in the PPIS. Therefore, we continue to
use the PE/HR that was developed from their supplemental survey data.
Finally, consistent with our past practice, the previous indirect
PE/HR values from the supplemental surveys for medical oncology,
independent laboratories, and IDTFs were updated to CY 2006 using the
MEI to put them on a comparable basis with the PPIS data. In the CY
2010 PFS final rule with comment period (74 FR 61753), we miscalculated
the indirect PE/HR for IDTFs as part of this update process. Therefore,
for CY 2011, we are using a revised indirect PE/HR of $479.81 for
IDTFs, consistent with our final policy to update the indirect PE/HR
values from prior supplemental survey data that we are continuing to
use in order to put these data on a comparable basis with the PPIS
data. This revision changes the IDTF indirect percentage from 51
percent to 50 percent for CY 2011.
Previously, we had established PE/HR values for various specialties
without SMS or supplemental survey data by crosswalking them to other
similar specialties to estimate a proxy PE/HR. For specialties that
were part of the PPIS for which we previously used a crosswalked PE/HR,
we instead use the PPIS-based PE/HR. We continue previous crosswalks
for specialties that did not participate in the PPIS. However,
beginning in CY 2010 we changed the PE/HR crosswalk for portable x-ray
suppliers from radiology to IDTF, a more appropriate crosswalk because
these specialties are more similar to each other with respect to
physician time.
In the CY 2010 PFS final rule with comment period (74 FR 61752), we
agreed that, under the current PE methodology, the PPIS data for
registered dieticians should not be used in the calculation of PE RVUs
since these dieticians are paid 85 percent of what a physician would be
paid for providing the service. To include their survey data in the PE
calculation would influence the ratesetting by incorporating what the
services would be paid if performed by registered dieticians and not
strictly what the payment rates would be if provided by physicians. We
further stated that we would utilize the ``All Physicians'' PE/HR, as
derived from the PPIS, in the calculation of resource-based PE RVUs in
lieu of the PE/HR associated with registered dieticians. In the
resource-based PE methodology for CY 2010, while we removed the
specialty of registered dieticians from the ratesetting step we did not
assign the ``All Physicians'' PE/HR to services furnished by registered
dieticians. Instead, we allowed the PE/HR for those services to be
generated by a weighted average of all the physician specialties that
also furnished the services. This method was consistent with our policy
to not use the registered dietician PPIS PE/HR in calculating the PE
RVUs for services furnished by registered dieticians but we did not
actually crosswalk the specialty of registered dietician to the ``All
Physicians'' PE/HR data as we had intended according to the final
policy. Nevertheless, we are affirming for CY 2011 that the final
resource-based PE RVUs have been calculated in accordance with the
final policy adopted in the CY 2010 PFS final rule with comment period
(74 FR 61752) for registered dietician services that crosswalks the
specialty to the ``All Physicians'' PE/HR data.
As provided in the CY 2010 PFS final rule with comment period (74
FR 61751), CY 2011 is the second year of the 4-year transition to the
PE RVUs calculated using the PPIS data. Therefore, in general, the CY
2011 PE RVUs are a 50/50 blend of the previous PE RVUs based on the SMS
and supplemental survey data and the new PE RVUS developed using the
PPIS data as described above. Note that the reductions in the PE RVUs
for expensive diagnostic imaging equipment attributable to the change
to an equipment utilization rate assumption of 75 percent (see 74 FR
61753 through 61755 and section II.A.3. of this final rule with comment
period) are not subject to the transition.
CMS' longstanding policy in a PFS transition payment year is that
if the CPT Editorial Panel creates a new code for that year, the new
code would be paid at its fully implemented PFS amount and not at a
transition rate for that year. Consistent with this policy, all new CY
2011 CPT codes will not be paid based on transitional PE RVUs in CY
2011. Instead, we will pay these services based on the fully
implemented PE RVUs in CY 2011. Additionally, existing CPT codes for
which the global period has changed in CY 2011 will not be subject to
the PPIS PE RVU transition. We believe that changing the global period
of a code results in the CPT code describing a different service to
which the previous PE RVUs would no longer be relevant when the code is
reported for a service furnished in CY 2011. The five CY 2011 existing
CPT codes with global period changes from CY 2010 to CY 2011 are: 11043
(Debridement, muscle, and/or fascia (includes epidermis, dermis, and
subcutaneous tissue, if performed); first 20 sq cm or less); 11044
(Debridement, bone (includes epidermis, dermis, subcutaneous tissue,
muscle and/or fascia, if performed); first 20 sq cm or less); 57155
(Insertion of uterine tandems and/or vaginal ovoids for clinical
brachytherapy); 97597 (Debridement (e.g., high pressure waterjet with/
without suction, sharp selective debridement with scissors,

[[Page 73184]]

scalpel and forceps), open wound, (e.g., fibrin, devitalized epidermis
and/or dermis, exudate, debris, biofilm), including topical
application(s), wound assessment, use of a whirlpool, when performed
and instruction(s) for ongoing care, per session, total wound(s)
surface area; first 20 square centimeters or less); and 97598
(Debridement (e.g., high pressure waterjet with/without suction, sharp
selective debridement with scissors, scalpel and forceps), open wound,
(e.g., fibrin, devitalized epidermis and/or dermis, exudate, debris,
biofilm), including topical application(s), wound assessment, use of a
whirlpool, when performed and instructions(s) for ongoing care, per
session, total wound(s) surface area; each additional 20 square
centimeters, or part thereof (List separately in addition to code for
primary procedure)).
c. Allocation of PE to Services
To establish PE RVUs for specific services, it is necessary to
establish the direct and indirect PE associated with each service.
(i) Direct costs. The relative relationship between the direct cost
portions of the PE RVUs for any two services is determined by the
relative relationship between the sum of the direct cost resources
(that is, the clinical staff, equipment, and supplies) typically
required to provide the services. The costs of these resources are
calculated from the refined direct PE inputs in our PE database. For
example, if one service has a direct cost sum of $400 from our PE
database and another service has a direct cost sum of $200, the direct
portion of the PE RVUs of the first service would be twice as much as
the direct portion of the PE RVUs for the second service.
(ii) Indirect costs. Section II.A.2.b. of this final rule with
comment period describes the current data sources for specialty-
specific indirect costs used in our PE calculations. We allocate the
indirect costs to the code level on the basis of the direct costs
specifically associated with a code and the greater of either the
clinical labor costs or the physician work RVUs. We also incorporate
the survey data described earlier in the PE/HR discussion. The general
approach to developing the indirect portion of the PE RVUs is described
below.
For a given service, we use the direct portion of the PE
RVUs calculated as described above and the average percentage that
direct costs represent of total costs (based on survey data) across the
specialties that perform the service to determine an initial indirect
allocator. For example, if the direct portion of the PE RVUs for a
given service were 2.00 and direct costs, on average, represented 25
percent of total costs for the specialties that performed the service,
the initial indirect allocator would be 6.00 since 2.00 is 25 percent
of 8.00.
We then add the greater of the work RVUs or clinical labor
portion of the direct portion of the PE RVUs to this initial indirect
allocator. In our example, if this service had work RVUs of 4.00 and
the clinical labor portion of the direct PE RVUs was 1.50, we would add
6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50
clinical labor portion) to get an indirect allocator of 10.00. In the
absence of any further use of the survey data, the relative
relationship between the indirect cost portions of the PE RVUs for any
two services would be determined by the relative relationship between
these indirect cost allocators. For example, if one service had an
indirect cost allocator of 10.00 and another service had an indirect
cost allocator of 5.00, the indirect portion of the PE RVUs of the
first service would be twice as great as the indirect portion of the PE
RVUs for the second service.
We next incorporate the specialty-specific indirect PE/HR
data into the calculation. As a relatively extreme example for the sake
of simplicity, assume in our example above that, based on the survey
data, the average indirect cost of the specialties performing the first
service with an allocator of 10.00 was half of the average indirect
cost of the specialties performing the second service with an indirect
allocator of 5.00. In this case, the indirect portion of the PE RVUs of
the first service would be equal to that of the second service.
d. Facility and Nonfacility Costs
For procedures that can be furnished in a physician's office, as
well as in a hospital or facility setting, we establish two PE RVUs:
Facility and nonfacility. The methodology for calculating PE RVUs is
the same for both the facility and nonfacility RVUs, but is applied
independently to yield two separate PE RVUs. Because Medicare makes a
separate payment to the facility for its costs of furnishing a service,
the facility PE RVUs are generally lower than the nonfacility PE RVUs.
e. 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), each of
which may be performed independently or by different providers, or they
may be performed together as a ``global'' service. When services have
PC and TC components that can be billed separately, the payment for the
global component equals the sum of the payment for the TC and PC. 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, PCs, and TCs for a service. (The direct PE RVUs for the TC
and PC sum to the global under the bottom-up methodology.)
f. Alternative Data Sources and Public Comments on Final Rule for 2010
In the CY 2010 PFS final rule with comment period (74 FR 61749
through 61750), we discussed the Medicare Payment Advisory Commission's
(MedPAC's) comment that in the future, ``CMS should consider
alternatives to collecting specialty-specific cost data or options to
decrease the reliance on such data.'' We agreed with MedPAC that it
would be appropriate to consider the future of the PE RVUs moving
forward. We sought comments from other stakeholders on the issues
raised by MedPAC for the future. In particular, we requested public
comments regarding MedPAC's suggestion that we consider alternatives
for collecting specialty-specific cost data or options to decrease the
reliance on such data. We noted MedPAC's comment that, ``CMS should
consider if Medicare or provider groups should sponsor future data
collection efforts, if participation should be voluntary (such as
surveys) or mandatory (such as cost reports), and whether a nationally
representative sample of practitioners would be sufficient for either a
survey or cost reports.'' MedPAC also stated that one option for
decreasing the reliance on specialty-specific cost data would be the
elimination of the use of indirect PE/HR data in the last step of
establishing the indirect cost portion of the PE RVUs as described
previously.
Almost all of the commenters on the CY 2010 PFS final rule with
comment period that addressed this issue expressed a general
willingness to work with CMS on methodological improvements or future
data collection efforts. Although no commenters detailed a
comprehensive overall alternative methodology, several commenters did
provide suggestions regarding future data collection efforts

[[Page 73185]]

and specific aspects of the current methodology.
The commenters on the CY 2010 PFS final rule with comment period
that addressed the issue of surveys supported the use of surveys if
they yielded accurate PE information. The few commenters that addressed
the issue of cost reports were opposed to physician cost reports. The
commenters varied with respect to their opinions regarding whether data
collection efforts should be led by organized medicine, individual
specialty societies, or CMS. Several commenters that addressed the
issue of voluntary versus mandatory data collection efforts supported
voluntary data collection efforts and opposed mandatory data collection
efforts.
Some commenters recommended no changes to the methodology or PE
data in the near future. Other commenters indicated that the
methodology and data changes needed to be made for CY 2011. Although
most commenters did not directly address the use of the indirect PE/HR
data, those that did predominately opposed the elimination of the use
of these data.
Many commenters addressed specifics of the PE methodology (as
further described in section II.A.2.c. of this final rule with comment
period). Some were opposed to the scaling factor applied in the
development of the direct PE portion of the PE RVUs so that in the
aggregate the direct portion of the PE RVUs do not exceed the
proportion indicated by the survey data (See Step 4 in g.(ii) below).
Several of these commenters advocated the elimination of this direct
scaling factor, while others indicated that the issue should be
examined more closely.
A few commenters recommended that physician work not be used as an
allocator in the development of the indirect portion of the PE RVUs as
described earlier in this section. A few indicated that physician time,
but not physician work, should be used in the allocation. Other
commenters suggested that indirect costs should be allocated solely on
the basis of direct costs.
We note that many of the issues raised by commenters on the CY 2010
PFS final rule with comment period are similar to issues raised in the
development of the original resource-based PE methodology and in
subsequent revisions to the methodology, including the adoption of the
bottom-up methodology. While we did not propose a broad methodological
change or broad data collection effort in the CY 2011 PFS proposed
rule, we invited comments on our summary of the issues raised by the
commenters on the CY 2010 PFS final rule with comment period, as
discussed in the CY 2011 PFS proposed rule (75 FR 40050). The complete
public comments on the CY 2010 PFS final rule with comment period are
available for public review at http://www.regulations.gov by entering
``CMS-1413-FC'' in the search box on the main page.
Comment: A number of commenters believe the PPIS data are flawed
and, therefore, should not be used to set the PE RVUs for all or
certain categories of PFS services. Other commenters supported the
adoption of the PPIS data and, whether ultimately favoring the adoption
of the PPIS data or not, many commenters stated that the 4-year
transition adopted by CMS is important to physicians and Medicare
beneficiaries to ensure access to care. The commenters explained that
the transition gives physician specialty societies the opportunity to
collect new and more detailed data where appropriate for refinement and
CMS the opportunity to more carefully analyze the new data and its
appropriateness. Although once again the commenters did not provide
specific recommendations on alternatives to a comprehensive survey of
practice expenses or options to decrease the PFS reliance on specialty-
specific cost data, the commenters offered the following suggestions
regarding future practice expense data collection.
Select a reputable company with experience in health care
market research.
Base changes on a comprehensive data source with adequate
participation rates.
Have data independently reviewed in order to ensure
accuracy.
Make data publicly available in time to allow for review
and comment by stakeholders.
Several commenters emphasized the administrative complexity and
burden if CMS were to require all physicians to submit cost reports.
One commenter supported a limited study of practice costs estimated by
cost reports to determine if the current PE RVUs were appropriately
paying physicians for the physician's office costs of services. The
commenter believes that cost reports would be more accurate than the
PPIS methodology. Finally, several commenters indicated a willingness
to engage CMS in more detailed discussion about potential refinements
to the current PE/HR data.
Response: We appreciate the commenters' recommendations regarding
factors we should consider in developing future practice expense data
collection efforts in order to improve the accuracy of the information.
While we are continuing the transition that was adopted in the CY 2010
PFS final rule with comment period (74 FR 61751) under the CY 2011 PFS
to full implementation of the PPIS data for the CY 2013 PFS PE RVUs, we
continue to remain interested in the thoughts of stakeholders regarding
the MedPAC comment that ``CMS should consider alternatives to
collecting specialty-specific cost data or options to decrease the
reliance on such data.'' More specifically, we encourage stakeholders
to contact us at any time if they encounter additional information to
share, develop further ideas or analyses that could inform our ongoing
consideration of physicians' practice expenses, or otherwise would like
to discuss this topic further as part of an open dialogue with us.
While to date, no stakeholders have presented a comprehensive overall
alternative methodology, we remain interested in potential novel or
refined approaches. We also continue to welcome more limited
suggestions for improvements to our current PE methodology or future
practice expense information collection activities.
g. PE RVU Methodology
For a more detailed description of the PE RVU methodology, we refer
readers to the CY 2010 PFS final rule with comment period with comment
period (74 FR 61745 through 61746).
(1) Setup File
First, we create a setup file for the PE methodology. The setup
file contains the direct cost inputs, the utilization for each
procedure code at the specialty and facility/nonfacility place of
service level, and the specialty-specific PE/HR data from the surveys.
(2) Calculate the Direct Cost PE RVUs
Sum the costs of each direct input.
Step 1: Sum the direct costs of the inputs for each service. Apply
a scaling adjustment to the direct inputs.
Step 2: Calculate the current aggregate pool of direct PE costs.
This is the product of the current aggregate PE (aggregate direct and
indirect) RVUs, the CF, and the average direct PE percentage from the
survey data.
Step 3: Calculate the aggregate pool of direct costs. This is the
sum of 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 scaling adjustment so that the aggregate direct cost pool does not
exceed the current aggregate direct cost pool and apply it

[[Page 73186]]

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 CF. Note that
the actual value of the CF used in this calculation does not influence
the final direct cost PE RVUs, as long as the same CF is used in Step 2
and Step 5. Different CFs will result in different direct PE scaling
factors, but this has no effect on the final direct cost PE RVUs since
changes in the CFs and changes in the associated direct scaling factors
offset one another.
(3) Create the Indirect Cost PE RVUs
Create indirect allocators.
Step 6: Based on the survey data, calculate direct and indirect PE
percentages for each physician specialty.
Step 7: Calculate direct and indirect PE percentages at the service
level by taking a weighted average of the results of Step 6 for the
specialties that furnish the service. Note that for services with TCs
and PCs, the direct and indirect percentages for a given service do not
vary by the PC, TC, and global components.
Step 8: Calculate the service level allocators for the indirect PEs
based on the percentages calculated in Step 7. The indirect PEs are
allocated based on the three components: The direct PE RVUs, the
clinical PE RVUs, and the work RVUs.
For most services the indirect allocator is: Indirect percentage *
(direct PE RVUs/direct percentage) + work RVUs.
There are two situations where this formula is modified:
If the service is a global service (that is, a service
with global, professional, and technical components), then the indirect
allocator is: Indirect percentage (direct PE RVUs/direct percentage) +
clinical PE RVUs + work RVUs.
If the clinical labor PE RVUs exceed the work RVUs (and
the service is not a global service), then the indirect allocator is:
Indirect percentage (direct PE RVUs/direct percentage) + clinical PE
RVUs.

Note: For global services, the indirect allocator is based on
both the work RVUs and the clinical labor PE RVUs. We do this to
recognize that, for the PC service, indirect PEs will be allocated
using the work RVUs, and for the TC service, indirect PEs will be
allocated using the direct PE RVUs and the clinical labor PE RVUs.
This also allows the global component RVUs to equal the sum of the
PC and TC RVUs.)

For presentation purposes in the examples in Table 2, the formulas
were divided into two parts for each service.
The first part does not vary by service and is the
indirect percentage (direct PE RVUs/direct percentage).
The second part is either the work RVUs, clinical PE RVUs,
or both depending on whether the service is a global service and
whether the clinical PE RVUs exceed the work RVUs (as described earlier
in this step).
Apply a scaling adjustment to the indirect allocators.
Step 9: Calculate the current aggregate pool of indirect PE RVUs by
multiplying the current aggregate pool of PE RVUs by the average
indirect PE percentage from the survey data.
Step 10: Calculate an aggregate pool of indirect PE RVUs for all
PFS services by adding the product of the indirect PE allocators for a
service from Step 8 and the utilization data for that service.
Step 11: Using the results of Step 9 and Step 10, calculate an
indirect PE adjustment so that the aggregate indirect allocation does
not exceed the available aggregate indirect PE RVUs and apply it to
indirect allocators calculated in Step 8.
Calculate the indirect practice cost index.
Step 12: Using the results of Step 11, calculate aggregate pools of
specialty-specific adjusted indirect PE allocators for all PFS services
for a specialty by adding the product of the adjusted indirect PE
allocator for each service and the utilization data for that service.
Step 13: Using the specialty-specific indirect PE/HR data,
calculate specialty-specific aggregate pools of indirect PE for all PFS
services for that specialty by adding the product of the indirect PE/HR
for the specialty, the physician time for the service, and the
specialty's utilization for the service across all services performed
by the specialty.
Step 14: Using the results of Step 12 and Step 13, calculate the
specialty-specific indirect PE scaling factors.
Step 15: Using the results of Step 14, calculate an indirect
practice cost index at the specialty level by dividing each specialty-
specific indirect scaling factor by the average indirect scaling factor
for the entire PFS.
Step 16: Calculate the indirect practice cost index at the service
level to ensure the capture of all indirect costs. Calculate a weighted
average of the practice cost index values for the specialties that
furnish the service. (Note: For services with TCs and PCs, we calculate
the indirect practice cost index across the global 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 component.)
Step 17: Apply the service level indirect practice cost index
calculated in Step 16 to the service level adjusted indirect allocators
calculated in Step 11 to get the indirect PE RVUs.
(4) Calculate the Final PE RVUs
Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs
from Step 17 and apply the final PE budget neutrality (BN) adjustment,
MEI rebasing adjustment, and multiple procedure payment reduction
(MPPR) adjustment.
The final PE BN adjustment is calculated by comparing the results
of Step 18 (prior to the MEI rebasing and MPPR adjustments) 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 ratesetting purposes, but all specialties are included for purposes
of calculating the final BN adjustment. (See ``Specialties excluded
from ratesetting calculation'' below in this section.)
As discussed in section II.E.5. of this final rule with comment
period, we are rebasing and revising the Medicare Economic Index (MEI)
for CY 2011. As discussed in section II.C.4. of this final rule with
comment period, section 1848(c)(2)(K) of the Act (as added by section
3134 of the ACA) specifies that the Secretary shall identify
potentially misvalued codes by examining multiple codes that are
frequently billed in conjunction with furnishing a single service.
There is inherent duplication in the PE associated with those services
which are frequently furnished together, so reducing PFS payment for
the second and subsequent services to account for the efficiencies in
multiple service sessions may be appropriate. Consistent with this
provision of the ACA, we are adopting a limited expansion of the
current MPPR policy for imaging services for CY 2011 and a new MPPR
policy for therapy services.
(5) Setup File Information
Specialties excluded from ratesetting calculation: For the
purposes of calculating the PE RVUs, we exclude certain specialties,
such as certain nonphysician practitioners paid at a percentage of the
PFS and low-volume specialties, from the calculation. These specialties
are included for the purposes of calculating the BN adjustment. They
are displayed in Table 1.

[[Page 73187]]

Table 1--Specialties Excluded from Ratesetting Calculation
----------------------------------------------------------------------------------------------------------------
Specialty code Specialty description
----------------------------------------------------------------------------------------------------------------
42........................... Certified nurse midwife.
49........................... Ambulatory surgical center.
50........................... Nurse practitioner.
51........................... Medical supply company with certified orthotist.
52........................... Medical supply company with certified prosthetist.
53........................... Medical supply company with certified prosthetist-orthotist.
54........................... Medical supply company not included in 51, 52, or 53.
55........................... Individual certified orthotist.
56........................... Individual certified prosthestist.
57........................... Individual certified prosthetist-orthotist.
58........................... Individuals not included in 55, 56, or 57.
59........................... Ambulance service supplier, e.g., private ambulance companies, funeral homes,
etc.
60........................... Public health or welfare agencies.
61........................... Voluntary health or charitable agencies.
73........................... Mass immunization roster biller.
74........................... Radiation therapy centers.
87........................... All other suppliers (e.g., drug and department stores).
88........................... Unknown supplier/provider specialty.
89........................... Certified clinical nurse specialist.
95........................... Competitive Acquisition Program (CAP) Vendor.
96........................... Optician.
A0........................... Hospital.
A1........................... SNF.
A2........................... Intermediate care nursing facility.
A3........................... Nursing facility, other.
A4........................... HHA.
A5........................... Pharmacy.
A6........................... Medical supply company with respiratory therapist.
A7........................... Department store.
1............................ Supplier of oxygen and/or oxygen related equipment.
2............................ Pedorthic personnel.
3............................ Medical supply company with pedorthic personnel.
----------------------------------------------------------------------------------------------------------------

Crosswalk certain low volume physician specialties:
Crosswalk the utilization of certain specialties with relatively low
PFS utilization to the associated specialties.
Physical therapy utilization: Crosswalk the utilization
associated with all physical therapy services to the specialty of
physical therapy.
Identify professional and technical services not
identified under the usual TC and 26 modifiers: Flag the services that
are PC and TC services, but do not use TC and 26 modifiers (for
example, electrocardiograms). This flag associates the PC and TC with
the associated global code for use in creating the indirect PE RVUs.
For example, the professional service, CPT code 93010
(Electrocardiogram, routine ECG with at least 12 leads; interpretation
and report only), is associated with the global service, CPT code 93000
(Electrocardiogram, routine ECG with at least 12 leads; with
interpretation and report).
Payment modifiers: Payment modifiers are accounted for in
the creation of the file. 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.
(6) Equipment Cost Per Minute
The equipment cost per minute is calculated as:

(1/(minutes per year * usage)) * price * ((interest rate/(1-(1/((1 +
interest rate) [caret] life of equipment)))) + maintenance)

Where:
minutes per year = maximum minutes per year if usage were continuous
(that is, usage = 1); generally 150,000 minutes.
usage = equipment utilization assumption; 0.75 for certain expensive
diagnostic imaging equipment (see 74 FR 61753 through 61755 and
section II.A.3. of this final rule with comment period) and 0.5 for
others.
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.

Note: The use of any particular conversion factor (CF) in Table
2 to illustrate the PE calculation has no effect on the resulting
RVUs.

[[Page 73188]]

TABLE 2--Calculation of PE RVUs Under Methodology for Selected Codes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
99213 33533 CABG,
Office arterial, 71020 Chest 71020-TC 71020-26 93000 ECG, 93005 ECG, 93010 ECG,
Step Source Formula visit, est single x-ray Chest x-ray Chest x-ray complete tracing report
Nonfacility facility Nonfacility Nonfacility Nonfacility Nonfacility Nonfacility Nonfacility
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Labor cost (lab).......... Step 1......... AMA................... ............... 13.32 77.52 5.74 5.74 0.00 6.12 6.12 0.00
(2) Supply cost (sup)......... Step 1......... AMA................... ............... 2.98 7.34 3.39 3.39 0.00 1.19 1.19 0.00
(3) Equipment cost (eqp)...... Step 1......... AMA................... ............... 0.19 0.65 8.17 8.17 0.00 0.12 0.12 0.00
(4) Direct cost (dir)......... Step 1......... ...................... =(1) + (2) + 16.50 85.51 17.31 17.31 0.00 7.43 7.43 0.00
(3).
(5) Direct adjustment (dir Steps 2-4...... See footnote*......... ............... 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
adj).
(6) Adjusted labor............ Steps 2-4...... =Lab * Dir adj........ =(1)*(5)....... 6.68 38.87 2.88 2.88 0.00 3.07 3.07 0.00
(7) Adjusted supplies......... Steps 2-4...... =Sup * Dir adj........ =(2)*(5)....... 1.50 3.68 1.70 1.70 0.00 0.60 0.60 0.00
(8) Adjusted equipment........ Steps 2-4...... =Eqp * Dir adj........ =(3)*(5)....... 0.10 0.33 4.10 4.10 0.00 0.06 0.06 0.00
(9) Adjusted direct........... Steps 2-4...... ...................... =(6) + (7) + 8.27 42.87 8.68 8.68 0.00 3.73 3.73 0.00
(8).
(10) Conversion factor (CF)... Step 5......... PFS................... ............... 36.87 36.87 36.87 36.87 36.87 36.87 36.87 36.87
(11) Adj labor cost converted. Step 5......... =(Lab * Dir adj)/CF... =(6)/(10)...... 0.18 1.05 0.08 0.08 0.00 0.08 0.08 0.00
(12) Adj supply cost converted Step 5......... =(Sup * Dir adj)/CF... =(7)/(10)...... 0.04 0.10 0.05 0.05 0.00 0.02 0.02 0.00
(13) Adj equipment cost Step 5......... =(Eqp * Dir adj)/CF... =(8)/(10)...... 0.00 0.01 0.11 0.11 0.00 0.00 0.00 0.00
converted.
(14) Adj. direct cost Step 5......... ...................... =(11) + (12) + 0.22 1.16 0.24 0.24 0.00 0.10 0.10 0.00
converted. (13).
(15) Work RVUs................ Setup File..... PFS................... ............... 0.97 33.75 0.22 0.00 0.22 0.17 0.00 0.17
(16) Dir pct.................. Steps 6,7...... Surveys............... ............... 0.26 0.18 0.29 0.29 0.29 0.29 0.29 0.29
(17) Ind pct.................. Steps 6,7...... Surveys............... ............... 0.74 0.82 0.71 0.71 0.71 0.71 0.71 0.71
(18) Ind alloc formula (1st Step 8......... See Step 8............ ............... ((14)/ ((14)/ ((14)/ ((14)/ ((14)/ ((14)/ ((14)/ ((14)/
part). (16))* (17) (16))* (17) (16))* (17) (16))* (17) (16))* (17) (16))* (17) (16))* (17) (16))* (17)
(19) Ind alloc (1st part)..... Step 8......... ...................... See (18)....... 0.65 5.29 0.58 0.58 0.00 0.25 0.25 0.00
(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)....... 0.97 33.75 0.30 0.08 0.22 0.25 0.08 0.17
(22) Indirect allocator (1st + Step 8......... ...................... =(19) + (21)... 1.62 39.04 0.88 0.66 0.22 0.50 0.33 0.17
2nd).
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
(23) Indirect adjustment (ind Steps 9-11..... See footnote** 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37
adj).
(24) Adjusted indirect Steps 9-11..... =Ind alloc * ind adj 0.60 14.47 0.33 0.24 0.08 0.19 0.12 0.06
allocator.
(25) Ind. practice cost index Steps 12-16.... See Steps 12-16 1.11 0.83 0.90 0.90 0.90 0.92 0.92 0.92
(IPCI).
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
(26) Adjusted indirect........ Step 17........ = Adj ind alloc * IPCI =(24) * (25)... 0.67 12.04 0.29 0.22 0.07 0.17 0.11 0.06
(27) MEI rebasing adjustment.. Step 18........ PFS................... ............... 1.18 1.18 1.18 1.18 1.18 1.18 1.18 1.18
(28) MPPR adjustments......... Step 18........ PFS................... ............... 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01
(29) PE RVU................... Step 18........ =(Adj dir + Adj ind) * =((14) + (26)) 1.06 15.68 0.63 0.54 0.09 0.32 0.25 0.07
budn * MEI adj * MPPR * budn * (27)
adj. * (28).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note:
PE RVUs in Table 2, row 29, may not match the values in Addendum B due to rounding.
* The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [Step 2]/[Step 3].
** The indirect adj = [current pe rvus * avg ind pct]/[sum of ind allocators] = [Step 9]/[Step 10].

[[Page 73189]]

3. PE Revisions for CY 2011
a. Equipment Utilization Rate
As part of the PE methodology associated with the allocation of
equipment costs for calculating PE RVUs, we currently use an equipment
utilization rate assumption of 50 percent for most equipment, with the
exception of expensive diagnostic imaging equipment (which is equipment
priced at over $1 million, for example, computed tomography (CT) and
magnetic resonance imaging (MRI) scanners), for which we adopted a 90
percent utilization rate assumption and provided for a 4-year
transition beginning in CY 2010 (74 FR 61755). Therefore, CY 2010 is
the first transitional payment year. Payment is made in CY 2010 for the
diagnostic services listed in Table 3 (those that include expensive
diagnostic imaging equipment in their PE inputs) of the CY 2011 PFS
proposed rule (75 FR 40054) based on 25 percent of the new PE RVUs and
75 percent of the prior PE RVUs for those services.
Section 1848(b)(4)(C) of the Act (as added by section 3135(a) of
the ACA) requires that with respect to fee schedules established for CY
2011 and subsequent years, in the methodology for determining PE RVUs
for expensive diagnostic imaging equipment under the CY 2010 PFS final
rule with comment period, the Secretary shall use a 75 percent
assumption instead of the utilization rates otherwise established in
that rule. The provision also requires that the reduced expenditures
attributable to this change in the utilization rate for CY 2011 and
subsequent years shall not be taken into account when applying the
budget neutrality limitation on annual adjustments described in section
1848(c)(2)(B)(ii)(II) of the Act.
As a result, the 75 percent equipment utilization rate assumption
will be applied to expensive diagnostic imaging equipment in a non-
budget neutral manner for CY 2011, and the resulting changes to PE RVUs
will not be transitioned over a period of years. We will apply the 75
percent utilization rate assumption in CY 2011 to all of the services
to which we currently apply the transitional 90 percent equipment
utilization rate assumption in CY 2010. These services are listed in a
file on the CMS Web site that is posted under downloads for the CY 2010
PFS final rule with comment period at http://www.cms.gov/physicianfeesched/downloads/CODES_SUBJECT_TO_90PCT_USAGE_RATE.zip.
These codes are also displayed in Table 3 at the end of this section.
Comment: Several commenters argued that the 75 percent utilization
rate assumption should not be applied because of the imprecise data on
which the policy was based. The commenters explained that based on an
independent survey, actual equipment utilization rates are close to 50
percent. In addition, the commenters postulated that rural imaging
centers would be adversely affected by the change due to lower
equipment utilization rates than non-rural centers. The commenters
requested that CMS base equipment utilization rate assumptions on
actual utilization data rather than assumptions.
Several other commenters supported the implementation of the 75
percent utilization rate assumption, and MedPAC recommended that CMS
explore increasing the equipment utilization rate assumption for
diagnostic imaging equipment that costs less than $1 million. Finally,
several commenters clarified that certain procedures were not subject
to the provision, including nuclear cardiology services and therapeutic
interventional radiology.
Response: Section 1848(b)(4)(C) of the Act (as added by section
3135(a) of the ACA) requires that with respect to fee schedules
established for CY 2011 and subsequent years, in the methodology for
determining PE RVUs for expensive diagnostic imaging equipment under
the CY 2010 PFS final rule with comment period, the Secretary shall use
a 75 percent assumption instead of the utilization rates otherwise
established in that rule. We acknowledge that further data regarding
actual equipment utilization in the physician's office setting may be
informative, but our use of such data to set the equipment utilization
rate assumption for expensive diagnostic imaging equipment at a value
other than 75 percent would require a statutory change.
We did not propose to expand the 75 percent equipment utilization
rate assumption for CY 2011 to other procedures beyond those that use
CT and MRI scanners as listed in Table 4 of the CY 2011 PFS proposed
rule (75 FR 40055) and Table 3 at the end of this section. Any future
changes in equipment utilization rate assumptions, including any
expansion of the 75 percent equipment utilization rate assumption to
additional expensive diagnostic imaging equipment, would be made
through the annual PFS notice and comment rulemaking cycle.
Furthermore, any changes in equipment utilization rate assumptions for
less costly diagnostic imaging equipment (less than $1 million) or for
therapeutic imaging or other equipment would not be subject to the
statutory provision that specifies a 75 percent assumption. We note
that we are constantly reassessing our methodology for developing the
PE RVUs and would propose any changes to the equipment utilization rate
assumptions for these types of equipment through the annual PFS
rulemaking cycle if we determine such changes could be appropriate.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal without modification. The 75 percent
equipment utilization rate assumption will be applied to expensive
diagnostic imaging equipment in a non-budget neutral manner for CY
2011, and the changes to the PE RVUs will not be transitioned over a
period of years. We will apply the 75 percent utilization rate
assumption in CY 2011 to all of the services to which we currently
apply the transitional 90 percent utilization rate assumption in CY
2010. The CY 2011 codes are displayed in Table 3 at the end of this
section that lists all the codes to which the 75 percent equipment
utilization rate assumption applies for CY 2011. In addition, the codes
subject to this policy are posted under the downloads for the CY 2011
PFS final rule with comment period on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
Additionally, for CY 2011, we proposed to expand the list of
services to which the higher equipment utilization rate assumption
applies to include all other diagnostic imaging services that utilize
similar expensive CT and MRI scanners. The additional 24 CPT codes
(listed in Table 4 of the CY 2011 PFS proposed rule (75 FR 40055)) to
which we proposed to apply the 75 percent equipment utilization rate
assumption also have expensive diagnostic imaging equipment (priced at
over $1 million) included in their PE inputs. These services are
predominantly diagnostic computed tomographic angiography (CTA) and
magnetic resonance angiography (MRA) procedures that include similar
expensive CT and MRI scanners in their direct PE inputs. We indicated
in the CY 2010 PFS final rule with comment period (74 FR 61754) that we
were persuaded by PPIS data on angiography that the extrapolation of
MRI and CT data (and their higher equipment utilization rate) may be
inappropriate. However, this reference was limited to those procedures
that include an angiography room in the direct PE inputs, such as CPT
code 93510 (Left heart catheterization, retrograde, from

[[Page 73190]]

the brachial artery, axillary artery or femoral artery; percutaneous).
In contrast, CTA and MRA procedures include a CT room or MRI room,
respectively, in the direct PE inputs, and the PPIS data confirm that a
higher assumed utilization rate than 50 percent would be appropriate.
The PPIS angiography room data that reflected a 56 percent equipment
utilization rate would not specifically apply to CTA and MRA
procedures. Thus, on further review, we believe it is appropriate to
include CTA and MRA procedures in the list of procedures for which we
assume a 75 percent equipment utilization rate, and we proposed to do
so beginning in CY 2011.
Consistent with section 1848(c)(2)(B)(v)(III) of the Act (as
amended by section 3135 of the ACA), the reduced expenditures
attributable to this change in the utilization rate assumption
applicable to CY 2011 shall not be taken into account when applying the
budget neutrality limitation on annual adjustments described in section
1848(c)(2)(B)(ii)(II) of the Act.
As provided in the CY 2010 PFS final rule with comment period (74
FR 61751), CY 2011 is the second year of the 4-year transition to the
PE RVUs calculated using the PPIS data. We note that the reductions in
the PE RVUs for expensive diagnostic imaging equipment attributable to
the change to an equipment utilization rate assumption of 75 percent
for CY 2011 are not subject to the transition.
Comment: Several commenters urged CMS not to finalize the proposed
expansion of the list of procedures to which the 75 percent equipment
utilization rate assumption would apply, pending further evaluation of
equipment utilization data. While noting the statutory requirement of
section 1848(b)(4)(C) of the Act (as added by section 3135(a) of the
ACA), the commenters believe that CMS is not required to add additional
services to the policy for CY 2011. Other commenters, including MedPAC,
supported the proposed increase in the equipment utilization rate
assumption from 50 percent to 75 percent for the 24 additional services
that use diagnostic imaging equipment priced at over $1 million.
Response: No commenters presented a rationale for not including the
proposed 24 additional services to the 75 percent equipment utilization
rate assumption, when the proposed additions use the same diagnostic CT
or MRI imaging equipment as the current codes to which the policy
applies. We note that the 90 percent equipment utilization rate
assumption that we finalized in the CY 2010 PFS final rule with comment
period (74 FR 61755) applies to CT and MRI scanners when used as
diagnostic imaging equipment, one of these two pieces of equipment is
listed as a direct PE input for the proposed MRA and CTA services, and
no commenters recommended that we remove the CT or MRI equipment inputs
from the additional codes. Therefore, we continue to believe that it is
appropriate to apply the 75 percent equipment utilization rate
assumption beginning in CY 2011 to MRA and CTA procedures, as we
proposed.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to include CTA and MRA procedures in
the 75 percent equipment utilization rate assumption policy because
they include expensive CT and MRI scanners that cost more than $1
million as direct PE inputs for these diagnostic imaging procedures. We
are modifying our proposal, however, and will not include CPT code
77079 (Computed tomography, bone mineral density study, 1 or more
sites; appendicular skeleton (peripheral) (e.g., radius, wrist, heel))
because, upon further analysis for this final rule with comment period,
we noted that the procedure does not include a CT room in its direct PE
inputs.
For CY 2011, we are also adding to the 75 percent equipment
utilization rate assumption policy three new CY 2011 CPT codes for
diagnostic imaging procedures that include a CT room in their direct PE
inputs, specifically CPT codes 74176 (Computed tomography, abdomen and
pelvis; without contrast material); 74177 (Computed tomography, abdomen
and pelvis; with contrast material); and 74178 (Computed tomography,
abdomen and pelvis; without contrast material in one or both body
regions, followed by with contrast material(s) and further sections in
one or both body regions). As new codes for CY 2011, the work, PE, and
malpractice RVUs for these CPT codes that are displayed in Addendum C
to this final rule with comment period are interim final values that
are open to comment. Similarly, the assignment of the 75 percent
equipment utilization rate assumption to these CPT codes, which
contributes to the development of their PE RVUs, is being made on an
interim final basis. We refer readers to section V.C. of this final
rule with comment period for further discussion of the establishment of
interim final RVUs for CY 2011 new and revised codes.
As a result of the CY 2011 changes, the 75 percent equipment
utilization rate assumption will be applied to all diagnostic imaging
procedures with nationally established rates under the PFS in CY 2011
and which include a CT or MRI scanner in their direct PE, consistent
with the statutory requirement of section 1848(b)(4)(C) of the Act (as
added by section 3135(a) of the ACA).
Consistent with section 1848(c)(2)(B)(v)(III) of the Act (as
amended by section 3135 of the ACA), the reduced expenditures
attributable to the change in the utilization rate assumption
applicable to CY 2011 (from the CY 2011 transitional rate for the 90
percent equipment utilization rate assumption for expensive diagnostic
imaging equipment costing over $1 million (CT and MRI scanners) that
would have applied under the final policy established in the CY 2010
PFS final rule with comment period to the 75 percent rate required
under section 1848(b)(4)(C) of the Act) shall not be taken into account
when applying the budget neutrality limitation on annual adjustments
described in section 1848(c)(2)(B)(ii)(II) of the Act.
Table 3 below lists the codes to which the 75 percent equipment
utilization rate assumption applies for CY 2011. The codes subject to
this policy are also posted under the downloads for the CY 2011 PFS
final rule with comment period on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.

Table 3--Final CPT Codes Subject to 75 Percent Equipment Utilization Rate Assumption in CY 2011
----------------------------------------------------------------------------------------------------------------
CPT code Short descriptor
----------------------------------------------------------------------------------------------------------------
70336........................................... Mri, temporomandibular joint(s).
70450........................................... Ct head/brain w/o dye.
70460........................................... Ct head/brain w/dye.
70470........................................... Ct head/brain w/o & w/dye.
70480........................................... Ct orbit/ear/fossa w/o dye.

[[Page 73191]]

70481........................................... Ct orbit/ear/fossa w/dye.
70482........................................... Ct orbit/ear/fossa w/o & w/dye.
70486........................................... Ct maxillofacial w/o dye.
70487........................................... Ct maxillofacial w/dye.
70488........................................... Ct maxillofacial w/o & w/dye.
70490........................................... Ct soft tissue neck w/o dye.
70491........................................... Ct soft tissue neck w/dye.
70492........................................... Ct soft tissue neck w/o & w/dye.
70496........................................... Ct angiography, head.
70498........................................... Ct angiography, neck.
70540........................................... Mri orbit/face/neck w/o dye.
70542........................................... Mri orbit/face/neck w/dye.
70543........................................... Mri orbit/face/neck w/o & w/dye.
70544........................................... Mri angiography head w/o dye.
70545........................................... Mri angiography head w/dye.
70546........................................... Mri angiography head w/o & w/dye.
70547........................................... Mri angiography neck w/o dye.
70548........................................... Mri angiography neck w/dye.
70549........................................... Mri angiography neck w/o & w/dye.
70551........................................... Mri brain w/o dye.
70552........................................... Mri brain w/dye.
70553........................................... Mri brain w/o & w/dye.
70554........................................... Fmri brain by tech.
71250........................................... Ct thorax w/o dye.
71260........................................... Ct thorax w/dye.
71270........................................... Ct thorax w/o & w/dye.
71275........................................... Ct angiography, chest.
71550........................................... Mri chest w/o dye.
71551........................................... Mri chest w/dye.
71552........................................... Mri chest w/o & w/dye.
71555........................................... Mri angio chest w/or w/o dye.
72125........................................... CT neck spine w/o dye.
72126........................................... Ct neck spine w/dye.
72127........................................... Ct neck spine w/o & w/dye.
72128........................................... Ct chest spine w/o dye.
72129........................................... Ct chest spine w/dye.
72130........................................... Ct chest spine w/o & w/dye.
72131........................................... Ct lumbar spine w/o dye.
72132........................................... Ct lumbar spine w/dye.
72133........................................... Ct lumbar spine w/o & w/dye.
72141........................................... Mri neck spine w/o dye.
72142........................................... Mri neck spine w/dye.
72146........................................... Mri chest spine w/o dye.
72147........................................... Mri chest spine w/dye.
72148........................................... Mri lumbar spine w/o dye.
72149........................................... Mri lumbar spine w/dye.
72156........................................... Mri neck spine w/o & w/dye.
72157........................................... Mri chest spine w/o & w/dye.
72158........................................... Mri lumbar spine w/o & w/dye.
72159........................................... Mri angio spine w/o & w/dye.
72191........................................... Ct angiography, pelv w/o & w/dye.
72192........................................... Ct pelvis w/o dye.
72193........................................... Ct pelvis w/dye.
72194........................................... Ct pelvis w/o & w/dye.
72195........................................... Mri pelvis w/o dye.
72196........................................... Mri pelvis w/dye.
72197........................................... Mri pelvis w/o &w/dye.
72198........................................... Mri angio pelvis w/or w/o dye.
73200........................................... Ct upper extremity w/o dye.
73201........................................... Ct upper extremity w/dye.
73202........................................... Ct upper extremity w/o & w/dye.
73206........................................... Ct angio upper extr w/o & w/dye.
73218........................................... Mri upper extr w/o dye.
73219........................................... Mri upper extr w/dye.
73220........................................... Mri upper extremity w/o & w/dye.
73221........................................... Mri joint upper extr w/o dye.
73222........................................... Mri joint upper extr w/dye.
73223........................................... Mri joint upper extr w/o & w/dye.
73225........................................... Mri angio upr extr w/o & w/dye.
73700........................................... Ct lower extremity w/o dye.
73701........................................... Ct lower extremity w/dye.

[[Page 73192]]

73702........................................... Ct lower extremity w/o & w/dye.
73706........................................... Ct angio lower extr w/o & w/dye.
73718........................................... Mri lower extremity w/o dye.
73719........................................... Mri lower extremity w/dye.
73720........................................... Mri lower extr w/& w/o dye.
73721........................................... Mri joint of lwr extre w/o dye.
73722........................................... Mri joint of lwr extr w/dye.
73723........................................... Mri joint of lwr extr w/o & w/dye.
73725........................................... Mri angio lower extr w or w/o dye.
74150........................................... Ct abdomen w/o dye.
74160........................................... Ct abdomen w/dye.
74170........................................... Ct abdomen w/o & w/dye.
74175........................................... Ct angio abdom w/o & w/dye.
74176........................................... Ct abd & pelvis w/o contrast.
74177........................................... Ct abdomen & pelvis w/contrast.
74178........................................... Ct abd & pelv 1+ section/regns.
74181........................................... Mri abdomen w/o dye.
74182........................................... Mri abdomen w/dye.
74183........................................... Mri abdomen w/o and w/dye.
74185........................................... Mri angio, abdom w/or w/o dye.
74261........................................... Ct colonography, w/o dye.
74262........................................... Ct colonography, w/dye.
75557........................................... Cardiac mri for morph.
75559........................................... Cardiac mri w/stress img.
75561........................................... Cardiac mri for morph w/dye.
75563........................................... Cardiac mri w/stress img & dye.
75565........................................... Card mri vel flw map add-on.
75571........................................... Ct hrt w/o dye w/ca test.
75572........................................... Ct hrt w/3d image.
75573........................................... Ct hrt w/3d image, congen.
75574........................................... Ct angio hrt w/3d image.
75635........................................... Ct angio abdominal arteries.
76380........................................... CAT scan follow up study.
77058........................................... Mri, one breast.
77059........................................... Mri, both breasts.
77078........................................... Ct bone density, axial.
77084........................................... Magnetic image, bone marrow.
----------------------------------------------------------------------------------------------------------------

b. HCPCS Code-Specific PE Issues
In this section, we discuss other specific CY 2011 proposals and
changes related to direct PE inputs. The changes that follow were
proposed in the CY 2011 PFS proposed rule and included in the proposed
CY 2011 direct PE database, which is available on the CMS Web site
under the downloads for the CY 2011 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. The final direct PE database for CY
2011 is available under the downloads for the CY 2011 PFS final rule
with comment period at the same location.
(1) Biohazard Bags
We identified 22 codes for which the supply item ``biohazard bag''
(SM004) is currently considered a direct PE input. The item is already
properly accounted for in the indirect PE because it is not
attributable to an individual patient service. Therefore, we proposed
to remove the biohazard bag from the CY 2011 direct PE database and
noted that the changes in direct PE inputs for the associated services
were reflected in the proposed CY 2011 direct PE database.
We did not receive any public comments on our proposal to remove
biohazard bags as a supply input. Therefore, we are finalizing our CY
2011 proposal to remove the supply item as a direct PE input for the
associated services. This change is reflected in the final CY 2011
direct PE database.
(2) PE Inputs for Professional Component (PC) Only and Technical
Component (TC) Only Codes Summing to Global Only Codes
In the case of certain diagnostic tests, different but related CPT
codes are used to describe global, professional, and technical
components of a service. These codes are unlike the majority of other
diagnostic test CPT codes where modifiers may be used in billing a
single CPT code in order to differentiate professional and technical
components. When different but related CPT codes are used to report the
components of these services, the different CPT codes are referred to
as ``global only,'' ``professional component (PC) only,'' and
``technical component (TC) only'' codes. Medicare payment systems are
programmed to ensure that the PE RVUs for global only codes equal the
sum of the PE RVUs for the PC and TC only codes. However, it came to
our attention that the direct PE inputs for certain global only codes
do not reflect the appropriate summation of their related TC only and
PC only component code PE inputs as they appear in the direct PE
database. While the PFS payment calculations have been programmed to
apply the correct PE RVUs for the global only code based on a summation
of component code PE RVUs, the direct PE database has reflected
incorrect inputs that are overridden by the payment system. Therefore,
we proposed to correct the direct PE inputs for the global only codes
so that the inputs reflect the appropriate summing of the PE inputs for
the associated PC only and TC only codes. The proposed CY 2011 direct
PE database included PE

[[Page 73193]]

corrections to the 14 CPT codes listed in Table 4.

Table 4--Groups of Related CPT Codes with Proposed Changes to PE Inputs so that Inputs for Professional
Component (PC) Only and Technical Component (TC) Only Codes Sum to Global Only Codes
----------------------------------------------------------------------------------------------------------------
CPT Code Long descriptor
----------------------------------------------------------------------------------------------------------------
93224.................................. Wearable electrocardiographic rhythm derived monitoring for 24 hours by
continuous original waveform recording and storage, with visual
superimposition scanning; includes recording, scanning analysis with
report, physician review and interpretation.
93225.................................. Wearable electrocardiographic rhythm derived monitoring for 24 hours by
continuous original waveform recording and storage, with visual
superimposition scanning; recording (includes connection, recording,
disconnection).
93226.................................. Wearable electrocardiographic rhythm derived monitoring for 24 hours by
continuous original waveform recording and storage, with visual
superimposition scanning; scanning analysis with report.
93230.................................. Wearable electrocardiographic rhythm derived monitoring for 24 hours by
continuous original waveform recording and storage without
superimposition scanning utilizing a device capable of producing a
full miniaturized printout; including recording, microprocessor-based
analysis with report, physician review and interpretation.
93231.................................. Wearable electrocardiographic rhythm derived monitoring for 24 hours by
continuous original waveform recording and storage without
superimposition scanning utilizing a device capable of producing a
full miniaturized printout; recording (includes connection, recording,
and disconnection).
93232.................................. Wearable electrocardiographic rhythm derived monitoring for 24 hours by
continuous original waveform recording and storage without
superimposition scanning utilizing a device capable of producing a
full miniaturized printout; microprocessor-based analysis with report.
93268.................................. Wearable patient activated electrocardiographic rhythm derived event
recording with presymptom memory loop, 24-hour attended monitoring,
per 30 day period of time; includes transmission, physician review and
interpretation.
93270.................................. Wearable patient activated electrocardiographic rhythm derived event
recording with presymptom memory loop, 24-hour attended monitoring,
per 30 day period of time; recording (includes connection, recording,
and disconnection).
93271.................................. Wearable patient activated electrocardiographic rhythm derived event
recording with presymptom memory loop, 24-hour attended monitoring,
per 30 day period of time; monitoring, receipt of transmissions, and
analysis.
93720.................................. Plethysmography, total body; with interpretation and report.
93721.................................. Plethysmography, total body; tracing only, without interpretation and
report.
93784.................................. Ambulatory blood pressure monitoring, utilizing a system such as
magnetic tape and/or computer disk, for 24 hours or longer; including
recording, scanning analysis, interpretation and report.
93786.................................. Ambulatory blood pressure monitoring, utilizing a system such as
magnetic tape and/or computer disk, for 24 hours or longer; recording
only.
93788.................................. Ambulatory blood pressure monitoring, utilizing a system such as
magnetic tape and/or computer disk, for 24 hours or longer; scanning
analysis with report.
----------------------------------------------------------------------------------------------------------------

Comment: A number of commenters expressed support for CMS' proposal
to ensure that the direct PE inputs for certain global only codes
reflect the appropriate summation of their related TC only and PC only
component code PE inputs as they appear in the direct PE database. One
commenter questioned why the prior clinical labor time for the global
only codes in the PE database did not match the direct PE inputs that
must have been used in CY 2010 to generate the PE RVUs, given that the
PE RVUs for the global only codes were the sum of the PE RVUs for the
component codes.
Response: We appreciate the commenters' support for the proposal,
and we are finalizing our correction of the direct PE inputs for the
global only codes so that the inputs reflect the appropriate summing of
the PE inputs for the associated PC only and TC only codes. In response
to the commenter who questioned why prior clinical labor time for the
global only codes in the PE database did not match the direct PE inputs
that must have been used to generate the PE RVUs for payment, we note
that Medicare payment systems are programmed to ensure that the PE RVUs
for global only codes equal the sum of the PE RVUs for the PC and TC
only codes. Therefore, rather than relying upon the direct PE inputs
for the global only codes to determine the PE RVUs, which would have
not resulted in values that equaled the summation of the component code
PE RUVs, our PFS system was programmed so that the PE RVUs for the
global only codes were set as the sum of the PE RVUS for the component
codes. We expect the corrections to the inputs as incorporated in the
direct PE database to alleviate any confusion caused by the prior
inclusion of inputs associated with the global only codes that were not
actually used to generate the PE RVUs.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to correct the direct PE inputs for the
global only codes so that the inputs reflect the appropriate summing of
the PE inputs for the associated PC only and TC only codes. The final
CY 2011 direct PE database includes PE corrections to the 14 CPT codes
listed in Table 4.
(3) Equipment Time Inputs for Certain Diagnostic Tests
In the CY 2011 PFS proposed rule (75 FR 40056), we stated that we
had recently identified equipment time PE inputs that we believed were
incorrect for four CPT codes associated with certain diagnostic tests
(each is displayed in Table 4):
CPT code 93225 is the TC only code that includes the
connection, recording, and disconnection of the holter monitor (CMS
Equipment Code EQ127) used in 24-hour continuous electrocardiographic
rhythm derived monitoring. The CY 2010 equipment time input for the
holter monitor is 42 minutes, which parallels the intra-service
clinical labor input time for the CPT code. However, we believed that
the equipment time should reflect the 24 hours of continuous monitoring
in which the device is used exclusively by the patient. Therefore, we
proposed to change the monitor equipment time for CPT code 93225 to
1440 minutes, the number of minutes in 24 hours.
CPT code 93226 is the TC only code that includes the
scanning analysis with report. We believed that the number of minutes
the monitor (CMS Equipment

[[Page 73194]]

Code EQ127) is used in this service should parallel the intra-service
clinical labor input time of 52 minutes during which the monitor is in
use, instead of the CY 2010 equipment time of 1440 minutes, because
this code does not represent 24 hours of device use. Therefore, we
proposed to change the monitor equipment time for CPT code 93226 to 52
minutes.
CPT 93224 is the global only code that includes the
connection, recording, and disconnection of the monitor (CMS Equipment
Code EQ127) and the scanning analysis with report, as well as the
physician review and interpretation. We proposed direct PE inputs for
CPT code 93224 to include 1492 total minutes of monitor time (which
represents the total monitor time we proposed for CPT codes 93225 and
93226).
CPT code 93788 is the TC only code that describes the
scanning analysis with report for ambulatory blood pressure monitoring.
We believed that the equipment time input for the blood pressure
monitor should parallel the 10 minutes of clinical labor input for the
CPT code since that is the time during which the monitor is in use. In
CY 2010, the equipment time input for the monitor is 1440 minutes,
which is appropriate only for CPT code 93786, the code that describes
the 24 hours of ambulatory blood pressure monitoring recording.
Therefore, we proposed to correct the equipment time input for the
ambulatory blood pressure monitor in CPT code 93788 to 10 minutes.
CPT code 93784 is the global only code that includes the
recording, the scanning analysis with report, and the physician
interpretation and report for ambulatory blood pressure monitoring. We
proposed to establish the direct PE inputs for CPT code 93784 to
include 1450 total minutes of time for the ambulatory blood pressure
monitor (which represents the proposed total amount of monitor time
included in CPT codes 93786 and 93788).
The proposed CY 2011 direct PE database reflected these changes.
Comment: Several commenters pointed out that the prior assignment
of the 1440 minutes of holter monitor equipment time to CPT code 93226
stemmed from discussions between CMS and provider groups that resulted
in PE policies initially implemented in CY 2007 (72 FR 18910). The
commenters recommended that CMS retain the 1440 minutes of holter
monitor equipment for CPT code 93326, consistent with current policy,
rather than reassign the 1440 minutes of holter monitor equipment time
as proposed to CPT code 93226.
Response: We agree with the commenters that it would be most
appropriate to maintain our established policy for the equipment times
associated with CPT codes 93225 and 93226, based upon further
description of the direct practice expenses experienced by the current
providers that typically furnish these services to Medicare
beneficiaries. Therefore, we are not adopting the equipment time
changes that we proposed for CPT codes 93225 and 93226. However, we are
revising the direct PE inputs for CPT code 93224, a global only code,
to include the total equipment time for the holter monitor that is
incorporated in component codes CPT codes 93225 and 93226, as discussed
in section II.A.3.b.(2). of this final rule with comment period. The PE
inputs for CPT code 93224 did not previously correctly reflect the
summation of the direct PE inputs for the component codes.
Comment: One commenter supported the proposed changes to the direct
PE inputs for CPT codes 93784 through 93788. However, the commenter was
confused about why 1440 minutes of equipment time were assigned to CPT
code 93786, which the commenter stated is used only for the technical
component of scanning the data rather than recording the data.
Response: As we stated in our proposal, we believe that the direct
PE inputs for CPT code 93786 are currently correct because the code
describes the recording of the data. We believe that the commenter may
have inadvertently referred to CPT code 93786 instead of CPT code
93788, which is the technical component code that describes the
scanning rather than the recording of the data. We proposed to remove
the 1440 minutes associated with the scanning analysis from the inputs
for CPT code 93788, not CPT code 93786.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposals to change the ambulatory blood
pressure monitor equipment times included as direct PE inputs for CPT
codes 938784 and 93788, while maintaining the current equipment time
direct PE input for CPT code 93786. However, we are not finalizing our
proposals to change the holter monitor equipment times included as
direct PE inputs for CPT codes 93225 and 93226, but instead will
maintain the inputs for CPT codes 93225 and 93226 as they were for CY
2010. We are also revising the direct PE inputs for CPT code 93224 to
include the total equipment time for the holter monitor that is
incorporated in CPT codes 93225 and 93226. The equipment times in the
final CY 2011 direct PE database reflect these decisions.
(4) Cobalt-57 Flood Source
Stakeholders requested that CMS reevaluate the useful life of the
Cobalt-57 flood source (CMS Equipment Code ER001), given their estimate
of approximately 271 days for the source's half-life. The CY 2010
useful life input in the CY 2010 direct PE database for the Cobalt-57
flood source is 5 years. Using publicly available catalogs, we found
that the Cobalt-57 flood source is marketed with a useful life of 2
years. Therefore, we proposed to change the useful life input from the
current 5 years to 2 years. The Cobalt-57 flood source was included
with the revised useful life input for 96 HCPCS codes in the proposed
CY 2011 direct PE database.
Comment: One commenter supported the proposal to change the useful
life input from 5 years to 2 years for the Cobalt-57 flood source.
Response: We appreciate the commenter's support for our proposal.
After consideration of the public comment we received, we are
finalizing our CY 2011 proposal to change the useful life input in the
direct PE database for the Cobalt-57 flood source from 5 years to 2
years. This change is included in the final CY 2011 direct PE database.
(5) Venom Immunotherapy
One stakeholder provided updated price information for the venoms
used for the five venom immunology CPT codes, specifically 95145
(Professional services for the supervision of preparation and provision
of antigens for allergen immunotherapy (specify number of doses);
single stinging insect venom); 95146 (Professional services for the
supervision of preparation and provision of antigens for allergen
immunotherapy (specify number of doses); 2 single stinging insect
venoms); 95147 (Professional services for the supervision of
preparation and provision of antigens for allergen immunotherapy
(specify number of doses); 3 single stinging insect venoms); 95148
(Professional services for the supervision of preparation and provision
of antigens for allergen immunotherapy (specify number of doses); 4
single stinging insect venoms); 95149 (Professional services for the
supervision of preparation and provision of antigens for allergen
immunotherapy (specify number of doses); 5 single stinging insect
venoms).
In the CY 2004 PFS final rule with comment period (68 FR 63206), we
adopted a pricing methodology that utilizes the average price of a 1
milliliter

[[Page 73195]]

dose of venom and adds that price per dose as direct PE inputs for CPT
codes 95145 and 95146. When a patient requires three stinging insect
venoms, as for CPT code 95147, the price input for a 3-vespid mix is
used. This 3-vespid mix price is also used to value CPT codes 95148
(four venoms) and 96149 (five venoms), with the single venom price
added once to CPT code 97148 and twice to CPT code 97149.
As requested by the stakeholder, we updated the price inputs for
the 1-milliliter dose of venom to $16.67 and for the 3-vespid mix to
$30.22 in the proposed CY 2011 direct PE database.
Comment: One commenter supported the proposal to update the price
inputs for the venoms used for venom immunotherapy.
Response: We appreciate the information provided by stakeholders
regarding the price inputs for venom immunotherapy supplies, consistent
with our interest in utilizing accurate market prices as the direct PE
inputs for these items.
After consideration of the public comment we received, we are
finalizing our CY 2011 proposals to update the price inputs for the 1-
milliliter dose of venom to $16.67 and for the 3-vespid mix to $30.22
in the CY 2011 direct PE database. These changes are included in the
final CY 2011 direct PE database.
(6) Equipment Redundancy
Stakeholders recently brought to our attention that the ECG, 3-
channel (with SpO2, NIBP, temp, resp) (CMS Equipment Code EQ011)
incorporates all of the functionality of the pulse oximeter with
printer (CMS Equipment Code EQ211). Therefore, in HCPCS codes where CMS
Equipment Code EQ011 is present, CMS Equipment Code EQ211 is redundant.
On this basis, we proposed to remove the pulse oximeter with printer
(CMS Equipment Code EQ211) as an input for the 118 codes that also
contain the ECG, 3-channel (with SpO2, NIBP, temp, resp) (CMS Equipment
Code EQ011). We made these adjustments in the proposed CY 2011 direct
PE database.
We received no public comments regarding this proposal to address
the pulse oximeter equipment redundancy. Therefore we are finalizing
our CY 2011 proposal without modification. We have made these
adjustments in the final CY 2011 direct PE database.
(7) Equipment Duplication
We recently identified a number of CPT codes with duplicate
equipment inputs in the PE database. We proposed to remove the
duplicate equipment items and modified the proposed CY 2011 direct PE
database accordingly as detailed in Table 5.

TABLE 5--CPT Codes With Proposed Removal of Duplicate Equipment Items in the Direct PE Database
--------------------------------------------------------------------------------------------------------------------------------------------------------
CMS equipment code
CPT Code for duplicate Description of equipment
equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
19302.............................. P-mastectomy w/1n removal. EF014 light, surgical.
ED005 camera, digital system, 12 megapixel (medical grade).
19361.............................. Breast reconstr w/lat flap EF031 table, power.
EQ168 light, exam.
44157.............................. Colectomy w/ileoanal anast EF031 table, power.
EQ168 light, exam.
44158.............................. Colectomy w/neo-rectum EF031 table, power.
pouch. EQ168 light, exam.
56440.............................. Surgery for vulva lesion.. EF031 table, power.
EQ170 light, fiberoptic headlight w-source.
57296.............................. Revise vag graft, open abd EF031 table, power.
EQ170 light, fiberoptic headlight w-source.
58263.............................. Vag hyst w/t/o & vag EF031 table, power.
repair.
59610.............................. Vbac delivery............. EF031 table, power.
67228.............................. Treatment of retinal EL005 lane, exam (oph).
lesion. EQ230 slit lamp (Haag-Streit), dedicated to laser use.
76813.............................. Ob us nuchal meas, 1 gest. ED024 film processor, dry, laser.
77371.............................. Srs, multisource.......... EQ211 pulse oximeter w-printer.
ED018 computer workstation, cardiac cath monitoring.
EL011 room, angiography.
93540.............................. Injection, cardiac cath... EQ011 ECG, 3-channel (with SpO2, NIBP, temp, resp).
EQ032 IV infusion pump.
EQ088 contrast media warmer.
EQ211 pulse oximeter w-printer.
93542.............................. Injection for heart x-rays ED018 computer workstation, cardiac cath monitoring.
EL011 room, angiography.
EQ011 ECG, 3-channel (with SpO2, NIBP, temp, resp).
EQ032 IV infusion pump.
EQ088 contrast media warmer.
EQ211 pulse oximeter w-printer.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Comment: One commenter pointed out that the equipment duplication
issue for CPT codes 93540 and 93542 is irrelevant because these codes
would no longer be reported for Medicare in CY 2011. The commenter
stated that the codes are being replaced by a new set of diagnostic
cardiac catheterization CPT codes.
Response: We agree with the commenter's assessment that our
proposal for these codes is not relevant for CY 2011 because these
codes are being deleted.
Comment: One commenter reviewed the duplicate inputs and offered a
correction regarding CPT code 19302 (Mastectomy, partial (eg,
lumpectomy,

[[Page 73196]]

tylectomy, quadrantectomy, segmentectomy); with axillary
lymphadenectomy). The commenter pointed out that one of the line-items
erroneously duplicated (light, surgical, EF014) for that code should
have originally been applied to CPT code 19304 (Mastectomy,
subcutaneous).
Response: We appreciate the commenter bringing this error to our
attention and we agree with the commenter's assessment.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to remove the duplicate equipment items
from the CY 2011 direct PE database as detailed in Table 5, with
modification to transfer the duplicate surgical light input from CPT
code 19302 to CPT code 19304. These changes are reflected in the final
CY 2011 direct PE database.
(8) Establishing Overall Direct PE Supply Price Inputs Based on Unit
Prices and Quantities
In the CY 2011 PFS proposed rule (75 FR 40057), we stated that we
had identified minor errors in total price inputs for a number of
supply items due to mathematical mistakes in multiplying the item unit
price and the quantity used in particular CPT codes for the associated
services. We proposed to modify the direct PE database to appropriately
include the overall supply price input for a supply item as the product
of the unit price and the quantity of the supply item used in the CPT
code. Most of the overall supply price input changes were small, and we
adjusted the proposed CY 2011 direct PE database accordingly. The CPT
and Level II HCPCS codes and associated supplies for nonfacility and
facility settings that were subject to these corrections are displayed
in Tables 6 and 7, respectively.
BILLING CODE 4120-01-P

[[Page 73197]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.233

[[Page 73198]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.234

[[Page 73199]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.235

[[Page 73200]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.236

[[Page 73201]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.237

[[Page 73202]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.238

[[Page 73203]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.239

BILLING CODE 4120-01-C
Comment: Several commenters agreed that the overall supply price
inputs should be equal to the product of the supply price and the
quantity associated with each code. Some commenters pointed out that
for many of the supply items displayed in Tables 6 and 7, the overall
supply prices remained incorrect in the proposed CY 2011 direct PE
database. The commenters speculated that an underlying programming
error may have led to incorrect calculations.
Response: In constructing the proposed CY 2011 direct PE database
posted on the CMS web site, we inadvertently retained a display column
of data that reflected our previous calculation error, despite our
correct calculation of the values for PFS ratesetting purposes. We have
corrected the underlying process error that led to the incorrect
display. We have modified the direct PE database for the CY 2011 PFS
final rule with comment period to appropriately display the overall
supply price input for a supply item as the product of the unit price
and the quantity of the supply item used in the CPT code.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to modify the direct PE database to
include the overall supply price input for a supply item as the product
of the unit price and the quantity of the supply item used in the CPT
code. We have modified the display column within the publicly available
database to reflect the proper calculation. These changes are reflected
in the final CY 2011 direct PE database.
c. AMA RUC Recommendations in CY 2010 for Changes to Direct PE Inputs
In a March 2010 letter, the AMA RUC made specific PE
recommendations that we considered in the CY 2011 PFS proposed rule (75
FR 40062 through 40063). The proposed changes that follow were included
in the proposed CY 2011 direct PE database, which is available on the
CMS Web site under the downloads for the CY 2011 PFS proposed rule at
http://www.cms.gov/PhysicianFeeSched/. The final direct PE database for
CY 2011 is available under the downloads for the CY 2011 PFS final rule
with comment period at the same location.
(1) Electrogastrography and Esophageal Function Test
We proposed to accept the AMA RUC recommendations for the CY 2011
PE inputs for the following CPT codes: 91132 (Electrogastrography,
diagnostic, transcutaneous); 91133 (Electrogastrography, diagnostic,
transcutaneous; with provocative testing); 91038 (Esophageal function
test, gastroesophageal reflux test with nasal catheter intraluminal
impedance electrode(s) placement, recording, analysis and
interpretation; prolonged (greater than 1 hour, up to 24 hours)). For
CPT code 91038, we assumed a useful life of 5 years for the equipment
item ``ZEPHR impedance/pH reflux monitoring system with data recorder,
software, monitor, workstation and cart,'' based on its entry in the
AHA's publication, ``Estimated Useful Lives of Depreciable Hospital
Assets,'' which we use as a standard reference. The proposed CY 2011
direct PE database was changed accordingly.
(2) 64-Slice CT Scanner and Software
The AMA RUC submitted an updated recommendation regarding the
correct pricing of the 64-slice CT scanner and its accompanying
software. Based on the documentation accompanying the recommendation,
we accepted this recommendation and proposed to update the price input
for the 64-slice scanner and software. This affected the following four
CPT codes that use either the scanner, the software, or both: 75571
(computed tomography, heart, without contrast material, with
quantitative evaluation of coronary calcium); 75572 (Computed
tomography, heart, with contrast material, for evaluation of cardiac
structure and morphology (including 3D image postprocessing, assessment
of cardiac function, and evaluation of venous structures, if
performed)); 75573 (Computed tomography, heart, with contrast material,
for evaluation of cardiac structure and morphology in the setting of
congenital heart disease (including 3D image postprocessing, assessment
of LV cardiac function, RV structure and function and evaluation of
venous structures, if performed)); and 75574 (Computed tomographic
angiography, heart, coronary arteries and bypass grafts (when present),
with contrast material, including 3D image post processing (including
evaluation of cardiac structure and morphology, assessment of cardiac
function, and evaluation of venous structure, if performed)). The
proposed CY 2011 direct PE database was modified accordingly.
(3) Breath Hydrogen Test
The AMA RUC provided recommendations regarding the PE inputs for
CPT code 91065 (breath

[[Page 73204]]

hydrogen test (e.g., for detection of lactase deficiency, fructose
intolerance, bacterial overgrowth, or oro-cecal gastrointestinal
transit). We accepted the recommendations with two modifications. We
folded the two pieces of equipment listed as ``quinGas Table-Top
Support Stand, 3 Tank'' and ``Drying Tube, Patient Sample'' into the
``BreathTrackerDigital SC Instrument'' and summed their inputs into one
equipment line-item, since these equipment items are used together
specifically for the service in question. We increased the useful life
input of the ``BreathTrackerDigital SC Instrument'' from 7 to 8 years
based on our use of the American Hospital Association (AHA)'s
publication entitled, ``Estimated Useful Lives of Depreciable Hospital
Assets'' as a standard reference. Additionally, because the AMA RUC did
not include equipment times in their recommendations for this CPT code,
we used 53 minutes as the total time for all equipment items based on
the total intra-service period for the clinical labor, consistent with
our general policy for establishing equipment times. These
modifications were reflected in the proposed CY 2011 direct PE
database.
(4) Radiographic Fluoroscopic Room
A recent AMA RUC review of services that include the radiographic
fluoroscopic room (CMS Equipment Code EL014) as a direct PE input
revealed that the use of the item is no longer typical for certain
services in which it is specified within the current direct cost
inputs. The AMA RUC recommended to CMS that the radiographic
fluoroscopic room be deleted from CPT codes 64420 (Injection,
anesthetic agent; intercostal nerve, single); 64421 (Injection,
anesthetic agent; intercostal nerves, multiple, regional block); and
64620 (Destruction by neurolytic agent, intercostal nerve). We accepted
these recommendations and, therefore, these changes were included in
the proposed CY 2011 direct PE database.
Comment: Several commenters generally expressed support for our
acceptance of these AMA RUC-recommended direct PE inputs with the
stated refinements. The AMA RUC expressed appreciation for CMS'
acceptance of the committee's recommendations.
Response: We appreciate the assistance of stakeholders in our
efforts to utilize the most accurate direct PE inputs for PFS services.
We also appreciate the judicious work of the AMA RUC in providing these
recommendations in time for us to respond to them and include our
proposals in the CY 2011 proposed rule.
Comment: One commenter expressed concern about these
recommendations on the basis of the flawed professional composition of
the AMA RUC. The commenter stated that without fair representation by
all specialties, including nonphysician practitioners who may bill Part
B directly under the PFS, CMS' reliance on the AMA RUC as representing
the professional views and knowledge of all healthcare specialties for
purposes of establishing the direct PE inputs for services paid under
the PFS is deeply flawed.
Response: As we have stated previously (69 FR 66243), because the
AMA RUC is an independent committee, we are not in a position to set
the requirements for AMA RUC membership. Concerned stakeholders should
communicate directly with the AMA RUC regarding its professional
composition. We note that we alone are responsible for all decisions
about the direct PE inputs for purposes of PFS payment so, while the
AMA RUC provides us with recommendations for new and revised CPT codes
in the context of what we believe is its broad expertise, we ultimately
remain responsible for determining the direct PE inputs for all new or
revised services.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposals to accept the AMA RUC recommendations,
with certain changes described above, regarding the direct PE inputs
for electrogastrography and esophageal function tests, the 64-slice CT
scanner and software, the breath hydrogen test, and certain procedures
that no longer require a radiographic fluoroscopic room. These
decisions are reflected in the final CY 2011 direct PE database.
(5) Cystometrogram
The AMA RUC recently identified a rank order anomaly regarding CPT
code 51726 (Complex cystometrogram (i.e., calibrated electronic
equipment)). Currently, this procedure has higher PE RVUs, despite
being less resource-intensive than the three CPT codes for which it
serves as the base: 51727 (Complex cystometrogram (i.e., calibrated
electronic equipment); with urethral pressure profile studies (i.e.,
urethral closure pressure profile), any technique); 51728 (Complex
cystometrogram (i.e., calibrated electronic equipment); with voiding
pressure studies (that is, bladder voiding pressure), any technique);
and 51729 (Complex cystometrogram (i.e., calibrated electronic
equipment); with voiding pressure studies (that is, bladder voiding
pressure) and urethral pressure profile studies (that is, urethral
closure pressure profile), any technique).
Since the AMA RUC's general view is that CPT codes with a 0-day
global period do not have pre-service time associated with the code,
the AMA RUC recommended removing the nonfacility pre-service clinical
labor time from the PE inputs for 51726. Additionally, the AMA RUC
recommended that the nonfacility clinical intra-service staff time for
CPT code 51276 be reduced from the 118 minutes of intra-service
clinical labor time currently assigned to the code to 85 minutes of
intra-service clinical labor time. These changes would resolve the rank
order anomaly and bring the PE inputs for CPT code 51726 into alignment
with the other three codes. Finally, and for the reasons stated above,
the AMA RUC recommended that CMS remove the 23 minutes of pre-service
nonfacility clinical labor time from CPT code 51725 (Simple
cystometrogram (CMG) (for example, spinal manometer)). We agreed with
the AMA RUC recommendations, proposed to accept these recommendations
for CY 2011 and, therefore, changed the direct PE inputs for CPT codes
51725 and 51726 in the nonfacility setting in the proposed CY 2011
direct PE database.
Comment: Some commenters argued that the rank order anomaly
resulted from clinical labor inputs that were too low in the more
complex codes, rather than too high in the base codes. These commenters
stated that the AMA RUC and CMS had addressed the wrong ``end'' of the
rank order anomaly in making the changes to the clinical labor minutes
assigned to CPT codes 51725 and 51726. Several commenters on the CY
2010 PFS final rule with comment period, where new CY 2011 CPT code
51727, 51728, and 51729 were assigned interim direct PE inputs, also
argued that CPT codes 51727, 51728, and 51729 should have additional
clinical labor inputs, including a greater number of minutes during the
intra-service period and minutes during the pre-service period.
Response: We have reviewed the direct PE inputs for all five CPT
codes in this series and continue to agree with the AMA RUC's
recommendations regarding changes for CY 2011. Specifically, we believe
the pre-service nonfacility clinical labor time for the 0-day global
period CPT codes 51725 and 51726 should be removed and the intra-
service clinical labor time for CPT code 51726 should also be reduced,
consistent with the usual treatment of

[[Page 73205]]

other 0-day global codes. We believe the AMA RUC provided
recommendations to us regarding the direct PE inputs for these four
cystometrogram services that accurately reflect the costs of the
resources (that is, the clinical labor, equipment, and supplies)
typically required to furnish these services to Medicare beneficiaries.
Comment: Several commenters requested that CMS change the supply
inputs included in the direct PE database for the complex
cystometrogram services. For example, the commenters requested that
single dual sensor catheters replace the single sensor catheters
currently included as direct PE inputs for these codes. The commenters
stated that both the catheters and their price inputs are outdated. In
other cases, the commenters explained that certain supplies in the
database were not those typically used by certain physician specialties
in performing the services.
Response: We rely on our review of recommendations received from
the AMA RUC in order to make changes to the clinical labor, supply, and
equipment inputs for CPT codes within the direct PE database. We have
no reason to believe that the supplies used in the complex
cystometrogram procedures described by CPT codes 51727, 51728, and
51729 are outdated because these were new codes for CY 2010 and the AMA
RUC recently addressed their direct PE inputs when initially
recommending values for the services. We believe the AMA RUC's
extensive expertise and broad perspective generally allows it to
accurately identify the direct PE inputs for new and revised CPT codes.
We encourage stakeholders who believe that enhancements in technology
or changes in medical practice have resulted in changes in the supplies
or equipment typically used in furnishing a particular service to
address these concerns with the AMA RUC.
As we discuss further in section II.A.3.e. of this final rule with
comment period with respect to our proposal regarding updating supply
and equipment price inputs, we welcome public requests for updates to
supply price and equipment price and useful life inputs associated with
existing codes through the process we are adopting beginning in CY
2011.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to accept the recommendations of the
AMA RUC regarding the revised direct PE inputs for CPT codes 51725 and
52726. The final direct PE inputs are included in the final CY 2011
direct PE database.
d. Referral of Existing CPT Codes for AMA RUC Review
As part of our review of high cost supplies, we conducted a
clinical review of the procedures associated with high cost supplies to
confirm that those supplies currently are used in the typical case
described by the CPT codes. While we confirmed that most high cost
supplies could be used in the procedures for which they are currently
direct PE inputs, we noted that one of the high cost supplies, fiducial
screws (CMS Supply Code SD073) with a current price of $558, is
included as a direct PE input for two CPT codes, specifically 77301
(Intensity modulated radiotherapy plan, including dose-volume
histograms for target and critical structure partial tolerance
specifications) and 77011 (Computed tomography guidance for
stereotactic localization). The documentation used in the current
pricing of the supply item describes a kit that includes instructions,
skull screws, a drill bit, and a collar for the TALON[reg] System
manufactured by Best nomos. Best nomos' literature describes the
insertion of the screws into the patient's skull to ensure accurate
set-up. When CPT codes 77301 and 77011 were established in CY 2002 and
CY 2003, respectively, we accepted the AMA RUC recommendations to
include fiducial screws in the PE for these services. Upon further
review, while we understand why this supply may still be considered a
typical PE input for CPT code 77011, we do not now believe that
fiducial screws, as described in the Best nomos literature, would
typically be used in CPT code 77301, where the most common clinical
scenario would be treatment of prostate cancer.
Therefore, in order to ensure that CPT codes 77301 and 77011 are
appropriately valued for CY 2011 through the inclusion or exclusion of
fiducial screws in their PE, in the CY 2011 PFS proposed rule (75 FR
40063), we asked the AMA RUC to review these CPT codes with respect to
the inclusion of fiducial screws in their PE. We requested that the AMA
RUC make recommendations to us regarding whether this supply should be
included in the PE or removed from the PE for CPT codes 77301 and 77011
in a timeframe that would allow us to adopt interim values for these
codes for CY 2011, should the AMA RUC recommend a change. Were the AMA
RUC to continue to recommend the inclusion of fiducial screws in the PE
for CPT code 77301 and/or 77011 for CY 2011, we requested that the AMA
RUC provide us with a detailed rationale for the inclusion of this
specialized supply in the PE for the typical case reported under the
relevant CPT code. We also requested that the AMA RUC furnish updated
pricing information for the screws if they were to continue to
recommend the screws as a PE input for one or both of these CPT codes
in CY 2011.
Comment: The AMA RUC recommended that CMS remove the fiducial
screws as a direct PE input from both CPT codes 77011 and 77301.
Several commenters also agreed that the fiducial screws would not
typically be used with CPT code 77301. Additionally, multiple
commenters pointed out that the fiducial screws may now be reported
using HCPCS supply code A4648 (Tissue marker, implantable, any type,
each) when the markers are implanted.
Response: We appreciate the responsiveness of the AMA RUC to our
request and the interest of the other commenters in this issue.
After consideration of the public comments we received and the AMA
RUC recommendation following publication of the CY 2011 PFS proposed
rule, for CY 2011, we are accepting the AMA RUC's recommendation and
removing fiducial screws from the direct PE database as inputs for CPT
codes 77011 and 77301. Because the direct PE inputs for these codes are
being revised on an interim final basis for CY 2011, the changes are
subject to public comment on this final rule with comment period.
e. Updating Equipment and Supply Price Inputs for Existing Codes
Historically, we have periodically received requests to change the
PE price inputs for supplies and equipment in the PE database. In the
past, we have considered these requests on an ad hoc basis and updated
the price inputs as part of quarterly or annual updates if we believed
them to be appropriate. In the CY 2011 PFS proposed rule (75 FR 49963),
we proposed to establish a regular and more transparent process for
considering public requests for changes to PE database price inputs for
supplies and equipment used in existing codes.
We proposed to act on public requests to update equipment and
supply price inputs annually through rulemaking by following a regular
and consistent process as discussed in the following paragraphs. We
proposed to use the annual PFS proposed rule released in the summer and
the final rule with comment period released on or about

[[Page 73206]]

November 1 each year as the vehicle for making these changes.
We would accept requests for updating the price inputs for supplies
and equipment on an ongoing basis; requests must be received no later
than December 31 of each calendar year to be considered for inclusion
in the next proposed rule. In that next proposed rule, we would present
our review of submitted requests to update price inputs for specific
equipment or supplies and our proposals for the subsequent calendar
year. We would then finalize changes in the final rule with comment
period for the upcoming calendar year. Our review of the issues and
consideration of public comments may result in the following outcomes
that would be presented in the final rule with comment period:
Updating the equipment or supply price inputs, as
requested.
Updating the equipment or supply price inputs, with
modifications.
Rejecting the new price inputs.
Declining to act on the request pending a recommendation
from the AMA RUC.
To facilitate our review and preparation of issues for the proposed
rule, at a minimum, we would expect that requesters would provide the
following information:
Name and contact information for the requestor.
The name of the item exactly as it appears in the direct
PE database under downloads for the most recent PFS final rule with
comment period, available on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
In order to best evaluate the requests in the context of our goal
of utilizing accurate market prices for these items as direct PE
inputs, we also would expect requestors to provide multiple invoices
from different suppliers/manufacturers. In some cases, multiple sources
may not be available, whereupon a detailed explanation should be
provided to support the request. When furnishing invoices, requestors
should take into consideration the following parameters:
++ May be either print or electronic but should be on supplier and/
or manufacturer stationery (for example, letterhead, billing statement,
etc.)
++ Should be for the typical, common, and customary version of the
supply or equipment that is used to furnish the services.
++ Price should be net of typical rebates and/or any discounts
available, including information regarding the magnitude and rationale
for such rebates or discounts.
++ If multiple items are presented on the same invoice, relevant
item(s) should be clearly identified.
We solicited public comments on this process, including the
information that requestors should furnish to facilitate our full
analysis in preparation for the next calendar year's rulemaking cycle.
Comment: Several commenters supported establishing a regular and
more transparent process for considering public requests for changes to
the direct PE price inputs for supplies and equipment used in existing
codes. However, other commenters were concerned that the process might
prevent CMS from making timely corrections to the database that are
brought to the attention of the agency by specialty societies or other
stakeholders. These commenters suggested creating an expedited process
whereby mistakes could be corrected.
Response: We appreciate the broad support for the proposal. We
believe that this process, though regular, would not limit our ability
to correct technical errors that are discovered by the agency or
brought to our attention by stakeholders. On these occasions, we would
continue to correct errors and issue correction notices to final rules
when appropriate. The regular process for updating supply and equipment
prices is intended to reflect significant changes in the market prices
of supplies and equipment that are used in the direct PE database. It
would not substitute for the timely correction of technical errors.
Comment: Some commenters were concerned that the proposed process
would necessitate a 12- to 24-month delay between CMS' acknowledgement
of a price update and the resulting change in PE RVU calculations. The
commenters pointed out that the current ad hoc process has historically
resulted in a fairly timely response from the agency in most
circumstances and were concerned that the formalization of the process
might result in unnecessary delays. One commenter suggested creating a
process for quarterly updates to the supply and equipment price inputs.
Response: We understand that some commenters are concerned about
the timelines for price updates. However, we believe that the value of
the transparency of the proposed process outweighs its potential for
slowing the previous ad hoc process. Additionally, it is important to
acknowledge that in most previous cases, price input updates would not
have been immediately effective since such updates have always required
CMS' review, concurrence, and processing through the rate setting
methodology prior to any change in Medicare payment rates.
Additionally, many stakeholders already provide public comments to CMS
regarding specific issues addressed in our annual rate setting for the
PFS through the notice and comment rulemaking process. Therefore, we
believe that the annual process offers both an economic use of
stakeholders' resources, as well as the best opportunity for broad
public input into proposed price changes. These are qualities any
accelerated alternative, such as quarterly updates, would lack.
We believe that an annual update process most effectively promotes
both timeliness and transparency, while also allowing for public
comment and input regarding our proposals before the adoption of
pricing changes that could have a significant effect on payment for
services under the PFS.
Comment: Some commenters asserted that it may be more difficult to
obtain invoices for some supplies that are not frequently used and
there should be acceptable alternative sources of information,
including price lists or other information from the manufacturer. One
commenter suggested that in the case of items that are not used in high
volumes in physicians' office, volume or other discounts are unlikely
for physicians' practices.
Response: Even though the direct PE inputs should reflect the
resource costs required for typical cases, we understand that there may
be circumstances in which updated invoices or invoices that reflect
volume or other discounts may be difficult to obtain. As stated in our
proposal, we will consider a detailed written explanation in support of
requests submitted without the documentation usually required.
Comment: One commenter urged that the updating of supply and
equipment prices be only for ``like'' items and not for ``newer
technology'' items. The commenter requested that CMS refer the initial
review of new supply and equipment inputs to the AMA RUC Practice
Expense Subcommittee for review and recommendation back to CMS. Other
commenters made specific requests for additions, deletions, or
substitutions of supply and equipment items associated with particular
codes.
Response: We appreciate the opportunity to clarify that this
regular and consistent process would only apply to the price inputs for
supply and equipment items. As part of our review of equipment price
inputs, we will also consider updates to the useful life of equipment
insofar as that information is

[[Page 73207]]

supported by similar documentation. However, we will continue to
encourage stakeholders who believe that there should be additions,
deletions, or substitutions of direct PE inputs associated with
particular codes to address these concerns through the AMA RUC,
including when a stakeholder believes that enhanced technology has
replaced older technology in the typical case of a particular service.
We believe the AMA RUC recommendations are an efficient and effective
mechanism to inform our review of changes to the clinical labor,
supply, and equipment inputs within the direct PE database.
Comment: One commenter was concerned about the potential for CMS to
reject the requested price input outright and suggested that CMS be
required to explain its rejection of the request for an updated price
input.
Response: We appreciate the concerns of the commenter and consider
this perspective as providing additional support for instituting such a
regular and transparent process. As we stated in the CY 2011 proposed
rule (75 FR 40063), we would present our review of submitted requests
to update price inputs for specific equipment or supplies and our
proposals for the subsequent calendar year in the annual proposed rule.
This process would provide CMS an annual opportunity to explain our
review and decisions regarding public requests for changes in direct PE
price inputs.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to act on public requests to update
equipment and supply price inputs annually through rulemaking by
following a regular and consistent process as discussed in the
preceding paragraphs. We will use the annual PFS proposed rule released
in the summer and the final rule with comment period released on or
about November 1 each year as the vehicle for making these changes. In
order to make the most effective use of the rulemaking process and be
responsive to the concerns of stakeholders that we consider the most
recent evidence available, we ask that requests for updates to supply
price inputs or equipment price or useful life inputs be submitted as
comments to the PFS final rule with comment period each year, subject
to the deadline for public comments applicable to that rule.
Alternatively, stakeholders may submit requests to CMS on an ongoing
basis throughout a given calendar year to CMS [email protected]. Requests received by the end of a calendar year
will be considered in rulemaking during the following year. For
example, requests received by December 31, 2010 will be considered in
conjunction with the CY 2012 PFS rulemaking cycle. We refer readers to
the description earlier in this section of the minimum information we
are requesting that stakeholders provide in order to facilitate our
review and preparation of issues for the proposed rule.
In the CY 2012 PFS proposed rule, scheduled to be released in the
summer of CY 2011, we will present a review of any timely requests we
receive to update supply price inputs or equipment price or useful life
inputs. After reviewing the issues and responding to the public
comments, we will finalize our decision as one of the outcomes listed
below for each request in the final rule with comment period for CY
2012.
Updating the equipment or supply price inputs, as
requested.
Updating the equipment or supply price inputs, with
modifications.
Rejecting the new price inputs.
Declining to act on the request pending a recommendation
from the AMA RUC.
f. Other Issues
We received other public comments on matters related to direct PE
inputs that were not the subject of proposals in the CY 2011 PFS
proposed rule. We thank the commenters for sharing their views and
suggestions. Because we did not make any proposals regarding these
matters, we do not generally summarize or respond to such comments in
this final rule with comment period. However, we are summarizing and
responding to several of the public comments in order to reiterate or
clarify certain information.
Comment: Several commenters stated that the clinical labor minutes
for CPT code 37210 (Uterine fibroid embolization (UFE, embolization of
the uterine arteries to treat uterine fibroids, leiomyomata),
percutaneous approach inclusive of vascular access, vessel selection,
embolization, and all radiological supervision and interpretation,
intraprocedural roadmapping, and imaging guidance necessary to complete
the procedure) are inconsistent with recommendations forwarded to CMS
by the AMA RUC for CY 2007 and accepted by CMS in the CY 2007 PFS final
rule with comment period (71 FR 69643). The commenters indicated that
10 minutes of clinical labor time were erroneously not attributed to
this CPT code in the proposed CY 2011 direct PE database.
Response: We agree with the commenters' assessment and appreciate
being informed of the error. The 10 minutes of clinical labor time
missing from the direct PE inputs for CPT code 37210 have been
incorporated and this change is reflected in the final CY 2011 direct
PE database.
Comment: Several commenters expressed concerns regarding the
current direct PE inputs for various services. One commenter submitted
extensive information regarding a perceived disparity between the
equipment inputs for echocardiography services and those for other
ultrasound services. Another commenter requested that CMS ask the AMA
RUC to establish nonfacility RVUs for the placement or insertion of
high dose rate brachytherapy catheters/applicators because it is common
practice, especially in gynecology, for physicians to perform such
procedures in their offices or in freestanding clinics. One commenter
stated that the proposed PE RVUs do not provide sufficient payment to
cover the cost of prothrombin time (PT)/international normalized ratio
(INR) home monitoring services and recommended that CMS alter the
direct PE inputs for those services. Another commenter requested that
CMS alter direct PE inputs for holter monitoring based on changes to
the language in CPT code descriptors from the current ``24 hours'' to
``up to 48 hours,'' even when the AMA RUC did not recommend such
changes.
Response: We did not propose CY 2011 changes to the direct PE
inputs for any of those services referenced by the commenters and,
therefore, their direct PE inputs have already been finalized in a
prior year's PFS rulemaking. As we have previously stated in this
section, we encourage stakeholders who believe a change is required in
the direct PE inputs associated with a particular service in the
typical case that is furnished in the facility or nonfacility setting
to address these concerns with the AMA RUC with respect to codes that
have been reviewed by the AMA RUC. The direct PE inputs for existing
services paid under the PFS have all been adopted through rulemaking
that has allowed for public notice and comment, so their current direct
PE inputs are final unless we would make a proposal to change them in a
future year. In most cases, we like to receive and review
recommendations from the AMA RUC for new and revised codes or other
codes for which another review has been conducted in order to assist us
in determining whether we should make changes to the clinical labor,
supply, and equipment inputs within the direct

[[Page 73208]]

PE database and, if so, what revisions should be made.
Additionally, throughout the year we meet with parties who want to
share their views on topics of interest to them. These discussions may
provide us with information regarding changes in medical practice and
afford opportunities for the public to bring to our attention issues
they believe we should consider for future rulemaking. Thus, we
encourage stakeholders to contact us at any time if there are topics
related to the direct PE inputs for physicians' services that they
would like to discuss.

B. Malpractice Relative Value Units (RVUs)

1. Background
Section 1848(c) of the Act requires that each service paid under
the PFS be comprised of three components: Work, PE, and malpractice.
From 1992 to 1999, malpractice RVUs were charge-based, using weighted
specialty-specific malpractice expense percentages and 1991 average
allowed charges. Malpractice RVUs for new codes after 1991 were
extrapolated from similar existing codes or as a percentage of the
corresponding work RVU. Section 4505(f) of the BBA required us to
implement resource-based malpractice RVUs for services furnished
beginning in 2000. Therefore, initial implementation of resource-based
malpractice RVUs occurred in 2000.
The statute also requires that we review, and if necessary adjust,
RVUs no less often than every 5 years. The first review and update of
resource-based malpractice RVUs was addressed in the CY 2005 PFS final
rule with comment period (69 FR 66263). Minor modifications to the
methodology were addressed in the CY 2006 PFS final rule with comment
period (70 FR 70153). In the CY 2010 PFS final rule with comment
period, we implemented the second review and update of malpractice
RVUs. For a discussion of the second review and update of malpractice
RVUs see the CY 2010 PFS proposed rule (74 FR 33537) and final rule
with comment period (74 FR 61758).
2. Malpractice RVUs for New and Revised Services Effective Before the
Next 5-Year Review
Currently, malpractice RVUs for new and revised codes effective
before the next 5-Year Review (for example, effective CY 2011 through
CY 2014) are determined by a direct crosswalk to a similar ``source''
code or a modified crosswalk to account for differences in work RVUs
between the new/revised code and the source code. For the modified
crosswalk approach, we adjust the malpractice RVUs for the new/revised
code to reflect the difference in work RVUs between the source code and
the AMA RUC's recommended work value (or the work value we are applying
as an interim final value under the PFS) for the new code. For example,
if the interim final work RVUs for the new/revised code are 10 percent
higher than the work RVUs for the source code, the malpractice RVUs for
the new/revised code would be increased by 10 percent over the source
code RVUs. This approach presumes the same risk factor for the new/
revised code and source code but uses the work RVUs for the new/revised
code to adjust for risk-of-service. The assigned malpractice RVUs for
new/revised codes effective between updates remain in place until the
next 5-Year Review.
For CY 2011, we explained that we will continue our current
approach for determining malpractice RVUs for new/revised codes that
become effective before the next 5-Year Review and update. Under this
approach we crosswalk the new/revised code to the RVUs of a similar
source code and adjust for differences in work (or, if greater, the
clinical labor portion of the fully implemented PE RVUs) between the
source code and the new/revised code. Additionally, we stated that we
would publish a list of new/revised codes and the analytic crosswalk(s)
used for determining their malpractice RVUs in the CY 2011 final rule
with comment period, which we have not previously done. We also
explained that the CY 2011 malpractice RVUs for new/revised codes would
be implemented as interim final values in the CY 2011 PFS final rule
with comment period, where they would be subject to public comment, and
finalized in the CY 2012 PFS final rule with comment period.
Comment: Several commenters supported the continuation of our
current approach to determining malpractice RVUs for new/revised codes
that become effective before the next 5-Year Review and update. The
commenters stated that publication of the new/revised codes and the
analytic crosswalk(s) used for determining their malpractice RVUs in
the final rule is a move toward greater transparency. A few commenters
requested that CMS provide the rationale used for selecting crosswalks
for new/revised codes and subject the rationale to public comment.
Response: For purposes of determining malpractice RVUs for the CY
2011 new/revised codes, we accepted all source code recommendations
submitted by the AMA RUC. We understand that the AMA RUC-recommended
source codes for new/revised codes were based on the expected similar
specialty mix of practitioners furnishing the source code and the new/
revised code. In other words, the medical specialties furnishing a
source code were expected to be similar to the specialty mix furnishing
the new/revised code. In adopting all of the AMA RUC's source code
recommendations for CY 2011, we agree with its assessment of these
similarities in each new/revised code case. If we were to disagree with
the AMA RUC's malpractice source code recommendations in a future year
for any new/revised codes, we would provide the rationale for both our
difference of opinion and the alternative source code we select for
purposes of establishing the interim final malpractice RVUs.
After consideration of the public comments we received, we are
continuing our current approach of assigning the interim final
malpractice RVUs for new/revised codes based on the methodology
described earlier in this section. We adjusted the malpractice RVUs of
the CY 2011 new/revised codes for differences in work RVUs (or, if
greater, the clinical labor portion of the fully implemented PE RVUs)
between the source code and the new/revised code to reflect the
specific risk-of-service for the new/revised code. The source code
crosswalks for the CY 2011 new/revised codes are being adopted on an
interim final basis and are subject to public comment on this CY 2011
final rule with comment period, as are the CY 2011 malpractice RVUs of
the new/revised codes that are listed in Addendum C to this final rule
with comment period. The malpractice RVUs for the CY 2011 new/revised
codes will be finalized in the CY 2012 PFS final rule with comment
period, where we will also respond to the public comments received on
the values that are included in this CY 2011 final rule with comment
period.
Table 8 lists the CY 2011 new/revised codes and their respective
source codes for determining the interim final CY 2011 malpractice
RVUs. We are also posting this crosswalk on the CMS Web site under the
downloads for the CY 2011 PFS final rule with comment period at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
3. Revised Malpractice RVUs for Selected Disc Arthroplasty Services
As discussed in the CY 2010 PFS proposed rule (74 FR 33539), we
assign malpractice RVUs to each service based upon a weighted average
of the risk factors of all specialties that furnish the service. For
the CY 2010 review of malpractice RVUs, we used CY 2008 Medicare
payment data on allowed services to establish the frequency of a
service by specialty. CPT code 22856 (Total disc arthroplasty
(artificial disc), anterior approach, including discectomy with end
plate preparation (includes osteophytectomy for nerve root or spinal
cord decompression and microdissection), single interspace, cervical)
had zero allowed services for CY 2008. Therefore, our contractor
initially set the level of services to 1, and assigned a risk factor
according to the average risk factor for all services that do not
explicitly have a separate technical or professional component. We
proposed to adopt our contractor's initial malpractice RVUs for CPT
code 22856 in the CY 2010 proposed rule. Application of the average
physician risk factor would have resulted in a significant decrease in
malpractice RVUs for CPT code 22856 in CY 2010.
Several commenters on the CY 2010 PFS proposed rule expressed
concern regarding the proposed malpractice RVUs for CPT code 22856,
which represented a proposed reduction of more than 77 percent. The
commenters stated that this service is predominantly furnished by
neurosurgeons and orthopedic surgeons. Given the high risk factors
associated with these specialty types and the changes in malpractice
RVUs for comparable services, the commenters stated that a reduction in
the malpractice RVUs of this magnitude for CPT code 22856 could not be
correct.
After consideration of the public comments, for CY 2010, we set the
risk factor for CPT code 22856 as the weighted average risk factor of
six comparable procedures mentioned by the commenters: CPT code 22554
(Arthrodesis, anterior interbody technique, including minimal
discectomy to prepare interspace (other than for decompression);
cervical below C2); CPT code 22558 (Arthrodesis, anterior interbody
technique, including minimal discectomy to prepare interspace (other
than for decompression); lumbar); CPT code 22857 (Total disc
arthroplasty (artificial disc), anterior approach, including discectomy
to prepare interspace (other than for decompression), single
interspace, lumbar); CPT code 22845 (Anterior instrumentation; 2 to 3
vertebral segments (list separately in addition to code for primary
procedure)); CPT code 63075 (Discectomy, anterior, with decompression
of spinal cord and/or nerve root(s), including osteophytectomy;
cervical, single interspace); and CPT code 20931 (Allograft for spine
surgery only; structural (list separately in addition to code for
primary procedure)). The weighted average risk factor for these
services is 8.4.
Since publication of the CY 2010 PFS final rule with comment
period, stakeholders have mentioned that we made significant changes to
the malpractice RVUs for CPT code 22856 in CY 2010. The commenters also
brought to our attention that other services are clinically similar to
CPT code 22856 and have similar work RVUs and, therefore, some
stakeholders believe these services should all have similar malpractice
RVUs. Services mentioned by the stakeholders that are clinically
similar to CPT code 22856 include CPT code 22857; CPT code 22861
(Revision including replacement of total disc arthroplasty (artificial
disc), anterior approach, single interspace;

[[Page 73214]]

cervical); CPT code 22862 (Revision including replacement of total disc
arthroplasty (artificial disc) anterior approach, lumbar); CPT code
22864 (Removal of total disc arthroplasty (artificial disc), anterior
approach, single interspace; cervical); and CPT code 22865 (Removal of
total disc arthroplasty (artificial disc), anterior approach, single
interspace; lumbar).
After further review of this issue, for CY 2011 we proposed to
apply the same risk factor used for CPT code 22856 to certain other
services within this family of services (CPT codes 22857 through 22865)
for which there were no allowed services in CY 2008. CPT codes 22861
and 22864 had zero allowed services in CY 2008 and our contractor
initially set their malpractice RVUs in the same way as it did for CPT
code 22856. Therefore, for CY 2011 we proposed to assign the weighted
average risk factor used for CPT code 22856 (that is, the weighted
average of the risk factors for CPT codes 20931, 22554, 22558, 22845,
22857, and 63075) to CPT codes 22861 and 22864. However, CPT codes
22857, 22862, and 22865 are low volume services (allowed services under
100). Our policy for low volume services is to apply the risk factor of
the dominant specialty as indicated by our claims data. Thus, for CY
2011 we proposed to continue to apply our policy for low volume
services to CPT codes 22857, 22862, and 22865.
Comment: A few commenters expressed support for the proposed
changes in malpractice RVUs for disc arthroplasty services that are
similar to CPT code 22856. One commenter urged CMS to finalize the
proposal in the CY 2011 PFS final rule.
Response: We appreciate the commenters' support for our proposal.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to apply the same risk factor used for
CPT code 22856 to CPT codes 22861 and 22864 for purposes of setting the
malpractice RVUs for these codes prior to the next 5-Year Review of
malpractice RVUs.

C. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the PFS
As discussed in section I. of this final rule with comment period,
in order to value services under the PFS, section 1848(c) of the Act
requires the Secretary to determine relative values for physicians'
services based on three components: The work, practice expense (PE),
and malpractice components. Section 1848(c)(1)(A) of the Act defines
the work component to include ``the portion of the resources used in
furnishing the service that reflects physician time and intensity in
furnishing the service.'' Additionally, the statute provides that the
work component shall include activities that occur before and after
direct patient contact. Furthermore, the statute specifies that with
respect to surgical procedures, the valuation of the work component for
the code would reflect a ``global'' concept in which pre-operative and
post-operative physicians' services related to the procedure would also
be included.
In addition, section 1848(c)(2)(C)(i) of the Act specifies that
``the Secretary shall determine a number of work relative value units
(RVUs) for the service based on the relative resources incorporating
physician time and intensity required in furnishing the service.'' As
discussed in detail in sections I.A.2. and I.A.3. of this final rule
with comment period, the statute also defines the PE and malpractice
components and provides specific guidance in the calculation of the
RVUs for each of these components. Section 1848(c)(1)(B) of the Act
defines the PE component as ``the portion of the resources used in
furnishing the service that reflects the general categories of expenses
(such as office rent and wages of personnel, but excluding malpractice
expenses) comprising practice expenses.''
Section 1848(c)(2)(C)(ii) of the Act specifies that the ``Secretary
shall determine a number of practice expense relative value units for
the services for years beginning with 1999 based on the relative
practice expense resources involved in furnishing the service.''
Furthermore, section 1848(c)(2)(B) of the Act directs the Secretary to
conduct a periodic review, not less often than every 5 years, of the
RVUs established under the PFS. Finally, on March 23, 2010, the ACA was
enacted, further requiring the Secretary to periodically review and
identify potentially misvalued codes and make appropriate adjustments
to the relative values of those services identified as being
potentially misvalued. Section 3134(a) of the ACA added a new section
1848(c)(2)(K) of the Act which requires the Secretary to periodically
identify potentially misvalued services using certain criteria, and to
review and make appropriate adjustments to the relative values for
those services. Section 3134(a) of the ACA also added a new section
1848(c)(2)(L) of the Act which requires the Secretary to develop a
validation process to validate the RVUs of potentially misvalued codes
under the PFS and make appropriate adjustments.
As discussed in section I.A.1. of this final rule with comment
period, we establish physician work RVUs for new and revised codes
based on our review of recommendations received from the AMA RUC. The
AMA RUC also provides recommendations to CMS on the values for codes
that have been identified as potentially misvalued. To respond to
concerns expressed by MedPAC, the Congress, and other stakeholders
regarding accurate valuation of services under the PFS, the AMA RUC
created the Five-Year Review Identification Workgroup in 2006. In
addition to providing recommendations to CMS for work RVUs, the AMA
RUC's Practice Expense Subcommittee reviews direct PE (clinical labor,
medical supplies, and medical equipment) for individual services and
examines the many broad methodological issues relating to the
development of PE RVUs.
In accordance with section 1848(c) of the Act, we determine
appropriate adjustments to the RVUs, taking into account the
recommendations provided by the AMA RUC and MedPAC, and publish the
explanation for the basis of these adjustments in the PFS proposed and
final rules. We note that section 1848(c)(2)(A)(ii) of the Act
authorizes the use of extrapolation and other techniques to determine
the RVUs for physicians' services for which specific data are not
available, in addition to taking into account the results of
consultations with organizations representing physicians.
2. Identifying, Reviewing, and Validating the RVUs of Potentially
Misvalued Services Under the PFS
a. Background
In its March 2006 Report to Congress, MedPAC noted that ``misvalued
services can distort the price signals for physicians' services as well
as for other health care services that physicians order, such as
hospital services.'' In that same report MedPAC postulated that
physicians' services under the PFS can become misvalued over time for a
number of reasons: ``For example, when a new service is added to the
physician fee schedule, it may be assigned a relatively high value
because of the time, technical skill, and psychological stress that are
required to perform it. Over time, skill, and stress involved may
decline as physicians become more familiar with the service and more
efficient at providing it. The amount of physician work needed to
furnish an existing service may decrease when new technologies are
incorporated. Services

[[Page 73215]]

can also become overvalued when practice expenses decline. This can
happen when the costs of equipment and supplies fall, or when equipment
is used more frequently, reducing its cost per use. Likewise, services
can become undervalued when physician work increases or practice
expenses rise.'' In the ensuing years since MedPAC's 2006 report,
additional groups of potentially misvalued services have been
identified by Congress, CMS, MedPAC, the AMA RUC, and other
stakeholders.
In recent years CMS and the AMA RUC have taken increasingly
significant steps to address potentially misvalued codes. As MedPAC
noted in its March 2009 Report to Congress, in the intervening years
since MedPAC made the initial recommendations, ``CMS and the AMA RUC
have taken several steps to improve the review process.'' Most
recently, section 1848(c)(2)(K)(ii) of the Act (as added by section
3134 of the ACA) directed the Secretary to specifically examine
potentially misvalued services in seven categories as follows:
(1) Codes and families of codes for which there has been the
fastest growth.
(2) Codes or families of codes that have experienced substantial
changes in practice expenses.
(3) Codes that are recently established for new technologies or
services.
(4) Multiple codes that are frequently billed in conjunction with
furnishing a single service.
(5) Codes with low relative values, particularly those that are
often billed multiple times for a single treatment.
(6) Codes which have not been subject to review since the
implementation of the RBRVS (the so-called ``Harvard-valued codes'').
(7) Other codes determined to be appropriate by the Secretary.
Section 1848(c)(2)(K)(iii) of the Act (as added by section 3134 of
the ACA) also specifies that the Secretary may use existing processes
to receive recommendations on the review and appropriate adjustment of
potentially misvalued services. In addition, the Secretary may conduct
surveys, other data collection activities, studies, or other analyses
as the Secretary determines to be appropriate to facilitate the review
and appropriate adjustment of potentially misvalued services. This
section authorizes the use of analytic contractors to identify and
analyze potentially misvalued codes, conduct surveys or collect data,
and make recommendations on the review and appropriate adjustment of
potentially misvalued services. Finally, section 1848(c)(2)(K)(iii)(V)
of the Act (as added by section 3134 of the ACA) specifies that the
Secretary may make appropriate coding revisions (including using
existing processes for consideration of coding changes) which may
include consolidation of individual services into bundled codes for
payment under the physician fee schedule.
b. Progress in Identifying and Reviewing Potentially Misvalued Codes
Over the last several years, CMS, in conjunction with the AMA RUC,
has identified and reviewed numerous potentially misvalued codes in all
seven of the categories specified in section 1848(c)(2)(K)(ii) (as
added by section 3134 of the ACA), and we plan to continue our work
examining potentially misvalued codes in these areas over the upcoming
years, consistent with the new legislative mandate on this issue. In
the current process, the AMA RUC reviews potentially misvalued codes
that are identified either by CMS or through its own processes and
recommends revised work RVUs and/or direct PE inputs for those codes to
CMS. CMS then assesses the recommended revised work RVUs and/or direct
PE inputs and, in accordance with section 1848(c) of the Act, we
determine if the recommendations constitute appropriate adjustments to
the RVUs under the PFS. Since CY 2009, CMS and the AMA RUC have
identified over 700 potentially misvalued codes.
For example, in regard to the first category (codes and families of
codes for which there has been the fastest growth), for CY 2009 CMS
identified over 100 potentially misvalued codes for which an analysis
of the utilization data showed an annual growth in allowed services of
10 percent (or more) for 3 consecutive years (73 FR 38586). Each of
these codes had allowed charges of $1 million or more in CY 2007. We
published this list in the CY 2009 PFS proposed rule (73 FR 38586
through 38589) and requested that the AMA RUC immediately begin a
review of the codes on this list. Meanwhile, in parallel with CMS'
efforts, the AMA RUC also initiated processes to identify and review
potentially misvalued codes on an ongoing basis using certain screens,
including screens for ``CMS fastest growing procedures'' and ``high
volume growth.'' Both of these AMA RUC screens are applicable to the
first category of potentially misvalued codes specified in the ACA. We
plan to continue to analyze Medicare claims data over future years to
identify additional services that exhibit rapid growth and high
Medicare expenditures for referral to the AMA RUC for review as
potentially misvalued codes.
Pertaining to the second category specified in section
1848(c)(2)(K)(ii) of the Act (as added by section 3134 of the ACA)
(codes or families of codes that have experienced substantial changes
in practice expenses), in CY 2009 we requested that the AMA RUC
continue its review of direct PE inputs, focusing particularly on high-
volume codes where the PE payments are increasing significantly under
the transition to the new PE methodology (73 FR 38589). The AMA RUC has
responded by sending CMS recommendations for revised direct PE inputs
for codes identified for PE review on an ongoing basis.
Additionally in CY 2009, we began an initiative to review and
update the prices for high-cost supplies in order to ensure the
accuracy and completeness of the direct PE inputs. We discuss our most
recent efforts in refining the process to update the prices of high-
cost supplies in section II.C.5. of this final rule with comment
period.
For the third category of potentially misvalued codes identified in
section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA) (codes
that are recently established for new technologies or services), the
AMA RUC routinely identifies such codes through a screen based on 3
years of Medicare claims data, and sends CMS recommendations for
revised work RVUs and/or direct PE inputs for these codes on an ongoing
basis. The AMA RUC may determine that a code for a new service requires
reevaluation or does not require reevaluation, or it may conclude, on a
case-by-case basis, that more than 3 years of claims data are necessary
before the code can be reviewed. In that case, it would determine the
appropriate future timeframe for review.
We also note that in its June 2008 Report to Congress entitled
``Reforming the Health Care System'' and in the context of a discussion
about primary care, MedPAC acknowledges, ``* * * Efficiency can improve
more easily for other types of services, such as procedures, with
advances in technology, technique, and other factors. Ideally, when
such efficiency gains are achieved, the fee schedule's relative value
units (RVUs) for the affected services should decline accordingly,
while budget neutrality would raise the RVUs for the fee schedule's
primary care services.'' (page 27). Section II.C.5. of this final rule
with comment period includes a discussion regarding periodic updates to
the costs of high-cost supplies. This discussion is highly relevant to
new technology services, where growth in volume of a

[[Page 73216]]

service as it diffuses into clinical practice may lead to a decrease in
the cost of expensive supplies. We also expect that other efficiencies
in physician work and PE may be achieved after an initial period of
relative inefficiency that reflects the ``learning curve.'' We plan to
pay particular attention to the work values and direct PE inputs for
these new services and the AMA RUC's periodic review process to ensure
that any efficiencies are captured under the PFS over time, recognizing
that the appropriate timing for revaluing these services needs to be
considered on a case-by-case basis depending on the growth rate in
service volume.
We have also addressed the fourth category (multiple codes that are
frequently billed in conjunction with furnishing a single service) in
rulemaking prior to the enactment of the ACA. As discussed in the CY
2009 PFS proposed rule (73 FR 38586), we have a longstanding policy of
reducing payment for multiple surgical procedures performed on the same
patient, by the same physician, on the same day. Over the ensuing
years, the multiple procedure payment reduction (MPPR) policy has been
extended to a number of nuclear diagnostic and diagnostic imaging
procedures. We continue our work to recognize efficiencies in this area
with a new CY 2011 policy to expand the MPPR policy to additional
combinations of imaging services and to therapy services for CY 2011 as
described in section II.C.4. of this final rule with comment period.
We note the AMA RUC has also established a screen to identify
services performed by the same physician on the same date of service 95
percent of the time or more. Over the past 2 years, the CPT Editorial
Panel has established new bundled codes to describe a comprehensive
service for certain combinations of these existing services that are
commonly furnished together, and the AMA RUC has recommended work
values and direct PE inputs to CMS for these comprehensive service
codes that recognize the associated efficiencies. We look forward to
working with the AMA RUC in this joint effort to examine codes commonly
reported together and more appropriately value common combinations
services.
We address the fifth category of potentially misvalued codes (codes
with low relative values, particularly those that are often billed
multiple times for a single treatment) in section II.C.3.b. of this
final rule with comment period. That is, we have provided a list of
services with low work RVUs that are commonly reported with multiple
units in a single encounter and requested that the AMA RUC review these
codes that we have identified as potentially misvalued.
The sixth category (codes which have not been subject to review
since the implementation of the RBRVS (the so-called ``Harvard-valued
codes'')) also continues to be addressed by CMS and the AMA RUC on an
ongoing basis. As we noted in the CY 2009 PFS proposed rule (73 FR
38589), there were at that time approximately 2,900 codes, representing
$5 billion in annual spending, that were originally valued using
Harvard data and had not subsequently been evaluated by the AMA RUC.
Consequently, in CY 2009, we requested that the AMA RUC engage in an
ongoing effort to review the remaining Harvard-valued codes, focusing
first on the high-volume, low-intensity codes (73 FR 38589). In
response to our request, the AMA RUC initially conducted an analysis of
Harvard-valued services with utilization above 10,000 services per
year, which resulted in a list of 296 distinct services (73 FR 69883).
The AMA RUC, in its public comment on the CY 2009 proposed rule, stated
that it believes it would be effective to limit any review to these 296
services and also noted that of the 296 services identified, 23 had
already been identified by another screen and were in the process of
being reviewed (73 FR 69883). To date, the AMA RUC has reviewed and
submitted to CMS recommendations for revised work RVUs and/or direct PE
inputs for a number of Harvard-valued codes, prioritizing those codes
with utilization of over 1 million services. The AMA RUC and CMS intend
to continue our ongoing assessment of Harvard-valued codes, next
targeting codes with utilization of over 100,000 services.
Finally, the seventh category of potentially misvalued codes in
section 1848(c)(2)(K)(ii) (as added by section 3134 of the ACA) is all
other codes determined to be appropriate by the Secretary. In this
category, CMS has previously proposed policies and requested that the
AMA RUC review codes for which there have been shifts in the site-of-
service (site-of-service anomalies), as well as codes that qualify as
``23-hour stay'' outpatient services. The policies for valuation of
both the site-of-service anomaly codes and the ``23-hour stay'' codes
are developed further in sections II.C.3.d. and e., respectively, of
this final rule with comment period. For CY 2011, we have also
identified codes with low work RVUs but that are high volume based on
claims data as another category of potentially misvalued codes and
referred these codes to the AMA RUC for review, as discussed in section
II.C.3.b. of this final rule with comment period. In addition, for CY
2011 we have newly targeted key codes that the AMA RUC uses as
reference services for valuing other services, termed ``multispecialty
points of comparison'' services, and referred these to the AMA RUC for
review as potentially misvalued codes as described in section II.C.3.a.
of this final rule with comment period. Finally, we note the AMA RUC
has also established screens to identify potentially misvalued codes in
additional categories, including codes with a high intra-service work
per unit of time (IWPUT) and codes representing services that had been
surveyed by one specialty, but are now performed by a different
specialty. We will continue to review AMA RUC recommendations for
revised work RVUs and/or direct PE inputs for codes that fall into
these categories.
As a result of the combined efforts of CMS and the AMA RUC to
address potentially misvalued codes, for CY 2009 the AMA RUC
recommended revised work values and/or PE inputs for 204 misvalued
services (73 FR 69883). For CY 2010, an additional 113 codes were
identified as misvalued and the AMA RUC provided new recommendations
for revised work RVUs and/or PE inputs to CMS as discussed in the CY
2010 PFS final rule with comment period (74 FR 61778). Upon review of
the AMA RUC-recommended work RVUs, CMS accepted the majority of the
values as appropriate adjustments to the RVUs under the PFS, in
accordance with section 1848(c) of the Act. However, for a number of
codes, mainly the site-of-service anomaly codes, we indicated that
although we would accept the AMA RUC valuations for these codes on an
interim basis through CY 2010, we had ongoing concerns about the
methodology used by the AMA RUC to review these services (73 FR 69883
and 74 FR 61776 through 61778, respectively). In the CY 2010 PFS final
rule with comment period, we requested that the AMA RUC reexamine the
site-of-service anomaly codes and use the building block methodology to
revalue the services (74 FR 61777). In that same rule, we also stated
that we would continue to examine these codes and consider whether it
would be appropriate to propose additional changes in future
rulemaking. We discuss our CY 2011 proposals with respect to these
codes in section II.C.3.d. of this final rule with comment period.

[[Page 73217]]

c. Validating RVUs of Potentially Misvalued Codes
In addition to identifying and reviewing potentially misvalued
codes, section 1848(c)(2)(L) (as added by section 3134 of the ACA)
specifies that the Secretary shall establish a formal process to
validate relative value units under the PFS. The validation process may
include validation of work elements (such as time, mental effort and
professional judgment, technical skill and physical effort, and stress
due to risk) involved with furnishing a service and may include
validation of the pre-, post-, and intra-service components of work.
The Secretary is directed to validate a sampling of the work RVUs of
codes identified through any of the seven categories of potentially
misvalued codes specified by section 1848(c)(2)(K)(ii) of the Act (as
added by section 3134 of the ACA). Furthermore, the Secretary may
conduct the validation using methods similar to those used to review
potentially misvalued codes, including conducting surveys, other data
collection activities, studies, or other analyses as the Secretary
determines to be appropriate to facilitate the validation of RVUs of
services. Currently, while CMS does assess the AMA RUC-recommended work
RVUs to determine if the recommendations constitute appropriate
adjustments to the RVUs under the PFS, we intend to establish a more
extensive validation process of RVUs in the future in accordance with
the requirements of section 1848(c)(2)(L) of the Act (as added by
section 3134 of the ACA). Therefore, in the CY 2011 PFS proposed rule
(75 FR 40068), we solicited public comments on possible approaches and
methodologies that we should consider for a validation process. We were
interested in public comments regarding approaches, including the use
of time and motion studies, to validate estimates of physician time and
intensity that are factored into the work RVUs for services with rapid
growth in Medicare expenditures, one of the categories that the statute
specifically directs CMS to examine. We indicated that we plan to
discuss the validation process in a future PFS rule once we have
considered the matter further in conjunction with any public comments
and other input from stakeholders that we receive.
Comment: Some commenters were skeptical that there could be viable
alternative methods to the existing AMA RUC code review process for
validating physician time and intensity that would preserve the
appropriate relativity of specific physician's services under the
current payment system. These commenters generally urged CMS to rely
solely on the AMA RUC to provide valuations for services under the PFS.
A number of commenters expressed the belief that since CMS has reviewed
the AMA RUC recommendations for codes and generally accepted these
valuations in the past, these actions constitute a ``CMS validation
process.'' The commenters asserted that this current ``CMS validation
process'' more than meets the requirement of section 1848(c)(2)(L) of
the Act (as added by section 3134 of the ACA).
In addition, a number of commenters opposed the approach of using
time and motion studies to validate estimates of physician time and
intensity, stating that properly conducted time and motion studies are
extraordinarily expensive and, given the thousands of codes paid under
the PFS, it would be unlikely that all codes could be studied. The
commenters generally opposed applying different methodologies to
valuing different services under the PFS and supported using a
consistent methodology for all codes. Some commenters observed that it
would be extremely difficult for CMS to establish a process by which to
validate a sample of work RVUs under the PFS because of the relative
nature of the system. Specifically, one commenter noted that the
``advantages of a relative system are considerable--they allow scaling
based on available funds and make it far easier for a payer such as
Medicare to set rates for multiple services with a single adjustment to
the conversion factor. However, one disadvantage of a relative system
is that it cannot be externally validated unless all components are
included in the validation. Services cannot be examined for absolute
accuracy, only for relative precision. If we identify some component of
the calculation used to generate the RVU that is incorrect, it is
impossible to know whether this is a systemic error or an issue with an
individual code. If it is a systemic error, then it does not invalidate
the relative value system, which merely must operate on an even playing
field.'' That is, many commenters believe that as long as appropriate
relativity is maintained in the work RVUs for services valued under the
PFS, the specific methodology for valuing services is less important.
Accordingly, many commenters expressed support for the AMA RUC's use of
``magnitude estimation'' to develop the recommended value for a service
and urged CMS to accept the AMA RUC's recommendations as the most
informed and best estimation of the true value of physician work for a
service.
In contrast, some commenters declared that ``the flaws inherent in
the RUC system are the lack of accountability and transparency.'' These
commenters believe that the AMA RUC's composition as a professional
panel puts cognitive services at a disadvantage and suggested that
``the composition of the RUC needs to be modified to more accurately
reflect the desired workforce composition. At present primary care
specialties are under-represented which we [the commenters] believe
contributes to the overvaluation of procedural codes and undervaluation
of cognitive codes.'' Similarly, other commenters noted that while
certified registered nurse anesthetists (CRNAs) furnished approximately
32 million anesthesia services in the United States annually and can
bill Medicare directly for their services, ``the AMA RUC excludes CRNAs
from directly participating in its deliberations because CRNAs are not
physicians.'' These commenters noted that ``without fair representation
by all specialties that bill Part B directly, CMS' reliance on the AMA-
RUC as representing the professional views and knowledge of all
healthcare specialties is deeply flawed.'' The commenters also advised
that ``while the RUC relies on persuasion and brokering deals, RVUs
need to be validated empirically.'' In general, these commenters
believe that since section 1848(c)(2)(L) of the Act (as added by
section 3134 of the ACA) expressly specifies that CMS has the authority
to conduct surveys and studies and collect data, CMS should develop a
process that uses empirical evidence as the basis for validation of
work RVUs.
Response: We agree with the commenters that the work before us to
develop a formal validation process as specified by section
1848(c)(2)(L) of the Act (as added by section 3134 of the ACA) will be
a challenging but worthwhile effort to ensure accurate valuation of
physician work under the PFS. While we have reviewed AMA RUC
recommendations for codes and frequently accepted these valuations in
the past, we disagree with the commenters' assertion that these actions
constitute a formal CMS validation process as envisioned by section
1848(c)(2)(L) of the Act (as added by section 3134 of the ACA). Section
1848(c)(2)(L) of the Act (as added by section 3134 of the ACA) clearly
specifies a new requirement that ``the Secretary shall establish a
process to validate relative value units under the fee schedule.''
While we solicited

[[Page 73218]]

comments on the possibility of using time and motion studies to support
a future validation process, we understand that these studies would
require significant resources and we remain open to suggestions for
other approaches to developing a validation process.
In response to the commenters who raised the issue of the AMA RUC's
most commonly used approach for valuing codes, referred to as
``magnitude estimation,'' we note that the AMA RUC does not rely on a
single consistent methodology to value codes. Based on our historical
and current review of the AMA RUC recommendation summaries which
accompany the work RVU recommendations for each code newly valued or
revalued by the AMA RUC each year, we have noticed that the AMA RUC
appears to use a variety of methodologies in its valuation process. For
some codes, the AMA RUC uses magnitude estimation in conjunction with
survey data from surveys conducted by the specialty societies to
support the values. For other codes, the AMA RUC uses magnitude
estimation to override the results of the survey data, recommending to
CMS a value that is not based on survey data, but rather, justified in
terms of its appropriate relativity within the system to other similar
services. The AMA RUC may also elect to use a crosswalk approach in
valuing a code by applying a work value from a currently valued code to
the code under review based on the clinical similarity of the
procedures or explicit considerations of pre-, intra-, and post-service
time. In some instances, we note that the AMA RUC has asserted that it
uses the building block methodology to value the code, a methodology we
have historically supported (74 FR 61777). Since the AMA RUC uses a
variety of methodologies for valuing codes, not just magnitude
estimation supported by survey data, or our recommended methodology of
valuation based on building blocks, we foresee that validation of the
work RVUs will be complex, perhaps requiring an initial study of the
all the possible valuation methodologies currently being employed by
the AMA RUC so that we can better understand how relativity between
services under the PFS has developed and been maintained over the
years.
As we have stated previously (69 FR 66243), because the AMA RUC is
an independent committee, we are not in a position to set the
requirements for AMA RUC membership regarding primary care specialties
or other types of practitioners. Concerned stakeholders should
communicate directly with the AMA RUC regarding its professional
composition. We note that we alone are responsible for all decisions
about establishing the RVUs for purposes of PFS payment so, while the
AMA RUC provides us with recommendations regarding the work and direct
PE inputs for new and revised CPT codes in the context of its broad
expertise, we determine the interim final RVUs for all new or revised
services. Additionally, the interim RVUs are subject to public comment
and we respond to those comments in a final rule when we adopt the
final RVUs for the new and revised CPT codes. We believe that the
formal validation process will further complement the ongoing work of
the AMA RUC to provide recommendations to us regarding the valuation of
PFS services.
Comment: While a number of commenters strongly opposed CMS' plans
to develop a formal validation process, many other commenters expressed
support for the development and establishment of a system-wide
validation process of the work RVUs under the PFS. The commenters
commended CMS for seeking new approaches to validation, as well as
being open to suggestions from the public on this process. A number of
commenters submitted technical advice and offered their time and
expertise as resources for CMS to draw upon in any examination of
possible approaches to developing a formal validation process.
Furthermore, MedPAC advised that a formal validation process should
include validating the fee schedule's estimates of physician time.
MedPAC noted that ``Contract research for CMS and the Assistant
Secretary for Planning and Evaluation has shown that some of the time
estimates are likely too high. In addition, the Government
Accountability Office has found that the fee schedule does not
adequately account for efficiencies occurring when a physician
furnishes multiple services for the same patient on the same day.''
Finally, MedPAC suggested that CMS should consider alternative
approaches, ``such as collecting data on a recurring basis from a
cohort of practices and other facilities where physicians and
nonphysician clinical practitioners work.''
Some commenters noted that ``involving RUC experts, those who are
most intimately acquainted with and possess the deepest level of
expertise and experience makes the most sense'' and stated that these
individuals ``are also those best equipped to provide insights and
guidance to help shape an independent validation system.'' A number of
commenters asked CMS to confirm that stakeholders would be given the
opportunity to comment on any specific proposals for a validation
process that CMS plans to implement.
Response: We thank the many commenters who generously offered to
help and provided technical suggestions, including the use of
statistical modeling and possible sources of data that we should
consider in developing a validation process. We will review MedPAC's
suggestions to examine physician time in the formal validation process.
We will also consider the commenters' recommendation that we include
the AMA RUC and other professional groups who also have a stake in
ensuring appropriate payment for practitioners' services. As we stated
previously, we intend to establish a more extensive validation process
of RVUs in the future in accordance with the requirements of section
1848(c)(2)(L) of the Act (as added by section 3134 of the ACA). We note
that MedPAC, in providing comments to the CY 2011 PFS proposed rule,
``strongly supports efforts to improve the accuracy of the fee
schedule's RVUs.'' We plan to discuss the validation process in more
detail in a future PFS rule once we have considered the matter further
in conjunction with the public comments that we have received in
response to our solicitation in the CY 2011 proposed rule as well as
other input from stakeholders. Moreover, we note that any proposals we
would make on the formal validation process would be subject to public
comment, and we would consider those comments before finalizing any
policies.
3. CY 2011 Identification and Review of Potentially Misvalued Services
In this section, we discuss codes that may be potentially misvalued
according to five different criteria:
Codes on the multi-specialty points of comparison list;
Codes with low work RVUs commonly billed in multiple units
per single encounter;
Codes with high volume and low work RVUs;
Codes with site-of-service anomalies; and
Codes that qualify as ``23-hour stay'' outpatient
services.
a. Codes on the Multispecialty Points of Comparison List
The AMA RUC uses a scale referred to as the multispecialty points
of comparison (MPC) to evaluate the reasonableness of a specialty
society's recommended RVU value for a service.

[[Page 73219]]

The MPC list contains reference codes of established comparison
services that are used in the valuation of new codes. The current MPC
list consists of 316 codes which the AMA RUC may use to compare and
contrast the relativity of codes under review to existing relative
values. Since the AMA RUC may use the values on the MPC list as a basis
for relativity when determining the values for new, revised, and newly
reviewed codes (including potentially misvalued codes), it is essential
that the services on the MPC list be appropriately valued since any
codes misvalued on the MPC list could contribute to the misvaluing of
other codes under review. While we believe that the entire MPC list
should be assessed to ensure that services are paid appropriately under
the PFS, we prioritized the review of the MPC list, ranking the codes
by allowed service units and charges based on CY 2009 claims data. We
proposed to refer the codes in Table 9 to the AMA RUC for review in CY
2011.

Table 9--Codes on the MPC List Referred for AMA RUC Review
------------------------------------------------------------------------
CPT code Short descriptor
------------------------------------------------------------------------
66984......................... Cataract surg w/iol, 1 stage.
97110......................... Therapeutic exercises.
43239......................... Upper GI endoscopy, biopsy.
20610......................... Drain/inject, joint/bursa.
78815......................... Pet image w/ct, skull-thigh.
45385......................... Lesion removal colonoscopy.
45380......................... Colonoscopy and biopsy.
11721......................... Debride nail, 6 or more.
17000......................... Destruct premalg lesion.
92980......................... Insert intracoronary stent.
74160......................... Ct abdomen w/dye.
71020......................... Chest x-ray.
11100......................... Biopsy, skin lesion.
66821......................... After cataract laser surgery.
52000......................... Cystoscopy.
92083......................... Visual field examination(s).
73721......................... Mri jnt of lwr extre w/o dye.
93010......................... Electrocardiogram report.
77334......................... Radiation treatment aid(s).
92250......................... Eye exam with photos.
95810......................... Polysomnography, 4 or more.
77003......................... Fluoroguide for spine inject.
11056......................... Trim skin lesions, 2 to 4.
76700......................... Us exam, abdom, complete.
77290......................... Set radiation therapy field.
77300......................... Radiation therapy dose plan.
43235......................... Uppr gi endoscopy, diagnosis.
71275......................... Ct angiography, chest.
95900......................... Motor nerve conduction test.
31231......................... Nasal endoscopy, dx.
95165......................... Antigen therapy services.
94060......................... Evaluation of wheezing.
31575......................... Diagnostic laryngoscopy.
------------------------------------------------------------------------

Comment: While some commenters agreed with CMS that the entire MPC
list should be assessed to ensure that services are paid appropriately
under the PFS, and supported the proposal that the AMA RUC review the
services listed in Table 9, a number of other commenters expressed
surprise that CMS seemed to be suggesting that any code on the MPC list
could be classified as potentially misvalued. Many commenters noted
that the MPC list of codes is considered the ``gold standard'' within
the PFS and it is used to help judge the appropriate relativity of
procedures across specialties. A number of commenters assured CMS that
the codes on the MPC list have been thoroughly vetted and, therefore,
these commenters took issue with CMS for implying that the codes could
somehow be considered potentially misvalued. Specifically, one
commenter noted, ``[t]he assumption of the specialties, the RUC and CMS
has been that these services are appropriately valued and well
established.'' Another commenter expressed the concern as follows:
``[c]hallenging the rank order of the MPC list essentially negates 20
years of RUC work. Obtaining new data to validate the old data
inevitably leads to the problem of what should be done if the data
yield different results. Is there any reason to believe that a newer
survey is a more accurate survey, or that the data analysis and
subsequent opinion of the current or future RUCs will be more valid
than that of previous RUCs? Admittedly data collection methods have
become more refined in the past 20 years, but that neither means nor
implies that relativity amongst physician services has changed.'' Some
commenters reminded CMS that the AMA RUC is already planning to review
some codes on the MPC list in the coming year, while other commenters
noted that some of the codes on the MPC list have been reviewed by the
AMA RUC within the past 6 years. Some commenters did not believe that
some of the well-established services on the MPC list would need
another review and that the resources required to re-review such
services could be better used elsewhere. Furthermore, some commenters
believe that if a code has been surveyed as part of the potentially
misvalued services initiative during the last 5 years and it is
identified again using a different screen, that it need not be
resurveyed again.
Finally, several commenters noted that while reviewing all the
codes on the MPC list would ``be a substantial undertaking for the RUC,
properly valuing these services will help restore equity in the
physician payment system.'' The commenters further suggested that CMS
should specify to the AMA RUC what it considers good survey
methodology, including the use of peer review and time studies.
Response: We note that the vast majority of commenters, whether
they supported or opposed our proposal, acknowledged the significant
and central role that the MPC list plays in the valuation of services
under the PFS. Because it is currently the ``gold standard'' to which
other codes, across specialties, are compared, we agree with the
commenters who suggested that codes on this list should be vetted,
though we disagree that we should assume this has been done or occurs
automatically and systematically. We also acknowledge that the AMA RUC
recently has reviewed some of the codes and is planning to review more
codes on the MPC list. Our proposal suggested prioritizing the review
of the codes by ranking them according to utilization which, in our
view, would potentially provide the most immediate benefit to the
system.
If a code on the MPC list has not been reviewed recently--certainly
more recently than 6 years ago--we believe that the code is vulnerable
to being potentially misvalued and that the misvaluation of an MPC code
could disproportionately affect the correct valuation of other related
services under the PFS. Given the rapid changes in medical practice, we
have no reason to believe that the relativity of the MPC codes would
not have changed over the past 20 years and we would expect that more
recent survey data would more accurately reflect the physician work in
current medical practice. If the codes are resurveyed and newer more
accurate data are available, we would support using the most recent
available data to value physician work under the PFS, which is
consistent with our general policy to use the most current data
whenever possible and practicable to update the PFS.
Given the evolving review process of the AMA RUC over the past
several years, CMS' strong interest in ensuring current and appropriate
physician work values for PFS services, and the increased emphasis on
revaluing established services that are potentially misvalued, we are
requesting that the AMA RUC provide a current and comprehensive
recommendation on the appropriate physician work value, including
describing and affirming the methodology for the recommended work
value, for all of the codes listed in Table 9. To the extent the AMA
RUC chooses to limit its work in reexamining MPC codes that have
recently been evaluated, consistent with our usual practice, we will
consider the context when we evaluate the AMA RUC's recommendation for
the value of the code.

[[Page 73220]]

Although valuation is ultimately our responsibility, the AMA RUC
and CMS remain partners in ensuring the appropriate valuation of
physician work for services under the PFS and we believe our proposal
serves to enhance this process. Accordingly, after consideration of the
public comments we received, we are finalizing our CY 2011 proposal and
we look forward to receiving the AMA RUC's recommendations for the
codes listed in Table 9.
b. Codes With Low Work RVUs Commonly Billed in Multiple Units Per
Single Encounter
Consistent with section 1848(c)(2)(K)(ii) of the Act (as added by
section 3134 of the ACA) which identifies categories of potentially
misvalued codes for our review, we believe services with low work RVUs
that are commonly billed with multiple units in a single encounter are
an additional appropriate category for identifying potentially
misvalued codes. An example of a high multiple/low work RVU service is
CPT code 95004 (Percutaneous tests (scratch, puncture, prick) with
allergenic extracts, immediate type reaction, including test
interpretation and report by a physician, specify number of tests). For
purposes of compiling a list of the high multiple/low work RVU
services, we defined a high multiple service as one that is commonly
performed in multiples of 5 or more per day. Then, we selected from
high multiple services with work RVUs of less than or equal to 0.5
RVUs. We note that in selecting 5 per day as the minimum threshold for
the number of common services performed in a multiple service
encounter, we intended to establish a meaningful threshold which, in
conjunction with the threshold for work RVUs of 0.5 RVUs or less, would
produce a reasonable number of services for the RUC to review that have
substantial total work RVUs for the comprehensive service furnished
during a single treatment. That is, as a general example, with a work
RVU threshold of 0.5 RVUs and a multiple threshold of 5 per day, the
total work RVUs for a typical treatment would equate to 2.5 RVUs, which
is approximately comparable to a high level office visit, an
interpretation of a complex imaging procedure, or a minor surgical
procedure.
In the CY 2011 PFS proposed rule (75 FR 40069), we requested that
the AMA RUC review the codes in Table 10.

Table 10--Codes With Low Work RVUs That are Commonly Billed in Multiple
Units Referred for AMA RUC Review
------------------------------------------------------------------------
CPT code Short descriptor
------------------------------------------------------------------------
95904......................... Sense nerve conduction test.
17003......................... Destruct premalg les, 2-14.
95004......................... Percut allergy skin tests.
11101......................... Biopsy, skin add-on.
95024......................... Id allergy test, drug/bug.
76000......................... Fluoroscope examination.
95144......................... Antigen therapy services.
95010......................... Percut allergy titrate test.
88300......................... Surgical path, gross.
95027......................... Id allergy titrate--airborne.
95015......................... Id allergy titrate--drug/bug.
95148......................... Antigen therapy services.
------------------------------------------------------------------------

c. Codes With High Volume and Low Work RVUs
We believe that codes that have low work RVUs but are high volume
based on claims data are another category of potentially misvalued
codes. Although these codes have low work RVUs (less than or equal to
0.25 RVUs), the high utilization of these codes represents significant
expenditures under the PFS such that their appropriate valuation is
especially important. Table 11 contains a list of such codes and we
requested that the AMA RUC review these codes in the CY 2011 PFS
proposed rule (75 FR 40069).

Table 11: Codes With Low Work RVUs That Are High Volume Referred for AMA
RUC Review
------------------------------------------------------------------------
CPT code Short descriptor
------------------------------------------------------------------------
71010.......................... Chest x-ray.
73510.......................... X-ray exam of hip.
97035.......................... Ultrasound therapy.
88313.......................... Special stains group 2.
73630.......................... X-ray exam of foot.
72100.......................... X-ray exam of lower spine.
73030.......................... X-ray exam of shoulder.
73562.......................... X-ray exam of knee, 3.
73560.......................... X-ray exam of knee, 1 or 2.
94010.......................... Breathing capacity test.
77052.......................... Comp screen mammogram add-on.
88304.......................... Tissue exam by pathologist.
73564.......................... X-ray exam, knee, 4 or more.
72170.......................... X-ray exam of pelvis.
74000.......................... X-ray exam of abdomen.
73610.......................... X-ray exam of ankle.
11719.......................... Trim nail(s).
73620.......................... X-ray exam of foot.
92567.......................... Tympanometry.
73110.......................... X-ray exam of wrist.
73130.......................... X-ray exam of hand.
93701.......................... Bioimpedance, cv analysis.
72040.......................... X-ray exam of neck spine.
92543.......................... Caloric vestibular test.
------------------------------------------------------------------------

Comment: A number of commenters agreed with CMS' proposal for the
AMA RUC to review codes with low work RVUs that are commonly billed
with multiple units, and codes with high volume and low work RVUs.
Other commenters did not support these proposals based on a belief that
just because a code has low work RVUs, the conclusion should not
necessarily be drawn that the code is potentially misvalued.
Response: While we do not believe that low work RVUs automatically
indicate that the code is misvalued, we believe that some codes in this
category may be vulnerable to being potentially misvalued because they
have not been subject to review recently, there are particular
challenges associated with establishing appropriate low work RVUs for
services, and these services would not likely be subject to AMA RUC
revaluation without CMS' recommendation. Accordingly, after
consideration of the public comments we received, we are finalizing our
CY 2011 proposal and we look forward to receiving the AMA RUC's
recommendation for the codes listed in Tables 10 and 11.
d. Codes With Site-of-Service-Anomalies
In previous years, we requested that the AMA RUC review codes that,
according to the Medicare claims database, have experienced a change in
the typical site of service since the original valuation of the code.
For example, we have found services that originally were furnished in
the inpatient setting but for which current claims data show the
typical case has shifted to being furnished outside the inpatient
setting. Since the procedures were typically performed in the inpatient
setting when the codes were originally valued, the work RVUs for these
codes would have been valued to include the inpatient physician work
furnished, as well as to reflect the intensive care and follow-up
normally associated with an inpatient procedure. If the typical case
for the procedure has shifted from the inpatient setting to an
outpatient or physician's office setting, it is reasonable to expect
that there have been changes in medical practice, and that such changes
would represent a decrease in physician time or intensity or both. The
AMA RUC reviewed and recommended to CMS revised work RVUs for 29 codes
for CY 2009 and 11 codes for CY 2010 that were identified as having
site-of-service anomalies.
In the CY 2010 PFS proposed and final rules with comment period (74
FR 33556 and 74 FR 61777, respectively), we encouraged the AMA RUC to
utilize the building block methodology when revaluing services with
site-of-service

[[Page 73221]]

anomalies. Specifically, where the AMA RUC has determined in its review
that changes in the inclusion of inpatient hospital days, office
visits, and hospital discharge day management services (that is, the
``building blocks'' of the code) are warranted in the revaluation of
the code, we asked the AMA RUC to adjust the site-of-service anomaly
code for the work RVUs associated with those changes.
Additionally, we suggested that in cases where the AMA RUC has
adjusted the pre-service, intra-service and post-service times of the
code under review, the AMA RUC should also make associated work RVU
adjustments to account for those changes. However, we remained
concerned that in the AMA RUC's recommendations of the work RVUs for
the CYs 2009 and 2010 site-of-service anomaly codes, the AMA RUC may
have determined that eliminating or reallocating pre-service and post-
service times, hospital days, office visits, and hospital discharge day
management services was appropriate to reflect the typical case that is
now occurring in a different setting, but the work RVUs associated with
those changes may not have been systematically extracted or reallocated
from the total work RVU value for the service.
In the CYs 2009 and 2010 PFS final rules with comment period (73 FR
69883 and 74 FR 61776 through 61778, respectively), we indicated that
although we would accept the AMA RUC valuations for these site-of-
service anomaly codes on an interim basis through CY 2010, we had
ongoing concerns about the methodology used by the AMA RUC to review
these services. We requested that the AMA RUC reexamine the site-of-
service anomaly codes and use the building block methodology to revalue
the services (74 FR 61777). We also stated that we would continue to
examine these codes and consider whether it would be appropriate to
propose additional changes in future rulemaking.
Accordingly, in preparation for CY 2011 rulemaking, we conducted a
comprehensive analysis of the codes that the AMA RUC reviewed for CYs
2009 and 2010 due to site-of-service anomaly concerns. We
systematically applied the reverse building block methodology to the 29
codes from CY 2009 and 11 codes from CY 2010 as follows:
First, we obtained the original work RVU value assigned to
the code (this is the ``starting value'') and made a list of the
building block services with RVUs that were originally associated with
the code (that is, before the AMA RUC reviewed the code for site-of-
service anomalies).
Next, we examined the AMA RUC-recommended changes to the
building blocks of the code.
We then deducted the RVUs associated with the AMA RUC's
recommended eliminations from the code's starting RVU value.
Generally, the AMA RUC eliminated inpatient hospital visit building
blocks from the value of the code since the site-of-service for the
code has shifted from the inpatient setting to another setting. We
noted in some cases, the AMA RUC left an inpatient hospital visit in
the valuation of the code. We believe this is inconsistent with the
change in the site-of-service to non-inpatient settings. Accordingly,
we adhered to the methodology and deducted the RVUs associated with all
inpatient hospital visits from the starting value. In cases where the
AMA RUC recommended adding or substituting outpatient visits, we also
added or substituted the RVUs associated with those changes to the
starting value. If the AMA RUC recommended changes to the pre-, intra-,
or post-service times, we calculated the incremental change in RVUs
associated with that time and either added or deducted that RVU amount
from the starting value. We noted that the RVU values associated with
the incremental time change were calculated using the intensity
associated with the particular pre-, intra-, or post-period. For the
intensity of the intra-service period, we utilized the original IWPUT
associated with the code. The AMA RUC generally recommended allowing
only half of a hospital discharge day management service for the site-
of-service anomaly codes. That is, CPT code 99238 (Hospital discharge
day management; 30 minutes or less) has a work RVU value of 1.28;
therefore, half the value associated with CPT code 99238 is 0.64.
Accordingly, if a code had one CPT code 99238 listed as part of the
original valuation, we deducted 0.64 RVUs from the starting value.
We standardized the methodology so that each of the site-of-service
anomaly codes had half of a hospital discharge day management service
value accounted in the valuation. Finally, we noted that while we
eliminated the RVUs associated with all inpatient hospital visits built
into the code's starting value, because the typical case no longer
occurs in the inpatient setting, we allowed for the possibility that in
some cases, some part of the work which had been furnished in the
inpatient setting may continue to be furnished even in the outpatient
setting. Therefore, to be conservative in our deductions of work RVUs
associated with the inpatient hospital codes from the starting values,
we allowed the intra-time of any inpatient hospital visits included in
the original valuation to migrate to the post-service period of the
code. Accordingly, while we deducted the full RVUs of an inpatient
hospital visit from the starting value, we added the intra-service time
of the inpatient hospital visit to the post-service time of the code
and accounted for the incremental change in RVUs. The following
description provides an example of our methodology.
CPT code 21025 (Excision of bone (e.g., for osteomyelitis or bone
abscess); mandible) has a starting value of 11.07 RVUs. Table 12 shows
the building blocks that are included in the original valuation of the
code.

Table 12
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Median intra- Immediate post- Original
Pre-service time service time service time 99231 99232 99238 99211 99212 99213 IWPUT
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
75 min........................ 120 min......... 43 min.......... 1 visit.......... 1 visit.......... 1 visit.......... 2 visits......... 2 visits......... 2 visits......... 0.0145
(0.76 RVUs)...... (1.39 RVUs)...... (1.28 RVUs)...... (0.36 RVUs)...... (0.96 RVUs)...... (1.94 RVUs)......
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The AMA RUC removed two inpatient hospital visits and reduced the
outpatient visits from 6 to 4 visits. Table 13 shows the building
blocks that were recommended for CY 2009 by the AMA RUC after its
review of the code for site-of-service anomalies.

[[Page 73222]]

Table 13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Median intra- Immediate post- Original
Pre-service time service time service time 99231 99232 99238 99211 99212 99213 IWPUT
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
85 min........................ 90 min.......... 30 min.......... 2 visits......... 2 visits......... 0.0530
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Next we calculated the RVUs associated with the changes to the
building blocks recommended by the AMA RUC. We note that the immediate
post-service value of 0.38 RVUs (Table 14) includes 30 minutes of
intra-service time from inpatient hospital CPT code 99231 (Level 1
subsequent hospital care, per day). Also, the median intra-service
value of 0.44 RVUs (Table 14) was determined using the starting IWPUT
value of 0.0145. Additionally, our methodology accounted for a half of
a hospital discharge day management service (CPT code 99238) for the
site-of-service anomaly code. Table 14 shows the RVU changes to the
building blocks that were calculated based on the methodology discussed
above.

Table 14
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Median intra- Immediate post-
Pre-service time service time service time 99231 99232 99238 99211 99212 99213
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0.22 RVUs...................... -0.44 RVUs........ 0.38 RVUs......... -0.76 RVUs......... -1.39 RVUs........ -0.64 RVUs........ -0.36 RVUs........ .................. ..................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the final step, the RVUs associated with the changes to the
building blocks recommended by the AMA RUC (Table 14) were deducted
from or added to the starting value of 11.07 RVUs, which resulted in
the CY 2011 reverse building block value of 8.08 RVUs (11.07 + 0.22-
0.44 + 0.38 - 0.76 - 1.39 - 0.64 - 0.36 = 8.08).
The methodology discussed above was applied to each of the site-of-
service anomaly codes from CYs 2009 and 2010 and the results are
summarized in Tables 15 and 16.
BILLING CODE 4120-01-P

[[Page 73223]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.245

[[Page 73224]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.246

BILLING CODE 4120-01-C
For most codes in Tables 15 and 16, the CY 2011 reverse building
block methodology produced a value that was somewhat lower than the AMA
RUC-recommended value. While our results suggested that the majority of
the codes with site-of-service anomalies continue to be overvalued
under the AMA RUC's most recent recommendations, we also found that the
methodology may produce a result that is considerably reduced or, in
several cases, a negative value. We understand that in previous years,
stakeholders have expressed confusion as to why the application of a
building block methodology would produce negative values. We believe in
some cases, the starting value, that is, the original work RVU, may
have been misvalued using building block inputs that were not
consistent with the service, although the overall work value of the
code may have been consistent with the values for other similar
services. Moreover, a number of these services are the Harvard-valued
codes, for which the RVUs were established many years ago based on
historical inputs that may no longer be appropriate for the code. An
attempt to extract the RVUs associated with these inappropriate inputs
through the reverse building block methodology could produce aberrant
results. Furthermore, in some cases, we noticed that the original IWPUT
of the code was negative even before the code was reviewed by the AMA
RUC for a site-of-service anomaly. A negative value for the IWPUT is
counterintuitive to the IWPUT concept, indicating that the code was
originally misvalued at the building block level. At a minimum, we
believe that in cases where the reverse building block methodology
produced aberrant results, and where clinical review indicated a need
for further analysis, the codes should be referred back to the AMA RUC
for review and new valuation should be performed based on the building
block methodology.
We noted the application of the reverse building block methodology
is an objective way to account for changes in the resources resulting
from the change in the site-of-service in which the typical service is
furnished. However, because relative values under the PFS are
``relative,'' that is, where work relative value units for a code are
established relative to work relative value units for other codes, the
recommended methodology of valuing services based on input building
blocks is best applied within the context of the AMA RUC discussion.
For example, we recognize that the AMA RUC looks at families of codes
and may assign RVUs based on a particular code ranking within the
family. This method of valuing services preserves relativity within the
relative value scale for that code family. However, we have stated that
we believe the relative value scale requires each service to be valued
based on the resources used in furnishing the service as specified in
section 1848(c)(1)(A) of the Act, which defines the physician work
component to include ``the portion of the resources used in furnishing
the service that reflects physician time and intensity in furnishing
the service.'' Furthermore, section 1848(c)(2)(C)(i) of the Act
specifies that ``the Secretary shall determine a number of work
relative value units (RVUs) for the service based on the relative
resources incorporating physician time and intensity required in
furnishing the service.'' Read together, these two sections of the
statute support our intention to rely on the building block methodology
to determine appropriate work RVUs for codes.
We noted that we continue to rely on the extensive expertise
provided by the AMA RUC to recommend appropriate input building blocks
for codes. Additionally, the AMA RUC's unique infrastructure and broad
perspective permits the valuation of a code within the context of
relativity to the entire relative value system. Therefore, we believe
that the recommended methodology of valuing services based on input
building blocks is best applied within the context of the AMA RUC
discussion.
Accordingly, in the CY 2011 PFS proposed rule (75 FR 40072), we
requested that the AMA RUC review the CPT codes displayed in Tables 15
and 16. In addition, where the application of the CY 2011 reverse
building block methodology produced an aberrant result that is clearly
not a reflection of physician work for the service, we requested that
the AMA RUC review the

[[Page 73225]]

input building blocks and recommend an appropriate RVU value that is
both consistent with the building blocks of the code and appropriate
relative to the values for other codes in the family. For other codes
where the application of the CY 2011 reverse building block methodology
produced a result that is consistent with the physician work for the
service, we encouraged the AMA RUC to confirm the values and recommend
these work values for CY 2011. In this way, we hoped to receive new AMA
RUC recommendations for all of the codes in Tables 15 and 16 for CY
2011. Furthermore, we indicated that if the recommendations that we
received from the AMA RUC were not consistent with the building block
methodology and not appropriate relative to the values of other
services, and the application of the CY 2011 reverse building block
methodology produced a result that CMS medical advisors believe is
consistent with the work for the service, we proposed to adopt the CY
2011 reverse building block methodology values that are listed in
Tables 15 and 16 for CY 2011. In cases where the reverse building block
methodology produced a negative work value, we suggested that the AMA
RUC review and revise the building blocks of the code so that a new
valuation could be determined based on the building block methodology.
For such codes, if the revised recommendations that we hoped to receive
from the AMA RUC were still not consistent with the building block
methodology upon revision, because we could not pay for these services
based on negative work RVUs, we proposed to modify the AMA RUC-
recommended values for these codes as CMS determined to be clinically
appropriate and adopt the CMS-modified RVUs on a interim final basis
for CY 2011.
In their future work, we urged the AMA RUC to use the building
block methodology when valuing services or provide CMS with extensive
rationale for cases where the AMA RUC believes the building block
methodology is inappropriate for a specific code. Since section
1848(c)(2)(L) of the Act (as added by section 3134 of the ACA)
specifies that the Secretary shall establish a process to validate work
RVUs of potentially misvalued codes under the PFS, as we have discussed
earlier in this section, we believe codes that are valued using the
building block methodology would be more likely to meet the standards
of a systematic RVU validation process that could be developed in
accordance with the requirements of the statute.
Comment: While several commenters supported CMS' recommendation to
use the reverse building block methodology to value physician work for
codes identified as having site-of-service anomalies, the majority of
commenters strongly opposed the reverse building block methodology,
expressing concern that the methodology produced very low or negative
work RVUs for a number of the codes listed in Tables 14 and 15. Several
letter writing campaigns by groups of providers and beneficiaries
affected by some of the codes listed in Tables 14 and 15 produced
scores of comments expressing confusion and alarm that CMS appeared to
be on the verge of finalizing negative work RVUs. Some commenters noted
that the values calculated by the application of the reverse building
block methodology would result in rank order anomalies across the PFS.
Many commenters reiterated CMS' observation that some of the codes
were originally Harvard-valued, for which the RVUs were established
many years ago based on historical inputs that may no longer be
appropriate for the code, and an attempt to extract the RVUs associated
with these inappropriate inputs through the reverse building block
methodology would produce aberrant (that is, very low or negative)
results. Some commenters disagreed with CMS' statement that if the
typical case for the procedure has shifted from the inpatient setting
to an outpatient or physician's office setting, it would be reasonable
to expect that there have been changes in medical practice, and that
such changes would represent a decrease in physician time, or
intensity, or both. These commenters believe that that this assumption
is fundamentally wrong and that the reverse actually may be true. One
commenter noted, ``When a procedure migrates from the inpatient to the
outpatient setting, the physician work and practice expense actually
increase. The result is more office visits, more utilization of office
staff, more consumption of office supplies, and no decrease in legal
liability to the physician (and in some instances increased legal
liability as functions formerly performed by hospital staff are now
done by physician office staff).''
A number of commenters asserted that any mathematical or
computational methodology used to value physician work is simply
absurd. Many commenters stated their preference for the AMA RUC's
established valuation process which the commenters believe is based on
specialty society survey data. Other commenters asserted that the AMA
RUC's use of magnitude estimation is the only methodology that makes
sense in assigning physician work values to individual services because
the PFS is a relative system and maintaining appropriate relativity
between the services is paramount in valuing physician work.
Response: We acknowledge that commenters overwhelmingly objected to
the proposed reverse building block methodology because, in some cases,
it produced very low or negative physician work values. While we
explained in the proposed rule (75 FR 40071 through 40072) the possible
reasons why negative values could be generated in the application of
the reverse building block methodology, the commenters generally
disregarded this explanation and summarily dismissed the methodology as
invalid based on the reasoning that negative work values are absurd.
Responding to the commenters who were concerned that CMS was preparing
to implement negative work RVUs imminently, we assure the commenters
that at no time was this a possibility, as we made clear in the CY 2011
PFS proposed rule (75 FR 40072) where we acknowledge that we could not
pay for services based on negative work RUVs. As we stated in the
proposed rule, in cases where the reverse building block methodology
produced a negative work value, we suggested that the AMA RUC review
and revise the building blocks of the code so that a new valuation
could be determined based on the building block methodology. We further
proposed that if we did not believe the AMA RUC recommended values were
consistent with the building block methodology, we would modify the
recommended values as we determined to be clinically appropriate and
adopt the modified RVUs on an interim final basis for CY 2011.
The AMA RUC has not provided revised work recommendations to us for
these codes for CY 2011. Therefore, in light of the strong public
opposition to the reverse building block methodology and since we
remain convinced that the values for the codes with site-of-service
anomalies listed in Tables 14 and 15 continue to be misvalued based on
our clinical review of the building blocks for those services as
recommended previously by the AMA RUC, we believe that the most
appropriate action is to continue to await the further AMA RUC review
of these codes that we requested in the CY 2011 PFS proposed rule (75
FR 40072). However, after consideration of the public comments we
received, we are modifying our CY 2011 proposal and we will not apply
the reverse building block methodology to value any of these codes for
CY 2011 as we proposed. We

[[Page 73226]]

are requesting that the AMA RUC reconsider its previously recommended
values that have been applied on an interim basis in CYs 2009 and 2010,
as applicable, and revise the work RVUs to better reflect the intensity
of the services and the revised physician times and post-procedure
visits included in the valuation of these codes. As we stated in the CY
2011 PFS proposed rule (75 FR 40072), we suggest that the AMA RUC
review and revise the building blocks of the codes so that a new
valuation can be determined based on the building block methodology.
Until we receive the revised values from the AMA RUC for CY 2012 and
can make a determination regarding them, we will continue to accept the
existing AMA RUC-recommended work RVUs listed in Tables 14 and 15 on an
interim basis for CY 2011. We would follow our usual method of
reviewing the AMA RUC recommendations in the context of the associated
valuation methodologies it used for CY 2012 and would either accept the
recommendations for these codes or provide alternative work values that
would be adopted on an interim final basis for CY 2012 and open to
public comment on the CY 2012 PFS final rule with comment period.
e. Codes With ``23-hour'' Stays
In the CY 2010 PFS proposed rule (74 FR 33557), we requested that
the AMA RUC review services that are typically performed in the
outpatient setting and require a hospital stay of less than 24 hours.
We stated in the proposed rule that we believed these to be primarily
outpatient services and expressed concern that the value of evaluation
and management (E/M) visits for inpatients was inappropriately included
in the valuation of codes that qualify as ``23-hour stay'' outpatient
services.
We received a number of comments in response to the discussion in
the CY 2010 proposed rule. The AMA RUC stated that it already values
stays of less than 23 hours appropriately by reducing the hospital
discharge day management service (that is, CPT code 99238), from 1 day
to a half day. The AMA RUC also explained that when the AMA RUC refers
to 23-hour stay services in discussions at AMA RUC meetings, it is
referring primarily to services that are reported in the Medicare
claims database as typically outpatient services, but where the patient
is kept overnight and, on occasion, even longer in the hospital.
Because the AMA RUC believes the patient stays overnight in the
hospital, it believes the inclusion of inpatient E/M visits to be
appropriate in the valuation of this category of codes.
We believe that the 23-hour stay issue encompasses several
scenarios. The typical patient is commonly in the hospital for less
than 24 hours, which often means the patient may indeed stay overnight
in the hospital. On occasion, the patient may stay longer than a single
night in the hospital; however, in both cases, the patient is
considered for Medicare purposes to be a hospital outpatient, not an
inpatient, and our claims data support that the typical 23-hour stay
service is billed as an outpatient service. Accordingly, we believe
that the valuation of the codes that fall into the 23-hour stay
category should not reflect work that is typically associated with an
inpatient service. For example, inpatient E/M visit codes such as CPT
codes 99231 (Level 1 subsequent hospital care, per day); 99232 (Level 2
subsequent hospital care, per day); and 99233 (Level 3 subsequent
hospital care, per day), should not be included at the full value in
the valuation of 23-hour stay services.
Currently, the valuation of 23-hour stay services is conducted in a
nonuniform manner by the AMA RUC. The AMA RUC has indicated that it
currently includes a half hospital discharge day management service and
no hospital inpatient visits for outpatient services with expected
hospital stays of 23 hours or less. In contrast, for those outpatient
services where the AMA RUC believes that the recovery period could be
longer than 23 hours, the AMA RUC stated in its comment on the CY 2010
PFS proposed rule that it currently includes a full hospital discharge
day management service and one or more inpatient E/M visits in the
code's value. However, we note the typical 23-hour stay service is
billed as an outpatient service and so long as the typical case
continues to be billed as an outpatient service, we believe the code
should not incorporate physician work values for services that are
typically associated with an inpatient service. In the CY 2010 PFS
proposed rule and final rule with comment period (74 FR 33556 and 74 FR
61777, respectively), we stated that we believed the use of inpatient
E/M visit codes for services rendered in the post-service period for
outpatient 23-hour stay procedures would result in overpayment for pre-
and post-service work that would not be furnished. Accordingly, we
proposed in the CY 2010 proposed rule (74 FR 33556 through 33557) not
to allow any additional inpatient E/M service to be billed for care
furnished during the post-procedure period when care is furnished for
an outpatient service requiring less than a 24-hour hospital stay.
However, we find it is plausible that while the patient receiving
the 23-hour stay service remains a hospital outpatient, the patient
would typically be cared for by the physician furnishing the procedure
during that post-procedure period. While we do not believe that post-
procedure hospital ``visits'' would be at the inpatient level since the
typical case is an outpatient who would be ready to be discharged from
the hospital in 23 hours or less, we agree that the intra-service time
of the inpatient hospital visit may be included in the valuation for
the 23-hour stay code.
Accordingly, for CY 2011 we modified our proposed CY 2010 approach
and suggested that in the future, when the AMA RUC reviews new and
potentially misvalued codes that are identified as 23-hour stay
services, the AMA RUC would apply the following methodology:
Begin with the starting RVU value of the 23-hour stay code
under review and decrease the hospital discharge day management service
from one day to a half day.
Deduct the RVUs of inpatient hospital visits from the
starting RVU value.
Reallocate the time associated with the intra-service
portion of the inpatient hospital visits to the immediate post-service
time of the 23-hour stay code under review.
Example: A 23-hour stay code is currently valued at 15 RVUs and has
1 hospital discharge day management service and 1 level 3 subsequent
hospital care visit incorporated in this value.
Applying step (1): 15-0.64* = 14.36
Applying step (2): 14.36-2** = 12.36
Applying step (3): 12.36 + (30 minutes x 0.0224)*** =
13.032 RVUs

* Value associated with \1/2\ hospital discharge day management
service.
** Value associated with an inpatient hospital visit, CPT code
99233.
*** Value associated with the reallocated intra-service time
multiplied by the post-service intensity of the 23-hour stay code.

Finally, we note that since work relative value units are
established by the Secretary in the context of relativity to other
codes in the system, the recommended methodology for the evaluation of
23-hour stay codes is best applied within the context of relativity. We
appreciate that the AMA RUC has the ability to assess the 23-hour stay
code after application of the recommended methodology to ensure

[[Page 73227]]

appropriate relativity of this code and other codes within the system.
We strongly encourage the AMA RUC to apply the recommended methodology
to ensure the consistent and appropriate valuation of the physician
work for these services.
Comment: A number of commenters asserted that if a service is
performed in the hospital and the patient stays overnight, the work of
the physician is typically the same regardless of whether the hospital
designates the patient receiving the services as an inpatient or
outpatient. Other commenters supported CMS' position in that it is
appropriate for physicians' services related to the post-procedure care
of the patient to be recognized and the intra-service time of the
inpatient hospital visit should be included in the valuation for the
23-hour stay code. Some commenters noted that recent issues associated
with hospital observation care may also be impacting CPT observation
care codes, and these commenters ``request that any changes in the 23+
hour stay policy be deferred until after the RUC conducts its
consideration of hospital observation services in February 2011.''
Response: While some commenters advocated for a deferral on the
issue of valuing 23-hour stay services, we note that a number of
commenters supported CMS' proposed approach. As we stated in the CY
2010 PFS proposed rule (74 FR 33557) and affirmed in the CY 2011 PFS
proposed rule (75 FR 40072), we believe these services, for a typical
patient, would be considered for Medicare purposes to be hospital
outpatient services, not inpatient services, and our claims data
support that the typical 23-hour stay service is billed as an
outpatient service. Furthermore, since the typical patient commonly
remains in the hospital for less than 24 hours, even if the stay
extends overnight, and discharge from the hospital is therefore
imminent, we believe the acuity of the typical patient is less than
that of a typical inpatient who is admitted to the hospital, resulting
in less intensity for the physician work to care for the hospital
outpatient immediately following a 23-hour stay procedure. Accordingly,
we believe that the valuation of the codes that fall into the 23-hour
stay category should not reflect physician work that is typically
associated with an inpatient service. Furthermore, we do not believe
that it would be more beneficial to suspend valuing 23-hour services in
the manner we discussed in the proposed rule until after the AMA RUC's
review of hospital observation care services. Even if the AMA RUC were
to provide future recommendations to us for valuing surgical procedures
in which hospital observation care services were substituted for
hospital inpatient care visits, we believe that we should treat the
valuation of the physician time in the same manner as discussed
previously, that is, by valuing the intra-service time of the hospital
observation care service in the immediate post-service time of the 23-
hour stay code being valued.
Accordingly, in light of the support from the commenters, we are
finalizing our proposed approach to valuing 23-hour stay services by
allowing the intra-service portion of the subsequent hospital care
visits (or observation care visits in the future if the AMA RUC were to
recommend them instead as building blocks for outpatient surgical
services) furnished to outpatients in the hospital post-procedure to be
allocated to the immediate post-service time of the procedure to
account for the physician work in these cases. We encourage the AMA RUC
to apply this methodology itself in the recommendations it provides to
us for valuing 23-hour stay codes, in order to ensure the consistent
and appropriate valuation of the physician work for these services.
4. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy to
Additional Nonsurgical Services
a. Background
Medicare has a longstanding policy to reduce payment by 50 percent
for the second and subsequent surgical procedures furnished to the same
patient by the same physician on the same day, largely based on the
presence of efficiencies in the practice expense (PE) and pre- and
post-surgical physician work. Effective January 1, 1995, the MPPR
policy, with the same percentage reduction, was extended to nuclear
medicine diagnostic procedures (CPT codes 78306, 78320, 78802, 78803,
78806, and 78807). In the CY 1995 PFS final rule with comment period
(59 FR 63410), we indicated that we would consider applying the policy
to other diagnostic tests in the future.
Consistent with recommendations of MedPAC in its March 2005 Report
to Congress on Medicare Payment Policy, under the CY 2006 PFS, the MPPR
policy was extended to the technical component (TC) of certain
diagnostic imaging procedures performed on contiguous areas of the body
in a single session (70 FR 70261). The reduction recognizes that, for
the second and subsequent imaging procedures, there are some
efficiencies in clinical labor, supplies, and equipment time. In
particular, certain clinical labor activities and supplies are not
duplicated for subsequent procedures and, because equipment time and
indirect costs are allocated based on clinical labor time; those would
also be reduced accordingly.
The imaging MPPR policy currently applies to computed tomography
(CT) and computed tomographic angiography (CTA), magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA), and ultrasound
services within 11 families of codes based on imaging modality and body
region. When we adopted the policy in CY 2007, we stated that we
believed efficiencies were most likely to occur when contiguous body
areas are the focus of the imaging because the patient and equipment
have already been prepared for the second and subsequent procedures,
potentially yielding resource savings in areas such as clerical time,
technical preparation, and supplies (70 FR 45850). Therefore, the MPPR
policy currently applies only to procedures involving contiguous body
areas within a family of codes, not across families, and to those
procedures that are furnished in a single session. Additionally, while
the MPPR policy applies to TC-only services and to the TC of global
services, it does not apply to professional component (PC) services.
Under the current imaging MPPR policy, full payment is made for the
TC of the highest-paid procedure, and payment is reduced by 25 percent
of the TC for each additional procedure when an MPPR scenario applies.
We had originally planned to phase in the MPPR policy over a 2-year
period, with a 25 percent reduction in CY 2006 and a 50 percent
reduction in CY 2007 (70 FR 70263). However, the Deficit Reduction Act
of 2005 (DRA) (Pub. L. 109-171) capped the PFS payment amount for most
imaging procedures at the amount paid under the hospital outpatient
prospective payment system (OPPS). In view of the DRA, we determined
that it would be prudent to retain the MPPR at 25 percent while we
continued to examine the appropriate payment levels (71 FR 69659). The
DRA also exempted reduced expenditures attributable to the MPPR policy
from the PFS budget neutrality provision. Most recently, effective July
1, 2010, section 3135(b) of the ACA increased the MPPR on the TC of
imaging services under the policy established in the CY 2006 PFS final
rule with comment period from 25 to 50 percent and exempted the reduced
expenditures attributable to this further change from the PFS budget
neutrality provision.

[[Page 73228]]

In the July 2009 GAO report entitled, ``Medicare Physician
Payments: Fees Could Better Reflect Efficiencies Achieved when Services
are Provided Together,'' the GAO recommended that we take further steps
to ensure that fees for services paid under the PFS reflect
efficiencies that occur when services are furnished by the same
physician on the same beneficiary on the same day. The GAO recommended
the following: (1) Expanding the existing MPPR policy to the PC to
reflect efficiencies in physician work for certain imaging services;
and (2) expanding the MPPR to reflect PE efficiencies that occur when
certain nonsurgical, nonimaging services are furnished together. The
GAO also encouraged us to focus on service pairs that have the most
impact on Medicare spending.
In the March 2010 report, MedPAC noted its concerns about
mispricing of services under the PFS. MedPAC indicated that it would
explore whether expanding the unit of payment through packaging or
bundling would improve payment accuracy and encourage more efficient
use of services.
In the CYs 2009 and 2010 PFS proposed rules (73 FR 38586 and 74 FR
33554, respectively), we stated that we planned to analyze nonsurgical
services commonly furnished together (for example, 60 to 75 percent of
the time) to assess whether an expansion of the MPPR policy could be
warranted. MedPAC encouraged us to consider duplicative physician work,
as well as PE, in any expansion of the MPPR policy.
b. CY 2011 Expansion of the Imaging Technical Component MPPR Policy to
Additional Combinations of Imaging Services
Over the past 2 years, the AMA RUC has examined several services
billed 90 percent or more of the time together as part of the
potentially misvalued service initiative and, in several cases, created
one code to describe the complete service, with a value that reflects
the expected efficiencies. Notwithstanding the bundling work of the
RUC, there may be additional imaging and other diagnostic services that
are furnished together less than 90 percent of the time where we could
still expect efficiencies in the TC, and in some cases in the PC,
resulting in potential overpayment for these services under current
policy when furnished together.
Section 1848(c)(2)(K) of the Act (as added by section 3134 of the
ACA) specifies that the Secretary shall identify potentially misvalued
codes by examining multiple codes that are frequently billed in
conjunction with furnishing a single service, and review and make
appropriate adjustments to their relative values. As a first step in
applying this provision, we proposed a limited expansion of the current
imaging MPPR policy for CY 2011. We will continue to review other
possible expansions of the MPPR policy to the TC and/or PC of imaging
procedures or other diagnostic tests for the future. Any further
changes will be addressed in future rulemaking.
In a related policy for hospital outpatient payment of imaging
services, in the CY 2009 OPPS/ASC final rule with comment period (73 FR
68559 through 68569), the OPPS adopted a policy to pay for two or more
CT and CTA, MRI and MRA, or ultrasound procedures furnished in the same
session through a single composite ambulatory payment classification
(APC) group. These composite APC payments were based on the 11 families
of codes subject to the MPPR under the PFS that were collapsed into 3
imaging families for the OPPS according to their modality--1 for
ultrasound, 1 for CT and CTA, and 1 for MRI and MRA services.
At that time, we stated our belief that the contiguous body area
concept that was incorporated in the PFS imaging families was not
necessary for potential efficiencies to be achieved in an imaging
session. We provided examples to illustrate that we would not expect
second and subsequent imaging services of the same modality involving
noncontiguous body areas to require duplicate facility resources
(comparable to the TC under the PFS) for clinical labor activities such
as greeting the patient, providing education and obtaining consent,
retrieving prior exams, setting up an intravenous infusion, and
preparing and cleaning the room, any more than second and subsequent
imaging procedures of the same modality involving contiguous body
areas. While we noted that multiple imaging claims under the OPPS are
generally within the same imaging modality and involve contiguous body
areas the vast majority of the time, we estimated that the collapsed 3
families, as opposed to the 11 PFS families, would add 12 percent
additional claims to those eligible for a single composite APC payment
under the OPPS based on the provision of 2 or more imaging services in
a single session, allowing us to capture additional claims with
efficiencies.
Taking into consideration the OPPS policy that was adopted in the
CY 2009 OPPS/ASC final rule with comment period, for CY 2011 under the
PFS, we proposed to apply the MPPR regardless of family, that is, the
policy would apply to multiple imaging services furnished within the
same family of codes or across families. This proposal would simplify
the current imaging MPPR policy in a way that is consistent with the
standard PFS MPPR policy for surgical procedures that does not group
procedures by body region. Therefore, the MPPR would apply to CT and
CTA, MRI and MRA, and ultrasound procedures services furnished to the
same patient in the same session, regardless of the imaging modality,
and not limited to contiguous body areas.
Because of the different pieces of equipment used for CT/CTA, MRI/
MRA, and ultrasound procedures, it would be unlikely that a single
practitioner would furnish more than one imaging procedure involving 2
different modalities to one patient in a single session where the
proposed MPPR policy would apply. On the other hand, while most
multiple procedures furnished with a single modality in one session
would involve procedures currently assigned to one of the 11 imaging
families, it would not be uncommon for more than one imaging procedure
of the same modality to be furnished across families and, like the
scenario for hospital outpatient imaging services, we would expect
efficiencies to occur in these cases. Therefore, we believe that an
expansion of the current imaging MPPR policy to account for
efficiencies in such situations would allow us to pay more
appropriately for these multiple imaging procedure sessions, consistent
with our ongoing efforts to address misvalued services.
The expansion of the imaging MPPR policy to include all of the
current codes in a single family to which the standard 50 percent
reduction for second and subsequent procedures would apply would reduce
payment for 20 percent more services than the current MPPR policy under
the PFS. Thus, in CY 2011, we would capture additional efficiencies and
pay more appropriately in these cases. We note that section
1848(c)(2)B)(v)(VI) (as added by section 3135(b) of the ACA)) specifies
that reduced expenditures attributable to the increase in the imaging
MPPR from 25 to 50 percent in CY 2011 are excluded from the PFS budget
neutrality adjustment. However, the reduced payment for code
combinations that would newly be subject to the imaging MPPR policy
under this proposal would be made in a budget neutral manner under the
PFS, as these new combinations are not included under section
1848(b)(4)(D) (as added by section 3135(b) of the ACA), which addresses
``single-session imaging to

[[Page 73229]]

consecutive body parts'' under the established imaging MPPR policy.
We also proposed to add the CY 2010 codes displayed in Table 17 of
the CY 2011 PFS proposed rule (75 FR 40075) to the list of imaging
services subject to the MPPR policy in CY 2011. These four codes (CPT
codes 75771 through 75774) were newly created for CY 2010 and are
similar to codes currently in imaging family 2, titled CT and CTA
(Chest/Thorax/Abdomen/Pelvis).
We further note that new CY 2010 CPT codes 74261 (Computed
tomography (CT) colonography, diagnostic, including image
postprocessing; without contrast material) and 74262 (Computed
tomography (CT) colonography, diagnostic, including image
postprocessing; with contrast material(s) including non-contrast
images, if performed) were added to the CY 2010 MPPR policy through the
July 2010 PFS quarterly update, with a retroactive effective date of
January 1, 2010. These codes replaced CPT code 0067T (Computed
tomographic (CT) colonography (that is, virtual colonoscopy);
diagnostic) in CY 2010, which was on the list of procedures subject to
the imaging MPPR policy prior to CY 2010.
As discussed earlier in this section, reduced expenditures
attributable to the increase in the MPPR for multiple imaging
procedures to consecutive body parts (that is, those previously
designated in the same family of codes) are exempt from the budget
neutrality provision of the PFS. However, the reduced expenditures
attributable to the MPPR for combinations of multiple imaging
procedures that we proposed for CY 2011 (the MPPR for multiple imaging
procedures not involving consecutive body parts) would be subject to
budget neutrality adjustment under the PFS. We note that this
formulation for whether reduced expenditures are exempt from budget
neutrality applies both to procedures currently subject to the imaging
MPPR and to new codes that would be subject to the policy in CY 2011
and in future years. To the extent that imaging procedures described by
the new codes are furnished in combination with other procedures that
are subject to the imaging MPPR on consecutive body areas, the reduced
expenditures attributable to the MPPR for these combinations would be
exempt from the PFS budget neutrality adjustment.
Comment: With one exception, the commenters uniformly opposed the
proposal to consolidate the imaging families for application of the
imaging MPPR and urged CMS not to finalize the proposal. The exception
was MedPAC, which supported the policy as reasonable and consistent
with the hospital OPPS policy on multiple imaging and the PFS MPPR
policy for multiple surgical procedures, neither of which are limited
to procedures involving contiguous body areas.
Many commenters pointed out that the AMA RUC has worked to resolve
any duplication in the direct PE inputs for services commonly furnished
together over the past few years. The commenters stated that new
bundled services were implemented in CY 2010 and speculated that
additional ones would be implemented in the future and, therefore,
concluded that a general MPPR to adjust PFS payment when imaging
services are commonly furnished together is not necessary. The
commenters argued that any duplication in the PE should be resolved at
the code pair level. The AMA RUC urged CMS to continue to work within
the established processes and offered for its Practice Expense
Subcommittee to review specific code pairs about which CMS was
concerned regarding potential PE duplication and recommend a course of
action that would be fair and consistent.
Response: The imaging MPPR is not intended to supersede the AMA RUC
process that values services described by CPT codes. We encourage the
AMA RUC to continue examining code pairs for PE duplication based upon
the typical case and appropriately valuing new comprehensive codes for
bundled services that are established by the CPT Editorial Panel.
However, we believe that it is necessary to address the PE duplication
immediately for imaging code pairs that have not been recently reviewed
or bundled into single comprehensive codes. We note that as more code
combinations are bundled into a single complete service reported by one
CPT code, they would no longer be subject to the MPPR. For example,
there are new CY 2011 codes to describe abdominal and pelvic CT scans
furnished together, specifically CPT codes 74176 (Computed tomography,
abdomen and pelvis; without contrast material); 74177 (Computed
tomography, abdomen and pelvis; with contrast material); and 74178
(Computed tomography, abdomen and pelvis; without contrast material in
one or both body regions, followed by with contrast material(s) and
further sections in one or both body regions). We are accepting the AMA
RUC recommendations for the direct PE inputs for these codes for CY
2011 and, therefore, their TCs are valued accordingly. Whereas prior to
CY 2011, the 50 percent imaging MPPR would have applied to the TC of
the second service when an abdominal and pelvic CT were furnished in
the same imaging session, this will no longer be the case in CY 2011.
Instead, the TC payment for the comprehensive code will reflect the
valuing of the specific services furnished in combination with one
another. Thus, we believe our current and proposed MPPR formulations
are consistent with the AMA RUC's work to review code pairs for
potential PE duplication and to appropriately value comprehensive codes
for a bundle of component services.
Comment: Numerous commenters opposed applying the MPPR to
noncontiguous body area imaging services using the same modality and to
combinations of imaging services involving different modalities. Many
commenters indicated that there is no major duplication in clinical
labor activities when two studies of noncontiguous body areas using a
single imaging modality are furnished in the same session and even less
duplication when imaging services are furnished in a separate session
on the same day using different modalities. The commenters argued that
the duplication in clinical labor activities that occurs in the pre-
and post-operative periods for multiple surgical procedures does not
apply to imaging services.
More specifically, several commenters observed that the minimal
duplicate costs of a few minutes of technician time do not justify a 50
percent payment reduction in the TC for the second service. Some
commenters also believe that the imaging MPPR creates an incentive for
physicians to order separate procedures on different days, thereby
discouraging efficiencies. In addition, the commenters contended that
the imaging MPPR is detrimental to patient care, access, and
convenience.
One commenter asserted that it is not appropriate to compare the
OPPS composite ambulatory payment classification (APC) groups to
office-based imaging as a justification for expanding the imaging MPPR
under the PFS. The commenter cited an analysis of OPPS payment
demonstrating that CMS pays hospitals for the second imaging study at
nearly 100 percent of the amount paid for a single study, concluding
that not until the third study would the payment be reduced from the
sum of what would otherwise be paid under the OPPS if the studies were
performed alone.
Another commenter agreed that the current PFS imaging families
could be further collapsed to eliminate the contiguous body area
concept but opposed applying the MPPR across

[[Page 73230]]

modalities. The commenter suggested establishing three families to
parallel the modality-based APC groups used under the OPPS, that is,
CT/CTA, MRI/MRA, and ultrasound. Another commenter noted that highly
specialized clinics often treat complex conditions and perform multiple
imaging services on noncontiguous body areas primarily for good patient
care. As an example of a situation when complex imaging services are
used to diagnose and treat significant medical conditions, the
commenter indicated that a CT of the chest may be furnished, resulting
in a diagnosis of lung cancer. In addition, the same commenter noted
that appropriate treatment of the patient's neurological signs and
symptoms also requires a CT of the head, because primary lung tumors
account for 50 percent of all metastatic brain tumors. The commenter
explained that these medically necessary combinations of imaging
services are often performed in a single imaging session. Results of
the initial imaging service, contended the commenter, could change the
course of treatment for the patient and it would be prudent not to
delay or complicate a patient's treatment plan. The commenter also
pointed out that it is a convenience to the patient to have same day
access for all imaging services.
Another commenter acknowledged that while some efficiencies are
gained in certain situations and settings when multiple imaging
services are furnished together, the expanded MPPR policy would not
appropriately pay for the additional studies required for the majority
of patients with significant medical conditions. The commenter
explained that highly organized clinics treating these complex patients
often structure patient encounters so that there are intervening
consultations with multiple providers and additional tests in between
imaging services.
Response: While most multiple procedures furnished with a single
modality in 1 session would involve procedures currently assigned to 1
of the 11 imaging families, it would not be uncommon for more than 1
imaging procedure of the same modality to be furnished across families,
and we would expect efficiencies to occur in these cases. As noted by
MedPAC, the proposed PFS MPPR expansion to eliminate the concept of
contiguous body areas as the basis for a payment reduction due to
efficiencies is consistent with the established hospital OPPS policy on
multiple imaging and the PFS MPPR policy for multiple surgical
procedures, neither of which is limited to procedures involving
contiguous body areas. While we acknowledge that the OPPS composite
imaging APCs utilize a different payment methodology than an MPPR to
reflect the level of efficiencies when multiple imaging services are
furnished together, consideration of the specific body areas imaged is
not an aspect of the OPPS policy. The OPPS methodology continues to
distinguish among services using different imaging modalities in part
because of the statutory requirement that APCs be clinically
homogenous. This same limitation would not apply to an MPPR. Despite
the differences in their payment methodologies, both the OPPS and the
PFS strive to recognize the efficiencies in the TCs when multiple
imaging services are furnished together. We continue to believe that
there are significant efficiencies in the TCs when multiple imaging
procedures of the same modality are furnished on noncontiguous body
areas in the same imaging a session, and believe that an expanded
imaging MPPR under the PFS is an important policy refinement to pay
more appropriately for the comprehensive imaging service under such
circumstances.
Because most of the combinations of imaging services furnished in
one session that are not now subject to the imaging MPPR occur within
one modality, we believe it would be unnecessarily complex to continue
separate families (even if fewer than 11) for different imaging
modalities to address the limited circumstances when imaging services
furnished with more than one modality are performed in a single imaging
session. Even in these unusual cases, we would expect certain
efficiencies in the TCs, such as the establishment of venous access
only one time. Finally, the more general proposed policy would provide
a streamlined basis for our further consideration of other possible
expansions of an MPPR policy to the TC and/or PC of imaging procedures
or other diagnostic tests in the future.
Consistent with our current expectations for provider ordering
practices under the established imaging MPPR policy for single
modality, contiguous body area imaging studies, under an expanded MPPR
we would not expect providers to order multiple imaging procedures of
different modalities or for noncontiguous body areas on different days
or order different imaging sessions on the same day simply to garner
increased payment unless it were medically reasonable and necessary
that the studies be furnished on different days or in different
sessions on the same day. However, where it is medically necessary to
have intervening consultations among multiple providers or other
diagnostic tests furnished to a patient between imaging services on the
same day to which the MPPR would otherwise apply, such cases would
constitute separate imaging sessions and the MPPR would not apply.
Comment: Many commenters addressed CMS' assertion that because of
the different pieces of equipment used for CT/CTA, MRI/MRA, and
ultrasound procedures it would be unlikely that a single practitioner
would furnish more than one imaging procedure involving two different
modalities to one patient in a single session where the proposed MPPR
policy would apply. While most commenters agreed with this statement,
the commenters questioned why CMS would implement the proposal if this
were the case. When procedures are furnished across modalities, the
commenters believe them to be separate and distinct procedures with
little or no overlap and argue that efficiencies cannot be achieved.
The commenters asserted that CMS offered no data to support its
expectation that efficiencies would occur when different imaging
modalities are furnished at the same time. Many commenters requested a
more rigorous analysis, validated evidence to support the proposed
expansion, and an opportunity for stakeholders to comment on the
analysis.
A number of the commenters agreed that specialized staff with
different expertise and certification is often needed to furnish
services within the different imaging modalities. When multiple imaging
is necessary, the commenters explained that two appointments are
created, and the patient is checked in twice, prepared and instructed
twice, educated on each study independently, transported from one room
to another, and furnished separate supplies such as contrast and IV
tubing, following which the two rooms are cleaned.
Response: We agree with the majority of commenters that in most
cases a practitioner would not furnish more than one imaging procedure
involving two different modalities to one patient in a single session.
While there may be some instances where the MPPR applies to two
different modalities used in a single session, the MPPR would not apply
in most cases because this clinical scenario is uncommon. In response
to the commenters who questioned why we proposed to apply an MPPR
across modalities, we believe that if, in the unusual case, more than
one imaging service of different modalities were

[[Page 73231]]

furnished to a patient in a single session, there would be some
efficiencies in the TC, such as greeting the patient only one time and
setting up one intravenous line. We acknowledge that the application of
a general MPPR policy to numerous imaging service combinations may
result in an overestimate of the efficiencies in some cases and an
underestimate in others, but this can be true for any service paid
under the PFS, and we believe it is important to establish a general
policy to pay appropriately for the TCs of combinations of imaging
services upon which we may consider building in the future. We do not
believe that it is administratively efficient or necessary for
appropriate payment to maintain modality-specific imaging families
given the uncommon occurrences of pairs of imaging services involving
different modalities furnished by one practitioner on the same day to a
single patient that we observe in our claims data.
Comment: Several commenters generally opposed the inclusion of
nondiagnostic radiation oncology imaging procedures in any future
expansion of the MPPR policy, given the clinical differences between
radiation oncology and diagnostic imaging. In addition, one commenter
noted that cardiologists commonly provide echocardiography services and
peripheral vascular ultrasound tests. While both types of services use
ultrasound technology that resembles the technology used in the
ultrasound procedures currently subject to the imaging MPPR, the
commenter reported that these services are furnished using a different
machine and different staff who have different expertise so the imaging
MPPR policy.
Response: We did not propose to expand the existing contiguous body
area MPPR policy, which currently includes only nonobstetrical chest,
abdominal, and pelvic ultrasound services, to include peripheral
vascular ultrasound services or echocardiography services in CY 2011.
While we explained in the CY 2011 PFS proposed rule (75 FR 40074) that
we would continue to review other possible expansions of the MPPR
policy to the TC and/or PC of imaging procedures or other diagnostic
tests for the future, we have not proposed to do so at this time.
Further changes to include services such as nondiagnostic radiation
oncology imaging services or echocardiography or peripheral vascular
ultrasound services would be addressed in future rulemaking.
Comment: A few commenters reported that it is often difficult for
imaging providers to understand when an encounter begins and ends and,
therefore, urged CMS to better define a single session. They explained
that it is not always easy to identify when the use of the -59 modifier
(Distinct procedural services), denoting a separate session under the
current imaging MPPR policy, is appropriate. This ambiguity leaves the
responsibility for determining whether imaging services are furnished
in a separate session to the judgment of the imaging technologist,
leading to inconsistent determinations and, therefore, variable payment
for the same services furnished in similar clinical scenarios. One
commenter specifically requested further parameters of a separate
encounter be defined to include the same exam room, a specific
timeframe, or a specific action. Another commenter noted that
distinguishing separate sessions is a particular challenge for
ultrasound imaging.
Response: In the CY 2006 PFS final rule with comment period (70 FR
70262), we indicated that a single imaging session is one encounter
where a patient could receive one or more radiological studies. If a
patient has a separate encounter on the same day for a medically
necessary reason and receives a second imaging service, this would
represent a separate session. Physicians would report the -59 modifier
to indicate multiple sessions and the MPPR would not apply. This same
policy would continue in CY 2011 under the consolidation of the imaging
families to expand the imaging MPPR under the PFS. We believe that
providers' 5 years of previous experience with this policy should allow
them to continue to appropriately distinguish separate imaging sessions
by reporting the -59 modifier, even under the expanded MPPR policy. We
may provide further subregulatory guidance to providers on this issue
in the future in view of our CY 2011 expanded imaging MPPR policy if
specific issues arise that we believe warrant further clarification
regarding the characteristics of separate imaging sessions.
After consideration of the public comments we received, we are
finalizing our proposal, without modification, to apply the 50 percent
imaging MPPR to all of the ultrasound, CT, CTA, MRI, and MRA services
to which the current contiguous body area and modality-specific policy
applies, regardless of the specific combinations of imaging services
furnished to the patient in a single session. We believe this proposal
is consistent with our overall strategy to pay more appropriately for
services that are commonly furnished together, consistent with section
1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) that
instructs the Secretary to identify multiple codes that are frequently
billed in conjunction with furnishing a single service, and review and
make appropriate adjustments to their relative values.
As stated earlier in this section, expenditures attributable to the
increase in the MPPR for multiple imaging procedures to consecutive
body parts (that is, those previously designated in the same family of
codes) are exempt from the budget neutrality provision of the PFS.
However, the reduced expenditures attributable to the MPPR for new
combinations of multiple imaging procedures that we are finalizing for
CY 2011 (the MPPR for multiple imaging procedures not involving
consecutive body parts) would be subject to budget neutrality
adjustment under the PFS. We note that this formulation for whether
reduced expenditures are exempt from budget neutrality applies both to
procedures currently subject to the imaging MPPR and to new codes that
are subject to the policy in CY 2011 and in future years. To the extent
that imaging procedures described by the new codes are furnished in
combination with other procedures that are subject to the imaging MPPR
on consecutive body areas, the reduced expenditures attributable to the
MPPR for these combinations would be exempt from the PFS budget
neutrality adjustment.
The complete list of codes subject to the CY 2011 MPPR policy for
diagnostic imaging services is included in Addendum F to this final
rule with comment period and the CY 2011 code additions to the MPPR
policy are listed in Table 17. The codes being added to the policy are
those we proposed, as well as new CY 2011 codes or newly covered codes
that are clinically similar to the imaging codes subject to the MPPR in
CY 2010. The new codes include CPT codes 74176 (Computed tomography,
abdomen and pelvis; without contrast material); 74177 (Computed
tomography, abdomen and pelvis; with contrast material(s)); and 74178
(Computed tomography, abdomen and pelvis; without contrast material in
one or both body regions, followed by contrast material(s) and further
sections in one or both body regions). The newly covered codes are CPT
codes 72159 (Magnetic resonance angiography, spinal canal and contents,
with or without contrast material) and 73225 (Magnetic resonance
angiography, upper extremity, with or without contrast material). These
codes are being added on an interim final

[[Page 73232]]

basis and are open to public comment on this final rule with comment
period. The complete list of CPT codes newly added to the diagnostic
imaging MPPR for CY 2011 is displayed in Table 17 below.

TABLE 17--CPT Code Additions to the Diagnostic Imaging MPPR Policy for
CY 2011
------------------------------------------------------------------------
Subject to
comment in CY
CPT code Short descriptor 2011 PFS final
rule
------------------------------------------------------------------------
72159......................... Mr angio spine w/o & w/ Yes.
dye.
73225......................... Mr angio upr extr w/o Yes.
& w/dye.
74176......................... Ct abd & pelvis w/o Yes.
contrast.
74177......................... Ct abdomen & pelvis w/ Yes.
contrast.
74178......................... Ct abd & pelv 1+ Yes.
section/regns.
75571......................... Ct hrt w/o dye w/ca No.
test.
75572......................... Ct hrt w/3d image..... No.
75573......................... Ct hrt w/3d image, No.
congen.
75574......................... Ct angio hrt w/3d No.
image.
------------------------------------------------------------------------

c. CY 2011 Expansion of the MPPR Policy to Therapy Services
In the July 2009 GAO report entitled, ``Medicare Physician
Payments: Fees Could Better Reflect Efficiencies Achieved when Services
are Provided Together,'' the GAO found efficiencies when multiple
physical therapy services were furnished in one session and concluded
that an MPPR policy could be appropriate for these services. In the
report, the GAO noted that officials from the AMA RUC explained that
time spent on pre-service and post-service therapy activities is spread
across the number of services in a typical session in order to avoid
duplication of the PE for the services. Nevertheless, the GAO found
that there was duplication of certain activities in the intra-service
period, and provided the example of time spent testing range of motion
or muscle flexibility that was duplicated in commonly observed code
pairs.
In the typical clinical scenario for therapy services, we believe
that therapy services are misvalued for PFS payment when multiple
services are furnished to a patient in a single session because
duplicate clinical labor and supplies are included in the PE of the
services furnished. We believe this duplication should be accounted for
under the PFS, as we currently account for efficiencies in multiple
surgical and multiple diagnostic imaging procedures furnished in a
single session. Over the past 2 years, the AMA RUC has examined several
services billed 90 percent or more of the time together as part of its
potentially misvalued service initiative and, in several cases, created
one code to describe the complete service, with a value that reflects
the expected efficiencies. Notwithstanding the AMA RUC's analyses, in
most cases it has not created one code to describe a complete therapy
service, in part because many of the core therapy CPT codes are timed
codes based on increments of treatment time.
Therefore, in the CY 2011 PFS proposed rule (75 FR 40075), we
proposed a further step to implement section 1848(c)(2)(K) of the Act
(as added by section 3134 of the ACA) that specifies that the Secretary
shall identify potentially misvalued codes by examining multiple codes
that are frequently billed in conjunction with furnishing a single
service. For CY 2011 we proposed an MPPR policy for the HCPCS codes
listed in Table 18, specifically the separately payable ``always
therapy'' services that are only paid by Medicare when furnished under
a therapy plan of care. These services are designated ``always
therapy'' services regardless of who furnishes them and always require
therapy modifiers to be reported, specifically -GP (Services rendered
under outpatient physical therapy plan of care); -GO (Services rendered
under outpatient occupational therapy plan of care); or -GN (Services
rendered under outpatient speech-language pathology plan of care). The
therapy codes are available in a file on the CMS Web site at: http://www.cms.gov/TherapyServices/. We excluded both contractor-priced and
bundled codes from Table 18 because, under our proposal, an MPPR would
not be applicable for ``always therapy'' services furnished in
combination with these codes. In the case of bundled codes that are not
separately paid, there are no explicit efficiencies in the direct PE to
be reflected in payment for the second and subsequent therapy services
furnished to the patient on the same day. In the case of contractor-
priced codes, there is no nationally established pricing that could be
uniformly adjusted to reflect the expected efficiencies when multiple
therapy services are furnished.

Table 18--Separately Payable ``Always Therapy'' Services Proposed as
Subject to the CY 2011 MPPR Policy *
------------------------------------------------------------------------
CPT/HCPCS code Short descriptor
------------------------------------------------------------------------
92506......................... Speech/hearing evaluation.
92507......................... Speech/hearing therapy.
92508......................... Speech/hearing therapy.
92526......................... Oral function therapy.
92597......................... Oral speech device eval.
92607......................... Ex for speech device rx, 1hr.
92608......................... Ex for speech device rx addl.
92609......................... Use of speech device service.
96125......................... Cognitive test by hc pro.
97001......................... Pt evaluation.
97002......................... Pt re-evaluation.
97003......................... Ot evaluation.
97004......................... Ot re-evaluation.
97010......................... Hot or cold packs therapy.
97012......................... Mechanical traction therapy.
97016......................... Vasopneumatic device therapy.
97018......................... Paraffin bath therapy.
97022......................... Whirlpool therapy.
97024......................... Diathermy eg, microwave.
97026......................... Infrared therapy.
97028......................... Ultraviolet therapy.
97032......................... Electrical stimulation.
97033......................... Electric current therapy.
97034......................... Contrast bath therapy.
97035......................... Ultrasound therapy.
97036......................... Hydrotherapy.
97110......................... Therapeutic exercises.
97112......................... Neuromuscular reeducation.
97113......................... Aquatic therapy/exercises.
97116......................... Gait training therapy.
97124......................... Massage therapy.
97140......................... Manual therapy.
97150......................... Group therapeutic procedures.
97530......................... Therapeutic activities.
97533......................... Sensory integration.
97535......................... Self care mngment training.
97537......................... Community/work reintegration.
97542......................... Wheelchair mngment training.
97750......................... Physical performance test.
97755......................... Assistive technology assess.
97760......................... Orthotic mgmt and training.
97761......................... Prosthetic training.
97762......................... C/o for orthotic/prosth use.
G0281......................... Elec stim unattend for press.

[[Page 73233]]

G0283......................... Elec stim other than wound.
G0329......................... Electromagnetic tx for ulcers.
------------------------------------------------------------------------
*Excludes contractor-priced and bundled codes.

We did not propose an MPPR policy for ``sometimes therapy''
services, specifically those services that may be furnished under a
therapy plan of care or otherwise by physicians or NPPs as medical
services. We believe that the care patterns are different for the
latter group of services that may sometimes be furnished as therapy
services, and we noted that they are less commonly furnished with
multiple services in a single session than the ``always therapy''
services. In the discussion that follows, our reference to therapy
services means those HCPCS codes designated annually as ``always
therapy'' services by CMS.
Based on CY 2009 PFS claims data, we identified over 500 therapy
service code pairs billed for the same patient in a single session. We
then reviewed a sample of the most common therapy code pairs,
specifically those high volume code pairs with more than 250,000
combined services per year, to examine the potential for duplication in
the PE. These code pairs represented more than half of the occurrences
of therapy services billed together. While we acknowledged that the PE
inputs per service for some therapy services were included in the
direct PE database based on one-half of the total PE inputs required
for two services furnished in a single session, which would account for
some duplication, this was not the case for all combinations of therapy
services. Of the high volume therapy services examined, approximately
one-fourth of the code pairs were not valued based on two services. In
addition, we noted that the CY 2009 PFS claims data for services paid
under the PFS (excluding services furnished in facility settings that
were paid at PFS rates) show that when multiple therapy services are
billed on a claim for the same date of service, the median number is
four services per day. Therefore, even for those clinical labor times
that may reflect the allocation of total time across two units of
therapy services, we believe that some elements of the current PE
inputs are duplicated based on current patterns of therapy service
delivery where most multiple service claims involve delivery of more
than two services in a session.
In the CY 2011 proposed rule (75 FR 40076), we stated that
duplicate labor activities currently included in the PE for the service
period for these high volume pairs of therapy services are as follows:
clean room/equipment; education/instruction/counseling/coordinating
home care; greet patient/provide gowning; obtain measurements, for
example, ROM/strength/edema; and post-treatment patient assistance. The
most common duplicate supply item included in the PE was the
multispecialty visit pack. Examples of duplicated and unduplicated
labor activities and supplies for two sample therapy code pairs and our
estimates of potential clinically appropriate time and quantity
reductions for multiple service sessions (which were also included in
our proposed rule) are displayed in Table 19. We note that CY 2009 PFS
claims data for these sample code pairs include over 3.4 million pairs
of CPT codes 97112 (Therapeutic procedure, 1 or more areas, each 15
minutes; neuromuscular reeducation of movement, balance, coordination,
kinesthetic sense, posture, and/or proprioception for sitting and/or
standing activities) and 97110 (Therapeutic procedure, 1 or more areas,
each 15 minutes; therapeutic exercises to develop strength and
endurance, range of motion and flexibility) furnished by the same
practitioner on the same day and over 500,000 pairs of CPT codes 97001
(Physical therapy evaluation) and 97140 (Manual therapy techniques (eg,
mobilization/manipulation, manual lymphatic drainage, manual traction),
1 or more regions, each 15 minutes).
BILLING CODE 4120-01-P

[[Page 73234]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.247

[[Page 73235]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.248

BILLING CODE 4120-01-C
In the CY 2011 PFS proposed rule (75 FR 40078), we did not remove
minutes for clinical labor tasks that were not duplicated. For example,
for CPT code pair 97001 and 97140 the following tasks were not
duplicated: post treatment patient assistance; prep and position
patient; and prepare room, equipment, and supplies. In addition, we did
not remove any supply items that would be required for only one of the
separate services because these would not be duplicated in the PE
applicable to the combination of services. We estimated no reduction
for equipment time, even though efficiencies would be expected for
equipment that is used in both services when they are furnished
together. Finally, a corresponding reduction to the indirect expenses
would be appropriate since indirect costs are allocated partially based
on direct costs. For five high volume therapy code pairs that each
occur over 2 million times in PFS claims for multiple therapy services
and account for almost half of such claims, we estimated that the
resulting reduction in the PE for the lower paying code would range
from 28 to 56 percent.
As we summarized in the CY 2011 PFS proposed rule (75 FR 40078),
given the duplicative clinical labor activities and supplies as shown
in the code combination examples, we believe it would be appropriate to
extend the MPPR policy that is currently applied to surgical services
and the TC of imaging services, to the PE component of certain therapy
services. Specifically, we proposed to apply a 50 percent payment

[[Page 73236]]

reduction to the PE component of the second and subsequent therapy
services for multiple ``always therapy'' services furnished to a single
patient in a single day. Because we believed it would be difficult to
determine the precise beginning and end of therapy sessions and we did
not believe that beneficiaries would typically have more than one
therapy session furnished in a single day, we proposed to apply the 50
percent MPPR policy to the PE component of subsequent therapy services
furnished to the same patient on the same day, rather than limiting the
proposed policy to services furnished in the same session.
We noted that many therapy services are time-based CPT codes, so
multiple units of a single code may be billed for a single session that
lasts for a longer period of time than one unit of the code. The
proposed MPPR policy would apply to multiple units of the same therapy
service, as well as to multiple different services, when furnished to
the same patient on the same day. Therefore, we proposed that full
payment would be made for the service or unit with the highest PE and
payment would be made at 50 percent of the PE component for the second
and subsequent procedures or units of the same service.
We proposed that the work and malpractice components of the therapy
service payment would not be reduced. For therapy services furnished by
an individual or group practice or ``incident to'' a physician's
service, the MPPR would apply to all ``always therapy'' services
furnished to a patient on the same day, regardless of whether the
services are furnished in one therapy discipline or multiple
disciplines, for example, physical therapy, occupational therapy, or
speech-language pathology. The MPPR policy would apply to both those
services paid under the PFS that are furnished in the office setting
and those services paid at the PFS rates that are furnished by
outpatient hospitals, home health agencies, comprehensive outpatient
rehabilitation facilities (CORFs), and other entities that are paid by
Medicare for outpatient therapy services. Table 20 provides a sample
calculation of the current and proposed CY 2011 payment for multiple
therapy services furnished in on the same day. For those services paid
under the PFS, the PFS budget neutrality provision would apply so that
the estimated reduced expenditures for therapy services would be
redistributed to increase payment for other PFS services.

TABLE 20--Sample Payment Calculation for Multiple Therapy Services Furnished to a Single Patient on the Same Day
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed CY
Procedure 1 Procedure 1 Procedure 2 Current total 2011 total Proposed payment calculation
Unit 1 Unit 2 payment payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Work........................... $7.00 $7.00 $11.00 $25.00 $25.00 no reduction
PE............................. $10.00 $10.00 $8.00 $28.00 $19.00 $10 + (0.5 x $10) + (0.5 x $8)
Malpractice.................... $1.00 $1.00 $1.00 $3.00 $3.00 no reduction
------------------------------------------------------------------------------------------------------------------------
Total.......................... $18.00 $18.00 $20.00 $56.00 $47.00 $18 + $7 + (0.5 x $10) + $1 + $11
+ (0.5 x $8) + $1
--------------------------------------------------------------------------------------------------------------------------------------------------------

In the CY 2011 PFS proposed rule (75 FR 40078), we stated that we
believe the proposed therapy MPPR policy would provide more appropriate
payment for therapy services that are commonly furnished together by
taking into account the duplicative clinical labor activities and
supplies in the PE that are not furnished more than once in the single
therapy session. This approach is consistent with the statutory
requirement for the Secretary to identify, review and adjust the
relative values of potentially misvalued services under the PFS as
specified by section 1848(c)(2)(K) of the Act (as added by section 3134
of the ACA). We also believe this proposed policy is responsive to
continued concerns about significant growth in therapy spending and to
MedPAC and GAO recommendations regarding the expansion of MPPR policies
under the PFS to account for additional efficiencies. We observed that
paying more appropriately for therapy services based on PE relative
values that are adjusted for the clinical scenario under which the
services are furnished would result in reduced therapy expenditures,
and beneficiaries would be able to receive more medically necessary
outpatient therapy services before reaching the therapy cap. For a
further discussion of potential alternatives to the therapy caps, we
refer readers to section III.A.2. of this final rule with comment
period.
Comment: Many commenters opposed application of the proposed MPPR
policy to therapy services. The commenters characterized the proposal
as drastic, arbitrary, and unfair, resulting in across-the-board cuts
based on flawed assumptions that would lead to therapy underpayments
that would jeopardize access to necessary care and harm patients. The
commenters requested that CMS withdraw the proposal, study the issue
further, and share the analyses with the public.
In contrast, MedPAC supported the general direction of the proposed
policy, but suggested that CMS better justify how a 50 percent
reduction would capture the duplicate inputs related to multiple
therapy services performed in a single session. MedPAC also recommended
that CMS request that the AMA RUC review the values of all outpatient
therapy codes to ensure that the practice expenses are not duplicated,
regardless of whether or not the current values of those codes assume
that two services are furnished during a single visit.
Numerous commenters requested a detailed justification for the
proposed policy's 50 percent reduction, including an explanation of the
methodology used to calculate the new payments that would result. These
commenters asked CMS to work with stakeholders to finalize a policy
that would not adversely impact access to care, particularly in rural
and other underserved areas. The commenters further urged consideration
of other payment methods and alternatives to the therapy caps that
would preserve and improve access to therapy services. The commenters
stated that between 80 to 90 percent of physical therapy services
furnished in private practices would potentially be subject to the
MPPR, concluding that the policy would result in payment decreases of
19.2 percent and 17.8 percent for physical therapy services in
facilities

[[Page 73237]]

and offices, respectively, notably more than the CMS' impact estimate
of 11 percent for the proposed rule.
The commenters provided analyses to show that the duplication of
supplies is very limited and argued that a more thorough analysis of
duplication based on expert clinical review would result in
considerably lower estimates of duplication. For example, the AMA RUC
explained that for a typical single session combination of 2 units of
CPT code 97110 (Therapeutic procedure, 1 or more areas, each 15
minutes; therapeutic exercises to develop strength and endurance, range
of motion and flexibility) and one unit of 97140 (Manual therapy
techniques (e.g., mobilization/manipulation, manual lymphatic drainage,
manual traction), 1 or more regions, each 15 minutes), a $12 PE payment
reduction from the MPPR would be applied to adjust for $3.60 in
potentially duplicated costs.
Before implementing an MPPR, the commenters urged CMS to take time
to ensure that individual services were valued correctly based upon the
resources needed to deliver them. The commenters advised CMS to conduct
a more thorough analysis, taking into consideration the fact that the
direct PE inputs for therapy services were already reduced to avoid
duplication. The commenters alleged that CMS provided incorrect
examples of duplication in the proposed rule examples by overestimating
the duplication compared to the standard time allocated by the AMA RUC
for certain activities. The commenters explained that PE for therapy
services was valued by the AMA RUC based upon three units of service,
not two units of service as stated by CMS in the proposed rule. Three
units of service are typical, and the commenters contended that no
duplication of PE exists when the typical three units of service are
delivered using typical time allotments for clinical labor activities.
The commenters submitted multiple examples of combinations of therapy
services, using the most frequently billed therapy codes and providing
valuations for each of the components of PE, such as pre-service and
post-service physical therapy assistant activities. The commenters
pointed out that in the case of single unit therapy claims, or claims
with one therapeutic procedure and one modality, there would currently
be underpayment based on how therapy services are valued. The
commenters further argued that it would not be fair to apply the MPPR
to all subsequent services when some of the code combinations are
already undervalued.
Many commenters observed that the AMA RUC has worked in good faith
to resolve any duplication in the PE inputs over the past few years and
pointed out that CMS has historically accepted over 90 percent of the
AMA RUC's recommendations. In April 2010, some commenters reported that
the AMA RUC reviewed high volume therapy code pairs that included the
most frequently billed therapy CPT code 97110, and the commenters
conveyed the AMA RUC's conclusion that there is no duplication in the
work or PE inputs for the most frequently reported therapy codes.
The commenters pointed out that single comprehensive codes for
certain bundles of component services were implemented in CY 2010, and
that additional ones would be created in the future. Therefore, the
commenters disagreed with CMS' reasoning for proposing a general MPPR
that is not code pair-specific in the context of these ongoing efforts
of the CPT Editorial Panel and the AMA RUC to revise the coding and
values for services that are commonly furnished together. Instead, the
commenters urged CMS to continue to work within the established
processes and resolve duplication, where it exists, at the code pair
level rather than with payment.
Response: We appreciate the detailed information provided by the
commenters regarding the historical AMA RUC process to value the
therapy codes and the additional examples of the practice expenses as
they apply to the many combinations of therapy services that may be
reported. We understand that the AMA RUC valued many of the therapy
services based on certain assumptions about the typical combinations of
services furnished in a therapy session. However, as the commenters
pointed out, there are numerous combinations of therapy services
observed in the PFS claims data that we posted on the CMS Web site
under supporting files for the CY 2011 PFS proposed rule that are
commonly furnished in the physician's office setting. In the context of
this large number of commonly observed combinations, we do not believe
that our usual PFS methodology of valuing the typical service
adequately accounts for the duplication in PE that occurs in the many
possible therapy service combinations. Although they are frequent, they
do not represent the typical case used by the AMA RUC in valuing the
individual component services and, thus, do not fully account for
duplications in PE. We proposed the therapy MPPR in order to pay more
appropriately for therapy services in general by adjusting for the
duplicate payment for the PE that may occur when combinations of
therapy services are furnished together.
We agree with the commenters that, when considering all claims for
therapy services paid under the PFS, the median number of services is
three. Thus, that number may have been appropriate for the AMA RUC to
use in valuing therapy services. However, the median number of four
services that we presented in the CY 2011 PFS proposed rule was based
upon all claims for multiple therapy services, and did not include
claims for a single therapy service. It was the multiple service claims
that we examined for purposes of the MPPR analysis, and it is these
claims to which the MPPR would apply. Therefore, we continue to believe
that the median number of four is the appropriate reference point when
evaluating an MPPR. We note further that when the AMA RUC valued
certain therapy services based on the assumption that a combination of
three types of therapy services would be furnished to the patient, then
in the case of multiple service claims where the median number of
services is four, some PE duplication would clearly occur for the
typical multiple service case with more than three services.
Although we continue to believe that 50 percent would generally be
an appropriate level for an MPPR for the PE component of payment for
therapy services, consistent with the current PFS MPPR policies for
imaging and surgical services and our PE overlap analysis of certain
therapy code combinations for the CY 2011 PFS proposed rule, we
acknowledge there are particular challenges associated with
establishing an MPPR for therapy services to account for the
duplication in PE. For example, the current coding structure for
therapy services relies upon timed units in many cases, and as a
result, the number of commonly observed combinations is very large. The
PE overlaps vary depending upon the specific combinations of services
furnished to the patient, which may include evaluation services,
therapeutic procedures, and therapeutic modalities. The common
occurrence of such a great variety of multiple therapy code
combinations contrasts with the relatively lesser number of
combinations and/or frequency of combinations of surgical procedures or
diagnostic imaging procedures to which the established PFS MPPR
policies apply.
As the commenters pointed out, the direct PE inputs for certain
therapy services were systematically established

[[Page 73238]]

based upon a standard AMA RUC methodology of three therapy services
furnished in a session that included two therapeutic procedures and one
therapeutic modality and that assigned certain PE inputs solely to the
two therapeutic procedures. However, the scenarios utilized by the AMA
RUC in this process are an incomplete representation of the usual
combinations of services reported when therapy services are furnished
in a practitioner's office. For example, the most common combination of
CPT codes for therapy services in CY 2009 PFS claims data consisted of
an average of 3.5 services which were comprised of some combination of
one or more units of a single therapeutic procedure CPT code and one or
more units of a single modality CPT code, rather than 3 total units of
the services. The second most common combination was a therapeutic
procedure CPT code alone, with an average of 2.8 units, while the AMA
RUC relied upon 2 therapeutic procedures in a session for its
assignment of certain PE inputs. Other commonly observed combinations
of codes included 3.4 to 4.6 therapy services, with different numbers
of therapeutic procedures and therapeutic modalities furnished to the
patient than were assumed by the AMA RUC under the scenarios that were
the basis for establishing the PE inputs for certain therapy CPT codes.
Therefore, despite the AMA RUC's consideration of multiple services for
valuation, the therapy code combinations as actually reported by
practitioners would typically have some additional duplication in their
PE. Thus, while the current PFS values for therapy services may reflect
some efficiencies in the PE for certain code combinations based on the
AMA RUC approach to valuation (to the extent we accepted the AMA RUC
recommendations), the actual efficiencies are not fully recognized in
the PE inputs for the most commonly reported therapy code combinations,
nor are they necessarily recognized in the many other common code
combinations that were not considered by the AMA RUC as the typical
case.
Based on our review of the scenarios submitted by the commenters,
we continue to believe that there is significant overlap in the PE when
many combinations of therapy services are furnished together and that
this overlap has not been adequately accounted for in the direct PE
inputs that the AMA RUC has recommended to us for the component
services. We believe the overlaps remain substantial and they can be
potentially higher than 50 percent for some combinations while lower
for others. Our analysis of five high volume therapy code pairs as
noted in the CY 2011 PFS proposed rule (75 FR 40078) suggested a
reduction in the PE for the lower paying code of 28 to 56 percent to
account for PE duplication.
In response to the commenters who projected that the impact on
physician's office payment for physical therapy services would be
greater than the 11 percent reduction we modeled for the proposed rule
(75 FR 40232), we note that an additional element of our analysis was
the continued transition to setting the PE RVUs based on the PPIS data.
The PPIS transition is expected to significantly increase payment for
the PE component of therapy services in CY 2011. While we acknowledge
that the estimated change in PE RVUs due to the proposed therapy MPPR
alone would result in a payment decrease for the specialty of physical
and occupational therapy of somewhat more than 11 percent, it is the
combined consideration of all factors affecting the CY 2011 PE RVUs
that resulted in the 11 percent decrease for physical and occupational
therapists in the proposed rule specialty impact table (75 FR 40232).
We note further that the estimated impact of all the PE RVU changes for
physical and occupational therapy based upon our proposals for CY 2011
if there were no remaining transition to the new PE RVUs using the PPIS
data would be -7 percent.
Any MPPR policy, such as the MPPR that currently applies to
surgical services and imaging procedures, is a relatively blunt payment
policy tool that improves the overall accuracy of payment when
combinations of services are furnished together but is not, by its
nature, a specific policy that precisely values each code combination.
A general MPPR is not unlike the well-established PFS pricing
methodology that relies on the typical case, where we readily
acknowledge that the clinician's resources used to furnish a specific
service to a specific patient on a specific day may be more or less
than those used in the typical case. Similarly, while we believe that
an MPPR would generally improve the accuracy of PFS payment when
multiple therapy services are furnished to a single patient in a single
session, we understand that for a specific combination of services for
a given patient, the resources required may be more or less than those
recognized for payment under the MPPR policy. In view of the
requirements of section 1848(c)(2)(K) of the Act (as added by section
3134 of the ACA) which specify that the Secretary shall identify
potentially misvalued codes by examining multiple codes that are
frequently billed in conjunction with furnishing a single service and
make RVU adjustments, we continue to believe it would be appropriate to
expand the current PFS MPPR policies to address those scenarios where
we conclude that combinations of services commonly furnished together
are systematically overvalued.
We believe the more specific valuation of common code combinations
is best conducted with input from the AMA RUC as it evaluates single
new comprehensive codes for a bundle of component services when those
new codes are established by the CPT Editorial Panel. In such cases
where a single code is used to report a comprehensive service, an MPPR
would no longer apply, which would be appropriate because the potential
for PE duplication would have been explicitly considered in determining
the PE inputs for the comprehensive service. As we stated earlier in
this section concerning the MPPR for imaging services, the MPPR is not
intended to supersede the AMA RUC process. We encourage the AMA RUC to
reexamine the values and direct PE inputs for therapy services,
including code pairs, for duplication in the PE, and to recommend
therapy services to the CPT Editorial Panel for consideration of
bundling into comprehensive codes. However, we believe it is
appropriate to use an MPPR to address the PE duplication that is
currently present within the PFS RVUs for the therapy codes when more
than one service is furnished to a patient.
After consideration of the public comments we received, we are
adopting, with modifications, our proposal to establish a MPPR policy
for ``always therapy'' services for CY 2011. However, given the
complexities involved in establishing an MPPR for the very large number
of therapy codes and combinations, rather than the proposed 50 percent
payment reduction to the PE component of the second and subsequent
``always therapy'' services billed by the same practitioner or facility
on the same date of service for the same patient, we are adopting a 25
percent MPPR for ``always therapy'' services furnished in CY 2011. We
continue to believe that a 50 percent MPPR for therapy services may be
appropriate in light of our analysis of five high volume therapy code
pairs that each occur over 2 million times in PFS claims for multiple
therapy services and account for almost half of such claims, and for
which we estimated that the resulting reduction in the PE for the lower
paying code would range from 28 to 56 percent. However, we believe a 25

[[Page 73239]]

percent MPPR represents an appropriate and conservative first step
toward eliminating payment for duplicative PE when multiple ``always
therapy'' services are furnished to the same patient by the same
therapy provider on the same date of service. We note that a 25 percent
MPPR represents half the proposed reduction, and is slightly less than
the lower range of the reduction suggested by our analysis of high
volume code pairs. During CY 2011 and future years, we will continue to
refine our analyses and consider whether further modifications to the
policy would be appropriate, including the possible adoption of a 50
percent MPPR or a different payment percentage reduction. Any further
changes to the MPPR for therapy services will be addressed in future
rulemaking, including the possible adoption of any alternative
percentage payment reduction to the 25 percent MPPR that will be in
place for CY 2011. We will also closely follow the work of the CPT
Editorial Panel and the AMA RUC with respect to the coding and
valuation for therapy services over the next few years as we assess the
potential merits of further changes to the MPPR policy. We note that
the typical reductions in total PFS payment for high utilization
therapy code combinations due to the MPPR alone would fall within the
range of 7 to 9 percent under our final policy, but this decrease will
be mitigated by the continued transition to use of the PPIS data. As
displayed in Table 101 of this final rule with comment period, we
estimate that the CY 2011 impact on the PE RVUs of the new therapy MPPR
and continued PPIS transition is a reduction in PFS payment to physical
and occupational therapists of approximately -3 percent.
The final list of CY 2011 CPT codes for ``always therapy'' services
that are subject to the therapy MPPR is displayed in Table 21 at the
end of this section.
Comment: Some commenters pointed out that CMS' analysis was based
only on data from physicians and private practice therapists, which the
commenters opposed as unrepresentative of the typical therapy session
because the data represent only 35 percent of outpatient therapy
services paid under Medicare. The commenters objected that no data from
skilled nursing facilities (SNFs), rehabilitation agencies, CORFs, and
hospital outpatient departments were considered in the analysis. The
commenters reported that application of the MPPR policy on a per-day
basis would be inconsistent with the delivery of therapy services in
provider settings where multiple sessions of the same or different
disciplines of therapy on the same day are commonly furnished to
``captive'' patients and would unfairly reduce payment for the
resources used to provide these services. The commenters believe there
is no duplication in the PE in such circumstances. Some commenters
suggested that reductions should not be applied when there is a break
in services into more than one session in the same day.
Response: With respect to payment under the PFS, according to
section 1848(c)(1)(B) of the Act, the term ``practice expense
component'' means the portion of the resources used in furnishing the
service that reflects the general categories of expenses (such as
office rent and wages of personnel, but excluding malpractice expenses)
comprising practice expenses. Under section 1848(c)(2)(C)(ii) of the
Act, we are required to determine PE RVUs based on the relative
practice expense resources involved in furnishing services. We develop
these resource-based PE RVUs by looking at the direct and indirect
physician practice resources involved in furnishing each service. To
establish the direct PE inputs for services paid under the PFS, we
consider the typical clinical scenario in which those services are
delivered and paid by Medicare. In the case of therapy services that
are paid under the PFS, the scenarios we consider are office-based (not
institutional) because these therapy services are the only ones that
are actually paid under the PFS (section 1848 of the Act) and subject
to all of the provisions of the PFS, including budget neutrality under
section 1848(c)(2)(B)(ii)(II) of the Act. Section 1834(k)(3) of the Act
then requires that we pay for all outpatient therapy services at the
applicable PFS amount. Therefore, our analyses and policy development
regarding the therapy MPPR were based solely on claims for office-based
therapy services and, given the applicable statutory payment
provisions; we do not believe it would have been appropriate for us to
consider institutional patterns of care in setting PFS rates for
therapy services.
We are required to establish the values for services paid under the
PFS (office-based services) so that therapy services are valued
appropriately in the context of all other services paid under the PFS,
and that means ensuring that therapy services are appropriately valued
for the office setting. In the case of other services paid under the
PFS that may be furnished in both facility and nonfacility settings, we
generally establish separate but related facility and nonfacility
values to differentially value the services when furnished in each of
the two types of settings. However, therapy services are only paid
under the PFS when furnished in the office setting, so we establish the
PFS values for therapy services based on patterns of care in the office
setting. This approach ensures equitable and relative treatment of all
services paid under the PFS with respect to the statutory provisions
that apply to the PFS, including year-to-year budget neutrality. In
contrast to other services paid under the PFS, the statute then
specifies that we pay for therapy services furnished in facility
settings at the applicable PFS amount (which, as discussed above, is
established based upon our resource-based methodology for services
furnished in nonfacility settings). Although the statutory payment
scheme for therapy services differs from most other services, we note
that this treatment ensures that Medicare payment is the same across
all settings for outpatient Part B therapy services.
We acknowledge the commenters' point that multiple therapy sessions
furnished to one patient by one provider (one National Provider
Identifier (NPI)) in a single day are more common in facility settings
than in the office setting. However, we continue to believe that in
these situations there would be some overlaps in the PE, including
patient education and obtaining measurements, that would be
appropriately accounted for through the therapy MPPR. Furthermore,
given the nature of therapy services and the associated coding, we
believe it would be very challenging to determine the medical necessity
of multiple therapy sessions on one date of service or the precise
beginning and ending of therapy sessions if we were to exclude from the
MPPR those therapy services furnished by the same provider to a single
patient on the same day but in different sessions, although we
acknowledge that this modification would be consistent with our
established policy for the imaging MPPR.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to apply the therapy MPPR when multiple
therapy services are billed on the same date of service for the same
patient by the same practitioner or facility under the same NPI,
regardless of whether those therapy services are furnished in separate
sessions.
Comment: Many commenters objected to applying the MPPR across
therapy disciplines because the commenters argued that physical
therapy,

[[Page 73240]]

occupational therapy, and speech-language pathology (SLP) are separate
and distinct interventions furnished independently by individually
licensed professionals, each of which is certified to provide unique
and specialized services that do not cross discipline or service lines.
Several commenters explained that each discipline involves entirely
different skills, equipment, supplies, and treatment goals, and
separate disciplines are often located in different treatment settings.
Individual plans of care, explained the commenters, are separately
maintained for each therapy discipline and contain specific goals and
treatments. Some commenters compared the proposal to claiming that
services furnished to a single patient on the same day by a
cardiologist and internal medicine specialist contain duplicative PE
inputs. The same commenters described administrative contact with the
patient in this scenario as distinct and separate, observing that
greeting and gowning the patient, cleaning, and assistant activities
are furnished independently by the second or subsequent discipline, and
cannot be shared.
The large majority of commenters argued that the proposal did not
make logical distinctions between therapy treatments or specialties or
even properly distinguish between the skills of rehabilitation
practitioners. While physical therapists and occupational therapists
report the same CPT codes, the commenters noted that the codes do not
represent the same service and the plan and approach to treatments
differ depending on the discipline.
Response: We recognize that the therapy disciplines are separately
qualified professionals who address specific impairments using separate
and unique skills. However, in the office setting which is the basis
for our valuing therapy services for payment under the PFS as discussed
previously, although we believe it would be uncommon for services to be
furnished to a single patient by different therapy disciplines and
billed by a single provider (one NPI) on the same date of service, we
continue to believe that there would be some overlap in the PE in this
circumstance. The PE overlaps that we would anticipate include greeting
the patient, obtaining vital signs, and post-visit phone calls. We do
not agree with the commenters that we should accept such multiple
discipline cases from the therapy MPPR that would otherwise apply.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to apply the therapy MPPR to all
therapy services across the disciplines billed on the same date of
service for the same patient by the same practitioner or facility under
the same NPI.
Comment: Several commenters pointed out that, unlike other therapy
services, many SLP services contain therapist work in their PE because
SLPs have no assistants. These commenters requested that the therapy
MPPR not be implemented, or at least be delayed, until the AMA RUC
completes its plan to recommend moving SLP work from PE to work. In
addition to bundled codes, the commenters also requested that add-on
codes, such as CPT code 92608 (Evaluation for prescription for speech-
generating augmentative and alternative communication device, face-to-
face with the patient; each additional 30 minutes (List separately in
addition to code for primary procedure)), be exempted from the therapy
MPPR, since the PE inputs for add-on codes explicitly take into
consideration the PE inputs for a base code that is always reported.
The commenters reported that the major SLP codes include a wide variety
of service types and are essentially bundled already, meaning that SLP
practitioners rarely bill two different services on the same day for
the same patient. The commenters expressed concern because SLP services
are furnished and valued differently than physical and occupational
therapy, yet the proposed rule contained no SLP examples to justify
including SLP codes in the MPPR or to estimate the impact on SLP
services.
Response: We note that most of the SLP codes will have been valued
with therapist work in the work component of the SLP service RVUs by CY
2011, although we do not see the continued valuation of therapist work
in the PE as an impediment to application of the MPPR to SLP services.
Since many single SLP codes represent multiple component services that
are reported using a single comprehensive code, the impact of the
therapy MPPR on PFS payment for SLP services would be minimal. For
those services that may occasionally be billed with more than one SLP
code for a session, we see no basis for treating SLP services
differently than other therapy services because we believe there would
also be PE duplication in these cases.
However, we agree with the commenters that add-on codes should not
be subject to the MPPR for therapy services because their PE inputs
already consider that the add-on code is always furnished along with a
primary service.
Therefore, after consideration of the public comments we received,
we are removing add-on therapy CPT code 92608 from the list of ``always
therapy'' services that we proposed for application of the therapy MPPR
policy. In addition, we are removing CPT code 97010 (Application of a
modality to 1 or more areas; hot or cold pack) which is a bundled code
that was inadvertently included on the proposed list. These changes are
reflected in the final list of codes subject to the therapy MPPR policy
that is displayed in Table 21 at the end of this section. This policy
parallels our treatment of the MPPR for surgical services, where
surgical add-on codes are not subject to the surgical MPPR.
Comment: Some commenters characterized the proposed therapy MPPR as
contrary to the objectives of the ACA, which the commenters believe was
designed to shift care to the most effective and efficient delivery
setting to ensure beneficiary access to cost-effective, high quality
and coordinated care. Because therapy services do not involve expensive
drugs or testing, yet they assist patients in avoiding or reducing
other medical costs, many commenters believe that physical therapy is
the most efficient and cost-effective treatment to return patients to
independent function. The commenters contended that growing Medicare
expenditures for the treatment of common musculoskeletal problems could
easily be controlled by earlier access of patients to physical therapy
services.
The commenters were concerned that lower therapy payments would
exacerbate the shortage of therapists, lead to restricted access to
therapy services, especially in rural areas, and result in patients who
are more prone to injuries and functioning at a lower level.
Undertreated functional impairments, argued the commenters, would lead
to increased spending for medication and medical costs associated with
decreased mobility, pain and falls, increased emergency room services,
longer inpatient stays, quicker returns to the hospital setting, and
earlier placement in nursing homes.
In addition, some commenters were concerned that the MPPR would
provide an incentive to schedule patients in a manner that would be
inefficient, inappropriate, and inconvenient for patients. The
commenters noted that research proves therapy is more effective for
many elderly patients with several visits on the same day, separated by
rest. The commenters indicated that patients in rural communities
prefer multiple therapy service visits to minimize lengthy commutes.

[[Page 73241]]

Response: Through the CY 2011 proposed rule and its associated
public comment period, we have invited public involvement in the
process of policy development regarding an MPPR for therapy services.
We believe the therapy MPPR policy is fully consistent with section
1848(c)(2)(K) of the Act (as added by section 3134 of the ACA) which
specifies that the Secretary shall identify potentially misvalued codes
by examining multiple codes that are frequently billed in conjunction
with furnishing a single service, and review and make appropriate
adjustments to their relative values. Therefore, we do not agree with
the commenters that the MPPR policy undermines the goals of the ACA
but, instead, we believe the policy fulfills one of our statutory
obligations by valuing more appropriately combinations of therapy
services furnished to patients and paid under the PFS. We have no
reason to believe that appropriately valuing services for payment under
the PFS by reducing payment for duplication in the resource-based PE
payment for the component services would contribute to therapist
workforce shortages or limit patients' access to medically reasonable
and necessary therapy services.
With respect to the ordering and scheduling of therapy services for
Medicare beneficiaries, we require that Medicare-covered services be
appropriate to patient needs and that a physician certifies each
patient's plan of care. We would not expect the adoption of an MPPR for
therapy services to result in therapy services being furnished on
separate days by one provider so that the provider may garner increased
therapy payment unless this pattern of care is the most clinically
appropriate for the patient. We agree with the commenters that this
unprofessional behavioral response on the part of practitioners would
be inefficient and inappropriate and could result in patient compliance
problems with the plan of care. We will continue to monitor access to
care and patterns of delivery for therapy services, with particular
attention focused on identifying any changes in the delivery of same
day therapy services that may be inappropriate.
Comment: Several commenters noted that CMS has contracted with
Computer Sciences Corporation (CSC) and RTI International to develop
outpatient therapy payment alternatives and urged CMS to place a high
priority on the development of an alternative payment approach for
therapy services rather than applying the proposed MPPR. Many
commenters supported bundled per-session codes that would vary based on
the severity of the patient and the complexity of evaluation and
treatment services, and some commenters believe this payment approach
would be more equitable than the proposed MPPR. The commenters argued
for a scientific approach to the development of alternatives to the
current payment system, which the commenters believe contrasts with the
analysis presented by CMS to support the MPPR. However, most commenters
encouraged further study and development before implementation of any
alternatives. Many commenters pledged to work with CMS in the future to
further develop a bundled service approach based on episodes of care.
Response: We appreciate the effort and useful information
contributed by stakeholders to the discussion and development of
alternatives to the therapy caps and we refer readers to section
III.A.2. of this final rule with comment period for a further
discussion of the public comments and our responses on this issue. We
look forward to the continued cooperation of stakeholders as we
continue our work in this area over the coming years. However, we do
not believe short-term alternative payment options for therapy services
are sufficiently developed to warrant immediate implementation, and the
commenters on the CY 2011 PFS proposed rule generally shared that view.
In contrast, we believe that we can implement an appropriate MPPR for
therapy services beginning in CY 2011 that would immediately provide
more appropriate payment for the PE component of therapy services when
multiple therapy services are furnished to one patient on one date of
service by one provider. Paying more appropriately for therapy services
in CY 2011 will allow patients to receive more medically necessary
therapy services before reaching the therapy cap. To the extent that
the therapy MPPR encourages the future bundling of therapy codes into a
single comprehensive service that would be specifically valued, we
support the exploration of that concept to capture the specific
efficiencies associated with certain combinations of therapy services.
Comment: Several commenters asserted that the therapy MPPR proposal
violated the Administrative Procedure Act (APA), alleging the proposal
was arbitrary and capricious. In addition, some commenters argued that
CMS did not provide sufficient information regarding the data and
analysis used to develop the policy to allow the informed public input
from qualified providers of therapy services.
Response: Consistent with the requirements of the APA, a full
description of our analysis and the rationale we used as the basis for
the proposed therapy MPPR policy was presented in the proposed rule,
the public comments on our proposal have been reviewed, and our
responses are provided in this final rule with comment period. Although
many commenters requested that we share more data to support the
proposed policy, several commenters demonstrated that they have their
own access to Medicare data by submitting reports to us along with
their comments in order to support their views or to refute the
examples we presented in the proposed rule. We note further that we
posted therapy utilization data on the CMS web site after publication
of the proposed rule to provide additional information regarding the
specific combinations and utilization of therapy services on PFS
claims. The information was posted under downloads for the CY 2011 PFS
proposed rule at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage. Therefore, we believe the final MPPR for therapy
services is being adopted in compliance with the notice and comment
rulemaking process under the APA.
In summary, after consideration of the public comments we received,
we are adopting our CY 2011 proposal to apply an MPPR to the PE
component of Medicare payment for the second and subsequent outpatient
``always therapy'' services, with a modification to apply a 25 percent
reduction for CY 2011 rather than the 50 percent reduction we had
proposed. Specifically, beginning in CY 2011 we are adopting an MPPR
for ``always therapy'' services under which a 25 percent reduction will
be applied to the PE component of payment for the second and subsequent
``always therapy'' service(s) (those displayed in Table 21) that are
furnished to a single patient by a single provider on one date of
service in all settings where outpatient therapy services are paid
under Part B. This policy applies to office-based therapy services paid
under the PFS as well as to institutional therapy services paid under
Part B at the PFS rates. We note that the MPPR would apply only when
multiple therapy services are billed on the same date of service for
one patient by the same practitioner or facility under the same NPI.
This policy does not apply to add-on, bundled, or contractor-priced
``always therapy'' codes. It does, however, apply to all ``always
therapy'' services furnished on a single date of service by the same
provider to a single

[[Page 73242]]

patient, including ``always therapy'' services furnished in different
sessions or in different therapy disciplines.
For those therapy services paid under the PFS, we are required to
make a budget neutrality adjustment under section 1848(c)(2)(B)(ii)(II)
of the Act. As a result, the estimated reduced expenditures for therapy
services due to the 25 percent MPPR will be redistributed to increased
CY 2011 payments for other PFS services. We refer readers to XI.A.2. of
this final rule with comment period for further discussion of the
impact of this policy. The final list of CY 2011 ``always therapy'' CPT
codes subject to the MPPR policy for therapy services is displayed in
Table 21.

Table 21--``Always Therapy'' Services Subject To The CY 2011 MPPR
Policy*
------------------------------------------------------------------------
CPT code Short descriptor
------------------------------------------------------------------------
92506......................... Speech/hearing evaluation.
92507......................... Speech/hearing therapy.
92508......................... Speech/hearing therapy.
92526......................... Oral function therapy.
92597......................... Oral speech device eval.
92607......................... Ex for speech device rx, 1 hr.
92609......................... Use of speech device service.
96125......................... Cognitive test by hc pro.
97001......................... Pt evaluation.
97002......................... Pt re-evaluation.
97003......................... Ot evaluation.
97004......................... Ot re-evaluation.
97012......................... Mechanical traction therapy.
97016......................... Vasopneumatic device therapy.
97018......................... Paraffin bath therapy.
97022......................... Whirlpool therapy.
97024......................... Diathermy eg, microwave.
97026......................... Infrared therapy.
97028......................... Ultraviolet therapy.
97032......................... Electrical stimulation.
97033......................... Electric current therapy.
97034......................... Contrast bath therapy.
97035......................... Ultrasound therapy.
97036......................... Hydrotherapy.
97110......................... Therapeutic exercises.
97112......................... Neuromuscular reeducation.
97113......................... Aquatic therapy/exercises.
97116......................... Gait training therapy.
97124......................... Massage therapy.
97140......................... Manual therapy.
97150......................... Group therapeutic procedures.
97530......................... Therapeutic activities.
97533......................... Sensory integration.
97535......................... Self care mngment training.
97537......................... Community/work reintegration.
97542......................... Wheelchair mngment training.
97750......................... Physical performance test.
97755......................... Assistive technology assess.
97760......................... Orthotic mgmt and training.
97761......................... Prosthetic training.
97762......................... C/o for orthotic/prosth use.
G0281......................... Elec stim unattend for press.
G0283......................... Elec stim other than wound.
G0329......................... Electromagntic tx for ulcers.
------------------------------------------------------------------------
*Excludes contractor-priced, bundled, and add-on ``always therapy''
codes.

5. High Cost Supplies
a. Background
MedPAC and the AMA RUC have long recommended that CMS establish a
frequent price update process for high-cost supplies that are direct PE
inputs in the PE database for services paid under the PFS because of
their speculation that prices for these items may decrease over time as
competition increases and new technologies disseminate into medical
practice. MedPAC in particular has perennially noted that it is
important for CMS to update the prices of high-priced supplies on a
regular basis as inaccurate prices can distort PE RVUs over time,
contributing to the misvaluation of established services under the PFS.
Most of the current prices for high-cost supplies included in the
direct PE database are from 2004 or earlier. There are currently 62
unique supplies with prices of $150 or more in the proposed CY 2011 PE
database, which is available on the CMS Web site under the supporting
data files for the CY 2011 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. Finally, we note that we do not actually pay the
supply prices included in the PE database but, instead, use them to
develop the PE RVUs according to our standard PE methodology as
described in section II.A.2. of this final rule with comment period.
Payment for a procedure that uses a supply is based upon the PE RVUs
that result from the PE methodology, and supplies are among the direct
PE inputs for procedures. Therefore, it is the relativity of high-cost
supply prices to prices for other PE items (equipment, low-cost
supplies, and clinical labor) that is important.
Accordingly, in the CY 2009 PFS proposed rule (73 FR 38582), we
proposed a process to update the prices for high-cost supplies priced
at $150 or more that are included in the PE inputs for procedures paid
under the PFS PE methodology. The CY 2009 proposed rule described a
publicly transparent process in which CMS would publish a list of the
high-cost supplies in the PFS proposed rule (65 supplies were included
in the CY 2009 PFS proposed rule), and specialty societies or other
relevant organizations would provide acceptable documentation
supporting the pricing for the supplies during the 60-day public
comment period. Furthermore, in that same proposed rule (73 FR 38582),
we provided guidance on what constitutes valid, reliable documentation
that reflects the typical price of the high-cost item in the
marketplace. We outlined examples of acceptable documentation, such as
a detailed description (including system components), sources, and
current pricing information, confirmed by copies of catalog pages,
invoices, and quotes from manufacturers, vendors, or distributors. We
indicated that documentation that does not include specific pricing
information such as phone numbers and addresses of manufacturers,
vendors, or distributors or Web site links without pricing information
would not be acceptable. We also noted that if acceptable documentation
was not received within the proposed rule's 60-day public comment
period, we would use prices from the Internet, retail vendors, and
supply catalogs to determine the appropriate cost, and that we would
use the lowest price identified by these sources (73 FR 38582).
Finally, we solicited public comments on alternatives that could be
used to update pricing information in the absence of acceptable
documentation provided by specialty societies or other interested
organizations.
In the CY 2009 PFS final rule with comment period (73 FR 69882), we
indicated that we received many comments on the proposed process and,
while some commenters expressed support, others believed the proposed
process was flawed and burdensome. Moreover, although we received some
data in response to our request for information on the 65 high-cost
supplies with prices of $150 or more, much of what we received was not
complete or did not represent typical market prices. In particular, we
expressed concern that the submitted data often represented
manufacturer list prices for the premier models of many supplies, while
we believed there were less expensive alternatives. Therefore, we were
unable to determine the most appropriate, typical supply prices for our
PFS payment methodology that prices the typical service described by a
HCPCS code. Rather than finalizing the proposed process for updating
high-cost supplies and revising the prices for the 65 supplies based on
inadequate pricing information, we stated in the CY 2009 PFS final rule
with comment period (73 FR 69882) that we would research the
possibility of using an independent contractor to assist us in
obtaining accurate pricing information. Furthermore, we informed the
public that we planned to study the limitations of available pricing
data and determine how to revise our proposed process to elicit better
data.
In the CY 2010 PFS proposed rule and final rule with comment period
(74 FR 33554 and 61776, respectively), we

[[Page 73243]]

stated that we were continuing to examine ways to obtain accurate
pricing information for high-cost supplies. We noted again in the CY
2010 PFS proposed rule that we would depend upon the cooperation of the
medical community to obtain typical prices in the marketplace, and we
provided stakeholders with another opportunity to submit public
comments on the process. In the CY 2010 PFS final rule with comment
period, we acknowledged commenters' general support for an initiative
to ensure accurate pricing of high-cost supplies. In general, the
commenters strongly preferred a transparent and public process, and we
stated that we would consider this perspective as we explore the best
way to ensure that accurate supply pricing information is used in the
PFS payment methodology.
b. Future Updates to the Prices of High-Cost Supplies
In working towards refining a process to update the prices of high-
cost supplies and consistent with our intention expressed in the CY
2009 PFS final rule with comment period (73 FR 69882), we contracted
with an independent contractor during CY 2009 to help us study the
availability of accurate pricing information. We requested that the
independent contractor, L&M Policy Research, research pricing
information for the 65 high-cost supplies listed in the CY 2009
proposed rule (73 FR 38583 through 38585) and determine what, if any,
pricing information reflecting typical market prices could be obtained
for these high-cost supplies.
We first requested that the contractor explore publicly available
sources to obtain typical market prices for these supplies. The
contractor utilized supply vendor catalogs and web sites and directly
contacted vendors, manufacturers, group purchasing organizations
(GPOs), and any other suppliers that the contractor identified in their
research in order to identify prices for each of the supplies. Where
more than one version of a supply item appeared to match a description
of a high-cost supply and/or more than one possible vendor or
manufacturer was identified, the contractor attempted to obtain prices
from the multiple sources.
Upon review of the high-cost supply list, the contractor refined
the list to 62 unique high-cost items with prices of $150 or more for
the study. The original list only consisted of 64 items but included
one item inadvertently listed twice (CMS Supply Code SD207 (suture
device for vessel closure (Perclose A-T))) and one item (CMS Supply
Code SH079 (collagen implant)) that was deleted from the PE database
after CY 2007 because it was no longer used as an input for any codes.
While the contractor was able to obtain prices for 37 of the 62 unique
supplies, the contractor was unable to obtain pricing information for
the remaining 25 supplies. Documentation of these prices, a requirement
we discussed in the CY 2009 PFS proposed rule (73 FR 38582), was only
obtained for 25 of the 36 supplies with new pricing information. For
the remainder, while the contractor was given price quotes over the
phone, the sales agents or customer service representatives declined to
provide any form of written documentation, in some cases because
company policies restricted providing pricing documentation to
prospective customers without an account. Moreover, information on
typical discounts was obtained for only seven products, and only one
discount was documented. In the case of these products, companies
disclosed the maximum available discounts, ranging from 18 percent to
45 percent. Relative to prices currently included in the PE database,
the contractor found higher prices for the majority of the medical
supplies that were researched, specifically 23 supplies with higher
prices, 8 with lower prices, and 3 with the same price. The high-cost
supplies studied by the contractor and their current database prices
are displayed in Table 22.

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BILLING CODE 4120-01-P

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[[Page 73247]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.252

Next, we directed the contractor to access the United States
General Services Administration (GSA) medical supply schedule to
augment the results obtained through review of vendor materials and
direct contact with vendors, manufacturers, and GPOs. We note that the
GSA establishes long-term government-wide contracts with commercial
firms for many products, negotiating contracts and determining prices
to be fair and reasonable prior to placing them on schedule. Included
on the schedule are thousands of medical supplies at prices that, in
most cases, are established through competition. The GSA schedule is an
open solicitation and a business of any size, if it is stable and
financially sound, can request to be included on the schedule. GSA's
vendors usually are nationwide

[[Page 73248]]

vendors with substantial non-government sales, and products on the
schedule must be manufactured in the U.S. or in a nation with a trade
agreement with the United States. Submissions for the schedule are
received 365 days per year, vendor contracts can be of varying lengths,
and vendors can add or delete products from the schedule. Depending on
the aggregate cost estimate associated with the vendor's supply items,
the time to achieve inclusion on the schedule can vary from as short as
several months to as long as 2 years. The GSA has delegated authority
to the Department of Veterans Affairs (VA) to procure medical supplies
under the VA Federal Supply Schedules Program.
Using the GSA general search engine under the category
``Laboratory, Scientific, & Medical'' available at https://www.gsaadvantage.gov/advgsa/advantage/main/start_page.do, the
contractor obtained nine prices for items similar to the high-cost
supplies in the PE database and that are displayed in Table 20 from the
publicly available information on the Internet, including pricing for
one product for which its prior work did not yield an updated price. We
believe that additional items that are similar to the high-cost
supplies in the PE database and that may be used with the same
procedures may be on the GSA schedule but we are still working through
the crosswalk between our supplies and the way the supplies are
presented on the GSA schedule. In the proposed rule (75 FR 40081), we
stated that examples of high-cost supplies in the PE database that the
contractor located on the GSA schedule include: (1) Kit, capsule, ESO,
endoscopy w-application supplies (ESO), priced at $450 in the PE
database and $444 on the GSA schedule; and (2) tube, jejunostomy,
priced at $195 the PE database and $60 to $83 on the GSA schedule,
depending on the characteristics of the tube. We note that the price of
the ``jejunostomy'' tube that we included in the proposed rule was
incorrect. The actual price of that supply item in the PE database is
$97.50, a lower value that is still substantially higher than the price
range on the GSA schedule.
Since the GSA medical supply schedule is a source for pricing
information that is public and transparent and reflects the best
government contract price for a product, we believe it is a desirable
resource for us to use in a refined process for updating the prices of
high-cost supplies. For historical context, CMS has previously proposed
to use VA prices that result from the competitive marketplace as
comparison points to limit the Medicare prices for oxygen and certain
items of durable medical equipment and prosthetic devices (62 FR 38100
through 38107, and 64 FR 44227 through 44231) in 1997 and 1999,
respectively. These prior proposals were based on our determination
that the Medicare payment amounts for these items as durable medical
equipment or prosthetics (not as physicians' services) were not
inherently reasonable. We noted, however, that our current interest in
the GSA schedule for pricing high-cost supplies for payment of
physicians' services is not based on considerations of inherent
reasonableness, and we do not actually pay the prices in the PE
database for supplies under the PFS.
We further noted that public commenters on pricing high-cost
supplies have consistently requested that we ensure that the pricing
information used to update the prices is provided publicly. The
commenters have observed that this transparency would enable
stakeholders to evaluate and provide feedback to the agency on pricing
accuracy (74 FR 61776). We also acknowledged that our past attempts
over several years to identify typical market prices for the high-cost
supplies have been inhibited by the limited availability of public data
that meet the documentation requirements we have previously
established. Individual vendors do not always publish their product
prices or provide typical discounts. Moreover, discounts may vary
depending on suppliers and the volume of supplies purchased. In the CY
2011 PFS proposed rule (75 FR 40082), we explained that our
understanding of the GSA medical supply schedule is that the publicly
listed fair and reasonable prices on the schedule generally do not
include volume and or certain other discounts that may be subsequently
negotiated by the buyer. Consequently, we would consider the prices
available on the GSA schedule to represent the ``individual item
ceiling'' price for a single item purchase, which we believe would be
appropriate to estimate the high-cost supply prices for physicians'
office purchases. We solicited public comments regarding the high-cost
supplies in the direct PE database for the CY 2011 PFS proposed rule,
available on the CMS Web site as noted earlier in this section, and the
corresponding supplies or alternative items that could be used for the
same function that are currently on the GSA supply schedule. We
encouraged commenters to provide a detailed analysis of the current
relationships between the items in the PE database and those on the GSA
schedule.
In the CY 2011 PFS proposed rule (75 FR 40082), we described a
refined process for regularly updating prices for high-cost supplies
under the PFS and solicit comments on how we could improve on this
process. The process could occur every 2 years beginning as soon as CY
2013, although we noted that we would propose the refined process
through rulemaking before revising the prices for any high-cost supply
item based on the GSA schedule. We could also consider establishing a
different price update period depending on whether a high-cost supply
was a new supply in the PE database or had been in use for some time,
in which case we might expect that the price would have stabilized and,
therefore, could be updated less frequently. In general, we would
expect that the periodicity of updating prices for high-cost supplies
that we eventually adopted would balance the associated administrative
burden with the rate of price changes, to ensure that the associated
procedures remain appropriately valued, rather than increasingly
misvalued, over time.
We envisioned that we would base high-cost supply price inputs on
the publicly available price listed on the GSA medical supply schedule.
Since the medical community would have several years to examine the GSA
medical supply schedule before the refined process would be adopted,
and we had found no apparent limitations on vendors placing products on
the GSA schedule, beyond the schedule's interest in competitive, best
value procurements, stakeholders would have the opportunity to ensure
that any high-cost direct PE input for a PFS service that may currently
be missing from the GSA medical supply schedule would be included
before CMS needs to access the publicly available price for the item.
If a supply price were not publicly available on the GSA medical supply
schedule by the time CMS needs to access the price, we would propose to
reduce the current price input for the supply by a percentage that
would be based on the relationship between GSA prices at that time and
the existing PE database prices for similar supplies (currently an
average 23 percent reduction). We believe that this refined process
would be desirable because it is consistent with commenters' repeated
requests for the updating methodology to be transparent and
predictable.
Moreover, the VA (with responsibility delegated by the GSA)
determines whether prices are fair and reasonable by comparing the
prices and discounts that a company offers the government

[[Page 73249]]

with the prices and discounts that the company offers to commercial
customers. Therefore, using the GSA medical supply schedule as a source
for publicly available prices would also better account for product-
specific market dynamics than the alternative of an across-the-board
percentage reduction for supplies not on the GSA schedule based on
general price trends for the high-cost supplies on the schedule. That
is, if the market price of a particular supply were not to drop
according to broad trends for other high-cost supplies, suppliers would
have the opportunity to provide their price to the public on the GSA
schedule in order to preclude any reduction in Medicare payment for
procedures associated with that supply.
Finally, we reiterated our interest in receiving detailed public
comments on the refined process discussed above, including all aspects
of the price update methodology that we have presented. Moreover, we
believe a similar approach could potentially be appropriate to update
the prices for other supplies in the PE database that would not fall
under our definition of high-cost supplies, and we welcomed further
public comments on that possible extension. We also invited further
suggestions for alternative approaches to updating high-cost supply
prices, specifically those that would result in a predictable, public,
and transparent methodology that would ensure that the prices in the PE
database reflect typical market prices. These principles are
particularly important in order to ensure that the services that
utilize the high-cost supplies when provided in the physician's office
are appropriately valued under the PFS and continue to be appropriately
valued over time.
Comment: Many commenters agreed with the need for a frequent,
transparent price update process for high-cost supplies based on
publicly available sources of pricing information. MedPAC supported
CMS' description of the process update the prices of high-cost supplies
presented in the CY 2011 PFS proposed rule: ``As an initial step, it is
reasonable to use the GSA schedule as a source for the prices of high-
cost supply items and to reduce the prices of items not on the GSA
schedule by the average difference between the GSA prices and the
prices in CMS' PE database for similar supplies.''
Response: We appreciate the general affirmation by many
stakeholders of the significance of accurate pricing of high-cost
supplies relative to other PE items (equipment, low-cost supplies, and
clinical labor). We also value MedPAC's support for the update process
that we described for the prices of high-cost supplies.
Comment: Many commenters asserted that because the medical supply
prices on the GSA schedule reflect the best price for government
entities, these prices are not representative of typical prices
available to practitioners caring for Medicare beneficiaries. The
commenters suggested that physicians in private practices do not have
the requisite purchasing power to negotiate such large discounts on
their own and that the sales environments for the government and
private markets are vastly different. Therefore, the commenters argued,
because the GSA schedule is a streamlined buying process that the
government uses to buy products and services through registered vendors
at pre-negotiated prices, the schedule does not provide an accurate
reflection of prices faced by any physician practice. Some commenters
also observed that the prices on this schedule have historically been
used only by manufacturers and suppliers in the context of providing
these high-cost supplies to the VA alone, and do not reflect prices to
other non-governmental entities.
Response: We appreciate the differences in the purchasing power of
the federal government and individual practitioners. However, we have
reason to believe that prices on the GSA schedule do not reflect the
full volume discounts available to large purchasers like the Federal
government. In fact, while the GSA has delegated the authority to the
VA to procure medical supplies under the VA Federal Supply Schedules
Program, we understand that the prices that appear on the schedule do
not reflect the prices the VA itself would usually pay for a medical
supply. Instead, the VA determines the schedule prices to be fair and
reasonable prior to placing them on the schedule, and uses that
schedule price as a starting point for its own negotiations with supply
vendors for specific purchases.
While several commenters explained how vendors provide the VA
itself with discounts that are greater than those offered to other
buyers, and a few additional commenters made uncorroborated claims that
prices on the GSA supply schedule reflect discounts unavailable to
other providers, we received no evidence that the prices contained on
the schedule are atypical of medical supply prices in the private
marketplace. We agree that the prices on the GSA schedule may reflect
some discounting, but we do not believe that the prices reflect the
full discounting available to the VA itself for many purchases.
Instead, we believe that the discounting on the GSA schedule reflects
what the VA has deemed reasonable for other government buyers in the
context of prices and discounts that a vendor offers to commercial
customers.
We also believe that typical practitioners receive discounts from
vendors' listed prices for supply items for a variety of reasons,
although we acknowledge that the basis for the discounts reflected on
the GSA schedule may differ from the basis for the discounts that are
available to typical practitioners. Therefore, we do not necessarily
agree with the premise underlying many commenters' concerns that the
usefulness of the GSA schedule as a source for PFS high-cost supply
prices is necessarily undermined solely because large government buyers
benefit from some exclusive discounts.
We believe that in a relative payment system, maintaining the
relativity of discounting among the prices for supply items may be more
significant than any concern associated with the reasons different
buyers receive particular discounts. At the moment, we have no reason
to believe that the prices on the GSA schedule are atypical of the non-
government market, despite broad assertions by the commenters that the
government may receive discounts for different reasons than those
available to private purchasers. As we consider this high-cost supply
update process for the future, we would be interested in receiving
further public comments that substantiate the claims that medical
supply prices on the GSA schedule are not representative of actual
prices paid by typical practitioners caring for Medicare patients.
Comment: Some commenters expressed concern that pricing high-cost
supplies based on the GSA supply schedule could result in loss of
appropriate relativity in PE RVUs because pricing for other supplies
would be determined using other methodologies.
Response: As stated earlier in this section, we do not actually pay
the supply prices included in the PE database but instead use them to
develop the PE RVUs according to our standard PE methodology as
described in section II.A.2. of this final rule with comment period.
However, we believe that inaccuracies in the prices for high-cost
supplies that are specific to a very few PFS services may
disproportionately distort physician payment by leading to inaccurate
PE RVUs for services using those high-cost supplies. We believe that
neglecting to incorporate any discounts or typical reductions in the
market price for a

[[Page 73250]]

high-cost supply that is sold to a practitioner for use in a specific
service would result in a greater likelihood that the service would be
misvalued under a relative payment system than would similar
imprecision in the prices for lower-cost supplies that are commonly
used in many services and where price changes are typically less
extreme. Finally, we note that we also remain interested in the
possibility of using the GSA supply schedule for all PFS supply and
equipment price inputs, as we stated in the CY 2011 PFS proposed rule
(75 FR 40082).
Comment: One commenter suggested that using the GSA schedule for
supply price inputs might allow a single supplier furnishing a small
volume of a product at a divergent price to distort the PE RVU
calculations. On the other hand, MedPAC stated that the current CMS'
process of ``using price information voluntarily submitted by specialty
societies, individual practitioners, suppliers, and product developers
might not result in objective and accurate prices because each group
has a financial stake in the process.''
Another commenter recommended that if CMS were to use the GSA
schedule prices as high-cost inputs, then CMS should guarantee that
physicians may purchase supplies at the GSA schedule prices. The
commenter claimed that failure to do so would result in inherently
unfair, lower PE RVUs for certain procedures, which could ultimately
create an access to care problem for Medicare beneficiaries.
Response: We believe that our current system of accepting
voluntarily submitted invoices for supply and equipment price direct PE
inputs may be problematic for high-cost supplies because the prices for
such supplies may be particularly susceptible to distortions that
significantly influence the PE RVUs that we use for payment of the
associated services. We also believe that any attempt to account for
these distortions and more appropriately value the services must be
transparent to the stakeholders. Because the prices on the GSA supply
schedule are developed based on the interaction between parties that
have competing financial interests (the VA and supply vendors), we
believe that these prices are more likely to be representative of
competitive market prices than are prices that are voluntarily
submitted by individuals with financial stakes in the PFS payment
process. We agree that distortions--whether price overstatements or
understatements--in the values of the direct PE inputs, resulting in
misvalued services, have the potential to create financial incentives
for practitioners that are detrimental to ensuring access to medically
necessary and reasonable care for Medicare beneficiaries. Based in part
on prior analysis by MedPAC, we believe that the greater risk of
misvalued PE RVUs results from overvaluing high-cost supplies since we
believe that prices for these items may generally decrease over time as
competition increases.
As we discussed in our response to a previous comment, we do not
actually use the prices in the PE database for supplies but instead
those prices are the basis for the PE RVUs for the associated services
developed under the budget neutral PFS. Therefore, we do not agree with
the commenter that we should guarantee that physicians may purchase
supplies at the GSA schedule prices. Where our goal is for the high-
cost supply prices we use for PFS ratesetting to reflect typical market
prices for these items, especially in a relative sense, for many
reasons different supplies may not be available to individual
practitioners purchasing them at the prices in the PE database. The PFS
is not a payment system that reimburses health care practitioners based
on their individual costs, and the price available to an individual
practitioner for a supply item may be high or lower than the price in
the PE database that is used for setting the PFS PE RVUs for the
associated procedure.
Comment: One commenter claimed that no U.S. manufacturer sells
cryoablation probes through the GSA supply schedule and, therefore,
asserted that the pricing process for high-cost supplies described in
the CY 2011 PFS proposed rule would be inappropriate for that
particular supply. Other commenters reported difficulty locating
particular medical supplies on the GSA supply schedule.
Response: While we recognize that not all high-cost supplies are
currently on the GSA supply schedule, as we stated in the CY 2011 PFS
proposed rule (75 FR 40082), we believe that since we have provided the
medical community several years to examine the GSA medical supply
schedule before its use could be adopted under the PFS, stakeholders
would have the opportunity to ensure that any high-cost direct PE input
for a PFS service that may currently be missing from the GSA medical
supply schedule would be included before CMS needs to access the
publicly available price for the item. Furthermore, we have found that
the use of multiple clinically related search terms under the GSA
schedule search engine improves our ability to locate supply items that
are related to those that we currently include in the direct PE
database for the PFS. We believe that the mistaken assumption that
certain supplies are unavailable on the GSA supply schedule, resulting
from some commenters' inconclusive searches, may have influenced many
commenters' responses to the process we discussed in the CY 2011 PFS
proposed rule.
Prior to adopting use of the GSA supply schedule to update the
prices for high-cost supplies under the PFS, we believe it would be
appropriate to work with interested stakeholders to consider developing
a crosswalk between supply items included the direct PE database and
the GSA supply schedule.
Comment: One commenter contended that implementation of a process
to update high-cost supply prices based on the GSA schedule would
disadvantage all medical device companies that have chosen to provide
devices directly to the armed services or facilities for the treatment
of veterans. A few commenters speculated that many supply vendors would
resist placing their products on the GSA schedule for a variety of
reasons, including avoiding any unnecessary regulatory burden or the
scrutiny of GSA audits.
Response: We have no reason to believe that vendors who sell
directly to the VA at discounts must incorporate negotiated discounted
prices on the GSA schedule, so we do not believe that utilizing
publicly available prices as direct PE inputs would have a
disproportionately unfair impact on suppliers who sell directly to the
VA. At the same time, we also understand that not every medical supply
vendor would choose to place their products on the GSA schedule. That
is why we stated in the proposed rule (75 FR 40082) that if a supply
price were not publicly available on the GSA medical supply schedule by
the time CMS needs to access the price, we would consider proposing to
reduce the current price input in the PE database for the supply by a
percentage that would be based on the relationship between GSA prices
at that time and the existing PE database prices for similar supplies.
Vendors would need to balance their concerns about placing their
products on the GSA supply schedule with the alternative pricing policy
that would apply.
Comment: Several commenters objected to a reduction of supply price
inputs based on the relationship between GSA prices at the time the
prices are being updated and the existing PE database prices for
similar supplies. Many of the commenters stated that the 23 percent
reduction presented as an example in the CY 2011 PFS proposed rule (75
FR 40082) was

[[Page 73251]]

based on a very small sample of items and appeared arbitrary. One
commenter contended that the percentage reduction would need to be
validated for application to current pricing and argued that it would
be inappropriate for use on an item-specific basis.
Additional commenters, including the AMA RUC, pointed out the
discrepancy between the price of the ``jejunostomy tube'' supply item
listed in the chart of high-cost supplies and in the direct PE
database. These commenters were concerned that this discrepancy may
have led CMS to incorrectly calculate the average difference between
GSA prices and current prices in the direct PE database. One commenter
reasoned that it would be unfair for CMS to change the price inputs for
innovative medical devices by relying on ``speculation that prices for
these items may decrease over time as competition increases and new
technologies disseminate into medical practice.''
Response: We appreciate the commenters' concerns regarding the
example of the 23 percent reduction mentioned in the CY 2011 PFS
proposed rule. We provided that sample percentage as an example based
on a current analysis of a small sample of supplies. We appreciate
commenters correctly pointing out that we displayed an outdated price
input for the supply item ``jejunostomy tube'' in the CY 2011 PFS
proposed rule (75 FR 40080 through 40081). As we explained in the
proposed rule, we are still working through the crosswalk between our
supplies and the way the supplies are presented on the GSA schedule. We
included the 23 percent figure as a rough guide based on a comparison
of current GSA schedule and PE database prices for a small sample of
high-cost supply items.
Prior to implementing any price update based on GSA supply schedule
prices, we would conduct a thorough analysis of the validity of the GSA
pricing data in question. We believe that using such data for price
comparisons, validated, and expanded to include all applicable supply
items, may be more likely to approximate typical prices for these
supplies than any available alternative--especially failing to update
the high-cost supply price inputs with the necessary frequency. In
cases where the prices for certain high-cost supplies do not follow the
broad trends for other high-cost supplies, suppliers would have the
opportunity to provide their price to the public on the GSA schedule in
order to preclude any reduction in Medicare payment for procedures
associated with that supply.
Comment: Some commenters asserted that CMS should conduct
independent market research similar in kind to the research CMS claims
that the VA conducts in placing supply items and their associated
prices on the GSA schedule. Another commenter recommended that CMS use
a particular market research contractor to price these supplies.
Response: As we stated in the CY 2011 PFS proposed rule (75 FR
40079), we contracted with an independent contractor during CY 2009 to
help us study the availability of accurate pricing information for
high-cost supplies. We believe such research needs to be conducted with
transparency, including using publicly available sources and contacting
supply vendors directly. The contractor reported tremendous difficulty
in identifying typical market prices using these methods. We have no
reason to believe that a different contractor using similar methods
would have greater success in acquiring market pricing information
without utilizing a methodology that would be burdensome to
practitioners or supply vendors or other stakeholders. Because the
supply vendors in contact with the VA generally have a financial
incentive to cooperate with their market research directly, we believe
that the VA's methodology in this case would yield more accurate
information than information derived from market researchers who do not
have such cooperation, like the contractor working previously on behalf
of CMS.
Comment: Several commenters, including the AMA RUC, recommended
that CMS consider creating HCPCS codes to be reported by rendering
physicians for high-cost supplies when used for the care of a patient
during procedure. The supplies could then be removed from the direct PE
database and appropriate pricing for these supply HCPCS codes could be
determined by CMS on an annual basis. One commenter requested that CMS
explore whether such a methodology would be budget neutral under the
PFS, since the commenter did not support an approach that would reduce
PFS payments for cognitive services.
Response: We appreciate the commenters' suggestions, but we believe
creating separately reportable HCPCS codes for high-cost supplies and
paying separately for these items would merely shift the pricing
challenge rather than resolve it, and could compound the problem of
misvaluing services by explicitly paying for high-cost supplies at the
expense of other low-cost supplies, equipment, and clinical labor
included in the PE component of PFS payment. We do not understand how
this suggestion would help CMS price the supply items accurately, nor
how it would lead to more appropriate payment for high-cost supplies
under the relativity of the budget neutral PFS. This approach would be
required to be budget neutral under the PFS and, to the extent that our
current PE methodology pays less than the direct PE database cost for a
supply item, payment for individual high-cost supplies at prices we
establish could redistribute dollars from other PFS services to payment
for these supply items if we were to pay more for them separately.
Finally, unbundling payment for high-cost supplies from the associated
procedures would be contrary to the current public policy interest in
increasing the size of the payment bundles used for Medicare payment to
encourage efficiencies in the delivery of services.
Comment: Several commenters expressed a readiness to provide any
additional information that may help CMS in pricing high-cost supplies,
in lieu of using the GSA schedule prices for that purpose.
Response: We appreciate commenters' offers of assistance regarding
the pricing of direct PE inputs. However, based on the public comments
from stakeholders that we received on the process we proposed in the CY
2009 PFS proposed rule and the experience of the CMS' contractor who
attempted to acquire market pricing for supply items directly from
supply vendors, we believe that use of the GSA schedule would have
greater potential to provide us systematically and transparently with
typical market prices for high-cost supply items that could be updated
with an appropriate periodicity.
Comment: Some commenters expressed concern that CMS had not
presented any information about how prices for Medicare PE purposes
would actually be developed from the GSA supply schedule and had not
specified how the Agency would do so nor whether (or when) CMS intended
to make the approach available for public comment.
Response: We appreciate the commenters' concerns regarding the
practical implementation of a high-cost supply price update process
based on prices on the GSA supply schedule. In the CY 2011 PFS proposed
rule (75 FR 40082), our discussion was intended to encourage broad
stakeholder comment, including consideration of potential alternatives
to the process presented. Prior to implementing a high-cost supply
update methodology, such as the use of prices on the GSA schedule that
was the focus of our proposed rule

[[Page 73252]]

discussion, we would expect to use annual rulemaking in order to
propose a more detailed process that would be subject to modification
based upon our consideration of the public comments.
In summary, we appreciate the many public comments we received on
our discussion of a process that would use GSA schedule prices to
update the prices for high-cost supplies utilized for developing PE
RVUs under the PFS. In the context of our explicit responsibility to
review and adjust the PFS values for potentially misvalued services
under section 1848(c)(2)(K) of the Act (as added by section 3134 of the
ACA), we believe it is especially important to soon establish a
periodic and transparent process to update the cost of high-cost
supplies to reflect typical market prices so that these supply items
are appropriately considered in our ratesetting methodology. While
public commenters expressed some concerns regarding our discussion of
use of the GSA supply schedule prices in such a process, at this point
we remain optimistic that this approach has significant potential to be
used under the PFS and, based on our several year history of work in
this area, we do not see other viable alternatives at this point. We
will continue to study the issue of how to update the prices for high-
cost supplies over the upcoming months, and we encourage stakeholders
to also further consider the process we discussed in CY 2011 rulemaking
and provide their additional thoughts and perspectives to us on an
ongoing basis.

D. Geographic Practice Cost Indices (GPCIs)

1. Background
Section 1848(e)(1)(A) of the Act requires us to develop separate
Geographic Practice Cost Indices (GPCIs) to measure resource cost
differences among localities compared to the national average for each
of the three fee schedule components (that is, work, PE, and
malpractice). While requiring that the PE and malpractice GPCIs reflect
the full relative cost differences, section 1848(e)(1)(A)(iii) of the
Act requires that the physician work GPCIs reflect only one-quarter of
the relative cost differences compared to the national average. In
addition, section 1848(e)(1)(G) of the Act sets a permanent 1.5 work
GPCI floor in Alaska for services furnished beginning January 1, 2009.
Section 1848(e)(1)(C) of the Act requires us to review and, if
necessary, adjust the GPCIs not less often than every 3 years. This
section also specifies that if more than 1 year has elapsed since the
last GPCI revision, we must phase in the adjustment over 2 years,
applying only one-half of any adjustment in each year. As discussed in
the CY 2009 PFS final rule with comment period (73 FR 69740), the CY
2009 adjustment to the GPCIs reflected the fully implemented fifth
comprehensive GPCI update. CY 2010 would have typically included no
adjustments to the GPCIs. However, section 3102(a) of the ACA amended
section 1848(e)(1)(E) of the Act to extend the 1.0 work GPCI floor for
services furnished through December 31, 2010. Additionally, section
3102(b) of the ACA added a new subparagraph (H) to section 1848(e)(1)
of the Act, which specifies that for CY 2010 and CY 2011, the employee
compensation and rent portions of the PE GPCI must reflect only one-
half of the relative cost differences for each locality compared to the
national average. The new subparagraph also includes a ``hold
harmless'' provision for CY 2010 and CY 2011 for any PFS locality that
would otherwise receive a reduction to its PE GPCI resulting from the
limited recognition of cost differences. Additionally, section
1848(e)(1)(I) of the Act (as added by section 10324(c) of the ACA)
established a 1.0 PE GPCI floor for services furnished in frontier
States effective January 1, 2011. In May 2010, we provided our Medicare
contractors with an updated CY 2010 payment file that included the 1.0
work GPCI floor and the PE GPCIs calculated according to the
methodology required by section 1848(e)(1)(H) of the Act (as added by
section 3102(b) of the ACA) for CY 2010, to be used for payment of
services furnished on or after January 1, 2010.
For the CY 2011 PFS proposed rule, we completed the sixth review of
the GPCIs and proposed new GPCIs. We noted that section 1848(e)(1)(E)
of the Act (as amended by section 3102(a) of the ACA) extends the 1.0
work GPCI floor only through December 31, 2010. Under current statute,
the 1.0 work GPCI floor will expire on January 1, 2011. Therefore, the
CY 2011 physician work GPCIs, and summarized geographic adjustment
factors (GAFs), do not reflect the 1.0 work floor. However, section
1848(e)(1)(G) of the Act (as amended by section 134(b) of the MIPPA)
set a permanent 1.5 work GPCI floor in Alaska for services furnished
beginning January 1, 2009 and, as noted above, section 1848(e)(1)(I) of
the Act (as added by section 10324(c) of the ACA) provides for a
permanent 1.0 PE GPCI floor for frontier States effective January 1,
2011. Therefore, as required by the statute, the 1.5 work GPCI floor
for Alaska and the 1.0 PE GPCI floor for frontier States will be in
effect for CY 2011. In addition to the limited recognition of certain
cost differences for the PE GPCIs, section 1848(e)(1)(H) of the Act (as
added by section 3102 (b) of the ACA) also requires us to complete an
analysis of the data sources used and cost share weights assigned to
the PE GPCIs. Implementation of the ACA provisions related to the CY
2011 PE GPCIs is discussed in more detail in the GPCI update section
below.
2. GPCI Update
As discussed in the CY 2011 PFS proposed rule (75 FR 40083), the
updated GPCI values were developed by Acumen, LLC (Acumen) under
contract to CMS. As mentioned above, there are three GPCI components
(physician work, PE, and malpractice), and all GPCIs are developed
through comparison to a national average for each component.
Additionally, each of the three GPCIs relies on its own data source(s)
and methodology for calculating its value as described below.
a. Physician Work GPCIs
The physician work GPCIs are designed to capture the relative cost
of physician labor by Medicare PFS locality. Previously, the physician
work GPCIs were developed using the median hourly earnings from the
2000 Census of workers in seven professional specialty occupation
categories which we used as a proxy for physicians' wages and
calculated to reflect one-quarter of the relative cost differences for
each locality compared to the national average. Physicians' wages are
not included in the occupation categories because Medicare payments are
a key determinant of physicians' earnings. Including physicians' wages
in the physician work GPCIs would, in effect, have made the indices
dependent upon Medicare payments.
The physician work GPCIs were updated in CYs 2001, 2003, 2005, and
2008 using professional earnings data from the 2000 Census. However,
wage and earnings data are no longer available from the Census long
form and the 2000 data are outdated. Therefore, for the proposed sixth
GPCI update, we used the 2006 through 2008 Bureau of Labor Statistics
(BLS) Occupational Employment Statistics (OES) data as a replacement
for the 2000 Census data. The use of BLS OES data as a replacement for
the 2000 Census data is discussed in more detail in the update of the
PE GPCIs section. As noted above, the 1.0 work GPCI floor is set to
expire under current statute on December 31, 2010. Therefore, the CY
2011 proposed

[[Page 73253]]

physician work GPCIs reflected the removal of this floor.
b. Practice Expense GPCIs
(1) The Affordable Care Act Requirements for PE GPCIs
(A) General Methodology for the CY 2011 GPCIs
The ACA added a new subparagraph (H) to section 1848(e)(1) of the
Act which revised the methodology for calculating the PE GPCIs for CY
2010 and CY 2011 so that the employee compensation and rent portions of
the PE GPCIs reflect only one-half of the relative cost differences for
each locality compared to the national average. Additionally, under
section 1848(e)(1)(H)(iii) of the Act (as added by section 3102(b) of
the ACA), each PFS locality is held harmless so that the PE GPCI will
not be reduced as a result of the change in methodology for PE GPCIs.
In accordance with section 1848(e)(1)(H)(ii) of the Act (as added by
section 3102(b) of the ACA), the employee compensation and rent
components of the proposed CY 2011 PE GPCIs were calculated to reflect
one-half of the cost differences for each PFS locality relative to the
national average cost. Additionally, as required by the statute,
physicians' services furnished in each PFS locality would be adjusted
by the higher of the locality's PE GPCI calculated with the limited
recognition of employee compensation and rent cost differences or the
PE GPCI calculated without the limited recognition of cost differences.
(B) Phase-In of PE GPCIs
Section 1848(e)(1)(C) of the Act requires us to phase in GPCI
adjustments over 2 years if there was more than 1 year between GPCI
adjustments. In accordance with the statute, we proposed to phase in
the updated PE GPCIs using one-half of the CY 2010 values and one-half
of the fully implemented values (as described in this section). To
apply the phase-in and hold harmless provisions of the Act, we
calculated transitional PE GPCIs based on two scenarios. Under the
first scenario, we calculated transitional CY 2011 PE GPCIs using the
full recognition of employee compensation and rent cost differences for
each locality as compared to the national average. As discussed below,
the first scenario reflects the ``hold harmless'' transitional PE GPCI
value that would apply to any PFS locality receiving a reduction to its
PE GPCI resulting from the application of the limited recognition of PE
cost differences. The CY 2011 transitional PE GPCI values with full
recognition of cost differences were calculated using one-half of the
CY 2010 PE GPCI values with full recognition of cost differences and
one-half of the updated PE GPCIs with full recognition of cost
differences. The first scenario represents the transitional PE GPCI
values prior to the limited recognition of cost differences (the pre-
ACA CY 2011 transitional values). In other words, this scenario does
not include the effects of sections 1848(e)(1)(H)(i) and (ii) of the
Act (as added by section 3102(b) of the ACA).
For the second scenario, we calculated transitional CY 2011 PE
GPCIs with the limited recognition of cost differences for the employee
compensation and rent components (as required by sections
1848(e)(1)(H)(i) and (ii) of the Act (as added by section 3102(b) of
the ACA)). The CY 2011 transitional PE GPCI values with the limited
recognition of cost differences were calculated using one-half of the
CY 2010 PE GPCIs with the limited cost differences and one-half of the
updated PE GPCIs with the limited cost differences. The hold harmless
provision under section 1848(e)(1)(H)(iii) of the Act (as added by
section 3102(b) of the ACA) was applied by selecting the greater of the
CY 2011 transitional PE GPCI value calculated with the limited
recognition of cost differences or the CY 2011 transitional PE GCPI
value calculated with full recognition of cost differences (the pre-ACA
CY 2011 transitional values). The phase-in of the CY 2011 PE GPCIs and
application of the hold harmless provision are illustrated in Table 23
below.

Table 23--Phase-In of the CY 2011 PE GPCIs
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2011 (transitional
CY 2010 Updated GPCIs year) Hold harmless
--------------------------------------------------------------------------------------------------------------------------------------------------------
File 1:
PE GPCI Without 3102(b) of ACA... Without ACA.......... Without ACA (Updated (\1/2\ of 2010) + (\1/2\ Greater of File 1 Transitional Value or File
Data). Updated GPCI). 2 Transitional Value.
File 2:
PE GPCI With 3102(b) of ACA...... With ACA............. With ACA (Updated (\1/2\ of 2010 w/ACA) +
Data). (\1/2\ Updated GPCI w/
ACA).
--------------------------------------------------------------------------------------------------------------------------------------------------------

(C) Data Analysis
Section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b)
of the ACA) also requires the Secretary to ``analyze current methods of
establishing practice expense adjustments under subparagraph (A)(i) and
evaluate data that fairly and reliably establishes distinctions in the
cost of operating a medical practice in different fee schedule areas.''
Section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of
the ACA) requires that such analysis shall include an evaluation of the
following:
The feasibility of using actual data or reliable survey
data developed by medical organizations on the costs of operating a
medical practice, including office rents and non-physician staff wages,
in different fee schedule areas.
The office expense portion of the practice expense
geographic adjustment, including the extent to which types of office
expenses are determined in local markets instead of national markets.
The weights assigned to each area of the categories within
the practice expense geographic adjustment.
This section also requires the Secretary to make appropriate
adjustments to the PE GPCIs no later than by January 1, 2012. To begin
to implement this statutory requirement based on our initial analysis,
we proposed to implement changes in PE data sources and cost share
weights discussed herein effective beginning in CY 2011.
In accordance with section 1848(e)(1)(H)(iv) of the Act (as added
by section 3102(b) of the ACA), we initially analyzed the current
methods and data sources used in the establishment of the PE GPCIs.
With respect to the method used, we began with a review of the GAO's
March 2005 Report entitled, ``MEDICARE PHYSICIAN FEES: Geographic
Adjustment Indices Are Valid in Design, but Data and Methods Need
Refinement'' (GAO-05-119). While we have raised concerns in the past
about some of the GAO's GPCI

[[Page 73254]]

recommendations, we noted that with respect to the PE GPCIs, the GAO
did not indicate any significant issues with the methods underlying the
PE GPCIs. Rather, the report focused on some of the data sources used
in the method. For example, the GAO stated that the wage data used for
the PE GPCIs are not current. Similarly, upon our reexamination of
public comments we had received on the PE GPCIs for previous updates,
we noted that the commenters predominately focused on either the data
sources used in the method or raised issues such as incentivizing the
provision of care in different geographic areas. However, the latter
issue (incentivizing the provision of care) is outside the scope of the
statutory requirement that the PE GPCIs reflect the relative costs of
the mix of goods and services comprising practice expenses in the
different fee schedule areas relative to the national average.
One key component of the PE GPCI method that our analysis
identified involved the office expense portion of the PE GPCIs and the
cost share weight assigned to this component. Most significantly, we
proposed that the weight for the office rent component be revised from
12.209 percent to 8.410 percent to reflect our more detailed breakout
of the types of office expenses that are determined in local markets
instead of national markets. For example, for previous GPCI updates, we
used the office expenses cost category as the cost share weight for
office rent and, therefore, all individual components previously
included in the office expenses category were adjusted for local area
cost differences by the GPCIs. As discussed in section II.E. of this
final rule with comment period, we proposed to disaggregate the broader
office expenses component into 9 new cost categories as part of the
proposed CY 2011 MEI rebasing. The disaggregation of the office
expenses category indicates that the fixed capital cost category, for
which the consumer price index (CPI) for owner's equivalent rent is the
price proxy, is the office expense category applicable to the office
rent component of the PE GPCI. Therefore, the fixed cost capital cost
category is the only component of office expenses that we proposed to
adjust for local area cost differences beginning in CY 2011. We
proposed to assign other newly defined components of the office
expenses category (for example, utilities, chemicals, paper, rubber and
plastics, telephone, postage, and moveable capital) to the medical
equipment, supplies, and other miscellaneous expenses cost component of
the PE GPCIs. As discussed later in this section, the medical
equipment, supplies, and other miscellaneous expenses component of the
PE GPCIs is assumed to have a national market and, therefore, this
component is not adjusted for local area cost differences.
The proposed expense categories for the PE GPCIs, along with their
respective cost share weights, are primarily derived from the 2006
American Medical Association (AMA) Physician Practice Information
Survey (PPIS) for self-employed physicians and selected self-employed
non-medical doctor specialties. The PPIS is the most comprehensive,
multispecialty, contemporaneous, and consistently collected PE data
source available. It was developed by medical organizations and
captures the costs of operating a medical practice, including office
rents and nonphysician staff wages. Moreover, we also examined the
feasibility of using the American Community Survey (ACS) and the Bureau
of Labor and Statistics (BLS) Occupational Employment Statistics (OES)
data for the employee compensation component of the PE GPCI. For
previous updates, the employee compensation component was based on the
2000 Decennial Census long form data. Since the Census data are
significantly outdated and the 2010 Census no longer includes
occupational wage data, we believe the ACS or BLS OES data might be
viable alternatives. While the ACS 3-year public use microsample (PUMS)
is currently available, it reflects only about 3 percent of households
and the data exhibit significant variation due to the small sample. In
particular, the ACS PUMS has fewer than 10 observations of pharmacists
in the Manhattan; Beaumont, Texas; and Southern Maine localities.
Therefore, we believe it would be premature to use the ACS data for
determining GPCI values. The 2006, 2007, and 2008 panels from the BLS
OES represent a larger sample than the ACS PUMS and more recent data
than the 2000 Census. As such, we proposed to use the BLS OES data for
updating the GPCIs. We look forward to exploring the use of the full
ACS data when they become available. Additionally, we explored other
sources of rent data (including commercial rental data and survey data)
for use in calculating the PE GPCIs. We could not identify a reliable
alternative rental data source available on a national basis with
coverage of nonmetropolitan areas.
We do not believe there is a national data source better than the
Housing and Urban Development (HUD) data for determining the relative
cost differences in office rents. Therefore, based on our review of the
available data sources, we proposed to use the 2010 apartment rental
data produced by HUD at the 50th percentile as a proxy for the relative
cost difference in physician office rents.
In the proposed rule (75 FR 40085), we indicated that we believe
our analysis of the current methods of establishing PE GPCIs and our
evaluation of data that fairly and reliably establish distinctions in
the cost of operating a medical practice in the different fee schedule
areas meet the statutory requirements of section 1848(e)(1)(H)(iv) of
the Act (as added by section 3102(b) of the ACA). A more detailed
discussion of our analysis of current methods of establishing PE GPCIs
and evaluation of data sources is included in Acumen's draft report.
Acumen's draft report and associated analysis of the sixth GPCI update,
including the PE GPCIs, was posted on the CMS Web site after display of
the CY 2011 PFS proposed rule. The draft report may be accessed from
the PFS Web site at: http://www.cms.gov/PhysicianFeeSched/ under the
``Downloads'' section of the CY 2011 PFS proposed rule Web page.
Acumen's final report and associated analysis of the sixth GPCI update
will be posted on the CMS Web site after publication of the CY 2011 PFS
final rule with comment.
(D) Determining the PE GPCI Cost Share Weights
To determine the cost share weights for the CY 2011 GPCIs, we
proposed to use the proposed 2006-based Medicare Economic Index (MEI)
as discussed in section II.E. of this final rule with comment period.
The proposed MEI was rebased and revised to reflect the weighted-
average annual price change for various inputs needed to provide
physicians' services. As discussed in detail in that section, the
proposed expense categories in the MEI, along with their respective
weights, were primarily derived from data collected in the 2006 AMA
PPIS for self-employed physicians and selected self-employed non-
medical doctor specialties.
For the cost share weight for the PE GPCIs, we used the 2006-based
MEI weight for the PE category of 51.734 percent minus the professional
liability insurance category weight of 4.295 percent. Therefore, we
proposed a cost share weight for the PE GPCIs of 47.439 percent. For
the employee compensation portion of the PE GPCIs, we used the
nonphysician employee compensation category weight of 19.153 percent.
The fixed capital category weight of 8.410, for which the CPI for

[[Page 73255]]

owner's equivalent rent is the price proxy, was used for the office
rent component. To determine the medical equipment, supplies, and other
miscellaneous expenses component, we removed professional liability
(4.295 percent), nonphysician employee compensation (19.153 percent),
and fixed capital (8.410 percent) from the PE category weight (51.734
percent). Therefore, we proposed a cost share weight for the medical
equipment, supplies, and other miscellaneous expenses component of
19.876 percent.
Furthermore, the physician compensation cost category and its
weight of 48.266 percent reflected the proposed work GPCI cost share
weight and the professional liability insurance weight of 4.295 percent
was used for the malpractice GPCI cost share weight. In the proposed
rule (75 FR 40085), we stated that we believe our analysis and
evaluation of the weights assigned to each of the categories within the
PE GPCIs meets the statutory requirements of section 1848(e)(1)(H)(iv)
of the Act (as added by section 3102(b) of the ACA).
The proposed cost share weights for the CY 2011 GPCIs are displayed
in Table 24 below.

Table 24--Cost Share Weights for CY 2011 GPCI Update
------------------------------------------------------------------------
Current Proposed
Expense category cost share cost share
weight (%) weight (%)
------------------------------------------------------------------------
Physician Work................................ 52.466 48.266
Practice Expense.............................. 43.669 47.439
--Employee Compensation................... 18.654 19.153
--Office Rent............................. 12.209 8.410
--Equipment, Supplies, Other.............. 12.806 19.876
Malpractice Insurance......................... 3.865 4.295
Total......................................... 100 100
------------------------------------------------------------------------

(E) PE GPCI Floor for Frontier States
Section 10324(c) of the ACA added a new subparagraph (I) under
section 1848(e)(1) of the Act to establish a 1.0 PE GPCI floor for
physicians' services furnished in frontier States. In accordance with
section 1848(e)(1)(I) of the Act (as added by section 10324(c) of the
ACA), beginning in CY 2011, we applied a 1.0 PE GPCI floor for
physicians' services furnished in States determined to be frontier
States. The statute requires us to define any State as a frontier State
if at least 50 percent of the State's counties are determined to be
frontier counties, which the statute defines as counties that have a
population density less than 6 persons per square mile. However,
section 1848(e)(1)(I) of the Act (as added by section 10324(c) of the
ACA) also specifies that this provision shall not apply to States
receiving a non-labor related share adjustment under section
1886(d)(5)(H) of the Act (which excludes Alaska and Hawaii from
qualifying as a frontier State).
Consistent with the proposed FY 2011 hospital inpatient prospective
payment system (IPPS) 1.0 wage index floor for frontier States (as
required by section 10324(a) of the ACA) (75 FR 30920 through 30921),
we proposed to identify frontier counties by analyzing population data
and county definitions based upon the most recent annual population
estimates published by the U.S. Census Bureau. We divided each county's
population total by each county's reported land area (according to the
decennial census) in square miles to establish population density. We
also proposed to update this analysis from time to time, such as upon
publication of a subsequent decennial census, and if necessary, add or
remove qualifying States from the list of frontier States based on the
updated analysis.
For a State that qualifies as a frontier State, in accordance with
section 1848(e)(1)(I) of the Act (as added by section 10324(c) of the
ACA), we proposed that physicians' services furnished within that State
would receive the higher of the applicable PE GPCI value calculated
according to the standard CY 2011 methodology or a minimum value of
1.00. Furthermore, in accordance with section 1848(e)(1)(I) of the Act
(as added by section 10324(c) of the ACA), the frontier State PE GPCI
floor is not subject to budget neutrality and would only be extended to
physicians' services furnished within a frontier State.
For determining the proposed CY 2011 PFS PE GPCI values, the
frontier States are the following: Montana; Wyoming; North Dakota;
Nevada; and South Dakota (as reflected in Table 25).

Table 25--Frontier States Under Section 1848(e)(1)(I) of the Act
[as Added by Section 10324(c) of the ACA]
------------------------------------------------------------------------
Percent
State Total Frontier frontier
counties counties counties
------------------------------------------------------------------------
Montana.......................... 56 45 80
Wyoming.......................... 23 17 74
North Dakota..................... 53 36 68
Nevada........................... 17 11 65
South Dakota..................... 66 34 52
------------------------------------------------------------------------

(2) Summary of the CY 2011 PE GPCIs
The PE GPCIs include three components: employee compensation,
office rent, and medical equipment, supplies and miscellaneous expenses
as discussed below:
Employee Compensation: We used the 2006 through 2008 BLS
OES data to determine the proposed employee

[[Page 73256]]

compensation component of the PE GPCIs. The proposed employee
compensation component accounted for 40.4 percent of the total PE
GPCIs.
Office Rents: Consistent with the previous GPCI update, we
used the most recent residential apartment rental data produced by HUD
(2010) at the 50th percentile as a proxy for the relative cost
differences in physician office rents. The proposed office rent
component accounted for 17.7 percent of the PE GPCIs.
Medical Equipment, Supplies, and other Miscellaneous
Expenses: We assumed that items such as medical equipment and supplies
have a national market and that input prices do not vary among
geographic areas. As discussed in previous GPCI updates in the CY 2005
and CY 2008 PFS proposed rules, specifically the fourth GPCI update (69
FR 47503) and fifth GPCI update (72 FR 38138), respectively, some price
differences may exist, but we believe these differences are more likely
to be based on volume discounts rather than on geographic market
differences. For example, large physicians' practices may utilize more
medical equipment and supplies and therefore may or may not receive
volume discounts on some of these items. To the extent that such
discounting may exist, it is a function of purchasing volume and not
geographic location. The proposed medical equipment, supplies, and
miscellaneous expenses component was factored into the PE GPCIs with a
component index of 1.000. The proposed medical equipment, supplies, and
other miscellaneous expense component accounted for 41.9 percent of the
PE GPCIs.
c. Malpractice GPCIs
The malpractice GPCIs are calculated based on insurer rate filings
of premium data for $1 million to $3 million mature claims-made
policies (policies for claims made rather than services furnished
during the policy term). The CY 2011 malpractice GPCI update reflects
2006 and 2007 premium data.
d. Public Comments and CMS Responses on the Proposed 6th GPCI Update
We received many public comments regarding the CY 2011 proposed
GPCIs. Summaries of the comments and our responses follow.
Comment: Many commenters requested that CMS delay implementation of
the changes in underlying PE GPCI data and cost share weights until
complete findings and recommendations from the Institute of Medicine's
study of geographic adjustment factors for physician payment, the
Secretary's Medicare Geographic Payment Summit, and the MEI technical
advisory panel have been developed and considered. A few commenters
acknowledged that the BLS OES data is the best data source for updating
the GPCIs for CY 2011 but expressed concern that it provides data for
MSAs and rest of state areas and not counties. The commenters believe
that collecting data at the MSA level distorts the accuracy of the
input costs and requested that CMS delay the update until the full ACS
data can be evaluated and compared with the BLS OES data. A few
commenters requested that CMS delay the GPCI update for CY 2011 as was
done in the CY 2004 PFS final rule with comment period for the 4th GPCI
update.
Additionally, several commenters stated that a more comprehensive
analysis and evaluation of the PE GPCI is required by the ACA, further
noting that section 1848(e)(1)(H)(v) of the Act (as added by section
3102(b) of the ACA) allows CMS until January 1, 2012 to implement the
findings from the analysis of PE data. To that end, several commenters
requested a more comprehensive analysis of the occupational groups used
to determine the employee wage component of the PE GPCI to reflect the
``true costs'' incurred by physician groups in the delivery of health
care to Medicare beneficiaries. The commenters cited pharmaceutical,
accounting, legal, computer science, and management professionals as
examples of the types of nonphysician labor costs that should be
included in the determination of the employee compensation index.
Several commenters also stated that HUD rental data does not reflect
the ``actual costs'' of physician office rent and therefore should be
replaced by another data source.
Response: Section 1848(e)(1)(C) of the Act requires us to review
and update the GPCIs at least every 3 years. When updating the GPCIs we
believe we should use the best data that are currently available. As
mentioned by the commenters, the BLS OES data are more timely data than
the 2000 census data (which has been used for previous GPCI updates).
We believe that the BLS OES data, which are currently available, are an
appropriate and relevant data source for updating the work GPCIs and
employee compensation component of the PE GPCIs. Also because of the
timeliness of the data, we believe that using the BLS OES data would
result in a more accurate reflection of the geographic practice cost
differences among PFS localities than not updating the GPCIs for CY
2011.
While we believe it is appropriate to finalize updated GPCIs for CY
2011 using the most current data, we also acknowledge that there is
much ongoing analysis that may inform future GPCI changes. Therefore,
as discussed below, we are not using the revised cost share weights for
the CY 2011 GPCIs that would apply under the revised and rebased MEI
for CY 2011. We will address the GPCI cost share weights once again in
the CY 2012 PFS proposed rule, and we may make additional proposals
that would further modify the GPCI data and/or methods for CY 2012.
Additionally, we will review the complete findings and
recommendations from the Institute of Medicine's study of geographic
adjustment factors for physician payment, the Secretary's Medicare
Geographic Payment Summit, and the MEI technical advisory panel, and we
will continue to study the issues as required by section
1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of the ACA).
We will once again consider the GPCIs for CY 2012 in the context of our
annual PFS rulemaking beginning in CY 2011 based on the information
available at that time. The CY 2011 GPCIs arising from the 6th GPCI
update reflect our initial review and response to the currently
available GPCI data, methods, and cost share weights. Once the full ACS
data are available, we will reassess the occupational groups used to
determine the employee compensation component of the PE GPCI and
continue to explore the use of commercial rent data as part of our
ongoing analysis of the GPCIs. We anticipate that further information,
including our review of the full ACS data, may lead to proposed
additional refinements to the GPCIs for future years. We have addressed
the CY 2011 GPCI cost share weights in response to other public
comments received on the CY 2011 PFS proposed rule that are summarized
later in this section.
With regard to the commenters who expressed concern that the BLS
OES data are not collected at the county level, we note that the 2000
Decennial Census data are only available at the county level for
approximately 10 percent of counties. For previous updates, the GAFs
for more than 90 percent of counties were developed based on MSAs or
larger geographic areas (for example, data for all rural areas in a
State were combined and used to proxy values for each rural county in a
State). Therefore, using BLS OES data and disaggregating data to the
county

[[Page 73257]]

level is not a significant departure from previous GPCI updates.
Moreover, we acknowledge that in the CY 2004 PFS proposed and final
rules (68 FR 49042 and 68 FR 63213 respectively), we updated only the
malpractice GPCI because the special tabulation of census data used for
the physician work GPCI and employee compensation portion of the PE
GPCI was not yet available. We explained that no acceptable data
sources could be found to update the work GPCIs and the employee
compensation portion of the practice expense GPCIs. Therefore, we made
no changes to the work GPCIs and PE GPCIs for CY 2004. However, in view
of the statutory requirement to update the GPCIs at least every 3
years, we do not believe it would be appropriate to finalize an update
only for malpractice GPCIs for CY 2011, while delaying the update of
the work GPCI and PE GPCI, when we currently have appropriate updated
data available to us for this purpose. As discussed previously, we will
review the GPCIs as part of the CY 2012 PFS rulemaking cycle (beginning
in CY 2011) based on the information available at that time, and we may
propose changes to the GPCIs prior to the next 3-year GPCI update.
Comment: Several commenters stated that the use of HUD rental data
is not an appropriate proxy for determining the office rent index and
suggested that CMS use data on actual physician office rents instead.
Additionally, one commenter questioned CMS' analysis of the Medical
Group Management Association's (MGMA's) survey data on rent. The
commenter raised questions as to why CMS rejected the use of MGMA
rental data due to insufficiency in sample size and representation,
despite admitting that the physician response rate on the MGMA survey
was typical for surveys of business.
Response: As we have previously explained in the CY 2005 and CY
2008 final rules with comment period (69 FR 66262 and 72 FR 66245
respectively), we recognize that apartment rents may not be a perfect
proxy for measuring the relative cost differences in physician office
rents. However, we believe the HUD rental data are the most
comprehensive and valid indicator that is available of the real estate
rental market in all areas of the country. We continue to believe that
HUD rental data remain the best data source for determining the
relative cost differences in physicians' office rent among all areas of
the country. The data are regularly updated and available nationally,
and retain consistency area-to-area and year-to-year. We would welcome
any alternative rental data source that is available nationally with
sufficient representation among PFS localities.
With regard to our review of MGMA survey data, we have concerns
with both the sample size and representativeness of the MGMA data. For
example, the responses represent only about 2,250 physician practices
nationwide and have disproportionate sample sizes by State, suggesting
very uneven response rates geographically. In addition, we also have
concerns that the MGMA data have the potential for response bias. The
MGMA's substantial reliance on its membership base suggests a nonrandom
selection into the respondent group. Some evidence for such issues in
the MGMA data arises from the very different sample sizes by State. For
example, in the MGMA data, 10 States have fewer than 10 observations
each, and California, New York, and New Jersey have fewer than 10
observations per locality. Therefore, we continue to believe the MGMA
survey data would not be a sufficient rental data source for all PFS
localities.
Comment: One commenter expressed concern that the BLS OES wage data
may result in the undervaluation of physician earnings because the data
exclude incomes of self-employed professionals.
Response: The GPCIs are not an absolute measure of physician
earnings; rather, they are a measure of the relative cost differences
for each of the three PFS components. We have no evidence to suggest
that self-employment income would have different geographic variation
than non-self-employed income. Absent such evidence, we would expect
that including wage data from self-employed professionals would result
in a geographic distribution of professional wages similar to the BLS
OES data source.
Comment: Many commenters stated that implementing PE GPCI changes
in CY 2011 would reduce payment to urban areas and, therefore, would
violate the ``hold harmless'' provision as required by the ACA.
Response: Section 1848(e)(1)(H) of the Act (as added by section
3102 (b) of the ACA) requires that we apply a limited recognition of
cost differences for the rent component and employee compensation
component of the PE GPCI as compared to the national average. This
section also includes a ``hold harmless'' provision for CY 2010 and CY
2011 for any PFS locality that would receive a reduction to its PE GPCI
resulting from the limited recognition of PE cost differences. For CY
2010 and CY 2011, we applied the limited recognition of PE cost
differences and ``hold harmless provision'' in accordance with the
statutory requirement, which is specific only to the limited
recognition of rent and employee wage cost differences. In other words,
the ``hold harmless'' (non-budget neutral) provision under section
1848(e)(1)(H)(iii) of the Act (as added by section 3102 (b) of the ACA)
does not apply to the effects of updated data incorporated into the
GPCIs as a result of our normal GPCI update process. As discussed
earlier in this section, the proposed GPCI update reflected our
preliminary review based on the best information currently available.
We anticipate that further information may lead to proposed additional
refinements to the GPCIs in future years.
Comment: One commenter recommended that CMS track the ``hold
harmless'' transitional GPCIs to determine whether certain regions of
the country are underpaid as a result of the application of the limited
recognition of PE cost differences.
Response: The ``hold harmless'' provision under section
1848(e)(1)(H)(iii) of the Act (as added by section 3102(b) of ACA) was
applied by selecting the greater of the CY 2011 transitional PE GPCI
value calculated with the limited recognition of cost differences or
the CY 2011 transitional PE GCPI value calculated with full recognition
of cost differences. Therefore, no locality is ``underpaid'' by the
application of the limited recognition of PE cost differences.
Comment: One commenter requested that CMS consider applying a 1.0
GPCI floor to non-frontier States that serve significant rural
populations. The commenter was not specific as to which GPCI (work, PE,
or malpractice) the floor should be applied.
Response: As discussed previously in this section, section
1848(e)(1)(I) of the Act (as added by section 10324(c) of the ACA)
established a permanent 1.0 PE GPCI floor only for frontier States, and
section 3102(a) of the ACA amended section 1848(e)(1)(E) of the Act to
extend the 1.0 work GPCI floor for services furnished only through
December 31, 2010. We do not otherwise have the authority to establish
GPCI floors that do not consider the differences in physicians'
resource costs among localities.
Comment: A few commenters requested that CMS release underlying
data sources, including county level GPCI values and budget neutrality
estimates, which would allow interested parties to replicate GPCI
calculations.
Response: We strive to be as transparent as possible in all of our
proposals. To that end, we have made

[[Page 73258]]

numerous files available on the CMS Web site under the downloads for
the CY 2011 PFS proposed rule to assist in the public's review of the
CY 2011 proposal. These files include: The preliminary contractor's
report on data for the 6th GPCI update; the CY 2010 through CY 2012
GPCIs, both as proposed (including the ACA provisions) and without the
ACA provisions to permit isolation of the impacts of the updated data;
and web links to the publicly available source data and copies of data
files that are not otherwise publicly available, for example county and
locality-specific RVUs from Medicare claims data and malpractice
insurance premium data. In combination, this information allows the
public to apply our methodology to replicate our calculations for the
proposed GPCIs.
Comment: Many commenters expressed concern about the proposed cost
share weights for the rent component and medical equipment, supplies,
and other miscellaneous component of the PE GPCI. The commenters stated
that the proposed cost share weights would unjustifiably shift Medicare
payment away from urban localities to rural localities. Several
commenters suggested that portions of the ``all other services''
component of the office expenses cost category, (which includes
maintenance services, storage, security and janitorial services, office
equipment, information technology systems, and medical record systems)
and the stand-alone ``other professional services'' cost category
(which includes accounting services, legal services, office management
services, continuing education, professional association memberships,
journals, and professional care expenses) are wage-related and,
therefore, should be adjusted for locality cost differences.
Additionally, a few commenters stated that the cost share weight
attributed to the rent component of the PE GPCI should vary by region
because one national cost share weight for rent penalizes areas where
office rent is a higher portion of practice expenses.
Response: Although we typically update the GPCI cost share weights
concurrently with the most recent MEI revision and rebasing, the
commenters raised many points regarding the reallocation of labor-
related costs from the medical equipment and supplies and miscellaneous
component to the employee compensation component of the PE GPCI. After
consideration of the public comments we received on this issue, we will
continue to use the current GPCI cost share weights for CY 2011. We
have asked the Institute of Medicine to evaluate the accuracy of the
geographic adjustment factors used for Medicare physician payment. The
Institute of Medicine will prepare two reports for Congress and the
Secretary of the Department of Health and Human Services. The first
report, expected in spring 2011, will include an evaluation of the
accuracy of geographic adjustment factors, and the methodology and data
used to calculate them. The second report, expected in spring 2012,
will evaluate the effects of the adjustment factors on the distribution
of the health care workforce, quality of care, population health, and
the ability to provide efficient, high-value care. For more information
on the Institute of Medicine's study on Medicare geographic adjustment
factors, we refer readers to the Institute of Medicine Web site: http://iom.edu/Activities/HealthServices/GeographicAdjustments.aspx.
We will explore further the options that were raised to us by the
commenters and the recommendations in the forthcoming Institute of
Medicine report(s). We will also continue our analysis of the cost
share weights attributed to the PE GPCI as required by section
1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of the ACA),
including the possibility of assigning cost share weights to the rent
component of the PE GPCI that vary among fee schedule areas. We will
address the GPCI cost share weights again in the CY 2012 PFS proposed
rule.
Comment: MedPAC suggested an alternative method for calculating the
PE GPCI. This alternative PE GPCI method would account for variations
in the cost share of equipment and supplies across services.
Response: We appreciate MedPAC's suggestion of an alternative
method that would vary the portion of PE that is geographically
adjusted for locality differences based on the characteristics of
individual services, rather than applying a uniform percentage across
all PFS services. We recommend that MedPAC continue to analyze this or
other alternative geographic adjustment methods, including their
administrative feasibility.
Comment: A few commenters stated that the ``range of disparity''
between the highest and lowest paid PFS localities is too large and
contradicts data studies showing little to no distinction in physician
practice expenses throughout the nation. For example, the commenters
stated that the AMA's analysis of its own PPIS data concluded that
``expenses did not differ significantly by either metro location or
Census region.'' One commenter requested an explanation of the
discrepancy between the AMA's findings of no measurable practice
expense distinctions and CMS' findings that continue to show
substantial distinctions in physician practice expenses among the
Medicare payment localities. Another commenter stated that a 2007
survey conducted by the journal, Medical Economics, indicated that the
average practice expenses are highest in the Midwestern States (which
is contrary to the proposed CY 2011 GPCIs).
Response: We have reviewed the studies referenced by the commenters
and compared their findings with the GPCI values calculated for the CY
2011 PFS proposed rule. As mentioned by the commenters, both the AMA
and Medical Economics studies aggregated per-physician expenses at the
Census region level. The AMA PPIS analysis showed the Northeast as
having the lowest per-physician expenses, followed by the Midwest then
the West, with the South identified as having the highest expenses.
Although there is about a 20 percent difference in total expenses
between the Northeast and South, the study noted that the difference
was not significant after controlling for practice setting and
physician specialty. The Medical Economics survey findings showed about
a 30 percent difference in costs, with the East showing the lowest
expenses and the Midwest with the highest. Both studies demonstrated
that rural areas have the highest per-physician expenses and highly
populated areas the lowest.
To compare the variation of PE GPCI values calculated for the CY
2011 PFS proposed rule to the AMA and Medical Economics studies, we
used PE RVUs to create weighted averages of the PE GPCIs by Census
region. Additionally, because the AMA and Medical Economics data
reported total per-physician practice expenses, whereas the GPCI is a
cost index, we produced indices for each source to create comparable
measures of variation. We then normalized each index to the lowest cost
area from each data source. Consequently, the index values show the
percent difference in costs relative to the lowest cost area. For
example, the AMA study shows the Northeast as having the lowest per-
physician expenses, thus establishing an index value of 1.00 for that
area. For the AMA study, the Midwest index value is 1.07 which
signifies that costs in the Midwest are 7 percent above the Northeast
AMA values. The PE GPCI data indicate that the Midwest has the lowest
costs; and the South, with an

[[Page 73259]]

index value of 1.01, has costs that are 1 percent above the Midwest
GPCI values. When aggregated to the Census region, the PE GPCIs showed
less variation in costs than the comparison data sources (AMA PPIS and
Medical Economics). Using the PE GPCI data to calculate Census region
indices produced only a 16 percent difference in costs between the most
costly and least costly areas, equating to roughly half the variation
found in the Medical Economics survey and about 75 percent of the
variation found in the PPIS study. Table 26 compares the results on the
disparity in costs by Census region.

Table 26--Census Region Cost Indices by Data Source
----------------------------------------------------------------------------------------------------------------
PE GPCI components
Medical PE GPCI --------------------------------------
AMA economics data Office
Rent Wages supplies
----------------------------------------------------------------------------------------------------------------
Midwest........................... 1.07 1.29 1.00 1.00 1.04 1.00
South............................. 1.21 1.20 1.01 1.12 1.00 1.00
West.............................. 1.11 1.06 1.14 1.47 1.17 1.00
Northeast......................... 1.00 1.00 1.16 1.55 1.18 1.00
----------------------------------------------------------------------------------------------------------------

Additionally, the conceptual approaches to the GPCIs and the data
sources noted by the commenters are sufficiently different to make
comparisons extremely difficult. The different rank ordering in the
costs by regions, as shown in Table E4, may also reflect the different
strategies used to measure costs. Specifically, the AMA and Medical
Economics studies ordered areas based on total physicians' expenses,
whereas the GPCIs are intended to provide a local cost index that is
then applied to each PFS component; work, practice expense, and
malpractice expense. Based on our review of the AMA PPIS and Medical
Economics studies, a key factor in explaining differences with the
proposed GPCI values is differences in practice patterns across the
different areas. Specifically, rural practitioners tend to see more
patients, incurring higher expenses. However, as noted in the Medical
Economics study, higher patient loads result in higher payment. To
place this in the context of Medicare PFS payment, seeing more patients
produces more billed services, allowed charges, and payments.
Therefore, the greater number of patients seen by rural physicians is
accounted for in total RVUs to the physician, rather than through the
GPCI values.
Moreover, the very low cost ranking of the Northeast in both the
AMA PPIS and Medical Economics datasets suggests a possible influence
of economies of scale. The GPCIs are designed to capture differences in
the prices of inputs facing physicians in each region. The input prices
are used to create GPCI values as a measure of the relative cost
differences in operating a medical practice in one locality versus
another. It is likely that the AMA and Medical Economics studies are
capturing differences in the production of services, distinct from the
input prices. In particular, the geographic differences may reflect
differences in economies of scale in more and less urbanized areas.
More rural practitioners are less likely to work in large practices,
leading to higher per-physician costs, all else being equal. For
example, a two-physician practice may need the same number of front
office staff as a one-physician practice. When this expense is measured
on a per-physician basis, the single physician pays twice as much for
front office support. This type of variation can occur within
localities and may reflect the practitioner's choice to work in a small
or large physician practice. Nevertheless, there is no mechanism within
the existing GPCI approach to account for the influence of economies of
scale, despite its potentially significant impact on the effective per-
unit costs of providing care.
Comment: Several commenters recommended that CMS use data from a
reliable survey of physicians' practices, such as the AMA PPIS or the
MGMA survey, to develop the office rent index and employee compensation
index.
Response: Because of the limited sample sizes of the AMA PPIS (n =
2,137) and MGMA studies (n = 2,246), we do not believe that it would be
possible to calculate reliable indices for all Medicare PFS localities
based upon these data. As mentioned previously, in the MGMA data, 10
States have fewer than 10 observations each, and California, New York,
and New Jersey have fewer than 10 observations per locality.
In light of the comments received suggesting the use of survey data
to determine GPCI values and the typical response rates for existing
physician surveys, we are continuing to consider the possibility of
establishing a physician cost report and requiring a sufficiently large
sample of physicians in each locality to report data on actual costs
incurred. However, we believe that a physician cost report could take
years to develop and implement, and could be prohibitively expensive.
We also have some concerns about the administrative burden this
approach would place on physician's office staff. Therefore, we are
requesting specific public comments regarding the potential benefits to
be gained from establishing a physician cost report and whether this
approach is appropriate to achieve potentially greater precision in
measuring the relative cost differences in physicians' practices among
PFS localities. We are also requesting public comments on the potential
administrative burden of requiring physicians to routinely complete and
submit a cost report and whether this requirement should be mandatory
for all physician practices. Additionally, we have asked the Institute
of Medicine to look at the use of survey data in the context of their
geographic adjustment analysis. It is also our understanding that
MedPAC is considering the issue of data sources used to determine
geographic payment adjustments under the PFS.
Comment: One commenter stated that all geographic adjustment
factors should be eliminated from the Medicare PFS ``except for those
designed to achieve a specific public policy goal, for example, to
encourage physicians to practice in underserved areas.'' The commenter
requested that CMS utilize the most broadly applicable methodology
allowed by law to reduce geographic payment disparity.
Response: We are required by section 1848(b)(1)(C) and (e)(1)(A) of
the Act to develop and apply separate GPCIs to adjust for resource cost
differences among localities compared to the national average for each
of the three PFS components: work, practice expense, and malpractice
expense. The purpose of the GPCIs is not to reduce

[[Page 73260]]

geographic payment disparity; rather, the GPCIs distribute PFS payments
among areas in order to adjust for area cost differences. In general
the data show that urban areas usually are higher cost, while rural
areas are lower cost. However, there are several provisions currently
in place that have the effect of reducing geographic payment
disparities. For example, the statute requires that only one-quarter of
area cost differences in physician work be recognized, and we assign a
1.0 index to the medical equipment, supplies, and miscellaneous
component of the PE GPCI because we believe there is a national market
for these items. In addition, 34 States and 2 territories are
``Statewide'' payment localities wherein all physicians, whether urban
or rural, are paid the same. Moreover, many geographic areas are
designated as Health Professional Shortage Areas (HPSAs). Physicians in
these areas may be eligible for a 10 percent HPSA bonus payment in
addition to the amount paid under the Medicare PFS for services they
furnish. Beginning in CY 2011, general surgeons furnishing major
surgical procedures in these areas may be eligible for the HPSA
surgical incentive payment program (HSIP) that also pays 10 percent in
addition to the amount paid under the PFS as discussed in section
VI.S.2. of this final rule with comment period. For complete
information on the HPSA bonus payment program and a list of eligible
areas for both programs by zip code, we refer readers to the CMS Web
site at: http://www.cms.hhs.gov/hpsapsaphysicianbonuses/01_overview.asp. All of these factors mentioned above have the effect of
reducing geographic payment disparities under the Medicare PFS.
Comment: One commenter encouraged CMS to follow the GAO's
recommendations, as outlined in the GAO's March 2005 Report (GAO-05-
119), for improving underlying GPCI data and methods by taking the
following actions:
Transition from Census Bureau's Decennial Census data to
the annual ACS for earning and wage data.
Include physician assistant wage data to improve the
measurement of the PE GPCI.
Consider the feasibility of using a commercial rent index
or a residential rent index directly based on ACS data for determining
the rent component of the PE GPCI.
Collect malpractice premium data from all States,
accounting for at least half of the malpractice business in a State.
Standardize collection of malpractice premium data, for
example by using data from Physician Insurer's Association of America.
Response: As previously discussed, the full ACS data were not
available in time for the 6th GPCI update. We intend to explore the use
of ACS data for determining the work GPCI and the employee compensation
component of the PE GPCI, as well as evaluate its possible use as an
office rent index once the data are fully available. We also intend to
continue exploring the potential use of commercial rent data as part of
our ongoing review and refinement of the GPCIs.
Additionally, we have considered the use of physician assistant
wages in calculating the employee compensation index. However, since
physician assistants can furnish medical services and bill the Medicare
program directly, their wages are influenced by Medicare PFS payment.
Therefore, we have some concern that a circular effect could occur if
we included physician assistants among the occupational groups
comprising the employee compensation component, similar to our concern
with including physicians' salaries in the determination of the work
GPCI.
With regard to the collection of malpractice premium data, the CY
2011 malpractice GPCI update reflects 2006 and 2007 premium data which
were also used for the CY 2010 update to the malpractice RVUs. As
compared to previous malpractice RVU updates, we substantially
increased the number of States from which we were able to collect rate
filings. We were able to collect malpractice premium data from every
State except for Mississippi and Puerto Rico. Premium data were
selected from at least two companies in each State, with more selected
if necessary to reach 50 percent of the market share in that State. To
ensure consistency across States we collected premium data from State
Departments of Insurance. For States where we were not able to collect
rate fillings, we used premium information from the Medical Liability
Monitor Survey data from 2005 through 2008.
e. Summary of Final CY 2011 GPCIs
After consideration of the public comments received on the GPCIs,
we are finalizing the 6th GPCI update using the most current data, with
modifications; we are not finalizing the proposal to change the GPCI
cost share weights for CY 2011. Instead, we are continuing to use the
current GPCI cost share weights for determining the PE GPCI values and
locality GAFs in CY 2011, and we will address the cost share weights
again in the CY 2012 PFS proposed rule. As a result, the cost share
weight for the physician work GPCI (as a percentage of the total) will
be 52.5 percent (current and for CY 2011) rather than 48.3 percent (as
proposed), and the cost share weight for the PE GPCI will be 43.7
percent (current and for CY 2011) rather than 47.4 percent (as
proposed) with only a slight difference in the employee compensation
component (18.7 percent rather than 19.2 percent as proposed). However,
the cost share weight for the office rent component of the PE GPCI will
be 12.2 percent (current and for CY 2011) rather than 8.4 percent (as
proposed), and the medical equipment, supplies, and other miscellaneous
expenses component will be 12.8 percent (current and for CY 2011)
rather than 19.9 percent (as proposed). Moreover, the cost share weight
for the malpractice GPCI will be 3.9 percent (current and for CY 2011)
rather than 4.3 percent (as proposed).
Additionally, we will review the complete findings and
recommendations from the Institute of Medicine's study of geographic
adjustment factors for physician payment, the Secretary's Medicare
Geographic Payment Summit, and the MEI technical advisory panel, and
continue to study the issues as required by section 1848(e)(1)(H)(iv)
of the Act (as added by section 3102(b) of the ACA). We will once again
consider the GPCIs for CY 2012 in the context of our annual PFS
rulemaking beginning in CY 2011 based on the information available at
that time.
We are using the 2006 through 2008 panels from the BLS OES data for
updating the work GPCIs and the employee compensation component of the
PE GPCIs. We are also using the 2010 apartment rental data produced by
HUD at the 50th percentile as a proxy for the relative cost difference
in physicians' office rents and 2006 and 2007 malpractice premium data
for determining the malpractice GPCIs.
As required by section 1848(e)(1)(H)(ii) and (iii) of the Act (as
added by section 3102(b) of the ACA), the CY 2011 GPCIs reflect only
one-half of the relative cost differences for the employee compensation
and rent portions of the PE GPCI, and the ``hold harmless'' provision
ensures that no locality receives a payment reduction resulting from
the limited recognition of PE cost differences. For CY 2011, the ``hold
harmless'' provision was applied by selecting the greater of the CY
2011 transitional PE GPCI value calculated with the limited recognition
of cost differences or the CY 2011 transitional

[[Page 73261]]

PE GPCI value calculated with full recognition of cost differences.
In accordance with section 1848(e)(1)(I) of the Act (as added by
section 10324(c) of the ACA), and consistent with the final FY 2011
hospital IPPS (75 FR 5160 through 5161), we applied a 1.0 PE GPCI floor
for services furnished in frontier States. The frontier States are the
following: Montana; Wyoming; North Dakota; Nevada; and South Dakota. As
we indicated above in this section, section 1848(e)(1)(E) of the Act
(as amended by section 3102(a) of the ACA) extended the 1.0 work GPCI
floor only through December 31, 2010. Therefore, the CY 2011 physician
work GPCIs and summarized GAFs do not reflect the 1.0 work floor.
However, the permanent 1.5 work GPCI floor for Alaska (as established
by section 134(b) of the MIPPA) will remain in effect for CY 2011.
We are finalizing the CY 2011 GPCIs shown in Addendum E. The GPCIs
have been budget neutralized to ensure that nationwide, total RVUs are
not impacted by changes in locality GPCIs. The 1.0 PE GPCI floor for
frontier States and the PE GPCI ``hold harmless'' provision were
applied to the budget neutralized GPCIs.
Typically when we complete a review and update of the GPCIs, the
values shown represent the first year of the 2-year GPCI update
transition. Although the CY 2011 GPCIs have been set on that basis, we
note that we will be assessing the results of the various studies
regarding the GPCIs and cost share weights (once they are completed),
and exploring the use of the full ACS data. Based on these assessments,
we may make additional proposals that would further modify the GPCIs
for CY 2012, which would result in changes to the CY 2012 GPCIs shown
in Addendum E to this final rule with comment period. Therefore, the
final CY 2011 GPCIs may not reflect a true mid-point ``phase-in'' to
the updated GPCIs, although, as noted above, they have been set for CY
2011 on that basis. The CY 2011 updated GAFs and GPCIs may be found in
Addenda D and E of this final rule with comment period.
3. Payment Localities
The current PFS locality structure was developed and implemented in
1997. There are currently 89 localities; 34 localities are Statewide
areas. There are 52 localities in the other 18 States, with 10 States
having 2 localities, 2 States having 3 localities, 1 State having 4
localities, and 3 States having 5 or more localities. The District of
Columbia, Maryland, and Virginia suburbs, Puerto Rico, and the Virgin
Islands are additional localities that make up the remainder of the
total of 89 localities. The development of the current locality
structure is described in detail in the CY 1997 PFS proposed rule (61
FR 34615) and the subsequent final rule with comment period (61 FR
59494).
As we have previously noted in the CYs 2008 and 2009 proposed rules
(72 FR 38139 and 73 FR 38513), any changes to the locality
configuration must be made in a budget neutral manner within a State
and can lead to significant redistributions in payments. For many
years, we have not considered making changes to localities without the
support of a State medical association in order to demonstrate
consensus for the change among the professionals whose payments would
be affected (with some increasing and some decreasing). However, we
have recognized that, over time, changes in demographics or local
economic conditions may lead us to conduct a more comprehensive
examination of existing payment localities.
For the past several years, we have been involved in discussions
with physician groups and their representatives about recent shifts in
relative demographics and economic conditions, most notably within the
current California payment locality structure. We explained in the CY
2008 PFS final rule with comment period that we intended to conduct a
thorough analysis of potential approaches to reconfiguring localities
and would address this issue again in future rulemaking. For more
information, we refer readers to the CY 2008 PFS proposed rule (72 FR
38139) and subsequent final rule with comment period (72 FR 66245).
As a follow-up to the CY 2008 PFS final rule with comment period,
we contracted with Acumen to conduct a preliminary study of several
options for revising the payment localities on a nationwide basis. The
contractor's interim report was posted on the CMS Web site on August
21, 2008, and we requested comments from the public. The report
entitled, ``Review of Alternative GPCI Payment Locality Structures,''
remains accessible from the CMS PFS Web page under the heading
``Interim Study of Alternative Payment Localities under the PFS.'' The
report may also be accessed directly from the following link: http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage.
We accepted public comments on the interim report through November
3, 2008. The alternative locality configurations discussed in the
report are described briefly below in this section.
Option 1: CMS Core-Based Statistical Area (CBSA) Payment Locality
Configuration
This option uses the Office of Management and Budget (OMB's)
Metropolitan Statistical Area (MSA) designations for the payment
locality configuration. MSAs would be considered as urban CBSAs.
Micropolitan Areas (as defined by OMB) and rural areas would be
considered as non-urban (rest of State) CBSAs. This approach would be
consistent with the IPPS pre-reclassification CBSA assignments and with
the geographic payment adjustments used in other Medicare payment
systems. This option would increase the number of PFS localities from
89 to 439.
Option 2: Separate High-Cost Counties from Existing Localities
(Separate Counties)
Under this approach, higher cost counties are removed from their
existing locality structure and they would each be placed into their
own locality. This option would increase the number of PFS localities
from 89 to 214, using a 5 percent GAF differential to separate high-
cost counties.
Option 3: Separate MSAs from Statewide Localities (Separate MSAs)
This option begins with statewide localities and creates separate
localities for higher cost MSAs (rather than removing higher cost
counties from their existing locality as described in Option 2). This
option would increase the number of PFS localities from 89 to 130,
using a 5 percent GAF differential to separate high-cost MSAs.
Option 4: Group Counties Within a State Into Locality Tiers Based on
Costs (Statewide Tiers)
This option creates tiers of counties (within each State) that may
or may not be contiguous but share similar practice costs. This option
would increase the number of PFS localities from 89 to 140, using a 5
percent GAF differential to group similar counties into statewide
tiers.
As discussed in Acumen's interim report, all four studied
alternative locality configurations would increase the number of
localities and separate higher cost areas from rural ``rest of state''
areas. As a result, payments to urban areas would increase, while rural
areas would see a decrease in payment because they would no longer be
grouped with higher cost ``urbanized'' areas. A number of public
commenters

[[Page 73262]]

on the draft report expressed support for Option 3 (separate MSAs from
Statewide localities) because the commenters believed this alternative
would improve payment accuracy over the current locality configuration
and could mitigate possible payment reductions to rural areas as
compared to Option 1 (CMS CBSAs). Therefore, Acumen is conducting a
more in-depth analysis of the dollar impacts that would result from the
application of Option 3. For a detailed discussion of the public
comments on the contractor's interim locality study report, we refer
readers to the CY 2010 PFS proposed rule (74 FR 33534) and subsequent
final rule with comment period (74 FR 61757).
We note that the discussion of PFS payment localities and our
preliminary study of alternative payment locality configurations in the
CY 2011 PFS proposed rule was intended for informational purposes only.
We did not make any proposals regarding the PFS locality configurations
for CY 2011 and, therefore, public comments on the PFS locality
configurations are not within scope of the CY 2011 PFS proposed rule.
We thank the commenters for sharing their views and suggestions;
however, we are not summarizing or responding to `out of scope'
comments in this final rule with comment period.

E. PFS Update for CY 2010: Rebasing and Revising of the Medicare
Economic Index (MEI)

1. Background
The Medicare Economic Index (MEI) was originally required by
section 1842(b)(3) of the Act, which states that prevailing charge
levels beginning after June 30, 1973 may not exceed the level from the
previous year except to the extent that the Secretary finds, on the
basis of appropriate economic index data, that such higher level is
justified by year-to-year economic changes. We continued to use the MEI
as part of the statutory update formula (specified under section 1848
of the Act) when the physician fee schedule was implemented in 1992 (56
FR 59511).
Beginning July 1, 1975, and continuing through today, the MEI has
served these purposes by reflecting the weighted-average annual price
change for various inputs needed to furnish physicians' services. As
such, the index is necessarily a fixed-weight input price index, with
an adjustment for the change in economy-wide, private nonfarm business
multifactor productivity. The MEI is comprised of two broad categories:
(1) Physician's own time; and (2) physician's practice expense (PE).
The MEI was first published on June 16, 1975 (40 FR 25446), and
became effective for services furnished beginning July 1, 1975. The
original MEI had a base period of 1971. The structure of the original
MEI remained essentially unchanged from its original until the CY 1993
final rule (57 FR 55896) in which we finalized a comprehensive rebasing
and revision process with a 1989 base year. The new index was based in
part on the recommendations of a Congressionally-mandated meeting of
experts held in March 1987. The MEI was again rebased in the CY 1999
final rule (63 FR 58845), which moved the cost structure of the index
from a 1989 base to a 1996 base. The methodology for the productivity
adjustment was revised in the CY 2003 final rule (67 FR 80019) to
reflect the percentage change in the 10-year moving average of economy-
wide private nonfarm business multifactor productivity (previously the
index was adjusted by a measure of labor productivity). The current
form of the MEI was detailed in the CY 2004 PFS final rule (68 FR
63239) which updated the cost structure of the index from a base year
of 1996 to 2000.
We proposed to rebase and revise the MEI and incorporate it into
the CY 2011 PFS update. The terms ``rebasing'' and ``revising'', while
often used interchangeably, actually denote different activities.
Rebasing refers to moving the base year for the structure of costs of
an input price index, while revising relates to other types of changes
such as changing data sources, cost categories, or price proxies used
in the price index. As is always the case with a rebasing and revising
exercise, we have used the most recently available, relevant, and
appropriate information to develop the proposed MEI cost category
weights and price proxies. In the following sections of this final rule
with comment period, we detail our proposals and respond to comments
regarding the updated cost weights for the MEI expense categories, our
rationale for selecting the price proxies in the MEI, and the results
of the rebasing and revising of the MEI.
2. Use of More Current Data
The MEI was last rebased and revised in 2003 in the CY 2004 PFS
final rule with comment period (68 FR 63239). The current base year for
the MEI is 2000, which means that the cost weights in the index reflect
physicians' expenses in 2000. However, we believe it is desirable to
periodically rebase and revise the index so that the expense shares and
their associated price proxies reflect more current conditions. For the
CY 2011 PFS update, we are finalizing the proposal to rebase and revise
the MEI to reflect appropriate physicians' expenses in 2006.
Compared to the 2000-based MEI, we proposed to make several changes
to the MEI cost structure. First, we proposed to exclude the
Pharmaceutical cost category as pharmaceuticals are neither paid for
under the PFS nor are they included in the definition of ``physicians'
services'' for purposes of calculating the physician update via the SGR
system (for more details see the CY 2010 PFS final rule with comment
period (74 FR 61961 through 61962)). We also proposed to exclude the
expenses associated with separately billable supplies since these items
are not paid for under the PFS. Our primary data source, the 2006
Physician Practice Information Survey (PPIS), collected data on these
costs enabling us to accurately remove them from the index. In
addition, we proposed to include nine new cost categories that
disaggregate the costs under the broader Office Expenses cost category.
The 2000-based MEI did not break these expenses into individual cost
categories. As a result of comments received, which are described more
fully below in this section, we are modifying this proposal to instead
include ten detailed cost categories. As indicated in the CY 2011 PFS
proposed rule, we proposed to continue to adjust the MEI for economy-
wide multifactor productivity based on changes in the 10-year moving
average of private nonfarm business multifactor productivity. After
considering the comments received, we are finalizing our proposal to
continue to adjust the MEI for economy-wide multifactor productivity
based on changes in the 10-year moving average of private nonfarm
business multifactor productivity.
3. Rebasing and Revising Expense Categories in the MEI
The MEI is used in conjunction with the SGR system to update the
PFS and represents the price component of that update. The proposed
expense categories in the index, along with their respective weights,
are primarily derived from data collected in the 2006 AMA PPIS for
self-employed physicians and selected self-employed non-medical doctor
specialties. As noted, in addition to data on medical doctors, we
included data from several non-medical doctor specialties in the MEI
cost weight calculations (including optometrists, oral surgeons,
podiatrists, and chiropractors) consistent with the definition of the
term ``physician'' in section 1861(r) of the Act. In summary,

[[Page 73263]]

the term ``physician'' when used in connection with the performance of
functions or actions an individual is legally authorized to perform
means the following: (1) A doctor of medicine or osteopathy; (2) a
doctor of dental surgery or of dental medicine; (3) a doctor of
podiatric medicine; (4) a doctor of optometry; or (5) a chiropractor.
For a complete definition, please see section 1861(r) of the Act. We
weighted the expense data from the above-referenced specialties with
the self-employed physician expense data using physician counts by
specialty, the same methodology used in the AMA PPIS.
The AMA PPIS data were used to determine the expenditure weights in
the MEI for all of the major cost categories including total expenses,
physicians' earnings, physicians' benefits, employed physician payroll,
nonphysician compensation, office expenses, professional liability
insurance (PLI), medical equipment, medical supplies, and other
professional expenses. We are finalizing our proposal to further
disaggregate both non-physician compensation and office expenses into
subcategories reflecting more detailed expenses. We used several data
sources for further disaggregation of expenses including: data from the
2002 Bureau of Economic Analysis (BEA) Benchmark Input-Output table (I/
O), the 2006 Bureau of the Census Current Population Survey (CPS), the
2006 Bureau of Labor Statistics (BLS) Occupational Employment Survey
(OES), the 2006 Employment Cost for Employee Compensation Survey
(ECEC), and the 2006 Internal Revenue Service (IRS) Statistics of
Income (SOI) data. The development of each of the cost categories using
these sources is described in detail below.
a. Developing the Weights for Use in the MEI
Developing a rebased and revised MEI requires selecting a base year
and determining the appropriate expense categories. We proposed to
rebase the MEI to CY 2006. We choose CY 2006 as the base year as: 1)
this is the most recent year for which comprehensive physician expense
data are available; and (2) we believe these data represent an accurate
proxy for the physician expense distribution in CY 2011.
Table 27 lists the set of mutually exclusive and exhaustive cost
categories that make up the final rebased and revised MEI, including
the addition of the All Other Products category we are adopting in
response to public comments.

Table 27--Final 2006 MEI Cost Categories, Weights, and Price Proxies Compared to the 2000 MEI Cost Categories
and Weights
----------------------------------------------------------------------------------------------------------------
Final 2006-
Cost category cost weights 2000 Cost 2006 Price proxies
(1,2) weights
----------------------------------------------------------------------------------------------------------------
Total............................. 100.00 100.000
Physician's Compensation (Own 48.266 52.466
Time) \(3)\.
Wages and Salaries............ 43.880 42.730 AHE Total Nonfarm Private for Production &
Nonsupervisory Employees.\(5)\
Benefits (3),(4).............. 4.386 9.735 ECI-Benefits Total Nonfarm Private.\(6)\
Physician's Practice Expense...... 51.734 47.534
Nonphysician Employee 19.153 18.654
Compensation.
Nonphysician Employee Wages 13.752 13.809
and Salaries.
Prof/Tech Wages........... 6.006 5.887 ECI-Wages/Salaries: Private Professional
&Technical.
Managerial Wages.......... 1.446 3.333 ECI-Wages/Salaries: Private Managerial.
Clerical Wages............ 4.466 3.892 ECI-Wages/Salaries: Private Clerical.
Services Wages............ 1.834 0.696 ECI-Wages/Salaries: Private Service.
Nonphysician Employee Benefits 5.401 4.845 ECI-Ben: Private Blend.
\(4)\.
Office Expenses............... 20.035 12.209
Utilities................. 1.266 ............. CPI Fuel & Utilities.\(7)\
Chemicals................. 0.723 ............. PPI for Other Basic Organic Chemical
Manufacturing.\(8)\
Paper..................... 0.657 ............. PPI for Converted Paper.
Rubber & Plastics......... 0.598 ............. PPI for Rubber and Plastics.
Telephone................. 1.501 ............. CPI for Telephone Services.
Postage................... 0.898 ............. CPI for Postage.
All Other Services........ 3.582 ............. ECI Compensation Services Occupations.
All Other Products........ 0.500 ............. CPI-U All Items Less Food and Energy.
Fixed Capital............. 8.957 ............. CPI for Owner's Equivalent Rent.
Moveable Capital.......... 1.353 ............. PPI for Machinery and Equipment.
PLI........................... 4.295 3.865 CMS-Prof. Liab. Phys. Premiums.
Medical Equipment............. 1.978 2.055 PPI-Medical Instruments & Equip.
Pharmaceuticals and Medical 1.760 4.320
Materials and Supplies.
Pharmaceuticals........... ............. 2.309
Medical Materials and 1.760 2.011 PPI Surg. Appliances and Supplies/CPI(U) Med
Supplies. Supplies.

[[Page 73264]]

Other Professional Expenses... 4.513 ............. CPI-U All Items Less Food and Energy.
Other Expenses................ ............. 6.433
----------------------------------------------------------------------------------------------------------------
(1) Due to rounding, weights may not sum to 100.000 percent.
(2) Sources: 2006 Physician Practice Information Survey (PPIS), Center for Health Policy Research, American
Medical Association; 2006 Employment Cost for Employee Compensation, U.S. Department of Labor, Bureau of Labor
Statistics; 2006 Occupational Employment Statistics (OES), BLS; U.S. Department of Commerce, Bureau of
Economic Analysis 2002 Benchmark Input Output Tables, and U.S. Department of Commerce, Bureau of the Census,
2006 Current Population Survey.
(3) Includes employed physician payroll.
(4) Includes paid leave.
(5) Average Hourly Earnings (AHE)
(6) Employment Cost Index (ECI)
(7) Consumer Price Index (CPI)
(8) Producer Price Index (PPI)

The development of each of the cost categories in the final 2006
MEI is described, in detail, as follows.
b. Physician's Own Time
The component of the MEI that reflects the physician's own time is
represented by the net income portion of business receipts. The
proposed 2006 cost weight associated with the physician's own time
(otherwise referred to as the Physician Compensation cost weight) is
based on 2006 AMA PPIS data for mean physician net income (physician
compensation) for self-employed physicians and for the selected self-
employed specialties referenced previously in this rule.
We proposed to continue to add employed physician compensation to
self-employed physician compensation in order to calculate an aggregate
Physician Compensation cost weight. By including the compensation of
employed physicians in the Physician Compensation expense category,
these expenses will be adjusted by the appropriate price proxies for a
physician's own time. The proposed 2006 Physician Compensation cost
weight is 48.266 percent as compared to a 52.466 percent share in the
2000-based MEI. We split the Physician Compensation component into two
subcategories: Wages & Salaries; and Benefits. For self-employed
physician's compensation, the ratios for Wages & Salaries and Benefits
were calculated using data from the PPIS. Self-employed physician wages
& salaries accounted for 92.2 percent of physician compensation while
physician benefits accounted for the remaining 7.8 percent. For
employed physician payroll, the distribution for wages & salaries and
benefits for 2006 was 85.8 percent and 14.2 percent, respectively. This
ratio was determined by calculating a weighted average of available SOI
data for partnerships, corporations, and S-corporations specific to
physicians and outpatient care centers. Based on these methods, the
proposed 2006 Physician Wages & Salaries cost weight was 43.880 percent
and the proposed 2006 Physician Benefits cost weight was 4.386 percent.
c. Physician's Practice Expenses
To determine the remaining individual Practice Expenses cost
weights, we used mean expense data from the 2006 PPIS survey expressed
as a percentage of total expenses. The detailed explanations for the
derivation of the individual weights under Practice Expenses are listed
below.
(1) Nonphysician Employee Compensation
The cost weight for Nonphysician Employee Compensation was
developed using the 2006 AMA PPIS mean expenses for these costs. We
further divided this cost share into Wages & Salaries and Benefits
using 2006 BLS Employer Costs for Employee Compensation (ECEC) data for
the Health Care and Social Assistance (private industry) category.
Although this survey does not contain data only for offices of
physicians, data are available to help determine the shares associated
with wages & salaries and benefits for private industry health care and
social assistance services (which include offices of physicians,
hospitals, nursing homes, and offices of dentists). We believe these
data provide a reasonable estimate of the split between wages and
benefits for employees in physicians' offices. Data for 2006 in the
ECEC for Health Care and Social Assistance indicate that wages and
benefits are 71.8 percent and 28.2 percent of compensation,
respectively. The 2000-based MEI included a wage and benefit split of
74.0 percent and 26.0 percent of compensation.
We proposed to use 2006 Current Population Survey (CPS) data and
2006 BLS Occupational Employment Statistics (OES) data to develop cost
weights for wages for nonphysician occupational groups. These are the
same data sources that were used in the 2000-based MEI. We determined
total annual earnings for offices of physicians using employment data
from the CPS and mean annual earnings from the OES. To arrive at a
distribution for these separate categories, we determined annual
earnings for each of the four categories (which are Professional &
Technical workers, Managers, Clerical workers, and Service workers),
using the Standard Occupational Classification (SOC) system. We then
determined the overall share of the total for each. The resulting
proposed distribution, as well as the distribution from the 2000-based
MEI, are presented in Table 28.

TABLE 28--Percent Distribution of Nonphysician Payroll Expense by
Occupational Group: 2006 and 2000
------------------------------------------------------------------------
2006 Expenditure 2000 Expenditure
BLS Occupational Group shares shares
------------------------------------------------------------------------
Total........................... 100.000 100.000

[[Page 73265]]

Professional & Technical 43.671 42.635
Workers....................
Managers.................... 10.517 24.138
Clerical Workers............ 32.477 28.187
Service Workers............. 13.336 5.040
------------------------------------------------------------------------
Values may not sum to 100 due to rounding.

The decrease in the Managers expenditure share is directly related
to a decrease in the total number of employees in Management
occupations in physicians' offices, in particular, ``Medical and health
service managers.'' The decrease in expenditure share may also be due,
in part, to the methods used in this rebasing. That is, for the 2006-
based MEI, we are using data limited to ``Offices of physicians.'' In
the 2000-based version of the index, the only data that were available
to inform these estimates were inclusive of physician offices and
clinics (``Offices of physicians and clinics''). An examination of 2006
CPS and OES data comparing ``Outpatient care centers'' to ``Offices of
physicians'' indicates that there is a higher share of management
occupations in the ``Outpatient care centers'' than in ``Offices of
physicians''.
The increase in the Service Workers expenditures share is
attributable to a substantive increase in the number of employees in
service occupations, particularly, ``Medical assistants and other
health care support occupations''.
(2) Office Expenses
The aggregate Office Expenses cost weight was derived using the
2006 AMA PPIS and was calculated as the mean office expenses expressed
as a percentage of mean total expenses. This calculation resulted in a
20.035 percent share of total costs in 2006 compared to a 12.209
percent share in the 2000-based index. The Office Expenses cost weight
used in the 2000-based MEI was based on the AMA 1997 Socioeconomic
Monitoring System (SMS) survey, which defined office expenses as rent,
mortgage interest, depreciation on medical buildings, utilities, and
telephones. The AMA expanded the office expense question in the 2006
PPIS survey to include additional expenses, described in more detail
below in this section.
As a result, and in order to provide for a higher level of
precision in assigning appropriate price proxies to underlying costs,
we proposed to further disaggregate the Office Expenses cost category
into 9 detailed cost categories using the BEA 2002-Benchmark I/O data
for Offices of Physicians, Dentists, and Other Health Practitioners
(North American Industrial Classification System (NAICS) 621A00). In
response to comments, and as described more fully below, we are
finalizing those nine categories, as well as adding a tenth detailed
cost category.
The proposed Office Expenses cost categories and associated cost
weights were developed by matching the BEA I/O data as closely as
possible to the 2006 AMA PPIS survey, which defined office expenses as
``office (non-medical) equipment and office (nonmedical) supplies, as
well as rent, mortgage, interest, maintenance, refrigeration, storage,
security, janitorial, depreciation on medical buildings used in your
practice, utilities, or other office computer systems (including
information management systems/electronic medical record systems) and
telephone.'' In most instances, the proposed underlying detailed cost
categories and associated cost weights were chosen to be consistent
with the NAICS 3-digit classification. BEA I/O expense data is
published on a NAICS-basis. Some of the proposed underlying detailed
cost categories such as All Other Services include various 3-digit
NAICS codes for service related industries. Similar methods are used in
the other legislatively-required market baskets developed by CMS. After
we categorized the BEA I/O data, we calculated the relative share for
each category as a percentage of the total office expenses categories
within the I/O data. We then aged the 2002 weights forward to 2006 to
derive the 2006 detailed Office Expense cost weights as a percent of
total Office Expenses. The methodology we used to age the data forward
was to apply the annual price changes from each respective price proxy
to the appropriate cost categories. We repeated this practice for each
year of the interval from 2002 to 2006. We then applied the resulting
2006 distributions to the aggregate 2006 AMA Office Expenses weight of
20.035 percent to yield the detailed 2006 Office Expenses' weights as a
percent of total expenses.
In response to public comments that are detailed in the subsequent
sections of this rule, we conducted an additional review of the BEA I/O
data used to disaggregate the Office Expense cost category, comparing
the I/O's detailed categories with the questions on the AMA PPIS
survey. This review led to small revisions to the underlying Office
Expense cost weights and resulted in the inclusion of one additional
cost weight in that category: All Other Products. These products, which
were previously assumed to be captured in the Other Professional
Expenses category (as measured by the AMA PPIS survey), include a
variety of miscellaneous products, such as miscellaneous wood and
building products, that we believe respondents included in Office
Expenses as maintenance expense. Table 27 provides the revised MEI
weights.
We believe the introduction of these new, more detailed categories
for the 2006-based index allow for an increased level of precision
while maintaining appropriate levels of aggregation in the index. The
individual price proxies are described in more detail in section
II.E.4.of this final rule.
The following is a description of the types of expenses included in
each of the detailed Office Expense cost categories.
Utilities: The Utilities cost weight includes expenses
classified in the fuel, oil and gas, water and sewage, and electricity
industries. These types of industries are classified in NAICS and
include NAICS 2211 (Electric power generation, transmission, and
distribution), 2212 (Natural gas distribution), and 2213 (Water,
sewage, and other systems). The cost weight for utilities is 1.266
percent.
Chemicals: The Chemicals cost weight includes expenses
classified in the NAICS 325 (Chemical manufacturing), excluding
pharmaceuticals and biologicals. This would include, but is not limited
to, expenses such as soap and cleaning compounds, as well as
photocopier

[[Page 73266]]

toners and laser printer toners. The cost weight for chemicals is 0.723
percent.
Paper: The Paper cost weight includes expenses classified
in NAICS 322 (paper manufacturing) and NAICS 323 (printing and related
support activities). This would include expenses associated with items
such as paper, paperboard, sanitary paper products, and printing. The
cost weight for paper is 0.657 percent.
Rubber and Plastics: The Rubber and Plastics cost weight
includes expenses classified in NAICS 326 (Plastics and Rubber Products
Manufacturing). This would include, but is not limited to expenses
associated with plastic bags, plastic trash cans, and plastic plumbing
fixtures. The cost weight for Rubber and Plastics is 0.598 percent.
Telephone: The Telephone cost weight includes expenses
classified in NAICS 517 (Telecommunications) and NAICS 518 (Internet
service providers), and NAICS 515 (Cable and other subscription
programming). Telephone service, which is one component of the
Telecommunications expenses, accounts for the majority of the
expenditures in this cost category. The cost weight for Telephone
services is 1.501 percent.
Postage: The Postage cost weight includes expenses
classified in NAICS 491 (Postal services) and NAICS 492 (Courier
services). The cost weight for Postage is 0.898 percent.
All Other Services: The All Other Services cost weight
includes other service expenses including, but not limited to,
nonresidential maintenance and repair, machinery repair, janitorial,
and security services. This cost weight does not include expenses
associated with professional services such as accounting, billing,
legal, and marketing which are included in the Other Professional
Expenses cost weight derived using the AMA PPIS survey. The cost weight
for All Other Services is 3.582 percent.
All Other Products: The All Other Products cost weight,
which we are adding based upon our further review in response to public
comments, includes other miscellaneous expenses, including but not
limited to, a variety of miscellaneous building products (such as wood
and concrete). The cost weight for All Other Products is 0.500 percent.
Fixed Capital: The Fixed Capital cost weight includes
expenses for building leases, mortgage interest, and depreciation on
medical buildings. The cost weight for Fixed Capital is 8.957 percent.
Moveable Capital: The Moveable Capital cost weight
includes expenses and depreciation costs for non-medical equipment
including but not limited to, computer equipment and software and the
rental and leasing of industrial machinery equipment. The cost weight
for Moveable Capital is 1.353 percent.
(3) Professional Liability Insurance (PLI) Expense
The proposed weight for PLI expense was derived from the 2006 AMA
survey and was calculated as the mean PLI expense expressed as a
percentage of mean total expenses. This calculation resulted in a
4.295-percent share of total costs in 2006 compared to a 3.865-percent
share in the 2000-based index. The increase in the weight for PLI
reflects the current prices of premiums, as well as an update to the
level of coverage purchased by physicians in 2006 compared to 2000.
(4) Medical Equipment Expenses
The proposed weight for Medical Equipment was calculated using the
2006 AMA PPIS mean expense data expressed as a percentage of mean total
expenses. This calculation resulted in a 1.978-percent share of total
costs in 2006 compared to a 2.055-percent share in the 2000-based
index. By definition, this category includes the expenses related to
depreciation, maintenance contracts, and the leases or rental of
medical equipment used in diagnosis or treatment of patients. The
category would also include the tax-deductible portion of the purchase
price or replacement value of medical equipment, if not leased.
(5) Medical Supplies Expenses
The proposed weight for Medical Supplies was calculated using the
2006 AMA PPIS mean expense data expressed as a percentage of mean total
expenses. This calculation resulted in a 1.760-percent share of total
costs in 2006 compared to a 2.011-percent share in the 2000-based
index. By definition, this category includes the expenses related to
medical supplies such as sterile gloves, needles, bandages, specimen
containers, and catheters. Additionally, we proposed to exclude the
expenses related to separately billable supplies as these expenses are
not paid for under the PFS. The Medical Supply cost category does not
include expenses related to drugs.
(6) Other Professional Expenses
The proposed weight for Other Professional expenses was calculated
using the 2006 AMA PPIS mean expense data expressed as a percentage of
mean total expenses. This calculation resulted in a 4.513-percent share
of total costs in 2006. By definition, this category includes the
expenses related to tax-deductible expenses for any other professional
expenses not reported in another category from the PPIS. These expenses
would include fees related to legal, marketing, accounting, billing,
office management services, professional association memberships,
maintenance of certification or licensure, journals and continuing
education, professional car upkeep and depreciation, and any other
general expenses or other professional expenses not reported elsewhere
on the PPIS.
In summary, we are finalizing the proposed 2006-based MEI cost
categories and respective cost weights for all categories except for
the underlying detailed Office Expense cost categories and cost
weights. In response to public comments, we reexamined the BEA I/O data
and compared it again with the specific types of costs sought by the
AMA PPIS survey question on Office Expenses. Although we are finalizing
the proposed Office Expense cost weight of 20.035 percent, our re-
evaluation resulted in slight changes to the underlying detail of the
Office Expense cost categories and cost weights. Specifically, we are
finalizing the nine proposed detailed cost categories and adding one
additional detailed cost category, All Other Products. The final
detailed cost categories and cost weights for the underlying Office
Expense cost categories are shown in Table 27.
Table 29 shows a comparison of the proposed MEI Office Expense cost
categories and weights to the final MEI Office Expense cost categories
and weights. In addition to adding the subcategory All Other Products,
the final Office Expenses' category weights were updated in response to
public comments to reflect the removal of automobile-related expenses,
which were in effect being double-counted, from the Movable Capital
category. Further examination of the AMA's PPIS questions showed that
automobile costs, such as those associated with leasing and
depreciation, were captured in the question related to other
professional expenses and are, thus accounted for in Other Professional
Expenses (with a final cost weight of 4.513 percent). Notably, that
cost weight is not impacted as, again, those costs were captured there
in the survey.

[[Page 73267]]

Table 29--Comparison of Proposed Office Expense Cost Categories and Cost
Weights to the Final Office Expense Cost Categories and Cost Weights
------------------------------------------------------------------------
2006 2006
Final Proposed
Cost categories weight weight
(%) (%)
------------------------------------------------------------------------
Office Expenses................................... 20.035 20.035
Utilities..................................... 1.266 1.139
Chemicals..................................... 0.723 0.679
Paper......................................... 0.657 0.616
Rubber & Plastics............................. 0.598 0.563
Telephone..................................... 1.501 1.415
Postage....................................... 0.898 0.661
All Other Services............................ 3.582 4.718
All Other Products............................ 0.500 .........
Fixed Capital................................. 8.957 8.410
Moveable Capital.............................. 1.353 1.834
------------------------------------------------------------------------

4. Selection of Price Proxies for Use in the MEI
After the 2006 cost weights for the rebased and revised MEI were
developed, we reviewed all of the price proxies to evaluate their
appropriateness. As was the case in the development of the 2000-based
MEI (68 FR 63239), most of the proxy measures we considered are based
on BLS data and are grouped into one of the following five categories:
Producer Price Indices (PPIs): PPIs measure price changes
for goods sold in markets other than retail markets. These fixed-weight
indexes are a measure of price change at the intermediate or final
stage of production. They are the preferred proxies for physician
purchases as these prices appropriately reflect the product's first
commercial transaction.
Consumer Price Indices (CPIs): CPIs measure changes in the
prices of final goods and services bought by consumers. Like the PPIs,
they are fixed-weight indexes. Since they may not represent the price
changes faced by producers, CPIs are used if there are no appropriate
PPIs or if the particular expenditure category is likely to contain
purchases made at the final point of sale.
Average Hourly Earnings (AHEs): AHEs are available for
production and nonsupervisory workers for specific industries, as well
as for the nonfarm business economy. They are calculated by dividing
gross payrolls for wages & salaries by total hours. The series reflects
shifts in employment mix and, thus, is representative of actual changes
in hourly earnings for industries or for the nonfarm business economy.
ECIs for Wages & Salaries: These ECIs measure the rate of
change in employee wage rates per hour worked. These fixed-weight
indexes are not affected by employment shifts among industries or
occupations and thus, measure only the pure rate of change in wages.
ECIs for Employee Benefits: These ECIs measure the rate of
change in employer costs of employee benefits, such as the employer's
share of Social Security taxes, pension and other retirement plans,
insurance benefits (life, health, disability, and accident), and paid
leave. Like ECIs for wages & salaries, the ECIs for employee benefits
are not affected by employment shifts among industries or occupations.
When choosing wage and price proxies for each expense category, we
evaluate the strengths and weaknesses of each proxy variable using the
following four criteria:
Relevance: The price proxy should appropriately represent
price changes for specific goods or services within the expense
category. Relevance may encompass judgments about relative efficiency
of the market generating the price and wage increases.
Reliability: If the potential proxy demonstrates a high
sampling variability, or inexplicable erratic patterns over time, its
viability as an appropriate price proxy is greatly diminished. Notably,
low sampling variability can conflict with relevance--since the more
specifically a price variable is defined (in terms of service,
commodity, or geographic area), the higher the possibility of high
sampling variability. A well-established time series is also preferred.
Timeliness of actual published data: For greater
granularity and the need to be as timely as possible, we prefer monthly
and quarterly data to annual data.
Public availability: For transparency, we prefer to use
data sources that are publicly available.
The BLS price proxy categories previously described meet the
criteria of relevance, reliability, timeliness, and public
availability. Below we discuss the price and wage proxies for the
rebased and revised MEI (as shown in Table E4), along with a summary of
the public comments we received on our proposals and our responses to
those comments.
a. Cost (Expense) Categories in the MEI
(1) Physician's Own Time (Physician Compensation)
For the revised and rebased MEI, we proposed to continue to use the
AHE for production and non-supervisory employees for the private
nonfarm economy as the proxy for the Physician Wages & Salaries
component (BLS series code: CEU0500000008).
The AHE for the private nonfarm economy reflects general earnings
including the impacts of supply, demand, and economy-wide productivity
for the average worker in the economy. As such, use of this proxy is
consistent with the original intent of the Congress for the change in
the MEI to follow reflect changes in expenses of practice and general
earnings levels.\1\ The current 2000-based MEI uses the ECI for Total
Benefits (BLS series code: CIU2030000000000I) for total private
industry as the price proxy for Physician Benefits. We proposed to
continue using the same proxy for the 2006-based MEI and received no
public comment on this particular aspect of the index. This means that
both the wage and benefit proxies for physician earnings are derived
from the private nonfarm business sector and are computed on a per-hour
basis.
---------------------------------------------------------------------------

\1\ U.S. Senate, Committee on Finance, Social Security
Amendments of 1972. ``Report of the Committee on Finance United
States Senate to Accompany H.R. 1,'' September 26, 1972, p. 191.
---------------------------------------------------------------------------

(2) Nonphysician Employee Compensation
For the 2006-based MEI, we proposed to use the same ECI private
series for each occupational group as in the 2000-based MEI. In
particular, we proposed to use the ECI for Professional and Technical
Workers, the ECI for Managerial Services, the ECI for Administrative
Support Services, and the ECI for Service Occupations.
As described in the CY 2008 PFS proposed rule (72 FR 38190), as a
result of the discontinuation of the White Collar Benefit ECI for
private workers, we proposed to continue to use a composite ECI benefit
index. We are continuing to use the composite ECI for non-physician
employees in the proposed rebased and revised MEI; however, we proposed
to rebase the weights within that blend in order to reflect the more
recent 2006 data. Table 30 lists the four ECI series and corresponding
weights used to construct the 2006 composite benefit index.

[[Page 73268]]

Table 30--CMS Composite Price Index for Nonphysician Employee Benefits
------------------------------------------------------------------------
2006
ECI series weight
(%)
------------------------------------------------------------------------
Benefits, Private, Professional & Related...................... 44
Benefits, Private, Management, Business, Financial............. 11
Benefits, Private, Office & Administrative Support............. 32
Benefits, Private, Service Occupations......................... 13
------------------------------------------------------------------------

(3) Utilities
For the 2006-based MEI, we proposed to use the CPI for Fuel and
Utilities (BLS series code CUUR0000SAH2) to measure the price
growth of this cost category. This cost category was not broken out
separately in the 2000-based MEI.
(4) Chemicals
For the 2006-based MEI, we proposed to use the PPI for Other Basic
Organic Chemical Manufacturing (BLS series code PCU32519-
32519) to measure the price changes of this cost category. We are using
this industry-based PPI because BEA's 2002 benchmark I/O data show that
the majority of the office of physicians' chemical expenses are
attributable to Other Basic Organic Chemical Manufacturing (NAICS
32519). This cost category was not broken out separately in the 2000-
based MEI.
(5) Paper
For the 2006-based MEI, we proposed to use the PPI for Converted
Paper and Paperboard (BLS series code WPU0915) to measure the
price growth of this cost category. This cost category was not broken
out separately in the 2000-based MEI.
(6) Rubber and Plastics
For the 2006-based MEI, we proposed to use the PPI for Rubber and
Plastic Products (BLS series code WPU07) to measure the price
growth of this cost category. This cost category was not broken out
separately in the 2000-based MEI.
(7) Telephone
For the 2006-based MEI, we proposed to use the CPI for Telephone
Services (BLS series code CUUR0000SEED) to measure the price
growth of this cost category. This cost category was not broken out
separately in the 2000-based MEI.
(8) Postage
For the 2006-based MEI, we proposed to use the CPI for Postage (BLS
series code CUUR0000SEEC01) to measure the price growth of
this cost category. This cost category was not broken out separately in
the 2000-based MEI.
(9) All Other Services
For the 2006-based MEI, we proposed to use the ECI for Compensation
for Service Occupations (private industry) (BLS series code
CIU2010000300000I) to measure the price growth of this cost
category. This cost category was not broken out separately in the 2000-
based MEI.
(10) All Other Products
As noted previously, we are adding this category in this final rule
with comment period in response to public comments. This category
includes a variety of miscellaneous expenses such as miscellaneous
building products; thus, we will use the CPI-U for All Items Less Food
and Energy as a proxy for price changes. This cost category was not
broken out separately in the 2000-based MEI.
(11) Fixed Capital
For the 2006-based MEI, we proposed to use the CPI for Owner's
Equivalent Rent (BLS series code CUUS0000SEHC) to measure the
price growth of this cost category. This price index represents about
50 percent of the CPI for Housing, which was used in the 2000-based MEI
to proxy total Office Expenses.
(12) Moveable Capital
For the 2006-based MEI, we proposed to use the PPI for Machinery
and Equipment (series code WPU11) to measure the price growth
of this cost category. This cost category was not broken out separately
in the 2000-based MEI.
(13) Professional Liability Insurance (PLI)
Each year, we solicit PLI premium data for physicians from a sample
of commercial carriers. This information is not collected through a
survey form, but instead is requested directly from, and provided by
(on a voluntary basis), several national commercial carriers. As we
require for our other price proxies, the professional liability price
proxy is intended to reflect the pure price change associated with this
particular cost category. Thus, it does not include changes in the mix
or level of liability coverage. To accomplish this result, we obtain
premium information from a sample of commercial carriers for a fixed
level of coverage, currently $1 million per occurrence and a $3 million
annual limit. This information is collected for every State by
physician specialty and risk class. Finally, the State-level,
physician-specialty data are aggregated by effective premium date to
compute a national total, using counts of physicians by State and
specialty as provided in the AMA publication, Physician Characteristics
and Distribution in the U.S.
The resulting data provide a quarterly time series, indexed to a
base year consistent with the MEI, and reflect the national trend in
the average professional liability premium for a given level of
coverage, generally $1 million/$3 million of claims-made mature
policies. From this series, quarterly and annual percent changes in PLI
are estimated for inclusion in the MEI.
The most comprehensive data on professional liability costs are
held by the State insurance commissioners, but these data are available
only with a substantial time lag and hence, the data currently
incorporated into the MEI are much timelier. We believe that, given the
limited data available on professional liability premiums, the
information and methodology described above produces an adequate proxy
of the PLI price trends facing physicians.
(14) Medical Equipment
The Medical Equipment cost category includes depreciation, leases,
and rent on medical equipment. We proposed to use the PPI for Medical
Instruments and Equipment (BLS series code: WPU156201) as the price
proxy for this category, consistent with the price proxy used in the
2000-based MEI and other CMS input price indexes.
(15) Medical Materials and Supplies
As was used in the 2000-based MEI, we proposed to use a blended
index comprised of a 50/50 blend of the PPI Surgical Appliances (BLS
series code: WPU156301) and the CPI-U for Medical Equipment and
Supplies (BLS series code: CUUR0000SEMG). We believe physicians
purchase the types of supplies contained within these proxies,
including such items as bandages, dressings, catheters, intravenous
(I.V.) equipment, syringes, and other general disposable medical
supplies, via wholesale purchase, as well as at the retail level.
Consequently, we proposed to combine the two aforementioned indexes to
reflect those modes of purchase.

[[Page 73269]]

(16) Other Professional Expenses
This category includes the residual subcategory of other
professional expenses such as accounting services, legal services,
office management services, continuing education, professional
association memberships, journals, professional car expenses, and other
general expenses and other professional expenses not captured
elsewhere. Given this heterogeneous mix of goods and services, we are
finalizing our proposal to use the CPI-U for All Items Less Food and
Energy. In summary, we are finalizing the proposed 2006-based MEI price
proxies with one modification. Since an additional cost category, All
Other Products, was added to the office expense disaggregation, we are
also finalizing the decision to use the CPI for All Items Less Food and
Energy as the price proxy for that category.
(b) Productivity Adjustment to the MEI
The MEI has been adjusted for changes in productivity since its
inception. In the CY 2003 PFS final rule (67 FR 80019), we implemented
a change in the way the MEI was adjusted to account for those changes
in productivity. The MEI used for the 2003 physician payment update
incorporated changes in the 10-year moving average of private nonfarm
business multifactor productivity that were applied to the entire
index. Previously, the index incorporated changes in productivity by
adjusting the labor portions of the index by changes in the 10-year
moving average of economy-wide private nonfarm business labor
productivity.
We proposed to continue to use the current method for adjusting the
full MEI for multifactor productivity in the rebased and revised MEI,
and are finalizing that proposal.
As described in the CY 2003 PFS final rule, we believe this
adjustment is appropriate because it explicitly reflects the
productivity gains associated with all inputs (both labor and non-
labor). We believe that using the 10-year moving average percent change
in private nonfarm business multifactor productivity is appropriate for
deriving a stable measure that helps alleviate the influence that a
peak (or a trough) of a business cycle may have on the measure. The
adjustment will be based on the latest available historical e private
nonfarm business multifactor productivity data as measured and
published by BLS.
5. Results of Rebasing
Table 31 illustrates the results of updating the MEI cost weights
for Physician Compensation, Practice Expenses (excluding PLI), and PLI
from a 2000-based cost distribution to a 2006-based cost distribution,
including all the proposed and finalized revisions as specified in this
final rule.

Table 31--Percent Distribution of Selected Physician Expenses Used To
Calibrate RVUs: CYs 2006 and 2000
------------------------------------------------------------------------
CY 2006 CY 2000
weight weight
(%) (%)
------------------------------------------------------------------------
Physician Compensation (Own Time)................. 48.266 52.466
Practice Expenses (less PLI)...................... 47.439 43.669
PLI............................................... 4.295 3.865
------------------------------------------------------------------------

The rebased and revised MEI has several differences as compared to
the 2000-based MEI; these changes have been discussed in detail in
prior sections of this rule. Table E8 shows the average calendar year
percent change for CY 2004 to CY 2011 for both the 2000- and 2006-based
MEIs. The 2006-based MEI annual percent changes differ from the 2000-
based MEI annual percent changes by 0.0 to 0.8 percentage point. For
CYs 2007 through 2011, the annual percent change in the rebased and
revised MEI was within 0.3 percentage point of the percent change in
the 2000-based MEI. In the earlier years, there were larger differences
between the annual percent change in the rebased and revised MEI and
the 2000-based MEI. The majority of these differences can be attributed
to the lower benefit cost weight, as measured by the 2006 AMA data, and
the exclusion of the Pharmaceuticals cost category. The remaining
differences are attributable to the higher cost weight for PLI, as
measured by the 2006 AMA data.

Table 32--Annual Percent Changes in the 2000-based and Revised 2006-
based MEI
------------------------------------------------------------------------
Current
Update year \(A)\ Final 2006- 2000-based
based MEI MEI
------------------------------------------------------------------------
CY 2004....................................... 2.3 2.6
CY 2005....................................... 1.8 2.6
CY 2006....................................... 1.8 2.4
CY 2007....................................... 1.6 1.9
CY 2008....................................... 1.9 1.8
CY 2009....................................... 1.6 1.6
CY 2010....................................... 1.5 1.2
CY 2011\(B)\.................................. 0.4 0.3
Average Change for CYs 2004- 2011............. 1.6 1.8
------------------------------------------------------------------------
\(A)\ Update year based on historical data through the second quarter of
the prior calendar year. For example, the 2010 update is based on
historical data through the second quarter 2009.
\(B)\ Based on historical data through the 2nd quarter 2010.

As shown in Table 33, the percent change of the rebased and revised
MEI for the CY 2011 PFS final rule is an increase of 0.4 percent, one
tenth of a percentage point higher than the 2000-based MEI for the same
period. The proposed rule included an estimated increase of 0.3 percent
for 2011 based on projected data from IHS Global Insight, Inc. The 0.4
percent increase was calculated based on historical data through the
second quarter of 2010, including revised data from the BLS on the 10-
year moving average of BLS private nonfarm business multifactor
productivity published on October 6, 2010 (http://www.bls.gov/news.release/pdf/prod3.pdf). The 0.1 percentage point difference in the
MEI update factor from the 0.3-percent estimate indicated in the
proposed rule to our current figure of 0.4 percent is primarily related
to the incorporation of more recent historical data for private nonfarm
business multifactor productivity.

Table 33--Annual Percent Change in the 2000-based and Revised 2006-based
MEI for CY 2011
------------------------------------------------------------------------
2006-based 2000-based
MEI MEI
------------------------------------------------------------------------
CY 2011....................................... 0.4 0.3
------------------------------------------------------------------------

[[Page 73270]]

Table 34--Annual Percent Change in the Revised and Rebased MEI CY 2011,
All Categories \1\
------------------------------------------------------------------------
CY 2011
Cost categories 2006 weight percent
\2\ (%) change
------------------------------------------------------------------------
MEI Total, productivity adjusted.............. 100.000 0.4
Productivity: 10[dash]year moving average of N/A 1.2
MFP..........................................
MEI Total, without productivity adjustment.... 100.000 1.6
Physician Compensation (Own Time) \3\..... 48.266 2.4
Wages and Salaries.................... 43.880 2.5
Benefits.............................. 4.386 1.7
Physician's Practice Expenses............. 51.734 0.7
Nonphysician Employee Compensation.... 19.153 1.5
Nonphysician Employee Wages....... 13.752 1.4
Prof/Tech Wages............... 6.006 1.2
Managerial Wages.............. 1.446 1.2
Clerical Wages................ 4.466 1.7
Services Wages................ 1.834 1.7
Nonphysician Employee Benefits.... 5.401 1.6
Other Practice Expenses............... 26.308 0.1
Office Expenses................... 20.035 0.6
Utilities..................... 1.266 -3.1
Chemicals..................... 0.723 -2.5
Paper......................... 0.657 -0.3
Rubber & Plastics............. 0.598 -0.3
Telephone..................... 1.501 0.8
Postage....................... 0.898 4.7
All Other Services............ 3.582 1.8
All Other Products............ 0.500 1.4
Fixed Capital................. 8.957 0.6
Moveable Capital.............. 1.353 0.1
PLI \4\............................... 4.295 -2.9
Medical Equipment..................... 1.978 0.5
Medical Materials and Supplies........ 1.760 0.4
Other Professional Expenses........... 4.513 1.4
------------------------------------------------------------------------
\1\ The estimates are based upon the latest available Bureau of Labor
Statistics data on the 10-year moving average of BLS private nonfarm
business multifactor productivity published on October 6, 2010 (http://www.bls.gov/news.release/pdf/prod3.pdf).
\2\ The weights shown for the MEI components are the 2006 base-year
weights, which may not sum to subtotals or totals because of rounding.
The MEI is a fixed-weight, Laspeyres input price index whose category
weights indicate the distribution of expenditures among the inputs to
physicians' services for CY 2006. To determine the MEI level for a
given year, the price proxy level for each component is multiplied by
its 2006 weight. The sum of these products (weights multiplied by the
price index levels) yields the composite MEI level for a given year.
The annual percent change in the MEI levels is an estimate of price
change over time for a fixed market basket of inputs to physicians'
services.
\3\ The measures of Productivity, Average Hourly Earnings, Employment
Cost Indexes, as well as the various Producer and Consumer Price
Indexes can be found on the Bureau of Labor Statistics (BLS) Web site
at http://stats.bls.gov.
\4\ Derived from a CMS survey of several major commercial insurers.
\N/A\ Productivity is factored into the MEI as a subtraction from the
total index growth rate; therefore, no explicit weight exists for
productivity in the MEI.

6. Medicare Economic Index Technical Advisory Panel
In the CY 2011 PFS proposed rule, we notified the public of our
intent to convene a Medicare Economic Index Technical Advisory Panel
(MEI TAP) to study all aspects of the MEI including its cost
categories, their associated cost weights and price proxies, and the
adjustment of the index by an economy-wide measure of multi-factor
productivity. We will be convening the MEI TAP. More details regarding
this issue can be found in the next section of this rule.
7. Summary of Comments and the Associated Responses
a. Timing of Rebasing and Revising the MEI
Comment: Many commenters support the rebasing and revising of the
MEI using CY 2006 as a base year and the incorporation of practice cost
changes reflected in the 2006 AMA PPIS. Many of these commenters also
indicated their support for the upcoming MEI technical advisory panel,
but stressed that CMS should not delay moving forward with rebasing and
revising the MEI for CY 2011. Several people wrote that they believe
that the rebasing, along with the addition of new product categories,
will result in a more accurate distribution of expenses among physician
compensation, practice expense, and professional liability. The
commenters believe that the proposal to rebase to 2006 will make the
MEI more representative of current conditions in the health care
marketplace and, in particular, more reflective of the higher burden of
practice expenses in relation to physician compensation in modern
physician practices. The commenters agree that the use of more current
data and the expansion of the categories used in determining the MEI
update are a technical improvement over the 2000-based MEI and urge CMS
to proceed accordingly.
Response: We agree with the commenters that the 2006-based MEI
reflects a more current estimate of the cost distribution associated
with furnishing physicians' services. Therefore we are finalizing our
proposals (with minor modifications described above) to rebase and
revise the MEI, and are proceeding with implementation of the 2006-
based MEI for CY 2011.
Comment: Many commenters indicated CMS should postpone
implementation of the rebased and revised MEI until the MEI technical
advisory panel can conduct a comprehensive review of all aspects of the
index. These commenters believe that it is premature to finalize
proposals

[[Page 73271]]

that will significantly change the MEI prior to receiving
recommendations from the technical advisory panel and therefore
strongly support convening the technical advisory panel first and
rebasing and revising the MEI afterwards.
Response: We agree with the commenters that the MEI technical
advisory panel should move forward (discussed in more detail below).
However, we do not find any compelling technical reason to postpone
finalizing the proposed changes to the index. We believe rebasing and
revising the index for CY 2011 to reapportion the work, practice
expense, and malpractice weights will allow the MEI to appropriately
reflect more recent data. For these reasons we disagree with the
commenters that support delaying the rebasing of the MEI until the
technical panel has had a chance to convene and make further
recommendations. Should we concur with recommendations from the
technical advisory panel that would result in technical improvements to
the MEI, we would propose any changes in a future rulemaking exercise.
Comment: One commenter questioned the need for changes in the MEI
in 2011, particularly since there is no statutory timeframe for these
changes and the most recent changes in practice expenses from the PPIS
survey are in the first year of a 4-year phase-in.
Response: The current MEI reflects the physician practice cost
structure for 2000. Based on both our own analysis and supporting
public comments, it is evident that this cost structure has changed
from 2000 to 2006. Accordingly, we believe it is technically
appropriate to update to a more recent base year for use in CY 2011.
Comment: A commenter suggested that when rebasing is done in the
future, CMS should propose phasing in the changes, perhaps over 2
years, in order to mitigate negative consequences.
Response: We do not believe it would be appropriate to phase in
changes to the MEI associated with rebasing and revising the index.
These periodic efforts are done to ensure that the MEI is reflecting
the latest available information and echoes current cost distributions
associated with furnishing physicians' services. Our approach is
consistent across all of the Medicare market baskets in this regard and
is likewise consistent with how technical improvements are incorporated
into other published price indexes, such as the CPI or PPI.
Comment: Some commenters asked CMS to delay rebasing the MEI until
the summit on geographic practice costs and the IOM studies have been
completed.
Response: We believe that it is technically appropriate to update
the MEI to reflect the more current cost structure as determined by
using the 2006 AMA PPIS data. We note that the MEI is constructed
independent of the GPCIs. While the GPCI weights have historically been
linked to the MEI cost weights, we do not believe it would be
appropriate to postpone rebasing the MEI in anticipation of the
summit's or the IOM's findings.
b. PPIS Data
Comment: Many commenters stated they, like CMS, are unaware of
another more robust or more current source of available data on
physician practice costs than the PPIS. Other commenters noted that CMS
and the AMA have supported using PPIS data to update the practice
expense per hour (PE/HR) calculations beginning in CY 2010. The
commenters believe that if the data were sufficient to adjust PE/HR,
then they are sufficient to update the MEI. Other commenters indicate
they support periodic updates to the index, recognizing the
difficulties associated with updating the MEI's cost categories and
weights on an annual basis.
Response: We agree with the commenters that the PPIS is the most
up-to-date and comprehensive data source available on physician
practice costs. We also believe that the estimates derived from the
PPIS are current, valid, and appropriate for use in rebasing and
revising the MEI. Likewise, we concur that a variety of data-related
issues would make updating the MEI on an annual basis difficult and
believe that periodic revisions such as the one we are adopting in this
final rule with comment period are more appropriate.
Comment: A few commenters expressed general concerns over using
data from the PPIS. One commenter specifically notes that the MEI
changes are allegedly being proposed to reflect changes in medical
practice based on research using PE data. The commenter has reviewed
some of the research, including the research process and questioned the
research data itself. Their concerns over the raw data source include
issues related to sample design, sample geographic distribution, and
sample size sufficiency. They questioned the choice of the data
collection firm used by AMA.
Response: We conducted an extensive review of the PPIS data and
continue to believe it appropriately reflects the cost distributions of
physicians. We note that we rely upon the physician community to
complete the AMA surveys as accurately as possible since unlike other
provider types (such as hospitals and skilled nursing facilities)
physicians are not required to submit annual Medicare cost report data.
Comment: Some commenters indicated that CMS did not make clear why
the rebased MEI would be based on PPIS data from 2006. Several
expressed concerns that the use of 4-year old data is questionable as
data this old would not reflect physician expenses in 2011 (and that
more up-to-date data on physician costs is surely available).
Response: As stated in the CY 2011 PFS proposed rule (75 FR 40088),
we chose to rebase the MEI to 2006 in order to incorporate the 2006 AMA
PPIS data. We believe the 2006 AMA PPIS data is the most up-to-date,
complete, statistically valid data source available. We welcome any
recommendations for more up-to-date data sources available on physician
expenses. We would also note that the 2006 data from the PPIS are used
to provide the cost structure that is used in the MEI. The increase in
the CY 2011 MEI ultimately reflects the input price inflation, adjusted
for productivity, that physicians face based on a 2006 distribution of
costs. It does not, nor is it intended to, reflect physician input cost
levels for 2011.
Comment: Some commenters noted that in the interest of
transparency, CMS should publish on its Web site all data from the PPIS
that were used in rebasing the MEI.
Response: We understand the commenter's request for transparency.
Unfortunately, we are unable to publish the detailed micro level data
from the AMA PPIS survey as it is proprietary information. We would
suggest the commenter contact the AMA with their request.
c. Office Expenses
Comment: Several commenters appreciated the intent of the new
subcategories found in Office Expenses to include more medical office-
specific data and believe it will improve the index.
Response: We agree with the commenters and believe that having
greater detail under the Office Expense cost category in the MEI
provides a technical improvement.
Comment: Several commenters questioned the CMS proposal to create
detailed categories under the broader Office Expense cost category.
Some of the commenters had specific concerns about the particular
subcategories. Examples included the following:
The Chemicals and Rubber & Plastics categories (all
derived from the BEA) might not be relevant (or

[[Page 73272]]

meaningful) to today's physicians' practice.
Computers, computer expenses, billing, and scheduling
technology and electronic medical records are high-cost, non-optional
office expenses for medical practices that are not adequately captured
and would represent more appropriate categories.
CMS references data on the Office Expenses' components
derived from the BEA, but the agency provided no rationale to justify
the changes in Office Expenses, nor did it provide a detailed
accounting methodology or solicit advice on new inputs to the index.
Response: We proposed to disaggregate the Office Expense cost
category into more detailed cost categories as a result of a change to
the question in the 2006 AMA PPIS survey that captured these types of
costs. In addition, in rulemaking for the CY 2008 Physician Fee
Schedule, we received a comment from the industry about our use of the
CPI for Housing to proxy Office Expenses (72 FR 66376). At that time,
we notified the public of our intent to explore the feasibility of
breaking the Office Expenses category into more descriptive cost
categories during the next rebasing.
In order to appropriately represent the information collected by
the PPIS and to increase the level of precision of our price proxies,
we proposed to disaggregate the Office Expense cost category and its
associated weight into more detailed components and to proxy those
costs with the most technically appropriate price proxies. Moreover, we
believe it would be technically inappropriate to proxy the Office
Expense cost category, which now includes a much broader range of
expenses, by one price proxy, namely the CPI for Housing. For these
reasons, we developed our proposals and solicited public comments.
We disagree with the commenters' assertion that the Chemicals and
Rubber & Plastics categories are not relevant to today's physician
practice (and note that the commenters did not provide additional
information or data to support the claim that the proposed categories
are not relevant). The information we relied on came directly from the
BEAs' Benchmark I/O files for Offices of Physicians, Dentists, and
Other Health Practitioners. The Chemicals cost category includes
expenses for items such as soaps and cleaning compounds, as well as
photocopier toners and laser printer toners. The Rubber and Plastics
category includes expenses for items such as plastic plumbing fixtures,
plastic bags, and plastic trash cans. Although we will continue to
explore further additional disaggregation of expenses, we believe that
the aforementioned costs are associated with, and relevant to,
furnishing physicians' services.
As indicated previously, and in response to the comment, we
conducted an additional review of the BEA I/O data used to disaggregate
the Office Expense cost category, comparing the detailed underlying
expenses with the questions on the AMA PPIS survey. This review led us
to make small revisions to the underlying Office Expense cost weights,
including the addition of another cost weight for the new subcategory,
All Other Products. These products were initially assumed to be
captured in Other Professional Expenses as measured by the AMA PPIS
survey, but were determined to have been reported as Office Expenses.
All Other Products would include a variety of miscellaneous products
such as miscellaneous wood and apparel products. Table E4 provides the
revised MEI weights. Also, as part of this additional analysis on the
Office Expense categories, we determined that automobile-related
expenses were captured in the PPIS question associated with Other
Professional Expenses (and that its associated weight reflected
respondents including those costs when answering that question). As a
result, we removed automobile-related NAICS-based industry spending
from the BEA I/O data that was being used to distribute expenses across
the various Office Expense subcategories. As this spending was included
in the Movable Capital subcategory for the proposed rule, the weight
associated with that subcategory will be 1.353 rather than the 1.834 we
proposed.
We disagree with the commenters' statements that the MEI does not
adequately capture high-level or high-cost technology expenses (and
briefly note that Movable Capital includes only non-medical movable
equipment). The Office Expense cost weight (20.035 percent) was
calculated using the 2006 PPIS data, which specifically requested
health information technology equipment and other nonmedical office
equipment to be included in the Office Expense category as follows:

Provide [your] share (dollar amount) of the specialty or
department level's share (dollar amount) of the practice's total
(dollar amount) for] 2006 office expenses, including office (non-
medical) equipment and office (non-medical) supplies, as well as
rent, mortgage interest, maintenance, refrigeration, storage,
security, janitorial, depreciation on medical buildings used in your
practice, utilities, or other office computer systems (including
information management systems/electronic medical record systems)
and telephone.

Given that the expenses related to information management systems
and electronic medical record systems were included as ``office
expenses'' in the 2006 PPIS, the 20.035 percent weight would include
these costs. Unfortunately, given the data limitations, it remains
difficult to determine a percentage associated specifically with
computer equipment, computer-related depreciation, and computer-related
leasing. For this rebasing, the costs we classified as Moveable Capital
are comprised of the expenses paid by Office of Physicians industry to
the following industries based on NAICS classification:

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

------------------------------------------------------------------------
33329A............................ Other industrial machinery
manufacturing.
33331A............................ Vending, commercial, industrial, and
office machinery manufacturing.
333414............................ Heating equipment, except warm air
furnaces.
333415............................ Air conditioning, refrigeration, and
warm air heating equipment
manufacturing.
33399A............................ Other general purpose machinery
manufacturing.
33411A............................ Computer terminals and other
computer peripheral equipment
manufacturing.
334210............................ Telephone apparatus manufacturing.
334220............................ Broadcast and wireless
communications equipment.
334290............................ Other communications equipment
manufacturing.
334300............................ Audio and video equipment
manufacturing.
334418............................ Printed circuit assembly (electronic
assembly) manufacturing.
334613............................ Magnetic and optical recording media
manufacturing.
335120............................ Lighting fixture manufacturing.
337110............................ Wood kitchen cabinet and countertop
manufacturing.
337215............................ Showcase, partition, shelving, and
locker manufacturing.
532400............................ Commercial and industrial machinery
and equipment rental and leasing.
------------------------------------------------------------------------

[[Page 73273]]

We believe technology-related expense are captured in the MEI and
that the PPI for Machinery and Equipment is an appropriate price proxy
to estimate price changes. However, we will actively monitor the data
moving forward to ensure these types of expenses are adequately
reflected in the MEI.
Finally, we would note that the descriptions of the methodologies
used to construct the subcategories under Office Expenses were both
detailed and consistent with those provided in the recent proposed
rules relating to the rebasing of other CMS market baskets. However, in
response to the comment we hope the additional information provided
here is helpful.
Comment: One commenter found it most problematic that the CMS
proposal related to Office Expenses would reduce the weight of rent
within physician practice expenses. Currently, rent comprises 12.2
percent of the practice expense GPCI. Under the proposed rule, rent
would be reduced to 8.4 percent. The commenter also noted that their
attempt to validate the proposal, using BEA 2002 Benchmark I/O use
files for NAICS 621A00 as described in the proposed rule were not
successful.
Response: We proposed to disaggregate the Office Expense cost
weight in the 2006-based MEI in order to recognize and take advantage
of the expansion of the AMA PPIS survey question to include additional
expenses not included in the 2000-based survey. Consistent with the
methodology used for other CMS market baskets, we relied upon the BEA
I/O data to disaggregate the Office Expense cost category, which we
described in the proposed rule. This methodology required a series of
calculations including classifying costs as office expenses consistent
with AMA PPIS survey. As noted elsewhere, and based on public comment,
we have refined our methodology, as well as added additional detail in
this final rule which we believe will be helpful in validating our
estimates. The new methodology has resulted in a cost weight of 8.957
percent for Fixed Capital. Comments related to weights specifically
associated with the PE GPCIs are found in section II.D. of this final
rule with comment period.
Comment: A commenter stated that it appeared that utility costs
have been included twice in the MEI calculation. The HUD data used by
CMS as a source for the rent data includes utilities. However,
utilities have been included a second time as a new component of the
``Office Expense'' category of ``Other Practice Expenses'' and it does
not appear that the ``Fixed Capital'' (rent) component has been scaled
down as a result. This error should be corrected, a new proposed rule
published, and a new comment period opened.
Response: We disagree with the commenter's assertions that
utilities expenses in the MEI are double counted. The Utilities cost
weight in the MEI was derived using the BEA I/O data for NAICS 621A
(Offices of Physicians, Offices of Dentist, and Offices of Other
Practitioners). The BEA I/O data provide information regarding
physicians' purchases from other industries. Expenses classified in the
Utilities cost weight, such as NAICS 22110 (Electric power generation,
transmission, and distribution), were not included in the Fixed Capital
cost weight; therefore, we did not include utility costs twice in the
MEI calculation. The HUD data referenced by the commenter is used in
conjunction with the GPCI rent update and is independent of the
development of the cost weight for Utilities in the MEI.
d. Purpose of the MEI
Comment: Several commenters requested that CMS address the problem
that the ``market basket'' of inputs, whose prices are measured in the
MEI, is outdated and, despite periodic rebasing, has not been
comprehensively revised since it was originally developed in 1973. They
indicated that the MEI does not reflect the inputs involved in 21st
century medical practice and claim that the costs associated with
complying with an array of government-imposed regulatory requirements,
including increasing staffing levels, costs related to Medicare
prescription drug plans and formulary compliance, compliance with rules
governing referrals and interactions with other providers, and others,
are not accounted for in the index. They also indicate that the MEI has
not been adjusted for modern practice costs such as computers, copiers,
and new medical technology.
Response: We disagree with the commenters' statement that the MEI
only measures changes in specific types of practice costs that existed
in 1973. Since 1973, the MEI has been rebased four times. For each of
those updates, the MEI methodology and data sources were thoroughly
reviewed and evaluated to ensure that the index accurately reflected
the cost distributions encountered by physicians. The revisions have
included changes to the structure of the index, the price proxies used,
the data sources used to develop the weights, the productivity
adjustment, and, as proposed in the CY 2011 PFS proposed rule,
disaggregating categories within the Office Expenses category into more
detail.
We also note that the MEI is a price index, not a cost index.
Changes in physician costs are a function of changes in prices and
changes in quantities. Examples of changes in quantities include
purchasing more moveable equipment (such as health information
technology), hiring additional office staff, or changing the mix of
staff. The MEI was established in accordance with section 1842(b)(3) of
the Act, which states the growth of prevailing charge levels is to be
limited to growth in an ``appropriate economic index''. The relevant
Senate Finance Committee report \2\ provides slightly more detail on
such an index, stating that:
---------------------------------------------------------------------------

\2\ U.S. Senate, Committee on Finance, Social Security
Amendments of 1972. ''Report of the Committee on Finance United
States Senate to Accompany H.R. 1,'' September 26, 1972, p. 190.

[I]t is necessary to move in the direction of an approach to
reasonable charge reimbursement that ties recognition of fee
increases to appropriate economic indexes so that the program will
not merely recognize whatever increases in charges are established
in a locality but would limit recognition of charge increases to
rates that economic data indicate would be fair to all concerned and
---------------------------------------------------------------------------
follow rather than lead any inflationary trends.

Thus, in accordance with Congressional intent that the index
reflect and follow inflationary trends, and since its inception in
1973, the MEI has been constructed as a fixed-weight price index that
measures the inflationary trends of goods and services associated with
furnishing physicians' services. The data sources that are used to
construct the weights have been updated regularly to include the modern
inputs required by physicians in running their respective practices.
The MEI then appropriately apportions the various costs into their
respective categories and calculates the associated weights. It is this
distribution of costs, and not the level of costs, that the MEI
appropriately incorporates. Based on this distribution, the MEI
measures the weighted input price inflation, adjusted by productivity,
faced by physicians. The MEI is then incorporated into the SGR formula
to derive the final PFS update. Having an accurate and contemporary
distribution of input costs is critical to producing an accurate
measure of price inflation and is the major reason we are moving
forward to rebase and revise the MEI for CY 2011.
Finally, to date, we have not received any proposals from the
public on how the MEI should be revised and still meet

[[Page 73274]]

its statutory requirements. We will continue to evaluate the validity
and relevance of the index to ensure that it meets statutory
requirements while adequately reflecting the evolution of the expense
distribution associated with furnishing physicians' services.
Comment: A commenter asserted that the time gap between the two
surveys, the PPIS and the SMS, may not be directly comparable, but a
comparison of the two indicates that medical practice costs increased
79 percent from 2000 to 2006. However, the MEI only increased 18
percent from 2000 to 2006. The commenter notes that every other
available measure of physician expense growth shows faster growth than
the MEI.
Response: The MEI is strictly a fixed-weight price index expressly
designed to measure the change in price of a fixed basket of goods.
Changes in physician costs are a function of changes in prices and
changes in quantities. As other commenters have noted to CMS, and CMS
agrees, cost increases are only reflected in the MEI's weights to the
extent the relative cost of an input changes over time. Comparing the
MEI (reflecting price changes) to other cost metrics (that reflect both
price changes, as well as changes in volume and mix) is inappropriate
given the MEI's definition and purpose.
Comment: A commenter noted that the proposed revisions to the MEI
do not do anything to improve the adequacy of the MEI. The commenter
also noted that in the proposed rule, CMS estimated the 2011 MEI at
just 0.3 percent, and the addition of the new components that CMS has
proposed based on BEA data does nothing to increase it.
Response: The rebased and revised MEI is intended to more
accurately reflect the cost structure of furnishing physicians'
services, as well as measure the input price inflation encountered by
physicians. Accordingly, we disagree with the commenter and believe
that the 2006-based MEI offers numerous technical improvements. These
improvements include updating the base year to reflect more current
cost distributions, updating price proxies, and adding more detailed
cost categories.
Comment: A commenter stated that the MEI is used to annually update
medical practice costs in the SGR calculation. Virtually all physician
groups signed on to a January 2009 letter arguing that the MEI's price
inputs as currently structured do not accurately reflect current
medical practice costs. No action has been taken to remedy the
situation.
Response: We disagree with the commenter's claim the MEI annually
updates the medical practice cost in the SGR. The purpose of the MEI in
the SGR is to measure price increases related to the furnishing of
physician services. It is not intended to measure cost increases, but
rather to reflect the cost structure associated with furnishing
physicians' services, and then subsequently measure the weighted price
increases associated with that cost structure. We would also like to
note that the MEI is currently part of the statutorily prescribed
formula for physician payment updates and that revisions to the MEI are
adopted through the notice and comment rulemaking process.
e. Technical Panel
Comment: Many commenters expressed their support for the convening
of a Medicare Economic Index Technical Advisory Panel (MEI TAP).
Response: We agree that the MEI TAP should be convened and will be
moving forward accordingly. This process includes announcing the
panel's creation through an official CMS communication such as a
Federal Register announcement. This announcement will provide details
on the expected number of panel members, provide an opportunity for the
public to nominate members, and inform the public of the objectives and
scope of the panel's activities.
We will be asking this group of independent experts to evaluate
only technical aspects of the MEI, including the index's inputs, input
weights, price-measurement proxies, and the productivity adjustment.
Any formal recommendations made by the MEI TAP will be carefully
considered by CMS. Suggested modifications that we believe would result
in technical improvements to the MEI would appear in subsequent PFS
proposed rules and be subject to public comment and the overall
rulemaking process.
Comment: Several commenters provided many suggestions on technical
issues that they believe should be considered by the technical advisory
panel. The commenters generally requested that the panel perform a
thorough review of all aspects and elements of the MEI.
Response: We appreciate the constructive comments on potential
topics for the MEI technical advisory panel, which will be asked to
fully evaluate the index. As noted above, the panel will be evaluating
all technical aspects of the MEI including the cost categories, their
associated weights and price proxies, and the productivity adjustment.
Comment: A commenter stated that any recommendations that are made
by the panel should be published with an opportunity for comment before
they are finalized.
Response: Any substantive recommendations from the technical
advisory panel that CMS believes will result in technical improvements
to the MEI will be subject to the rulemaking process, including giving
the opportunity to the public to review and comment.
Comment: Some commenters request that CMS reach out to the medical
community to ensure that the panel's work is accurate and complete.
Others indicated that pending the recommendations of the technical
advisory panel, CMS should: (1) Include physicians and other
stakeholders in the MEI revision process, so that the impact of any
recommended changes can be studied prior to implementation; and (2)
clearly state their rationale for proposed changes.
Response: As mentioned previously, we will be reaching out to the
public for suggestions as to the composition of an independent expert
panel that will assist us in ensuring that the MEI is constructed
accurately and completely, and fulfills its purpose to appropriately
reflect the inflationary pressures faced by physicians in furnishing
services. CMS will also present to the public any future proposed
revisions to the MEI through notice and comment rulemaking, during
which we will clearly state the rationale for any proposed changes and
consider public comment before finalizing changes to the index.
Comment: One commenter believes that one of the possible options
for resolving the SGR problem involves replacing the SGR update formula
with the MEI. The commenter noted that input from the MEI technical
panel should better position the MEI as a viable alternative to the SGR
update formula.
Response: We welcome any technical comments the public has on the
composition of the MEI, including the inputs, input weights, price-
measurement proxies, and productivity adjustment. Any recommendations
from the MEI TAP will be evaluated and considered for possible future
rulemaking. However, we note that replacement of, or adjustments to,
the SGR is outside the scope of the MEI TAP.

[[Page 73275]]

f. Other
Comment: Several commenters agreed with CMS' proposal to remove
pharmaceuticals and separately billable medical supplies, since these
are not paid under the PFS. Even though this change lessens the weight
given to the practice expense component of the index, it made sense to
the commenters given the separate line-item payments for these goods.
Further, incident-to drugs are now paid based on average sales price
(ASP) and, since last-year's changes, are no longer a factor in the SGR
formula and the determination of the PFS conversion factor.
Response: We agree with the commenters on the appropriateness of
removing drugs and separately billable supplies from the MEI since they
are not paid under the PFS and are no longer included as costs in the
SGR formula.
Comment: A commenter disagreed with the continued use of the AHE
wage data for the total nonfarm business economy as a price proxy for
physician income rather than using BLS data specific to all
professional and technical workers.
Response: We disagree with the commenter's suggestion. We believe
that the use of the average hourly earnings data for the total nonfarm
business economy, which captures skill mix shifts in the labor force,
is the most appropriate index for use as the price proxy for physician
income in the MEI. The AHE for the nonfarm business economy reflects
general earnings including the impacts of supply, demand, and economy-
wide productivity for the average worker in the economy. Its use is
consistent with the Congress's original intent that the index be based
on changes in expenses of practice and general earnings levels.\3\ It
is also consistent with our use of the BLS private nonfarm business
multifactor productivity measure to adjust the index as economy-wide
wage increases reflect economy-wide productivity increases. Therefore,
we are finalizing our proposal to continue to use average hourly
earnings for the total private nonfarm economy as a price proxy for
physician income in the 2006-based MEI.
---------------------------------------------------------------------------

\3\ U.S. Senate, Committee on Finance, Social Security
Amendments of 1972, ``Report of the Committee on Finance United
States Senate to Accompany H.R. 1,'' September 26, 1972, p. 191.
---------------------------------------------------------------------------

Comment: A commenter stated that although CMS has expanded the
designation of the data underlying some of the GPCI and MEI constructs
over the designations of previous years, the descriptions used are
sometimes either inconsistent or contradictory. For example, CMS noted
that ``for the proposed sixth GPCI update, we used the 2006 through
2008 Bureau of Labor Statistics (BLS) Occupational Employment
Statistics (OES) data as a replacement for the 2000 Census data.'' (75
FR 40083). In contrast, CMS used ``2006 Occupational Employment
Statistics (OES), BLS'' for the proposed 2006 MEI expense weights. (75
FR 40089, note (2)). The commenter believes it is impossible to discern
from the proposed rule whether inconsistent data sets were used or
whether there is simply a misprint.
Response: Because the MEI and GPCIs serve different purposes and
are not interdependent, we may use data from different years and, in
some instances, different sources. Both the MEI and the GPCI use the
OES. However, because the MEI is based to 2006 it is appropriate to use
the 2006 BLS Occupational Employment Statistics data to disaggregate
the nonphysician wages cost weight into more detailed occupational cost
weights.
For the proposed sixth GPCI update, CMS proposed to use OES data
for 2006 through 2008. The rationale for choosing this data for the
proposed GPCI update was provided in the CY 2011 PFS proposed rule (75
FR 40084).
8. Adjustments to the RVU Shares To Match the Proposed Rebased MEI
Weights
As described in the previous section, CMS proposed to rebase the
MEI for CY 2011 based on the most current data and establish new
weights for physician work, PE, and malpractice under the MEI. As
stated in the previous section, the MEI was rebased to a CY 1996 base
year beginning with the CY 1999 MEI (63 FR 58845), and to a CY 2000
base year beginning with the CY 2004 MEI (68 FR 63239). For both the CY
1999 and CY 2004 rebasing, we made adjustments to ensure that estimates
of aggregate PFS payments for work, PE, and malpractice were in
proportion to the weights for these categories in the rebased MEI (63
FR 58829 and 69 FR 1095).
Consistent with past practice when the MEI has been rebased, we
proposed to make adjustments to ensure that estimates of aggregate CY
2011 PFS payments for work, PE, and malpractice are in proportion to
the weights for these categories in the rebased CY 2011 MEI.
As explained in the CY 2011 PFS proposed rule (75 FR 40095), to
match the proportions for work, PE, and malpractice in the rebased CY
2011 MEI would necessitate increasing the proportion of aggregate CY
2011 PFS payments for PE and malpractice and decreasing the proportion
for work. This could be accomplished by applying adjustments directly
to the work, PE, and malpractice RVUs. However, as stated in the
proposed rule (75 FR 40095), we are cognizant of the public comments
made during prior rulemaking on issues related to scaling the work
RVUs. Many commenters have indicated a preference for the work RVUs to
remain stable over time and for any necessary adjustments that would
otherwise be made broadly to the work RVUs to be accomplished in an
alternative manner. For example, in past 5-Year Reviews of the work
RVUs, many commenters cited stability in the work RVUs, among other
reasons, in their requests that any required budget neutrality
adjustments not be made directly to the work RVUs. Given these prior
comments, for CY 2011, we proposed to make the necessary MEI rebasing
adjustments without adjusting the work RVUs. Instead, we proposed to
increase the PE RVUs and the malpractice RVUs. Furthermore, as noted in
the proposed rule (75 FR 40096), section 1848(c)(2)(B)(ii)(II) of the
Act requires that changes to RVUs cannot cause the amount of
expenditures for a year to differ by more than $20 million from what
expenditures would have been in the absence of the changes. Therefore,
as required by section 1848(c)(2)(B)(ii) of the Act, we proposed to
make an adjustment to the CY 2011 conversion factor to ensure that the
adjustments to the PE RVUs and the malpractice RVUs would not cause an
increase in CY 2011 PFS expenditures.
Comment: A number of commenters expressed support for the use of
the most current and accurate data as inputs to ``formulas used by the
Agency, whether the formula for the SGR, for practice expense inputs,
malpractice expense inputs, or in this case to calculating the Medicare
Economic Index.'' These commenters supported the proposal to rebase and
revise the MEI using the AMA PPIS data and the corresponding
adjustments to the work, PE, and MP RVUs. Some commenters noted
particularly that since the AMA PPIS has been deemed appropriate for
the purpose of the PE RVU update process begun in CY 2010, using this
same data source to inform the MEI costs and weights in CY 2011 is also
appropriate because it will ensure that all of the major cost-based
components of the fee schedule methodology will now be tied to cost
data collected in the same year (2006). Furthermore, a number of
commenters supported the

[[Page 73276]]

proposed policy to adjust the RVU shares on the basis that the changes
appear to have a modest positive impact on many of the services that
were negatively affected by the implementation of the AMA PPIS data in
CY 2010. These services were typically ones that are more heavily
weighted to PE than work. In contrast, numerous commenters expressed
dissatisfaction with the proposed policy on the premise that it
``penalizes health care work that is not technology-intensive,'' that
is, services that are typically more heavily weighted to physician work
than PE, ``when in fact it is the technology-intensive health expenses
that are actually driving up costs.'' A few of these commenters
suggested that CMS insulate certain services that are work-intensive
from the effects of the MEI rebasing.
Response: We believe that using the most current and accurate data
whenever practicable to update the PFS is a key principle for the
payment system. We agree with the commenters that using the AMA PPIS
data to rebase and revise the MEI in CY 2011 promotes consistency
within the PFS. In using the AMA PPIS information to rebase and revise
the MEI, the result is that the most current data drive the work RVU
share down compared to the PE RVU and malpractice RVU shares. Since the
PFS is both resource-based, relative, and budget neutral, if the data
show that physicians' resources (that is, costs) have shifted
proportionately more to PE and malpractice, the proportion for work
must come down. We have tried to accommodate the preferences of
previous commenters to preserve the stability of work RVUs by proposing
to make the necessary MEI rebasing adjustments without adjusting the
work RVUs. However, given the PFS budget neutrality requirement, we
cannot implement some commenters' suggestion to insulate certain
services that are work-intensive from the effects of the MEI rebasing
without violating the inherent relativity of the system. That is, in
order to insulate certain services from the effects of the MEI rebasing
while adjusting the RVU shares to match the proportions for work, PE,
and malpractice in the rebased MEI in a budget neutral manner as
discussed previously, the individual work RVUs for those certain
services would need to be increased. However, if we were to increase
the work RVUs for those certain services, the services would no longer
be appropriately valued relative to the other services under the PFS.
Comment: Of the many commenters who supported CMS' proposal to
adjust the RVU shares to match the proportions for work, PE, and
malpractice in the rebased CY 2011 MEI, the vast majority also favored
adjusting the RVU shares upward for PE and malpractice while making a
corresponding adjustment to the conversion factor for budget neutrality
without modifying the RVUs for work. These commenters stated that
stability in the work RVUs was desirable. However, some commenters also
expressed concern that CMS proposed an additional downward adjustment
to the conversion factor when, under current law, the effect of the SGR
update formula in December of 2010 and CY 2011 would reduce PFS
payments significantly. These commenters generally opposed the MEI
rebasing and the adjustment to the RVUs to match the MEI weights;
however, if CMS were to proceed with the policy, the commenters
suggested that, at the very least the adjustments be phased in over 2
or 4 years. A few commenters suggested replacing the SGR update formula
entirely with the MEI.
Response: We are sympathetic to the commenters' concern that an
additional downward adjustment to the conversion factor on top of the
negative effect of the statutory SGR-based update is inopportune.
However, as we explained in the proposed rule (75 FR 40095) and
discussed previously in this section, rather than applying adjustments
directly to the work, PE, and malpractice RVUs in order to match the
rebased MEI weights for those categories, we believe that it is
appropriate for the work RVUs to remain stable over time. The only way
we can make the adjustments without affecting the work RVUs is to also
make an adjustment to the conversion factor. We note that we did not
receive a public comment suggesting that we make the downward
adjustment to the work RVUs instead of the conversion factor in order
to meet the requirements of section 1848(c)(2)(B)(ii) of the Act for
budget neutrality. In response to the commenters that suggested
replacing the SGR update with the MEI, we assume the commenters are
making a general suggestion for a change in the current law, which is
outside the purview of CMS.
Comment: Many commenters addressed CMS' proposal to convene a
technical advisory panel to review all aspects of the MEI. In light of
this proposal, the majority of commenters urged CMS to delay
implementation of the MEI rebasing and any other MEI changes, including
the proposed adjustment to the RVU shares, until the advice of the
technical advisory panel is reviewed by CMS and recommendations for
change, if any, are considered. Additionally, while the commenters
generally supported convening an MEI technical advisory panel, some
commenters, including MedPAC, advised that CMS should go ahead and
implement the rebased and revised MEI and the proposed adjustment to
the RVU shares in CY 2011. These commenters noted that if the
recommendations of the advisory panel indicated that the MEI should be
adjusted, CMS could propose future changes accordingly.
Response: We acknowledge the overwhelming support from commenters
for the MEI technical advisory panel and refer readers to section
II.E.6 of this final rule with comment period for a more detailed
discussion of our plans to convene the panel. We note that a more
detailed summary of the public comments and our responses is included
in that section.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to make MEI rebasing adjustments to the
PFS work and PE RVUs and to adjust the conversion factor to maintain
budget neutrality. In light of the substantial support in general for
us to make adjustments to match the proportions of the work, PE, and
malpractice RVU shares to the categories in the revised and rebased CY
2011 MEI and our decision, as described in section II.E.5 of this final
rule, to proceed with rebasing the MEI for CY 2011, we are finalizing
our proposal to adjust the RVU shares for CY 2011 to align the RVU
shares with the rebased MEI weights. Specifically, we will not be
making an adjustment directly to the work RVUs. Instead, we are
increasing the PE RVUs by an adjustment factor of 1.181 and the
malpractice RVUs by an adjustment factor of 1.358. The RVUs in Addendum
B to this final rule with comment period reflect the application of
these adjustment factors. We note that an application of the 1.358
adjustment factor to the malpractice RVUs for services with malpractice
RVUs of 0.01 will, due to rounding, result in malpractice RVUs of 0.01.
Furthermore, section 1848(c)(2)(B)(ii)(II) of the Act requires that
changes to RVUs cannot cause the amount of expenditures for a year to
differ by more than $20 million from what expenditures would have been
in the absence of the changes. Therefore, as required by section
1848(c)(2)(B)(ii) of the Act, we are making an adjustment of 0.9181 to
the CY 2011 conversion factor to ensure that the 1.181 adjustment to
the PE RVUs and the 1.358 adjustment

[[Page 73277]]

to the malpractice RVUs do not cause an increase in CY 2011 PFS
expenditures.

F. Allowed Expenditures for Physicians' Services and the Sustainable
Growth Rate

1. Medicare Sustainable Growth Rate (SGR)
The SGR is an annual growth rate that applies to physicians'
services paid by Medicare. The use of the SGR is intended to control
growth in aggregate Medicare expenditures for physicians' services.
Payments for services are not withheld if the percentage increase in
actual expenditures exceeds the SGR. Rather, the PFS update, as
specified in section 1848(d)(4) of the Act, is adjusted based on a
comparison of allowed expenditures (determined using the SGR) and
actual expenditures. If actual expenditures exceed allowed
expenditures, the update is reduced. If actual expenditures are less
than allowed expenditures, the update is increased.
Section 1848(f)(2) of the Act specifies that the SGR for a year
(beginning with CY 2001) is equal to the product of the following four
factors:
(1) The estimated change in fees for physicians' services;
(2) The estimated change in the average number of Medicare fee-for-
service beneficiaries;
(3) The estimated projected growth in real GDP per capita; and
(4) The estimated change in expenditures due to changes in statute
or regulations.
In general, section 1848(f)(3) of the Act requires us to publish
SGRs for 3 different time periods, no later than November 1 of each
year, using the best data available as of September 1 of each year.
Under section 1848(f)(3)(C)(i) of the Act, the SGR is estimated and
subsequently revised twice (beginning with the FY and CY 2000 SGRs)
based on later data. (The Act also provides for adjustments to be made
to the SGRs for FY 1998 and FY 1999. See the February 28, 2003 Federal
Register (68 FR 9567) for a discussion of these SGRs.) Under section
1848(f)(3)(C)(ii) of the Act, there are no further revisions to the SGR
once it has been estimated and subsequently revised in each of the 2
years following the preliminary estimate. In this final rule with
comment, we are making our preliminary estimate of the CY 2011 SGR, a
revision to the CY 2010 SGR, and our final revision to the CY 2009 SGR.
2. Physicians' Services
Section 1848(f)(4)(A) of the Act defines the scope of physicians'
services covered by the SGR. The statute indicates that ``the term
physicians' services includes other items and services (such as
clinical diagnostic laboratory tests and radiology services), specified
by the Secretary, that are commonly performed or furnished by a
physician or in a physician's office, but does not include services
furnished to a Medicare+Choice plan enrollee.''
We published a definition of physicians' services for use in the
SGR in the November 1, 2001 Federal Register (66 FR 55316). We defined
physicians' services to include many of the medical and other health
services listed in section 1861(s) of the Act. As discussed in the CY
2010 PFS final rule with comment period (74 FR 61961), the statute
provides the Secretary with clear discretion to decide whether
physician-administered drugs should be included or excluded from the
definition of ``physicians' services.'' Accordingly, we removed
physician-administered drugs from the definition of ``physicians'
services'' in section 1848(f)(4)(A) of the Act for purposes of
computing the SGR and the levels of allowed expenditures and actual
expenditures beginning with CY 2010, and for all subsequent years.
Furthermore, in order to effectuate fully the Secretary's policy
decision to remove drugs from the definition of ``physicians'
services,'' we removed physician-administered drugs from the
calculation of allowed and actual expenditures for all prior years.
Additionally, payment was made under the PFS for several new
benefit categories in CY 2010 including pulmonary rehabilitation (PR),
cardiac rehabilitation (CR), intensive cardiac rehabilitation (ICR),
and kidney disease education (KDE) services. We note further that
section 101 of the MIPPA added a new benefit category for ``additional
preventive services'' effective January 1, 2009. Although we neglected
to identify and add these additional benefit categories when describing
the scope of physicians' services for purposes of the SGR in course of
rulemaking for CY 2010 and CY 2009, respectively, we did include
payments for these services in calculating target and actual PFS
expenditures beginning in CY 2009 for additional preventive services
and beginning in CY 2010 for PR, CR, ICR, and KDE services.
Section 4103 of the ACA added a new benefit category for
``personalized prevention plan services'' (which include the annual
wellness visit). Payment for these services will be made under the PFS,
and payments for these services will be included in calculating target
and actual PFS expenditures, beginning January 1, 2011.
Thus, for purposes of determining allowed expenditures, actual
expenditures for all years, and SGRs beginning with CY 2010 and for all
subsequent years, we are specifying that physicians' services include
the following medical and other health services if bills for the items
and services are processed and paid by Medicare carriers (and those
paid through intermediaries where specified) or the equivalent services
processed by the Medicare Administrative Contractors (MACs):
Physicians' services.
Services and supplies furnished incident to physicians'
services, except for the expenditures for drugs and biologicals which
are not usually self-administered by the patient.
Outpatient physical therapy services and outpatient
occupational therapy services.
Services of PAs, certified registered nurse anesthetists,
certified nurse midwives, clinical psychologists, clinical social
workers, NPs, and certified nurse specialists.
Screening tests for prostate cancer, colorectal cancer,
and glaucoma.
Screening mammography, screening pap smears, and screening
pelvic exams.
Diabetes outpatient self-management training (DSMT)
services.
MNT services.
Diagnostic x-ray tests, diagnostic laboratory tests, and
other diagnostic tests (including outpatient diagnostic laboratory
tests paid through intermediaries).
X-ray, radium, and radioactive isotope therapy.
Surgical dressings, splints, casts, and other devices used
for the reduction of fractures and dislocations.
Bone mass measurements.
An initial preventive physical exam.
Cardiovascular screening blood tests.
Diabetes screening tests.
Telehealth services.
Physician work and resources to establish and document the
need for a power mobility device.
Additional preventive services.
Pulmonary rehabilitation.
Cardiac rehabilitation.
Intensive cardiac rehabilitation.
Kidney disease education services.
Personalized prevention plan services.
3. Preliminary Estimate of the SGR for 2011
Our preliminary estimate of the CY 2011 SGR is -13.4 percent. We
first estimated the CY 2011 SGR in March

[[Page 73278]]

2010, and we made the estimate available to the MedPAC and on our Web
site. Table 35 shows the March 2010 estimate and our current estimates
of the factors included in the CY 2011 SGR. The majority of the
difference between the March estimate and our current estimate of the
CY 2011 SGR is explained by adjustments to reflect several intervening
legislative changes that occurred after our March estimate was
prepared.

Table 35--CY 2011 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Statutory factors March estimate Current estimate
----------------------------------------------------------------------------------------------------------------
Fees.................................... 0.2 percent (1.002)........ 0.2 percent (1.002)
Enrollment.............................. 3.1 percent (1.031)........ 2.4 percent (1.024)
Real Per Capita GDP..................... 0.8 percent (1.008)........ 0.7 percent (1.007)
Law and Regulation...................... -4.4 percent (0.956)....... -16.2 percent (0.838)
-----------------------------------------------------------------------
Total............................... -0.4 percent (0.996)....... -13.4 percent (0.866)
----------------------------------------------------------------------------------------------------------------
Note: Consistent with section 1848(f)(2) of the Act, the statutory factors are multiplied, not added, to produce
the total (that is, 1.002 x 1.024 x 1.007 x 0.838 = 0.866). A more detailed explanation of each figure is
provided in section II.F.6.a. of this final rule with comment period.

4. Revised Sustainable Growth Rate for CY 2010
Our current estimate of the CY 2010 SGR is 8.3 percent. Table 36
shows our preliminary estimate of the CY 2010 SGR that was published in
the CY 2010 PFS final rule with comment period (74 FR 61965) and our
current estimate. The majority of the difference between the
preliminary estimate and our current estimate of the CY 2010 SGR is
explained by adjustments to reflect several intervening legislative
changes that have occurred since publication of the CY 2010 final rule
with comment period.

Table 36--CY 2010 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Estimate from CY 2010 final
Statutory factors rule Current estimate
----------------------------------------------------------------------------------------------------------------
Fees.................................... 0.9 percent (1.009)........ 0.9 percent (1.009)
Enrollment.............................. 1.2 percent (1.012)........ 1.6 percent (1.016)
Real Per Capita GDP..................... 0.7 percent (1.007)........ 0.7 percent (1.007)
Law and Regulation...................... -11.3 percent (0.887)...... 4.9 percent (1.049)
-----------------------------------------------------------------------
Total............................... -8.8 percent (0.912)....... 8.3 percent (1.083)
----------------------------------------------------------------------------------------------------------------
Note: A more detailed explanation of each figure is provided in section II.F.6.b. of this final rule with
comment period.

5. Final Sustainable Growth Rate for CY 2009
The SGR for CY 2009 is 6.4 percent. Table 37 shows our preliminary
estimate of the CY 2009 SGR from the CY 2009 PFS final rule with
comment period (73 FR 69904), our revised estimate from the CY 2010 PFS
final rule with comment period (74 FR 61966), and the final figures
determined using the best available data as of September 1, 2010.

Table 37--CY 2009 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Estimate from CY Estimate from CY
Statutory factors 2009 final rule 2010 final rule Final
----------------------------------------------------------------------------------------------------------------
Fees.............................. 2.1 percent (1.021). 1.8 percent (1.018). 1.8 percent (1.018)
Enrollment........................ -0.2 percent (0.998) -0.8 percent (0.992) -0.6 percent (0.994)
Real Per Capita GDP............... 1.2 percent (1.012). 0.9 percent (1.009). 1.0 percent (1.010)
Law and Regulation................ 4.2 percent (1.042). 4.1 percent (1.041). 4.1 percent (1.041)
-----------------------------------------------------------------------------
Total......................... 7.4 percent (1.074). 6.1 percent (1.061). 6.4 percent (1.064)
----------------------------------------------------------------------------------------------------------------
Note: A more detailed explanation of each figure is provided in section II.F.6.b. of this final rule with
comment period.

6. Calculation of CYs 2011, 2010, and 2009 Sustainable Growth Rates
a. Detail on the CY 2011 SGR
All of the figures used to determine the CY 2011 SGR are estimates
that will be revised based on subsequent data. Any differences between
these estimates and the actual measurement of these figures will be
included in future revisions of the SGR and allowed expenditures and
incorporated into subsequent PFS updates.
(1) Factor 1--Changes in Fees for Physicians' Services (Before Applying
Legislative Adjustments) for CY 2011
This factor is calculated as a weighted-average of the CY 2011
changes in fees for the different types of services included in the
definition of physicians' services for the SGR. Medical and other
health services paid using the PFS are estimated to account for
approximately 89.4 percent of total allowed charges included in the SGR
in CY 2011 and are updated using the MEI. The MEI for CY 2011 is 0.4
percent. Diagnostic laboratory tests are estimated to represent
approximately 10.6 percent of Medicare allowed charges included in the
SGR for CY 2011. Medicare payments for these tests are updated by the
Consumer Price Index for Urban Areas (CPI-U), which is 1.1 percent for
CY 2011. However, section 3401 of the ACA reduces the CPI-U update
applied to clinical laboratory tests by a productivity adjustment, but
does not allow this adjustment to cause the

[[Page 73279]]

update to be negative. The applicable productivity adjustment for CY
2011 is 1.2 percent. Adjusting the CPI-U update by the productivity
adjustment results in a -0.1 percent (1.1 percent-1.2 percent) update
for CY 2011. However, since section 3401 of the ACA does not allow the
productivity adjustment to result in a negative CLFS update, the result
is that the CLFS update for CY 2011 is 0.0 percent. Additionally,
section 3401 of the ACA reduces the update applied to clinical
laboratory tests by 1.75 percent for CYs 2011 through 2015. Therefore,
for CY 2011, diagnostic laboratory tests will receive an update of -
1.75 percent. Additionally, as discussed in the CY 2010 PFS final rule
with comment period (74 FR 61961), we removed physician-administered
drugs from the definition of ``physicians' services'' in section
1848(f)(4)(A) of the Act for purposes of computing the SGR and the
levels of allowed expenditures and actual expenditures beginning with
CY 2010, and for all subsequent years. Therefore, drugs represent 0.0
percent of Medicare allowed charges included in the SGR in CY 2011.
Table 38 shows the weighted-average of the MEI and laboratory price
changes for CY 2010.

Table 38--Weighted-Average of the MEI and Laboratory Price Changes for
CY 2011
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician............................... 0.894 0.4
Laboratory.............................. 0.106 -1.8
Weighted-average........................ 1.000 0.2
------------------------------------------------------------------------

We estimate that the weighted-average increase in fees for
physicians' services in CY 2011 under the SGR (before applying any
legislative adjustments) will be 0.2 percent.
(2) Factor 2--The Percentage Change in the Average Number of Part B
Enrollees From CY 2010 to CY 2011
This factor is our estimate of the percent change in the average
number of fee-for-service enrollees from CY 2010 to CY 2011. Services
provided to Medicare Advantage (MA) plan enrollees are outside the
scope of the SGR and are excluded from this estimate. We estimate that
the average number of Medicare Part B fee-for-service enrollees will
increase by 2.4 percent from CY 2010 to CY 2011. Table 39 illustrates
how this figure was determined.

Table 39--Average Number of Medicare Part B Fee-for-Service Enrollees
From CY 2010 to CY 2011
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2010 2011
------------------------------------------------------------------------
Overall....................... 43.932 million... 45.010 million
Medicare Advantage (MA)....... 11.683 million... 11.998 million
Net........................... 32.249 million... 33.012 million
Percent Increase.............. ................. 2.4 percent
------------------------------------------------------------------------

An important factor affecting fee-for-service enrollment is
beneficiary enrollment in MA plans. Because it is difficult to estimate
the size of the MA enrollee population before the start of a CY, at
this time we do not know how actual enrollment in MA plans will compare
to current estimates. For this reason, the estimate may change
substantially as actual Medicare fee-for-service enrollment for CY 2011
becomes known.
(3) Factor 3--Estimated Real Gross Domestic Product Per Capita Growth
in 2011
We estimate that the growth in real GDP per capita from CY 2010 to
CY 2011 will be 0.7 percent (based on the 10-year average GDP over the
10 years of 2002 through 2011). Our past experience indicates that
there have also been changes in estimates of real per capita GDP growth
made before the year begins and the actual change in GDP computed after
the year is complete. Thus, it is possible that this figure will change
as actual information on economic performance becomes available to us
in CY 2011.
(4) Factor 4--Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2011
Compared With CY 2010
The statutory and regulatory provisions that will affect
expenditures in CY 2011 relative to CY 2010 are estimated to have an
impact on expenditures of -16.2 percent. These include the Department
of Defense Appropriations Act (DODAA), the Temporary Extension Act
(TEA), and the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act (PACMBPRA) which provided for
physician updates.
Furthermore, the ACA contained provisions regarding the policy on
equipment utilization for imaging services, the multiple procedure
payment reduction policy for imaging services, and the annual wellness
visit providing personalized prevention plan services.
b. Detail on the CY 2010 SGR
A more detailed discussion of our revised estimates of the four
elements of the CY 2010 SGR follows.
(1) Factor 1--Changes in Fees for Physicians' Services (Before Applying
Legislative Adjustments) for CY 2010
This factor was calculated as a weighted-average of the CY 2010
changes in fees that apply for the different types of services included
in the definition of physicians' services for the SGR in CY 2010.
We estimate that services paid using the PFS account for
approximately 91.1 percent of total allowed charges included in the SGR
in CY 2010. These services were updated using the CY 2010 MEI of 1.2
percent. We estimate that diagnostic laboratory tests represent
approximately 8.9 percent of total allowed charges included in the SGR
in CY 2010. Medicare payments for these tests are updated by the CPI-U,
which is -1.4 percent for CY 2010. However, section 145 of the MIPPA,
as modified

[[Page 73280]]

by section 3401 of the ACA, reduced the update applied to clinical
laboratory tests by 0.5 percent for CY 2009 and CY 2010. Therefore, for
CY 2010, diagnostic laboratory tests received an update of -1.9
percent. Since we removed physician-administered drugs from the
definition of ``physicians' services'' for purposes of computing the
SGR and the levels of allowed expenditures and actual expenditures
beginning with CY 2010, and for all subsequent years, drugs represent
0.0 percent of Medicare allowed charges included in the SGR in CY 2010.
Table 40 shows the weighted-average of the MEI, laboratory, and
drug price changes for CY 2010.

Table 40--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2010
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician............................... 0.911 1.2
Laboratory.............................. 0.089 -1.9
Drugs................................... 0.000 0.0
Weighted-average........................ 1.000 0.9
------------------------------------------------------------------------

After considering the elements described in Table 40, we estimate
that the weighted-average increase in fees for physicians' services in
CY 2010 under the SGR (before applying any legislative adjustments)
will be 0.9 percent. Our estimate of this factor in the CY 2010 PFS
final rule with comment period was 0.9 percent (74 FR 61966).
(2) Factor 2--The Percentage Change in the Average Number of Part B
Enrollees From CY 2009 to CY 2010
We estimate that the average number of Medicare Part B fee-for-
service enrollees (excluding beneficiaries enrolled in Medicare
Advantage plans) increased by 1.6 percent in CY 2010. Table 41
illustrates how we determined this figure.

Table 41--Average Number of Medicare Part B Fee-for-Service Enrollees
From CY 2009 to CY 2010
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2009 2010
------------------------------------------------------------------------
Overall....................... 42.846 million... 43.932 million
Medicare Advantage (MA)....... 11.098 million... 11.683 million
Net........................... 31.748 million... 32.249 million
Percent Increase.............. ................. 1.6 percent
------------------------------------------------------------------------

Our estimate of the 1.6 percent change in the number of fee-for-
service enrollees, net of Medicare Advantage enrollment for CY 2010
compared to CY 2009, is a larger change than our original estimate of
1.2 percent in the CY 2010 PFS final rule with comment period (74 FR
61967). While our current projection based on data from 8 months of CY
2010 differs from our original estimate of 1.2 percent when we had no
actual data, it is still possible that our final estimate of this
figure will be different once we have complete information on CY 2010
fee-for-service enrollment.
(3) Factor 3--Estimated Real Gross Domestic Product Per Capita Growth
in CY 2010
We estimate that the growth in real GDP per capita will be 0.7
percent for CY 2010 (based on the 10-year average GDP over the 10 years
of CY 2001 through CY 2010). Our past experience indicates that there
have also been differences between our estimates of real per capita GDP
growth made prior to the year's end and the actual change in this
factor. Thus, it is possible that this figure will change further as
complete actual information on CY 2010 economic performance becomes
available to us in CY 2011.
(4) Factor 4--Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2010
Compared With CY 2009
The statutory and regulatory provisions that will affect
expenditures in CY 2010 relative to CY 2009 are estimated to have an
impact on expenditures of 4.9 percent. These include the DODAA, TEA,
and PACMBPRA which provided for physician updates. Also included are
the MIPPA provisions regarding the physician update, Physician Quality
Reporting Initiative (PQRI) and e-prescribing bonuses, the work GPCIs,
and payment provisions related to certain pathology services.
Additionally, the ACA contained provisions regarding the work GPCIs,
the policy on equipment utilization for imaging services, coverage of
preventive services, and a physician enrollment requirement.
c. Detail on the CY 2009 SGR
A more detailed discussion of our final revised estimates of the
four elements of the CY 2009 SGR follows.
(1) Factor 1--Changes in Fees for Physicians' Services (Before Applying
Legislative Adjustments) for CY 2009
This factor was calculated as a weighted-average of the CY 2009
changes in fees that apply for the different types of services included
in the definition of physicians' services for the SGR in CY 2009. As we
stated in the CY 2010 PFS final rule with comment period (74 FR 61965),
although we removed drugs from the calculation of allowed and actual
expenditures under sections 1848(d)(3)(C) and 1848(d)(4) of the Act
retrospectively to the 1996/1997 base year, we determined that we were
only authorized to remove drugs from the calculation of the SGR
beginning with CY 2010. Therefore, we did not remove drugs from the SGR
calculations for previous years, including CY 2009. Consistent with
this determination, the revisions to our estimate of the CY 2009 SGR
will be limited to revisions to reflect later data available as of
September 1, 2010, that were not available when we published our
previous estimates.
Services paid using the PFS accounted for approximately 82.3
percent of total Medicare-allowed charges included in the SGR for CY

[[Page 73281]]

2009 and are updated using the MEI. The MEI for CY 2009 was 1.6
percent. Diagnostic laboratory tests represented approximately 8.0
percent of total CY 2009 Medicare allowed charges included in the SGR
and were updated by the CPI-U, which was 5.0 percent for CY 2009.
However, section 145 of the MIPPA, as modified by section 3401 of the
ACA, reduced the update applied to clinical laboratory tests by 0.5
percent for CYs 2009 and 2010. Therefore, for CY 2009, diagnostic
laboratory tests received an update of 4.5 percent. Drugs represented
approximately 9.7 percent of total Medicare-allowed charges included in
the SGR for CY 2009. We estimate a weighted-average change in fees for
drugs included in the SGR of 1.6 percent for CY 2009. Table 42 shows
the weighted-average of the MEI, laboratory, and drug price changes for
CY 2009.

Table 42--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2009
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician............................... 0.823 1.6
Laboratory.............................. 0.080 4.5
Drugs................................... 0.097 1.6
Weighted-average........................ 1.000 1.8
------------------------------------------------------------------------

After considering the elements described in Table 42, we estimate
that the weighted-average increase in fees for physicians' services in
CY 2009 under the SGR (before applying any legislative adjustments) was
1.8 percent. This figure is a final one based on complete data for CY
2009.
(2) Factor 2--The Percentage Change in the Average Number of Part B
Enrollees From CY 2008 to CY 2009
We estimate the change in the number of fee-for-service enrollees
(excluding beneficiaries enrolled in MA plans) from CY 2009 to CY 2010
was -0.6 percent. Our calculation of this factor is based on complete
data from CY 2009. Table 43 illustrates the calculation of this factor.

Table 43--Average Number of Medicare Part B From CY 2008 to CY 2009
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2008 2009
------------------------------------------------------------------------
Overall....................... 41.958 million.. 42.846 million
Medicare Advantage (MA)....... 10.008 million.. 11.098 million
Net........................... 31.950 million.. 31.748 million
Percent Change................ ................ -0.6 percent
------------------------------------------------------------------------

(3) Factor 3--Estimated Real Gross Domestic Product Per Capita Growth
in CY 2009
We estimate that the growth in real per capita GDP was 1.0 percent
in CY 2009 (based on the 10-year average GDP over the 10 years of CY
2000 through CY 2009). This figure is a final one based on complete
data for CY 2009.
(4) Factor 4--Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2009
Compared With CY 2008
Our final estimate for the net impact on expenditures from the
statutory and regulatory provisions that affect expenditures in CY 2009
relative to CY 2008 is 4.1 percent. These include the DRA provision
regarding payments for imaging services, the Medicare, Medicaid, and
SCHIP Extension Act of 2007 (Pub. L. 110-173) (MMSEA) provision
regarding the PQRI bonuses payable in CY 2009, and the MIPPA provisions
regarding the physician update, mental health services, and the change
in application of budget neutrality to the CF.

G. The Update Adjustment Factor (UAF)

Section 1848(d) of the Act provides that the PFS update is equal to
the product of the MEI and the UAF. The UAF is applied to make actual
and target expenditures (referred to in the statute as ``allowed
expenditures'') equal. As discussed previously, allowed expenditures
are equal to actual expenditures in a base period updated each year by
the SGR. The SGR sets the annual rate of growth in allowed expenditures
and is determined by a formula specified in section 1848(f) of the Act.
1. Calculation Under Current Law
Under section 1848(d)(4)(B) of the Act, the UAF for a year
beginning with CY 2001 is equal to the sum of the following--
Prior Year Adjustment Component. An amount determined by--
+ Computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians' services
for the prior year (the year prior to the year for which the update is
being determined) and the amount of the actual expenditures for those
services for that year;
+ Dividing that difference by the amount of the actual expenditures
for those services for that year; and
+ Multiplying that quotient by 0.75.
Cumulative Adjustment Component. An amount determined by--
+ Computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians' services
from April 1, 1996, through the end of the prior year and the amount of
the actual expenditures for those services during that period;
+ Dividing that difference by actual expenditures for those
services for the prior year as increased by the SGR for the year for
which the UAF is to be determined; and
+ Multiplying that quotient by 0.33.
Section 1848(d)(4)(E) of the Act requires the Secretary to
recalculate allowed expenditures consistent with section 1848(f)(3) of
the Act. As discussed previously, section 1848(f)(3) specifies that the
SGR (and, in turn, allowed expenditures) for the upcoming CY (CY 2011
in this case), the current

[[Page 73282]]

CY (that is, CY 2010) and the preceding CY (that is, CY 2009) are to be
determined on the basis of the best data available as of September 1 of
the current year. Allowed expenditures for a year generally are
estimated initially and subsequently revised twice. The second revision
occurs after the CY has ended (that is, we are making the second
revision to CY 2009 allowed expenditures in this final rule with
comment).
Table 44 shows the historical SGRs corresponding to each period
through CY 2011.

Table 44--Annual and Cumulative Allowed and Actual Expenditures for Physicians' Services From April 1, 1996 through the End of the Current Calendar Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Cumulative
Annual allowed Annual actual allowed actual
Period expenditures ($ expenditures ($ expenditures ($ expenditures ($ FY/CY SGR (%)
in billions) in billions) in billions) in billions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
4/1/96-3/31/97......................................... \1\ $46.8 $46.8 $46.8 $46.8 N/A
4/1/97-3/31/98......................................... 48.3 47.0 95.2 93.9 FY 1998=3.2
4/1/98-3/31/99......................................... 50.4 47.8 145.6 141.7 FY 1999=4.2
1/1/99-3/31/99......................................... 12.7 12.4 \(2)\ 141.7 FY 1999=4.2
4/1/99-12/31/99........................................ 40.3 37.0 \(3)\ 178.8 FY 2000=6.9
1/1/99-12/31/99........................................ 53.0 49.5 185.8 178.8 FY 1999/2000
1/1/00-12/31/00........................................ 56.8 54.1 242.7 232.9 CY 2000=7.3
1/1/01-12/31/01........................................ 59.4 61.2 302.1 294.2 CY 2001=4.5
1/1/02-12/31/02........................................ 64.3 64.6 366.4 358.7 CY 2002=8.3
1/1/03-12/31/03........................................ 69.0 70.2 435.4 429.0 CY 2003=7.3
1/1/04-12/31/04........................................ 73.6 78.3 509.0 507.2 CY 2004=6.6
1/1/05-12/31/05........................................ 76.7 83.5 585.7 590.7 CY 2005=4.2
1/1/06-12/31/06........................................ 77.8 84.6 663.5 675.3 CY 2006=1.5
1/1/07-12/31/07........................................ 80.5 84.5 744.0 759.8 CY 2007=3.5
1/1/08-12/31/08........................................ 84.2 86.7 828.2 846.4 CY 2008=4.5
1/1/09-12/31/09........................................ 89.6 90.6 917.8 937.0 CY 2009=6.4
1/1/10-12/31/10........................................ 97.0 92.9 1,014.7 1,029.9 CY 2010=8.3
1/1/11-12/31/11........................................ 84.0 NA 1,098.7 NA CY 2011=-13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\(1)\ Allowed expenditures in the first year (April 1, 1996-March 31, 1997) are equal to actual expenditures. All subsequent figures are equal to
quarterly allowed expenditure figures increased by the applicable SGR. Cumulative allowed expenditures are equal to the sum of annual allowed
expenditures. We provide more detailed quarterly allowed and actual expenditure data on our Web site at the following address: http://www.cms.hhs.gov/SustainableGRatesConFact/ SustainableGRatesConFact/. We expect to update the web site with the most current information later this month.
\(2)\ Allowed expenditures for the first quarter of 1999 are based on the FY 1999 SGR.
\(3)\ Allowed expenditures for the last three quarters of 1999 are based on the FY 2000 SGR.

Consistent with section 1848(d)(4)(E) of the Act, Table 44 includes
our second revision of allowed expenditures for CY 2009, a
recalculation of allowed expenditures for CY 2010, and our initial
estimate of allowed expenditures for CY 2011. To determine the UAF for
CY 2011, the statute requires that we use allowed and actual
expenditures from April 1, 1996 through December 31, 2010 and the CY
2011 SGR. Consistent with section 1848(d)(4)(E) of the Act, we will be
making revisions to the CY 2010 and CY 2011 SGRs and CY 2010 and CY
2011 allowed expenditures. Because we have incomplete actual
expenditure data for CY 2010, we are using an estimate for this period.
Any difference between current estimates and final figures will be
taken into account in determining the UAF for future years.
We are using figures from Table 44 in the following statutory
formula:
[GRAPHIC] [TIFF OMITTED] TR29NO10.231

UAF11 = Update Adjustment Factor for CY 2011 = -2.9 percent
Target10 = Allowed Expenditures for CY 2010 = $97.0 billion
Actual10 = Estimated Actual Expenditures for CY 2010 = $92.9
billion
Target 4/96-12/10 = Allowed Expenditures from 4/1/1996-12/
31/2010 = $1,014.7 billion
Actual 4/96-12/10 = Estimated Actual Expenditures from 4/1/
1996-12/31/2010 = $1,029.9 billion
SGR11 = -13.4 percent (0.866)
[GRAPHIC] [TIFF OMITTED] TR29NO10.232

Section 1848(d)(4)(D) of the Act indicates that the UAF determined
under section 1848(d)(4)(B) of the Act for a year may not be less than
-0.07 or greater than 0.03. Since -0.029 is between -0.07 and 0.03, the
UAF for CY 2010 will be -0.029.
Section 1848(d)(4)(A)(ii) of the Act indicates that 1.0 should be
added to the UAF determined under section 1848(d)(4)(B) of the Act.
Thus, adding

[[Page 73283]]

1.0 to -0.029 makes the UAF equal to 0.971.

H. Physician and Anesthesia Fee Schedule Conversion Factors for CY 2011

The CY 2011 PFS CF is $25.5217. The CY 2011 national average
anesthesia CF is $15.8085.
1. Physician Fee Schedule Update and Conversion Factor
a. CY 2011 PFS Update
The formula for calculating the PFS update is set forth in section
1848(d)(4)(A) of the Act. In general, the PFS update is determined by
multiplying the CF for the previous year by the percentage increase in
the MEI times the UAF, which is calculated as specified under section
1848(d)(4)(B) of the Act.
b. CY 2011 PFS Conversion Factor
Generally, the PFS CF for a year is calculated in accordance with
section 1848(d)(1)(A) of the Act by multiplying the previous year's CF
by the PFS update.
We note section 101 of the MIEA-TRHCA provided a 1-year increase in
the CY 2008 CF and specified that the CF for CY 2009 must be computed
as if the 1-year increase had never applied. Section 101 of the MMSEA
provided a 6-month increase in the CY 2009 CF, from January 1, 2009,
through June 30, 2009, and specified that the CF for the remaining
portion of CY 2009 and the CFs for CY 2010 and subsequent years must be
computed as if the 6-month increase had never applied. Section 131 of
the MIPPA extended the increase in the CY 2009 CF that applied during
the first half of the year to the entire year, provided for a 1.1
percent increase to the CY 2010 CF, and specified that the CFs for CY
2011 and subsequent years must be computed as if the increases for CYs
2008, 2009, and 2010 had never applied. Section 1011(a) of the DODAA
and section 5 of the TEA specified a zero percent update for CY 2010,
effective January 1, 2010 through May 31, 2010. Subsequently, section
101(a)(2) of the PACMBPRA provided for a 2.2 percent update to the CF,
effective from June 1, 2010 to November 30, 2010. Therefore, under
current law, the CF in effect in December 2010 is $28.3868.
In addition, when calculating the PFS CF for a year, section
1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases
in RVUs may not cause the amount of expenditures for the year to differ
more than $20 million from what it would have been in the absence of
these changes. If this threshold is exceeded, we must make adjustments
to preserve budget neutrality. We estimate that CY 2011 RVU changes
would result in a decrease in Medicare physician expenditures of more
than $20 million. Accordingly, we are increasing the CF by 1.0045 to
offset this estimated decrease in Medicare physician expenditures due
to the CY 2011 RVU changes. Furthermore, as discussed in section II.E.6
of this final rule with comment period, we are decreasing the CF by
0.9181 in order to offset the increase in Medicare physician payments
due to the CY 2011 rescaling of the RVUs so that the proportions of
total payments for the work, PE, and malpractice RVUs match the
proportions in the final revised and rebased MEI for CY 2011.
Accordingly, we calculate the CY 2011 PFS CF to be $25.5217. This final
rule with comment period announces a reduction to payment rates for
physicians' services in CY 2011 under the SGR formula. These payment
rates are currently scheduled to be reduced under the SGR system on
December 1, 2010, and then again on January 1, 2011. The total
reduction in MPFS rates between November 2010 and January 2011 under
the SGR system will be 24.9 percent. By law, we are required to make
these reductions in accordance with section 1848(d) and (f) of the Act,
and these reductions can only be averted by an Act of Congress. While
Congress has provided temporary relief from these reductions every year
since 2003, a long-term solution is critical. We are committed to
permanently reforming the Medicare payment formula.
We illustrate the calculation of the CY 2011 PFS CF in Table 45.

Table 45--Calculation of the CY 2011 PFS CF
------------------------------------------------------------------------

------------------------------------------------------------------------
December 2010 Conversion Factor.... ...................... $28.3868
CY 2011 Medicare Economic Index.... 0.4 percent (1.0040) ...........
CY 2011 Update Adjustment Factor... -2.9 percent (0.9710) ...........
CY 2011 RVU Budget Neutrality 0.5 percent (1.0045) ...........
Adjustment.
CY 2011 Rescaling to Match MEI -8.2 percent (0.9181) ...........
Weights Budget Neutrality
Adjustment.
CY 2011 Conversion Factor.......... ...................... $25.5217
------------------------------------------------------------------------

We note payment for services under the PFS will be calculated as
follows:
Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.
2. Anesthesia Conversion Factor
We calculate the anesthesia CF as indicated in Table 45. Anesthesia
services do not have RVUs like other PFS services. Therefore, we
account for any necessary RVU adjustments through an adjustment to the
anesthesia CF to simulate changes to RVUs. More specifically, if there
is an adjustment to the work, PE, or malpractice RVUs, these
adjustments are applied to the respective shares of the anesthesia CF
as these shares are proxies for the work, PE, and malpractice RVUs for
anesthesia services. Furthermore, as discussed in section II.E.6 of
this final rule with comment period, we are rescaling the RVUs so that
the proportions of total payments for the work, PE, and malpractice
RVUs match the proportions in the final revised and rebased MEI for CY
2011. Accordingly, we are adjusting the anesthesia CF to reflect the
RVUs adjustments being made to all other physician fee schedule
services to match the revised and rebased MEI weights.
As explained previously, in order to calculate the CY 2011 PFS CF,
the statute requires us to calculate the CFs for CYs 2009, 2010, and
2011 as if the various legislative changes to the CFs for those years
had not occurred. Accordingly, under current law, the anesthesia CF in
effect in December 2010 is $16.6058. We illustrate the calculation of
the CY 2011 anesthesia CF in Table 46.

Table 46--Calculation of the CY 2011 Anesthesia Conversion Factor
------------------------------------------------------------------------

------------------------------------------------------------------------
December 2010 Anesthesia Conversion ...................... $16.6058
Factor.
CY 2011 Medicare Economic Index.... 0.4 percent (1.0040) ...........

[[Page 73284]]

CY 2011 Update Adjustment Factor... -2.9 percent (0.9710) ...........
CY 2011 Anesthesia Adjustment...... -2.3 percent (0.97651) ...........
CY 2011 Anesthesia Conversion ...................... $15.8085
Factor.
------------------------------------------------------------------------

III. Code-Specific Issues for the PFS

A. Therapy Services

1. Outpatient Therapy Caps for CY 2011
Section 1833(g) of the Act applies an annual, per beneficiary
combined cap on expenses incurred for outpatient physical therapy and
speech-language pathology services under Medicare Part B. A similar
separate cap for outpatient occupational therapy services under
Medicare Part B also applies. The caps apply to expenses incurred for
therapy services furnished in outpatient settings, other than in an
outpatient hospital setting which is described under section
1833(a)(8)(B) of the Act. The caps were in effect during 1999, from
September 1, 2003 through December 7, 2003, and continuously beginning
January 1, 2006. The caps are a permanent provision, that is, there is
no end date specified in the statute for therapy caps. Beginning
January 1, 2006, the DRA provided for exceptions to the therapy caps
until December 31, 2006. The exceptions process for therapy caps has
been extended through December 31, 2009 pursuant to three subsequent
amendments (in MEIA-TRHCA, MMSEA, and MIPPA).
Section 1833(g)(5) of the Act (as amended by section 3103 of the
ACA) extended the exceptions process for therapy caps through December
31, 2010. The annual change in the therapy cap is computed by
multiplying the cap amount for CY 2010, which is $1,860, by the MEI for
CY 2011, and rounding to the nearest $10. This amount is added to the
CY 2010 cap to obtain the CY 2011 cap. Since the MEI for CY 2011 is 0.4
percent, the therapy cap amount for CY 2011 is $1870.
The agency's authority to provide for exceptions to therapy caps
(independent of the outpatient hospital exception) will expire on
December 31, 2010, unless the Congress acts to extend it. If the
current exceptions process expires, the caps will be applicable in
accordance with the statute, except for services furnished and billed
by outpatient hospital departments.
Comment: The commenters unanimously requested repeal of the therapy
caps, while characterizing caps as arbitrary and medically unfounded
and the combination of cap amounts for PT and SLP services as
groundless. A number of commenters argued that therapy caps restrict
provision of medically necessary services to beneficiaries. Several
commenters reported that patients are discharged for care prior to
recovery due to payment restrictions and this leads to increased
medical costs for Medicare.
Response: Therapy caps are mandated by statute. We have no
authority to repeal the caps, or to restructure the grouping of therapy
disciplines to which the caps apply. However, we understand the
concerns of the commenters, and we are actively exploring alternatives
to therapy caps to inform the discussions about approaches to identify
and pay for those therapy services that are necessary for patients to
attain the best outcomes with the most efficient use of resources.
2. Alternatives to Therapy Caps
a. Background
In section 4541 of the Balanced Budget Act of 1997 (Pub. L. 105-33)
(BBA), the Congress enacted the financial limitations on outpatient
therapy services (the ``therapy caps'' discussed above for physical
therapy, occupational therapy, and speech-language pathology). At the
same time, the Congress requested that the Secretary submit a Report to
Congress that included recommendations on the establishment of a
revised coverage policy for outpatient physical therapy services and
outpatient occupational therapy services under the statute. The
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) (BBRA) placed
the first of a series of moratoria on implementation of the limits. In
addition, it required focused medical review of claims and revised the
report requirements in section 4541(d)(2) of the BBA to request a
report that included recommendations on the following: (A) The
establishment of a mechanism for assuring appropriate utilization of
outpatient physical therapy services, outpatient occupational therapy
services, and speech-language pathology services; and (B) the
establishment of an alternative payment policy for such services based
on classification of individuals by diagnostic category, functional
status, prior use of services (in both inpatient and outpatient
settings), and such other criteria as the Secretary determines
appropriate, in place of the limits. In 1999, therapy services were not
defined, but services documented as therapy were billed and reported
when furnished by a variety of individuals in many different settings.
These services were not identified in a way that would allow analysis
of utilization or development of alternative payment policies. Since
that time, we have clarified the definition of therapy services and
applied the qualifications of therapists consistently to outpatient
settings, which have facilitated analysis of therapy services.
We have studied therapy services with the assistance of a number of
contractors over the past 11 years. Reports of these projects are
available on the CMS Web site at http://www.cms.gov/TherapyServices/.
On November 9, 2004, we delivered the Report to Congress, Number
137953, ``Medicare Financial Limitations on Outpatient Therapy
Services'' that referenced two utilization analyses. We periodically
updated the utilization analyses and posted other contracted reports on
the CMS web site in order to further respond to the requirements of the
BBRA. Subsequent reports highlighted the expected effects of limiting
services in various ways and presented plans to collect data about
patient condition using available tools. The general belief was that if
patient condition could be reliably described, that approach would
ensure appropriate payment for appropriately utilized services.
Over the past decade, significant progress has been made in
identifying the outpatient therapy services that are billed to
Medicare, the demographics of the beneficiaries who utilize those
services, the types of services, the HCPCS codes used to bill the
services, the allowed and paid amounts of the services, and the
settings, geographic locations, and provider or supplier types where
services are furnished.
Some of the information that is necessary to ensure appropriate
utilization and develop objective and equitable payment alternatives to
therapy caps based on patient condition has proven difficult to
develop. The influence of prior use of inpatient services on outpatient
use of therapy services was not accessible due to systems issues and
differences in the policies, billing, and reporting practices for
inpatient and outpatient therapy

[[Page 73285]]

services. The weakness of the ICD-9-CM diagnostic codes in describing
the condition of the rehabilitation patient obscured analyses of claims
to assess the need for therapy services. The primary diagnosis on the
claim is a poor predictor for the type and duration of therapy services
required, which complicates assignment of patient cohorts for analysis.
Although changes to the guidance in the Medicare Benefit Policy Manual
(Pub. 100-02) on documentation of therapy services in 2005 improved the
consistency of records and facilitated chart review, it became
increasingly obvious that neither claims analysis nor chart review
could serve as a reliable and valid method to determine a patient's
need for services or to form the basis for equitable payment. We
concluded that in order to develop alternative payment approaches to
the therapy caps, we needed a method to identify patients with similar
risk-adjusted conditions (cohorts) and then we would identify the
therapy services that are necessary for the patients to attain the best
outcomes with the most efficient use of resources.
While we studied therapy utilization, a number of proprietary tools
were developed by researchers in the professional community to assess
the outcomes of therapy. Some tool sponsors collected sufficient
information to predict with good reliability the amount or length of
treatment that would result in the best expected outcomes. We
encouraged the use of these proprietary tools in manual instructions,
but proprietary tools do not serve our purposes because modification of
proprietary tools may only be done by the tool sponsor. There now are
some versions of the tools in the public domain and they are being
utilized widely to identify patient conditions and, by some insurers,
to pay for efficient and effective treatment. Examples of such tools
include the National Outcomes Measurement System (NOMS) by the American
Speech-Language Hearing Association and Patient Inquiry by Focus On
Therapeutic Outcomes, Inc. (FOTO).
In 2006, Focus on Therapeutic Outcomes, Inc. delivered to CMS a
report titled, ``Pay for Performance for Physical Therapy and
Occupational Therapy,'' which is also available on the CMS Web site at
http://www.cms.gov/TherapyServices. The purpose of this project was to
simulate a pay-for-performance implementation, designed to align
financial incentives with the achievement of better clinical outcomes
from services that were delivered efficiently. The project, funded by
HHS/CMS Grant 18-P-93066/9-01, demonstrated the predictive validity of
the risk-adjusted pay-for-performance model and the feasibility of
reducing payments without affecting services to beneficiaries who need
them.
b. Current Activities
The Tax Relief and Health Care Act of 2006 (TRHCA) extended the
therapy cap exceptions process through December 31, 2007 and provided
funds used for two CMS projects related to developing alternative
payment approaches for therapy services that are based on beneficiary
needs. A 5-year project titled ``Development of Outpatient Therapy
Alternatives'' (DOTPA), awarded to RTI International, was initiated in
order to develop a comprehensive and uniform therapy-related data
collection instrument, assess its feasibility, and determine the subset
of the measures that we could routinely and reliably collect in support
of payment alternatives. While DOTPA will identify measurement items
relevant to payment, the project will not deliver a standardized
measurement tool. We may either develop a tool or allow other tools to
be used for payment purposes when they include those items that
identify the following: (1) Beneficiary need; and (2) outcomes (that is
effectiveness of therapy services). In addition to therapy caps, the
DOTPA project considers our interest in value-based purchasing by
identifying components of value, including beneficiary need and the
effectiveness of therapy services. The DOTPA project reports are
available on the contractor's Web site at http://optherapy.rti.org/.
The data collection design and instrument development have been
completed, and a Paperwork Reduction Act (PRA) package was submitted
for approval of the data collection forms by the Office of Management
and Budget (OMB). The Federal Register notice for the second round of
public comment on this package was published on April 23, 2010 (75 FR
21296). The PRA package has been approved; the contractor is recruiting
potential participants in the data collection, developing training
materials for participants, and updating the project web site. We did
not seek public comments on the DOTPA project in the proposed rule.
The TRCHA also funded the 2-year project contracted to Computer
Sciences Corporation (CSC) entitled ``Short Term Alternatives for
Therapy Services'' (STATS). STATS has provided recommendations
regarding alternative payment approaches to therapy caps that could be
considered before completion of the DOTPA project. The STATS project
draws upon the analytical and clinical expertise of contractors and
stakeholders to consider policies, measurement tools, and claims data
that are currently available to provide further information about
patient condition and the outcomes of therapy services. The final
report, received September 13, 2010, included recommended actions we
could take within 2 or 3 calendar years to replace the current cap
limits on therapy services with a policy that pays appropriately for
necessary therapy services.
c. Potential Short-Term Approaches to Therapy Caps
On June 30, 2009, we received a draft of the CSC report titled
``STATS Outpatient Therapy Practice Guidelines,'' a summary of expert
workgroup discussions, and several short-term payment alternatives for
consideration. CSC discussed options based on the assumption that
short-term policy changes should facilitate the development of adequate
function and/or outcomes reporting tools. In the longterm, CSC
recommended that payment be based on function or quality measurements
that adequately perform risk adjustment for episode-based payment
purposes.
Based on the draft report, additional stakeholder input, and
subsequent communications with the contractor, in the CY 2011 PFS
proposed rule (75 FR 40097 through 40099) we discussed several
potential alternatives to the therapy caps that could lead to more
appropriate payment for medically necessary and effective therapy
services that are furnished efficiently. We solicited public comments
on the proposed rule regarding all aspects of these alternatives,
including the potential associated benefits or problems, clinical
concerns, practitioner administrative burden, consistency with other
Medicare and private payer payment policies, and claims processing
considerations. We did not propose either short-term or long-term
payment alternatives to the therapy caps. However, we referred readers
to section II.C.4.(c) of the proposed rule for our CY 2011 proposal to
expand the MPPR policy to ``always therapy'' services furnished in a
single session in order to pay more appropriately for therapy services,
taking into consideration the expected efficiencies when services are
furnished together. While we did not propose the adoption of an MPPR
policy for therapy services specifically as an alternative to the
therapy caps, we acknowledged that by paying more appropriately for
combinations of

[[Page 73286]]

therapy services that are commonly furnished in a single session,
practitioners would be able to furnish more medically necessary therapy
services to a given beneficiary before surpassing the caps. We noted
that the proposed MPPR policy would have the potential to reduce the
number of beneficiaries impacted by the therapy caps in a given year.
Comment: Many commenters stated that use of the financial cap on
therapy services as a rationale for the proposed MPPR was unacceptable
and not a sound basis for such a significant policy proposal. Quite a
few commenters contrasted the cap alternatives research with the MPPR
which, in the commenters' opinion, did not reflect a similar level of
analysis. Instead of implementing the proposed MPPR, a large majority
of the commenters urged CMS to place a high priority in resources and
funding for research to identify alternatives to the cap that would
ensure patients receive medically necessary therapy services.
While the commenters agreed that more therapy could be furnished to
a beneficiary before surpassing the caps if the payments were reduced,
the commenters believe that other, more serious access problems would
result from arbitrary payment reductions under an MPPR. Many commenters
were concerned that the proposed MPPR policy might restrict access to
therapy services for patients with more severe problems, especially
neurological problems and complex medical conditions. Less payment,
explained the commenters, would force therapists to spend less time
with patients, incentivize cutting corners, and encourage greater fraud
and abuse. The commenters argued that the shortage of therapists,
particularly physical therapists, would be exacerbated and access to
therapy services would be severely jeopardized.
Response: We appreciate the effort and resources contributed by
stakeholders to the discussion and development of alternatives to
therapy caps. We look forward to the continued cooperation of
stakeholders as we continue our work in this area over the coming
years. We refer readers to section II.C.4.(c) of this final rule with
comment period for a detailed discussion of the public comments and our
responses regarding the proposed therapy MPPR.
The three specific short-term options that we discussed in the CY
2011 PFS proposed rule would not have required statutory changes when
CSC originally delivered them. In CY 2011, some would require extension
of the therapy cap exceptions process. Some would require moderate
reporting changes that would yield more detailed information about
patient function and progress to inform future payment approaches and
facilitate the medical review of services above the therapy caps at the
present time. Others require new coding and bundled per-session payment
that would be a first step toward episode-based payment. They are not
necessarily independent of each other.
Under each of these alternatives, administrative simplification
with respect to current policies, such as HCPCS code edits and ``ICD-9-
CM to HCPCS code'' crosswalk edits that serve to limit utilization
without regard to the patient's clinical presentation, could be pursued
in the context of these options.
The first option would modify the current therapy caps exceptions
process to capture additional clinical information regarding therapy
patient severity and complexity in order to facilitate medical review.
This approach would complement the DOTPA project, which is identifying
items to measure patient condition and outcomes. We believe the first
option may have the greatest potential for rapid implementation that
could yield useful information in the short-term. In the CY 2011 PFS
proposed rule (75 FR 40097), we indicated that we were especially
interested in detailed public comments on this option that could inform
a potential proposal to adopt such an alternative through future
rulemaking. The second option would involve introducing additional
claims edits regarding medical necessity, in order to reduce
overutilization. The third option would be to adopt a per-session
bundled payment that would vary based on patient characteristics and
the complexity of evaluation and treatment services furnished in the
session. Each option would require significant provider and contractor
education, and all would necessitate major claims processing systems
changes. Moreover, some of the options may affect beneficiaries by
changing the type or amount of services covered by Medicare or the
beneficiary's cost sharing obligations.
Comment: Many commenters agreed that a long term solution to the
therapy caps is desirable. Generally, the commenters supported an
evidence-based payment system grounded in accurate, comprehensive
analysis of the clinical characteristics of the wide range of therapy
patients in diverse settings and the concept of bundled payment for
episodes of care based on clinical characteristics of patients. Many
commenters urged CMS to place a high priority in resources and funding
for research to identify alternatives to the cap that would ensure
patients receive medically necessary therapy services. The commenters
asserted that such research would be a key factor in identifying
clinically appropriate ways to control spending. Those who commented on
this issue commended CMS for proposing alternatives that reflect in-
depth analytical work, expressing appreciation to CMS and its
contractor for the opportunity to participate on task forces and
pledging continued assistance in trials of alternatives. The commenters
also commend CMS for recommending better clinical information be
included in payment decisions.
MedPAC and some other commenters supported all three alternatives
as reasonable steps consistent with the end goals of value for
purchases based on the care needs of beneficiaries. Many commenters
supported the first option or the third option, and very few supported
the second option. Regardless of the alternative chosen, commenters
consistently recommended further study and analysis, with a national
demonstration or pilot project to test any alternative prior to
implementation.
Response: We continue to believe that the advice and assistance of
stakeholders, including clinicians and practice administrators, are
essential to the development of policies that are appropriate,
realistic, and effective in allowing necessary therapy care while
limiting overutilization. We appreciate the time and effort provided by
the dedicated professionals involved in the STATS workgroups and DOTPA
technical advisory panels.
Comment: A commenter suggested that diagnoses cannot be used to
predict medical necessity. The same commenter argued that if the
patient were assessed using self-reported functional status measures
that are risk-adjusted using many variables, it would be possible to
predict outcomes, identify ineffective treatment, and reduce gaming
without relying on clinician-generated estimates known to be biased and
fraught with poor reliability and validity.
Several other commenters stated that clinicians' judgment is
essential to accurate outcomes assessment, and these commenters
provided examples of clinical judgments believed essential to
appropriate care planning.
Response: None of the alternatives discussed in the proposed rule
would require a measurement tool scored by either a clinician or the
patient. We note the disagreement among the commenters on this point.

[[Page 73287]]

Comment: While generally supportive of the development of
alternatives to therapy caps, many commenters expressed concern that
there were insufficient data and details of the options discussed in
the proposed rule to develop a rational payment system based on the
options at this time. Several commenters suggested that sophisticated
multivariate statistical methods with a long list of clinically
appropriate risk-adjustment variables would be required. Another
commenter recommended using risk-adjustment models built on large
aggregate datasets to develop efficiency and effectiveness projections
on which payments could be based.
Response: We agree that the alternatives presented were not fully
developed and that statistically sound methods of evaluation of the
fully developed alternatives would be appropriate. We made no specific
proposal to adopt an alternative beginning in CY 2011, but instead
presented three potential options in order to gather additional public
input on the overall concepts and the details to inform our future
developmental work in this area. We will continue to review and
consider all the information provided to us and acknowledge that, in
the context of any future proposal, we would need to provide further
detail as part of notice and comment rulemaking in order for the public
to provide meaningful comment prior to the adoption of changes to
therapy payment.
Comment: Many commenters complained that therapy payments have
decreased relative to inflation over the past 10 years. The commenters
described the practitioner's struggle to provide appropriate care and
noted their fear of alternatives that could result in fewer resources
with which to treat beneficiaries. Some commenters stated that Medicaid
payments also decreased, leaving them with less flexibility to provide
covered services to Medicare beneficiaries. Several commenters warned
that those who bill therapy services will find ``creative'' ways to
manage patients in the future, leading to reduced quality of care, or
that therapists will be laid off, leading to access problems for
beneficiaries.
Some commenters recommended that CMS take time to consider the
potential alternatives to therapy caps from all angles related to cost,
including the costs of different health outcomes. Several commenters
reported that outpatient physical therapy saves Medicare spending by
preventing more expensive procedures and surgeries.
Response: Achieving appropriate payment for quality services that
quickly lead to good health outcomes is among the major goals of our
payment policy. It is also our goal to limit overutilization of
services, and to discourage the provision of services that are not
medically reasonable and necessary or represent an abuse of Medicare
funds. To that end, we will continue to develop policies aimed at
paying for those therapy services that meet patients' needs. The clear
challenge is to identify those needs and the services required.
Comment: One commenter was concerned that underlying therapy
utilization data are flawed due to inconsistent coverage and payment
policies that also negatively affect good clinical practice by
restricting the therapist's clinical judgment. The commenter provided
detailed examples to illustrate inconsistencies in forms and billing
rules between Part A and B providers and suppliers which in the
aggregate, the commenter argued, impede CMS' ability to analyze claims
data for comparison purposes. Differences due to National Correct
Coding Initiative (NCCI) and Medically Unlikely Edit (MUE) policies and
most particularly local coverage determinations (LCDs) were also
identified by the commenter as creating significant variations among
contractors. The commenter was particularly concerned about
requirements for specific ICD-9-CM and CPT code combinations, which
limit therapy diagnoses or require specific diagnoses as primary.
Response: We develop national and local policies and guidelines as
needed to interpret statutory requirements and to limit, whenever
possible, abusive behaviors while encouraging high quality care and
good outcomes for beneficiaries. Since no one method is entirely
effective in curbing incorrect or fraudulent billing practices, a
number of approaches have been adopted. We attempt to coordinate these
policies and we recognize that it is sometimes difficult for providers
and suppliers to stay informed about changes, especially when they
treat beneficiaries whose services are impacted by different payment
policies. We will continue to work cooperatively with interested
stakeholders, as we did with the STATS project, to identify and resolve
concerns or conflicts regarding our policies. We intend that any claims
data collected in a pilot study would be unencumbered by conflicts that
have been identified.
Comment: Many commenters stated that the options are identified as
alternatives to the cap exceptions process, which expires December 31,
2010.
Response: The short-term alternatives discussed are potential
alternatives to the therapy caps, and while it may be possible to
implement some as modifications to the exceptions process, we recognize
that Congress would have to act to extend the authority for a therapy
cap exceptions process or to otherwise provide for certain alternatives
to therapy caps.
Option (1): Revise therapy caps exceptions process by requiring the
reporting of new patient function-related Level II HCPCS codes and
severity modifiers.
This option would require that clinicians submit beneficiary
function-related nonpayable HCPCS codes to replace the -KX modifier
(Specific required documentation on file). Codes would not be submitted
on every claim, but at episode onset and at periodic intervals (for
example, progress report intervals of 12 sessions or 30 days--whichever
is less). Codes would be submitted for all patients in order for the
claims to be paid and not only those claims approaching or surpassing
the therapy caps. The current -KX modifier is not useful to identify
claims exceeding therapy caps, because it is used for services both
before and after the caps are exceeded, and it must be used on the
entire claim for facilities. New codes also would not identify claims
above the cap, but they would perform the same function as the current
-KX modifier to signal that documentation in the medical record
supported medical necessity that should lead to an exception to the
therapy caps. The codes would also provide more information for medical
review.
Six Level II HCPCS G-codes representing functions addressed in the
plan of care and 5 (or 7) modifiers representing severity/complexity
would be utilized to report information on the claim. Examples of six
new function-related G-codes:
GXXXU--Impairments to body functions and/or structures--
current.
GXXXV--Impairments to body functions and/or structures--
goal.
GXXXW--Activity limitations and/or participation
restrictions--current.
GXXXX--Activity limitations and/or participation
restrictions--goal.
GXXXY--Environmental barriers--current.
GXXXZ--Environmental barriers--goal.
Two potential severity/complexity scales have been suggested that
would require the adoption of 5 or 7 new severity modifiers,
respectively. Under one scenario, modifiers based on the

[[Page 73288]]

International Classification of Function would identify severity as
follows:
None (0 to 4 percent).
MILD (5 to 24 percent).
MODERATE (25 to 49 percent).
SEVERE (50 to 95 percent).
COMPLETE (96 to 100 percent).
Alternatively, a proportional severity/complexity scale would use 7
modifiers to describe impairments, limitations, or barriers--
0 percent;
1 to 19 percent;
20 to 39 percent;
40 to 59 percent;
50 to 79 percent;
80 to 99 percent; or
100 percent.
Implementation of this general approach might require 6 months to 2
years to modify claims processing for the current therapy caps and
exceptions processing of claims, and to develop, pilot test, and refine
coding before applying the approach nationally. While therapists
initially would need to learn the new codes and update their billing
systems, ultimately their reporting burden might be reduced because the
-KX modifier would not be required on each claim line for patients with
expenditures approaching or exceeding the therapy caps. This option
could potentially result in a small reduction in outpatient therapy
expenditures due to increased Medicare contractor scrutiny of episodes
where functional severity scores did not change over time, or to other
atypical reporting patterns associated with the new codes.
In the longterm, these codes and modifiers could be mapped to
reliable and validated measurement tools (either currently available
tools in the public domain or newly developed tools from items on the
DOTPA instrument or the Continuity Assessment Record and Evaluation
(CARE) tool). If statistically robust patient condition information
were collected from claims data, it may be possible to develop Medicare
payment approaches for outpatient therapy services that could pay
appropriately and similarly for efficient and effective services
furnished to beneficiaries with similar conditions who have good
potential to benefit from the services furnished. At a minimum, the new
codes could allow contractors to more easily identify and limit the
claims for beneficiaries who show no improvement over reasonable
periods of time.
Comment: Most commenters supported the concept of Option (1)
although often not without concerns about the details of
implementation. The commenters generally endorsed the concept of
describing patients' goals in terms of activity participation and
environmental barriers, in addition to impairments based on the World
Health Organization's (WHO's) International Classification of
Functioning, Disability and Health (ICF). Some supported Option (1) as
the best of the three options as it could begin providing a national
overview of functional status and severity of patients which would be
essential if CMS were to pursue future episode-based payment. The
majority of commenters agreed with the concept of developing an
infrastructure to work toward payment reform based on episodes of care,
patient characteristics, functional status, rehabilitation complexity,
severity, and outcomes. Many commenters supported Option (1) as the
first step in a plan to move toward Option (3) that would introduce
per-session codes to bundle payment, as described in detail below, and
ultimately episode-based payments, although a few suggested the
severity codes could be used, after adequate testing and definition, to
inform appropriate payment. Some commenters recommended developing
Option (1) and suggested that further development should include:
definition of terms (including the ICD-10 diagnosis codes in 2013),
input from therapists, field testing, and data analysis to ensure that
payment appropriately reflects patient complexity and risk before
application of the codes to individual therapy disciplines.
The commenters in favor of this option supported the use of ICF
language in descriptions, but consistently preferred a 7-point rating
scale for severity over the 5-point scale based on the ICF. Several
commenters also noted that sufficient training would be required for
contractors and providers of service under this option.
Response: We appreciate the perspectives of the commenters who see
Option (1) as a first step in the process of exploring alternatives to
the therapy caps that could move toward payment based on the needs of
beneficiaries.
Comment: Many commenters opposed this option as burdensome, easy to
``game,'' and lacking the potential for saving money. The commenters in
opposition to the option claimed it could require a great deal of
research to establish, validate and value codes, and then pilot test,
refine, establish inter-tester reliability, and modify the claims
processing process, which could take 2 years. Instead, the same
commenters recommended the use of valid and reliable measurement tools
currently in the public domain and in use by clinicians. One commenter
requested that CMS not use clinician-graded single item assessment
scales of patient severity or complexity, unless such methodology
possessed published reliability and validity on the selection and
grading processes because there are more psychometrically sound
published scales available that include a risk adjustment process to
predict treatment success and number of visits and are less vulnerable
to gaming. If scales were used, several commenters recommended that
they must be sensitive and cardinal so each change would represent an
equal increment.
Response: We recognize that Option (1) is not yet fully developed
and would require further study. As we consider this option further, we
will also assess the feasibility of using currently available validated
measurement scales in the public domain. The issues of ``gaming'' and
savings remain of interest in relationship to this and the other
options.
Comment: Several commenters voiced serious concerns about the
concept of using function-related codes and severity modifiers on the
claim to monitor patient improvement. The commenters were alarmed that
contractors would deny services when improvement was insufficiently
demonstrated, or when the beneficiary's goal was to prevent
deterioration of function. Several commenters were concerned that a
contractor's attention to function and severity modifiers might cause
the contractor to unduly limit the therapy sessions a patient needed to
maintain or increase functionality.
A few commenters interpreted the statute to require only that a
service be medically necessary to treat the underlying illness or
condition, and not to require that the service lead to improvement.
According to the commenters, a service required to maintain current
function is medically necessary but the focus on identifying
improvement would prevent those patients with progressive diseases from
receiving therapy to prevent further decline in function when there is
little probability of meeting an undefined improvement standard. A few
commenters provided citations of court cases that rejected Medicare
policies and practices that denied therapy services based on arbitrary
rules of thumb without consideration of the patient's individual
condition. Therefore, the same commenters recommended that CMS omit
reference to improvement standards in any proposal related to Option
(1).
Response: The policies for Medicare Part B outpatient therapy
services require payment for therapy services that require the skills
of a therapist. In

[[Page 73289]]

contrast, ``Unskilled services are palliative procedures that are
repetitive or reinforce previously learned skills, or maintain function
after a maintenance program has been developed * * *. services related
to activities for the general good and welfare of patients, for
example, general exercises to promote overall fitness and flexibility
and activities to provide diversion or general motivation, do not
constitute therapy services for Medicare purposes'' (Medicare Benefit
Policy Manual, Pub. 100-02, chapter 15, section 220.2.A.). We note that
when the goal of therapy is to halt degeneration of function due to
disease, therapy is not palliative or related to general welfare, but
may be an active treatment with measurable outcomes. For that reason,
we do not anticipate that function-related codes and severity modifiers
would be used exclusively as a proxy for the determination of medical
necessity.
The Medicare policy goes on to state, `` * * * services must be
necessary for the establishment of a safe and effective maintenance
program required in connection with a specific disease state. In the
case of a progressive degenerative disease, service may be
intermittently necessary to determine the need for assistive equipment
and/or establish a program to maximize function * * *.'' (Pub. L. 100-
02, chapter 15, section 220.2.A.). Further details concerning
maintenance therapy and examples of covered services to patients with
degenerative neurological diseases are found in Pub. 100-02, chapter
15, section 220.2.D.
Option (2): Enhance existing therapy caps exceptions process by
applying medical necessity edits when per-beneficiary expenditures
reach a predetermined value.
The existing automatic process for exceptions, and the revised
exceptions process described in Option (1) above, pay practitioners
indefinitely for services if they attest on the claim by appending a
specific modifier to therapy HCPCS codes that the services being
furnished are medically necessary and that supporting documentation is
included in the medical record. Unless the local contractor uses claims
edits or does post-payment review, these processes do not identify or
limit unusually high annual per-beneficiary utilization. High
utilization is not limited to beneficiaries with multiple or complex
conditions. We would use existing therapy utilization data to develop
annual per-beneficiary medical necessity payment edits, such as limits
to the number of services per-session, per-episode, or per-diagnostic
grouping, for exceptions to the therapy caps which would be set at
benchmark payment levels that only a small percentage of beneficiaries
would surpass in a single year. Once these levels were reached,
additional claims would be denied and practitioners would need to
appeal those denials if they wished to challenge Medicare's nonpayment.
This alternative would require 1 to 2 years to implement as an
expansion of existing policy, and its effects would be anticipated by
analysis of the current utilization of therapy services. Additional
practitioner burden would be incurred in the small number of cases
exceeding the per beneficiary expenditure edits if the practitioner
chose to appeal the medical necessity denial.
Comment: Few commenters preferred Option (2) over the other two. In
addition, the commenters stated that they were familiar with this
approach because other insurers use a similar system of edits, so the
adoption of Option (2) for Medicare patients would not represent an
additional administrative burden. The commenters who favored this
option reported that it would be the easiest for CMS to implement and
would be the only option likely to save money in the very short-term.
Some commenters who favored this option would still prefer the use of
existing measurement tools to gather data about therapy services. One
commenter pointed out that limits per-diagnosis should be based on
reasonable data that reflect good patient outcomes.
Most of the commenters who supported Option (2) also noted that
this option could influence therapy utilization and possibly outcomes,
creating flawed data that were not representative of needed services.
The commenters were concerned that future payment policy decisions
might later be based on those flawed data.
Response: We agree that Option (2) has the benefit of being
relatively easy to implement and we appreciate the perspective of some
commenters on the low anticipated burden. We also recognize that a
database of limited services would not be appropriate to use for
estimating the full cost of medically necessary services.
Comment: Some commenters took a neutral position on this option,
finding that it could be part of a viable alternative to therapy caps
but only after considerable study and development. MedPAC noted that
Option (2) would implement more meaningful therapy caps in the interim,
while longer-term solutions were being developed and tested. At the
same time, MedPAC supported CMS' efforts to identify medically
unnecessary care and to implement payment systems that ensure that the
program obtains value for its purchases. Other commenters were
concerned that the benchmark levels for edits be realistic and not
arbitrary. The commenters requested that CMS consider a method to deal
with outliers without forcing denials and appeals.
Response: Option (2) could be used in combination with other
options. We recognize the description we provided was not specific
about the edit levels and that further deliberation would be
appropriate before edits could be implemented.
Comment: The majority of commenters opposed Option (2). Although
some commenters agreed that edits for medically unlikely services are
useful and appropriate, they expressed concerns about this approach
because edits can often be arbitrary, are not based on patient needs,
and may improperly limit necessary services. Some commenters asserted
that individuals with degenerative conditions may require shorter
sessions over longer periods of time to address functional loss and
slow deterioration and to maximize health outcomes. The commenters also
opposed edits that would fail to address the affects of cognitive
impairment on treatment. Several commenters cited the existing ICD-9-
CPT code crosswalks, LCDs, NCCI edits, and MUEs as examples of similar
edits that commenters often found to be clinically inappropriate. The
commenters argued that current edits and policies based on unsupported
information led to denials and appeals that were costly to therapists
and CMS. The commenters urged CMS to avoid edits that lack clinical
relevance or a scientific basis and create anomalies in claims data.
Response: Option (2) was developed with input from therapy
professionals based on their review of therapy utilization data. If
this option were to be implemented, we would, at a minimum, review the
advice and recommendations of stakeholders, along with any available
utilization data to inform our decisions regarding the edit levels.
Comment: A few commenters criticized Option (2) as scientifically
flawed. One commenter reported that use of a combined effectiveness
(that is, functional status change) and efficiency (that is, number of
treatment visits) algorithm in a value-based payment process is one of
the few methods where one could determine if the patient needs more or
less treatment to reach optimal risk-adjusted gains in functional
status. The same commenter referenced numerous research efforts that
have analyzed functional status outcomes in

[[Page 73290]]

rehabilitation using sophisticated risk-adjustment methods and
requested that CMS use these as a basis for a new payment policy.
Other commenters asserted that currently available utilization data
are inadequate to develop predetermined edit values, citing studies of
therapy utilization under contract to CMS and studies performed by
industry that demonstrate why ICD-9 coding, lack of function/severity
data, and lack of a definition for ``episode'' are problematic.
Response: Current therapy utilization data reveal that one percent
of beneficiaries who receive services incur costs that proportionately
far exceed those of the other 99 percent of beneficiaries. However, we
are also aware that without some knowledge of the condition of the
beneficiary, it is impossible to determine which, if any, of those
services were medically necessary. While it would be desirable to
analyze more detailed utilization data that include patient function/
severity outcomes for setting edit values, those data are not available
to us in the short-term. We believe that the existing limited
utilization data, albeit not fully descriptive of patients, could
inform potential future edit values for therapy services.
Comment: If CMS plans to move forward with edits, many commenters
strongly requested that professional organizations be consulted to
determine whether such edits are clinically appropriate and realistic.
Some commenters specifically urged CMS to await the results of the
DOTPA pilot in the hope of capturing meaningful clinical differences
between patients before applying edits. Before such edits could
reliably be applied to payment, other commenters recommended that CMS
design, test, and evaluate additional data on functional status and
barriers to participation. Many commenters indicated that more data are
needed; especially thresholds based on episodes, condition groupings,
and similar criteria that could trigger medical review, but not support
denial. To that end, some commenters stated that it might be possible
to support this approach under Option (2), but after Option (1) was
implemented.
Response: We understand the commitment of stakeholders to the
development of alternatives to the therapy caps based on clinically
appropriate policies. We will consider the potential benefit of Option
(1) to develop data on which to base the edits required under Option
(2) as we further contemplate alternatives to the therapy caps.
Comment: A few commenters opposed Option (2) edits because the
edits would virtually eliminate the exceptions process mandated by law
and replace it with denial of claims at a predetermined value, which
may be inconsistent with the statutory requirement for an exceptions
process. The same commenters stated that there would be no basis for
edits until Option (1) was implemented to provide more detailed claims-
based information. Several commenters reported research showing 10
percent of Part B patients in nursing facilities have highly complex
problems, with multidisciplinary needs and inconsistent patterns of
therapy service use. The commenters were concerned that denials would
interfere with treatment of these complex patients with special needs.
Response: Option (2) would require an existing exception to the
therapy caps, which would be enhanced to allow limited billing and
payment for medically necessary services that exceed the caps. The
option could not be used if the exceptions process were not extended.
However, the Deficit Reduction Act of 2005 that established exceptions
to the caps for medically necessary therapy services also required
implementation of clinically appropriate code edits in order to
identify and eliminate improper payments for therapy services. CMS
currently applies NCCI and MUE edits to therapy services that fail to
meet a reasonable assumption of medical necessity. We view
implementation of Option (2) as consistent with our current authority
to create edits to control inappropriate billings.
Benchmark levels for Option (2) would be based on existing therapy
utilization data and limits would be set at levels that a high
percentage of beneficiaries would not exceed. While it may be helpful
to have more data related to patient condition as described in Option
(1) before implementing Option (2), we do not consider such information
vital to the development of limits that affect a very small percentage
of beneficiaries whose service payments would so far exceed average
payments that they would be likely to include inappropriate billings
and would be unlikely to interfere with the delivery of medically
necessary services.
Comment: If the option of implementing edits were pursued, several
commenters indicated that the edits should be variable based on
clinical criteria, result in medical review instead of denials, and
reflect issues of multidisciplinary care, care coordination, and
clinical issues.
Response: If Option (2) were to be further developed, we would
consider the commenters' suggestions prior to finalizing a plan for
implementation, along with any new information available from
additional research studies, OIG reports, or other sources.
Option (3): Introduce per-session ``Evaluation/Assessment and
Intervention'' (E&I) codes to bundle payment for groups of current
therapy HCPCS codes into a single per-session payment.
As discussed in section II.C.4.(c) of this final rule with comment
period, multiple therapy services are often furnished in a single
session, and we proposed to expand the MPPR policy to ``always
therapy'' services in CY 2011 in order to take into consideration the
efficiencies that occur when multiple services (the typical therapy
scenario) are furnished in one session to a beneficiary. Furthermore,
we note that section 1848(c)(2)(K) of the Act (as added by section 3134
of the ACA) regarding potentially misvalued codes under the PFS
specifies that the Secretary may make appropriate coding changes, which
may include consolidation of individual services into bundled codes for
payment under the PFS, as part of her review and adjustment of the
relative values for services identified as potentially misvalued.
This option would require that practitioners submit a single new
Level II HCPCS code to represent all the therapy services currently
reported and paid separately for an outpatient therapy session. Payment
for the HCPCS code would be based on patient characteristics (as
identified through prior CMS contractor analyses) and the complexity of
the evaluation/assessment and intervention services furnished during
the session. The new coding requirements would not necessarily disrupt
the current exceptions process or the revised exceptions process
described in Option (1) above. Approximately 12 E&I codes would be
needed for each discipline, taking into consideration the basic
algorithm shown in Table 47.

[[Page 73291]]

Table 47--Evaluation/Assessment & Intervention Level II HCPCS Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Evaluation/assessment complexity
--------------------------------------------------------------------------------------
Minimal Moderate Significant
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intervention level.................. None....................... E&I Code 1........ E&I Code 2........ E&I Code 3.
Minimal.................... E&I Code 4........ E&I Code 5........ E&I Code 6.
Moderate................... E&I Code 7........ E&I Code 8........ E&I Code 9.
Significant................ E&I Code 10....... E&I Code 11....... E&I Code 12.
--------------------------------------------------------------------------------------------------------------------------------------------------------

We would need to develop and test operational definitions for each
E&I code so that practitioners would be able to properly report
services and appropriate relative values could be established for each
per-session code. We believe that a pilot study might reveal that the
different practice patterns for the three therapy professions (physical
therapy, occupational therapy, and speech-language pathology) could
necessitate separate relative value determinations for each E&I code by
type of therapy service furnished. As a result, up to 36 total new
Level II HCPCS codes could be needed (12 per discipline).
We anticipate that the definitions of E&I codes 1 through 3 and 7
through 12 would describe services that may only be furnished by a
``clinician'' (therapist, physician, or non-physician practitioner).
E&I codes 1 through 3 would be reported for sessions that consisted
only of evaluations. In addition, the definitions of E&I codes 4
through 6 would describe services that could be furnished by or under
the permissible supervision of all qualified outpatient therapy
professionals. Based upon historical therapy utilization patterns, the
vast majority of E&I codes submitted would likely fall in the 4 through
9 code range. We would expect the RVUs under the PFS for all E&I codes
to take into consideration the efficiencies when multiple services
(those that would be currently reported under multiple CPT codes) are
furnished.
This option would require 2 to 4 years to add new codes and conduct
a short-term pilot study to refine coding and value the 12 new HCPCS
codes (or 36 if they are specific to each therapy discipline). There
would be significant initial practitioner administrative burden to
learn new codes and update billing systems. However, ultimately, with
elimination of the practitioner's reporting of 76 different codes and
many of the associated claims processing edits, the administrative
burden of reporting therapy services to Medicare would be minimized.
This bundled approach to reporting and payment could result in more
appropriate valuation of therapy services that reflects efficiencies
when individually reported services are furnished in the same session.
As a result, it could lead to reduced therapy expenditures, as well as
a reduction in the number of beneficiaries affected by the therapy caps
in a given year.
Comment: The vast majority of commenters concurred that provider
payments should be influenced by underlying beneficiary
characteristics. Most commenters agreed that following research and
development, an episode-based payment alternative would be the most
feasible payment model for outpatient therapy services in the longterm,
and some recommended it be developed in a performance-based model. The
commenters generally supported this option as a foundation to those
goals, but recommended expert therapist input into the process and
further study to determine how such an approach might affect different
therapy types and settings. Several commenters noted that it would be
critical to ensure clear nomenclature, the availability of an
appropriate reporting methodology, and adequate payment for these codes
that reflects the resources used to provide these services.
To assure appropriate payment for needed services, the commenters
agreed that the outcomes resulting from provider interventions must be
incorporated in payment models. The commenters believe that experience
gained in a transparent development process could be carried over into
future payment system reform. Therefore, the majority of commenters who
supported Option (3) also requested that there be a transparent process
of development and testing in which expert therapists from various
settings were included. Many also argued that Option (3) should be
developed only after Option (1) had been implemented and function and
severity data had been collected to inform the development of Option
(3).
Response: We appreciate the support of commenters for Option (3)
and their interest in moving toward long-term goals by implementing
short-term approaches as an incremental step. We agree that the
information presented in the proposed rule was limited regarding Option
(3) and that further study would be necessary before a bundled per-
session payment approach could be implemented. We will consider the
commenters' recommendations to develop an episode-based payment
alternative in the future.
Comment: The concept of moving toward per-session codes that would
be based on the severity of the patient and intensity of therapist
clinical judgment and work involved in the provision of the therapy
service was welcomed by many commenters. Those commenters who
encouraged CMS to use this option to reduce the administrative burden
of counting minutes and eliminate NCCI edits and MUEs anticipated
corresponding improvement in the effective and efficient delivery of
clinical interventions. The commenters urged CMS to ensure compliance
of policies related to Option (3) with other payment policies, such as
the delivery of medically necessary care driven by the development of
an appropriate functional goal-based plan of care.
Response: While a per-session payment methodology could result in
modification of current policies regarding counting treatment time, it
would not necessarily result in deleting claims edits. If we were to
adopt such a methodology, we would assess the current claims processing
edits and determine whether they continued to be appropriate and/or
implement new edits to address potential issues under the revised
payment approach.
Comment: Some commenters suggested a modified definition of
severity. The commenters recommended two separate severity tables of
``severity or complexity,'' one for evaluation and the other for
intervention. For each table separately, severity/complexity of
clinical presentation would be rated as low, moderate, or high. In all
cases, the commenters believe CMS should identify the factors to be
used to determine severity for both evaluations and interventions. The
commenters urged that CMS defer to professional standards of practice
and state law with respect to the provision of services in each
category. Other commenters

[[Page 73292]]

recommended modifiers for complex patients and comprehensive
multidisciplinary rehabilitation settings to facilitate application of
special policies for those circumstances.
Response: The tables presented in the proposed rule were
illustrative of the potential Level II per-session HCPCS codes, and
these codes would require further development prior to implementation.
We appreciate the commenters' suggestions and will consider them as we
weigh this option.
Comment: Some commenters who supported the general premise of
Option (3) and some commenters who opposed it were not optimistic that
per-session payment could be developed in a reliable and valid manner
in the shortterm.
Response: This alternative was developed as a short-term action
that would start the process toward bundled payments for therapy
episodes. The work completed by expert therapist advisors to the STATS
workgroups laid a foundation that could facilitate development of the
initial per-session HCPCS codes, which could reasonably be based on
utilization data that demonstrated which services were historically
billed together most of the time. We have analyzed data regarding
common therapy code combinations. While a per-session payment approach
could have a significant impact on payment for therapy services, we
would not expect that developing and valuing per-session E&I codes
would be a particularly lengthy or complex process. We note that over
the past several years, the CPT Editorial Panel has bundled multiple
services into a single code numerous times in different medical
specialty areas and the AMA RUC has then valued the new comprehensive
service by taking into account the expected efficiencies in the
physician work and/or practice expense.
Comment: Rather than consign the code definition and valuation
processes integral to Option (3) to the CPT Editorial Panel and AMC RUC
processes, which have little transparency, several commenters
recommended that CMS develop Level II HCPCS codes for this purpose and
allow for continued stakeholder input as to their valuation. Some
commenters expressed appreciation for being included in the STATS
process and suggested it as a model for future transparency in
developing payment policies.
Response: We appreciate the confidence stakeholders expressed
regarding our capacity to develop HCPCS codes and values using a
transparent process that includes input from stakeholders. If we were
to move toward per-session payment in the future, we would need to
consider the most appropriate approach to the development and valuation
of new codes to describe those services. In the meantime, we note that
if the CPT Editorial Panel were to develop new codes for comprehensive
therapy services, as they have developed new CY 2011 comprehensive
codes for cardiac catheterization and lower extremity endovascular
revascularization services that bundle services that are commonly
furnished together, we would consider those therapy codes for adoption
under the PFS and would value them if we recognized them for PFS
payment.
Comment: Due to the nature of certain services when assessment and
intervention are inseparable, some commenters asserted that
interventions should not be included in this model but should be
separately identified. The commenters provided the examples of active
wound care management and prosthetic/orthotic management.
Response: The details of therapy E&I codes have not been proposed
or finalized. We appreciate the perspective of the commenters and will
keep it in mind if we were to pursue the creation of per-session
therapy codes in the future.
Comment: While some commenters stated that Option (3) has the
potential to simplify and increase consistency in coding for therapy
services, several commenters who opposed this option and Option (1)
mentioned that providers would learn to ``game the system'' and that
all patients would be documented as severe on initial intake.
Response: We too are concerned about approaches where providers
could learn to game the system. The commenters who criticized this
option generally preferred the edits in Option (2).
Restriction on utilization of certain codes sometimes increases the
risk of billing different codes, billing more of the same codes, or
increasing patient visits, resulting in the same or greater cost to the
Medicare program. The edits described in Option (2) would prevent high
payments for individual beneficiaries, but might have little or no
effect on the payments to providers or suppliers who increase the
number of beneficiaries treated. Generally, we apply a number of
different methods concurrently to reduce risk.
At times, it may be difficult to know whether the clinical judgment
and objective measurements have been accurately reported or documented
in the record and whether the service furnished is appropriately
represented by the billed HCPCS code. Providers focused on billing
inappropriately may also document inappropriately. In the long term, we
hope to incentivize honest and ethical providers and suppliers of
services to furnish effective and efficient, high quality services.
Possible fraudulent activity may be identified by aberrant billing
patterns, and the new codes could facilitate the identification of such
patterns.
Several commenters expanded on the options presented as
alternatives to the therapy caps or recommended options of their own. A
few presented their own analyses of utilization to support their
recommendations.
Comment: Several commenters recommended incorporation of currently
and publicly available validated tools to inform the collection of
patient-specific information and move toward performance-based payment.
A few commenters suggested that the study ``Pay-for-Performance for
Outpatient Physical Therapy and Occupational Therapy'' that Focus On
Therapeutic Outcomes (FOTO) completed in 2006 under Grant 18-
P-93066-/0-01 might be a good template from which to start a process to
replace caps and ultimately develop a value-based purchasing process.
The commenters suggested the FOTO predictive model could be used, after
pilot testing, to develop a reimbursement process where care is based
on need and payment is based on results.
Response: We recognize the importance of demonstrating the
application of a value-based purchasing approach to physical and
occupational therapy services. We posted the FOTO study on the CMS Web
site at: http://www.cms.gov/TherapyServices/downloads/P4PFinalReport06-01-06.pdf.
We are aware that research continues on the functional status
indicator and that other measurement tools are also available in the
public domain. The STATS discussions resulted in some improvements in
the feasibility of matching outcomes data to claims. However, there are
a number of problems that would have to be resolved before any of the
currently available versions of therapy outcomes tools could be
incorporated into payment policy. The FOTO study did not address value-
based purchasing for speech-language pathology services and there
remain questions about applying the FOTO functional status indicator,
or any self-reported measure, to certain cognitively impaired patients
or to the Medicare population without further refinement.

[[Page 73293]]

As we continue to explore various options, we would be interested
in the feasibility of using historical research, existing electronic
input systems, and registry information to provide a conceptual
framework for alternative payment systems.
Comment: Although CMS did not discuss the option of establishing
therapy payments based on episodes in the discussion of short-term
options, many commenters encouraged CMS to pursue that goal. Using data
obtained from the severity/complexity codes described in Option (1),
DOTPA, and other data initiatives, several commenters urged CMS to
undertake research to develop a new episodic prospective payment system
for Part B therapy services. Some commenters described the details of a
plan to base therapy episode payment on groups based on patient
clinical characteristics, considering mean episode costs, adjusting for
high and low outliers or interrupted episodes, setting a default
payment for unmapped episode groups, and also adjusting for local wage
indices and providing an annual market basket payment rate update.
The opportunity for CMS to define sessions and episodes more
clearly and the potential to support the overall goal of payment reform
was eagerly anticipated by several commenters. The commenters applauded
CMS for recognizing the potential opportunity to gather these data on
episodes for payment of therapy services furnished in the institutional
setting.
Episode-based payment was recommended as an alternative to the
proposed therapy MPPR by numerous commenters. The commenters explained
that the fundamental problem with fee-for-service payment is the
incentive to over utilize therapy services in the outpatient setting
and limit institutional providers from using resources flexibly. The
commenters described analysis of a large database of Medicare
beneficiaries as the basis for a methodology for grouping diagnosis
codes to create episodes of care on which therapy payment would be
based. The commenters noted that adjustment would be needed to payments
for complex patients and readmissions. The same commenters supported
episode payments for separate therapy disciplines based on a patient's
medical diagnosis and goals. A critical goal for these commenters was
to identify and account for differences in the conditions and needs of
patients in skilled nursing facilities as opposed to other outpatient
therapy settings.
Response: We did not discuss development of episode-based payments
as an option in the CY 2011 PFS proposed rule because we recognize that
substantially more research would be necessary to define the episodes
and determine what resources would be needed for different groups or
categories of patients before the episodes could be incorporated into a
payment system, particularly one that also addressed quality,
efficiency, and good health outcomes. However, the absence of
discussion in our proposed rule of an episode-based payment methodology
as a short-term therapy cap alternatives option should not be
interpreted as our reluctance to pursue the definition of episodes or
the refinement of the concept of episode-based payments.
Comment: A number of commenters supported testing variables they
believe to be important in making a clinical judgment concerning a
patient's severity, including: general type of patient (orthopedic,
neurological, medical, etc.); impairment (body part treated); intake
functional status; patient age; symptom acuity; surgical history;
payer; gender; level of fear-avoidance of physical activities; and
number of co-morbid conditions. Other commenters urged inclusion of
clinical judgment of severity based on medical condition, physical
impairments resulting from these conditions, patient function, and
ability to participate in activities of daily living.
Response: As we progress in the analysis of payment alternatives to
the therapy caps, we appreciate the information on variables believed
to be critical by stakeholders who have conducted related research and/
or furnished therapy services to a wide array of patients in different
clinical settings. We welcome their expert contributions and
collaboration with us on this important issue.
In conclusion, we emphasize that we continue to be committed to
developing alternatives to the therapy caps that would provide
appropriate payment for medically necessary and effective therapy
services furnished to Medicare beneficiaries based on patient needs,
rather than the current therapy caps which establish financial
limitations on Medicare payment for therapy services in some outpatient
settings regardless of medical necessity. The Congress has repeatedly
intervened to allow exceptions to these caps for certain time periods,
and the current exceptions are automatically processed based on a
practitioner's attestation that medical necessity is documented in the
chart for an individual patient. We believe that, ultimately, payment
for therapy services should incentivize the most effective and
efficient care, consistent with Medicare's focus on value in its
purchasing.
The STATS contractor has worked closely with a broad variety of
clinicians, administrators, scientists, researchers, and other
contractors to develop the three alternatives presented in this
discussion in CY 2011 rulemaking for the PFS. We are grateful for all
public comments on the proposed rule from interested stakeholders,
including individual therapists from both facility and nonfacility
outpatient settings paid under Medicare Part B.
We are committed to finding alternatives to the current therapy cap
limitations on expenditures for outpatient therapy services that will
ensure that beneficiaries continue to receive those medically necessary
therapy services that maximize their health outcomes. We continue to
dedicate our resources to identifying alternatives that would encourage
the most efficient and cost-effective treatments. We believe motivated
therapists, with attention to the most cost-effective practices, can
incorporate practice efficiencies that benefit patients by achieving
the best possible results at the lowest cost. Our STATS and DOTPA
projects, which are currently engaged in data collection and analysis
to inform short-term and long-term alternatives to the therapy caps,
respectively, lay the foundation for future payment alternatives for
outpatient therapy services. We are optimistic that the STATS project
has identified short-term, feasible alternatives that may be tested in
the future. The DOTPA project will create a tool and test its use to
collect patient condition information that could then be applied to
identify patient need for therapy services. Together, these projects
may provide the basis for a long-term plan to reshape Medicare's
payment policy for outpatient therapy services to align with the value-
based purchasing principles that are now guiding principles of the
Medicare program.

B. Diabetes Self-Management Training (DSMT) Services (HCPCS Codes G0108
and G0109)

1. Background
Section 1861(s)(2)(S) of the Act provides for coverage of DSMT in
outpatient settings without limiting this coverage to hospital
outpatient departments. DSMT services consist of educational and
training services furnished to an individual with diabetes by a
certified provider in an outpatient setting.
Section 1861(qq)(2)(A) of the Act stipulates that training must be

[[Page 73294]]

furnished by a ``certified provider'' which is a physician or other
individual or entity that also provides other items or services for
which payment may be made under Medicare. This program is intended to
educate beneficiaries in the successful self-management of diabetes.
The program includes instructions in self-monitoring of blood glucose;
education about diet and exercise; an insulin treatment plan developed
specifically for the patient who is insulin-dependent; and motivation
for patients to use the skills for self-management. DSMT services are
reported under HCPCS codes G0108 (Diabetes outpatient self-management
training services, individual, per 30 minutes) and G0109 (Diabetes
outpatient self-management training services, group session (2 or
more), per 30 minutes).
2. Payment for DSMT Services
In accordance with section 1848(j)(3), Medicare payment for
outpatient DSMT services is made under the PFS as specified in Sec.
414.1 through Sec. 414.48. When we created HCPCS codes G0108 and
G0109, the only direct costs included in the PE were registered nurse
labor. Section 410.144(a)(4)(a) states that the DSMT team includes at
least a registered dietitian and a certified diabetes educator. We
initially did not establish work RVUs for DSMT services because we
believed training would typically be performed by individuals other
than a physician, such as a registered nurse (65 FR 83130). However,
since that time, we have received requests from a number of
stakeholders, including the American Association of Clinical
Endocrinologists (AACE), the American Association of Diabetes Educators
(AADE), and the Juvenile Diabetes Research Foundation, to include
physician work in valuing DSMT services that is similar to the
physician work that has been included in medical nutrition therapy
(MNT) services since CY 2007 and kidney disease education (KDE)
services since CY 2010. The stakeholders argued that because physicians
coordinate DSMT programs, provide patient instruction, and communicate
with referring physicians, physician work should be included in the
RVUs for DSMT services. The stakeholders also requested that we
reconsider the direct PE inputs for DMST services and include clinical
labor for diabetes educators at a higher hourly rate instead of
registered nurse labor. In addition, they stated that the supplies and
equipment in the PE for DSMT services should be the same as for KDE
services, with additional direct PE inputs for a diabetes educator
curriculum, data tracking software, and DSMT program accreditation.
For CY 2011, we proposed the following:
To assign physician work RVUs to DSMT services that are
comparable, as adjusted for the service times of the HCPCS codes, to
the work RVUs for MNT services. The rationale for the proposed work
RVUs for the DSMT HCPCS G-codes was based on the similarity of DSMT
services to MNT services in the individual (CPT code 97803) and group
(CPT code 97804) setting.
That HCPCS G0108 for 30 minutes of individual DSMT
services would be crosswalked to CPT code 97803 (Medical nutrition
therapy; re-assessment and intervention, individual, face-to-face with
the patient, each 15 minutes) for purposes of assigning work RVUs, with
the physician work RVUs for CPT code 97803 multiplied by two to account
for the greater time associated with HCPCS code G0108 (that is, 30
minutes).
That HCPCS G0109 for 30 minutes of group DSMT services
would be crosswalked to CPT code 97804 (Medical nutrition therapy;
group (2 or more individuals(s)), each 30 minutes) for purposes of
assigning work RVUs.
To modify the PE inputs for DSMT services to reflect the
current equipment and supplies for the KDE HCPCS G-codes implemented in
the CY 2010 PFS final rule with comment period (74 FR 61901) (that is,
HCPCS codes G0420 (Face-to-face educational services related to the
care of chronic kidney disease; individual, per session, per one hour)
and G0421 (Face-to-face educational services related to the care of
chronic kidney disease; group, per session, per one hour)), based on
the similarity in the equipment and supplies necessary for DSMT and KDE
services. We made adjustments to some of the equipment times for the 30
minute DSMT individual and group services as compared to the one hour
individual and group KDE services.
To include a diabetes educator curriculum and data
tracking software in the PE inputs for DSMT services, while noting that
we did not include the DSMT program accreditation costs because it is
our general practice not to include these costs in the PE inputs.
To utilize the same approach for clinical labor as we
adopted for MNT services when we provided physician work RVUs for those
services in CY 2007 (71 FR 69645), rather than changing the current
labor type for DSMT services. Specifically, we removed all of the
clinical labor from the group DSMT code and most of the clinical labor
from the individual DSMT code, given that we proposed work RVUs for
both DSMT HCPCS codes for CY 2011.
In the CY 2011 PFS proposed rule (75 FR 40100), we stated our
belief that these proposals would value DSMT services more consistently
with other similar services that are paid under the PFS. As a result of
our proposed CY 2011 changes, the proposed work RVUs for HCPCS codes
G0108 and G0109 were 0.90 and 0.25, respectively. As described above,
we also proposed to modify the direct PE inputs for these codes for CY
2011.
Comment: Numerous commenters specifically supported the
establishment of work RVUs for the DSMT services based on the work RVUs
of the similar MNT services, CPT codes 97803 for 15 minutes of
individual MNT services and 97804 for 30 minutes of group MNT services.
Some commenters explained that addition of work RVUs would lead to
higher payment rates for DSMT services, resulting in a significant
positive impact on diabetes education practices and increased patient
access to care for DSMT services. Several commenters suggested that
this change would appropriately recognize the active role many
physicians contribute to ensuring that their patients have access to
DSMT services and providing care coordination and communication with
the multidisciplinary DSMT team members. One commenter concurred with
the proposal to update the direct PE inputs for the DSMT HCPCS codes
based on those assigned to the HCPCS codes for KDE services.
Response: We appreciate the commenters' support for our proposal to
establish work RVUs and to update the direct PE inputs for the DSMT
services.
In conducting our review of the public comments on this issue for
this final rule with comment period, we examined newly available PFS
claims data for same day billings from one provider for a single
Medicare beneficiary. In response to that analysis and in accordance
with our PFS methodology which values services as delivered to the
typical patient, we note that we have made minor adjustments to some of
the direct PE inputs for supplies and equipment times for both HCPCS G-
codes for DSMT services, G0108 and G0109, under our final CY 2011
policy. We made these refinements after a review of our PFS utilization
data indicated that 2 units of HCPCS code G0108 (a total of 60 minutes)
were typically billed together on the same day for the same patient,
instead of the one unit of HCPCS code G0108 (30

[[Page 73295]]

minutes) which was used as the assumption for the typical session at
the time of our CY 2011 proposal. As a result, we have assigned half of
the amount of the direct inputs for supplies and equipment time in
HCPCS code G0420 (60 minutes individual KDE services) to HCPCS code
G0108 (30 minutes individual DSMT services). Regarding the direct PE
inputs for HCPCS code G0109, we continue to believe that there is a
similarity among the group and individual DSMT and KDE services and the
education practices when these services are delivered, as reflected in
their PFS utilization patterns. For this reason, we have made minor
modifications to the PE inputs for HCPCS code G0109 (30 minutes of
group DSMT services) to reflect half of each input for HCPCS code G0421
(60 minutes of group KDE services) that parallel the modifications we
made for the individual DSMT HCPCS code described previously. We
further note that these refinements to the direct PE inputs for DSMT
services are based on the final adjustments that were made to the
direct PE inputs for HCPCS codes G0420 and G0421 for KDE services,
discussed in section V. B.2.e. of this final rule with comment period,
because our approach to establishing the direct PE inputs for the DMST
HCPCS G-codes is based on the inputs for KDE services.
As a result, the modifications we made to the supplies and
equipment inputs for the DSMT HCPCS G-codes, G0108 and G0109, equal
half of the same supply and equipment times in the one hour HCPCS G-
codes for KDE services, G0420 and G0421.
In addition, because the $200 price of the diabetes educator
curriculum does not meet the $500 floor we established for inclusion in
the equipment database, we have bundled the diabetes educator
curriculum price with the $500 data tracking software one because the
patient's curriculum information is typically recorded in the tracking
software. The equipment descriptor for the data tracking software was
modified to read: Diabetes education data tracking software, includes
curriculum. Accordingly, we changed the price input from $500 to $700
and assigned the bundled equipment a total of 4 minutes. In this way,
we are including the cost of the curriculum in the direct PE inputs for
DSMT services as we proposed for CY 2011, while remaining consistent
with the established $500 floor on inclusion of equipment in the PE
database.
After consideration of the public comments we received, we are
finalizing the proposed work RVUs and direct PE input for DSMT
services, with modification to make the PE adjustments described
previously. The final CY 2011 direct PE database that lists the direct
PE inputs is available on the CMS Web site under the downloads for the
CY 2011 PFS final rule with comment period at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage. The final CY 2011 RVUs for
HCPCS codes G0108 and G0109 are displayed in Addendum B to this final
rule with comment period.

C. End-Stage Renal Disease Related Services for Home Dialysis (CPT
codes 90963, 90964, 90965, and 90966)

1. End-Stage Renal Disease Home Dialysis Monthly Capitation Payment
Services (CPT codes 90963, 90964, 90965, and 90966)
In the CY 2004 PFS final rule with comment period (68 FR 63216), we
established new Level II HCPCS G-codes for end-stage renal disease
(ESRD) monthly capitation payment (MCP) services. For center-based
patients, payment for the G-codes varied based on the age of the
beneficiary and the number of face-to-face visits furnished each month
(for example, 1 visit, 2-3 visits and 4 or more visits). Under the MCP
methodology, the lowest payment applied when a physician provided one
visit per month; a higher payment was provided for two to three visits
per month. To receive the highest payment, a physician would have to
provide at least four ESRD-related visits per month. However, payment
for home dialysis MCP services only varied by the age of beneficiary.
Although we did not initially specify a frequency of required visits
for home dialysis MCP services, we stated that we ``expect physicians
to provide clinically appropriate care to manage the home dialysis
patient'' (68 FR 63219).
Effective January 1, 2009, the CPT Editorial Panel created new CPT
codes to replace the G-codes for monthly ESRD-related services, and we
accepted the new codes for use under the PFS in CY 2009. The CPT codes
for monthly ESRD-related services for home dialysis patients include
the following, as displayed in Table 32 of the CY 2011 PFS proposed
rule (75 FR 40101) and reprinted as Table 48 below: 90963, 90964,
90965, and 90966. In addition, the clinical vignettes used for the
valuation of CPT codes 90963, 90964, 90965, and 90966 include scheduled
(and unscheduled) examinations of the ESRD patient.
Given that we pay for a physician (or nonphysician practitioner
(NPP)) to evaluate the ESRD patient over the course of an entire month
under the MCP, we believe that it is clinically appropriate for the
physician (or NPP) to have at least one in-person, face-to-face
encounter with the patient per month. As such, for CY 2011 we proposed
to require the MCP physician (or NPP) to furnish at least one in-person
patient visit per month for home dialysis MCP services (as described by
CPT codes 90963 through 90966). The proposed requirement would be
effective for home dialysis MCP services beginning January 1, 2011. As
stated in the CY 2011 PFS proposed rule (75 FR 40100), we believe this
requirement reflects appropriate, high quality medical care for ESRD
patients being dialyzed at home and generally would be consistent with
the current standards of medical practice.
Comment: Many commenters stated that a monthly visit embodies the
standard of care for home dialysis patients. However, many of the same
commenters also stated that it may not always be feasible to furnish a
face-to-face visit every month for home dialysis patients due to
extenuating circumstances. A number of commenters explained that, in
contrast to patients who dialyze in a dialysis center, home dialysis
patients would need to travel to the doctor's office (or the physician
would need to visit the patient's home) which would be an undue burden
on both the physician and the patient. To that end, several commenters
urged CMS to provide flexibility in cases where a patient does not show
up for their scheduled appointment and for those that cannot travel due
to significant geographic distance between the patient and the
nephrologist. For example, some specialty societies stated that
pediatric home dialysis patients may experience exceptional
circumstances due to the scarcity of pediatric nephrologists and remote
geographic locations, making the monthly face-to-face visit requirement
harder to fulfill. In these circumstances, one commenter requested that
CMS consider allowing the MCP physician to furnish at least 1 visit
every 3 months and allowing the other monthly visits to be furnished as
a telehealth service. Additionally, several commenters explained that
the monthly management of a home dialysis patient involves many tasks
(in addition to face-to-face visits) including: Reviewing lab tests,
treatment data and the dialysis prescription; monitoring the patient's
vascular access; and overseeing quality improvement activities (as well
as incurring the practice expense

[[Page 73296]]

associated with managing the patient's care). The commenters stated
that the MCP physician should not be ``penalized'' if the patient
chooses not to attend the monthly visit. Moreover, many of the
commenters who agreed that monthly visits are optimal care did not
support a monthly visit requirement for the home dialysis MCP service.
The commenters stated that the frequency of face-to-face visits should
remain at the discretion of the nephrologist and patient. Several of
the commenters who did not support a policy change also stated that
requiring a monthly visit could create disincentives for providing
beneficiaries with home dialysis therapy in circumstances where it may
be difficult for the MCP physician to furnish a visit every month. The
commenters explained that nephrologists may not want to encourage home
dialysis therapy if they will not get paid as a result of a patient
``opting out'' of a scheduled visit.
Response: We continue to believe that furnishing monthly face-to-
face visits is an important component of high quality medical care for
ESRD patients being dialyzed at home and generally would be consistent
with the current standards of medical practice. However, we also
acknowledge that extenuating circumstances may arise that make it
difficult for the MCP physician (or NPP) to furnish a visit to a home
dialysis patient every month. Therefore, we will allow Medicare
contractors the discretion to waive the requirement for a monthly face-
to- face visit for the home dialysis MCP service on a case-by-case
basis, for example, when the MCP physician's (or NPP's) notes indicate
that the MCP physician (or NPP) actively and adequately managed the
care of the home dialysis patient throughout the month. Additionally,
as we explained in the CY 2004 PFS final rule with comment period (68
FR 63219 through 63220), we also believe that the use of other
practitioners working with the MCP physician (or NPP) to furnish the
required monthly visit for the home dialysis MCP service could help
alleviate scheduling issues and problems related to geographic
distance.
With regard to the comment on furnishing the proposed required
visit for the home dialysis MCP as a telehealth service, we note that
any interested parties may submit requests to add services to the list
of Medicare telehealth services. Requests submitted before the end of
CY 2010 will be considered for the CY 2012 PFS proposed rule.
Requestors should be advised that each request to add a service to the
list of Medicare telehealth services must include any supporting
documentation the requestor wishes us to consider as we review the
request. For more information on submitting a request for an addition
to the list of Medicare telehealth services, including where to
directly mail these requests, we refer readers to section IV.B. of this
final rule with comment period and the CMS Web site at: http://www.cms.hhs.gov/telehealth.
Comment: Several commenters stated that the conditions for coverage
for dialysis facilities require a monthly interaction between a
clinician representing the facility and the home dialysis patient. The
commenters believe that the conditions for coverage for dialysis
facilities permit flexibility in the monthly visit requirement if the
patient chooses to opt out of the monthly visit and requested that CMS
align the proposed visit requirement for the home dialysis MCP service
with the ``flexibility'' permitted under the conditions for coverage
for dialysis facilities.
Response: With regard to conditions for coverage for dialysis
facilities, Sec. 494.90(b)(4) of the regulations specifies that the
dialysis facility must ensure that all dialysis patients are seen by a
physician, nurse practitioner, clinical nurse specialist, or
physician's assistant providing ESRD care at least monthly. Section
494.100 requires ``a dialysis facility that is certified to provide
service to home patients to ensure that home dialysis services are at
least equivalent to those provided to in-facility patients and meet all
applicable conditions of this part.'' In addition, the interpretive
guidance for part 494 entitled ``Conditions for Coverage for ESRD
Facilities'' specifies that a monthly visit is required for each home
patient by a physician, an advanced practice registered nurse, or a
physician assistant. The visit may be conducted in the dialysis
facility, at the physician's office, or in the patient's home. The
guidelines state that ``any patient may choose not to be seen by a
physician every month'' but also specify that if there is a pattern of
a patient consistently missing physician and or practitioner visits,
the lack of medical oversight should be addressed with the patient in
the plan of care.
The requirement for at least one monthly visit with a clinician
associated with the dialysis facility is a condition for coverage for
the dialysis facility for purposes of participating in the Medicare
program and not a direct factor in determining the payment amount for
the dialysis facility. In other words, the clinician visit is not a
component of the facility's composite rate. However, as mentioned in
the background section, the clinical vignettes used for the valuation
of the home dialysis MCP service under the PFS include scheduled (and
unscheduled) examinations of the ESRD patient. Given that physician or
NPP visits are a factor in determining the PFS payment amount for the
home MCP service that is furnished to the typical Medicare beneficiary,
we do not believe that the monthly visit requirement for the home
dialysis MCP service is analogous to the visit requirement under the
conditions for coverage for dialysis facilities that has no
implications for setting payment rates under the PFS. Therefore, we do
not agree that the visit requirement for the home dialysis MCP service
necessarily should be ``aligned'' with the conditions for coverage for
dialysis facilities.
Comment: One commenter suggested that CMS consider structuring the
home dialysis MCP similar to the center-based MCP. Under this approach,
the commenter suggested that a higher payment amount could be made for
home dialysis MCP services with at least one in person, face-to-face
visit per month.
Response: We will consider the commenter's suggestion as we
continue to develop and refine Medicare payment policy for physicians
and practitioners managing patients on dialysis. In the event we decide
to make changes in the payment amount(s) for the home dialysis MCP
services, we would do so in a future proposed rule where the public
would have the opportunity to provide comments as afforded by the
rulemaking process.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal, with modification. We will require the
MCP physician (or NPP) to furnish at least one in-person patient visit
per month for home dialysis MCP services (as described by CPT codes
90963 through 90966). However, Medicare contractors will have the
discretion to waive the monthly visit requirement for the home dialysis
MCP service on a case-by-case basis.
2. Daily and Monthly ESRD-Related Services (CPT Codes 90951 Through
90970)
In CY 2008, the AMA RUC submitted recommendations for valuing the
new CY 2009 CPT codes displayed in Table 48 that replaced the MCP HCPCS
G-codes for monthly ESRD-related services. We accepted these codes for
use under the PFS.

[[Page 73297]]

Table 48--MCP Codes Recognized Under the PFS
----------------------------------------------------------------------------------------------------------------
MCP Code Long descriptor
----------------------------------------------------------------------------------------------------------------
90951.................................. End-stage renal disease (ESRD) related services monthly, for patients
younger than 2 years of age to include monitoring for the adequacy of
nutrition, assessment of growth and development, and counseling of
parents; with 4 or more face-to-face physician visits per month.
90952.................................. End-stage renal disease (ESRD) related services monthly, for patients
younger than 2 years of age to include monitoring for the adequacy of
nutrition, assessment of growth and development, and counseling of
parents; with 2-3 face-to-face physician visits per month.
90953.................................. End-stage renal disease (ESRD) related services monthly, for patients
younger than 2 years of age to include monitoring for the adequacy of
nutrition, assessment of growth and development, and counseling of
parents; with 1 face-to-face physician visit per month.
90954.................................. End-stage renal disease (ESRD) related services monthly, for patients 2-
11 years of age to include monitoring for the adequacy of nutrition,
assessment of growth and development, and counseling of parents; with
4 or more face-to-face physician visits per month.
90955.................................. End-stage renal disease (ESRD) related services monthly, for patients 2-
11 years of age to include monitoring for the adequacy of nutrition,
assessment of growth and development, and counseling of parents; with
2-3 face-to-face physician visits per month.
90956.................................. End-stage renal disease (ESRD) related services monthly, for patients 2-
11 years of age to include monitoring for the adequacy of nutrition,
assessment of growth and development, and counseling of parents; with
1 face-to-face physician visit per month.
90957.................................. End-stage renal disease (ESRD) related services monthly, for patients
12-19 years of age to include monitoring for the adequacy of
nutrition, assessment of growth and development, and counseling of
parents; with 4 or more face-to-face physician visits per month.
90958.................................. End-stage renal disease (ESRD) related services monthly, for patients
12-19 years of age to include monitoring for the adequacy of
nutrition, assessment of growth and development, and counseling of
parents; with 2-3 face-to-face physician visits per month.
90959.................................. End-stage renal disease (ESRD) related services monthly, for patients
12-19 years of age to include monitoring for the adequacy of
nutrition, assessment of growth and development, and counseling of
parents; with 1 face-to-face physician visit per month.
90960.................................. End-stage renal disease (ESRD) related services monthly, for patients
20 years of age and older; with 4 or more face-to-face physician
visits per month.
90961.................................. End-stage renal disease (ESRD) related services monthly, for patients
20 years of age and older; with 2-3 face-to-face physician visits per
month.
90962.................................. End-stage renal disease (ESRD) related services monthly, for patients
20 years of age and older; with 1 face-to-face physician visit per
month.
90963.................................. End-stage renal disease (ESRD) related services for home dialysis per
full month, for patients younger than 2 years of age to include
monitoring for the adequacy of nutrition, assessment of growth and
development, and counseling of parents.
90964.................................. End-stage renal disease (ESRD) related services for home dialysis per
full month, for patients 2-11 years of age to include monitoring for
the adequacy of nutrition, assessment of growth and development, and
counseling of parents.
90965.................................. End-stage renal disease (ESRD) related services for home dialysis per
full month, for patients 12-19 years of age to include monitoring for
the adequacy of nutrition, assessment of growth and development, and
counseling of parents.
90966.................................. End-stage renal disease (ESRD) related services for home dialysis per
full month, for patients 20 years of age and older.
----------------------------------------------------------------------------------------------------------------

There are four additional CPT codes for ESRD-related services that
are reported on a per-day basis. These daily CPT codes are: 90967 (End-
stage renal disease (ESRD) related services for dialysis less than a
full month of service, per day; for patients younger than 2 years of
age); 90968 (End-stage renal disease (ESRD) related services for
dialysis less than a full month of service, per day; for patients 2-11
years of age); 90969 (End-stage renal disease (ESRD) related services
for dialysis less than a full month of service, per day; for patients
12-19 years of age); and 90970 (End-stage renal disease (ESRD) related
services for dialysis less than a full month of service, per day; for
patients 20 years of age and older).
For the MCP codes displayed in Table 32 of the CY 2011 PFS proposed
rule, the AMA RUC initially recommended 36 minutes of clinical labor
time for the pre-service period. They also recommended an additional 6
minutes in the post-period for CPT codes 90960, 90961, 90962, and
90966. For the four codes describing daily services (CPT codes 90967
through 90970), the AMA RUC recommended including 1.2 minutes of
clinical labor per day, which is the prorated amount of pre-service
clinical labor included in the monthly codes. The AMA RUC also
recommended that CPT codes 90952 and 90953 be contractor-priced.
In the CY 2009 PFS final rule with comment period (73 FR 69898), we
asked the AMA RUC to reconsider their recommended PE inputs in the
interest of making certain that they accurately reflected the typical
direct PE resources required for these services. In addition, we asked
the AMA RUC to review the physician times for CPT codes 90960 and 90961
that are used in the calculation of the PE RVUs. We accepted the work
values for the new CPT codes for ESRD-related services that were
recommended by the AMA RUC.
Since CY 2009, we have continued to calculate the PE RVUs for the
entire series of MCP codes displayed in Table 32 of the CY 2011 PFS
proposed rule (75 FR 40101) by using the direct PE inputs from the
predecessor HCPCS G-codes, except for CPT codes 90952 and 90953 which
are contractor-priced. We have also continued to use the physician time
associated with the predecessor HCPCS G-codes for CPT codes 90960 and
90961 for purposes of calculating the PE RVUs.
In CY 2009, the AMA RUC submitted new recommendations for CPT codes
90951 and 90954 through 90970. For each of the MCP codes (CPT code
90951 and CPT codes 90954 through 90966), the AMA RUC recommended an
increased pre-service clinical staff time of 60 minutes. For each of
the daily dialysis service codes (CPT codes 90967 through 90970), the
AMA RUC

[[Page 73298]]

recommended an increased clinical labor time of two minutes, which is
the prorated amount of clinical labor included in the monthly codes.
The AMA RUC also recommended an additional 38 minutes of physician time
for CPT codes 90960 and 90961. This resulted in a total physician time
of 128 minutes and 113 minutes, respectively, for these codes. The AMA
RUC continued to recommend that CPT codes 90952 and 90953 be
contractor-priced.
For CY 2011, we proposed to accept these AMA RUC recommendations as
more accurate reflections of the typical direct PE resources required
for these services. Therefore, we proposed to develop the PE RVUs for
CPT code 90951 and CPT codes 90954 through 90970 using the direct PE
inputs as recommended by the AMA RUC and reflected in the proposed CY
2011 PE database, which is available on the CMS Web site under the
supporting data files for the CY 2011 PFS proposed rule at: http://www.cms.gov/PhysicianFeeSched/. We also proposed to use the AMA RUC-
recommended physician times for CPT codes 90960 and 90961. Consistent
with the AMA RUC's recommendations, we proposed to continue to
contractor-price CPT codes 90952 and 90953.
We did not receive public comment on our proposal to accept these
AMA RUC recommendations as more accurate reflections of the typical
direct PE resources required for these services. Therefore, we are
finalizing our CY 2011 proposal to develop the PE RVUs for CPT code
90951 and CPT codes 90954 through 90970 using the direct PE inputs as
recommended by the AMA RUC and reflected in the CY 2011 direct PE
database, which is available on the CMS Web site under the supporting
data files for the CY 2011 PFS final rule with comment period at:
http://www.cms.gov/PhysicianFeeSched/. We will also use the AMA RUC-
recommended physician times for CPT codes 90960 and 90961. Consistent
with the AMA RUC's recommendations, we will continue to contractor-
price CPT codes 90952 and 90953.

D. Portable X-Ray Set-Up (HCPCS Code Q0092)

When a portable x-ray is furnished to a single patient, as many as
four component HCPCS codes may be billed and paid for the service,
including the portable x-ray transportation (HCPCS code R0070
(Transportation of portable x-ray equipment and personnel to home or
nursing home, per trip to facility or location, one patient seen)); the
portable x-ray set-up (HCPCS code Q0092 (Set-up of portable x-ray
equipment)); and the professional and technical components of the x-ray
service itself (CPT 70000 series). Currently, the direct PE database
contains x-ray equipment in both the radiology codes in the 70000
series of CPT and HCPCS code Q0092, the code for the set-up of a
portable x-ray. In the technical component of the x-ray service is the
direct PE input of a radiology room which contains x-ray equipment for
the various radiology codes in the 70000 series of CPT. In addition,
portable x-ray equipment is included as a direct PE input for HCPCS
code Q0092. Thus, x-ray equipment currently is recognized within the
direct PE values for two of the HCPCS codes that would be reported for
the portable x-ray service, resulting in an overvaluation of the
comprehensive portable x-ray service.
Therefore, for CY 2011 we proposed to remove portable x-ray
equipment as a direct PE input for HCPCS code Q0092, in order to pay
more appropriately for the x-ray equipment used to furnish a portable
x-ray service. We believe the resulting payment for the comprehensive
portable x-ray service would more appropriately reflect the resources
used to furnish portable x-ray services by providing payment for the x-
ray equipment solely through payment for the technical component of the
x-ray service that is furnished.
Comment: Several commenters opposed the removal of portable x-ray
equipment as a direct PE input for HCPCS code Q0092. The commenters
believe the elimination of the equipment from HCPCS code Q0092 is
inconsistent with longstanding CMS payment policy recognizing the
unique and additional costs incurred by portable x-ray suppliers in
furnishing services that involve special equipment requiring extra
assembly and disassembly time. In addition, the commenters believe that
the proposed equipment elimination conflicts with the statutory mandate
of section 1848(c) of the Act that CMS calculate the PFS RVUs based on
the actual resources used in furnishing a service because equipment is
a legitimate direct PE component of the set-up component service (HCPCS
code Q0092).
Response: We agree that x-ray equipment is used to furnish a
portable x-ray service and the equipment set-up is reported with HCPCS
code Q0092. However, because the portable x-ray set-up service would
always be reported along with the technical component of the x-ray
service (CPT 70000 series) that already includes x-ray equipment as a
direct PE input, to include x-ray equipment again in the PE of the set-
up code would clearly be duplicative. Only one item of equipment, that
is, a single x-ray machine, is used in furnishing the portable x-ray
service. We are, therefore, eliminating the portable x-ray equipment
from HCPCS code Q0092 and, instead, recognizing the cost of such
equipment in the direct PE for the technical component of the x-ray
service.
Comment: According to several commenters, because CMS has not
undertaken a review of all combinations of services paid under the PFS
that together might comprise a ``comprehensive service'' to identify
potentially duplicative direct PE inputs when the services are
furnished together, CMS should refrain from applying the proposed
policy to suppliers of portable x-ray services.
Response: While it would require an extensive analysis to review
all combinations of PFS services that may be furnished together and
identify potentially duplicative PE inputs, the PFS has several
longstanding policies that were adopted to provide appropriate payment
when certain services are furnished together. For example, existing
multiple procedure payment reduction policies reduce payment for the
second and subsequent surgical procedures or technical components of
imaging services when furnished to the same patient by the same
physician on the same day, based partly on the presence of efficiencies
in the PE under such circumstances. Furthermore, as discussed in
section II.C.4. of this final rule with comment period, we are adopting
a new multiple procedure payment reduction policy for CY 2011 for
therapy services because of the duplication in the PE when therapy
services are furnished together. Finally, we note that for those CPT
codes that are designated as add-on codes to primary services, we
ensure that the direct PE inputs do not duplicate inputs in the primary
services. Given our ongoing efforts to more appropriately value
services furnished together, we believe that HCPCS code Q0092
essentially functions as an ``add-on'' code to the primary service that
it generally accompanies, which is the technical component of an x-ray
service. Therefore, we believe it is fully consistent with our ongoing
efforts to recognize efficiencies through payment policy when multiple
services are furnished together to remove the duplicative x-ray
equipment from the direct PE inputs for HCPCS code Q0092.
Comment: A few commenters believe that elimination of x-ray
equipment in HCPCS code Q0092 would have a negative impact on the
financial status

[[Page 73299]]

of portable x-ray suppliers who are typically small business owners.
According to the commenters, CMS should heed the statutory mandates of
the Regulatory Flexibility Act (RFA) which require mitigation of such
adverse effects.
Response: We note that the RFA requires only that we analyze
regulatory options for small businesses that include a justification
for the reason action is being taken, the kinds and number of small
entities the rule affects, and an explanation of any meaningful options
that achieve the objectives with less significant adverse economic
impact on the small entities. The CY 2011 PFS proposed rule included a
regulatory impact analysis (75 FR 40230 through 40245), as does section
XI.A. of this final rule with comment period. As a specialty, the
aggregate impact on portable x-ray suppliers from the PFS changes
proposed for CY 2011 was an increase of 8 percent in the proposed rule
(75 FR 40232), and it is an increase of 6 percent for CY 2011 as
displayed in Table 101 of this final rule with comment period.
Therefore, the combined effect of all final PFS policies for CY 2011
will not adversely impact portable x-ray suppliers.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to remove portable x-ray equipment as a
direct PE input for HCPCS code Q0092.

E. Pulmonary Rehabilitation Services (HCPCS Code G0424)

In the CY 2010 PFS proposed rule (74 FR 33614), we proposed to
create new HCPCS G-code G0424 (Pulmonary rehabilitation, including
aerobic exercise (includes monitoring), per session, per day) to
describe the services of a pulmonary rehabilitation (PR) program as
specified in section 144(a) of the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA). Using CPT code 93797 (Cardiac rehab
without telemetry) as a reference code, we proposed to assign 0.18 work
RVUs and 0.01 malpractice RVUs to G0424. To establish PE RVUs, we
reviewed the PE inputs of similar services, particularly those of the
respiratory therapy HCPCS codes G0237 (Therapeutic procedures to
increase strength or endurance or respiratory muscles, face to face,
one on one, each 15 minutes (includes monitoring)) and G0238
(Therapeutic procedures to improve respiratory function, other than
described by G0237, one on one, face to face, per 15 minutes (includes
monitoring)), as well as the cardiac rehabilitation codes, CPT codes
93797 and 93798 (Physician services for outpatient cardiac
rehabilitation; with continuous ECG monitoring (per session)). In the
CY 2010 PFS final rule with comment period (74 FR 61886), we finalized
our proposal with modifications to the code descriptor and PE inputs,
as recommended by some commenters.
Based on commenters' recommendations from the CY 2010 PFS final
rule with comment period and further information furnished by
stakeholders, for CY 2011 we proposed to increase the work RVUs for
HCPCS code G0424 to 0.28 for CY 2011 to be comparable to the work RVUs
for cardiac rehabilitation with monitoring (CPT code 93798) in view of
the monitoring required for HCPCS code G0424.
We also proposed to increase the clinical labor time for the
respiratory therapist from 15 minutes to 30 minutes and to crosswalk
the PE equipment inputs for HCPCS code G0424 to those for respiratory
treatment services (HCPCS code G0238), which include a 1-channel ECG
and a pulse oximeter. We retained the treadmill currently assigned to
HCPCS code G0424 and adjusted the equipment time to 45 minutes. While
several public commenters recommended this equipment, these commenters
also requested a full 60 minutes of respiratory therapist time be
included in the PE for HCPCS code G0424, comparable to the 15 minutes
of respiratory therapist time included in the one-on-one codes for 15
minutes of respiratory treatment services (HCPCS codes G0237 and
G0238). However, because pulmonary rehabilitation services reported
under HCPCS code G0424 can be furnished either individually or in
groups, we believe that 30 minutes of respiratory therapist time would
be more appropriate for valuing the typical pulmonary rehabilitation
service.
Comment: Many commenters applauded CMS for its proposal to increase
the work RVUs for HCPCS code G0424 to 0.28. While the commenters
supported the increase in work RVUs in the short term, they believe
that an accurate, independent assessment of the work value associated
with physician's office-based pulmonary rehabilitation is the only
reasonable way to determine actual physician work. The commenters
stated that continuing to rely on work values related to cardiac
rehabilitation is flawed, noting that the clinical characteristics of
the cardiac rehabilitation patient are different from the pulmonary
rehabilitation patient. Due to the expected frequency and duration of
acute events, the commenters explained that the pulmonary
rehabilitation patient would require greater physician involvement.
Response: Until we gain more data and experience on the use of this
code to report pulmonary rehabilitation services furnished to Medicare
beneficiaries under the new comprehensive benefit, we believe using the
work RVUs for cardiac rehabilitation with monitoring (CPT code 93798)
as a crosswalk is appropriate for this service. We further note that
the crosswalk methodology is commonly used by the AMA RUC in
recommending work RVUs to us for new or revised codes.
Comment: A number of commenters generally supported the increase in
the clinical labor time for a respiratory therapist from 15 minutes to
30 minutes. While the commenters generally agreed with CMS' reasoning
for not increasing the respiratory therapist time to 60 minutes, the
commenters noted that in the physician's office setting, pulmonary
therapy items and services are routinely provided one-on-one, face-to-
face, requiring 60 minutes of individualized therapy services by a
respiratory therapist. Some commenters believe that the proposal to
increase the respiratory therapist time to only 30 minutes would place
physicians at an economic disadvantage in the provision of pulmonary
rehabilitation items and services when furnished in an office setting
due to the limited amount of office space available to treat more than
one patient in the same time period. One commenter suggested that the
respiratory therapist time be increased to 45 minutes or that CMS
consider the development of a HCPCS code for the provision of pulmonary
rehabilitation items and services to patients on a one-on-one, face-to-
face per 15 minute basis to ensure that physicians can provide this
service in the office setting. Another commenter believed that HCPCS
code G0424 is undervalued at 0.46 PE RVUs in comparison to the PE RVUs
for other PFS services that are conceptually similar but do not include
a treadmill, arm ergometer, monitoring devices, or emergency carts.
Response: Payment for services under the PFS is resource-based, and
individual services are valued based upon the resources needed to
provide the typical service. As we noted in the CY 2011 PFS proposed
rule (75 FR 40103), pulmonary rehabilitation services reported under
HCPCS code G0424 can be furnished either individually or in groups and
we continue to believe that 30 minutes of respiratory therapist time is
appropriate for valuing the typical pulmonary rehabilitation service.
We believe that

[[Page 73300]]

pulmonary rehabilitation in the physician's office is most commonly
furnished to a group of patients, rather than one-on-one for 60 minutes
of respiratory therapist time. Regarding the commenter who was
concerned that the PE for HCPCS code G0424 was undervalued in
comparison to similar services that do not use the equipment necessary
for HCPCS code G0424, we note that we have utilized the standard PFS PE
methodology to develop the PE RVUs for HCPCS code G0424 based on the
direct PE inputs we consider to be appropriate.
Comment: One commenter suggested that the valuing of HCPCS code
G0424 is flawed and does not fully account for the inclusion of all
professionals who are involved in the pulmonary rehabilitation program,
specifically physical therapists. In addition, the commenter referenced
the CY 2010 PFS final rule with comment (74 FR 61884) where CMS stated
and recognized that physical therapists provide pulmonary
rehabilitation services. The commenter believes that by only basing the
value on services performed by respiratory therapists, CMS has
miscalculated the payment for the comprehensive, multidisciplinary
pulmonary rehabilitation program and recommended that CMS create a
separate HCPCS code with a higher value that could be used to delineate
those patients who require individualized physical therapy within the
pulmonary rehabilitation program.
Response: Like all services paid under the PFS, pulmonary
rehabilitation is valued based on the staff type who would typically
perform this service, a respiratory therapist. Because the items and
services furnished by a pulmonary rehabilitation program are
individualized, we expect that evaluations and individualized
treatments would be conducted by one or more members of the
multidisciplinary team of the pulmonary rehabilitation program with the
appropriate expertise. Therefore, individualized treatment by a
physical therapist would be furnished when required by the patient as
part of the pulmonary rehabilitation plan of care. However, we do not
believe individualized treatment would be typical and, therefore, we do
not believe the creation of a separate HCPCS code with a higher value
is necessary to recognize those cases that require individualized
physical therapy as part of a pulmonary rehabilitation program.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to increase the work RVUs for HCPCS
code G0424 to 0.28 for CY 2011 to be comparable to the work RVUs for
cardiac rehabilitation with monitoring (CPT code 93798). In addition,
we are finalizing our CY 2011 proposal to increase the clinical labor
time for the respiratory therapist from 15 minutes to 30 minutes and to
crosswalk the PE equipment inputs for HCPCS code G0424 to those for
respiratory treatment services (HCPCS code G0238), which include a 1-
channel ECG and a pulse oximeter.

F. Application of Tissue Cultured Skin Substitutes to Lower Extremities
(HCPCS Codes G0440 and G0441)

There are currently two biological products, Apligraf and
Dermagraft, which are FDA-approved for the treatment of diabetic foot
ulcers. While commonly used by podiatrists for this purpose, these
products are also used by other specialists in the treatment of other
clinical conditions, such as burns.
Many Medicare contractors have established local coverage
determinations specifying the circumstances under which these services
are covered. In the case of diabetic foot ulcers, clinical studies of
Apligraf application were based on up to 5 treatments over a 12-week
period. In contrast, Dermagraft was applied weekly, up to 8 treatments
over a 12-week period.
The skin substitute CPT codes were reviewed and new codes were last
created by the CPT Editorial Panel for CY 2006. There are currently 2
skin repair CPT codes that describe Apligraf application, one primary
code, CPT code 15340 (Tissue cultured allogeneic skin substitute; first
25 sq cm or less) and one add-on code, CPT code 15341 (Tissue cultured
allogeneic skin substitute; each additional 25 sq cm, or part thereof
(List separately in addition to code for primary procedure)) and 4
codes that describe Dermagraft application, two initial codes based on
body area, CPT codes 15360 (Tissue cultured allogeneic dermal
substitute, trunk, arms, legs; first 100 sq cm or less, or 1% of body
area of infants and children) and 15365 (Tissue cultured allogeneic
dermal substitute, face, scalp, eyelids, mouth, neck, ears, orbits,
genitalia, hands, feet, and/or multiple digits; first 100 sq cm or
less, or 1% of body area of infants and children) and two add-on codes,
CPT codes 15361 (Tissue cultured allogeneic dermal substitute, trunk,
arms, legs; each additional 100 sq cm, or each additional 1% of body
area of infants and children, or part thereof (List separately in
addition to code for primary procedure)) and 15366 (Tissue cultured
allogeneic dermal substitute, face, scalp, eyelids, mouth, neck, ears,
orbits, genitalia, hands, feet, and/or multiple digits; each additional
100 sq cm, or each additional 1% of body area of infants and children,
or part thereof (List separately in addition to code for primary
procedure)).
In the CY 2011 PFS proposed rule (75 FR 40103), we noted that
several stakeholders had expressed concern about the appropriateness
and equity of the coding and payment for these services, given their
similar uses and the office resources required when the products are
applied repeatedly over a number of weeks for treatment of lower
extremity ulcers. They were concerned that current coding, with the
associated payment policies and relative values, does not provide for
appropriate payment for the services based on how they are furnished.
In addition, some stakeholders believe that the current coding and
payment provides a financial incentive for the selection of one tissue
cultured product over another, rather than facilitating clinical
decision-making based solely on the most clinically appropriate product
for the patient's case. For example, the Dermagraft and Apligraf
application codes have 90-day and 10-day global periods, respectively,
and their current values include several follow-up office visits. When
patients are treated periodically with repeated applications of the
products over several weeks, the patients may be seen in follow-up by
the physician. However, those encounters would not be evaluation and
management visits but, instead, would be procedural encounters that
would typically be valued differently under the PFS than the follow-up
office visits currently included in the values for the Dermagraft and
Apligraf application codes. Furthermore, while different stakeholders
indicated that debridement and site preparation are variably performed
when these products are applied, the CPT codes for Dermagraft
application allow separate reporting of these preparation services when
they are performed, while the Apligraf application codes bundle these
services. Since CY 2006, the PFS has accepted the AMA RUC work and PE
recommendations for the Dermagraft and Apligraf application codes and
has paid accordingly.
With respect to Medicare payment policy, some Medicare contractors
allow the use of modifier -58 (Staged or related procedure or service
by the same physician during the postoperative period) to be reported
with the skin substitute application codes and provide full payment for
the service

[[Page 73301]]

each time it is performed, even if the subsequent application(s) is
within the global period of the service. Other contractors do not allow
the use of modifier -58 and, therefore, provide a single payment for a
series of applications over 90 days or 10 days, as applicable to the
particular code reported for the product's initial application.
Because of the current inconsistencies in valuing similar skin
substitute application services and the common clinical scenarios for
their use for Medicare beneficiaries, in the CY 2011 PFS proposed rule
(75 FR 40103), we stated that we believe it would be appropriate to
temporarily create Level II HCPCS G-codes to report application of
tissue cultured skin substitutes applied to the lower extremities in
order to provide appropriate and consistent payment for the services as
they are commonly furnished. Therefore, we proposed to create two new
HCPCS G-codes for CY 2011, GXXX1 (Application of tissue cultured
allogeneic skin substitute or dermal substitute; for use on lower limb,
includes the site preparation and debridement if performed; first 25 sq
cm or less) and GXXX2 (Application of tissue cultured allogeneic skin
or dermal substitute; for use on lower limb, includes the site
preparation and debridement if performed; each additional 25 sq cm),
that would be recognized for payment under the PFS for the application
of Apligraf or Dermagraft to the lower limb. These codes would not
allow separate reporting of CPT codes for site preparation or
debridement. We emphasized that we would expect that the use of these
HCPCS G-codes for payment under Medicare would be temporary, while
stakeholders work through the usual channels to establish appropriate
coding for these services that reflects the current common clinical
scenarios in which the skin substitutes are applied. Furthermore, we
stated that we would expect to receive recommendations from the AMA RUC
for appropriate work values and direct practice expense inputs for the
applicable codes, according to the usual process for new or revised
codes.
Under the PFS, as a temporary measure, the HCPCS G-codes would be
assigned a 0-day global period so payment would be made each a time a
covered service was furnished. We proposed to base payment on the
physician work relative values and the direct PE inputs for the
existing CPT codes for Apligraf application, with adjustments for the
global period differences because the HCPCS G-codes and the Apligraf
application CPT codes. These CPT codes resemble the new HCPCS G-codes
in terms of wound size description and the inclusion of site
preparation and debridement in their current values so we believe they
appropriately represent the physician work involved in the proposed
HPCPCS G-codes. However, we proposed to adjust the work RVUs of the
Apligraf application codes to derive the HCPCS G-code proposed CY 2011
work values by extracting the values for any office visits and
discharge day management services because the HCPCS G-codes have a 0-
day global period. In addition, we proposed to adjust the direct PE
inputs of the Apligraf application codes to develop the proposed CY
2011 direct PE inputs of the HPCPS G-codes that have a 0-day global
period.
Our crosswalks and adjustments resulted in proposed CY 2011 work
RVUs of 2.22 for HPCPCS code GXXX1 and 0.50 for HCPCPS GXXX2. The
proposed direct PE inputs for HCPCS codes GXXX1 and GXXX2 are included
in the direct PE database for the CY 2011 proposed rule that is posted
on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp.
We noted that many Medicare contractors currently have local
coverage policies that specify the circumstances under which Medicare
covers the application of skin substitutes. The local coverage policies
may include diagnostic or prior treatment requirements, as well as
frequency limitations on the number and periodicity of treatments. We
stated our expectation that these policies would be updated in the
context of the temporary new HCPCS G-codes that we proposed for use in
CY 2011 to report the application of tissue cultured allogeneic skin or
dermal substitutes. We proposed to establish the HCPCS G-codes for
temporary use in CY 2011 in order to improve the consistency and
resource-based nature of PFS payments for skin substitute application
services that require similar resources. However, we noted our
continued interest in ensuring that skin substitutes are properly
utilized for Medicare beneficiaries who will benefit from that
treatment. We indicated that we would continue to monitor the
utilization of these services and plan to identify any concerning
trends in utilization that contractors may want to examine further
through medical review or other approaches.
Comment: While acknowledging concerns with the existing CPT codes
for the application of skin substitutes, several commenters opposed the
proposed HCPCS G-codes because the commenters believe that CMS should
wait for new codes to be created by the CPT Editorial Panel and the
associated recommendations to be developed by the AMA RUC for physician
work and direct PE inputs for any new codes. The commenters argued that
CMS' proposal to create new temporary codes would circumvent or
otherwise influence the well-established processes already underway to
address issues identified by the stakeholders. Several commenters
pointed out that CMS' proposal would not treat the application of skin
substitutes that are not tissue cultured similarly to the procedures
for the application of Apligraf and Dermagraft. Because these
commenters argued that inconsistencies in coding and payment for the
other products would continue, several commenters recommended that CMS
await a more comprehensive solution from the CPT Editorial Panel.
On the other hand, a number of commenters supported the proposal to
establish the two new HCPCS G-codes, and a few of these commenters
recommended no changes to the proposed HCPCS code descriptors. However,
one commenter who generally supported the proposal recommended that CMS
expand the proposed HCPCS code descriptors to incorporate the
application of a broader range of skin substitutes that were not tissue
cultured, specifically to include the application of biologically
active skin substitutes.
Another commenter requested that CMS clarify the meaning of
``dermal substitute.'' This commenter also requested that CMS delete
the words ``for use on lower limb'' and allow the new codes to be used
for application of tissue cultured skin or dermal substitutes on
locations other than the lower limb. Consistent with this perspective,
the commenter further recommended that CMS not recognize the existing
CPT codes for application of Apligraf and Dermagraft on other areas of
the body. The commenter argued that, as proposed, the HCPCS G-codes
would lead to confusion and the potential for fraudulent billing
because both a HCPCS G-code and a CPT code could describe the
application of the same product to the lower extremities. The commenter
believes that CMS should only recognize the proposed G-codes under the
PFS for the application of tissue cultured skin or dermal substitutes
to any body site, to allow for consistency in reporting and payment of
these services.
Several commenters requested that CMS provide guidance on the
proper use of the current CPT codes and new HCPCS G-codes for reporting
the application of skin substitutes. Other

[[Page 73302]]

commenters were concerned that the temporary HCPCS G-codes could create
confusion, disrupt physician's office billing policies, and otherwise
burden coding staff and advised CMS to not finalize the proposal.
Response: We appreciate the perspectives of stakeholders and we
share the commenters' desire for appropriate and consistent payment
that is resource-based for the application of skin substitutes as these
services are commonly furnished for appropriate clinical indications.
We appreciate and value the work of the CPT Editorial Panel in
evaluating the complexities and nuances in this area and look forward
to reviewing any new codes created for CY 2012 or later years and the
AMA RUC recommendations for the physician work and direct PE inputs for
those new codes. We note that there are no new codes for CY 2011 that
describe the application of skin substitutes and, therefore, new codes
would not be available before CY 2012 at the earliest.
In proposing to create two temporary HCPCS G-codes for CY 2011, we
sought a fair and balanced temporary alternative to provide appropriate
and equitable payment for the application of tissue cultured skin or
dermal substitutes to the lower extremities. While we understand from
stakeholders that the work of the CPT Editorial Panel is ongoing in
this area, our proposal was specifically to establish temporary HCPCS
G-codes that would allow for more appropriate reporting and payment
under certain scenarios in the short term while a more comprehensive
solution is being developed and refined by expert advisors. Because our
proposal was so limited in scope and temporary, clearly it was not our
intention to circumvent or unduly influence the CPT Editorial Panel or
the AMA RUC as these groups proceed in their comprehensive work to
establish new codes and values for the application of skin substitutes.
We would also not expect that the characteristics of the temporary
HCPCS G-codes, in terms of terminology in the code descriptors, global
periods, work values, or direct PE inputs, should shape or otherwise
affect the ongoing work of stakeholders who are developing a complete
approach to coding for the application of skin substitutes. We
acknowledge that new CPT codes and their AMA RUC-recommended values and
direct PE inputs arising from these processes may appropriately differ
in one or multiple characteristics from the temporary HCPCS G-codes.
With regard to the commenters who were concerned about the limited
scope of our proposal and suggested that we not proceed or that we
broaden the scope of the proposed code descriptors to address
inequities and inconsistencies that the commenters believe would
persist under our proposal, we believe that the limited proposal
continues to be the most appropriate temporary approach for CY 2011.
First, it was not our intention to comprehensively address the issue of
coding revisions for the application of skin substitutes because we are
aware of the ongoing work of the CPT Editorial Panel in this area and
would not want to undermine its deliberative process. Moreover, based
on the public comments we received, we have reason to believe that a
revised coding structure for the application of skin substitutes will
be available soon. Second, the HCPCS G-codes that we proposed had a 0-
day global period based on the FDA-approved indications and regimens
for the application of the tissue cultured products to which the codes
would apply, and we are not certain to what extent a 0-day global
period would be appropriate for the application of other skin
substitutes. Third, while several commenters provided suggestions
regarding alternative language that could be used in the HCPCS G-code
descriptors, it is unclear which skin substitutes products would be
incorporated under the revised terms. Some of the suggested
alternatives would use phrases such as ``biologically active'' that, as
far as we know, are not fully defined in the medical community and are
not currently used in the CPT code descriptors that describe the
application of skin substitutes. Because of our uncertainty in this
regard, we would be hesitant to make such significant revisions to the
HCPCS G-code descriptors without the opportunity for public notice and
comment, which would allow stakeholders the opportunity to provide
input about revised code descriptors and the appropriateness of the
values for the HCPCS G-codes. In contrast, our proposal relied upon the
use of terms in the HCPCS G-code descriptors that are already included
in the descriptors for established CPT codes and, therefore, we do not
believe we would be setting a precedent that would affect the current
work of the CPT Editorial Panel on this issue. Finally, we do not see a
need to further clarify terms, such as ``dermal substitute,'' in the
HCPCS G-code descriptors because these are currently used in the CPT
code descriptors and the same definitions would apply to the G-codes.
Furthermore, we believe it would continue to be appropriate to
recognize the existing CPT codes for the application of tissue cultured
skin or dermal substitutes to areas of the body other than the lower
extremities. We established the 0-day global period, the physician work
values, and the direct PE inputs for the proposed HCPCS G-codes based
on the specific clinical scenarios where Apligraf or Dermagraft would
be applied to treat lower extremity ulcers. We do not necessarily
believe that the same global periods and values would be appropriate
for the application of these products to other body areas under
different clinical scenarios. The usual coding guidance that providers
should report the most specific HCPCS code that describes the service
furnished would apply in the case of the application of Apligraf or
Dermagraft. If one of these products were applied to the lower
extremities, we would expect the HCPCS G-codes to be reported, rather
than the CPT codes, as the HCPCS G-codes are more specific to
application in that body area.
Finally, because it is our common practice to create one or more
new HCPCS G-codes for payment under the PFS each year, we believe that
physicians' offices are experienced in integrating new codes into the
reporting of services furnished and paid under the PFS. Not only are
local coverage determinations commonly applicable to the application of
skin substitutes, we also understand that there are a subset of
physicians who regularly apply tissue cultured skin or dermal
substitutes to lower extremities to treat ulcers. In this context, we
believe that our national educational efforts, in addition to education
by local contractors, will quickly disseminate information to the
relevant practitioners about these new HCPCS G-codes and their
appropriate use in CY 2011.
After consideration of the public comments we received, we are
finalizing our proposal, with editorial modification, to create two new
HCPCS G-codes for reporting the application of tissue cultured skin
substitutes and dermal substitutes to the lower extremities in CY 2011.
For internal consistency, we are changing the descriptors of HCPCS
codes GXXX1 and GXXX2 from the proposed language to both refer to
``skin substitute or dermal substitute.'' HCPCS code GXXX2 as proposed
read ``Application of tissue cultured allogeneic skin or dermal
substitute; for use on lower limb, includes the site preparation and
debridement if performed; each additional 25 sq cm.'' The final codes
are HCPCS code G0440 (Application of

[[Page 73303]]

tissue cultured allogeneic skin substitute or dermal substitute; for
use on lower limb, includes the site preparation and debridement if
performed; first 25 sq cm or less) and HCPCS code G0441 (Application of
tissue cultured allogeneic skin substitute or dermal substitute; for
use on lower limb, includes the site preparation and debridement if
performed; each additional 25 sq cm) that will be recognized for
payment under the PFS in CY 2011.
Comment: A number of commenters supported the assignment of a 0-day
global period to the application of tissue cultured skin or dermal
substitutes. Many expressed the view that assigning a 0-day global
period to the codes would allow the products to be prescribed and
administered based on their clinical value, without concern for payment
differences between products. The commenters who did not support the 0-
day global period were those who believe that the proposal would
further payment inequities between products used similarly. For
example, one commenter reasoned that, insofar as a patient is likely to
require multiple administrations of a skin substitute product during a
90-day period, providers would have a significant incentive to use the
products whose application would be reported under the proposed codes
rather than a product whose application procedure continues to have a
90-day global period.
Another commenter addressed the bundling of site preparation and
debridement into the proposed HCPCS codes GXXX1 and GXXX2. The
commenter argued that the proposed values for the new codes HCPCS G-
codes would not be sufficient to account for this work. The commenter
recommended that the proposed values should be adjusted upward or
separate payment should be allowed for site preparation and/or
debridement.
In reviewing CMS' proposed methodology for setting the physician
work values for the HCPCS G-codes, one commenter contended that CMS
should finalize a total of 2.86 works RVUs for GXXX1 instead of the
proposed 2.22 work RVUs. The commenter claimed that the work RVUs for
GXXX1 should be crosswalked from CPT code 15340 less only the physician
work for the two post-procedure visits in CPT code 15340 which are not
included in HCPCS code GXXX1.
Another commenter recommended that CMS review the proposed PE
inputs for the new HCPCS G-codes. Specifically, the commenter explained
that the only difference in clinical labor time between CPT code 15340
and HCPCS code GXXX1 should be an adjustment to account for the
difference in the global period (10 days for CPT code 15340 and 0 days
for HCPCS code GXXX1). The commenter also stated that HCPCS code GXXX1
should include all the pre-service clinical staff time in CPT code
15340, yet did not for the proposed rule. The commenter was unclear on
whether the post-service clinical labor time was properly adjusted to
account for the change in global period from CPT code 15340 to HCPCS
code GXXX1.
Response: We agree with the commenters that a 0-day global period
is the most appropriate for the application of tissue cultured skin
substitutes or dermal substitutes to the lower limb for purposes of the
temporary HCPCS G-codes, pending a comprehensive change in coding
established by the CPT Editorial Panel. As discussed in the previous
response, we sought a fair and balanced temporary solution to provide
appropriate and consistent payment for the application of tissue
cultured skin substitutes or dermal substitutes to the lower limb. The
commenters who did not support the 0-day global period were those who
were more broadly against the creation of the new HCPCS G-codes codes
because of potential payment imbalances between products that would be
included in the new codes and those that would not be. No commenters
asserted that the 0-day global period would be inappropriate for the
codes to which we proposed to apply that period.
The proposed physician work values for HCPSC G-codes G0440 and
G0441 (proposed as HCPCS codes GXXX1 and GXXX2, respectively) were
crosswalked, with adjustment for the different global periods, from CPT
codes 15340 and 15341. CPT codes 15340 and 15341 currently include site
preparation and debridement and, as such, the additional reporting of a
separate CPT code for these activities, if performed on the same site
as the skin substitute application procedure, is not permitted. We
believe that the values for both the current CPT codes and the HCPCS G-
codes are clinically appropriate for the services they describe, with
payment for site preparation and debridement bundled if furnished.
In response to a commenter's concern, we reviewed the proposed
valuation of the physician work for HCPCS codes G0440 and G0441 to
ensure consistency with our proposed methodology, and we continue to
believe that the appropriate work value for HCPCS code G0440 is 2.22
RVUs as we proposed. HCPCS code G0440 was crosswalked to CPT code
15340, with adjustments to account for the 0-day global period of the
HCPCS G-code. CPT code 15340, with a 10-day global period, is currently
valued to include two CPT code 99212 (level 2 established patient
office or other outpatient visit) post-operative visits (0.48 RVUs
each, 0.96 RVUs total) and half of one CPT code 99238 (Hospital
discharge day management; 30 minutes or less) visit (1.28 RVUs each,
0.64 RVUs total). CPT code 15340 has a current total physician work
value of 3.82 RVUs. To adjust for the 0-day global period for the minor
procedure described by HCPCS code G0440, we believe it would be
appropriate to deduct the value of both the two post-operative office
visits and the discharge day visit. In the case of post-operative
office visits, these may be separately reported and paid if medically
reasonable and necessary. In addition, we also do not believe that a
half discharge day visit should be a building block based on the
clinical characteristics of the procedure described by HCPCS code
G0440. When we make these adjustments to the work value of 3.82 RVUs
for CPT code 15340, 2.22 work RVUs, the value we proposed for HCPCS
code G0440, remain.
We also reviewed the proposed PE inputs included in the direct PE
database for the CY 2011 PFS proposed rule. Like the physician work
values, to determine the PE inputs we crosswalked HCPCS code G0440 from
CPT code 15340 and HCPCS code G0441 from CPT code 15341. As one
commenter observed, the difference in the values should reflect the
shift from a 10-day global period to a 0-day global period. However,
for PE inputs, the change in global period typically affects both the
pre- and post-service PE inputs. To establish the post-operative
clinical labor time for HCPCS code G0440, we subtracted out the time
associated with the two CPT code 99212 visits that were removed (32
minutes total) and the half discharge day visit (19 minutes total) that
was eliminated, bringing the post-operative clinical labor time down
from 54 minutes to three minutes. For the pre-service activities, while
0-day global period procedures generally have 0 minutes of pre-service
clinical labor time allocated to them, we believe that 5 minutes in the
nonfacility setting and 10 minutes in the facility setting reflect more
appropriate pre-service clinical labor times in the instance of HCPCS
code G0440. These revised pre- and post-service clinical labor times
were reflected in the proposed CY 2011 direct PE database for HCPCS
code G0440.
While we valued the physician work and clinical labor time PE
inputs

[[Page 73304]]

according to the crosswalk methodology as described in the CY 2011 PFS
proposed rule (75 FR 40103 through 40104), upon review of the new CY
2011 HCPCS G-codes for this final rule with comment period, we noticed
that we had not applied the proposed methodology to the PE inputs for
equipment and supplies. Therefore, consistent with our proposal, we
have adjusted the supply and equipment PE inputs for HCPCS codes G0440
and G0441 in the final CY 2011 PE database to reflect the shift to a 0-
day global period from a 10-day global period for these HCPCS codes. As
the equipment and supply PE inputs for the 10-day global period CPT
codes reflect those necessary for multiple visits to the provider, the
equipment and supply inputs for the new HCPCS G-codes codes should
reflect more appropriate values for codes with a 0-day global period.
After consideration of the public comments we received, we are
finalizing our proposal to value HCPCS codes G0440 and G0441 as 0-day
global procedures into which site preparation and debridement are
bundled. As we proposed, under our final policy we have crosswalked the
physician work RVUs and direct PE inputs from CPT codes 15340 and 15341
to HCPCS codes G0440 and G0441, respectively, with adjustments. We have
adjusted the work RVUs and the direct PE inputs (clinical labor,
equipment, and supplies) to reflect the shift from a 10-day global
period to a 0-day global period for the new HCPCS G-codes.
Comment: Several commenters were concerned about the use of the -58
modifier for 10-day and 90-day global surgical procedures for the
application of skin substitutes when repeated application of a product
within the global period is the typical case. The commenters were
largely supportive of eliminating the use of the -58 modifier for the
two new HCPCS codes which, the commenters remarked, has been the source
of some confusion and has been interpreted inconsistently by Medicare
contractors. The commenters explained that the change to a 0-day global
period would result in no need for the -58 modifier to be reported with
the HCPCS G-codes. Several commenters recommended that CMS provide
guidance on use of the -58 modifier with the existing CPT codes for the
application of skin substitutes, most of which have 90-day global
period and all of which would continue to be recognized for payment
under the PFS.
Response: Assignment of a 0-day global period for the two HCPCS G-
codes eliminates the need for use of the -58 modifier with these two
new codes. We recognize that the -58 modifier may continue to be used
in conjunction with the other CPT codes with 10-day or 90-day global
periods for the application of skin substitutes. Specific
determinations of the appropriate use of the -58 modifier will continue
to be the responsibility of individual Medicare contractors.
In summary, after consideration of the public comments we received,
we are finalizing our CY 2011 proposal, with modification to adjust the
supply and equipment direct PE inputs, as well as editorial
modification to the code descriptors for consistency, to create two new
HCPCS G-codes for CY 2011, G0440 (Application of tissue cultured
allogeneic skin substitute or dermal substitute; for use on lower limb,
includes the site preparation and debridement if performed; first 25 sq
cm or less) and G0441 (Application of tissue cultured allogeneic skin
substitute or dermal substitute; for use on lower limb, includes the
site preparation and debridement if performed; each additional 25 sq
cm), that will be recognized for payment under the PFS for the
application of products described by the codes to the lower limb. These
codes do not allow separate reporting of CPT codes for site preparation
or debridement. Providers reporting the application of tissue cultured
allogeneic skin substitute or dermal substitutes to the lower limb for
payment under the PFS in CY 2011 should report HCPCS code G0440, along
with HCPCS code G0441 if applicable based on wound size, and not CPT
code 15340, 15341, 15360, 16361, 15365, or 15366.
Under the PFS, as a temporary measure, the HCPCS G-codes are
assigned a 0-day global period so payment is made each a time a covered
service is furnished. As proposed, we are basing payment on the
physician work relative values and the direct PE inputs for the
existing CPT codes 15340 and 15341 for Apligraf application, with
adjustments for the global period differences between the HCPCS G-codes
and the Apligraf application CPT codes. However, as we proposed, we
have adjusted the work RVUs of the Apligraf application codes to derive
the final CY 2011 HCPCS G-code work values by extracting the values for
any office visits and discharge day management services because the
HCPCS G-codes have a 0-day global period. In addition, with
modifications of our proposed PE equipment and supply inputs to be
fully consistent with our crosswalk proposal, we have adjusted the
direct PE inputs of the Apligraf application codes to develop the final
CY 2011 direct PE inputs for the HPCPS G-codes that have a 0-day global
period.
Our crosswalks and adjustments result in CY 2011 final work RVUs of
2.22 for HCPCS code G0440 and 0.50 for HCPCS G0441. The final direct PE
inputs for HCPCS codes G0440 and G0442 are included in the direct PE
database for the CY 2011 PFS final rule with comment period rule.

G. Canalith Repositioning (CPT code 95992)

For CY 2009, CPT created a new code for canalith repositioning,
specifically CPT code 95992 (Canalith repositioning procedure(s) (eg,
Epley maneuver, Semont maneuver), per day). This service may be
furnished by both physicians and therapists. Although we accepted the
AMA RUC-recommended work RVUs and PE inputs, we initially bundled this
procedure on an interim basis in the CY 2009 PFS final rule with
comment period (73 FR 69896), indicating that we believed it would be
paid through the E/M service that it would accompany. Subsequently, in
view of concerns from therapists who cannot furnish E/M services, we
clarified that therapists could report one of the generally defined
therapy CPT codes when canalith repositioning was furnished. In the CY
2010 PFS final rule with comment period (74 FR 61766), we changed the
code's status under the PFS to ``not recognized for payment under
Medicare,'' consistent with our expectation that another payable code
would be reported when the service was furnished.
Based on further information from stakeholders regarding the
distinct and separate nature of this procedure from an E/M service and
their request that we recognize this CPT code for payment, similar to
our separate payment for most other procedures commonly furnished in
association with an E/M service, we proposed to recognize CPT code
95992 for payment under the CY 2011 PFS, consistent with our typical
treatment of most other codes for minor procedures. In doing so, we
proposed to change the code's status to ``A'' and utilize the CY 2009
RUC recommendations for work RVUs (0.75) and PE inputs for establishing
its payment in CY 2011. (That is, status ``A'' means Active code. These
codes are separately payable under the PFS if covered.) Because
canalith repositioning (CPT code 95992) can be furnished by physicians
or therapists as a therapy service under a therapy plan of care or by
physicians as physicians' services outside of a therapy plan of care,
we would add CPT code

[[Page 73305]]

95992 to the ``sometimes therapy'' list on the therapy code abstract
file.
Comment: Many commenters supported CMS' proposal to acknowledge the
distinct and separate nature of CPT code 95992 from an E/M service by
recognizing CPT code 95992 for separate payment and agreed with the
proposed use of the AMA RUC- recommended values for work RVUs (0.75)
and PE inputs for establishing payment in CY 2011.
Response: We appreciate the commenters' support for our proposal.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to recognize CPT code 95992 for payment
under the PFS. As a result, the code's status has been changed to ``A''
in Addendum B to this final rule with comment period and the CY 2009
AMA RUC recommendations for work RVUs (0.75) and PE inputs will be used
for establishing its payment in CY 2011. (That is, status ``A'' means
Active code. These codes are separately payable under the PFS if
covered.) CPT code 95992 has also been added to the ``sometimes
therapy'' list on the therapy code abstract file.

H. Intranasal/Oral Immunization Codes (CPT codes 90467, 90468, 90473,
and 90474)

To ensure that the PE RVUs are consistent between the intranasal/
oral and injectable immunization administration CPT codes that describe
services that utilize similar PE resources, we proposed to crosswalk
the PE values for CPT code 90471 (Immunization administration (includes
percutaneous, intradermal, subcutaneous, or intramuscular injections);
one vaccine (single or combination vaccine/toxoid)) to CPT codes 90467
(Immunization administration younger than age 8 years (includes
intranasal or oral routes of administration) when the physician
counsels the patient/family; first administration (single or
combination vaccine/toxoid), per day) and 90473 (Immunization
administration by intranasal or oral route; one vaccine (single or
combination vaccine/toxoid)).
Similarly, we also proposed to crosswalk the PE values for CPT code
90472 (Immunization administration (includes percutaneous, intradermal,
subcutaneous, or intramuscular injections); each additional vaccine
(single or combination vaccine/toxoid) (List separately in addition to
code for primary procedure)) to CPT codes 90468 (Immunization
administration younger than age 8 years (includes intranasal or oral
routes of administration) when the physician counsels the patient/
family; each additional administration (single or combination vaccine/
toxoid), per day (List separately in addition to code for primary
procedure)) and 90474 (Immunization administration by intranasal or
oral route; each additional vaccine (single or combination vaccine/
toxoid) (List separately in addition to code for primary procedure)).
Comment: Many commenters expressed support for the proposal. One
commenter questioned why the PE values are currently different and
several other commenters urged CMS to utilize the AMA RUC
recommendations and the resource-based methodology to develop PE RVUs
for these services in CY 2011, rather than crosswalk the PE RVUs.
Response: We appreciate the support from the commenters for our
proposal. We would note that, even with the same direct PE inputs,
somewhat different PE RVUs for the various CPT codes may result from
our PE methodology that relies upon the historical specialty mix, as
reflected in the most recent PFS utilization data, of providers who
furnished the services to allocate the indirect PE. Therefore, because
we believe it is especially important to have consistent PE values for
payment of these similar services under the PFS, we are unable to
utilize the AMA RUC direct PE input recommendations and the resource-
based methodology to develop PE RVUs for these services. While in
general we value services under the PFS with reference to the direct PE
inputs recommended by the AMA RUC and our standard resource-based
approach to establishing PE RVUs, we note that we also commonly use
crosswalks to other similar codes to establish the values for services
in certain circumstances. In this instance, we believe a crosswalk is
particularly appropriate in order to maintain appropriate relativity
between similar services and avoid the potential for non-clinically-
based bias in favor of one vaccine administration technique over
another.
Comment: A few commenters questioned why the CY 2011 proposed rule
referenced ``physician'' counseling when identifying CPT codes 90467
and 90468 and requested clarification that nurse practitioners (NPs)
and physician assistants (PAs) also be included within the scope of
this proposal.
Response: We would like to clarify that the reference to
``physician'' counseling noted by the commenters is part of the
official CPT code descriptors for CPT codes 90467 and 90468. Consistent
with our usual interpretation of CPT codes that include the term
physician in the code descriptor, for Medicare payment purposes this
specificity does not exclude NPs or PAs from providing counseling to
the patient/family that is within the NP's or PA's scope of practice.
Comment: Several commenters recommended modifying the proposal by
crosswalking the PE RVUs for CPT code 90466 (Immunization
administration younger than age 8 years of age (includes percutaneous,
intradermal, subcutaneous, or intramuscular injections) when the
physician counsels the patient/family; each addition injection (single
or combination vaccine/toxoid) per day (List separately in addition to
code for primary procedure)) to CPT code 90468 to achieve parity and
reflect the additional clinical time and other practice expenses
expended to provide immunizations to young children.
Response: For CY 2011, the CPT Editorial Panel revised the
reporting of immunization administration services for the pediatric
population. As a result, CPT codes 90466 and 90468 have been deleted
and replaced with CPT code 90461 (Immunization administration through
18 years of age via any route of administration, with counseling by
physician or other qualified health professional; each additional
vaccine/toxoid component (List separately in addition to code for
primary procedure)). In addition, CPT codes 90465 (Immunization
administration younger than 8 years of age (includes percutaneous,
intradermal, subcutaneous, or intramuscular injections) when the
physician counsels the patient/family; first injection (single or
combination vaccine/toxoid), per day) and 90467 were deleted and
replaced with CPT code 90460 (Immunization administration through 18
years of age via any route of administration, with counseling by
physician or other qualified health care professional; first vaccine/
toxoid component).
We agree with the commenters who believe that consistency in the PE
RVUs across CPT codes with different code descriptors reflecting
immunization services to different populations or using different
routes of administration is desirable. As a matter of longstanding
policy (69 FR 66307), we have crosswalked the nonfacility PE value from
CPT code 96372 (Therapeutic, prophylactic, or diagnostic injection
(specify substance or drug); subcutaneous or intramuscular)
[predecessor CPT codes 90782 and 90772] to the PE values for CPT code
90471 and to the HCPCS G-codes for administration of specific vaccines.
We

[[Page 73306]]

will continue this crosswalk for CY 2011 and, as we proposed, also
crosswalk the nonfacility PE value of CPT code 90471 to CPT code 90473.
The PE value for CPT code 90472 is based on the direct PE inputs for
that code, according to the usual PFS methodology. We will crosswalk
the nonfacility PE value of CPT code 90472 to CPT code 90474 for CY
2011 as we proposed. Finally, we are modifying our CY 2011 proposal and
crosswalking the nonfacility PE RVUs for CPT codes 90472 and 90474 to
new CPT code 90461 (replacement code for CPT codes 90466 and 90468) for
CY 2011. In addition, we will crosswalk the nonfacility PE RVUs for CPT
codes 90471 and 90473 to new CPT code 90460 (replacement code for CPT
codes 90465 and 90467).
After consideration of the public comments we received and the CY
2011 changes in codes for pediatric immunization services by the CPT
Editorial Panel, we are finalizing our CY 2011 proposals, with the
following modifications. In summary, for CY 2011 we will--
Crosswalk the nonfacility PE RVUs for CPT codes 90472 and
90474 to new CPT code 90461; and
Crosswalk the nonfacility PE RVUs for CPT codes 90471 to
90473 to new CPT code 90460.

I. Refinement Panel Process

As discussed in the 1993 PFS final rule with comment period (57 FR
55938), we adopted a refinement panel process to assist us in reviewing
the public comments on interim physician work RVUs for CPT codes with
an interim final status in each year and developing final work values
for the subsequent year. We decided that the panel would be comprised
of a multispecialty group of physicians who would review and discuss
the work involved in each procedure under review, and then each
individual would individually rate the work of the procedure. We
believed that establishing the panel with a multispecialty group would
balance the interests of those who commented on the work RVUs against
the budgetary and redistributive effects that could occur if we
accepted extensive increases in work RVUs across a broad range of
services. Historically, the refinement panel has based its
recommendation to change a work value or to retain the interim value
has hinged solely on the outcome of a statistical test on the ratings
(an F-test).
Depending on the number and range of codes that public commenters,
typically specialty societies, request be subject to refinement, we
establish refinement panels with representatives from 4 groups of
physicians: Clinicians representing the specialty most identified with
the procedures in question; physicians with practices in related
specialties; primary care physicians; and contractor medical directors
(CMDs). Typically the refinement panels meet in the summer prior to the
promulgation of the final rule finalizing the RVUs for the codes.
Typical panels have included 8 to 10 physicians across the 4 groups.
Over time, the statistical test used to evaluate the RVU ratings of
individual panel members have become less reliable as the physicians in
each group have tended to select a previously discussed value, rather
than independently evaluating the work. In addition, the resulting RVUs
have occasionally exhibited rank order anomalies (that is, a more
complex procedure is assigned lower RVUs than a less complex
procedure).
Recently, section 1848(c)(2)(K) of the Act (as added by section
3134 of the ACA) authorized the Secretary to review potentially
misvalued codes and make appropriate adjustments to the relative
values. In addition, MedPAC has encouraged CMS to critically review the
values assigned to the services under the PFS. MedPAC has stated its
belief that CMS has historically relied too heavily on specialty
societies to identify services that are misvalued by accepting a high
proportion of the recommendations of the AMA RUC.
We believe the refinement panel process continues to provide
stakeholders with a meaningful opportunity to review and discuss the
interim work RVUs with a clinically diverse group of experts which then
provides informed recommendations to CMS. Therefore, in the CY 2011
proposed rule (75 FR 40105), we indicated that we would like to
continue the refinement process, including the established composition
that includes representatives from the 4 groups of physicians, but with
administrative modification and clarification. Specifically, for
refinement panels beginning in CY 2011 (that is, for those codes with
CY 2011 interim values that would be subject to refinement during CY
2011), we proposed to eliminate the use of the F-test and instead base
revised RVUs on the median work value of the panel members' ratings. We
believe this approach will simplify the refinement process
administratively, while resulting in a final panel recommendation that
reflects the summary opinion of the panel members based on a commonly
used measure of central tendency that is not significantly affected by
outlier values. In addition, we clarified that we have the final
authority to set the RVUs and, therefore, may make adjustments to the
work RVUs resulting from refinement if policy concerns warrant their
modification.
Comment: Most commenters expressed support for the proposal to
eliminate the F-test, including the increased transparency of the
refinement panel process that the commenters believe would result from
this change. Many commenters, including the AMA RUC, agreed with the
use of the median work value of the panel members' ratings and believe
the median would provide a clearer view of the central tendency of the
estimates provided by the survey respondents. On the other hand,
several commenters believe the current process is effective and
eliminates the effects of agreement between the panel members' ratings.
The AMA RUC recommended that CMS be mindful when assigning
individuals to the refinement panel to ensure that all members,
including CMDs, are not from the same specialties that were involved in
the public comment originating the issue under review. Another
commenter cautioned CMS that the refinement panels need to be balanced
and should ensure that there is at least one representative on the
panel who has direct experience with the procedure or service under
review.
Response: We appreciate the support of the commenters regarding our
proposal to use the median work value of the panel members' ratings and
will move forward to finalize our proposal for refinement panels
beginning in CY 2011 (refinement of CY 2011 new/revised codes with
interim values).
When identifying individuals for the refinement panel, including
CMDs, we attempt to select individuals from each of the different
specialties with an interest in the codes being refined, not just the
specialty or specialties responsible for the public comment originating
the request for refinement. We also take steps to ensure that the panel
members have direct experience and knowledge of the procedure or
service under review. We will certainly continue our efforts in this
regard. However, we note that in recent years the number of physicians
who are available to participate in the refinement panel has been
limited at times, and some specialty societies have had difficulty
obtaining representation for the panel.

[[Page 73307]]

Comment: Several commenters urged CMS to use a methodology that
would allow the AMA RUC-recommended value to prevail when appropriately
supported by the pertinent specialty societies and when the value is
strongly supported by the rank order and resources of the procedure,
since the PFS final rule with comment period is the first opportunity
for the public to see the RVUs for the coming calendar year. These
commenters also believe a full and fair review process is warranted
prior to the publication of these values in the final rule with comment
period.
Response: We note that PFS payments for services are resource-
based. When reviewing the AMA RUC recommendations, our decisions to
value services are based on the resources needed to perform the typical
service and, therefore, these decisions are based upon a thorough
review of the AMA RUC recommendations in the context of the specific
new or revised codes. In those cases where we reject the AMA RUC
recommendations, we publish our rationale in the PFS final rule with
comment period where we first make the values public. These values are
published as interim final values that are subject to public comment.
The public comment period serves as the opportunity for public review
and we see no other alternative to this timing, given the timeframes in
which the new or revised CPT codes and the AMA RUC recommendations
regarding their values are available to us and in which the new or
revised CPT codes must be incorporated into the PFS for payment.
Comment: Several commenters expressed concerns about the proposal
to allow CMS to have the final authority to set the work RVUs if policy
concerns warrant modifications to the values derived from the
refinement process. These commenters opposed this proposal and
recommended that the decisions of the refinement panels remain
unchanged by CMS. The commenters believe a major strength of the
current process is that is gives stakeholders a strong incentive to
participate, knowing that the outcomes of the process will not be
overturned by CMS.
Response: Although we appreciate the concerns raised by the
commenters, by law, we retain the final responsibility and authority to
set the RVUs and, therefore, may make adjustments to the work RVUs
resulting from refinement if policy concerns (such as a rank order
anomaly) warrant their modifications.
Comment: One commenter urged CMS to make the refinement process
transparent and open to the public.
Response: We believe our proposal would make the refinement process
more transparent, as noted by some commenters. We further believe that
representation from specialty societies as part of the AMA RUC process
for valuing the codes allows the input of physicians who have direct
experience with the procedure or service under review.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to eliminate the use of the F-test for
the refinement panels and, instead, we will base the revised RVUs on
the median work value of the panel members' ratings. In addition, we
note that CMS retains the final authority to set the RVUs and,
therefore, make adjustments to the work RVUs resulting from refinement
if policy concerns warrant their modification.

J. Remote Cardiac Monitoring Services (CPT codes 93012, 93229, 93268,
and 93271)

In the CY 2011 PFS proposed rule (75 FR 40105), we reiterated our
concerns about the issue of developing PE RVUs for services that are
utilized 24 hours a day, 7 days a week (24/7), such as those that
require certain centralized monitoring system equipment and which have
been discussed in earlier PFS rulemaking cycles, most recently in the
CY 2010 PFS final rule with comment period (74 FR 61755). We stated
that the PE equipment methodology was developed for equipment that is
in use during standard physician's office business hours and not
equipment that is used in furnishing such continuous services, and that
we would conduct further analysis of this issue. We indicated that
services that were contractor-priced in CY 2009 remained contractor-
priced in CY 2010 and that any proposed changes would be communicated
through future rulemaking.
In the CY 2011 PFS proposed rule (75 FR 40105), we explained that
since publication of the CY 2010 PFS final rule with comment period, we
focused our additional analysis on 4 of the CPT codes that commenters
have brought to our attention because they involve concurrent, remote,
24/7 attended monitoring of multiple patients from a central location:
CPT code 93012 (Telephonic transmission of post-symptom
electrocardiogram rhythm strip(s); 24-hour attended monitoring, per 30
day period of time; tracing only); CPT code 93229 (Wearable mobile
cardiovascular telemetry with electrocardiographic recording,
concurrent computerized real time data analysis and greater than 24
hours of accessible ECG data storage (retrievable with query) with ECG
triggered and patient selected events transmitted to a remote attended
surveillance center for up to 30 days; technical support for connection
and patient instructions for use, attended surveillance, analysis and
physician prescribed transmission of daily and emergent data reports);
CPT code 93268 (Wearable patient activated electrocardiographic rhythm
derived event recording with presymptom memory loop, 24-hour attended
monitoring, per 30 day period of time; includes transmission, physician
review and interpretation); and CPT 93271 code (Wearable patient
activated electrocardiographic rhythm derived event recording with
presymptom memory loop, 24-hour attended monitoring, per 30 day period
of time; monitoring, receipt of transmissions, and analysis).
We pointed out that of these four codes, CPT code 93229 is
currently contractor-priced in CY 2010, meaning that the local Medicare
contractors determine payment rates for the service within the PFS
geographic areas in their jurisdiction. The three services that are
currently nationally-priced on the PFS are in the first year of a 4-
year transition to lower payment rates based on the use of the PPIS
data adopted in the CY 2010 PFS final rule with comment period. We
refer readers to section II.A.2. of this final rule with comment period
for a description of the general PFS PE methodology that is the basis
for the following discussion of approaches to establishing PE RVUs for
these four CPT codes.
In the CY 2011 PFS proposed rule, we explained that we examined
several alternative methods for developing PE RVUS upon which PFS
payment rates for these four CPT codes could be based. Each of these
services involves transmission of information from multiple patients
who wear individual monitoring devices that transmit patient-specific
information to centralized equipment that is simultaneously in use for
multiple patients. We stated that we believed it would be most
consistent with the principles underlying the PFS PE methodology to
classify the centralized monitoring equipment as an indirect cost since
it is servicing multiple patients at the same time. We explained that
after classifying this equipment as an indirect cost, we used our
standard methodology to calculate an indirect practice cost index value
for each code based on the PE/HR survey data of the historical mix of
specialties providing these services. We went on to state that

[[Page 73308]]

establishing payment rates for these codes based on this approach would
result in decreases in the payment rates for these services, including
the typical contractor's price for CPT code 93229. For the three
services that are nationally priced, these decreases would be relative
to the lower payment rates based on the use of the PPIS data after the
4-year transition.
In the CY 2011 PFS proposed rule, we acknowledged that we had also
received PE/HR data from the Remote Cardiac Services Provider Group
(RCSPG), a group of Independent Diagnostic Testing Facility (IDTF)
suppliers of these types of services. We explained that for sensitivity
analysis purposes, we substituted these data for the PE/HR data of the
specialties performing these services, while continuing to treat the
centralized monitoring equipment as an indirect cost. We stated that we
found that establishing payment rates for these codes based on the
approach of using the submitted RCSPG PE/HR data would again result in
decreases in the payment rates for these services, including the
typical contractor's price for CPT code 93229. As in the prior
alternative, the decreases for the nationally priced codes would be
relative to the payment rates reflecting the 4-year transition to the
PPIS data.
We indicated that although we believed that it would be most
consistent with the principles underlying the PE methodology to
classify the centralized monitoring equipment as an indirect cost, we
also performed a sensitivity analysis of the payment rates if the
centralized monitoring equipment were classified as a direct cost. In
this simulation, we assumed that the centralized monitoring equipment
was in year-round use, 7 days per week for 24 hours per day. We found
that establishing payment rates for these codes based on the approach
of classifying the centralized monitoring equipment as a direct cost
would again result in decreases in the payment rates for the nationally
priced services relative to their payment rates after the 4-year
transition to the use of the PPIS data, as well as to the typical
current contractor's price for CPT code 93229.
Finally, we explained that we considered proposing contractor-
pricing for all four of these services for CY 2011 but were cognizant
of past public comments on this issue that had requested that all of
these services be priced nationally on the PFS, including the one
service (CPT code 93229) that is currently contractor-priced.
In the CY 2011 PFS proposed rule, we also considered that the
services currently priced nationally on the PFS were scheduled to
receive lower payment rates under the 4-year transition to the PPIS
data and that the contractor's price for CPT 93229 was recently reduced
in the area where the majority of the billings for this service
currently occur.
We concluded that after taking all these factors into
consideration, we were not proposing CY 2011 methodological or direct
cost input changes for CPT codes 93012, 93268, or 93271--the services
that are nationally priced under the PFS. We proposed to continue
contractor-pricing for CPT 93229 for CY 2011. We solicited public
comments on this issue, including responses to our analysis of
alternative approaches to establishing PE RVUs for 24/7 services, and
further discussion of the issues we identified in our alternative
pricing methodologies. In addition, while we had focused the 24/7
services analysis up until that point in time on developing the PE RVUS
for remote cardiac monitoring services, we observed that there may be
24/7 services in other areas of medicine, either currently paid under
the PFS or in development for the future. Therefore, we also solicited
public comments on these current or emerging 24/7 services, including
descriptions of the similarities or differences between these other
services and remote cardiac monitoring services, particularly with
respect to the issues we identified in our analysis of alternative
approaches to establishing PE RVUs for remote cardiac monitoring
services under the PFS.
Comment: Several commenters expressed concerns regarding CMS'
discussion of PFS payment for remote cardiac monitoring, which included
no proposal of changes for CY 2011. The commenters pointed out the
benefits of 24/7 remote monitoring services for cardiac and other
specialty services and argued that these types of services can differ
in complexity and frequency from one another and from traditional
medical services. In general, the commenters expressed interest in CMS
accurately capturing the cost components for all of these services,
primarily arguing for the consideration of these costs as direct costs.
One commenter explained that the current methodology for assigning
PE RVUs does not work for remote cardiac providers whose businesses are
structured differently from physicians' practices and, as a result, the
RVUs assigned to the services do not reflect their proper relative
cost. Although CMS focused its analysis on services characterized by
concurrent, remote, 24/7 attended monitoring of multiple patients from
a single location, the commenter addressed cardiac event monitoring,
pacemaker monitoring, Holter monitoring, International Normalized Ratio
(INR) monitoring, and a number of new monitoring technologies such as
cardiac telemetry under the umbrella term of remote cardiac monitoring.
The commenter asserted that the IDTF providers of remote cardiac
monitoring services operate on a 24/7 basis because the services that
they furnish require round-the-clock service and are, therefore,
structured very differently from physicians' offices and other IDTFs.
The commenter argued that CMS should utilize PE/HR data submitted by
RCSPG, a group of IDTF suppliers of these types of services, to the
entire ranging of cardiac monitoring services furnished by these
providers. Alternatively, the commenter indicated that CMS could use
the all physician indirect percentage, use an indirect practice cost
index (IPCI) of one, and add equipment costs to the PE formula for
allocating indirect costs in setting the PE RVUs for cardiac monitoring
services. Finally, the commenter requested that if CMS did not adopt
one of the previous two suggestions, then CMS should temporarily
suspend the phase-in of the use of PPIS data for cardiac monitoring
services. Several other commenters also requested that CMS suspend the
PPIS transition for remote cardiac monitoring services.
Several commenters disagreed with CMS regarding the appropriateness
of treating the centralized monitoring equipment as an indirect cost,
arguing that the equipment is used specifically for patients that are
receiving a specific service and, therefore, represents a direct cost
like other medical equipment. The commenters contended that the
centralized equipment is inherently different from other indirect
practice expenses that are used to run a practice and are not tied
directly to any one particular service. One commenter speculated that
considering the cardiac monitoring equipment as an indirect expense
would dilute the payment for this cardiac telemetry by distributing it
to many people who are not providing it. Another commenter expressed
concern that an indirect cost approach does not appropriately account
for the significant differences in remote monitoring services and thus
cannot accurately capture the cost components of each.
With respect to the remote cardiac monitoring service described by
CPT code 93229 which is contractor-priced, one commenter made several
specific requests, namely that CMS: (1) Nationally price CPT code 93229
rather

[[Page 73309]]

than contractor-price the service; (2) consider the centralized
monitoring equipment associated with CPT code 93229 as a direct cost;
(3) adjust the equipment utilization assumption for the centralized
monitoring equipment from 100 percent to 50 percent; (4) use new direct
cost inputs (for example, the cost of the monitoring device worn by
patient) supplied by the commenter; (5) incorporate a new PE/HR, based
on the cardiac monitoring industry-wide RCSPG PE/HR data applied to all
cardiac monitoring services, based on data from two telemetry providers
for CPT code 93229 that yields a PE/HR of $243.22 that would be applied
to CPT code 93229, or based on data for telemetry and cardiac event
monitoring (CEM) which results in a PE/HR of $214.79 that would be
applied to telemetry and CEM services; and (6) apply an additional
indirect allocation in the CMS PE methodology based on the equipment
direct costs as previously recommended by one telemetry provider. The
commenter provided equipment inputs and the associated prices and
further recommended that CMS should continue to apply the clinical
labor and supply input items associated with this services as
recommended by the AMA RUC.
Response: We appreciate the continuing interest of the commenters
in the pricing of cardiac monitoring services under the PFS. After
further review of this issue, while we continue to recognize there are
some unique aspects to the services, we do not agree with the
commenters that the PE for cardiac monitoring services cannot be
appropriately valued using the PFS PE methodology. After our review, we
believe that we can appropriately identify and price the direct cost
inputs for these services. Furthermore, we note that the PPIS data for
allocating indirect costs is from a multispecialty, nationally
representative PE survey of both physicians and NPPS and, as the most
comprehensive source of PE information available to date, appropriate
for use for cardiac monitoring services. Therefore, we disagree that we
should suspend the PE transition to the PPIS data or otherwise change
our established methodology for setting the PE RVUs furnished by a
subset of providers in a certain specialty area.
We continue to believe that it is more appropriate to classify the
costs associated with the centralized monitoring equipment, including
the hardware and software, workstation, webserver, and call recording
system, as indirect costs since it is difficult to allocate those costs
to services furnished to individual patients in a manner that
adequately reflects the number of patients being tested. This would be
true for CPT code 93229 which has not previously been nationally
priced. We believe that the ability to appropriately allocate costs to
individual services is a key concept that should guide our adoption of
the direct PE inputs for services paid under the PFS. Having drawn this
conclusion, we plan to review the direct PE inputs for other nationally
priced services that include centralized monitoring equipment under the
PFS and, if we find that we have not consistently treated that
equipment as an indirect cost, we may propose changes to the direct PE
inputs for existing codes in a future PFS rulemaking cycle.
We agree with several commenters that it would be appropriate at
this time to nationally price CPT code 93229, especially in light of
our conclusion regarding how the centralized monitoring system should
be treated under the PFS PE methodology and the fact that the
commenters have provided current prices and associated documentation
for the direct PE inputs used in the typical case. Therefore, we are
accepting the AMA RUC recommendations originally made for CY 2009 (73
FR 69896) for clinical labor and supplies for CPT code 93229 and are
utilizing these direct PE inputs for CY 2011. With respect to the
equipment inputs provided to us by one commenter who currently
furnishes the majority of services described by CPT code 93229, under
our final CY 2011 policy the only piece of equipment that would be
appropriately treated as a direct PE input is the cardiac telemetry
monitoring device worn by the patient. The other equipment items,
including the monitoring system software and hardware, workstation,
webserver, and call recording system are indirect practice costs.
Therefore, we are accepting the commenter's submission of $21,575 as
the price for this device in the typical case, and applying a 50
percent utilization rate and useful life of 3 years as recommended by
the commenter.
We do not believe it would be appropriate to deviate from our
standard PFS PE methodology to adopt a PE/HR that is specific to CPT
code 93229 or any other set of cardiac monitoring codes based on data
from two telemetry providers, from a subset of services provided by
certain specialty cardiac monitoring providers, or from a certain group
of specialty providers that overall furnish only a portion of cardiac
monitoring services, nor to change our established indirect PE
allocation methodology. We believe the current PE methodology
appropriately captures the relative costs of these services in setting
their PE RVUs, based on the conclusion we have drawn following our
assessment of the centralized monitoring system that is especially
characteristic of services such as CPT code 93229. We note that these
direct PE inputs are included in the final CY 2011 direct PE database
that is posted on the CMS Web site under downloads for this CY 2011 PFS
final rule with comment period at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage. We further note that the
CY 2011 payment for CPT code 93229 (without considering the negative
PFS update that will apply for CY 2011 under current law) is close to
the current typical contractor's price for the service in CY 2010.
After consideration of the public comments we received, we are
establishing a national price for CPT code 93229 based on nationally
set RVUs, instead of maintaining the code as contractor-priced as we
proposed. We are adopting the AMA RUC's recommendations for the
clinical labor and supply inputs, and utilizing price, utilization, and
useful life information provided by the commenters as equipment inputs
for the cardiac telemetry monitoring device worn by the patient. The
final CY 2011 RVUs for CPT code 93229 are displayed in Addendum B to
this final rule with comment period. While we are making no changes to
the direct PE inputs for other remote cardiac monitoring CPT codes for
CY 2011, we will consider in the future whether changes could be
appropriate if we conclude that these services utilize a centralized
monitoring system that would most appropriately be treated an indirect
cost.
Comment: While most of the commenters addressed remote cardiac
monitoring services specifically discussed in the CY 2011 PFS proposed
rule, several commenters addressed other types of emerging 24/7
services. One commenter described a pilot program that utilizes
telehealth to monitor certain health status indicators for cardiac
patients. This monitoring occurs during the day and night and includes
an assessment by a nurse. The commenter stated that the initial results
of the pilot show a lower rate of hospital readmissions for
participants. The commenter asserted that there is currently no payment
for this service, and urged CMS to consider funding for these types of
programs.
Outside of cardiac monitoring, another commenter noted that there
are many types of remote monitoring

[[Page 73310]]

services that provide important benefits, especially for chronically
ill patients. The commenter explained that these may include health
status monitoring services, activity and sensor monitoring services,
and medication dispensing and monitoring services. The commenter
asserted that the resource requirements for these types of services can
differ in complexity and frequency and may involve varied resources,
including equipment and other fees; training and coaching; data
collection, monitoring and documentation; and personal emergency
response. As such, the commenter recommended that CMS' PE methodology
for remote monitoring services be as transparent and flexible as
possible to allow for these differences, and to accurately capture the
cost components for each. Therefore, the commenter, concluded that a
direct cost approach would be the most appropriate approach in most
cases.
Response: We thank the commenters for providing information on
other current and emerging 24/7 services. We will consider appropriate
payment for other 24/7 services under the PFS as specific codes for
such services are created by the CPT Editorial Panel. Regarding direct
PE inputs for other remote monitoring services, we acknowledge
diversity in the direct and indirect costs to providers for furnishing
various monitoring services--and all services--and believe that our
current PE methodology, as discussed earlier in this section, is able
to yield appropriate values across this wide range. As stated earlier
in the context of remote cardiac monitoring, we believe that the
ability to appropriately allocate costs to the services furnished to
individual patients is a key concept that should guide our adoption of
the direct PE inputs for services paid under the PFS, including remote
monitoring and other 24/7 services.
We look forward to continuing a dialogue with stakeholders involved
in developing and furnishing 24/7 services as medical practice evolves
in order to ensure that the PFS pays appropriately for those 24/7
services that are covered by Medicare and paid as physicians' services.

IV. Medicare Telehealth Services for the Physician Fee Schedule

A. Billing and Payment for Telehealth Services

1. History
Prior to January 1, 1999, Medicare coverage for services delivered
via a telecommunications system was limited to services that did not
require a face-to-face encounter under the traditional model of medical
care. Examples of these services included interpretation of an x-ray or
electrocardiogram or electroencephalogram tracing, and cardiac
pacemaker analysis.
Section 4206 of the BBA provided for coverage of, and payment for,
consultation services delivered via a telecommunications system to
Medicare beneficiaries residing in rural health professional shortage
areas (HPSAs) as defined by the Public Health Service Act.
Additionally, the BBA required that a Medicare practitioner
(telepresenter) be with the patient at the time of a teleconsultation.
Further, the BBA specified that payment for a teleconsultation had to
be shared between the consulting practitioner and the referring
practitioner and could not exceed the fee schedule payment which would
have been made to the consultant for the service provided. The BBA
prohibited payment for any telephone line charges or facility fees
associated with the teleconsultation. We implemented this provision in
the CY 1999 PFS final rule with comment period (63 FR 58814).
Effective October 1, 2001, section 223 of the Medicare, Medicaid
and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)
(BIPA) added a new section 1834(m) to the Act which significantly
expanded Medicare telehealth services. Section 1834(m)(4)(F)(i) of the
Act defines Medicare telehealth services to include consultations,
office visits, office psychiatry services, and any additional service
specified by the Secretary, when delivered via a telecommunications
system. We first implemented this provision in the CY 2002 PFS final
rule with comment period (66 FR 55246). Section 1834(m)(4)(F)(ii) of
the Act required the Secretary to establish a process that provides for
annual updates to the list of Medicare telehealth services. We
established this process in the CY 2003 PFS final rule with comment
period (67 FR 79988).
As specified in regulations at Sec. 410.78(b), we generally
require that a telehealth service be furnished via an interactive
telecommunications system. Under Sec. 410.78(a)(3), an interactive
telecommunications system is defined as multimedia communications
equipment that includes, at a minimum, audio and video equipment
permitting two-way, real-time interactive communication between the
patient and the practitioner at the distant site. Telephones, facsimile
machines, and electronic mail systems do not meet the definition of an
interactive telecommunications system. An interactive
telecommunications system is generally required as a condition of
payment; however, section 1834(m)(1) of the statute does allow the use
of asynchronous ``store-and-forward'' technology in delivering these
services when the originating site is a Federal telemedicine
demonstration program in Alaska or Hawaii. As specified in regulations
at Sec. 410.78(a)(1), store and forward means the asynchronous
transmission of medical information from an originating site to be
reviewed at a later time by the practitioner at the distant site.
Medicare telehealth services may be provided to an eligible
telehealth individual notwithstanding the fact that the individual
practitioner providing the telehealth service is not at the same
location as the beneficiary. An eligible telehealth individual means an
individual enrolled under Part B who receives a telehealth service
furnished at an originating site. As specified in BIPA, originating
sites are limited under section 1834(m)(3)(C) of the statute to
specified medical facilities located in specific geographic areas. The
initial list of telehealth originating sites included the office of a
practitioner, a critical access hospital (CAH), a rural health clinic
(RHC), a federally qualified health center (FQHC) and a hospital. More
recently, section 149 of the Medicare Improvements for Patients and
Providers Act of 2008 (Pub. L. 110-275) (MIPPA) expanded the list of
telehealth originating sites to include hospital-based renal dialysis
centers, skilled nursing facilities (SNFs), and community mental health
centers (CMHCs). In order to serve as a telehealth originating site,
these sites must be located in an area designated as a rural HPSA, in a
county that is not in a metropolitan statistical area (MSA), or must be
an entity that participate in a Federal telemedicine demonstration
project that has been approved by (or receives funding from) the
Secretary as of December 31, 2000. Finally, section 1834(m) of the
statute does not require the eligible telehealth individual to be
presented by a practitioner at the originating site.
2. Current Telehealth Billing and Payment Policies
As noted above, Medicare telehealth services can only be furnished
to an eligible telehealth beneficiary in an originating site. An
originating site is defined as one of the specified sites where an
eligible telehealth individual is located at the time the service is
being furnished via a telecommunications system. In general,
originating sites must be located in a rural HPSA or in a county
outside of an MSA. The

[[Page 73311]]

originating sites authorized by the statute are as follows:
Offices of a physician or practitioner
Hospitals
CAHs
RHCs
FQHCs
Hospital-Based or Critical Access Hospital-Based Renal
Dialysis Centers (including Satellites)
SNFs
CMHCs
Currently approved Medicare telehealth services include the
following:
Initial inpatient consultations
Follow-up inpatient consultations
Office or other outpatient visits
Individual psychotherapy
Pharmacologic management
Psychiatric diagnostic interview examination
End Stage Renal Disease (ESRD) related services
Individual medical nutrition therapy (MNT)
Neurobehavioral status exam
Individual health and behavior assessment and intervention
(HBAI).
In general, the practitioner at the distant site may be any of the
following, provided that the practitioner is licensed under State law
to furnish the service being furnished via a telecommunications system:
Physician
Physician assistant (PA)
Nurse practitioner (NP)
Clinical nurse specialist (CNS)
Nurse midwife
Clinical psychologist
Clinical social worker
Registered dietitian or nutrition professional.
Practitioners furnishing Medicare telehealth services are located
at a distant site, and they submit claims for telehealth services to
the Medicare contractors that process claims for the service area where
their distant site is located. Section 1834(m)(2)(A) of the Act
requires that a practitioner who furnishes a telehealth service to an
eligible telehealth individual be paid an amount equal to the amount
that the practitioner would have been paid if the service had been
furnished without the use of a telecommunications system. Distant site
practitioners must submit the appropriate HCPCS procedure code for a
covered professional telehealth service, appended with the -GT (Via
interactive audio and video telecommunications system) or -GQ (Via
asynchronous telecommunications system) modifier. By reporting the -GT
or -GQ modifier with a covered telehealth procedure code, the distant
site practitioner certifies that the beneficiary was present at a
telehealth originating site when the telehealth service was furnished.
The usual Medicare deductible and coinsurance policies apply to the
telehealth services reported by distant site practitioners.
Section 1834(m)(2)(B) of the Act provides for payment of a facility
fee to the originating site. To be paid the originating site facility
fee, the provider or supplier where the eligible telehealth individual
is located must submit a claim with HCPCS code Q3014 (Telehealth
originating site facility fee), and the provider or supplier is paid
according to the applicable payment methodology for that facility or
location. The usual Medicare deductible and coinsurance policies apply
to HCPCS code Q3014. By submitting HCPCS code Q3014, the originating
site authenticates that it is located in either a rural HPSA or non-MSA
county or is an entity that participates in a Federal telemedicine
demonstration project that has been approved by (or receives funding
from) the Secretary as of December 31, 2000 as specified in section
1834(m)(4)(C)(i)(III) of the Act.
As described above, certain professional services that are commonly
furnished remotely using telecommunications technology, but that do not
require the patient to be present in-person with the practitioner when
they are furnished, are covered and paid in the same way as services
delivered without the use of telecommunications technology when the
practitioner is in-person at the medical facility furnishing care to
the patient. Such services typically involve circumstances where a
practitioner is able to visualize some aspect of the patient's
condition without the patient being present and without the
interposition of a third person's judgment. Visualization by the
practitioner can be possible by means of x-rays, electrocardiogram or
electroencephalogram tracings, tissue samples, etc. For example, the
interpretation by a physician of an actual electrocardiogram or
electroencephalogram tracing that has been transmitted via telephone
(that is, electronically, rather than by means of a verbal description)
is a covered physician's service. These remote services are not
Medicare telehealth services as defined under section 1834(m) of the
Act. Rather, these remote services that utilize telecommunications
technology are considered physicians' services in the same way as
services that are furnished in-person without the use of
telecommunications technology; they are paid under the same conditions
as in-person physicians' services (with no requirements regarding
permissible originating sites), and should be reported in the same way
(that is, without the -GT or -GQ modifier appended).

B. Requests for Adding Services to the List of Medicare Telehealth
Services

As noted above, in the December 31, 2002 Federal Register (67 FR
79988), we established a process for adding services to or deleting
services from the list of Medicare telehealth services. This process
provides the public with an ongoing opportunity to submit requests for
adding services. We assign any request to make additions to the list of
Medicare telehealth services to one of the following categories:
Category 1: Services that are similar to professional
consultations, office visits, and office psychiatry services. In
reviewing these requests, we look for similarities between the
requested and existing telehealth services for the roles of, and
interactions among, the beneficiary, the physician (or other
practitioner) at the distant site and, if necessary, the telepresenter.
We also look for similarities in the telecommunications system used to
deliver the proposed service, for example, the use of interactive audio
and video equipment.
Category 2: Services that are not similar to the current
list of telehealth services. Our review of these requests includes an
assessment of whether the use of a telecommunications system to deliver
the service produces similar diagnostic findings or therapeutic
interventions as compared with the in-person delivery of the same
service. Requestors should submit evidence showing that the use of a
telecommunications system does not affect the diagnosis or treatment
plan as compared to in-person delivery of the requested service.
Since establishing the process to add or remove services from the
list of approved telehealth services, we have added the following to
the list of Medicare telehealth services: individual HBAI services;
psychiatric diagnostic interview examination; ESRD services with 2 to 3
visits per month and 4 or more visits per month (although we require at
least 1 visit a month to be furnished in-person by a physician, CNS,
NP, or PA in order to examine the vascular access site); individual
MNT; neurobehavioral status exam; and initial and follow-up inpatient
telehealth consultations for beneficiaries in hospitals and skilled
nursing facilities (SNFs).

[[Page 73312]]

Requests to add services to the list of Medicare telehealth
services must be submitted and received no later than December 31 of
each calendar year to be considered for the next rulemaking cycle. For
example, requests submitted before the end of CY 2010 are considered
for the CY 2012 proposed rule. Each request for adding a service to the
list of Medicare telehealth services must include any supporting
documentation the requester wishes us to consider as we review the
request. Because we use the annual PFS rulemaking process as a vehicle
for making changes to the list of Medicare telehealth services,
requestors should be advised that any information submitted is subject
to public disclosure for this purpose. For more information on
submitting a request for an addition to the list of Medicare telehealth
services, including where to mail these requests, we refer readers to
the CMS Web site at http://www.cms.gov/telehealth/.

C. Submitted Requests for Addition to the List of Telehealth Services
for CY 2011

We received requests in CY 2009 to add the following services as
Medicare telehealth services effective for CY 2011: (1) Individual
kidney disease education (KDE) services; (2) individual diabetes self-
management training (DSMT) services; (3) group KDE, DSMT, MNT, and HBAI
services; (4) initial, subsequent, and discharge day management
hospital care services; (5) initial, subsequent, discharge day
management, and other nursing facility care services; (6)
neuropsychological testing services; (7) speech-language pathology
services; and (8) home wound care services. The following presents a
discussion of these requests, including our proposed additions to the
CY 2011 telehealth list.
1. Individual KDE Services
The American Society of Nephrology, Dialysis Patient Citizens,
AMGEN, and Kidney Care Partners submitted requests to add individual
KDE services, reported by HCPCS code G0420 (Face-to-face educational
services related to the care of chronic kidney disease; individual, per
session, per one hour), to the list of approved telehealth services for
CY 2011 on a category 1 basis.
Individual KDE services, covered under the new Medicare KDE benefit
effective for services furnished beginning in CY 2010, are defined as
face-to-face educational services provided to a patient with stage IV
chronic kidney disease (CKD). We believe the interaction between a
practitioner and a beneficiary receiving individual KDE services is
similar to the education, assessment, and counseling elements of
individual MNT services, reported by HCPCS code G0270 (Medical
nutrition therapy; reassessment and subsequent intervention(s)
following second referral in same year for change in diagnosis, medical
condition or treatment regimen (including additional hours needed for
renal disease), individual, face to face with the patient, each 15
minutes); CPT code 97802 (Medical nutrition therapy; initial assessment
and intervention, individual, face-to-face with the patient, each 15
minutes); and CPT code 97803 (Medical nutrition therapy; re-assessment
and intervention, individual, face-to-face with the patient, each 15
minutes), all services that are currently on the telehealth list.
Therefore, we proposed to add HCPCS code G0420 to the list of
telehealth services for CY 2011 on a category 1 basis and to revise our
regulations at Sec. 410.78(b) and Sec. 414.65(a)(1) to include
individual KDE as a Medicare telehealth service.
Comment: Several commenters expressed support for CMS' proposal to
add KDE services to the list of Medicare telehealth services for CY
2011. One commenter stated that the proposal would provide patients at
risk for developing chronic kidney disease and ESRD with access to
educational services that may help in controlling the progression of
disease. Another commenter suggested that delivery of KDE services
through telehealth would provide beneficiaries with the flexibility to
interact with practitioners in a manner tailored to their needs, thus
facilitating a more patient-centered approach. Another commenter noted
that greater flexibility in the provision of KDE services is
particularly important in rural areas where individuals do not have as
much access to dialysis centers.
Response: We agree with the commenters that adding KDE services to
the list of Medicare telehealth services may be valuable to Medicare
beneficiaries, especially insofar as it helps provide greater access to
the services for beneficiaries in rural or other isolated areas.
Comment: One commenter who supported the proposal also encouraged
the CMS to maintain its existing policy regarding the qualified
providers for KDE services in order to appropriately ensure the quality
and content conveyed to patients in educational sessions and remain
concordant with the intent of MIPPA.
Response: We note that the addition of KDE to the list of Medicare
telehealth services does not alter the qualifications for providers of
KDE services as specified in Sec. 410.48 of the regulations.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to add HCPCS code G0420 to the list of
telehealth services for CY 2011 on a category 1 basis and to revise our
regulations at Sec. 410.78(b) and Sec. 414.65(a)(1) to include
individual KDE as a Medicare telehealth service.
2. Individual DSMT Services
The Tahoe Forest Health System and the Marshfield Clinic submitted
requests to add individual DSMT services, reported by HCPCS code G0108
(Diabetes outpatient self-management training services, individual, per
30 minutes), to the list of telehealth services for CY 2011 on a
category 1 basis. In the CY 2009 PFS final rule with comment period (73
FR 69743), we stated that we believe individual DSMT services are not
analogous to individual MNT services because of the element of skill-
based training that is encompassed within individual DSMT services that
is not an aspect of individual MNT services (or any other services
currently approved for telehealth). Due to the statutory requirement
that DSMT services include teaching beneficiaries the skills necessary
for the self-administration of injectable drugs, we have stated our
belief that DSMT, whether provided to an individual or a group, must be
evaluated as a category 2 service as specified in the CY 2009 PFS
proposed rule (73 FR 38516). Prior to CY 2011 rulemaking, we had
considered several previous requests to add DSMT to the list of
Medicare telehealth services. We had not added individual DSMT to the
list of telehealth services because we believe that skill-based
training, such as teaching patients how to inject insulin, would be
difficult to accomplish effectively without the physical presence of
the teaching practitioner (70 FR 45787 and 70157, and 73 FR 38516 and
69743).
In considering the new request to add individual DSMT services to
the list of telehealth services in CY 2011, we took into account
requestors' argument that individual DSMT services are highly similar
to individual MNT services and that injection training constitutes just
a small proportion of DSMT services. Except for the component of
individual DSMT services that involves instruction in self-
administration of injectable drugs for eligible beneficiaries, we
agreed with the requestors that individual DSMT

[[Page 73313]]

services are similar to individual MNT services, which are currently on
the list of Medicare telehealth services. We note that Medicare
coverage of DSMT services was initially authorized in the BBA. After
more than a decade of Medicare coverage, the most recent information
shows that DSMT continues to be significantly underutilized in the
context of the eligible population of Medicare beneficiaries. While we
are uncertain to what extent geographic barriers to care contribute to
this underutilization, given the morbidity associated with poorly
managed diabetes and the growing evidence-base regarding effective DSMT
services, we believe it is very important to facilitate Medicare
beneficiary access to these underutilized services. While we were
previously concerned about treating the components of DSMT services
differently in the context of considering DSMT services for the
telehealth list, in the CY 2011 PFS proposed rule (75 FR 40108), we
stated our belief that our concern regarding the skill-based injection
training component of DSMT services could be addressed by imposing a
requirement that a minimum portion of the training be furnished in-
person. We noted that for beneficiaries who meet the coverage criteria,
Medicare covers 10 hours of DSMT services in the year following the
initial training, as described in the Medicare Benefit Policy Manual
(Pub. 100-02, Chapter 15, Section 300.3). Taking into consideration the
initial year coverage of DSMT services, for CY 2011 we proposed that a
minimum of 1 hour of instruction in injection training must be
furnished in-person during the year following the initial DSMT service.
Imposing this condition would allow us to expand access to DSMT
services by adding individual DSMT services to the list of telehealth
services, while ensuring effective injection training for
beneficiaries.
Therefore, we proposed to add HCPCS code G0108 to the list of
telehealth services beginning in CY 2011. We also proposed that, as a
condition of payment for individual DSMT services furnished as
telehealth services to an eligible telehealth individual, a minimum of
1 hour of in-person instruction in the self-administration of
injectable drugs must be furnished to the individual during the year
following the initial DSMT service. The injection training may be
furnished through either individual or group DSMT services. By
reporting the -GT or -GQ modifier with HCPCS code G0108 as a telehealth
service, the distant site practitioner would certify that the
beneficiary has received or will receive 1 hour of in-person DSMT
services for purposes of injection training during the year following
the initial DSMT service. Consistent with this proposal, we proposed to
revise our regulations at Sec. 410.78(b) and Sec. 414.65(a)(1) to
include individual DSMT services as a Medicare telehealth service, with
the exception of 1 hour of in-person instruction in self-administration
of injectable drugs which must be furnished to the eligible telehealth
individual as individual or group DSMT services during the year
following the initial DSMT service.
Comment: A number of commenters expressed support for CMS' proposal
to add DSMT services to the list of Medicare telehealth services. One
commenter requested that CMS clarify that this proposal would permit
NPs and PAs in all patient care settings to provide and bill for DSMT
services furnished through telehealth technologies.
Response: As we stated in the CY 2011 PFS proposed rule (75 FR
40109), our proposal is consistent with the statutory requirements of
section 1834(m)(1) of the Act and as provided in Sec. 410.141(e) that
individual DSMT services may be furnished by a physician, individual,
or entity that furnishes other services for which direct Medicare
payment may be made and that submits necessary documentation to, and is
accredited by, an accreditation organization approved by us as
described in the Benefit Policy Manual (Pub. 100-04, chapter 15,
section 300.2). However, consistent with the statutory requirements of
section 1834(m)(1) of the Act and as provided in Sec. 410.78(b)(1) and
(b)(2) of our regulations, Medicare telehealth services, including
individual DSMT furnished as a telehealth service, can only be
furnished by a licensed physician, PA, NP, CNS, certified nurse-
midwife, clinical psychologist, clinical social worker, or registered
dietitian or nutrition professional. Additionally, the site of the
beneficiary must conform with the statutory requirements of telehealth
originating sites from section 1834(m)(3)(C) of the Act and described
in section IV.A. 2. of this final rule with comment period.
Comment: One commenter requested that pharmacists be added to the
list of eligible Medicare telehealth distant site practitioners. The
commenter stated that since pharmacists are already providing valuable
DSMT services to patients in-person, these practitioners should not be
excluded from providing those same valuable services via telehealth.
Response: Under section 1834(m) of the Act, payment is made for a
Medicare telehealth service furnished by a physician or practitioner in
a distant site. For purposes of Medicare telehealth services, the
physician or practitioner must either be a physician as defined in
section 1861(r) of the Act or another practitioner as defined in
section 1842(b)(18)(C) of the Act. Because pharmacists do not fall
within these statutory definitions, we do not have the authority to
make payment to pharmacists as eligible distant site practitioners for
Medicare telehealth services.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to add HCPCS code G0108 to the list of
telehealth services beginning in CY 2011. As a condition of payment for
individual DSMT services furnished as telehealth services to an
eligible telehealth individual, a minimum of 1 hour of in-person
instruction in the self-administration of injectable drugs must be
furnished to the individual during the year following the initial DSMT
service. The injection training may be furnished through either
individual or group DSMT services. By reporting the -GT or -GQ modifier
with HCPCS code G0108 as a telehealth service, the distant site
practitioner certifies that the beneficiary has received or will
receive 1 hour of in-person DSMT services for purposes of injection
training during the year following the initial DSMT service. Consistent
with this final policy, we are revising our regulations at Sec.
410.78(b) and Sec. 414.65(a)(1) to include individual DSMT services as
a Medicare telehealth service, with the exception of 1 hour of in-
person instruction in self-administration of injectable drugs which
must be furnished to the eligible telehealth individual as individual
or group DSMT services during the year following the initial DSMT
service.
We note that, as specified in Sec. 410.141(e), individual DSMT
services may be furnished by a physician, individual, or entity that
furnishes other services for which direct Medicare payment may be made
and that submits necessary documentation to, and is accredited by, an
accreditation organization approved by CMS. However, consistent with
the statutory requirements of section 1834(m)(1) of the Act and as
provided in Sec. 410.78(b)(1) and (b)(2) of our regulations, Medicare
telehealth services, including individual DSMT furnished as a
telehealth service, can only be furnished by a licensed physician, PA,
NP, CNS, certified nurse-midwife, clinical psychologist, clinical
social worker, or registered dietitian or nutrition professional.

[[Page 73314]]

3. Group KDE, MNT, DSMT, and HBAI Services
The American Society of Nephrology, Dialysis Patient Citizens,
AMGEN, Tahoe Forest Health Systems, Kidney Care Partners, the American
Telemedicine Association, and the Marshfield Clinic submitted requests
to add one or more of the following group services to the telehealth
list for CY 2011:
Group KDE services, reported by HCPCS code G0421 (Face-to-
face educational services related to the care of chronic kidney
disease; group, per session, per one hour);
Group MNT services, reported by CPT code 97804 (Medical
nutrition therapy; group (2 or more individual(s)), each 30 minutes);
Group DSMT services, reported by HCPCS code G0109
(Diabetes outpatient self-management training services, group session
(2 or more), per 30 minutes); and/or
Group HBAI services, reported by CPT code 96153 (Health
and behavior intervention, each 15 minutes, face-to-face; group (2 or
more patients)) and 96154 (Health and behavior intervention, each 15
minutes, face-to-face; family (with the patient present)).
When furnished as individual services, HBAI and MNT services are
currently on the list of Medicare telehealth services. Furthermore, we
proposed to add individual KDE and DSMT services to the list of
Medicare telehealth services beginning in CY 2011 as described above.
In the CY 2007 and CY 2010 PFS rulemaking cycles (70 FR 45787 and
70157, and 74 FR 33543 and 61764), we stated that we did not believe
that group services could be appropriately delivered through
telehealth. In the CY 2011 PFS proposed rule (75 FR 40109), we observed
that currently there are no group services approved as Medicare
telehealth services and that there is a different interactive dynamic
between the practitioner and his or her patients in group services as
compared to individual services. We previously had considered requests
to add various group services to the list of Medicare telehealth
services on a category 2 basis because we had believed that, especially
given the interactive dynamic between practitioners and their patients,
group services were not similar to other services on the list of
Medicare telehealth services. Therefore, we had maintained that it was
necessary to evaluate the addition of group services by comparing
diagnostic findings or therapeutic interventions when services are
furnished via telehealth versus when services are furnished in-person.
In the CY 2011 proposed rule (75 FR 40109), we stated that we
continue to believe that the group dynamic may be a critical and
defining element for certain services, and that this characteristic
precludes many group services from being considered on a category 1
basis for addition to the list of Medicare telehealth services. For
example, we believe that due to the therapeutic nature of the group
dynamic that is integral to group psychotherapy, group psychotherapy is
fundamentally different from other Medicare telehealth services and,
therefore, could not be considered on a category 1 basis for addition
to the telehealth services list. For the same reason, in the absence of
evidence to the contrary, we do not believe group psychotherapy
services could be appropriately delivered through telehealth.
However, upon further consideration, with regard to the particular
group education and training services for which we received requests
for addition to the Medicare telehealth services list, for CY 2011 we
concluded that we believe the group dynamic is not central to the core
education and training components of these particular services,
specifically DSMT, MNT, KDE, and HBAI services. We believe that these
group services are sufficiently similar to the individual, related
services that are already on the telehealth services list or were
proposed for addition beginning in CY 2011. Specifically, we believe
that for these group services, which consist principally of an
information exchange for the purpose of education and training, the
roles of, and interactions between, the patients and the practitioner
are sufficiently similar to the related individual education and
training services that the services can be furnished appropriately as a
telehealth service.
Therefore, we proposed to add HCPCS code G0421 for group KDE
services, CPT code 97804 for group MNT services, HCPCS code G0109 for
group DSMT services, and CPT codes 96153 and 96154 for group HBAI
services to the Medicare telehealth services list on a category 1 basis
for CY 2011. Furthermore, because the concerns we raised above
regarding adequate injection training with the addition of individual
DSMT are also present for group DSMT, we proposed to require the same
minimum of 1 hour of in-person instruction for injection training
within the year following the initial DSMT service for any beneficiary
that receives DSMT services via telehealth. By reporting the -GT or -GQ
modifier with HCPCS code G0109, the distant site practitioner would
certify that the beneficiary has received or will receive 1 hour of in-
person instruction in self-administration of injectable drugs which
must be furnished to the eligible telehealth individual as individual
or group DSMT services during the year following the initial DSMT
service. Consistent with this proposal to add these group education and
training services, we also proposed to revise our regulations at Sec.
410.78(b) and Sec. 414.65(a)(1) to include group KDE, MNT, DSMT, and
HBAI services as Medicare telehealth services, with the exception of 1
hour of in-person instruction in self-administration of injectable
drugs which must be furnished to the eligible telehealth individual as
individual or group DSMT services in the year following the initial
DSMT service.
Comment: Many commenters agreed with CMS' proposal to add group
KDE, MNT, DSMT, and HBAI to the list of Medicare telehealth services
for CY 2011. Some commenters commended CMS' willingness to expand the
list of Medicare telehealth services and explained that the additions
would facilitate beneficiary access to care.
Many commenters also urged CMS to make further additions to the
list of Medicare telehealth services beyond those proposed for CY 2011.
Response: We believe adding these group services to the list of
Medicare telehealth services will facilitate beneficiary access to
care, and we appreciate the commenters' shared interest in that goal.
The process for requesting additional services to be added to the
list of Medicare telehealth services is described in section IV.B. of
this final rule with comment period. Requests for additions for CY 2012
must be received by the end of CY 2010. Further information is
available about the process on the CMS web site at: http://www.cms.gov/telehealth/.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to add HCPCS code G0421 for group KDE
services, CPT code 97804 for group MNT services, HCPCS code G0109 for
group DSMT services, and CPT codes 96153 and 96154 for group HBAI
services to the Medicare telehealth services list on a category 1
basis. Furthermore, because we have the same concerns for group DSMT
services that we raised above regarding adequate injection training for
individual DSMT services, we are requiring the same minimum of 1 hour
of in-person instruction for injection training within

[[Page 73315]]

the year following the initial DSMT service for any beneficiary that
receives DSMT services via telehealth. By reporting the -GT or -GQ
modifier with HCPCS code G0109, the distant site practitioner would
certify that the beneficiary has received or will receive 1 hour of in-
person DSMT services for purposes of injection training during the year
following the initial DSMT service. Consistent with the addition of
these group education and training services, we are also revising our
regulations at Sec. 410.78(b) and Sec. 414.65(a)(1) to include group
KDE, MNT, DSMT, and HBAI services as Medicare telehealth services, with
the exception of 1 hour of in-person instruction for injection training
within the year following the initial DSMT service.
As described above for individual DSMT services, we note that group
DSMT services may be furnished by a physician, individual, or entity
that furnishes other services for which direct Medicare payment may be
made and that submits necessary documentation to, and is accredited by,
an accreditation organization approved by CMS, as specified in Sec.
410.141(e) for DSMT services. However, consistent with the statutory
requirements of section 1834(m)(1) of the Act and as provided in Sec.
410.78(b)(1) and (b)(2) of our regulations, Medicare telehealth
services, including group DSMT furnished as a telehealth service, can
only be furnished by a licensed physician, PA, NP, CNS, certified
nurse-midwife, clinical psychologist, clinical social worker, or
registered dietitian or nutrition professional.
4. Initial, Subsequent, and Discharge Day Management Hospital Care
Services
The University of Louisville School of Medicine, the American
Telemedicine Association, and Mille Lacs Health System submitted
various requests to add initial hospital care services (reported by CPT
codes 99221 (Level 1 initial hospital care), 99222 (Level 2 initial
hospital care), and 99223 (Level 3 initial hospital care)); subsequent
hospital care services (reported by CPT codes 99231 (Level 1 subsequent
hospital care), 99232 (Level 2 subsequent hospital care), and 99233
(Level 3 subsequent hospital care)); and/or hospital discharge day
management services (reported by CPT codes 99238 (Hospital discharge
day management; 30 minutes or less) and 99239 (Hospital discharge day
management; more than 30 minutes) to the Medicare telehealth services
list beginning in CY 2011, generally on a category 1 basis. Some of the
requestors also recommended that we limit the delivery of these
services through telehealth to the provision of services to patients
with a psychiatric diagnosis or to those treated in a psychiatric
hospital or licensed psychiatric bed.
We appreciate the recommendations of the requestors to
substantially expand the list of Medicare telehealth services. The
requestors submitted a number of studies regarding the outcomes of
telehealth services in caring for patients with psychiatric diagnoses.
However, we note that the CPT codes for hospital care services are used
to report care for hospitalized patients with a variety of diagnoses,
including psychiatric diagnoses. In the CY 2011 PFS proposed rule (75
FR 40110), we stated our belief that it would not be appropriate to add
services to the telehealth list only for certain diagnoses because the
service described by a HCPCS code is essentially the same service,
regardless of the patient's diagnosis. When evaluating the addition of
services for telehealth on a category 1 basis, our focus is on the
roles of, and interactions among, the beneficiary, the physician or
practitioner, and the telepresenter (if applicable), which generally
are similar across diagnoses for services that may be reported with the
same HCPCS codes. Even in the unique case of certain ESRD services, we
limited additions to the list of Medicare telehealth services based on
the appropriateness of certain specific codes, taking into
consideration the full service descriptions (69 FR 47511). Therefore,
we continue to believe that it is most appropriate to consider
additions to the list of telehealth services based on the overall
suitability of the services described by the relevant HCPCS codes to
delivery through telehealth.
In the CY 2005, CY 2008, and CY 2009 PFS rulemakings (69 FR 47510
and 66276, 72 FR 38144 and 66250, and 73 FR 38517 and 69745,
respectively), we did not add initial, subsequent, or discharge day
management hospital care services to the list of approved telehealth
services because of our concern regarding the use of telehealth for the
ongoing evaluation and management (E/M) for the generally high acuity
of hospital inpatients. While we continue to have some concern in this
area, we also share the requestors' interest in improving access for
hospitalized patients to care furnished by treating practitioners.
Therefore, we reevaluated these services in the context of the CY 2011
requests, including considering the possibility that these services
could be added on a category 1 basis based on their resemblance to
services currently on the telehealth list, such as initial and follow-
up inpatient telehealth consultations. The following presents a
discussion of our review for the CY 2011 proposed rule of the
subcategories of hospital care services included in these requests.
Currently, one of the three codes for an initial hospital care
service (specifically CPT codes 99221, 99222, or 99223) is reported for
the first hospital inpatient E/M visit to the patient by the admitting
or a consulting practitioner when that visit is furnished in person. In
addition, we note that currently there are several HCPCS G-codes on the
Medicare telehealth services list that may be reported for initial and
follow-up inpatient consultations through telehealth, specifically
HCPCS codes G0406 (Follow-up inpatient telehealth consultation,
limited, physicians typically spend 15 minutes communicating with the
patient via telehealth); G0407 (Follow-up inpatient telehealth
consultation, intermediate, physicians typically spend 25 minutes
communicating with the patient via telehealth); G0408 (Follow-up
inpatient telehealth consultation, complex, physicians typically spend
35 minutes or more communicating with the patient via telehealth);
G0425 (Initial inpatient telehealth consultation, typically 30 minutes
communicating with the patient via telehealth); G0426 (Initial
inpatient telehealth consultation, typically 50 minutes communicating
with the patient via telehealth); and G0427 (Initial inpatient
telehealth consultation, typically 70 minutes or more communicating
with the patient via telehealth).
While initial inpatient consultation services are currently on the
list of approved telehealth services, there are no services on the
current list of telehealth services that resemble initial hospital care
for an acutely ill patient by the admitting practitioner who has
ongoing responsibility for the patient's treatment during the hospital
course. Therefore, we were unable to consider initial hospital care
services on a category 1 basis for the telehealth list for CY 2011.
We reviewed the documentation submitted in support of adding the
initial hospital care codes to the Medicare telehealth services list as
category 2 requests. Most of the studies provided by the requestors
were specific to the treatment of patients with particular diagnoses.
Additionally, the studies were not specific to initial hospital care
visits by admitting practitioners. Finally, most of the studies
concluded that more research was required in order to establish medical
equivalence between telehealth

[[Page 73316]]

and in-person services. Therefore, we received no information that
provides robust support for the addition of initial hospital care
services to the approved telehealth list on a category 2 basis. The
initial hospital care codes describe the first visit to the
hospitalized patient by the admitting practitioner who may or may not
have seen the patient in the decision-making phase regarding
hospitalization. We believe it is critical that the initial hospital
visit by the admitting practitioner be conducted in-person to ensure
that the practitioner with ongoing treatment responsibility
comprehensively assesses the patient's condition upon admission to the
hospital through a thorough in-person examination. Therefore, we did
not propose to add initial hospital care services to the Medicare
telehealth services list for CY 2011.
We again considered adding subsequent hospital care services
reported by CPT codes 99231 through 99233 to the telehealth list for CY
2011 on a category 1 basis. In the CY 2005 and CY 2008 PFS proposed
rules (69 FR 47511 and 72 FR 38155), we stated that the potential
acuity of patients in the hospital setting precludes consideration of
subsequent hospital visits as similar to existing telehealth services.
However, as stated earlier, we also note that HCPCS codes for initial
and follow-up inpatient consultation services are on the list of
telehealth services. These E/M services are furnished to high acuity
hospitalized patients, although not by the admitting practitioner
himself or herself. However, in light of the increasingly prevalent
care model that entails multidisciplinary team care for patients with
complex medical illnesses that involve multiple body systems,
consulting practitioners may often play a key, intensive, and ongoing
role in caring for hospitalized patients. Therefore, we believe that
subsequent hospital care visits by a patient's admitting practitioner
may sufficiently resemble follow-up inpatient consultation services to
consider these subsequent hospital care services on a category 1 basis
for the telehealth list. While we still believe the potential acuity of
hospital inpatients is greater than those patients likely to receive
currently approved Medicare telehealth services, we also believe that
it would be appropriate to permit some subsequent hospital care
services to be furnished through telehealth in order to ensure that
hospitalized patients have frequent encounters with their admitting
practitioner. However, we also continue to believe that the majority of
these visits should be in-person to facilitate the comprehensive,
coordinated, and personal care that medically volatile, acutely ill
patients require on an ongoing basis.
Therefore, for CY 2011 we proposed that subsequent hospital care
services, specifically CPT codes 99231, 99232, and 99233, be added to
the list of telehealth services on a category 1 basis for CY 2011, but
with some limitations on the frequency with which these services may be
furnished through telehealth. Because of our concerns regarding the
potential acuity of hospital inpatients, we proposed to limit the
provision of subsequent hospital care services through telehealth to
once every 3 days. We were confident that admitting practitioners would
continue to make appropriate in-person visits to all patients who need
such care during their hospitalization. Consulting practitioners should
continue to use the inpatient telehealth consultation HCPCS G-codes,
specifically G0406, G0407, G0408, G0425, G0426, or G0427 when reporting
consultations furnished to inpatients via telehealth.
Consistent with this proposal, we proposed to revise Sec.
410.78(b) and Sec. 414.65(a)(1) to include subsequent hospital care
services as Medicare telehealth services, with the limitation of one
telehealth subsequent hospital care service every 3 days.
We also considered adding hospital discharge day management
services to the list of telehealth services. These services, reported
by CPT codes 99238 and 99239, include the final examination of the
patient, discussion of the hospital stay, instructions for continuing
care to all relevant caregivers, and preparation of discharge records,
prescriptions, and referral forms. These services are furnished when a
practitioner deems it medically reasonable and necessary to assess a
patient's readiness for discharge and to prepare a patient for
discharge from an acute care environment to a less intensive setting.
There are no services on the current list of telehealth services that
resemble such preparation of a patient for discharge. We believe it is
especially important that, if a practitioner furnishes a discharge day
management service, the service be furnished in-person in order to
allow the practitioner to comprehensively assess the patient's status
in preparation for discharge so that the patient will have a higher
likelihood of making a successful transition to the less intensive
setting. Therefore, we did not consider hospital discharge day
management services for addition to the Medicare telehealth services
list on a category 1 basis.
We reviewed the documentation submitted by requestors in support of
adding these codes to the Medicare telehealth services list on a
category 2 basis. Most of the submitted studies were specific to the
treatment of patients with specific diagnoses and were not specific to
discharge services. Additionally, most of the studies concluded that
more research was required in order to establish medical equivalence
between telehealth and in-person services. The submitted documentation
did not provide the necessary evidence to alter our previous conclusion
that hospital discharge day management services should be provided in-
person in light of the acuity of hospitalized patients, their typically
complex post-hospitalization care needs, and the importance of patient
education by the admitting practitioner who had ongoing responsibility
for the patient's treatment during the hospital stay. Therefore, we did
not propose to add hospital discharge day management services to the
list of telehealth services for CY 2011.
Comment: Many commenters expressed support for all of CMS' proposed
additions to the list of Medicare telehealth services, including
subsequent hospital care services. One commenter urged CMS to focus on
adding services where research demonstrates that technology can
facilitate medically equivalent services and improve beneficiary access
to providers, and to carefully monitor implementation of any new
telehealth services to ensure that patients' experience of the care is
positive and that patient outcomes are not compromised. The commenter
encouraged CMS' continued attention to the evidence and the role of
patient needs as CMS evaluates telehealth requests. The commenter cited
CMS' decision not to propose the addition of hospital discharge day
management services as a Medicare telehealth service as an example of
the agency applying appropriate rigor to best reflect patient needs and
preferences.
Response: We appreciate the support for our proposed additions, as
well as our consideration and decisions regarding requested additions
to telehealth services that we did not propose to add to the list of
telehealth services for CY 2011.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to add subsequent hospital care
services, specifically CPT codes 99231, 99232, and 99233, to the list
of telehealth services on a category 1 basis for CY 2011, but with the
limitation of one

[[Page 73317]]

subsequent hospital care service furnished through telehealth every 3
days. We are revising Sec. 410.78(b) and Sec. 414.65(a)(1)
accordingly to include subsequent hospital care services as Medicare
telehealth services, with the limitation of one telehealth subsequent
hospital care service every 3 days. We are also finalizing our decision
not to add initial or discharge day management hospital care services
to the list of Medicare telehealth services.
5. Initial, Subsequent, Discharge Day Management, and Other Nursing
Facility Care Services
The American Telemedicine Association and the Marshfield Clinic
submitted requests to add nursing facility care codes, covering the
spectrum of initial (reported by CPT codes 99304 (Level 1 initial
nursing facility care), 99305 (Level 2 initial nursing facility care)
and 99306 (Level 3 initial nursing facility care)); subsequent
(reported by CPT codes 99307 (Level 1 subsequent nursing facility
care), 99308 (Level 2 subsequent nursing facility care), 99309 (Level 3
subsequent nursing facility care), and 99310 (Level 4 subsequent
nursing facility care)); discharge day management (reported by CPT
codes 99315 (Nursing facility discharge day management; 30 minutes or
less) and 99316 (Nursing facility discharge day management; more than
30 minutes)); and other (reported by CPT code 99318 (Evaluation and
management of a patient involving an annual nursing facility
assessment)) services, to the Medicare telehealth services list
beginning in CY 2011. The commenters requesting the addition of these
services expressed concerns regarding limited access to care if we did
not allow these services to be furnished through telehealth, and
requested that CMS acknowledge the recent Congressional inclusion of
nursing facilities as telehealth originating sites by adding these
codes to the list of Medicare telehealth services.
In the CY 2010 PFS proposed and final rules (74 FR 33544 and 74 FR
61762), we discussed concerns about potential disparities in patient
acuity between nursing facility services and the current list of
Medicare telehealth services. We also declined to add HCPCS codes to
the Medicare telehealth services list that are used exclusively to
describe Federally-mandated nursing facility visits. As discussed in
the CY 2010 PFS proposed rule (74 FR 33543), the long-term care
regulations at Sec. 483.40(c) require that residents of SNFs receive
initial and periodic personal visits. These regulations ensure that at
least a minimal degree of personal contact between a practitioner and a
SNF resident is maintained, both at the point of admission to the
facility and periodically during the course of the resident's stay. We
continue to believe that these Federally-mandated visits should be
conducted in-person, and not as Medicare telehealth services.
Therefore, in the CY 2010 PFS final rule with comment period, we
revised Sec. 410.78 to preclude physicians and other practitioners
from furnishing the physician visits required under Sec. 483.40(c)
through telehealth.
We reviewed the use of telehealth for each of the subcategories of
nursing facility services included in the requests for CY 2011. We
identified the E/M services that fulfill Federal requirements for
personal visits under Sec. 483.40(c), and we did not propose for CY
2011 to add any HCPCS codes to the Medicare telehealth services list
that are used exclusively to describe these Federally-mandated visits.
These codes include the CPT codes for initial nursing facility care
(CPT codes 99304 through 99306) that are used to report the initial E/M
visit that fulfills Federally-mandated requirements under Sec.
483.40(c) and other nursing facility service (CPT code 99318) that is
only payable by Medicare if the visit is substituted for a Federally-
mandated visit under Sec. 483.40(c).
The nursing facility discharge day management services reported
under CPT code 99315 and 99316 are E/M visits that prepare a nursing
facility resident for discharge from the facility. There are no
Medicare requirements that such a service be furnished. If a
practitioner chooses to furnish this service, we continue to believe
that an in-person visit is most appropriate in order to ensure the
resident is prepared for discharge from the nursing facility. These
services are furnished when a practitioner deems it medically
reasonable and necessary to assess a patient's readiness for and to
prepare a patient being discharged from the monitored nursing facility
environment to another typically less intensive setting. There are no
services on the current list of telehealth services that resemble such
preparation of a patient for discharge. As in the case of hospital
discharge day management services, we believe it is especially
important that, if a practitioner furnishes a nursing facility
discharge day management service, the service be furnished in-person.
The practitioner must be able to comprehensively assess the patient's
status in preparation for discharge so that the patient will have a
higher likelihood of making a successful transition from the nursing
facility to another setting. Therefore, we did not consider nursing
facility discharge day management services for addition to the Medicare
telehealth services list on a category 1 basis for CY 2011. When we
considered the addition of these services under category 2, we had no
evidence that nursing facility discharge services furnished through
telehealth are equivalent to in-person discharge services. Therefore,
we did not propose to add nursing facility discharge day management
services to the CY 2011 telehealth list.
Subsequent nursing facility services, reported by CPT codes 99307
through 99310, may be used to report either a Federally-mandated
periodic visit under Sec. 483.40(c) or another E/M visit, prior to or
after the initial nursing facility care visit, as long as the
subsequent nursing facility care visit is medically reasonable and
necessary for the resident's care. While we continue to believe that
many SNF residents have complex medical care needs, we believe that it
is appropriate to consider the addition of these codes to the
telehealth list on a category 1 basis. As we state above in the context
of our discussion of subsequent hospital care services, the HCPCS codes
for initial and follow-up inpatient consultation services for nursing
facility patients are on the list of Medicare telehealth services, and
subsequent nursing facility services are similar to those services.
These E/M services are furnished to high acuity, complex SNF patients,
although not by the admitting practitioner himself or herself.
Therefore, we believe that subsequent nursing facility visits by a
patient's admitting practitioner sufficiently resemble follow-up
inpatient consultation services to consider them on a category 1 basis
for the telehealth list. We concluded for CY 2011 that it would be
appropriate to permit some subsequent nursing facility care services to
be furnished through telehealth to ensure that complex nursing facility
patients have frequent encounters with their admitting practitioner,
although we continue to believe that the Federally-mandated visits
should be in-person to facilitate the comprehensive, coordinated, and
personal care that these complex patients require on an ongoing basis.
Therefore, we proposed that subsequent nursing facility care
services, specifically CPT codes 99307, 99308, 99309 and 99310, be
added to the list of Medicare telehealth services on a category 1 basis
beginning in CY 2011, with some limitations on furnishing these
services through telehealth. Because of our concerns regarding the
potential acuity and

[[Page 73318]]

complexity of SNF inpatients, we proposed to limit the provision of
subsequent nursing facility care services furnished through telehealth
to once every 30 days. We were especially interested in public
comments, including any evidence regarding patterns of high quality
care and clinical outcomes, regarding this proposal to limit the
provision of subsequent nursing facility care services furnished
through telehealth to once every 30 days. We remain committed to
ensuring that SNF inpatients receive appropriate in-person visits and
that Medicare pays only for medically reasonable and necessary care.
Currently and continuing in CY 2011, an unlimited number of initial and
follow-up consultation services may be furnished through telehealth to
these patients, so we believe that only a limited number of subsequent
nursing facility care services by the admitting practitioner would be
appropriate for SNF inpatients. Finally, we specified that subsequent
nursing facility care services reported for a Federally-mandated
periodic visit under Sec. 483.40(c) may not be furnished through
telehealth. In light of this CY 2011 proposal, we were confident that
admitting practitioners would continue to make appropriate in-person
visits to all patients who need such care during their SNF stay.
Consistent with our proposal, we proposed to revise Sec. 410.78(b)
and Sec. 414.65(a)(1) to include subsequent nursing facility care
services as Medicare telehealth services, with the limitation of one
telehealth subsequent nursing facility care service every 30 days.
Federally-mandated periodic visits may not be furnished through
telehealth, as specified currently in Sec. 410.78(e)(2).
Comment: One commenter recommended that CMS limit the use of
telehealth for subsequent nursing facility care services to CPT codes
99307 and 99308, the lower two levels of care. The commenter stated
that the subsequent nursing facility care services described by CPT
codes 99309 and 99310, the higher two levels of care, require a
detailed to comprehensive history and examination, along with moderate
to complex decisionmaking that warrant an in-person visit with the
physician. The same commenter disagreed with the limitation of one
telehealth subsequent nursing facility care service every 30 days and
suggested that unless and until evidence of overutilization is
obtained, the limit could hinder access to appropriate care under the
telehealth benefit. The commenter agreed with the CMS policy that all
Federally-mandated visits as defined by the long-term care regulations
Sec. 483.40(c) should be conducted in-person and not as Medicare
telehealth services.
Response: We appreciate the response to our specific request for
public comment regarding the addition of subsequent nursing facility
care services to the list of Medicare telehealth services with the
limitation of one telehealth subsequent nursing facility care service
every 30 days. As we stated in the proposed rule (75 FR 40112), we
remain committed to ensuring that SNF inpatients receive appropriate
in-person visits and that Medicare pays only for medically reasonable
and necessary care. We received no new evidence from the commenter
regarding patterns of high quality care and clinical outcomes in terms
of our proposal to limit the provision of subsequent nursing facility
care services furnished through telehealth to once every 30 days.
Because we want to ensure that nursing facility patients with complex
medical conditions have appropriately frequent medically reasonable and
necessary encounters with their admitting practitioner, we continue to
believe that it would be appropriate to permit the full range of
subsequent nursing facility care services to be furnished through
telehealth. At the same time, because of our concerns regarding the
potential acuity and complexity of SNF inpatients, we want to ensure
that these patients continue to receive in-person visits as appropriate
to manage their care. We are adding these services as Medicare
telehealth services with the limitation as we proposed, and we remain
confident that admitting practitioners will continue to make
appropriate in-person visits to all patients who need such care during
their SNF stay.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to add subsequent nursing facility care
services, specifically CPT codes 99307, 99308, 99309 and 99310, to the
list of Medicare telehealth services on a category 1 basis beginning in
CY 2011, with limits to the provision of subsequent nursing facility
care services furnished through telehealth to once every 30 days. We
are revising Sec. 410.78(b) and Sec. 414.65(a)(1) to include
subsequent nursing facility care services as Medicare telehealth
services, with the limitation of one telehealth subsequent nursing
facility care service every 30 days. Federally-mandated periodic visits
may not be furnished through telehealth, as specified currently in
Sec. 410.78(e)(2).
6. Neuropsychological Testing Services
The American Telemedicine Association submitted a request to add
neuropsychological testing services, described by CPT codes 96119
(Neuropsychological testing (for example, Halstead-Reitan
Neuropsychological Battery, Wechsler Memory Scales and Wisconsin Card
Sorting Test), per hour of the psychologist's or physician's time, both
face-to-face time administering tests to the patient and time
interpreting these test results and preparing the report); and 96119
(Neuropsychological testing (for example, Halstead-Reitan
Neuropsychological Battery, Wechsler Memory scales and Wisconsin Card
Sorting Test), with qualified health care professional interpretation
and report, administered by technician, per hour of technician time,
face-to-face), to the list of telehealth services for CY 2011 based on
their similarity to other telehealth services.
In the CY 2008 PFS final rule with comment period (72 FR 66251), we
stated that we have received conflicting comments and data regarding
the appropriateness of furnishing neuropsychological testing via
telehealth. While we appreciate the recent request for addition of
these same services to the Medicare telehealth services list, we did
not believe that these services are similar to services currently on
the Medicare telehealth services list and, therefore, we concluded that
they would not be appropriate for consideration or addition under
category 1 for CY 2011. In the CY 2011 request for the addition of the
these services, we received no information to indicate that the
diagnostic findings of neuropsychological testing through telehealth
are similar to those based upon in-person testing, and therefore that
testing through telehealth does not affect the patient's diagnosis.
Consequently, we did not propose to add neuropsychological testing
services to the list of approved Medicare telehealth services for CY
2011.
We received no public comments regarding our discussion of the
request to add neuropsychological testing to the list of Medicare
telehealth services. Therefore, we are finalizing our decision not to
add neuropsychological testing to the list of Medicare telehealth
services for CY2011.
7. Speech-Language Pathology Services
The Marshfield Clinic submitted a request to add various speech-
language pathology services to the list of approved telehealth services
for CY

[[Page 73319]]

2011. Speech-language pathologists are not permitted under section
1842(b)(18)(C) of the Act to furnish and receive payment for Medicare
telehealth services. Therefore, we did not propose to add any speech-
language pathology services to the list of Medicare telehealth services
for CY 2011. For further discussion of these services in the context of
telehealth, we refer readers to the CY 2005 and CY 2007 PFS proposed
and final rules with comment period (69 FR 47512 and 66276, and 71 FR
48995 and 69657).
Comment: One commenter stated that research has proven that
audiology procedures offered via telehealth services have great
potential. The commenter also stated that CMS should use its broad
discretion in implementing programs to expand the list of available
telehealth services to include audiology.
Response: It is not within our administrative authority to pay
speech language pathologists and audiologists for services furnished
via telehealth. The statute authorizes the Secretary to pay for
telehealth services only when furnished by a physician or a
practitioner as those terms are defined in section 1834(m)(4)(D) and
(E) of the Act.
After consideration of the public comment we received, we are
finalizing our decision not to add various speech-language pathology
services to the list of approved telehealth services for CY 2011.
8. Home Wound Care Services
Wound Care Associates, LLC, submitted a request to add wound care
in the home setting to the list of Medicare telehealth services. A
patient's home is not permitted under current statute to serve as an
originating site for Medicare telehealth services. Therefore, we did
not propose to add home wound care services to the list of Medicare
telehealth services for CY 2011.
We received no public comments regarding our discussion of the
request to add wound care in the home setting to the list of Medicare
telehealth services. Therefore, we are finalizing our decision not to
add wound care in the home setting to the list of Medicare telehealth
services for CY2011.
9. Other Issues
We received other public comments on matters related to Medicare
telehealth services that were not the subject of proposals in the CY
2011 PFS proposed rule. We thank the commenters for sharing their views
and suggestions. Because we did not make any proposals regarding these
matters, we do not generally summarize or respond to such comments in
this final rule with comment period. However, we are summarizing and
responding to the following comments in order to reiterate certain
information.
Comment: One commenter requested an explanation of the acceptable
time and format to request or recommend changes to the criteria set in
2003 by which CMS considers specific services for Medicare coverage
when furnished through telehealth.
Response: As we discussed in the CY 2010 PFS final rule with
comment period (74 FR 61766), our established criteria and process for
reviewing requests to add to the list of approved Medicare telehealth
services were subject to full notice and comment procedures in the CY
2003 PFS proposed and final rules. Since we did not make any proposals
relating to the criteria or process for CY 2011, any potential
revisions to the process for adding or deleting services from the list
of approved Medicare telehealth services are outside the scope of this
CY 2011 final rule with comment period.
Throughout the year, we regularly meet with parties who want to
share their views on topics of interest to them. These discussions may
provide us with information regarding changes in medical practice and
afford opportunities for the public to bring to our attention issues
they believe we should consider for future rulemaking. Thus, we
encourage stakeholders to contact us at any time if there are topics
related to physician payment policy that they would like to discuss.
Comment: One commenter requested an explanation regarding how the
payment rates for telehealth consultations are set in a manner that is
consistent with section 1834(m)(2)(A) of the Act that requires Medicare
to pay a practitioner who furnishes a telehealth service an amount
equal to the amount that the practitioner would have been paid if the
service had been furnished without the use of a telecommunications
system.
Response: As we stated in the CY 2009 PFS final rule with comment
period (73 FR 69745), we established the RVUs for follow-up inpatient
telehealth consultations at the same level as the RVUs established for
subsequent hospital care (as described by CPT codes 99231 through
99233). For CY 2010, we established the RVUs for initial inpatient
telehealth consultations at the same level as the RVUs for initial
hospital care (as described by CPT codes 99221 through 99223) (75 FR
61775). We believe this is appropriate because a physician or
practitioner furnishing a telehealth service is paid an amount equal to
the amount that would have been paid if the service had been furnished
without the use of a telecommunication system. Since physicians and
practitioners furnishing follow-up inpatient consultations in an in-
person encounter must continue to utilize subsequent hospital care
codes (as described by CPT codes 99231 through 99233) and those
furnishing initial inpatient consultations in an in-person encounter
must generally utilize initial hospital care codes (as described by CPT
codes 99221 through 99223), we believe it is appropriate that the RVUs
for the subsequent and initial telehealth HCPCS G-codes are set at the
same level as the subsequent and initial hospital care codes,
respectively.

D. Summary of CY 2011 Telehealth Policies

In summary, we are finalizing our proposals to add the following
requested services to the list of Medicare telehealth services for CY
2011:
Individual and group KDE services (HCPCS codes G0420 and
G0421, respectively);
Individual and group DSMT services, with a minimum of 1
hour of in-person instruction to be furnished in the year following the
initial DSMT service to ensure effective injection training (HCPCS
codes G0108 and G0109, respectively);
Group MNT and HBAI services (CPT codes 97804, and 96153
and 96154, respectively);
Subsequent hospital care services, with the limitation for
the patient's admitting practitioner of one telehealth visit every 3
days (CPT codes 99231, 99232, and 99233); and
Subsequent nursing facility care services, with the
limitation for the patient's admitting practitioner of one telehealth
visit every 30 days (CPT codes 99307, 99308, 99309, and 99310).
Furthermore, we are revising Sec. 410.78(b) and Sec. 414.65(a)(1)
accordingly. Specifically, we are adding individual and group KDE
services, individual and group DSMT services, group MNT services, group
HBAI services, and subsequent hospital care and nursing facility care
services to the list of telehealth services for which payment will be
made at the applicable PFS payment amount for the service of the
practitioner. In addition, we have reordered the listing of services in
these two sections and removed ``initial and follow-up inpatient
telehealth consultations furnished to beneficiaries in hospitals and
SNFs'' in Sec. 410.78(b) because these are described by the more
general term ``professional

[[Page 73320]]

consultations'' that is in the same section. Finally, we are continuing
to specify that the physician visits required under Sec. 483.40(c) may
not be furnished as telehealth services.

E. Telehealth Originating Site Facility Fee Payment Amount Update

Section 1834(m) of the Act establishes the payment amount for the
Medicare telehealth originating site facility fee for telehealth
services provided from October 1, 2001, through December 31 2002, at
$20. For telehealth services provided on or after January 1 of each
subsequent calendar year, the telehealth originating site facility fee
is increased by the percentage increase in the MEI as defined in
section 1842(i)(3) of the Act. The MEI increase for 2011 is 0.4
percent. Therefore, for CY 2011, the payment amount for HCPCS code
Q3014 (Telehealth originating site facility fee) is 80 percent of the
lesser of the actual charge or $24.10. The Medicare telehealth
originating site facility fee and MEI increase by the applicable time
period is shown in Table 49.

Table 49--The Medicare Telehealth Originating Site Facility Fee and MEI
Increase by the Applicable Time Period
------------------------------------------------------------------------
MEI
Facility increase Period
fee (%)
------------------------------------------------------------------------
$20.00 N/A 10/01/2001-12/31/2002
$20.60 3.0 01/01/2003-12/31/2003
$21.20 2.9 01/01/2004-12/31/2004
$21.86 3.1 01/01/2005-12/31/2005
$22.47 2.8 01/01/2006-12/31/2006
$22.94 2.1 01/01/2007-12/31/2007
$23.35 1.8 01/01/2008-12/31/2008
$23.72 1.6 01/01/2009-12/31/2009
$24.00 1.2 01/01/2010-12/31/2010
$24.10 0.4 01/01/2011-12/31/2011
------------------------------------------------------------------------

V. Addressing Interim Final Relative Value Units From CY 2010 and
Establishing Interim Relative Value Units for CY 2011

A. Background

In accordance with section 1848(c) of the Act, CMS determines work,
PE, and malpractice RVUs for each service paid under the PFS. On an
annual basis, the AMA RUC provides CMS with recommendations regarding
physician work values for new, revised, and potentially misvalued
codes. Over the last several years, CMS, in conjunction with the AMA
RUC, has identified and reviewed numerous potentially misvalued CPT
codes. In 2006, the AMA RUC established the Five-Year Review
Identification Workgroup to identify potentially misvalued services
using the following screens: ``New Technology;'' ``Site-of-Service
Anomalies;'' `` High Volume Growth;'' ``CMS Fastest Growing;'' ``High
Intra-Service Work per Unit Time (IWPUT);'' ``Services Surveyed by One
Specialty--Now Performed by a Different Specialty;'' ``Harvard-Valued,
Utilization over 1 Million;'' ``Harvard Valued, Utilization over
100,000;'' and ``Codes Reported Together/Bundled CPT Services.'' In
addition to providing recommendations to CMS for work RVUs, the AMA
RUC's Practice Expense Subcommittee reviews and then the AMA RUC
recommends direct PE inputs (clinical labor, medical supplies, and
medical equipment) for individual services. To guide the establishment
of malpractice RVUs for new and revised codes before the next 5-Year
Review of Malpractice, the AMA RUC also provides crosswalk
recommendations, that is, ``source'' codes with a similar specialty mix
of practitioners furnishing the source code and the new/revised code.
CMS reviews the AMA RUC recommendations on a code-by-code basis. For
AMA RUC recommendations regarding physician work RVUs, we determine
whether we agree with the recommended work RVUs for a service (that is,
we agree the valuation is accurate), or, if we disagree, we determine
an alternative value that better reflects our estimate of the physician
work for the service. Because of the timing of the CPT Editorial Panel
decisions, AMA RUC recommendations, and our rulemaking cycle, we
publish these work RVUs in the PFS final rule with comment period as
interim final values, subject to public comment. Similarly, we assess
the AMA RUC's recommendations for direct PE inputs and malpractice
crosswalks, and establish PE and malpractice interim final values,
which are also subject to comment. We note that, with respect to
interim final PE RVUs, the main aspect of our valuation that is open
for public comment for a new, revised, or potentially misvalued code is
the direct PE inputs and not the other elements of the PE valuation
methodology, such as the indirect cost allocation methodology, that
also contribute to establishing the PE RVUs for a code. The public
comment period on the PFS final rule with comment period remains open
for 60 days after the rule is issued.
If we receive public comments on the interim final work RVUs for a
specific code indicating that refinement of the interim final work
value is warranted based on sufficient information from the commenters
concerning the clinical aspects of the physician work associated with
the service (57 FR 55917), we refer the service to a refinement panel,
as discussed in further detail in sections III.I. and V.B.1. of this
final rule with comment period.
In the interval between closure of the comment period and the
subsequent year's PFS final rule with comment period, we consider all
of the public comments on the interim final work, PE, and malpractice
RVUs for the new, revised, and potentially misvalued codes and the
results of the refinement panel, if applicable. Finally, we address the
interim final RVUs (including the interim final direct PE inputs) by
providing a summary of the public comments and our responses to those
comments, including a discussion of any changes to the interim final
work or malpractice RVUs or direct PE inputs, in the following year's
PFS final rule with comment period. We then typically finalize the
direct PE inputs and the work, PE, and malpractice RVUs for the service
in that year's PFS final rule with comment period, unless we determine
it would be more appropriate to continue their interim final status for
another year and solicit further public comment.

B. Addressing Interim Final RVUs From CY 2010

In this section, we address the interim final values published in
Appendix C of the CY 2010 PFS final rule with comment period (74 FR
62144 through 62146), as subsequently corrected in the December 10,
2009 (74 FR 65449) and May 11, 2010 correction notices (75 FR 26350).
We discuss the results of the CY 2010 refinement panel, respond to
public comments received on specific interim final values (including
direct PE inputs) from CY 2010, address the status of the interim final
values of a number of potentially misvalued codes from CY 2009 and CY
2010, and address the other new, revised, or potentially misvalued
codes with interim final values for CY 2010 that are not specifically
discussed elsewhere in this final rule with comment period.
We note that the final CY 2011 direct PE database that lists the
direct PE inputs is available on the CMS Web site under the downloads
for the CY 2011 PFS final rule with comment period at: http://
www.cms.gov/PhysicianFeeSched/PFSFRN/

[[Page 73321]]

list.aspTopOfPage. The final CY 2011 work, PE, and malpractice
RVUs are displayed in Addendum B to this final rule with comment
period.
1. CY 2010 Interim Final Work RVUs Referred to the Refinement Panel
We received public comments on 4 CPT codes with CY 2010 interim
final work values. We referred these services to the CY 2010 refinement
panel for further review. For ease of discussion, we will be referring
to these services as ``refinement codes.'' Consistent with past
practice (62 FR 59084), we convened a multispecialty panel of
physicians to assist us in the review of the comments. The panel was
moderated by our physician advisors, and consisted of the following
voting members:
One or two clinicians representing the commenting
organization.
Two primary care clinicians nominated by the American
Academy of Family Physicians and the American College of Physicians.
Three contractor medical directors (CMDs).
Clinicians with practices in related specialties who were
expected to have knowledge of the services under review.
We assembled a set of 300 reference services and asked the panel
members to compare the clinical aspects of physician work for the
refinement code to one or more of the reference services. In compiling
the set of reference services, we attempted to include: (1) Services
that are commonly performed for which the work RVUs are not
controversial; (2) services that span the spectrum of work intensity;
and (3) at least three services performed by each of the major
specialties that furnish the refinement codes so that the perspective
of relevant specialties would be represented. The panel process was
designed to capture each participant's independent judgment and his or
her clinical experience which informed and drove the discussion of the
refinement code during the refinement panel proceedings. Following the
discussion, each voting participant rated the physician work of the
refinement code. Ratings were obtained individually and confidentially,
with no attempt to achieve consensus among the panel members.
We then analyzed the ratings for each refinement code based on a
presumption that the interim final work RVUs were correct unless the
ratings clearly indicated a different result. Ratings of work were
analyzed for consistency among the four different groups (commenting
organization, primary care physicians, CMDs, and related clinicians)
represented on the panel. In addition, we used statistical tests to
determine whether there was sufficient agreement among the groups of
the panel and whether the agreed-upon RVUs differed significantly from
the interim final RVUs published in Addendum C of the CY 2010 final
rule with comment period. We did not modify the interim final RVUs
unless there was clear agreement for a change. If there was agreement
across groups for change, but the groups did not agree on what the new
RVUs should be, we eliminated the outlier group and looked for
agreement among the remaining groups as the basis for new RVUs for the
refinement code. This methodology is consistent with the historical
refinement process as established in the November 25, 1992 PFS final
rule with comment period (57 FR 55938).
Our decision to convene multispecialty panels of physicians and to
apply the statistical tests described above has historically been based
on our need to balance the interests of those who commented on the
interim final work values with the redistributive effects that would
occur in other specialties if the work values were changed. We refer
readers to section III.I. of this final rule with comment period for a
full discussion of the changes to the refinement process that we are
adopting for refinement panels beginning in CY 2011.
Table 50 lists those refinement codes reviewed under the CY 2010
refinement panel process described in this section. The table includes
the following information:
CPT Code. This is the CPT code for a service.
Short Descriptor. This is an abbreviated version of the
narrative description of the code.
CY 2010 Interim Final Work RVUs. The interim final work
RVUs that appeared in the CY 2010 PFS final rule with comment period
(74 FR 61949 through 61953), as subsequently corrected in the December
10, 2009 (74 FR 65449) and May 11, 2010 correction notices (75 FR
26350), are shown for each reviewed code.
Requested Work RVUs. This column identifies the work RVUs
requested by the commenters.
CY 2011 Final Work RVUs. This column contains the final
work RVUs after consideration by the refinement panel.
We note that we are accepting the results of the CY 2010 refinement
panel for all of these codes as the final work RVUs for CY 2011. These
final values are also displayed in Addendum B to this final rule with
comment period.

Table 50--CPT Codes Reviewed Under the CY 2010 Refinement Panel Process
----------------------------------------------------------------------------------------------------------------
CY 2010 interim Requested work CY 2011 final
CPT Code Mod Short descriptor final work RVUs RVUs work RVUs
----------------------------------------------------------------------------------------------------------------
74261............................ 26 Ct colonography, w/ 2.28 2.40 2.40
o dye.
78451............................ 26 Ht muscle image 1.38 1.40 1.38
spect, sing.
78452............................ 26 Ht muscle image 1.62 1.75 1.62
spect, mult.
95905............................ 26 Motor/sens nrve 0.05 0.15 0.05
conduct test.
----------------------------------------------------------------------------------------------------------------

2. CY 2010 Interim Final RVUs for Which Public Comments Were Received
a. Insertion of Breast Prosthesis (CPT Code 19340)
CPT code 19340 (Immediate insertion of breast prosthesis following
mastopexy, mastectomy or in reconstruction) was identified by CMS for
AMA RUC review as requested by the specialty society. The AMA RUC
recommended 13.78 work RVUs for CY 2010, which CMS accepted. However,
as noted by a public comment on the CY 2010 PFS final rule with comment
period, the interim final CY 2010 work RVUs published in the CY 2010
PFS final rule with comment period (74 FR 61779, 62023 and 62144) for
this service did not reflect the increases in the evaluation and
management services for the post-operative visits associated with this
service that resulted from the CY 2010 changes to the consultation code
policy. The work RVUs for CPT code 19340 with these increases included
are 13.99 RVUs. This correction was included in the May 11, 2010
correction notice to the CY 2010 final rule with comment period (75 FR
26356). We are finalizing the interim work RVUs for CPT code 19340 of
13.99 for CY 2011.

[[Page 73322]]

b. Computed Tomographic Colonography (CPT Code 74261)
For CPT code 74261, (Computed tomographic (CT) colonography,
diagnostic, including image postprocessing; without contrast material),
the AMA RUC recommended 2.40 work RVUs. During the AMA RUC meeting,
this code was compared to two CPT codes: 75635 (Computed tomographic
angiography, abdominal aorta and bilateral iliofemoral lower extremity
runoff, with contrast material(s), including noncontrast images, if
performed, and image postprocessing (work RVUs = 2.40)) and 78815
(Positron emission tomography (PET) with concurrently acquired computed
tomography (CT) for attenuation correction and anatomical localization
imaging; skull base to mid-thigh (work RVUs = 2.44)). Based on the
comparisons of similar physician work, physician time, and intensity/
complexity measures, the AMA RUC determined that work RVUs of 2.40 were
appropriate for CPT code 74261. We disagreed with the AMA RUC-
recommended work RVUs and believe CPT code 74263 (Computed tomographic
(CT) colonography, screening, including image postprocessing)
represents a more comparable service because it has virtually the same
description of work, pre-, intra-, and post-service time for which the
AMA RUC recommended work RVUs of 2.28. Therefore, we assigned interim
final work RVUs of 2.28 to CPT code 74261 for CY 2010.
Comment: Several commenters disagreed with the interim final work
RVUs assigned by CMS and believe that equalizing the work RVUs for
diagnostic and screening computed tomographic colonography ignores the
reality that patients referred for diagnostic study, by definition,
have greater complexity. These commenters believed that for this reason
and the increased time involved with a diagnostic study, higher work
RVUs are necessary to maintain the proper relativity with the
corresponding screening CPT code 74263. The commenters recommended that
CMS accept the AMA RUC-recommended work RVUs of 2.40 for CPT code 74261
and refer this code to the CY 2010 refinement panel for review.
Response: Based on the concerns expressed by the commenters, we
referred this code to the CY 2010 refinement panel for review. As a
result of the statistical analysis of the CY 2010 refinement panel
ratings, we are assigning 2.40 work RVUs to CPT code 74261 as the final
value for CY 2011.
c. Myocardial Perfusion Imaging (CPT Codes 78451, 78452, 78453, and
78454)
For CPT code 78451 (Myocardial perfusion imaging, tomographic
(SPECT) (including attenuation correction, qualitative or quantitative
wall motion, ejection fraction by first pass or gated technique,
additional quantification, when performed); single study, at rest or
stress (exercise or pharmacologic)), the AMA RUC recommended 1.40 work
RVUs, while the AMA RUC recommended 1.75 work RVUs for CPT code 78452
(Myocardial perfusion imaging, tomographic (SPECT) (including
attenuation correction, qualitative or quantitative wall motion,
ejection fraction by first pass or gated technique, additional
quantification, when performed); multiple studies, at rest and/or
stress (exercise or pharmacologic) and/or redistribution and/or rest
reinjection).
Upon review of the AMA RUC recommendations for these codes, it was
unclear what methodology the AMA RUC used to calculate the recommended
work RVUs for CPT code 78451. Therefore, we disagreed with the AMA RUC-
recommended work RVUs of 1.40 for CPT code 78451 and believe the work
RVUs for the survey 25th percentile were more appropriate. Therefore,
we assigned interim final work RVUs of 1.38 to CPT code 78451 for CY
2010.
For CPT code 78452, we disagreed with the reference code used, CPT
code 70496 (Computed tomographic angiography, head, with contrast
material(s), including noncontrast images, if performed, and image
postprocessing (work RVUs = 1.75)). We believe CPT code 78452 is
comparable to CPT code 73219 (Magnetic resonance (eg, proton) imaging,
upper extremity, other than joint; with contrast material(s) (work RVUs
= 1.62)), which has the same pre-, intra-, and post-service time.
Therefore, we assigned interim final work RVUs of 1.62 to CPT code
78452 for CY 2010.
We accepted the CY 2010 recommendations of the AMA RUC for the
direct PE inputs for CPT codes 78451, 78452, 78453, and 78454 (75 FR
61955).
Comment: Several commenters disagreed with the interim final work
RVUs assigned by CMS for these two services. The commenters pointed out
that the specialty and AMA RUC recommendations for both of these
services already reflected a tremendous reduction from the work RVUs
for the services as reported by multiple component codes in previous
years and expressed disappointment that additional reductions were made
by CMS. The commenters explained that in an effort to maintain
relativity between CPT codes 78451 and 78452, the recommended RVUs for
78451 were derived by calculating the relationship between the median
survey RVUs for CPT codes 78451 and 78452 and maintaining this
relationship between the recommended RVUs for CPT codes 78451 and
78452. That is, the survey work RVU relationship between CPT code
78451: 78452 is [1.50: 1.87], leading to the same relationship between
the AMA RUC-recommended RVUs for 78451: 78452 of [1.40: 1.75]. The AMA
RUC agreed that the computed work RVUs, 1.40 for CPT code 78451,
maintain the relativity of the original survey data and provide an
appropriate measure of the work for CPT code 78451.
The commenters believe that CMS does not have the special expertise
necessary to choose a different reference code than the code selected
by the multispecialty AMA RUC panel and disagreed with the reference
code used by CMS for establishing work RVUs for CPT code 78452. The AMA
RUC pointed out that the reference code has no associated computer
post-processing analysis, requires the interpretation of fewer images,
and has no additional cine-motion images to analyze and interpret, all
of which are included in the myocardial perfusion imaging procedures.
The commenters requested that CMS accept the AMA RUC
recommendations of 1.40 work RVUs for CPT code 78451 and 1.75 work RVUs
for CPT code 78452 and refer these codes to the CY 2010 refinement
panel for review.
Response: Based on the concerns expressed by the commenters, these
codes were referred to the CY 2010 refinement panel for review. As a
result of the statistical analysis of CY 2010 refinement panel ratings,
the work RVUs for these codes were unchanged. Therefore, we are
adopting the interim final values for these codes as final, with 1.38
work RVUs for CPT code 78451 and 1.62 work RVUs for CPT code 78452 for
CY 2011.
Comment: Several commenters asserted that CMS had incorrectly
crosswalked equipment time inputs for several myocardial perfusion
imaging codes (CPT codes 78451, 78452, 78453, and 78454), rather than
accepting the AMA RUC recommendations for these codes as CMS had stated
in the CY 2010 PFS final rule with comment period (74 FR 61955). One
commenter further suggested that the useful life of 5 years for the
Cobalt-57 flood source was incorrect.

[[Page 73323]]

Response: We appreciate the commenters' assistance, and we
corrected the equipment times in the May 11, 2010 correction notice to
the CY 2010 PFS final rule with comment period (75 FR 26356 and 26570).
We are finalizing these direct PE inputs for CY 2011. We also proposed
to change the useful life of the Cobalt-57 flood source from 5 to 2
years for CY 2011 (75 FR 40056). We address our final policies
regarding this proposal in section II.A.3.b.(4) of this final rule with
comment period.
Comment: Several commenters expressed concern that CMS applied
fully transitioned PE RVUs to the new and revised CY 2010 CPT codes,
specifically CPT codes 78451, 78452, 78453, and 78554. The commenters
argued that the result of the lack of a transition to use of the PPIS
data was an immediate 26 percent reduction for myocardial perfusion
imaging services, simply because the CPT code descriptors had been
revised to capture multiple procedure components. The commenters
requested that the new CPT codes follow the same blend of new and
previous PE RVUs that was applied to the existing CPT codes in CY 2010
and later years.
Response: Our longstanding policy is that if the CPT Editorial
Panel creates a new code for a given year, the new code would be paid
at its fully implemented PFS amount and not at a transition rate for
that year. Consistent with this policy, the new CY 2010 myocardial
perfusion imaging codes, and all other new CY 2010 CPT codes, are not
being paid based on transitional PE RVUs in CY 2010. We will continue
to pay these services based on the fully implemented PE RVUs in CY
2011, the same approach we are applying to other CPT codes that were
new for CY 2010 or CY 2011.
d. Nerve Conduction Test (CPT Code 95905)
For CPT code 95905 (Motor and/or sensory nerve conduction, using
preconfigured electrode array(s), amplitude and latency/velocity study,
each limb, includes F-wave study when performed, with interpretation
and report), the AMA RUC recommended 0.05 work RVUs, which we accepted
in the CY 2010 PFS final rule with comment (74 FR 61953).
Comment: One commenter requested that CMS refer CPT code 95905 to
the CY 2010 refinement panel for review. The commenter believes the AMA
RUC erred in its recommendation to CMS in regard to the physician work
involved. The commenter noted that when this code was discussed at the
AMA RUC meeting, the commenter and other specialty societies that
presented this code to the AMA RUC recommended assignment of 0.15 work
RVUs. The commenter also believes that the undervaluation of the
physician work for this service may undermine the ability of physicians
to provide the service.
Response: Based on the concerns expressed by the commenter, this
code was referred to the CY 2010 refinement panel for review. As a
result of the statistical analysis of the CY 2010 refinement panel
ratings, the work RVUs for this code were unchanged. Therefore, we are
finalizing the interim final values for CPT code 95905 as 0.05 work
RVUs for CY 2011.
e. Kidney Disease Education Services (HCPCS Codes G0420 and G0421)
During rulemaking for CY 2010, we adopted policies to provide for
the implementation of section 152(b) of the MIPPA which created a new
benefit category for kidney disease education (KDE) services for
Medicare beneficiaries diagnosed with Stage IV chronic kidney disease
(CKD). The MIPPA also amended section 1848(j)(3) of the Act which
allows for payment of KDE services under the PFS. For CY 2010, we
proposed and finalized the RVUs for the two HCPCS G-codes established
for the payment of KDE services (74 FR 61901), G0420 (Face-to-face
educational services related to the care of chronic kidney disease;
individual, per session, per one hour) and G0421 (Face-to-face
educational services related to the care of chronic kidney disease;
group, per session, per one hour). For purposes of valuing the HCPCS
codes for KDE services, we based the work RVUs and the PE inputs, with
minor modifications, on CPT codes for medical nutrition therapy (MNT)
services, specifically CPT code 97802 (Medical nutrition therapy;
initial assessment and intervention, individual, face-to-face with the
patient, each 15 minutes) and CPT code 97804 (Medical nutrition
therapy; group (2 or more individual(s)), each 30 minutes), because we
believed these services to be similar. We crosswalked the work RVUs for
HCPCS code G0420 from CPT code 97802 and for HCPCS code G0421 from CPT
code 97804. We multiplied the work RVUs for HCPCS code G0420 by four
and the work RVUs for HCPCS code G0421 by two to account for the fact
that we crosswalked a 15 minute code to a 60 minute code (CPT code
97802 to HCPCS code G0420) and a 30 minute code to a 60 minute code
(CPT code 97804 to HCPCS code G0421). In order to determine the direct
PE inputs for the KDE services, we indicated that we did not perform
straight multiplication of the actual MNT inputs because we did not
believe that the required equipment and supplies for the KDE services
would increase in direct proportion to the increased time for the
codes. For both HCPCS codes G0420 and G0421, we noted that we did not
increase the equipment time-in-use for the body analysis machine,
printer, or scale, and that we did increase the inputs for the table,
computer, paper, and other printed materials.
Comment: Several commenters expressed support for the CY 2010 work
RVUs for the KDE HCPCS codes G0420 and G0421. However, one commenter
requested that CMS include the supplies for the KDE services as
directly proportional multiple units of the MNT services in order to
appropriately pay for the costs of care, noting that HCPCS code G0420
(60 minutes) should have 4 times as many supplies as those in CPT code
97802 (15 minutes) and HCPCS code G0421 (60 minutes) should have 2
times as many as those in CPT code 97804 (30 minutes).
Response: We appreciate the commenters' support for the interim
final work
Response: We appreciate the commenters' support for the interim
final work RVUs we established for HCPCS codes G0420 and G0421 for KDE
services and we are finalizing those work RVUs for CY 2011. After
reviewing the direct PE inputs for supplies in both the KDE HCPCS G-
codes (G0420 and G0421) and the MNT CPT codes (CPT codes 97802 and
97804), we agree with the commenter that we had not increased the
number of sheets of paper for either HCPCS code G0420 or G0421 as we
indicated we would (74 FR 61901). Therefore, we have increased the
number of paper sheets from 2 in CPT code 97802 (15 minutes) to 8 in
HCPCS code G0420 (60 minutes) and from 2 in CPT code 97804 (30 minutes)
to 4 in HCPCS code G0421 (60 minutes). We have also made conforming
changes to the printer times for both KDE HCPCS G-codes in the
equipment file because we base the printer time on the number of sheets
of paper. We are adopting these modified direct PE inputs for HCPCS
codes G0420 and G0421 as final for CY 2011.

[[Page 73324]]

f. Excision of Soft Tissue and Bone Tumors (CPT codes 21011 through
21016, 21552, 21554 through 21558, 21930 through 21933, 21395, 21936,
22900 through 22905, 23071, 23073, 23075 through 23078, 23200, 23210,
23220, 24071, 24073, 24075 through 24077, 24079, 24150 through 24153,
25071, 25073, 25075 through 25078, 25170, 26111, 26113, 26115 through
26118, 26250, 26255, 26260, 26262, 27043, 27045, 27047 through 27049,
27059, 27075 through 27078, 27327 through 27329, 27337, 27339, 27364,
27365, 27615, 27616, 27618, 27619, 27632, 27634, 27619, 27645 through
27647, 28039, 28041, 28043, 28045 through 28047, 28171, 28173, and
28175)
For CY 2010, the CPT Editorial Panel split 31 excision codes into
62 codes differentiated by the size of the excised lesion, 18 codes
were revised, and 12 additional codes were created. Although we had
significant concerns with the pre-service times and the AMA RUC-
recommended work RVUs for these codes for CY 2010, in the context of
public comments on the CY 2010 proposed rule regarding the site-of-
service anomaly codes, we agreed to accept the AMA RUC-recommended work
values for these codes on an interim final basis for CY 2010 (74 FR
61954). We also requested that the AMA RUC reexamine the minutes
allocated for positioning of the patient for these codes. We noted that
we would work with the AMA RUC to address our concerns about the
valuation of these codes and would consider whether it would be
appropriate to propose further changes in future rulemaking. We
indicated that we did not agree with the AMA RUC's recommendations for
the inclusion of inpatient hospital care services in these codes,
particularly in the cases of codes that would be reported for the
smaller-sized tumors. As a result, we stated that we would monitor the
frequency data for these codes and may propose further changes to the
work RVUs in the future based on these data. We emphasized that the AMA
RUC itself recommended that these services be re-reviewed to determine
the accuracy of the utilization assumptions once 2 years of utilization
data were available.
In addition, we noted that the CPT 2010 instructions regarding the
use of the excision and resection of soft tissue and bone tumor codes
advised that a complex repair may be separately reported. However,
longstanding Medicare policy generally includes payment for all simple,
intermediate, and complex repairs of procedural incisions and,
therefore, Medicare would not separately pay for complex repairs
associated with procedures reported by these codes.
Comment: Several commenters were pleased that CMS agreed to accept
the AMA RUC-recommended values for these new and revised codes. One
commenter endorsed CMS' decision to closely monitor the utilization
rates for these codes and believes this would be important to ensure
accurate payment. The commenters did not see a need for CMS or the AMA
RUC to review the pre-service times assigned to the codes and stated
that all of these times were derived from the AMA RUC's pre-service
time package methodology, a methodology that CMS has historically
supported. The commenters asserted that the times assigned are
reflective of the actual patient positioning times. Therefore, the
commenters urged CMS to withdraw the request that the AMA RUC revisit
the pre-service times for these codes. The commenters asserted that
further review would add extra time and work to the already significant
workload of the AMA RUC and would not result in any changes.
Response: We appreciate the commenters' support for our acceptance
of the AMA RUC-recommended values for these new and revised codes and
we are finalizing the interim final work RVUs for these codes for CY
2011. As we stated in the CY 2010 PFS final rule with comment period,
we will continue to monitor the frequency data for these codes and work
with the AMA RUC to address our concerns and, if appropriate, propose
further changes in future rulemaking. In addition, we are reiterating
our request originally made in the CY 2010 PFS final rule with comment
period (74 FR 61954) that the AMA RUC review the pre-service times for
these codes and provide their recommendations to us.
g. Cryoablation of Prostate (CPT code 55873)
In June 2008, CMS requested that the AMA RUC review the nonfacility
direct PE inputs for CPT code 55873 (Cryosurgical ablation of the
prostate (includes ultrasonic guidance for interstitial cryosurgical
probe placement). During this review, the AMA RUC recognized that this
service was initially reviewed as a new code by the AMA RUC in February
2001. The AMA RUC believed that the intra-service physician time since
the initial review had declined (from 200 minutes) as the service is
now more commonly performed. The AMA RUC agreed with the specialty
society that the service should be surveyed for physician work and also
recommended revisions in the direct PE inputs. As a result of the AMA
RUC review and input from the specialty society, the AMA RUC
recommended 13.45 work RVUs and revisions to the direct PE inputs for
this service for CY 2010. We reviewed these recommendations and
accepted the AMA RUC-recommended work RVUs for this code and the direct
PE inputs in the CY 2010 PFS final rule with comment (74 FR 61954 and
61955).
Comment: One commenter expressed concern about the reduction in the
work RVUs for CPT code 55873 and the lack of public notice given prior
to the reduction. The commenter believes that the intra-service time
was underestimated and could vary based on the skill set of the
physician. The commenter requested that CMS reinstate the work RVUs as
included in the CY 2010 PFS proposed rule for CY 2010 (74 FR 33740).
Response: While we originally requested that the AMA RUC review the
nonfacility direct PE inputs for CPT code 55873, we believe that it is
appropriate for the AMA RUC to respond to its findings during a limited
review by taking other actions that it believes to be appropriate for
the particular circumstances, such as requesting that procedures be
resurveyed. We followed our usual methodology for revised codes whereby
we respond to the AMA RUC work recommendations and adopt interim final
values in the final rule with comment period for the upcoming year. In
this way, we facilitate appropriate payment for the services on an
interim final basis while providing public notice and the opportunity
for public comment prior to finalizing the values in the following
year.
We note that the RVUs for services paid under the PFS are resource-
based, and individual services are valued based upon the typical
resources used to provide the service. Because clinical utilization of
this service has increased over the last several years and information
from the current AMA RUC survey suggests there has been a decrease in
intra-service time from 200 to 100 minutes, we continue to believe the
reduction in intra-service time and the revised work RVUs as
recommended to us by the AMA RUC are clinically appropriate for this
service. We commonly expect greater work efficiency as clinical
experience with a new service increases over time, and this service
fits that profile. Therefore, we are finalizing the interim final work
RVUs of 13.60 for CPT code 55873 for CY 2011.

[[Page 73325]]

Comment: One commenter stated that the 162 minutes of clinical
labor time for CPT code 55873 in the final CY 2010 PFS direct PE
database should be 168 minutes. The commenter also indicated that
supply code SD074 be included as an input for CPT code 55873 based on
the AMA RUC's CY 2010 recommendations.
Response: We appreciate the commenter bringing this information to
our attention and agree with the commenter's assessment. The 6 minutes
of clinical labor time missing from the direct PE inputs for CPT code
55873 have now been included, as has the filiform, and these changes
are reflected in the final CY 2011 PFS direct PE database. We are
finalizing these direct PE inputs for CPT code 55873 for CY 2011.
h. Urodynamics Studies (CPT Codes 51728 and 51729)
In February 2008, the AMA RUC identified CPT codes 51726 (Complex
cystometrogram (ie, calibrated electronic equipment)); 51772 (Urethral
pressure profile studies (UPP) (urethral closure pressure profile), any
technique); 51795 (Voiding pressure studies (VP); bladder voiding
pressure, any technique); and 51797 (Voiding pressure studies, intra-
abdominal (ie, rectal, gastric, intraperitoneal) (List separately in
addition to code for primary procedure)) through the ``Codes Reported
Together'' potentially misvalued codes screen as combinations of codes
that were reported together more than 95 percent of the time. The AMA
RUC referred all four codes to the CPT Editorial Panel for creation of
CPT codes for new comprehensive services and for reorganization of the
coding structure to reflect the typical procedures performed. As a
result, CPT codes 51772 and 51795 were deleted, CPT code 51797 was
revised, and CPT codes 51727 (Complex cystometrogram (ie, calibrated
electronic equipment); with urethral pressure profile studies (ie,
urethral closure pressure profile), any technique); 51728 (Complex
cystometrogram (ie, calibrated electronic equipment); with voiding
pressure studies (i.e., bladder voiding pressure), any technique); and
51729 (Complex cystometrogram (i.e., calibrated electronic equipment);
with voiding pressure studies (ie, bladder voiding pressure) and
urethral pressure profile studies (i.e., urethral closure pressure
profile), any technique) were created for CY 2010. Accordingly, the AMA
RUC reviewed the clinical labor inputs for the typical patient and made
minor edits regarding the intra-service time for these services. In
addition, the AMA RUC made adjustments to the medical supplies and
equipment. As noted in the CY 2010 PFS final rule with comment period
(74 FR 61955), we accepted these recommendations for the direct PE
inputs on an interim final basis.
Comment: Several commenters asserted that CPT codes 51728 and 51729
should have additional clinical labor inputs, including a greater
number of minutes during the intra-service period and minutes during
the pre-service period. These commenters also requested revisions to
the PE supply inputs for the codes.
Response: We discuss our CY 2011 proposal and the final CY 2011
policy with respect to the direct PE inputs for CPT codes 51728 and
51729 in section II.A.3.c.(5) of this final rule with comment period.
As we state there, we reviewed the direct PE inputs for these two CPT
codes and three related CPT codes following revised AMA RUC
recommendations for CY 2011. We agreed with the AMA RUC recommendations
regarding changes for CY 2011. Specifically, we believe the pre-service
nonfacility clinical labor time for the 0-day global period CPT codes
51725 (simple cystometrogram (CMG) (eg, spinal manometer)) and 51726
should be removed and the intra-service clinical labor time for CPT
code 51726 should also be reduced, consistent with the usual treatment
of other 0-day global codes. We believe the AMA RUC provided
recommendations to us regarding the direct PE inputs for these
cystometrogram services that accurately reflect the costs of the
resources (that is, the clinical labor, equipment, and supplies)
typically required to furnish these services to Medicare beneficiaries.
Comment: Several additional commenters alerted CMS to incorrect
supply inputs for CPT codes 51728 and 51729. The commenters noted that
the AMA RUC direct PE recommendations for CPT code 51728 included an
additional beaker. In the case of CPT code 51729, the commenters stated
that CMS did not include the recommended beaker and tubing in the
direct PE database for the CY 2010 final rule with comment period.
Response: We appreciate the commenters' assistance, and we made
these corrections in the May 11, 2010 correction notice to the CY 2010
PFS final rule with comment period (75 FR 26356 and 26478). We are
finalizing these direct PE inputs, as corrected, for CPT codes 51728
and 51239 for CY 2011.
i. Coronary Computed Tomographic Angiography (CPT Codes 75571, 75572,
75573, and 75574)
In October 2008, the CPT Editorial Panel deleted eight Category III
CPT codes (0144T through 0151T) and created four new codes for CY 2010,
specifically CPT codes 75571 (Computed tomography, heart, without
contrast material, with quantitative evaluation of coronary calcium);
75572 (Computed tomography, heart, with contrast material, for
evaluation of cardiac structure and morphology (including 3D image
postprocessing, assessment of cardiac function, and evaluation of
venous structures, if performed)); 75573 (Computed tomography, heart,
with contrast material, for evaluation of cardiac structure and
morphology in the setting of congenital heart disease (including 3D
image postprocessing, assessment of LV cardiac function, RV structure
and function and evaluation of venous structures, if performed)); and
75574 (Computed tomographic angiography, heart, coronary arteries and
bypass grafts (when present), with contrast material, including 3D
image postprocessing (including evaluation of cardiac structure and
morphology, assessment of cardiac function, and evaluation of venous
structures, if performed)) to describe the evolution of the performance
of cardiac and coronary computed tomography for specific clinical
scenarios. We accepted the AMA RUC recommendations for direct PE inputs
for these codes on an interim final basis for CY 2010 (74 FR 61955).
Comment: Several commenters stated that the final CY 2010 PFS
direct PE database included incomplete direct PE inputs for CPT codes
75572 and 75573. The commenters also submitted updated pricing
information for the 64-slice CT scanner.
Response: We appreciate the commenters' assistance, and we
corrected these errors in the May 11, 2010 correction notice to the CY
2010 PFS final rule with comment period (75 FR 26356 and 26543). We are
finalizing the direct PE inputs for CPT codes 75571, 75572, 75573, and
75574, as corrected, for CY 2011. Additionally, we proposed an updated
price for the 64-slice CT scanner and its accompanying software in the
CY 2011 PFS proposed rule (75 FR 40062). We address that proposal and
our final CY 2011 policy in section II.A.3.c.(2) of this final rule
with comment period.

[[Page 73326]]

j. Adjacent Tissue Transfer or Rearrangement (CPT Codes 14301 and
14302)
CPT code 14300 (Adjacent tissue transfer or rearrangement, more
than 30 sq cm, unusual or complicated, any area) was identified by the
Five-Year Review Identification Workgroup through its ``Site-of-Service
Anomalies'' screen for potentially misvalued codes and subsequently
identified through the ``CMS Fastest Growing'' screen. The service was
referred to the CPT Editorial Panel to clarify the coding for tissue
transfers involving different size areas. As a result, CPT code 14300
was deleted and two new codes, CPT codes 14301 (Adjacent tissue
transfer or rearrangement, any area; defect 30.1 sq cm to 60.0 sq cm)
and 14302 (Adjacent tissue transfer or rearrangement, any area; each
additional 30.0 sq cm, or part thereof (List separately in addition to
code for primary procedure)) were created. We accepted the AMA RUC
recommendations for direct PE inputs on an interim final basis for CY
2010 (74 FR 61955).
Comment: One commenter stated that there were discrepancies between
the AMA RUC recommendations and the direct PE inputs for CPT codes
14301 and 14302.
Response: We appreciate the commenters' assistance, and we
corrected these errors in the May 11, 2010 correction notice to the CY
2010 PFS final rule with comment period (75 FR 26356 and 26368). Upon
additional review of the direct PE inputs for consistency with the CY
2010 AMA RUC recommendations for this CY 2011 final rule with comment
period, we also found that the instrument pack for CPT code 14301
should be EQ138 (instrument pack, medium ($1500 and up)) instead of
EQ137 (instrument pack, basic ($500-$1499)). Furthermore, CPT code
14301 should have one SA054 (pack, post-op incision care (suture)) as a
supply input in both the nonfacility and facility settings. The final
CY 2011 PFS direct PE database reflects these additional corrections.
We are finalizing the direct PE inputs for CPT codes 14301 and 14302
for CY 2011.
k. Insertion of a Temporary Prostatic Urethral Stent (CPT code 53855)
CPT code 53855 (Insertion of a temporary prostatic urethral stent,
including urethral measurement) was created for CY 2010 to describe the
service previously reported under the Category III CPT code 0084T. We
accepted the AMA RUC recommendations for direct PE inputs on an interim
final basis for CY 2010 (74 FR 61955).
Comment: One commenter stated that CPT code 53855 was incorrectly
missing supply codes SD074 and SH050 as inputs in the final CY 2010 PFS
direct PE database. The commenter also noted that SJ038 was incorrectly
substituted for SJ032.
Response: We appreciate the commenter bringing these items to our
attention and agree with the commenter's assessment. The supply items
for CPT code 53588 (filiform and one unit of lidocaine) have been
included in the direct PE inputs and we have replaced petroleum jelly
with lubricating jelly. These changes are reflected in the final CY
2011 PFS direct PE database. We are finalizing the revised direct PE
inputs for CPT code 53855 for CY 2011.
l. High Dose Rate Brachytherapy (CPT codes 77785, 77786, and 77787)
CPT codes 77785 (Remote afterloading high dose rate radionuclide
brachytherapy; 1 channel); 77786 (Remote afterloading high dose rate
radionuclide brachytherapy; 2-12 channels); and 77787 (Remote
afterloading high dose rate radionuclide brachytherapy; over 12
channels) were identified by the Five-Year Review Identification
Workgroup through the ``CMS Fastest Growing'' and ``High Volume
Growth'' potentially misvalued codes screens and later revised by the
CPT Editorial Panel for CY 2009. As a result, the AMA RUC made
recommendations for physician work and direct PE inputs for these
revised services for CY 2009, which we accepted in the CY 2009 PFS
final rule with comment period (73 FR 69892). Upon acceptance of the
AMA RUC recommendations, we received several comments concerning the
direct PE direct inputs (for example, supply costs and the useful life
of the renewable sources) related to several high dose radiation
therapy and placement CPT codes. In the CY 2010 PFS proposed rule (74
FR 33532), we requested that the AMA RUC revisit the direct PE inputs
for these services. In response to our request, the AMA RUC reviewed
the direct PE inputs for these services and made adjustments to the
clinical labor staff type, changed the time for some activities, and
edited the medical supplies and equipment for the typical patient
scenario. In addition, the AMA RUC also recommended further discussion
between the specialty and CMS regarding appropriate resolution of the
PE input price for the Iridium-192 brachytherapy source typically used
in CPT codes 77785, 77786, and 77787. We accepted these direct PE
recommendations for CY 2010 on an interim final basis (74 FR 61782).
Comment: One commenter informed CMS of two concerns regarding CPT
codes 77785, 77786, and 77787. The commenter stated that the AMA RUC
summary direct PE output table included incorrectly doubled PE inputs
for each of the codes. The commenter also pointed out that the medical
physicist clinical labor time for CPT code 77786 should be 54 minutes
instead of 29 minutes.
Response: We appreciate the commenters' assistance, and we
corrected these errors in the May 11, 2010 correction notice to the CY
2010 PFS final rule with comment period (75 FR 26356 and 26564). We are
finalizing the direct PE inputs for CPT codes 77785, 77786, and 77787,
as corrected, for CY 2011.
m. Injection of Facet Joint (CPT Codes 64490, 64491, 64492, 64493,
64494, and 64495)
Facet joint injection services were identified by the Five-Year
Review Identification Workgroup ``High Volume Growth'' potentially
misvalued codes screen and referred to the CPT Editorial Panel to
create an appropriate coding structure to report primary and additional
injections. As a result, the four existing codes describing these
services were deleted and CPT codes 66490 (Injection(s), diagnostic or
therapeutic agent, paravertebral facet (zygapophyseal) joint (or nerves
innervating that joint) with image guidance (fluoroscopy or CT),
cervical or thoracic; single level); 64491 (Injection(s), diagnostic or
therapeutic agent, paravertebral facet (zygapophyseal) joint (or nerves
innervating that joint) with image guidance (fluoroscopy or CT),
cervical or thoracic; second level (List separately in addition to code
for primary procedure)); 64492 (Injection(s), diagnostic or therapeutic
agent, paravertebral facet (zygapophyseal) joint (or nerves innervating
that joint) with image guidance (fluoroscopy or CT), cervical or
thoracic; third and any additional level(s) (List separately in
addition to code for primary procedure)); 64493 (Injection(s),
diagnostic or therapeutic agent, paravertebral facet (zygapophyseal)
joint (or nerves innervating that joint) with image guidance
(fluoroscopy or CT), lumbar or sacral; single level); 64494
(Injection(s), diagnostic or therapeutic agent, paravertebral facet
(zygapophyseal) joint (or nerves innervating that joint) with image
guidance (fluoroscopy or CT), lumbar or

[[Page 73327]]

sacral; second level (List separately in addition to code for primary
procedure)); and 64495 (Injection(s), diagnostic or therapeutic agent,
paravertebral facet (zygapophyseal) joint (or nerves innervating that
joint) with image guidance (fluoroscopy or CT), lumbar or sacral; third
and any additional level(s) (List separately in addition to code for
primary procedure)) were created for CY 2010. Accordingly, the AMA RUC
reviewed the direct PE inputs as recommended by the specialty and made
some minor edits to the clinical labor and medical supplies to reflect
the typical patient service, which we accepted in the CY 2010 PFS final
rule with comment on an interim final basis (74 FR 61955).
Comment: Several commenters stated that the equipment and supplies
listed in the final CY 2010 PFS direct PE database for CPT codes 64490,
64491, 64492, 64493, 64494, and 64495 were incorrect and not consistent
with the AMA RUC's recommendations.
Response: We verified that the equipment and supplies listed as
direct inputs for these codes in the final CY 2011 direct PE database
match the CY 2010 recommendations provided to us by the AMA RUC. We
encourage stakeholders who believe a change is required in the direct
PE inputs associated with a particular service in the typical case that
is furnished in the facility or nonfacility setting to address these
concerns with the AMA RUC. We are finalizing these direct PE inputs for
CPT codes 64490, 64491, 64492, 64493, 64494, and 64495 for CY 2011.
n. Knee Arthroscopy (CPT Code 29870)
In the CY 2008 PFS final rule (72 FR 66238), we deferred the
establishment of nonfacility direct PE inputs for CPT code 29870
(Arthroscopy, knee, diagnostic, with or without synovial biopsy
(separate procedure)) and stated that the physicians performing
arthroscopic services in the nonfacility setting should be given the
opportunity to have a multispecialty review by the AMA RUC. We accepted
the AMA RUC recommendations for nonfacility direct PE inputs in the CY
2010 PFS final rule with comment period on an interim final basis (74
FR 61955).
Comment: One commenter indicated that the wrong arthroscopic system
was approved by the AMA RUC for CPT code 29870.
Response: We verified that the equipment input for this code in the
final CY 2011 PFS direct PE database matches the recommendation
provided to us by the AMA RUC. We encourage stakeholders who believe a
change is required in the direct PE inputs associated with a particular
service in the typical case that is furnished in the facility or
nonfacility setting to address these concerns with the AMA RUC. We are
finalizing the direct PE inputs for CPT code 298770 for CY 2011.
3. Status of Interim Final Work RVUs for Potentially Misvalued Site-of-
Service Anomaly Codes From CY 2009 and CY 2010
In previous years, we have requested that the AMA RUC review codes
that, according to Medicare claims data, have experienced a change in
the typical site-of-service since the original valuation of the code.
The AMA RUC reviewed and recommended to CMS revised work RVUs for 29
codes for CY 2009 and 11 codes for CY 2010 that were identified as
having site-of-service anomalies. In the CYs 2009 and 2010 PFS final
rules with comment period (73 FR 69883 and 74 FR 61776 through 61778,
respectively), we indicated that although we would accept the AMA RUC
valuations for these site-of-service anomaly codes on an interim final
basis through CY 2010, we had ongoing concerns about the methodologies
used by the AMA RUC to review these services. We requested that the AMA
RUC reexamine the site-of-service anomaly codes and use the building
block methodology to revalue the services (74 FR 61777).
For CY 2011, as discussed in more detail in section II.C.3.d. of
this final rule with comment period, we are requesting that the AMA RUC
reconsider its previously recommended values, which have been applied
on an interim final basis in CYs 2009 and 2010, and revise the work
RVUs to better reflect the intensity of the services and the revised
physician times and post-procedure visits included in the valuation of
these codes. Until we receive the revised values from the AMA RUC for
CY 2012 and can make a determination regarding them, we are continuing
to accept the existing AMA RUC-recommended work RVUs listed in Tables
14 and 15 in section II.C.3.d. of this final rule with comment period
on an interim final basis for CY 2011.
4. Other New, Revised, or Potentially Misvalued Codes With CY 2010
Interim Final RVUs Not Specifically Discussed in the CY 2011 Final Rule
With Comment Period
For all other CY 2010 new, revised, or potentially misvalued codes
with CY 2010 interim final RVUs that are not specifically discussed in
this final rule with comment period, we are finalizing, without
modification, the interim final work and malpractice RVUs and direct PE
inputs that we initially adopted for CY 2010.

C. Establishment of Interim Final RVUs for CY 2011

In this section, we discuss the establishment of work, PE, and
malpractice interim final RVUs for CY 2011 and issues related to the
processes for establishing these values. These CY 2011 work, PE, and
malpractice interim final RVUs, and the associated direct PE inputs,
are open to comment on this CY 2011 final rule with comment period. In
general, the work, PE, and malpractice RVUs and the associated direct
PE inputs for the CY 2011 new and revised codes will be finalized in
the CY 2012 PFS final rule with comment period, where we will also
respond to the public comments received on the values and direct PE
inputs that are adopted on an interim final basis in this CY 2011 final
rule with comment period. The final CY 2011 PFS direct PE database and
the crosswalks for the malpractice RVUs for new and revised codes are
posted on the CMS Web site under the downloads for the CY 2011 PFS
final rule with comment period at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
For CY 2011, we received AMA RUC recommendations for 325 new,
revised, and potentially misvalued CPT codes and 93 recommended
deletions. Of the 325 codes, 84 were identified as potentially
misvalued, 125 as new, and 116 as revised. After subtracting out CPT
codes for which no work RVU recommendation were given--including codes
listed on the Clinical Lab Fee Schedule (CLFS), vaccine codes, and
technical component only codes--there were 291 codes for which the AMA
RUC provided work RVU recommendations for CY 2011: 82 CPT codes
classified by the AMA RUC as potentially misvalued, 108 as new, and 101
as revised. Of note, as displayed in Table 53, we consider 204 of the
AMA RUC work recommendations for CY 2011 new and established CPT codes
to be for codes identified through, created as a result of, or valued
in association with service(s) identified through a potentially
misvalued code screen. Additionally, we received direct PE input
recommendations from the AMA RUC for 325 CPT codes for CY 2011.
For CY 2011, we note that the CPT Editorial Panel deleted CPT codes
0160T (Therapeutic repetitive transcranial magnetic stimulation
treatment planning) and 0161T (Therapeutic repetitive transcranial
magnetic stimulation treatment delivery and management, per session)
and created two new CPT codes, 90867

[[Page 73328]]

(Therapeutic repetitive transcranial magnetic stimulation treatment;
planning) and 90868 (Therapeutic repetitive transcranial magnetic
stimulation treatment; delivery and management, per session). Due to
the timing of the creation of these codes, the AMA RUC was unable to
provide work and PE recommendations for CY 2011. As a result, these
codes will be contractor-priced for CY 2011.
1. Establishment of Interim Final Work RVUs for CY 2011
a. Background
As we previously explained in section V.A. of this final rule with
comment period, on an annual basis, the AMA RUC provides CMS with
recommendations regarding physician work values for new, revised, and
potentially misvalued codes. We review the AMA RUC-recommended work
RVUs on a code-by-code basis. We determine whether we agree with the
AMA RUC's recommended work RVUs for a service (that is, we agree the
valuation is accurate), or, if we disagree, we determine an alternative
value that better reflects our estimate of the physician work for the
service.
As stated earlier, the AMA RUC provided work RVU recommendations
for 291 CPT codes. Of the 291, we are accepting 207 (71 percent) of the
AMA RUC-recommended values and providing alternative values for the
remaining 84 (29 percent). Over the last several years our rate of
acceptance of the AMA RUC recommendations has been higher, at 90
percent or greater. However, in response to concerns expressed by
MedPAC, the Congress, and other stakeholders regarding the accurate
valuation of services under the PFS, we have intensified our scrutiny
of the work valuations of new, revised, and potentially misvalued
codes. We note that most recently, the law was amended (section
1848(c)(2)(L) of the Act (as added by section 3134 of the ACA)) to add
a new requirement which specifies that the Secretary shall establish a
formal process to validate RVUs under the PFS. The validation process
may include validation of work elements (such as time, mental effort
and professional judgment, technical skill and physical effort, and
stress due to risk) involved with furnishing a service and may include
validation of the pre-, post-, and intra-service components of work.
Furthermore, the Secretary is directed to validate a sampling of the
work RVUs of codes identified through any of the seven categories of
potentially misvalued codes specified by section 1848(c)(2)(K)(ii) of
the Act (as added by section 3134 of the ACA). While we are currently
in the planning stage of developing a formal validation process, we
believe we should be incorporating, where appropriate, the validation
principles specified in the law. That is, in reviewing the CY 2011 AMA
RUC recommendations for valuing the work of new, revised, and
potentially misvalued services, we have expended significant effort in
evaluating whether the recommended values reflect the work elements,
such as time, mental effort, and professional judgment, technical skill
and physical effort, and stress due to risk, involved with furnishing
the service. We subjected each of the CY 2011 codes to a rigorous
clinical review, examining the pre-, post-, and intra-service
components of the work. If we concluded that the AMA RUC's recommended
value for a code was not accurate, we looked for comparisons with other
established reference codes with clinical similarity or analogous pre-,
post-, and intra-service times, and, where applicable, employed the
building block approach to inform our interim final decision to
establish an alternative value that we believe is more appropriate.
The AMA RUC has emphasized the need to value services ``relative''
to other services, explaining in its public comment on the CY 2011 PFS
proposed rule that it will ``continue to employ magnitude estimation in
developing relative value recommendations as it is the cornerstone of
the RBRVS (resource-based relative value scale).'' We agree that
services paid under the PFS should be reviewed and valued in manner
consistent with Medicare payment policy to maintain appropriate
relativity between services and promote accurate pricing. In our review
of the 291 CY 2011 AMA RUC recommendations for work values, we noted
that the AMA RUC used a variety of approaches and methodologies to
arrive at the recommended work values. For some codes, the AMA RUC used
magnitude estimation in conjunction with survey data from physician
surveys conducted by the specialty societies to support the values. For
other codes, the AMA RUC used magnitude estimation to override the
results of the survey data, recommending to CMS a value that was not
based on survey data but rather, justified in terms of its appropriate
relativity within the system to other similar services. The AMA RUC may
also elect to use a crosswalk approach in valuing a code by applying a
work value from a currently valued code to the code under review based
on the clinical similarity of the procedures or explicit considerations
of pre-, intra-, and post-service times. In some instances, the AMA RUC
asserted that it used the building block methodology to value the code,
a methodology CMS has historically supported (74 FR 61776).
We understand that the AMA RUC believes that it must approach
valuation on a code-by-code basis, and depending on the context of the
particular code, some methodologies may be better suited than others
for valuation purposes. However, we remain concerned over the
variations and some applications of the AMA RUC's methodologies which,
if we continue to accept them, could contribute to inaccuracy in the
relativity of physician work valued under the PFS for different
services. Our concerns at this time include the following
methodological issues which we observed during our review of the CY
2011 AMA RUC work recommendations:
AMA RUC-recommended values without benefit of a survey:
For a number of codes, the AMA RUC justified the work RVUs by
crosswalking the codes to existing codes deemed comparable by the AMA
RUC. Since the specialty society did not conduct a survey for these
codes, there are no survey data to back up the recommended work RVUs.
Surveys conducted on existing codes produced predictable
results: In providing recommendations for existing potentially
misvalued codes, the AMA RUC often recommended maintaining the current
work RVUs and supported this valuation by citing the survey results.
Upon clinical review of a number of these cases, we are concerned over
the validity of the survey results since the survey values often are
very close to the current code values. Increasingly, rather than
recommending the median survey value that has historically been most
commonly used, the AMA RUC is choosing to recommend the 25th percentile
value, potentially responding to the same concern we have identified.
AMA RUC deviated significantly or disregarded survey
results completely: For the majority of codes, the AMA RUC cited the
survey results in support of the work RVU recommendations and in many
instances adopted either the survey median or 25th percentile value as
the AMA RUC-recommended value. However, in some instances, the AMA RUC
recommended work RVUs which deviated significantly from the survey
results. Rather than using the survey data, the AMA RUC appears to have
relied on another methodology to value the code, such as ``magnitude

[[Page 73329]]

estimation'' or crosswalk to a comparable code.
In reviewing the 291 work RVU recommendations from the AMA RUC for
CY 2011, we concluded that the strongest support for the valuation of a
code occurred when the AMA RUC cited multiple germane methodologies
that all yielded a similar value that was also supported by the survey.
We tended to accept the AMA RUC-recommended values in these instances.
However, we found the weakest and least convincing valuations occurred
in cases where the AMA RUC either deviated significantly or disregarded
the survey results in favor of tweaking various components of the code
in order to justify a value which the AMA RUC believed was correct due
to perceived ``magnitude estimation'' for that code. We are concerned
that such actions by the AMA RUC may create problems for any systematic
validation processes that could be implemented in the future as
required by section 1848(c)(2)(L) of the Act (as added by section 3134
of the ACA).
Accordingly, for those CY 2011 codes for which we did not accept
the AMA RUC recommendations and are instead establishing alternative
interim final values, we discuss our decisions based on groupings of
codes in the following sections. Table GG4 at the end of this section
displays the AMA RUC recommendations and interim final work RVUs for CY
2011 new, revised, and potentially misvalued codes. b. CY 2011 Interim
Final Work RVUs for New and Revised Codes (1) CY 2011 New and Revised
Codes that Do Not Represent Major New Comprehensive Services
We provide an explanation in the following sections of our
rationale for not accepting particular AMA RUC-recommended or Health
Care Professional Advisory Committee (HCPAC)-recommended work RVUs for
CY 2011 new and revised CPT codes that do not represent major new
comprehensive services that are listed in Table 51 and discussed in the
subsequent section. The issues are arranged by type of service in CPT
code order and address only work RVUs. These codes are listed in Table
53, which includes a complete list of all new, revised, and potentially
misvalued CPT codes with CY 2011 AMA RUC work RVU recommendations and
CMS' interim final decisions for CY 2011.
(A) Excision and Debridement (CPT Codes 11010, 11011, 11012, 11042,
11043, 10144, 11045, 11046, 11047, and 97598)
CPT codes 11043 (Debridement; skin, subcutaneous tissue, and
muscle) and 11044 (Debridement; skin, subcutaneous tissue, muscle, and
bone) were identified by the AMA RUC's Five-Year Review Identification
Workgroup through the ``Site-of-Service Anomalies'' potentially
misvalued codes screen in September 2007. The AMA RUC recommended that
the entire family of services described by CPT codes 11040 through
11044 and 97597 and 97598 be referred to the CPT Editorial Panel
because the current descriptors allowed reporting of the codes for a
bimodal distribution of patients and also to better define the terms
excision and debridement. These codes were included with many other
codes under review by the CPT Excision and Debridement Workgroup. CPT
codes 11010, 11011, 11012, and 11042 through 11047 were reviewed by the
AMA RUC and CPT codes 97597 and 97598 were reviewed by the HCPAC.
The code descriptors for CPT codes 11010 (Debridement including
removal of foreign material at the site of an open fracture and/or an
open dislocation (e.g., excisional debridement); skin and subcutaneous
tissues); 11011 (Debridement including removal of foreign material at
the site of an open fracture and/or an open dislocation (e.g.,
excisional debridement); skin, subcutaneous tissue, muscle fascia, and
muscle); and 11012 (Debridement including removal of foreign material
at the site of an open fracture and/or an open dislocation (e.g.,
excisional debridement); skin, subcutaneous tissue, muscle fascia,
muscle, and bone) were revised to clarify to payors and providers that
these codes describe debridement of a single traumatic wound caused by
an open fracture which creates a single exposure, despite the number of
fractures or dislocations in the same anatomic site. The AMA RUC and
the specialty society agreed that the revisions made to these
descriptors were editorial and the current work RVUs for these services
correctly related to the typical patient and should be maintained,
recommendations which we have accepted on an interim final basis for CY
2011.
The CPT Editorial Panel revised the descriptor for CPT code 11042
(Debridement subcutaneous tissue (includes epidermis and dermis, if
performed); first 20 square centimeters or less). As a result, the AMA
RUC reviewed the specialty-recommended work RVUs for this service, 1.12
work RVUs (the previous AMA RUC HCPAC recommendation as valued during
the CY 2005 Five-Year Review of Work), and noted that they were higher
than the current PFS value for this service (0.80 work RVUs). The AMA
RUC determined that there was compelling evidence to consider new work
RVUs for this service. The AMA RUC also reviewed the survey data for
CPT code 11042 and made slight changes to the pre-, intra-, and post-
service times. This service was compared to the key reference CPT code
16020 (Dressings and/or debridement of partial-thickness burns, initial
or subsequent; small (less than 5% total body surface area)) (work RVUs
= 0.80) and MPC CPT code 56605 (Biopsy of vulva or perineum (separate
procedure); 1 lesion) (work RVUs = 1.10). Based on these comparisons,
the AMA RUC agreed that the previous AMA RUC HCPAC recommendation of
1.12 work RVUs was an appropriate value as it would maintain relativity
between the key reference code and the surveyed code. The AMA RUC
recommended work RVUs of 1.12 for CPT code 11042.
We disagree with the AMA RUC-recommended value for this service and
are maintaining the current work RVUs of 0.80. We believe the AMA RUC-
recommended value (1.12 work RVUs) was based on the old surveyed value.
The reference code, CPT code 16020, has more overall time but is valued
at 0.80 work RVUs. In addition, the reference code has a size
limitation that varies by individual body size, but the surveyed CPT
code 11042 has an add-on code (CPT code 11045) for each additional 20
square centimeters. Therefore, we are not accepting the AMA RUC
recommendation and are assigning an alternative value of 0.80 work RVUs
to CPT code 11042 on an interim final basis for CY 2011.
For CPT code 11045 (Debridement subcutaneous tissue (includes
epidermis and dermis, if performed); each additional 20 square
centimeters, or part thereof (List separately in addition to code for
primary procedure)), which is the add-on code to CPT code 11042, the
AMA RUC recommended 0.69 work RVUs. This value was obtained by applying
a 14 percent reduction to the median work value of 0.80 to maintain the
relativity between CPT codes 11042 and 11045 of the survey data
collected. Due to the reduction in work RVUs to CPT code 11042 by CMS,
we reduced the AMA RUC-recommended work RVUs of 0.69 for CPT code 11045
and assigned 0.33 work RVUs to this service. This value was obtained by
removing

[[Page 73330]]

the pre- and post-service time from the interim final RVUs of 0.80 for
the primary procedure (CPT code 11042). Therefore, we are assigning an
alternative value of 0.33 work RVUs to CPT code 11045 on an interim
final basis for CY 2011.
CPT codes 11043 (Debridement, muscle and/or fascia (includes
epidermis, dermis, and subcutaneous tissue, if performed); first 20
square centimeters or less) and 11044 (Debridement, bone (includes
epidermis, dermis, subcutaneous tissue, muscle and/or fascia, if
performed); first 20 square centimeters or less) were surveyed as 90-
day global codes. However, due to disagreement with the survey
vignettes and the new global period (90 days), in addition to broad
variations in surveyed facility length of stay, the AMA RUC requested
that CMS change the global period to 0 days. CMS agreed and the codes
were resurveyed as 0-day global codes.
For CPT code 11043, the AMA RUC recommended 3.00 work RVUs. The AMA
RUC reviewed the survey data and compared the surveyed code to the key
reference CPT code 15002 (Surgical preparation or creation of recipient
site by excision of open wounds, burn eschar, or scar (including
subcutaneous tissues), or incisional release of scar contracture,
trunk, arms, le.g.s; first 100 sq cm or 1% of body area of infants and
children) (work RVUs = 3.65). The AMA RUC noted that the reference code
had significantly more total service time as compared to the surveyed
code and that the surveyed code was less intense to perform in
comparison to the reference code. Based on this comparison, the AMA RUC
recommended work RVUs of 3.00, the survey 25th percentile for this
service.
The AMA RUC-recommended work inputs for this service include less
clinical time and fewer follow-up E/M visits than are currently
attributed to the performance of this service; however, the AMA RUC-
recommended work RVU value decreased by only 0.14 RVUs. We disagree
with the AMA RUC-recommended RVUs for this service and believe 2.00
work RVUs, the survey low value, reflects a more appropriate decrease
in work RVU value given the recommended decrease in clinical time and
follow-up E/M visits. Therefore, we are assigning an alternative value
of 2.00 work RVUs to CPT code 11043 on an interim final basis for CY
2011.
For CPT code 11046 (Debridement, muscle and/or fascia (includes
epidermis, dermis, and subcutaneous tissue, if performed); each
additional 20 square centimeters, or part thereof (List separately in
addition to code for primary procedure)), which is the add-on code to
CPT code 11043, the RUC recommended 1.29 work RVUs, the survey 25th
percentile. To maintain consistency and relativity between this add-on
code and its primary code (CPT code 11043), for which we are
recommending the survey low value as discussed above, and given the
time and intensity the AMA RUC recommended to perform this service, we
disagree with the AMA RUC-recommended work RVUs for this service and
believe 0.70 work RVUs, the survey low value, are more appropriate.
Therefore, we are assigning an alternative value of 0.70 work RVUs to
CPT code 11046 on an interim final basis for CY 2011.
For CPT code 11044, the AMA RUC recommended 4.56 work RVUs. The AMA
RUC reviewed the survey data and compared the surveyed code to the
reference CPT code 15004 (Surgical preparation or creation of recipient
site by excision of open wounds, burn eschar, or scar (including
subcutaneous tissues), or incisional release of scar contracture, face,
scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet and/
or multiple digits; first 100 sq cm or 1% of body area of infants and
children) (work RVUs = 4.58). The AMA RUC noted that the reference code
had the same intra-service time and that the surveyed code and the
reference code required similar mental effort and judgment to perform.
Based on this comparison, the AMA RUC recommended work RVUs of 4.56,
the survey 25th percentile, and believes this value accurately reflects
the relative physician work to perform this service and maintains
proper rank order with CPT codes 11042 and 11043. The AMA RUC-
recommended work inputs for this service include less clinical time and
fewer follow-up E/M visits than are currently attributed to the
performance of this service; however, the AMA RUC-recommended work RVUs
increased. We disagree with the AMA RUC-recommended work RVUs for this
service and believe 3.60 work RVUs, the survey low value, reflect a
more appropriate decrease in work RVU value given the recommended
decrease in clinical time and follow-up E/M visits. Therefore, we are
assigning an alternative value of 3.60 work RVUs to CPT code 11044 on
an interim final basis for CY 2011.
For CPT code 11047 (Debridement, bone (includes epidermis, dermis,
subcutaneous tissue, muscle and/or fascia, if performed); each
additional 20 square centimeters, or part thereof) the AMA RUC
recommended 2.00 work RVUs, the survey median value. To maintain
consistency and relativity between this add-on code and its primary
code (CPT code 11044), for which we are recommending the survey low
value as discussed above, and given the time and intensity the AMA RUC
recommended to perform this service, we disagree with the AMA RUC-
recommended value and believe 1.20 RUVs, the survey low value, are more
appropriate for this service. Therefore, we are assigning 1.20 work
RVUs to CPT code 11047 on an interim final basis for CY 2011.
For CY 2011, the services previously reported by CPT codes 11040
(Debridement; skin, partial thickness) and 11041 (Debridement; skin,
full thickness) will now be reported with revised CPT codes 97597
(Debridement (eg, high pressure waterjet with/without suction, sharp
selective debridement with scissors, scalpel and forceps), open wound,
(eg, fibrin, devitalized epidermis and/or dermis, exudate, debris,
biofilm), including topical application(s), wound assessment, use of a
whirlpool, when performed and instruction(s) for ongoing care, per
session, total wound(s) surface area; first 20 square centimeters or
less) and 97598 (Debridement (eg, high pressure waterjet with/without
suction, sharp selective debridement with scissors, scalpel and
forceps), open wound, (e.g., fibrin, devitalized epidermis and/or
dermis, exudate, debris, biofilm), including topical application(s),
wound assessment, use of a whirlpool, when performed and instruction(s)
for ongoing care, per session, total wound(s) surface area; each
additional 20 square centimeters, or part thereof (List separately in
addition to code for primary procedure)). The HCPAC recommended 0.54
work RVUs for CPT code 97597, which is a value between the CY 2010
values for CPT code 11040 (0.50 work RVUs) and CPT code 97597 (0.58
work RVUs), which we have accepted on an interim final basis in this
final rule with comment period for CY 2011. However, the work RVUs for
this CPT code were further subject to a work budget neutrality
adjustment, as discussed in section V.C.1.b.(iii) of this final rule
with comment period.
For CPT code 97598, the HCPAC recommended 0.40 work RVUs, the
survey 25th percentile. We disagree with the HCPAC-recommended value
for this service and, given the similarity of code descriptors between
the 11000 series and the 97000 series CPT codes, we believe a more
appropriate value would be 0.25 RVUs, the survey low value, as it is
more consistent with the work RVU value associated with new add-on CPT
code 11045, discussed above. We also believe the post-service

[[Page 73331]]

time for CPT code 97598 should be reduced to 0 minutes to coincide with
the CPT codes in the 11000 series, which have 0 or 1 minute of post-
service time. Therefore, we are assigning an alternative value of 0.25
work RVUs to CPT code 97598 and reducing the post-service time to 0
minutes on an interim final basis for CY 2011. However, the work RVUs
for this CPT code were subject to a work budget neutrality adjustment,
as discussed in section V.C.1.b.(iii) of this final rule with comment
period.
(B) Arthrodesis Including Discectomy (CPT Code 22551)
As a result of CPT code 22554 (Arthrodesis, anterior interbody,
including disc space preparation, discectomy, osteophytectomy and
decompression of spinal cord and/or nerve roots; cervical, below C2)
being reviewed by the AMA RUC because of its identification by the
Five-Year Review Identification Workgroup ``Codes Reported Together''
potentially misvalued codes screen in February 2008, CPT code 22551
((Arthrodesis, anterior interbody, including disc space preparation,
discectomy, osteophytectomy and decompression of spinal cord and/or
nerve roots; cervical, below C2)) was created by the CPT Editorial
Panel in October 2009, to describe fusion and discectomy of the
anterior cervical spine. The AMA RUC recommended 24.50 work RVUs. The
specialty society requested 25.00 work RVUs. Upon review of the AMA
RUC-recommended value and the reference codes used, it was unclear why
the AMA RUC decided not to accept the specialty society's recommended
value of 25.00 work RVUs. We disagree with the AMA RUC-recommended
value of 24.50 and believe work RVUs of 25.00 are appropriate for this
service. We are also requesting that the specialty society re-review
with the AMA RUC the pre-service times for codes in this family since
concerns were noted in the AMA RUC recommendation about the pre-service
time for this service. Therefore, we are assigning an alternative value
of 25.00 work RVUs to CPT code 22551 on an interim final basis for CY
2011.
(C) Strapping Lower Extremity (CPT Codes 29540 and 29550)
CPT code 29540 (Strapping; ankle and/or foot) was identified by the
Five-Year Review Identification Workgroup ``Harvard-Valued''
potentially misvalued codes screen with utilization over 100,000 screen
in October 2009. The AMA RUC recommended this whole family of services
be surveyed.
For CPT code 29540, the HCPAC recommended 0.39 work RVUs. The HCPAC
compared the total time required for CPT code 29540 to 29580
(Strapping; Unna boot), 18 and 27 minutes, respectively, and noted that
CPT code 29540 requires less time, mental effort/judgment, technical
skill and psychological stress than CPT code 29580. The HCPAC
determined that CPT code 29540 was approximately 30 percent less
intense and complex than CPT code 29580, resulting in work RVUs of 0.39
for CPT code 29540. We disagree with the HCPAC-recommended value for
this service and believe work RVUs of 0.32 are appropriate. We believe
CPT code 11720 (Debridement of nail(s) by any method(s); 1 to 5) (work
RVUs = 0.32) is a more appropriate crosswalk. Therefore, we are
assigning an alternative value of 0.32 work RVUs to CPT code 29540 on
an interim final basis for CY 2011.
For CPT code 29550 (Strapping; toes), the HCPAC recommended 0.25
work RVUs. The HCPAC compared this service to CPT code 97762 (Checkout
for orthotic/prosthetic use, established patient, each 15 minutes)
(work RVUs = 0.25), which requires the same intensity and complexity to
perform as CPT code 29550. The HCPAC recommended crosswalking the work
RVUs for 29550 to reference CPT code 97762. The HCPAC reviewed the
survey time and determined that 7 minutes pre-service, 5 minutes intra-
service, and 1 minute immediate post-service time were appropriate to
perform this service. We disagree with the HCPAC-recommended value for
this service and believe work RVUs of 0.15, the survey low value, are
appropriate, with 5 minutes of pre- and intra-service time and 1 minute
of post-service time, as we believe the HCPAC-recommended pre-service
time of 7 minutes is excessive. Therefore, we are assigning an
alternative value of 0.15 work RVUs to CPT code 29550 on an interim
final basis for CY 2011.
(D) Paraesophageal Hernia Procedures (CPT Codes 43333 and 43335)
In February 2010, the CPT Editorial Panel deleted six existing
codes and created ten new codes to remove obsolete and duplicative
codes and add new codes to report current surgical techniques for
paraesophageal hernia repair. For CPT code 43333 (Repair,
paraesophageal hiatal hernia (including fundoplication), via
laparotomy, except neonatal; with implantation of mesh or other
prosthesis), the AMA RUC recommended 30.00 work RVUs. The AMA RUC
recommended 33.00 work RVUs for CPT code 43335 (Repair, paraesophageal
hiatal hernia (including fundoplication), via thoracotomy, except
neonatal; with implantation of mesh or other prosthesis). While the AMA
RUC-recommended values are the survey median values, we disagree with
them. We adjusted the AMA RUC-recommended values for the codes without
implantation of mesh or other prosthesis upward by 2.50 work RVUs to
account for the differential between those codes and the parallel codes
with implantation of mesh or other prosthesis. We note that 2.50 work
RVUs was the lowest differential that was recommended by the AMA RUC
between the with/without implantation of mesh or other prosthesis codes
in this family. That is, for CPT code 43333, the revised work RVUs were
established by adding 2.50 work RVUs to the AMA RUC-recommended work
RVUs of 26.60 for CPT code 43332 (Repair, paraesophageal hiatal hernia
(including fundoplication), via laparotomy, except neonatal; without
implantation of mesh or other prosthesis), which resulted in work RVUs
of 29.10. Likewise, for CPT code 43335, the revised work RVUs were
established by adding 2.50 work RVUs to the AMA RUC-recommended work
RVUs of 30.00 for CPT code 43334 (Repair, paraesophageal hiatal hernia
(including fundoplication), via thoracotomy, except neonatal; without
implantation of mesh or other prosthesis), resulting in work RVUs of
32.50. Therefore, we are assigning alternative work RVUs of 29.10 to
CPT code 43333 and 32.50 to CPT code 43335 on an interim final basis
for CY 2011. However, the work RVUs for this CPT code were subject to a
work budget neutrality adjustment, as discussed in section
V.C.1.b.(iii) of this final rule with comment period.
(E) Vaginal Radiation Afterloading Apparatus for Clinical Brachytherapy
(CPT Codes 57155 and 57156)
CPT Code 57155 (Insertion of uterine tandems and/or vaginal ovoids
for clinical brachytherapy) was originally identified through the Five-
Year Review Identification Workgroup ``Site-of-Service Anomalies''
potentially misvalued codes screen in September 2007 and was later
revised by the CPT Editorial Panel to indicate insertion of a single
tandem rather than tandems.
For CY 2011, the AMA RUC recommended 5.40 work RVUs for CPT code
57155 (Insertion of uterine tandems and/or vaginal ovoids for clinical
brachytherapy). This value was established based on the survey 25th
percentile and a review of comparable services, specifically CPT codes
55920 (Placement of needles or catheters into pelvic organs and/or
genitalia (except

[[Page 73332]]

prostate) for subsequent interstitial radioelement application)(work
RVUs = 8.31); 50382 (Removal (via snare/capture) and replacement of
internally dwelling urethral stent via percutaneous approach, including
radiological supervision and interpretation) (work RVUs = 5.50); and
52001 (Cystourethroscopy with irrigation and evacuation of multiple
obstructing clots) (work RVUs = 5.44). We disagree with the AMA RUC-
recommended value for this service because the method used to derive
the value lacked a defined logic. We believe work RVUs of 3.37 are
appropriate for this service, which is the same as the value assigned
to CPT code 58823 (Drainage of pelvic abscess, transvaginal or
transrectal approach, percutaneous (eg, ovarian, pericolic)), which we
also believe is a more comparable code. Therefore, we are assigning an
alternative value of 3.37 work RVUs to CPT code 57155 on an interim
final basis for CY 2011.
For CPT code 57156 (Insertion of a vaginal radiation afterloading
apparatus for clinical brachytherapy), the AMA RUC recommended 2.69
work RVUs, the survey 25th percentile. Given our decision to revise
downward the work RVUs for CPT code 57185, a related code, upon review
of the AMA RUC recommendations for CPT code 57156, we believe that the
AMA RUC-recommended value of 2.69 is too high. In light of this, we are
crosswalking the value of CPT code 57156 from CPT code 62319
(Injection, including catheter placement, continuous infusion or
intermittent bolus, not including neurolytic substances, with or
without contrast (for either localization or epidurography), of
diagnostic or therapeutic substance(s) (including anesthetic,
antispasmodic, opioid, steroid, other solution), epidural or
subarachnoid; lumbar, sacral (caudal)) (work RVUs = 1.87), which has
the same intra-service time (30 minutes) and overall lower total time
than the comparison services referenced by the AMA RUC. Therefore, we
are assigning an alternative value of 1.87 work RVUs to CPT code 57156
on an interim final basis for CY 2011.
(F) Vagus Nerve Stimulator (CPT Codes 61885, 64568, 64569, and 64570)
CPT code 61885 (Insertion or replacement of cranial neurostimulator
pulse generator or receiver, direct or inductive coupling; with
connection to a single electrode array) was identified by the Five-Year
Review Identification Workgroup by its ``Site-of-Service Anomalies''
screen for potentially misvalued codes in September 2007. After
reviewing the vagal nerve stimulator family of services, the specialty
societies agreed that the family lacked clarity and the CPT Editorial
Panel created three new codes to accurately describe revision of a
vagal nerve stimulator lead, the placement of the pulse generator and
replacement or revision of the vagus nerve electrode.
For CY 2011, the AMA RUC recommended 6.44 work RVUs for CPT code
61885. Upon review of the AMA RUC recommendations, the method used to
establish the AMA RUC-recommended value for this service lacked a
defined logic. Although the AMA RUC compared this service to the key
reference service, CPT code 63685 (Insertion or replacement of spinal
neurostimulator pulse generator or receiver, direct or inductive
coupling) (Work RVUs = 6.05) and other relative services and noted the
similarities in times, an appropriately rigorous methodology was not
used. The AMA RUC-recommended work RVUs did not adequately account for
the elimination of two inpatient visits and the reduction in outpatient
visits for this service. We disagree with the AMA RUC-recommended value
and believe 6.05 work RVUs, the survey 25th percentile, are appropriate
for this service. Therefore, we are assigning an alternative value of
6.05 work RVUs to CPT code 61885 on an interim final basis for CY 2011.
For CPT code 64568 (Incision for implantation of cranial nerve (eg,
vagus nerve) neurostimulator electrode array and pulse generator), the
AMA RUC recommended 11.19 work RVUs. Similar to the rationale provided
by the AMA RUC for the valuation of CPT code 61885, the method used to
value this service lacked a defined logic. As with CPT code 61885
discussed above, to which this code is related, we disagree with the
AMA RUC-recommended value for this service and believe the survey 25th
percentile, 9.00 work RVUs, is appropriate. Therefore, we are assigning
an alternative value of 9.00 work RVUs to CPT code 64568 on an interim
final basis for CY 2011.
For CPT code 64569 (Revision or replacement of cranial nerve (eg,
vagus nerve) neurostimulator electrode array, including connection to
existing pulse generator), the AMA RUC recommended 15.00 work RVUs, the
survey median value, and 13.00 work RVUs, the survey median value, for
CPT code 64570 (Removal of cranial nerve (eg, vagus nerve)
neurostimulator electrode array and pulse generator). Based on the
reduction in work RVUs for CPT codes 61885 and 64568 that we are
adopting on an interim final basis for CY 2011 and to maintain
relativity for the codes in this family, we believe work RVUs of 11.00,
the survey 25th percentile, are appropriate for CPT code 64569 and work
RVUs of 9.10, the survey 25th percentile, are appropriate for CPT code
64570. Therefore, we are assigning an alternative value of 11.00 work
RVUs to CPT code 64569 and 9.10 work RVUs to CPT code 64570 on an
interim final basis for CY 2011.
(G) Ultrasound of Extremity (CPT Codes 76881 and 76882)
In October 2008, CPT code 76880 (Ultrasound, extremity,
nonvascular, real time with image documentation) was identified by the
Five-Year Review Identification Workgroup through its ``CMS Fastest
Growing'' screen for potentially misvalued codes. In February 2009, the
CPT Editorial Panel deleted CPT code 76880 and created two new codes,
CPT codes 76881 (Ultrasound, extremity, nonvascular, real-time with
image documentation; complete) and 76882 (Ultrasound, extremity,
nonvascular, real-time with image documentation; limited anatomic
specific) to distinguish between the comprehensive diagnostic
ultrasound and the focused anatomic-specific ultrasound.
For CPT code 76881, the AMA RUC recommended work RVUs of 0.72 and a
total time of 25 minutes. For CPT code 76882, the AMA RUC recommended
0.50 work RVUs and a total time of 21 minutes. The predecessor CPT code
76880 (Ultrasound, extremity, nonvascular, real time with image
documentation) described a nonvascular ultrasound of the entire
extremity and was assigned work RVUs of 0.59 and a total time of 18
minutes. The new CPT codes describe a complete service, CPT code 76881,
and a limited service, CPT code 76882 (defined as examination of a
specific anatomic structure, such as a tendon or muscle).
We disagree with the AMA RUC recommendations for these services.
For CPT code 76881, we do not believe an increase in work RVUs is
justified given that this service will be reported for the evaluation
of the extremity, as was CPT code 76800 which is being deleted for CY
2011. Therefore, we believe work RVUs of 0.59 are appropriate for this
service, consistent with the value of the predecessor code. For CPT
code 76882, we believe a value of 0.41 is more appropriate,
representing a statistical computation based on maintaining the
relationship between the AMA RUC-recommended values for CPT codes 76881
and 76882. Therefore, we are assigning alternative work RVUs of 0.59 to
CPT code 76881 and 0.41 to CPT code

[[Page 73333]]

76882 on an interim final basis for CY 2011.
(H) Evaluation of Fine Needle Aspirate (CPT Code 88172)
Due to confusion amongst payers and providers, in February 2010 the
CPT Editorial Panel revised the descriptor for CPT code 88172
(Cytopathology, evaluation of fine needle aspirate; immediate
cytohistologic study to determine adequacy of specimen(s)) and created
a new code, CPT code 88177 (Cytopathology, evaluation of fine needle
aspirate; immediate cytohistologic study to determine adequacy for
diagnosis, each separate additional evaluation episode, same site), to
report the first evaluation episode and each additional episode of
cytopathology evaluation of fine needle aspirate. For CPT code 88172,
the AMA RUC recommended work RVUs of 0.69 based on comparing this code
to several other services, without the use of an appropriate
methodology. We disagree with the AMA RUC-recommended value and believe
the current work RVUs of 0.60 are appropriate and should be maintained
for this service. Although the code has been revised, no explanation by
the AMA RUC was provided to demonstrate an increase in work, and we do
not believe the work has changed. Therefore, we are assigning an
alternative value of 0.60 work RVUs to CPT code 88172 on an interim
final basis for CY 2011.
(I) Immunization Administration (CPT Code 90460 and 90461)
The CPT Editorial Panel revised the reporting of immunization
administration in the pediatric population in order to better align the
service with the evolving best practice model of delivering combination
vaccines. For CY 2011, the AMA RUC recommended 0.20 work RVUs for CPT
code 90460 (Immunization administration through 18 years of age via any
route of administration, with counseling by physician or other
qualified health care profession; first vaccine/toxoid component) and
0.16 work RVUs for CPT code 90461 (Immunization administration through
18 years of age via any route of administration, with counseling by
physician or other qualified health profession; each additional
vaccine/toxoid component (List separately in addition to code for
primary procedure)). This is an increase from the current values for
the predecessor services. The AMA RUC states that the increase in
recommended work RVUs is due to increased time for patient education.
In addition, effective January 1, 2011, reporting and payment for these
services is to be structured on a per toxoid basis rather than a per
vaccine (combination of toxoids) basis as it was in prior years. We
disagree with the AMA RUC-recommended values for these services and are
maintaining the current work RVUs for the related predecessor codes of
0.17 RVUs for CPT code 90460 and 0.15 work RVUs for CPT code 90461
since these codes would be billed on a per toxoid basis in CY 2011.
Therefore, we are assigning alternative values of 0.17 work RVUs to CPT
code 90460 and 0.15 work RVUs to CPT code 90461 on an interim final
basis for CY 2011.
(J) Diabetic Retinopathy Imaging (CPT Code 92228)
In February, 2010 the CPT Editorial Panel established two codes for
reporting remote imaging for screening retinal disease and management
of active retinal disease. For CPT code 92228 (Remote imaging for
monitoring and management of active retinal disease (eg, diabetic
retinopathy) with physician review, interpretation and report,
unilateral or bilateral), the AMA RUC recommended 0.44 work RVUs. The
AMA RUC compared this service to CPT code 92250 (Fundus photography
with interpretation and report) (Work RVUs = 0.44) due to similar times
and believes this service is comparable to the service under review. We
disagree with the reference service used by the AMA RUC and compared
this code to another diagnostic service, CPT code 92135 (Scanning
computerized ophthalmic diagnostic imaging, posterior segment, (eg,
scanning laser) with interpretation and report, unilateral) (Work RVUs
= 0.35), which we believe is more equivalent but has more pre- and
intra-service time. Upon further review of CPT code 92228 and the time
and intensity needed to perform this service, we believe work RVUs of
0.30, the survey low value, are more appropriate. Therefore, we are
assigning an alternative value of 0.30 work RVUs to CPT code 92228 on
an interim final basis for CY 2011.
(K) Speech-Language Pathology Services (CPT Codes 92508 and 92606)
Section 143 of the MIPPA specifies that speech-language
pathologists may independently report services they provide to Medicare
patients. Starting in July 2009, speech-language pathologists were able
to bill Medicare as independent practitioners. As a result, the
American Speech-Language-Hearing Association (ASHA) requested that CMS
ask the AMA RUC to review the speech-language pathology codes to newly
value the professionals' services in the work and not the practice
expense. ASHA indicated that it would survey the 12 speech-language
pathology codes over the course of the CPT 2010 and CPT 2011 cycles.
Four of these services were reviewed by the HCPAC or the AMA RUC and
were included in the CY 2010 PFS final rule with comment period (74 FR
61784 and 62146). For CY 2011, the HCPAC submitted work recommendations
for the remaining eight codes.
For CPT code 92508 (Treatment of speech, language, voice,
communication, and/or auditory processing disorder; group, 2 or more
individuals), the HCPAC recommended 0.43 work RVUs which was derived by
dividing the value for CPT code 92507 (Treatment of speech, language,
voice, communication, and/or auditory processing disorder; individual)
(work RVUs = 1.30) by 3, as the specialty society stated to the AMA RUC
that there are typically 3 participants in a group. We disagree with
the HCPAC-recommended value for this service and believe it is too
high. We believe work RVUs of 0.33 are more appropriate, which was
derived by dividing the value for CPT code 92507 by 4 participants, as
we understand from providers that 4 more accurately represents the
typical number of participants in a group. Additionally, the work RVUs
derived from dividing the RVUs for the related individual treatment
code by 4, 0.33 RVUs, are appropriate for this group treatment service
relative to the work RVUs of 0.27 for CPT code 97150 (Therapeutic
procedure(s), group (2 or more individuals)) which is furnished to a
similar patient population, namely patients who have had a stroke.
Therefore we are assigning alternative work RVUs of 0.33 to CPT code
92508 on an interim final basis for CY 2011.
For CPT code 92606 (Therapeutic service(s) for the use of non-
speech-generating device, including programming and modification), the
HCPAC recommended 1.40 work RVUs, the survey median value. This service
is currently bundled under the PFS and we will maintain this status for
CY 2011. We are publishing the AMA RUC-recommended value in Addendum B
to this final rule with comment period in accordance with our usual
practice for bundled services.
(L) Sleep Testing (CPT Codes 95806 and 95807)
Sleep testing CPT codes were identified by the Five-Year Review
Identification Workgroup as potentially misvalued codes through the
``CMS

[[Page 73334]]

Fastest Growing'' potentially misvalued codes screen. The CPT Editorial
Panel created separate Category I CPT codes to report for unattended
sleep studies. The AMA RUC recommended concurrent review of the family
of sleep codes.
For CPT code 95806 (Sleep study, unattended, simultaneous recording
of, heart rate, oxygen saturation, respiratory airflow, and respiratory
effort (eg, thoracoabdominal movement)), the AMA RUC recommended 1.28
work RVUs. The AMA RUC recommended 1.25 work RVUs for CPT code 95807
(Sleep study, simultaneous recording of ventilation, respiratory
effort, ECG or heart rate, and oxygen saturation, attended by a
technologist). Although the AMA RUC-recommended values for these codes
reflect the survey 25th percentile, we disagree with the values and
believe the values should be reversed because of the characteristics of
the services. CPT code 95807 has 5 minutes more pre-service time but a
lower AMA RUC-recommended value. Therefore, we have assigned
alternative values of 1.25 work RVUs to CPT code 95806 and 1.28 work
RVUs to CPT code 95807 on an interim final basis for CY 2011.
(M) Subsequent Hospital Observation Care
At the June 2009 CPT Editorial Panel meeting, three new codes were
approved to report subsequent observation services in a facility
setting. These codes are CPT code 99224 (Level 1 subsequent observation
care, per day); CPT code 99225 (Level 2 subsequent observation care,
per day): and CPT code 99226 (Level 3 subsequent observation care, per
day).
The AMA RUC reviewed the survey data for CPT code 99224 and
accepted the following physician times: 5 minutes of pre-service, 10
minutes of intra-service, and 5 minutes of post-service time. The AMA
RUC believed this code was comparable in physician time and intensity
to CPT code 99231 (Level 1 subsequent hospital care, per day, for the
evaluation and management of a patient), and recommended work RVUs of
0.76. Similarly, the AMA RUC reviewed the survey data for CPT code
99225 and accepted the following physician times: 9 minutes of pre-
service, 20 minutes of intra-service, and 10 minutes of post-service
time. The AMA RUC believed this code was comparable in physician time
and intensity to CPT code 99232 (Level 2 subsequent hospital care, per
day, for the evaluation and management of a patient), and recommended
work RVUs of 1.39. Finally, the AMA RUC reviewed the survey data for
CPT code 99226 and accepted the following physician times: 10 minutes
of pre-service, 30 minutes of intra-service, and 15 minutes of post-
service time. The AMA RUC believed this code was comparable in
physician time and intensity to CPT code 99233 (Level 3 subsequent
hospital care, per day, for the evaluation and management of a
patient), and recommended work RVUs of 2.00.
Observation services are outpatient services ordered by a patient's
treating practitioner. Admission of the patient to the hospital as an
inpatient or the ending of observation services must also be ordered by
the treating practitioner. CMS has stated that in only rare and
exceptional cases would reasonable and necessary outpatient observation
services span more than 48 hours. In the majority of cases, the
decision whether to discharge a patient from the hospital following
resolution of the reason for the observation care or to admit the
patient as an inpatient can be made in less than 48 hours, usually in
less than 24 hours. Consequently, we believe that the acuity level of
the typical patient receiving outpatient observation services would
generally be lower than that of the inpatient level. We believe that if
the patient's acuity level is determined to be at the level of the
inpatient, the patient should be admitted to the hospital as an
inpatient. We note that CMS has publicly stated in a recent letter to
the AHA that ``it is not in the hospital's or the beneficiary's
interest to extend observation care rather than either releasing the
patient from the hospital or admitting the patient as an inpatient * *
*''
Consequently, we are not accepting the AMA RUC's recommendation to
value the subsequent observation care codes at the level of subsequent
inpatient hospital care services. Instead, to recognize the differences
in patient acuity between the two settings, we removed the pre- and
post-services times from the AMA RUC-recommended values for subsequent
observation care, reducing the values to approximately 75 percent of
the values for the subsequent hospital care codes. Therefore, we are
assigning alternative work RVUs of 0.54 to CPT code 99224, 0.96 to CPT
code 99225, and 1.44 to CPT code 99226 on an interim final basis for CY
2011.
(2) Comprehensive Codes for a Bundle of Existing Component Services
A subset of AMA RUC work RVU recommendations addressed valuing new
CY 2011 CPT codes resulting from the bundling of two or more existing
component services performed together 95 percent or more of the time.
We expect this bundling of component services to continue over the next
several years as the AMA RUC further recognizes the work efficiencies
for services commonly furnished together. Stakeholders should expect
that increased bundling of services into fewer codes will result in
reduced PFS payment for a comprehensive service by explicitly
considering the efficiencies in work and/or PE that may occur when
component services are furnished together.
For CY 2011, the AMA RUC provided CMS with recommendations for
several categories of new comprehensive services that historically have
been reported under multiple component codes. In some CY 2011 cases,
the CPT Editorial Panel undertook relatively minor bundling, such as
bundling the associated imaging with a procedure in a single new CPT
code. In other cases, the CPT Editorial Panel bundled significant
component codes for distinct procedures that were previously separately
reported. This section focuses on the latter cases, and we note that
these codes fall into three major clinical categories: Endovascular
revascularization, computed tomography (CT), and diagnostic cardiac
catheterization. While we acknowledge that each category of services is
unique, since bundling of component services is likely to occur more
often in the coming years we believe a consistent approach is
especially important when valuing bundled services as part of the
potentially misvalued codes initiative in order to ensure that we fully
account for the resulting work efficiencies. Specifically, we recommend
that the AMA RUC use, whenever possible, the building block approach,
which is a consistent and transparent methodology based on the
components of a code.
The new CY 2011 comprehensive codes in these three clinical
categories are displayed in Table 51 and our discussion of their work
values follows.

[[Page 73335]]

Table 51--New CY 2011 Comprehensive Codes and Work RVUs for Endovascular Revascularization, CT, and Diagnostic
Cardiac Catheterization Services
----------------------------------------------------------------------------------------------------------------
AMA RUC- CY 2011
CPT code Long descriptor recommended interim final
work RVUs Work RVUs
----------------------------------------------------------------------------------------------------------------
Endovascular Revascularization
----------------------------------------------------------------------------------------------------------------
37220.................. Revascularization, endovascular, open or percutaneous, 8.15 8.15
iliac artery, unilateral, initial vessel; with
transluminal angioplasty.
37221.................. Revascularization, endovascular, open or percutaneous, 10.00 10.00
iliac artery, unilateral, initial vessel; with
transluminal stent placement(s), includes angioplasty
within the same vessel, when performed.
37222.................. Revascularization, endovascular, open or percutaneous, 3.73 3.73
iliac artery, each additional ipsilateral iliac
vessel; with transluminal angioplasty (List separately
in addition to code for primary procedure).
37223.................. Revascularization, endovascular, open or percutaneous, 4.25 4.25
iliac artery, each additional ipsilateral iliac
vessel; with transluminal stent placement(s) (List
separately in addition to code for primary procedure),
includes angioplasty within the same vessel, when
performed.
37224.................. Revascularization, endovascular, open or percutaneous, 9.00 9.00
femoral/popliteal artery(s), unilateral; with
transluminal angioplasty.
37225.................. Revascularization, endovascular, open or percutaneous, 12.00 12.00
femoral/popliteal artery(s), unilateral; with
atherectomy, includes angioplasty within the same
vessel, when performed.
37226.................. Revascularization, endovascular, open or percutaneous, 10.49 10.49
femoral/popliteal artery(s), unilateral; with
transluminal stent placement(s), includes angioplasty
within the same vessel, when performed.
37227.................. Revascularization, endovascular, open or percutaneous, 14.50 14.50
femoral/popliteal artery(s), unilateral; with
transluminal stent placement(s) and atherectomy,
includes angioplasty within the same vessel, when
performed.
37228.................. Revascularization, endovascular, open or percutaneous, 11.00 11.00
tibial/peroneal artery, unilateral, initial vessel;
with transluminal angioplasty.
37229.................. Revascularization, endovascular, open or percutaneous, 14.05 14.05
tibial/peroneal artery, unilateral, initial vessel;
with atherectomy, includes angioplasty within the same
vessel, when performed.
37230.................. Revascularization, endovascular, open or percutaneous, 13.80 13.80
tibial/peroneal artery, unilateral, initial vessel;
with transluminal stent placement(s) , includes
angioplasty within the same vessel, when performed.
37231.................. Revascularization, endovascular, open or percutaneous, 15.00 15.00
tibial/peroneal artery, unilateral, initial vessel;
with transluminal stent placement(s) and atherectomy,
includes angioplasty within the same vessel, when
performed.
37232.................. Revascularization, endovascular, open or percutaneous, 4.00 4.00
tibial/peroneal artery, unilateral, each additional
vessel; with transluminal angioplasty (List separately
in addition to code for primary procedure).
37233.................. Revascularization, endovascular, open or percutaneous, 6.50 6.50
tibial/peroneal artery, unilateral, each additional
vessel; with atherectomy (List separately in addition
to code for primary procedure), includes angioplasty
within the same vessel, when performed.
37234.................. Revascularization, endovascular, open or percutaneous, 5.50 5.50
tibial/peroneal artery, unilateral, each additional
vessel; with transluminal stent placement(s) (List
separately in addition to code for primary procedure),
includes angioplasty within the same vessel, when
performed.
37235.................. Revascularization, endovascular, open or percutaneous, 7.80 7.80
tibial/peroneal artery, unilateral, each additional
vessel; with transluminal stent placement(s) and
atherectomy (List separately in addition to code for
primary procedure), includes angioplasty within the
same vessel, when performed.
----------------------------------------------------------------------------------------------------------------
CT Abdomen/CT Pelvis
----------------------------------------------------------------------------------------------------------------
74176.................. Computed tomography, abdomen and pelvis; without 1.74 1.74
contrast material.
74177.................. Computed tomography, abdomen and pelvis; with contrast 1.82 1.82
material.
74178.................. Computed tomography, abdomen and pelvis; without 2.01 2.01
contrast material in one or both body regions,
followed by with contrast material(s) and further
sections in one or both body regions.
----------------------------------------------------------------------------------------------------------------
Diagnostic Cardiac Catheterization
----------------------------------------------------------------------------------------------------------------
93451.................. Right heart catheterization including measurement(s) of 3.02 2.72
oxygen saturation and cardiac output, when performed.
93452.................. Left heart catheterization including intraprocedural 4.32 4.75
injection(s) for left ventriculography, imaging
supervision and interpretation, when performed.
93453.................. Combined right and left heart catheterization including 5.98 6.24
intraprocedural injection(s) for left
ventriculography, imaging supervision and
interpretation, when performed.
93454.................. Catheter placement in coronary artery(s) including 4.95 4.79
intraprocedural injection(s) for coronary angiography,
imaging supervision and interpretation;.

[[Page 73336]]

93455.................. with catheter placement(s) in bypass graft(s) 6.15 5.54
(internal mammary, free arterial, venous grafts)
including intraprocedural injection(s) for bypass graft
angiography
93456.................. with right heart catheterization 6.00 6.15
93457.................. with catheter placement(s) in bypass graft(s) 7.66 6.89
(internal mammary, free arterial, venous grafts)
including intraprocedural injection(s) for bypass graft
angiography and right heart catheterization
93458.................. with left heart catheterization including 6.51 5.85
intraprocedural injection(s) for left ventriculography,
when performed
93459.................. with left heart catheterization including 7.34 6.60
intraprocedural injection(s) for left ventriculography,
when performed, catheter placement(s) in bypass
graft(s) (internal mammary, free arterial, venous
grafts) with bypass graft angiography
93460.................. with right and left heart catheterization including 7.88 7.35
intraprocedural injection(s) for left ventriculography,
when performed
93461.................. with right and left heart catheterization including 9.00 8.10
intraprocedural injection(s) for left ventriculography,
when performed, catheter placement(s) in bypass
graft(s) (internal mammary, free arterial, venous
grafts) with bypass graft angiography
93563.................. Injection procedure during cardiac catheterization 2.00 1.11
including image supervision, interpretation, and
report; for selective coronary angiography during
congenital heart catheterization
93564.................. for selective opacification of aortocoronary venous 2.10 1.13
or arterial bypass graft(s) (eg, aortocoronary
saphenous vein, free radial artery, or free mammary
artery graft) to one or more coronary arteries and in
situ arterial conduits (eg, internal mammary), whether
native or used for bypass to one or more coronary
arteries during congenital heart catheterization, when
performed
93565.................. for selective left ventricular or left arterial 1.90 0.86
angiography
93566.................. for selective right ventricular or right atrial 0.96 0.86
angiography
93567.................. for supravalvular aortography 1.08 0.97
93568.................. for pulmonary angiography 0.98 0.88
----------------------------------------------------------------------------------------------------------------

The AMA RUC used a variety of methodologies in developing RVUs for
comprehensive codes in these three categories of bundled services. To
develop the RVUs for the comprehensive endovascular revascularization
services, the AMA RUC generally recommended the median work RVUs from
the physician survey performed by the specialty society. The
recommended values for the comprehensive services are an average of 27
percent lower than the summed RVUs of the component services (taking
into consideration any MPPR that would currently apply) included in the
bundle. To develop the RVUs for comprehensive CT services, the AMA RUC
recommended taking the sum of 100 percent of the current work RVUs for
the code with the highest RVUs and 50 percent for the second code.
Under this methodology, the recommended work RVUs for the comprehensive
CT codes are consistently approximately 25 percent lower than the sum
of the RVUs for the component services. The approach of a uniform
discount on the second CT service resembles an MPPR and, given the
public concerns regarding our proposed expansion of current MPPR
policies under the PFS for CY 2011 as discussed in section II.C.4. of
this final rule with comment period, we are unsure how the AMA RUC's
recommended CT methodology actually considered the physician work
required for the specific component services being bundled.
Nevertheless, while we believe that the application of a consistent
approach to valuing comprehensive services is desirable, we agree that
the decreased work RVUs the AMA RUC recommended for comprehensive
services in these two categories reflect a reasonable estimation of the
work efficiencies created by the bundling of the component services.
Therefore, we are accepting as interim final work RVUs the AMA RUC-
recommended values for endovascular revascularization and CT services
listed in Table 51 for CY 2011.
To develop the RVUs for comprehensive diagnostic cardiac
catheterization services, the AMA RUC generally recommended the lower
of either the sum of the current RVUs for the component services or the
physician survey 25th percentile value. In most cases, the AMA RUC's
recommendation for the comprehensive service was actually the sum of
the current work RVUs for the component services and we are unsure how
this approach is resource-based with respect to physician work. We are
also concerned that the physician survey appears to have overstated the
work for these well-established procedures so significantly that the
25th percentile value was usually higher than the sum of the current
RVUs for the component services. Under this methodology, the AMA RUC-
recommended RVUs for the comprehensive codes for diagnostic cardiac
catheterization are an average of only one percent lower than the sum
of the RVUs for the component services (taking into consideration any
MPPR that would currently apply) included in the bundle.
We do not find the AMA RUC's methodology or the resulting values in
this case to be acceptable for a major code refinement exercise of this
nature. If we were to accept the AMA RUC's recommended values for these
cardiac catheterization codes, we essentially would be agreeing with
the presumption that there are negligible work efficiencies gained in
the bundling of these cardiac catheterization services. On the
contrary, we believe that the AMA RUC did not fully consider or account
for the efficiency gains when the component services are furnished
together, including the significant reduction in service time. Rather,
the AMA RUC appears to have considered only the summation of the
component

[[Page 73337]]

services to the comprehensive service. Therefore, we are requesting
that the AMA RUC reexamine these codes as quickly as possible, given
the significant PFS utilization and spending for cardiac
catheterization services, and put forward an alternative approach to
valuing these services that would produce relative values that are
resource-based and do not rely predominantly on the current component
service values in a circular rationale.
Since we believe that the new comprehensive diagnostic cardiac
catheterization codes would be overvalued under the AMA RUC's CY 2011
recommendations, we have employed an interim methodology to determine
alternative values for these services which we are assigning as the
interim final work RVUs for CY 2011. To account for efficiencies
inherent in bundling, we set the work RVUs for all of the CY 2011
cardiac catheterization codes for which we received AMA RUC
recommendations to 10 percent less than the sum of the current work
RVUs for the component codes, taking into consideration any MPPR that
would apply under current PFS policy. These values are displayed in
Table 51 and in Addendum B and C to this final rule with comment
period. We recognize that this interim methodology is not highly
specific and further acknowledge that the use of another approach by
the AMA RUC may have differential effects on the values of the new
comprehensive services compared to the proportionate reduction on the
sum of the RVUs for the component services that we have adopted as a
temporary methodology. However, given the complexity of the component
code combinations that contribute to the comprehensive cardiac
catheterization codes and the apparent overstatement of physician work
from the physician survey, we are unable to present a more refined,
code-specific methodology for the interim final values. Instead, based
upon a very conservative estimate of the work efficiencies we would
expect to be present when multiple component services are bundled
together into a single comprehensive service, we have set interim final
work values for the cardiac catheterization codes using a 10 percent
reduction on the current values. As points of comparison, we note that
the current MPPR policies under the PFS for imaging and surgical
services reduce payment for the second and subsequent procedures by 50
percent on the TC and complete service, respectively, and, as discussed
in detail in section II.C.4. of this final rule with comment period, we
are adopting a 25 percent MPPR on the PE component of payment for
therapy services in CY 2011. We further note that the service-specific
work efficiencies for the other two major categories of new bundled
codes for CY 2011, specifically endovascular revascularization and CT,
are generally between 20 and 35 percent.
(3) Work Budget Neutrality for Clinical Categories of CPT Codes
Work budget neutrality, as a concept, is applied to hold the
aggregate work RVUs constant within a set of clinically related CPT
codes, while maintaining the relativity of values for the individual
codes within that set. In some cases, when the CPT coding framework for
a clinically related set of CPT codes is revised by the creation of new
CPT codes or existing CPT codes are revalued, the aggregate work RVUs
recommended by the AMA RUC within a clinical category of CPT codes may
change, although the actual physician work for the services has not
changed. When this occurs, work budget neutrality may be applied to
adjust the work RVUs of each clinically related CPT code so that the
sum of the new/revised code work RVUs (weighted by projected
utilization) for a set of CPT codes would be the same as the sum of the
current work RVUs (weighted by projected utilization) for that set of
codes.
When the AMA RUC recommends work RVUs for new or revised CPT codes,
we review the work RVUs and adjust or accept the recommended values as
appropriate, making note of whether any estimated changes in aggregate
work RVUs would result from true changes (increases or decreases) in
physician work or from structural coding changes. We then determine
whether the application of budget neutrality within sets of codes is
appropriate. That is, if, within a set of clinically related codes, the
aggregate work RVUs would increase under the RVUs we would be adopting
for the upcoming year but without a corresponding true increase in
physician work, we generally view this as an indication that an
adjustment to ensure work budget neutrality within the set of CPT codes
is warranted.
As the AMA RUC and CMS move to bundle and revalue more existing
codes, creating significant structural coding changes, ensuring work
budget neutrality is an important principle so that these changes are
not unjustifiably redistributive among PFS services. This year, we
found four sets of clinically related CPT codes where we believe the
application of work budget neutrality is appropriate. That is, in these
clinical areas, we believe the increases in aggregate work RVUs for the
related services that would result from the work RVUs we would adopt
(either the AMA RUC-recommended work RVUs or the alternative work RVUs
determined by CMS) would not represent a true increase in the physician
work for these services. These codes are in the areas of paraesophageal
hernia procedures, obstetrical care, esophageal motility and high
resolution esophageal pressure topography, and skin excision and
debridement.
Table 52 lists the CPT codes that are affected by an application of
work budget neutrality in CY 2011.

Table 52--CY 2011 Work Budget Neutrality (BN) for Clinical Categories of New/Revised Codes
----------------------------------------------------------------------------------------------------------------
CMS-
AMA RUC- recommended CY 2011
CPT Code Short descriptor recommended work RVUs pre- interim final
work RVUs BN work RVUs
----------------------------------------------------------------------------------------------------------------
Paraesophageal Hernia Procedures, BN Factor of 0.7374
----------------------------------------------------------------------------------------------------------------
43283....................... Lap esoph lengthening............. 4.00 4.00 2.95
43327....................... Esoph fundoplasty lap............. 18.10 18.10 13.35
43328....................... Esoph fundoplasty thor............ 27.00 27.00 19.91
43332....................... Transab esoph hiat hern rpr....... 26.60 26.60 19.62
43333....................... Transab esoph hiat hern rpr....... 30.00 29.10 21.46
43334....................... Transthor diaphrag hern rpr....... 30.00 30.00 22.12
43335....................... Transthor diaphrag hern rpr....... 33.00 32.50 23.97
43336....................... Thorabd diaphr hern repair........ 35.00 35.00 25.81

[[Page 73338]]

43337....................... Thorabd diaphr hern repair........ 37.50 37.50 27.65
43338....................... Esoph lengthening................. 3.00 3.00 2.21
----------------------------------------------------------------------------------------------------------------
Obstetrical Care, BN Factor of 0.8922
----------------------------------------------------------------------------------------------------------------
59400....................... Obstetrical care.................. 32.69 32.16 28.69
59409....................... Obstetrical care.................. 14.37 14.37 12.82
59410....................... Obstetrical care.................. 18.54 18.01 16.07
59412....................... Antepartum manipulation........... 1.71 1.71 1.53
59414....................... Deliver placenta.................. 1.61 1.61 1.44
59425....................... Antepartum care only.............. 6.31 6.31 5.63
59426....................... Antepartum care only.............. 11.16 11.16 9.96
59430....................... Care after delivery............... 2.47 2.47 2.20
59510....................... Cesarean delivery................. 36.17 35.64 31.80
59514....................... Cesarean delivery only............ 16.13 16.13 14.39
59515....................... Cesarean delivery................. 22.00 21.47 19.15
59610....................... Vbac delivery..................... 34.40 33.87 30.22
59612....................... Vbac delivery only................ 16.09 16.09 14.35
59614....................... Vbac care after delivery.......... 20.26 19.73 17.60
59618....................... Attempted vbac delivery........... 36.69 36.16 32.26
59620....................... Attempted vbac delivery only...... 16.66 16.66 14.86
59622....................... Attempted vbac after care......... 22.53 22.00 19.63
----------------------------------------------------------------------------------------------------------------
Esophageal Motility and High Resolution Esophageal Pressure Topography, BN Factor of 0.8500
----------------------------------------------------------------------------------------------------------------
91010....................... Esophagus motility study.......... 1.50 1.50 1.28
91013....................... Esophgl motil w/stim/perfus....... 0.21 0.21 0.18
----------------------------------------------------------------------------------------------------------------
Skin Excision and Debridement, BN Factor of 0.9422
----------------------------------------------------------------------------------------------------------------
97597....................... Rmvl devital tis 20 cm/<.......... 0.54 0.54 0.51
97598....................... Rmvl devital tis addl 20 cm<...... 0.40 0.25 0.24
----------------------------------------------------------------------------------------------------------------

For the paraesophageal hernia procedures, the CPT Editorial Panel
deleted six existing CPT codes and created ten new codes to remove
obsolete and duplicative codes and add new codes to report current
surgical techniques for paraesophageal hernia procedures. Since in this
case there would be more codes that describe the same physician work
with a greater degree of precision, the aggregate increase in work RVUs
that would result from our adoption of the CMS-recommended RVUs that
are largely based on the AMA RUC's work RVU recommendations would not
represent a true increase in physician work. Therefore, we believe it
would be appropriate to apply work budget neutrality to this set of
codes. After reviewing the AMA RUC-recommended work RVUs, we adjusted
the work RVUs for two codes (CPT codes 43333 and 43335) as described
previously in section V.C.1.b.(i)(4) of this final rule with comment
period, and then applied work budget neutrality to the set of
clinically related CPT codes. The work budget neutrality factor for
these 12 paraesophageal hernia procedure CPT codes is 0.7374.
For the obstetrical care codes, the AMA RUC reviewed 17 existing
obstetrical care codes as part of the potentially misvalued codes
initiative. It recommended significant increases in the work RVUs for
some of the comprehensive obstetrical care codes (incorporating more
than one element of antepartum care, delivery, and/or postpartum care)
largely to address the management of labor. While we generally agree
with the resulting AMA RUC-recommended rank order of services in this
family, the aggregate increase in work RVUs for the obstetrical
services that would result from our adoption of the CMS-recommended
work RVUs that are largely based on the AMA RUC work RVU
recommendations is not indicative of a true increase in physician work
for the services. Therefore, we believe it would be appropriate to
apply work budget neutrality to this set of codes. After reviewing the
AMA RUC-recommended work RVUs, we adjusted the work RVUs for several
codes as described in the following section V.C.1.c.(6) of this final
rule with comment period, and then applied work budget neutrality to
the set of clinically related CPT codes. The work budget neutrality
factor for the 17 obstetrical care CPT codes is 0.8922.
For esophageal motility and high resolution esophageal pressure
topography, two CPT codes were deleted and the services will be
reported under a revalued existing CPT code and a new add-on code in CY
2011. We agree with the AMA RUC that there is compelling evidence to
change the work RVUs for the existing code to account for the inclusion
of procedures with higher work RVUs that would previously have been
reported under the deleted codes. We also agree with the AMA RUC-
recommended work RVUs for the add-on code. While we agree with the AMA
RUC's recommendations for the new work RVUs for both codes, we do not
believe that this structural coding change should result in an increase
in aggregate physician work for the same services and, therefore, we
believe it would be appropriate to apply work budget neutrality to this
set of codes. The work budget neutrality factor for these 2 codes is
0.8500.
In the skin excision and debridement category, two CPT codes were
deleted and the services that would previously

[[Page 73339]]

have been reported under these codes will be reported under two
existing codes in CY 2011. However, the two existing wound management
codes have been restructured from describing two distinct procedures
reported based on wound surface area to describing a primary procedure
and an add-on procedure that would additionally be reported in the case
of a larger wound. Once again, the increase in aggregate work RVUs that
would result from our adoption of the CMS-recommended work RVUs that
are largely based on the AMA RUC work RVU recommendations do not
represent a true increase in physician work for these procedures.
Therefore, we believe it would be appropriate to apply work budget
neutrality to this set of codes. After reviewing the AMA RUC-
recommended work RVUs, we adjusted the work RVUs for one code (CPT code
97598) as described previously in section V.C.1.b.(i)(1) of this final
rule with comment period, and then applied work budget neutrality to
the set of clinically related CPT codes. The budget neutrality factor
for these 2 codes is 0.9422.
c. CY 2011 Interim Final Work RVUs for Potentially Misvalued Codes
In the following section, we provide a discussion of our rationale
for not accepting particular AMA RUC-recommended work RVUs for CY 2011
CPT codes that have been identified as potentially misvalued through
the AMA RUC's screens and with CMS guidance. Table 53 lists all 291 CPT
codes for which the AMA RUC has provided CMS with work RVU
recommendations for CY 2011. Furthermore, the table displays the AMA
RUC's recommended work value as well as CMS' interim final decisions
for CY 2011. For CY 2011, the AMA RUC provided work RVU recommendations
for a total of 82 codes identified as potentially misvalued in
categories based on the screen that identified the codes, including
``Harvard-Valued;'' ``CMS Fastest Growing:'' and ``Site-of-Service
Anomalies.'' For CY 2011, CMS is not accepting 26 of the 82 AMA RUC-
recommended work values for codes identified as potentially misvalued.
We are instead providing alternative interim final work RVUs as
discussed in the forthcoming section.
(1) Excision and Debridement (CPT Codes 11043 and 11044)
CPT codes 11043 (Debridement; skin, subcutaneous tissue, and
muscle) and 11044 (Debridement; skin, subcutaneous tissue, muscle, and
bone) were identified by the AMA RUC's Five-Year Review Identification
Workgroup through the ``Site-of-Service Anomalies'' potentially
misvalued codes screen in September 2007. The AMA RUC recommended that
the entire family of services described by CPT codes 11040 through
11044 and 97597 and 97598 be referred to the CPT Editorial Panel
because the current descriptors allowed reporting of the codes for a
bimodal distribution of patients and also to better define the terms
excision and debridement. For CY 2011, the AMA RUC reviewed this family
of codes which includes the two potentially misvalued codes, CPT codes
11043 and 11044, and provided work RVU recommendations to CMS. Since
the family also included other new and revised codes, we have
consolidated the discussion of Excision and Debridement codes in
section V.C.1.b.(i)(1), which discusses new and revised codes. Section
V.C.1.b.(i)(1) provides the complete discussion of CMS' interim final
work RVU decisions for this family of codes. However, to summarize the
CMS decisions in brief, we disagree with the AMA RUC's CY 2011 work RVU
recommendations and are assigning alternative values for both CPT codes
11043 and 11044 on an interim final basis for CY 2011.
(2) Strapping Lower Extremity (CPT Code 29540)
CPT code 29540 (Strapping; ankle and/or foot) was identified as a
potentially misvalued code through the Five-Year Review Identification
Workgroup under the ``Harvard Valued'' codes potentially misvalued
codes screen for services with utilization over 100,000. This code is
also a member of a family of codes under review for CY 2011 and as
such, the full discussion for the Strapping Lower Extremity family is
provided in section V.C.1.b.(i)(3), which discusses new and revised
codes. However, to summarize the CMS decision in brief, we disagree
with the AMA RUC's CY 2011 work RVU recommendations and are assigning
an alternative value of 0.32 RVUs to CPT code 29540 on an interim final
basis for CY 2011.
(3) Control Nasal Hemorrhage (CPT Code 30901)
CPT code 30901 (Control nasal hemorrhage, anterior, simple (limited
cautery and/or packing) any method) was identified as a potentially
misvalued code through the Five-Year Review Identification Workgroup
under the ``Harvard Valued'' potentially misvalued codes screen for
services with utilization over 100,000. The AMA RUC agreed with the
specialty society, stating that there is no compelling evidence to
change the current work RVUs of 1.21. To support the current valuation,
the AMA RUC compared CPT code 30901 to CPT code 36620 (Arterial
catheterization or cannulation for sampling, monitoring or transfusion
(separate procedure); percutaneous), and agreed that CPT code 30901
required slightly more total service time to perform but required
comparable intensity and complexity. The AMA RUC also compared CPT code
30901 to the key reference code CPT code 31231 (Nasal endoscopy,
diagnostic, unilateral or bilateral (separate procedure) and agreed
that code CPT code 30901 would be relatively more intense/complex. We
disagree with the AMA RUC's CY 2011 work RVU recommendation to maintain
the current work RVUs of 1.21 for code CPT code 30901 because the AMA
RUC-recommended work value does not appropriately account for the
significant reduction in intra-service time. We believe the more
appropriate work RVUs are 1.10, based on the survey 25th percentile.
Therefore, we are assigning an alternative value of 1.10 work RVUs to
CPT code 29540 on an interim final basis for CY 2011.
(4) Cystourethroscopy (CPT Codes 52281 and 52332)
CPT codes 52281 (Cystourethroscopy, with calibration and/or
dilation of urethral stricture or stenosis, with or without meatotomy,
with or without injection procedure for cystography, male or female)
and 52332 (Cystourethroscopy, with insertion of indwelling ureteral
stent (e.g., Gibbons or double-J type) were identified as a potentially
misvalued code through the Five-Year Review Identification Workgroup
under the ``Harvard Valued'' potentially misvalued codes screen for
services with utilization over 100,000.
The AMA RUC reviewed the survey results and determined that the
physician time of 16 minutes pre-, 20 minutes intra-, and 10 minutes
immediate post-service time and maintaining the current work RVUs of
2.80 appropriately account for the time and work required to perform
this procedure. We disagree with the CY 2011 AMA RUC work RVU
recommendation to maintain the current RVUs for this code because the
physician time to perform this service (a building block of the code)
has changed since the original ``Harvard values'' were established, as
indicated by the AMA RUC-recommended reduction in pre-service time.
Accounting for the reduction in pre-service time, we calculated work
RVUs that are close to the survey 25th percentile. Therefore,

[[Page 73340]]

we are assigning 2.60 work RVUs to CPT code 52281 on an interim final
basis for CY 2011.
Similarly, for CPT code 52332, we disagree with the AMA RUC's CY
2011 work RVU recommendation to maintain the current value due to the
same concerns, a significant reduction in pre-service time. Based on
the same building block rationale we applied to CPT code 52281, the
other code within this family, we believe 1.47, which is the survey
25th percentile and maintains rank order, is a more appropriate
valuation for 52332. Therefore, we are assigning an alternative value
of 1.47 work RVUs to CPT code 52332 on an interim final basis for CY
2011.
(5) Vaginal Radiation Afterloading Apparatus for Clinical Brachytherapy
(CPT Code 51755)
CPT code 57155 (Insertion of uterine tandems and/or vaginal ovoids
for clinical brachytherapy) was identified as a potentially misvalued
code by the Five-Year Review Identification Workgroup through the
``Site-of-Service Anomalies'' potentially misvalued codes screen. This
code is a member of a family of codes under review for CY 2011 and as
such, the full discussion for the family is provided in section
V.C.1.b.(1)(E), which discusses new and revised codes. However, to
summarize the CMS decision in brief, we disagree with the AMA RUC's CY
2011 work RVU recommendations and are assigning an alternative value of
3.37 RVUs to CPT code 57155 on an interim final basis for CY 2011.
(6) Obstetrical Care Codes (CPT Codes 59440, 59410, 59510, 59515,
59610, 59614, 59618, and 59622)
As a result of being identified as potentially misvalued codes by
the Five-Year Review Identification Workgroup ``High IWPUT'' screen for
potentially misvalued codes, the AMA RUC reviewed the CPT codes that
define obstetrical care (CPT codes 59400 through 59622). CPT codes
59400, 59410, 59510, 59515, 59610, 59614, 59618 and 59622 include
antepartum care and/or delivery as well as postpartum care for which
the AMA RUC recommended significantly increased work values. The AMA
RUC recommended 32.69 work RVUs for CPT code 59400 (Routine obstetric
care including antepartum care, vaginal delivery (with or without
episiotomy, and/or forceps) and postpartum care); 18.54 work RVUs for
CPT code 59410 (Vaginal delivery only (with or without episiotomy and/
or forceps); including postpartum care); 36.17 work RVUs for CPT code
59510 (Routine obstetric care including antepartum care, cesarean
delivery, and postpartum care); 22.00 work RVUs for CPT code 59515
(Cesarean delivery only; including postpartum care), 34.40 work RVUs
for CPT code 59610 (Routine obstetric care including antepartum care,
vaginal delivery (with or without episiotomy, and/or forceps) and
postpartum care, after previous cesarean delivery); 20.26 work RVUs for
CPT code 59614 (Vaginal delivery only, after previous cesarean delivery
(with or without episiotomy and/or forceps); including postpartum
care), 36.69 work RVUs for CPT code 59618 (Routine obstetric care
including antepartum care, cesarean delivery, and postpartum care,
following attempted vaginal delivery after previous cesarean delivery);
and 22.53 work RVUs for CPT code 59622 (Cesarean delivery only,
following attempted vaginal delivery after previous cesarean delivery;
including postpartum care). For postpartum care with delivery, which is
included in all of these codes, the AMA RUC recommended one CPT code
99214 (Level 4 established patient office or other outpatient visit).
We disagree with the AMA RUC-recommended work RVUs for these
services and believe that one CPT code 99213 visit (Level 3 established
patient office or other outpatient visit) more accurately reflects the
services furnished for this postpartum care visit. Therefore, for all
CPT code 99214 blocks for CPT codes that include postpartum care
following delivery visits, we have converted the CPT code 99214 visit
to a CPT code 99213 visit and have revised the work RVUs accordingly.
Therefore, we are adopting alternative work RVUs and are assigning
32.16 work RVUs to CPT code 59400; 18.01 work RVUs to CPT code 59410;
35.64 work RVUs to CPT code 59510; 21.47 work RVUs to CPT code 59515;
33.87 work RVUs to CPT code 59610; 19.73 work RVUs to CPT code 59614;
36.16 work RVUs to CPT code 59618; and 22.00 work RVUs to CPT code
59622, prior to the work budget neutrality adjustment as discussed in
section V.C.1.b.(3) of this final rule with comment period, on interim
final basis for CY 2011.
(7) Vagus Nerve Stimulator (CPT Code 61885)
CPT code 61885 (Insertion or replacement of cranial neurostimulator
pulse generator or receiver, direct or inductive coupling; with
connection to a single electrode array) was identified as a potentially
misvalued code by the Five-Year Review Identification Workgroup under
the ``Site-of-Service Anomalies'' screen for potential misvalued codes.
We discuss this code in the context of the Vagus Nerve Stimulator
family, provided in section V.C.1.b.(i)(6), which discusses new and
revised codes. However, to summarize the CMS decision in brief, we
disagree with the AMA RUC's CY 2011 work RVU recommendations and are
assigning an alternative value of 6.05 RVUs to CPT code 61885 on an
interim final basis for CY 2011.
(8) Transforaminal Epidural Injection (CPT Code 64483)
CPT code 64483 (Injection(s), anesthetic agent and/or steroid,
transforaminal epidural, with image guidance (fluoroscopy or CT),
lumbar or sacral; single level) was identified as a potentially
misvalued code through the Five-Year Review Identification Workgroup
under the ``CMS Fastest Growing'' potentially misvalued codes screen.
The AMA RUC compared components of this code (pre-, intra-, and post-
service times, in addition to intensity) to a number of other codes,
although the AMA RUC's application of the crosswalk methodology was
unclear to us. The AMA RUC recommended 1.90 work RVUs; however, we
disagree with AMA RUC's CY 2011 work RVU recommendation and believe
1.75 work RVUs, based on the survey 25th percentile, more appropriately
accounts for the significant reductions in pre-, intra-, and post-
service time. Therefore, we are assigning an alternative value of 1.75
work RVUs to CPT code 64483 on an interim final basis for CY 2011.
(9) CT Thorax (CPT Code 71250)
CPT Code 71250 (Computed tomography, thorax; without contrast
material) was identified as a potentially misvalued code by the Five-
Year Review Identification Workgroup under the ``CMS Fastest Growing''
potentially misvalued codes screen. This service had never been
surveyed by the AMA RUC until this review was conducted for CY 2011.
The specialty recommended a pre-service time of 5 minutes based on the
survey results and the AMA RUC concurred. The AMA RUC also agreed that
the surveyed intra-service of 15 minutes and immediate post-service
time of 5 minutes were typical for the physician work required for the
service. While the AMA RUC accepted the survey results for physician
times based on its comparisons to similar services and other
considerations, the AMA RUC believed maintaining the code's current
value of 1.16 work RVUs was more appropriate, noting that this
recommended value is slightly lower than the survey 25th percentile of
1.20.

[[Page 73341]]

We disagree with the AMA RUC's CY 2011 work RVU recommendation to
maintain the current value for CPT code 71250 and similar codes. As we
have previously discussed, we are increasingly concerned over the
validity of accepting work valuations based upon surveys conducted on
existing codes as we have noticed a pattern of predictable survey
results. That is, in providing recommendations for existing potentially
misvalued codes in CY 2011, the AMA RUC often recommended maintaining
the current work RVUs and supported this valuation by citing the survey
results. Upon clinical review of a number of these cases, we are
concerned over the validity of the survey results since the survey
values often are very close to the current known value for the code. We
are concerned that this may indicate a bias in the survey results since
respondents would know the current value for the existing code at the
time the survey is being conducted. Increasingly, rather than
recommending the median survey value that has historically been most
commonly used, the AMA RUC is choosing to recommend the 25th percentile
value, potentially responding to the same concern we have identified.
Therefore, based on our concern that CT codes would continue to be
misvalued if we were to accept the AMA RUC recommendation to maintain
the current value, we are assigning an alternative value of 1.00 work
RVUs (the survey low value) to CPT code 71250 on an interim final basis
for CY 2011.
(10) CT Spine (CPT Code 72125)
CPT codes 72125 (Computed tomography, cervical spine; without
contrast material); 72128 (Computed tomography, thoracic spine; without
contrast material); and 72131 (Computed tomography, lumbar spine;
without contrast material) were identified as potentially misvalued
codes by the Five-Year Review Workgroup under the ``CMS Fastest
Growing'' screen for potentially misvalued codes. For CPT code 72125,
the AMA RUC concurred with the specialty-recommended pre-service time
of 5 minutes based on the survey results. The AMA RUC also agreed that
the surveyed intra-service of 15 minutes and immediate post-service
time of 5 minutes were typical for the physician work required for the
service. The AMA RUC compared this service to other comparable services
and concluded that it was appropriate to maintain the current work RVUs
of 1.16.
Similarly, for CPT codes 72128 and 72131, the AMA RUC accepted the
survey physician times, but also disregarded the survey work RVU
results. Upon clinical review of these codes in this family, we are
concerned over the validity of the survey results since the survey 25th
percentile values are very close to the current value of 1.16 RVUs for
the code. As we stated previously, we are concerned that this pattern
may indicate a bias in the survey results. Therefore, based on our
concern that the CT codes would continue to be misvalued if we were to
accept the AMA RUC recommendation to maintain the current values, we
are assigning alternative work RVUs of 1.00 (the survey low value) to
CPT codes 72125, 72128, and 72131 on an interim final basis for CY
2011.
(11) CT Upper and CT Lower Extremity (CPT Code 73200 and 73700)
CPT codes 73200 (Computed tomography, upper extremity; without
contrast material) and 73700 (Computed tomography, lower extremity;
without contrast material) were identified as potentially misvalued
codes by the Five-Year Review Workgroup under the ``CMS Fastest
Growing'' screen for potentially misvalued codes. Similar to the other
CT codes previously discussed, the AMA RUC reviewed the survey results
and accepted the survey physician times, recommending maintaining the
current work RVUs of 1.09 for these services. Our clinical review of
the codes, CPT codes 73200 and 73700, as with the other CT codes
previously discussed, concluded that maintaining the current values
would result in an overvaluing of this type of service. We remain
concerned over the validity of the survey results. Therefore, based on
our concern that CT codes would continue to be misvalued if we were to
accept the AMA RUC recommendation to maintain the current values, we
disagree with the AMA RUC's CY 2011 work RVU recommendations. We are
assigning alternative work RVUs of 1.00 (the survey low RVU value) to
CPT codes 73200, and 73700 on an interim final basis for CY 2011.
(12) Radiation Treatment Management (CPT Code 77427)
CPT code 77427 (Radiation treatment management, 5 treatments) was
identified as a potentially misvalued code by the Five-Year
Identification Workgroup's ``Site-of-Service Anomalies'' screen for
potentially misvalued codes in 2007. For CY 2011, the AMA RUC reviewed
the specialty survey results and agreed that the surveyed physician
time of 7 minutes pre-service, 70 minutes intra-service, and 10 minutes
immediate post-service is appropriate. The AMA RUC also used the
building block approach to value the treatment visits associated with
CPT code 77427. The AMA RUC averaged the number of weekly E/M visits,
that is, 4 of CPT code 99214 (Level 4 established patient office or
other outpatient visit) and 2 of CPT code 99213 (Level 3 established
patient office or other outpatient visit) over 6 weeks to calculate an
E/M building block of 1.32 RVUs. Similarly, to value the post-operative
office visits associated with this code, the AMA RUC calculated a
building block of 0.57 to account for the average over 6 weeks of ``E/M
visits after treatment planning.'' The AMA RUC then crosswalked the
physician times for CPT code 77427 to CPT code 77315 (Teletherapy,
isodose plan (whether hand or computer calculated); complex (mantle or
inverted Y, tangential ports, the use of wedges, compensators, complex
blocking, rotational beam, or special beam considerations)) and used
the value of CPT code 77315 as the remaining building block for CPT
code 77427. Accordingly, the AMA RUC calculated total work RVUs of 3.45
and recommended this value for CPT code 77427.
Upon clinical review, we modified one of the building blocks that
the AMA RUC used to calculate the work RVUs associated with the
treatment E/M office visits. We believe instead of the average based
upon 4 units of CPT code 99214 and 2 units of CPT code 99213, a more
appropriate estimation would be an average of 3 units of CPT code 99214
and 3 units of CPT code 99213. Accordingly, we are assigning an
alternative value of 2.92 work RVUs to CPT code 77427 on an interim
final basis for CY 2011.
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BILLING CODE 4120-01-C
2. Establishment of Interim Final Direct PE Inputs for CY 2011
a. Background
As we previously explained in section V.A. of this final rule with
comment period, on an annual basis, the AMA RUC provides CMS with
recommendations regarding direct PE inputs, including clinical labor,
supplies, and equipment, for new, revised, and potentially misvalued
codes. These recommendations, therefore, include inputs for all direct
PE categories excluding supply prices and equipment prices and useful
life inputs, which are specifically discussed in section II.A.3.e. of
this final rule with comment period.
We review the AMA RUC-recommended direct PE inputs on a code-by-
code basis, including the recommended facility PE inputs and/or
nonfacility PE inputs, as clinically appropriate for the code. We
determine whether we agree with the AMA RUC's recommended direct PE
inputs for a service or, if we disagree, we refine the PE inputs to
represent inputs that better reflect our estimate of the PE resources
required for the service in the facility and/or nonfacility settings.
We also confirm that CPT codes should have facility and/or nonfacility
direct PE inputs and make changes based on our clinical judgment and
any PFS payment policies that would apply to the code.
We received direct PE input recommendations from the AMA RUC for
325 CPT codes for CY 2011, including those CPT codes where the AMA RUC
recommended no changes to the direct PE inputs of existing codes. We
note that we have included in this count those recommendations received
from the AMA RUC that were provided for CY 2011 and addressed in the CY
2011 PFS proposed rule. These recommendations are discussed in section
II.A.3.c. of this final rule with comment period. We have accepted for
CY 2011, as interim final and without refinement, the direct PE inputs
based on the recommendations submitted by the AMA RUC for the 258 codes
listed in Table 54.
For the remainder of the AMA RUC's direct PE recommendations for 67
codes, we have accepted the PE recommendations submitted by the AMA RUC
as interim final, but with refinements. These codes and the refinements
to their direct PE inputs are listed in Table 55.
Accordingly, while Table 55 details the CY 2011 refinements of the
AMA RUC's direct PE recommendations at the code-specific level, we
discuss the general nature of some common refinements and the reasons
for particular refinements in the following section. We note that the
final CY 2011 PFS direct PE database reflects the refined direct PE
inputs that we are adopting on an interim final basis for CY 2011. That
database is available under downloads for the CY 2011 PFS final rule
with comment period on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
b. CY 2011 Interim Final Direct PE Inputs for New, Revised, and
Potentially Misvalued Codes
(1) General Equipment Time
Many of the refinements to the AMA RUC direct PE recommendations
were made in the interest of promoting a transparent and consistent
approach to equipment time inputs. In the past, the AMA RUC did not
always provide us with recommendations regarding equipment time inputs.
In CY 2010, we requested that the AMA RUC provide equipment times along
with the other direct PE recommendations. Subsequent to that request,
we provided the AMA RUC with general guidelines regarding appropriate
equipment time inputs. We appreciate the AMA RUC's willingness to
provide us with these additional inputs as part of their direct PE
recommendations.
In general, the equipment time inputs correspond to the intra-
service portion of the clinical labor times. We have clarified that
assumption to consider equipment time as the sum of the times within
the intra-service period when a clinician is using the piece of
equipment, plus any additional time the piece of equipment is not
available for use for another patient due to its use during the
designated procedure. In addition, when a piece of equipment is
typically used during additional visits included in a service's global
period, the equipment time should also reflect that use.
Certain highly technical pieces of equipment and equipment rooms
are less likely to be used by a clinician over the full course of a
procedure and are typically available for other patients during time
that may still be in the intra-service portion of the service. We
adjust those equipment times accordingly. For example, CPT code 74178
(Computed tomography, abdomen and pelvis; without contrast material in
more than one body region) includes 3 minutes of intra-service clinical
labor time associated with obtaining the patient's consent for the
procedure. Since it would be atypical for this activity to occur within
the CT room, we believe these 3 minutes should not be attributed to the
CT room.
We are refining the CY 2011 AMA RUC direct PE recommendations to
conform to these equipment time policies. These refinements are
reflected in the final CY 2011 PFS direct PE database and detailed in
Table 55.
(2) Equipment Time and Clinical Labor for Conscious Sedation
In services that include conscious sedation recovery, clinical
labor and equipment time inputs are generally established using a
distinctive logic. In the case of these services, clinical labor time
is based on 15 minutes of registered nurse (RN) recovery monitoring for
each hour monitored following the procedure to account for a typical
1:4 nurse to patient ratio. Times for equipment used during the
recovery monitoring period, therefore, are equal to four times the
number of RN minutes during the recovery monitoring period.
Equipment time for pieces of equipment used in conscious sedation
should generally include time to administer the anesthesia, time for
the procedure, and time to monitor the patient following the
procedures. Standard equipment and supplies for conscious sedation
include: EQ011 (ECG, 3-channel (with SpO2, NIBP, temp, resp)); EF019
(stretcher chair); EQ032 (IV infusion pump); and SA044 (pack, conscious
sedation).
We are refining the CY 2011 AMA RUC direct PE recommendations to
conform to these policies. These refinements are reflected in the final
CY 2011 PFS direct PE database and detailed in Table 55.
(3) Equipment Time for Add-On Codes
For add-on codes, only minutes allocated to the procedure itself
are added to the time for the equipment, since any additional minutes
would duplicate the equipment time already accounted for in the primary
procedure that accompanies the add-on code.
We are refining the CY 2011 AMA RUC PFS direct PE recommendations
to conform to this policy. These refinements are reflected in the final
CY 2011 PFS direct PE database and detailed in Table 55.
(4) Changes in Standard Uses of Certain Supplies
As discussed in section II.A.3.b.(1) of this final rule with
comment period, we are finalizing our proposal to remove the supply
item ``biohazard bag'' from the direct PE database because the item is
considered an indirect practice

[[Page 73351]]

expense. Additionally, as discussed in section II.A.3.b.(6) of this
final rule with comment period, we are finalizing our CY 2011 proposal
to remove the pulse oximeter with printer (CMS Equipment Code EQ211) as
an input for the 118 codes that also contain the ECG, 3-channel (with
SpO2, NIBP, temp, resp) (CMS Equipment Code EQ011).
We are refining the CY 2011 AMA RUC PFS direct PE recommendations
to conform to these policies. These refinements are reflected in the
final CY 2011 PFS direct PE database and detailed in Table 55.
(5) New Supply and Equipment Items
When clinically appropriate, the AMA RUC generally recommends the
use of supply and equipment items that already exist in the direct PE
database for new, revised, and potentially misvalued codes. Some
recommendations include supply or equipment items that are not
currently in the direct PE database. In these cases, the AMA RUC has
historically recommended a new item be created and has facilitated CMS'
pricing of that item by working with the specialty societies to provide
sales invoices to us. We appreciate the contributions of the AMA RUC in
that process.
Despite the assistance of the AMA RUC for CY 2011, we did not
receive adequate information for pricing the following new supply items
included in the AMA RUC's CY 2011 direct PE recommendations: SC098
(Catheter, angiographic, Berman); SD251 (Sheath Shuttle (Cook)); SD255
(Reentry Device (Frontier, Outback, Pioneer)); SD257 (Tunneler); and
SD258 (Vacuum Bottle). We agree with the AMA RUC that these supply
items are appropriate direct PE inputs for the associated procedures.
However, because these items do not resemble current supplies in the PE
database, we were unable to identify existing supplies with input
prices to substitute for the AMA RUC-recommended direct PE inputs. We
were also unable to estimate the prices for these new supply items
based on analogy to existing supplies in the direct PE database
because, as stated previously, they are not clinically similar to
existing items in the direct PE database and we do not have information
on the pricing of the new supply items. Therefore, our only alternative
for these supply items for CY 2011 was to accept them as direct PE
inputs for the associated services based on the AMA RUC
recommendations, but to price them at $0 for CY 2011. For CY 2012, we
will consider the prices for these supply items eligible to be updated
through the process we are finalizing for CY 2011 that is described in
section II.A.3.e. of this final rule with comment period.
In the case of certain other direct PE recommendations for CY 2011,
the AMA RUC has recommended new supply or equipment items that we
believe to be already described by existing items in the direct PE
database. Therefore, we are refining the AMA RUC CY 2011 direct PE
recommendations to utilize existing supply and equipment items in the
PE database where appropriate. These refinements are reflected in the
final CY 2011 PFS direct PE database and detailed in Table 55.
(6) Endovascular Revascularization Stents
In reviewing the supply input recommendations from the AMA RUC for
CPT codes describing certain endovascular revascularization services,
we considered the quantity of high-cost stents associated with some of
the codes. The recommendations included two or three stents for each of
the following six CPT codes: 37226 (Revascularization, femoral/
popliteal artery(s), unilateral; with transluminal stent placement(s));
37227 (Revascularization, femoral/popliteal artery(s), unilateral; with
transluminal stent placement(s) and atherectomy); 37230
(Revascularization, tibial/peroneal artery, unilateral, initial vessel;
with transluminal stent placement(s)); 37231 (Revascularization,
tibial/peroneal artery, unilateral, initial vessel; with transluminal
stent placement(s) and atherectomy); 37234 (Revascularization, tibial/
peroneal artery, unilateral, each additional vessel; with transluminal
stent placement(s) (List separately in addition to code for primary
procedure)); and 37235 (Revascularization, tibial/peroneal artery,
unilateral, each additional vessel; with transluminal stent
placement(s) and atherectomy (List separately in addition to code for
primary procedure)).
Given the complex clinical nature of these services, their new
pricing in the nonfacility setting under the PFS, and the high cost of
each stent, we were concerned that two or three stents could
overestimate the number of stents used in the typical office procedure
that would be reported under one of the CPT code. Therefore, we
examined CY 2009 hospital OPPS claims data for the combinations of
predecessor codes that would have historically been reported for each
case reported in under CY 2011 under a single comprehensive code.
Because of the OPPS device-to-procedure claims processing edits, all
prior cases would have included HCPCS C-code for at least one stent on
the claim for the case. Based on our analysis of these data, we
determined that for each new CY 2011 comprehensive code, the
predecessor code combinations would have used only one stent in 65
percent or more of the cases. We have no reason to believe that when
these new CPT codes are reported for procedures performed in the
nonfacility setting, patients would receive more than the one stent
typically used in the hospital outpatient setting. Therefore, we are
refining the CY 2011 AMA RUC recommendations to include one stent in
the direct PE inputs for each of the six endovascular revascularization
stent insertion codes, including the add-on codes. These refinements
are reflected in the final CY 2011 PFS direct PE database.
(7) Nasal/Sinus Endoscopy Supply and Equipment Items
The AMA RUC recommendation for direct PE inputs for CPT code 31295
(Nasal/sinus endoscopy, surgical; with dilation of maxillary sinus
ostium (e.g., balloon dilation), transnasal or via canine fossa),
included irregular supply and equipment inputs. The AMA RUC recommended
two similar, new supply items, specifically ``kit, sinus surgery,
balloon (maxillary, frontal, or sphenoid)'' and ``kit, sinus surgery,
balloon (maxillary)'' as supply inputs with a quantity of one-half for
each item. We believe that this recommendation was intended to reflect
an assumption that each of these distinct supplies is used in
approximately half of the cases when the service is furnished. In
general, the direct PE inputs should reflect the items used when the
service is furnished in the typical case. Therefore, the quantity of
supply items associated with a code should reflect the actual units of
the item used in the typical case, and not be reflective of any
estimate of the proportion of cases in which any supply item is used.
We note, however, that fractional inputs are appropriate when
fractional quantities of a supply item are typically used, as is
commonly the case when the unit of a particular supply reflects the
volume of a liquid supply item instead of quantity. Additionally, in
the case of certain services with global service periods, fractional
quantities of supplies may be appropriate when fractional numbers of
post-service office visits are associated with a code.
Upon receipt of these recommendations, we requested that the AMA
RUC clarify the initial recommendation by determining which

[[Page 73352]]

of these supply items would be used in the typical case. The AMA RUC
recommended that the supply item ``kit, sinus surgery, balloon
(maxillary, frontal, or sphenoid)'' be included in the inputs for the
code. We considered that recommendation, but we believe that the item
``kit, sinus surgery, balloon (maxillary)'' is more clinically
appropriate based on the description of CPT code 32195.
The AMA RUC recommendation for equipment inputs for the same code
(CPT code 31295) included a parallel irregularity by distributing half
of the equipment minutes to each of two similar pieces of equipment,
one existing and one new: ``Endoscope, rigid, sinoscopy'' (ES013) and
``fiberscope, flexible, sinoscopy'' (new). We believe that this
recommendation was intended to reflect an assumption that each of these
distinct pieces of equipment is used in approximately half of the cases
in which the service is furnished. In general, the direct PE inputs
should reflect the items used when the service is furnished in the
typical case. Therefore, the equipment time inputs associated with a
code should reflect the number of minutes an equipment item is used in
the typical case, and not be distributed among a set of equipment items
to reflect an estimate of the proportion of cases in which a particular
equipment item might be used. However, we note that in the case of
certain services with global service periods, distribution of equipment
minutes among similar equipment items may be appropriate when
fractional numbers of post-service office visits are associated with a
code. Upon review of these items, we believe that the new piece of
equipment, ``fiberscope, flexible, sinoscopy,'' is more clinically
appropriate based on the description of CPT code 32195.
We are refining the CY 2011 AMA RUC direct PE recommendations to
conform to these determinations. These refinements are reflected in the
final CY 2011 PFS direct PE database and detailed in Table 55.

Table 54--CPT Codes With Accepted AMA RUC Direct PE Recommendations for
CY 2011 Codes
------------------------------------------------------------------------
CPT Code Short descriptor
------------------------------------------------------------------------
11010........................ Debride skin at fx site
11011........................ Debride skin musc at fx site
11012........................ Deb skin bone at fx site
11045........................ Deb subq tissue add-on
11046........................ Deb musc/fascia add-on
11047........................ Deb bone add-on
11900........................ Injection into skin lesions
11901........................ Added skin lesions injection
12001........................ Repair superficial wound(s)
12002........................ Repair superficial wound(s)
12004........................ Repair superficial wound(s)
12005........................ Repair superficial wound(s)
12006........................ Repair superficial wound(s)
12007........................ Repair superficial wound(s)
12011........................ Repair superficial wound(s)
12013........................ Repair superficial wound(s)
12014........................ Repair superficial wound(s)
12015........................ Repair superficial wound(s)
12016........................ Repair superficial wound(s)
12017........................ Repair superficial wound(s)
12018........................ Repair superficial wound(s)
15823........................ Revision of upper eyelid
19357........................ Breast reconstruction
20005........................ I&d abscess subfascial
20664........................ Application of halo
20930........................ Sp bone algrft morsel add-on
20931........................ Sp bone algrft struct add-on
22315........................ Treat spine fracture
22552........................ Addl neck spine fusion
22554........................ Neck spine fusion
22585........................ Additional spinal fusion
22851........................ Apply spine prosth device
23430........................ Repair biceps tendon
27065........................ Remove hip bone les super
27066........................ Remove hip bone les deep
27067........................ Remove/graft hip bone lesion
27070........................ Part remove hip bone super
27071........................ Part removal hip bone deep
29540........................ Strapping of ankle and/or ft
29550........................ Strapping of toes
29914........................ Hip arthro w/femoroplasty
29915........................ Hip arthro acetabuloplasty
29916........................ Hip arthro w/labral repair
30901........................ Control of nosebleed
31256........................ Exploration maxillary sinus
31267........................ Endoscopy maxillary sinus
31276........................ Sinus endoscopy surgical
31287........................ Nasal/sinus endoscopy surg
31288........................ Nasal/sinus endoscopy surg
33411........................ Replacement of aortic valve
33620........................ Apply r&l pulm art bands
33621........................ Transthor cath for stent
33622........................ Redo compl cardiac anomaly
33860........................ Ascending aortic graft
33863........................ Ascending aortic graft
33864........................ Ascending aortic graft
34900........................ Endovasc iliac repr w/graft
35471........................ Repair arterial blockage
36410........................ Non-routine bl draw > 3 yrs
37205........................ Transcath iv stent percut
37206........................ Transcath iv stent/perc addl
37207........................ Transcath iv stent open
37208........................ Transcath iv stent/open addl
37222........................ Iliac revasc add-on
37223........................ Iliac revasc w/stent add-on
37232........................ Tib/per revasc add-on
37233........................ Tibper revasc w/ather add-on
37765........................ Stab phleb veins xtr 10-20
37766........................ Phleb veins--extrem 20+
38900........................ Io map of sent lymph node
43283........................ Lap esoph lengthening
43327........................ Esoph fundoplasty lap
43328........................ Esoph fundoplasty thor
43332........................ Transab esoph hiat hern rpr
43333........................ Transab esoph hiat hern rpr
43334........................ Transthor diaphrag hern rpr
43335........................ Transthor diaphrag hern rpr
43336........................ Thorabd diaphr hern repair
43337........................ Thorabd diaphr hern repair
43338........................ Esoph lengthening
43605........................ Biopsy of stomach
43753........................ Tx gastro intub w/asp
47480........................ Incision of gallbladder
47490........................ Incision of gallbladder
49324........................ Lap insert tunnel ip cath
49327........................ Lap ins device for rt
49400........................ Air injection into abdomen
49412........................ Ins device for rt guide open
49419........................ Insert tun ip cath w/port
49421........................ Ins tun ip cath for dial opn
49422........................ Remove tunneled ip cath
50250........................ Cryoablate renal mass open
50542........................ Laparo ablate renal mass
50590........................ Fragmenting of kidney stone
50684........................ Injection for ureter x-ray
*51725....................... Simple cystometrogram
*51726....................... Complex cystometrogram
*51727....................... Cystometrogram w/up
*51728....................... Cystometrogram w/vp
*51729....................... Cystometrogram w/vp&up
51736........................ Urine flow measurement
51741........................ Electro-uroflowmetry first
52281........................ Cystoscopy and treatment
52332........................ Cystoscopy and treatment
55866........................ Laparo radical prostatectomy
55876........................ Place rt device/marker pros
59400........................ Obstetrical care
59409........................ Obstetrical care
59410........................ Obstetrical care
59412........................ Antepartum manipulation
59414........................ Deliver placenta
59425........................ Antepartum care only
59426........................ Antepartum care only
59430........................ Care after delivery
59510........................ Cesarean delivery
59514........................ Cesarean delivery only
59515........................ Cesarean delivery
59610........................ Vbac delivery
59612........................ Vbac delivery only
59614........................ Vbac care after delivery
59618........................ Attempted vbac delivery
59620........................ Attempted vbac delivery only
59622........................ Attempted vbac after care
61781........................ Scan proc cranial intra
61782........................ Scan proc cranial extra
61783........................ Scan proc spinal
61885........................ Insrt/redo neurostim 1 array
62268........................ Drain spinal cord cyst
62269........................ Needle biopsy spinal cord
62281........................ Treat spinal cord lesion
62319........................ Inject spine w/cath l/s (cd)
63075........................ Neck spine disk surgery
63076........................ Neck spine disk surgery
63610........................ Stimulation of spinal cord
*64420....................... Nblock inj intercost sng
*64421....................... Nblock inj intercost mlt
64480........................ Inj foramen epidural add-on
64484........................ Inj foramen epidural add-on
64508........................ Nblock carotid sinus s/p
64561........................ Implant neuroelectrodes

[[Page 73353]]

64566........................ Neuroeltrd stim post tibial
64568........................ Inc for vagus n elect impl
64569........................ Revise/repl vagus n eltrd
64570........................ Remove vagus n eltrd
64581........................ Implant neuroelectrodes
64611........................ Chemodenerv saliv glands
*64620....................... Injection treatment of nerve
64708........................ Revise arm/leg nerve
64712........................ Revision of sciatic nerve
64713........................ Revision of arm nerve(s)
64714........................ Revise low back nerve(s)
65778........................ Cover eye w/membrane
65780........................ Ocular reconst transplant
66761........................ Revision of iris
67028........................ Injection eye drug
69802........................ Incise inner ear
70010........................ Contrast x-ray of brain
71250........................ Ct thorax w/o dye
72125........................ Ct neck spine w/o dye
72128........................ Ct chest spine w/o dye
72131........................ Ct lumbar spine w/o dye
73080........................ X-ray exam of elbow
73200........................ Ct upper extremity w/o dye
73510........................ X-ray exam of hip
73610........................ X-ray exam of ankle
73630........................ X-ray exam of foot
73700........................ Ct lower extremity w/o dye
74430........................ Contrast x-ray bladder
*75571....................... Ct hrt w/o dye w/ca test
*75572....................... Ct hrt w/3d image
*75573....................... Ct hrt w/3d image congen
*75574....................... Ct angio hrt w/3d image
75954........................ Iliac aneurysm endovas rpr
75960........................ Transcath iv stent rs&i
75962........................ Repair arterial blockage
75964........................ Repair artery blockage each
76000........................ Fluoroscope examination
76942........................ Echo guide for biopsy
77003........................ Fluoroguide for spine inject
*77011....................... Ct scan for localization
77012........................ Ct scan for needle biopsy
*77301....................... Radiotherapy dose plan imrt
77427........................ Radiation tx management x5
88120........................ Cytp urne 3-5 probes ea spec
88121........................ Cytp urine 3-5 probes cmptr
88172........................ Cytp dx eval fna 1st ea site
88173........................ Cytopath eval fna report
88177........................ Cytp c/v auto thin lyr addl
88300........................ Surgical path gross
88302........................ Tissue exam by pathologist
88304........................ Tissue exam by pathologist
88305........................ Tissue exam by pathologist
88307........................ Tissue exam by pathologist
88309........................ Tissue exam by pathologist
88363........................ Xm archive tissue molec anal
88367........................ Insitu hybridization auto
88368........................ Insitu hybridization manual
90460........................ Imadm any route 1st vac/tox
90461........................ Imadm any route addl vac/tox
90870........................ Electroconvulsive therapy
90935........................ Hemodialysis one evaluation
90937........................ Hemodialysis repeated eval
90945........................ Dialysis one evaluation
90947........................ Dialysis repeated eval
91013........................ Esophgl motil w/stim/perfus
*91038....................... Esoph imped funct test > 1h
91117........................ Colon motility 6 hr study
*91132....................... Electrogastrography
*91133....................... Electrogastrography w/test
92081........................ Visual field examination(s)
92082........................ Visual field examination(s)
92132........................ Cmptr ophth dx img ant segmt
92133........................ Cmptr ophth img optic nerve
92134........................ Cptr ophth dx img post segmt
92504........................ Ear microscopy examination
92507........................ Speech/hearing therapy
92508........................ Speech/hearing therapy
92606........................ Non-speech device service
92607........................ Ex for speech device rx 1hr
92608........................ Ex for speech device rx addl
92609........................ Use of speech device service
93040........................ Rhythm ecg with report
93041........................ Rhythm ecg tracing
93042........................ Rhythm ecg report
93224........................ Ecg monit/reprt up to 48 hrs
93225........................ Ecg monit/reprt up to 48 hrs
93226........................ Ecg monit/reprt up to 48 hrs
93227........................ Ecg monit/reprt up to 48 hrs
93228........................ Remote 30 day ecg rev/report
93270........................ Remote 30 day ecg rev/report
93271........................ Ecg/monitoring and analysis
93272........................ Ecg/review interpret only
93462........................ L hrt cath trnsptl puncture
93463........................ Drug admin & hemodynmic meas
93563........................ Inject congenital card cath
93564........................ Inject hrt congntl art/grft
93565........................ Inject l ventr/atrial angio
93652........................ Ablate heart dysrhythm focus
93922........................ Upr/l xtremity art 2 levels
93923........................ Upr/lxtr art stdy 3+ lvls
93924........................ Lwr xtr vasc stdy bilat
95800........................ Slp stdy unattended
95801........................ Slp stdy unatnd w/anal
95803........................ Actigraphy testing
95805........................ Multiple sleep latency test
95806........................ Sleep study unatt&resp efft
95807........................ Sleep study attended
95808........................ Polysomnography 1-3
95810........................ Polysomnography 4 or more
95811........................ Polysomnography w/cpap
95857........................ Cholinesterase challenge
95950........................ Ambulatory eeg monitoring
95953........................ Eeg monitoring/computer
96105........................ Assessment of aphasia
97598........................ Rmvl devital tis addl 20 cm<
99224........................ Subsequent observation care
99225........................ Subsequent observation care
99226........................ Subsequent observation care
------------------------------------------------------------------------
*CPT codes discussed in more detail in section II.A.3.c. of this final
rule with comment period.

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[[Page 73377]]

3. Establishment of Interim Final Malpractice RVUs for CY 2011
According to our final policy as discussed in section II.B.2. of
this CY 2011 final rule with comment period, we have assigned
malpractice RVUs for CY 2011 new and revised codes by a crosswalk to a
similar source code. We have reviewed the malpractice source code AMA
RUC recommendations for 224 CY 2011 new and revised codes and we are
accepting them all for CY 2011. According to our policy, we have
adjusted the malpractice RVUs of the CY 2011 new/revised codes for
differences in work RVUs (or, if greater, the clinical labor portion of
the fully implemented PE RVUs) between the source code and the new/
revised code to reflect the specific risk-of-service for the new/
revised code. The source code crosswalks for the CY 2011 new/revised
codes are subject to public comment on this CY 2011 final rule with
comment period, as well as the CY 2011 malpractice RVUs of the new/
revised codes that are listed in Addendum C to this final rule with
comment period.
Table 8 lists the CY 2011 new/revised codes and their respective
source codes for determining the interim final CY 2011 malpractice
RVUs. We are also posting the crosswalk on the CMS Web site under the
downloads for the CY 2011 PFS final rule with comment period at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.

VI. Provisions of the Affordable Care Act

The following section addresses certain provisions of the Patient
Protection and Affordable Care Act (Pub. L. 111-148), enacted on March
23, 2010, as amended by the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152) enacted on March 30, 2010 (collectively
known as the Affordable Care Act (ACA)).

A. Section 3002: Improvements to the Physician Quality Reporting System

Section 3002 of the ACA makes a number of changes to the Physician
Quality Reporting System (previously referred to as the Physician
Quality Reporting Initiative, or PQRI), including authorizing incentive
payments through 2014, and requiring a payment adjustment beginning in
2015, for eligible professionals who do not satisfactorily submit
quality data. For a more detailed discussion of the provisions of
section 3002 of the ACA, please refer to section VII.F.1. of this final
rule with comment period.

B. Section 3003: Improvements to the Physician Feedback Program and
Section 3007: Value-Based Payment Modifier Under the Physician Fee
Schedule

1. Background
As required under section 1848 (n) of the Act, as added by section
131(c) of MIPPA, we established and implemented by January 1, 2009, the
Physician Resource Use Measurement & Reporting (RUR) Program (now
referred to as the Physician Feedback Program) for purposes of
providing confidential reports to physicians that measure the resources
involved in furnishing care to Medicare beneficiaries. Section 1848(n)
of the Act also authorizes us to include information on the quality of
care furnished to Medicare beneficiaries by a physician or group of
physicians.
We are continuing a phased implementation of the Physician Feedback
Program. Phase I was discussed in the CY 2010 proposed and final rules
(74 FR 33589, and 74 FR 61844, respectively), and has been completed.
Phase I consisted of several activities including extensive data
analysis to inform decisions about topics such as measures,
attribution, and risk adjustment and formative testing of report design
with practicing physicians. We concluded Phase I by sending to
individual practicing physicians in 12 geographic areas \4\ several
hundred reports that contained per capita and episode-based cost
information.
---------------------------------------------------------------------------

\4\ The 12 geographic areas are: Boston, MA, Syracuse, NY,
Northern New Jersey, Greenville, SC, Miami, FL, Little Rock, AR,
Indianapolis, IN, Cleveland, OH, Lansing, MI, Phoenix, AZ, Seattle,
WA, and Orange County, CA.
---------------------------------------------------------------------------

Phase I of the Physician Feedback Program focused on providing
confidential feedback on resource use measures. Section 1848
(n)(1)(A)(iii) of the Act states that the Secretary may also include
information on the quality of care furnished to Medicare beneficiaries
by physicians (or groups of physicians) in the feedback reports. We
believe that providing physicians with feedback on both quality and
cost is consistent with the direction of other CMS value-based
purchasing (VBP) initiatives. As a result, we decided to include
quality measures in Phase II of the Physician Feedback Program and, in
particular, we considered measures used in the Physician Quality
Reporting System (previously referred to as the Physician Quality
Reporting Initiative (PQRI)) and claims-based measures such as the
measures used in the Generating Medicare Physician Quality Performance
Measurement Results (GEM) project (74 FR 61846).
Section 1848 (n)(1)(A)(ii) of the Act also states that the
Secretary may provide reports at the physician group level.
Accordingly, as part of Phase II of the Physician Feedback Program, we
will also include reporting to group practices, defined as more than
one physician practicing medicine together (74 FR 61846). In addition,
we noted that the definition applies to the following types of
physician groups: (1) Formally established single or multi-specialty
group practices; (2) physicians practicing in defined geographic
regions; and (3) physicians practicing within facilities or larger
systems of care (74 FR 61846). As we continue with Phase II, we plan to
report to both physician group practices and their affiliated
practitioners, recognizing that many physicians practice in
arrangements other than solo practices. We believe that using both
group and individual level reporting will also allow us to gain
experience with the sample size issues that arise when individual
physicians have too few Medicare beneficiaries with specific conditions
to generate reliable information. (See the CY 2010 final rule with
comment period (74 FR 61844) for a detailed discussion of plans for
Phase II.)
2. Effect of the ACA of 2010 on the Program
The ACA contains two provisions relevant to the Physician Feedback
Program. Section 3003 of the ACA continues the confidential feedback
program and requires the Secretary, beginning in 2012, to provide
reports that compare patterns of resource use of individual physicians
to other physicians. In addition, section 3007 of the ACA requires the
Secretary to apply a separate, budget-neutral payment modifier to the
Fee-For-Service PFS payment formula. The value-based payment modifier,
which will be phased in beginning January 1, 2015 through January 1,
2017, will provide for differential payment under the fee schedule to a
physician or groups of physicians, and later, possibly to other
eligible professionals, based upon the relative quality and cost of
care of their Medicare beneficiaries. Accordingly, our goal is to have
Medicare physicians receive a confidential feedback report prior to
implementation of the value-based payment modifier. We view these two
provisions as complementary, as we expect the work done for the
Physician Feedback Program under section 3003 of the ACA will inform
our implementation of the value-based

[[Page 73378]]

payment modifier under section 3007 of the ACA. The approach used for
performance assessment in the confidential feedback reports will serve
as the foundation for implementing the value-based payment modifier.
Specifically, throughout future phases of reports under the Physician
Feedback Program, we will continue to enhance our measures and methods
and improve the content of the reports based on both our research and
the feedback of stakeholders before the value-based payment modifier
begins to affect physician payments in 2015.
We plan to engage in a large-scale effort to garner widespread
stakeholder involvement with regard to how we continue to build and
expand the confidential feedback program and transition to
implementation of the value-based payment modifier. We recognize that
such a payment modifier may have an impact on the delivery of care to
Medicare beneficiaries. Reports that will be produced in the future
based on changes as a result of section 3003 of the ACA will contain
both cost and quality data, and work done to improve these reports with
regard to fair and actionable measures in each of these domains will
aid our decision making in how to apply the value-based payment
modifier. We intend to seek stakeholder input on various aspects of
program design, including cost and quality measures, methodologies for
compositing measures, and feedback report content and delivery. Such
feedback may be gathered through rulemaking, open door forums, or other
mechanisms. Below we summarize the public comments received on the
changes we proposed to make to Phase II of the Physician Feedback
Program.
3. Summary of Comments and Phase II Proposed Changes
a. Episode Groupers
We intend that reports in Phase II of the Physician Feedback
Program will be distributed in the fall of 2010. However, we proposed
several changes to the program parameters for Phase II that were
finalized in prior rules (75 FR 40114). First, we proposed to
discontinue our use of commercially-available proprietary episode
grouping software given limitations we noted in proprietary episode
grouping software we used in previous phases of the program. In
addition, we noted that section 3003 of the ACA requires that the
Secretary develop a Medicare-specific episode grouper by January 1,
2012, and make the details of the episode grouper available to the
public. It is our intent that the Medicare-specific episode grouper
will address the limitations we found in the proprietary software.
We recognize that, because of its disease/condition-specific focus,
episode-based cost information can be more meaningful and actionable
for physicians than per capita information. We plan to provide such
information in feedback reports after public grouper software is
developed. Prior to that, we may consider other potential interim
options for episode grouping to provide such information. As we
indicated, we believe that our use of proprietary episode grouping
software in the previous phases of the program had certain limitations
(75 FR 40114). These software products were not intended for use with
Medicare claims data, and we discovered several problems with the data
outputs. Specifically, the groupers do not work well to create episodes
for beneficiaries with multiple chronic conditions, which is a
significant portion of Medicare beneficiaries.
For example, when a beneficiary with a chronic disease is
hospitalized for an acute condition, that beneficiary most likely also
receives treatments unrelated to the condition for which he or she is
hospitalized, but related to the chronic disease. The groupers, which
are proprietary and often referred to as ``black boxes,'' do not enable
users to understand the coding to determine how to accommodate these
issues. Therefore, we had to make several decisions about how to pre-
process the claims data so that the groupers could recognize and
attempt to deal with these issues in the clinical grouping logic. After
report production in Phase I, we discovered several problems with the
pre-processing, which resulted in inaccurate episode cost information
being disseminated.
Until a Medicare-specific episode grouping software is developed,
we plan to produce reports for Phase II that contain annualized per
capita cost information. More specifically, instead of episode-specific
cost information, we plan to provide all patient per capita cost
information, as well as per capita cost information for those
beneficiaries with five common chronic diseases: (1) Diabetes; (2)
congestive heart failure; (3) coronary artery disease; (4) chronic
obstructive pulmonary disease; and (5) prostate cancer. This
information will not be limited to the cost of treating the disease
itself, but will provide total Part A/B per capita cost information, as
well as service category breakdowns, for the care received by the
subset of attributed beneficiaries with that disease.
Comment: Many commenters were supportive of CMS' decision to
discontinue using the proprietary episode grouper software in Phase II
and instead to develop a Medicare-specific grouper available to the
public. Several of these commenters discussed the specific limitations
of proprietary groupers and also the importance of developing and
utilizing a Medicare-specific episode grouper available to the public.
Many commenters urged CMS to include extensive testing and stakeholder
input while developing the Medicare-specific grouper. These commenters
asserted that it was important that the process to develop a Medicare-
specific grouper be available to the public, as well as the methodology
such a grouper will employ, remain transparent, and open for public
review and recommendation. A few commenters expressed concern about
CMS' ability to create a fair and accurate Medicare-specific episode
grouper in the timeline allotted for its implementation. One commenter
specifically requested that CMS, to the extent possible, express
concern about the timeline enacted by Congress. Another commenter
opposed dropping the episode grouper in Phase II and requested that CMS
use this time to test and explore different episode grouping
methodologies.
Response: We appreciate these comments in support of our proposal
to discontinue our use of commercially-available proprietary episode
grouping software due to concerns over their suitability for use with
Medicare claims and the pending development of a Medicare-specific
episode grouper. Our research has documented that the currently
available episode groupers, as they are now configured, present
significant challenges to their use with our highly complex patient
population. Therefore, we believe it is appropriate to discontinue use
of the commercially available episode groupers for the Phase II reports
and until a Medicare-specific episode grouper is available. We
acknowledge the suggestion, however, that CMS test and explore
different episode grouping methodologies. We are bound by statute to
make the details of the developed Medicare-specific episode grouper
available to the public and intend to do so. We also intend to involve
the stakeholder community and to receive their input during the testing
stage. We acknowledge that there are many challenges involved in
deciding on the methodologies to utilize in developing the episode
grouper. We also acknowledge that the statutorily required timeframe
for development of the grouper is one of those challenges. We believe
that the episode grouper is

[[Page 73379]]

a useful element in appropriately providing effective and actionable
cost measures for physician feedback. We intend to research and test
many different methodologies in order to create a fair and appropriate
episode grouper for the Medicare population and will incorporate
episode-based cost measures into the physician feedback reports as
early as possible.
After considering all of the public comments received regarding
this issue and for the reasons we explained above, we are finalizing
our proposal to discontinue use of the commercially-available
proprietary episode grouping software for Phase II reports.
b. Quality Measures
We proposed to exclude data from the Physician Quality Reporting
System in the Physician Feedback Program reports even though commenters
have been generally supportive of including Physician Quality Reporting
System measures in the reports (75 FR 40114).
The first year of the Physician Quality Reporting System was 2007,
participation was still quite low, and the first round of Physician
Quality Reporting feedback reports contained errors that necessitated
correction. To date, work by CMS' Physician Feedback Program support
contractor has been based upon claims data from 2007. Because of the
low number of physicians reporting under the Physician Quality
Reporting System in 2007, and because providers have the flexibility to
choose which measures to report under the Physician Quality Reporting
System, we believe the resulting small numbers of physicians reporting
an individual measure would greatly limit meaningful peer comparisons,
and thus the number of providers who would receive a feedback report.
Therefore for Phase II, we proposed to use the claims-based measures
developed by CMS in the GEM project (75 FR 40115).\5\ This is a core
set of 12 process quality measures developed by HEDIS that can be
calculated using only administrative claims data. Several chronic
conditions that are prevalent in the Medicare population are captured
by this set of measures. However, in future phases of the program, we
intend to explore the possibility of linking the Physician Feedback
Program to the Electronic Health Record (EHR) incentive program for
meaningful use of EHR technology (as added by the Health Information
Technology for Economic and Clinical Health Act (Title IV of Division B
of the Recovery Act, together with Title XIII of Division A of the
Recovery Act) (HITECH)), and the group practice reporting option (GPRO)
in the Physician Quality Reporting System. Both of these programs offer
measures and measure sets, as well as methods of reporting data which
would be conducive to meaningful peer comparisons among physicians.
---------------------------------------------------------------------------

\5\ http://www.cms.gov/GEM.
---------------------------------------------------------------------------

Comment: Several commenters agreed with our proposal to not use
Physician Quality Reporting System measures during Phase II. These
commenters argued that the Physician Quality Reporting System measures
are voluntarily reported, some reports have contained errors, and
therefore, these data are inadequate for assessing quality for many
providers. Several commenters voiced concerns and/or disagreement with
using GEM measures as an alternative to the Physician Quality Reporting
System measures. These commenters claimed that the GEM measures are too
focused on primary care and prevention, are limited in scope (for
example, do not contain any measures for prostate cancer, and breast
and colorectal cancer measures are only related to screening), and have
few, if any, measures pertaining to some specialties. Some commenters
advocated for the future use of Physician Quality Reporting System
measures claiming that more eligible professionals are participating in
the program now. Several commenters agreed with CMS' decision to
explore linking the Physician Feedback Program with the EHR incentive
program.
Response: We appreciate these comments and we understand the
commenters' concern that the 12 core GEM measures may not fully measure
the broad scope of care delivered to Medicare beneficiaries. However,
the GEM measures serve as an initial core measure set, upon which a
larger set can be built for purposes of including in future reports. We
also believe that the GEM measures will yield sufficient information to
allow peer group comparisons. In contrast, the Physician Quality
Reporting System data available to us for the Phase II reports were
very limited and would not provide sufficient data for the minimum case
size and number of peers needed to report data for many physicians. We
plan to take into account the limitations commenters raised as we
explore our options for choosing and developing measures for subsequent
phases of the Physician Feedback Program and the development of the
value-based payment modifier. As part of this process, we fully intend
to explore the possibility of linking this program to the EHR incentive
program for meaningful use of electronic health records, and the GPRO
option in the Physician Quality Reporting System. We recognize the need
to develop a comprehensive measure set that will fairly measure both
quality and resource use. We intend to work with the stakeholder
community to create a fair, reasonable, and actionable set of measures
that we expect to publish not later than January 1, 2012 for future use
in determining the value-based payment modifier.
After considering all of the comments we received and for the
reasons discussed above, we are finalizing our proposal to not include
Physician Quality Reporting System data in the Phase II reports.
c. Report Distribution
We proposed to distribute reports electronically in Phase II, by
leveraging the infrastructure used to distribute Physician Quality
Reporting System feedback reports (75 FR 40155). We believe this
infrastructure will enable groups to utilize an electronic portal to
download their Phase II reports. Individual practitioners will be able
to contact their MACs/fiscal intermediaries to receive an e-mailed copy
of their reports. We have received feedback from physicians that the
reports distributed in Phase I were too long and cumbersome to manage
in hard copy. We proposed consolidating the report and disseminating it
electronically for easier navigation. Below we summarize our responses
to public comments we received regarding this proposal.
Comment: Most commenters generally expressed support for our
proposal to distribute reports electronically in Phase II utilizing the
existing infrastructure that is used to distribute Physician Quality
Reporting System feedback reports. One commenter in particular, noted
that the Physician Quality Reporting System portal was cumbersome and
that security issues created access problems. Many commenters stressed
that the reports need to be easy to navigate and need to be easily
understood.
Response: We agree that electronic delivery is a desirable means of
distribution for these reports and are continuing to evaluate and
develop methods to make future reports easily accessible, user friendly
and informative. We appreciate all of the feedback from commenters
regarding this proposal. While we acknowledge that users have expressed
difficulty in using the Physician Quality Reporting System portal, it
was the best option for electronic dissemination of the Phase II
reports. In the future we will consider all of the potential options
available to

[[Page 73380]]

us and will take these suggestions into account when developing future
means of report distribution. After taking into consideration the
comments summarized above, we are finalizing our proposal to distribute
Phase II reports electronically utilizing the existing infrastructure
used to distribute Physician Quality Reporting System feedback reports.
In the future, as we disseminate increasing numbers of reports, we will
provide information regarding how individuals and groups can access
their reports through sub-regulatory guidance and other means of
notification.
4. Implementation of Sections 3003 and 3007 of the ACA
Sections 3003 and 3007 of the ACA contain several important
implementation dates. In addition to developing an episode grouper by
January 1, 2012, we are required by the same date to publish the cost
and quality measures we intend to use for purposes of the value-based
payment modifier. The payment modifier will become effective for
certain physicians and groups of physicians on January 1, 2015, with a
phased implementation so that all physicians paid under the PFS will be
subject to the value-based payment modifier by January 1, 2017. On or
after January 1, 2017, we have the authority to also apply the payment
modifier to other eligible professionals. Through the rulemaking
process in 2013, we will begin implementing the program parameters for
the value-based payment modifier.
In anticipation of implementing sections 3003 and 3007 of the ACA,
we intend to perform extensive data analysis and research, and to seek
stakeholder input on issues related to cost and quality measures so
that we can be prepared to publish, by January 1, 2012, measures we
intend to use for purposes of the value-based payment modifier. We
intend for the work done in establishing cost and quality measures for
purposes of the payment modifier to inform the continued dissemination
of confidential feedback reports to both individual physicians and
physician groups. Specifically, the measures chosen for purposes of the
value-based payment modifier will be included in future phases of the
confidential feedback reports.
As noted previously, Phase I included reports to several hundred
physicians. In Phase II, during Fall 2010, we anticipate disseminating
reports to about 40 large physician groups and the approximately 2,000
physicians affiliated with those groups. We anticipate future phases of
the reports to include additional dissemination to increasing numbers
of practitioners and groups such that virtually every applicable
Medicare practitioner receives a report prior to implementation of the
value-based payment modifier.
5. Summary of Comments Sought on Specific Statistical Issues Related to
the ACA Sections 3003 and 3007
We recognize that there are many important decisions to be made
when implementing a program that compares physicians to their peers,
especially when such information can lead to differential payment.
Since the inception of the Physician Feedback program, all data have
been price standardized which includes accounting for geographic
adjustments. We have identified important statistical issues in
previous rules, and as we have done in previous rules, we sought input
on several of these topics as they relate to future phases of reports.
These include, but are not limited to: risk adjustment; attribution;
benchmarking; peer groups; minimum case sizes; cost and quality
measures; and compositing methods. Specific parameters of the Physician
Feedback Program are based on the most current information we have
available to us. These parameters will continue to evolve and we will
continue to evaluate them as the state of the art in these areas
continues to improve. Therefore, in the proposed rule, we solicited
public comment on the following statistical and methodological issues
(75 FR 40115).
a. Risk Adjustment
The cost data used in Phase I were risk adjusted. For the per
capita costs, we used CMS' Hierarchical Condition Categories (HCC)
model developed for risk adjustment in Medicare Advantage plans. This
model takes into account beneficiary characteristics such as age, sex,
and Medicaid status, and then predicts costs for beneficiaries based on
their unique mix of health conditions. Several other socioeconomic
factors, such as the median income per capita in the county where the
physician practices, were used. For the episode-based costs, we used
the risk adjustment method built into the proprietary grouper software.
Regression analyses indicated that these additional socioeconomic
factors did little to improve the fit of the model.
The cost data in Phase II are risk adjusted using the HCC model,
but excluding the additional socioeconomic factors such as the median
income per capita in the county where the physician practices, that had
been used in Phase I. And since there are no episode-based costs in
Phase II--only annual per capita costs--the HCC model will be the only
method used. Other methods of risk adjustment, such as the CC
(complications and co-morbidities) and MCC (major complications and co-
morbidities) indicators implemented in the 2008 MS-DRG system, were
considered but not employed.
The quality data included in Phase II will not be risk adjusted
because the GEM measures are all clinical process measures, measure
specifications provided detailed inclusion/exclusion criteria, and it
is generally accepted that such measures need not be risk adjusted.
Beneficiaries should receive the indicated preventive services (for
example, breast cancer screening) regardless of their demographic
characteristics or presence or absence of health conditions.
We solicited comment on the appropriate method for risk adjusting
cost data, as well as our reasoning for not risk adjusting clinical
process quality measures (75 FR 40115) and the comments we received are
summarized below.
Comment: There were a number of comments regarding the need to risk
adjust for socioeconomic and cultural differences (including English
proficiency, literacy, poverty, and family structure) and multiple co-
morbidities in order to avoid creating a disincentive for physicians
who treat disadvantaged or complex patient populations. If
socioeconomic factors are not added to the HCC model, commenters
suggested using an alternative method to account for these factors such
as a stratified analysis and comparison among similar providers and/or
similar patient groups. Similarly, some commenters suggested that
patients with substance abuse and mental health co-morbidities should
be stratified into a distinct cohort. Other commenters suggested that
exclusions be allowed for patient non-adherence or for cases of
terminal illness. While there was general agreement that process
measures do not require risk adjustment, several of the commenters
pointed out that socioeconomic factors can also impact process and
claims-based measures and risk adjustment of these measures should be
considered on a measure by measure basis. Commenters asserted that
outcome measures should be risk adjusted and some suggested that CMS
use publically available risk models developed by specialty societies.
Some commenters suggested that CMS provide evidence of the utility and
reliability of using HCC to risk adjust per capita measures.

[[Page 73381]]

Several commenters suggested that CMS test multiple methodologies for
risk adjustment and perform appropriate statistical analyses to
determine variability among the different methodologies. Commenters
emphasized the need to implement a methodology that would be
transparent to the public and all stakeholders.
Response: We thank the commenters for their thoughtful input. In
Phase II reports, we will employ the same method of risk adjustment for
per capita cost measures as we use in our Medicare Advantage (MA)
program, that is, the hierarchal condition category (HCC) model. We
will continue to seek stakeholder input as we consider these comments
and ways to improve our risk adjustment methodology.
b. Attribution
Deciding which physician(s) is/are responsible for the care of
which beneficiaries is an important aspect of measurement. We must
strike a balance between only attributing cost information to
physicians for the services they personally delivered, and attributing
costs to physicians based on a more encompassing view of the services
provided to each beneficiary so as to encourage better care
coordination and accountability for patient outcomes.
There are several methods that are generally used for attributing
beneficiaries' costs to physicians for the purposes of measuring and
comparing performance. In Phase I, we used two different attribution
methodologies. Half of the reports used the multiple-proportional
attribution, in which a beneficiary's costs were summed, and then
divided among the physicians who treated that beneficiary in the same
proportion as their share of evaluation and management (E&M) services
provided. The other half of the reports used the plurality-minimum
method, in which a beneficiary's entire cost (either for the episode or
for the year) was attributed to the physician who performed the
plurality of the E&M services, subject to a minimum percentage (in that
case, 10 percent).
In Phase II reports, we plan to use the plurality-minimum method
with a minimum percentage threshold of E&M services of 20 percent for
individual physicians and a minimum percentage threshold of E&M
services of 30 percent of the E&M services for physician group level
reports (75 FR 40116). These minimum threshold determinations were
based on our analysis of the claims data. We recognize that other
attribution methods exist, which may be either more or less appropriate
given the aspect of care one is measuring. For example, it may be
desirable to attribute the entire cost of a surgical episode to the
performing surgeon. Another method for attributing costs is referred to
as multiple-even, in which the entire beneficiary's cost is attributed
to multiple physicians who treated the beneficiary.
We sought comment on the topic of attribution methodologies,
including both of those we have already used in the program, as well as
others. The comments we received are summarized below.
Comment: Many commenters voiced concern about the plurality minimum
attribution method that CMS has planned to use in its Phase II feedback
reports. A number of commenters asked that we ensure that the plurality
minimum method does not penalize primary care doctors by holding them
accountable for all the services beneficiaries receive, since they only
deliver a subset of all of the care a beneficiary receives. Other
commenters were concerned that if there were too many visits to a
specialist, the specialist might get penalized. Many commenters were
opposed to the plurality minimum model, not wanting to be held
accountable for care they do not influence. Others expressed concern
that costs could be attributed incorrectly and also that unintended
changes in referral patterns might result, as physicians might be
influenced by the cost of care without regard to quality. One commenter
requested that CMS consider attribution options built on threshold
concepts or specific agreement between a physician/medical group and
patient on responsibility for management of a specific condition with
the goal of focusing measurement and attribution assignment on those
patients who are truly under the care of the physician or group for the
condition. Another commenter asked CMS to ensure that the same patient
is attributed for resource use and quality, and additionally to clarify
if patients will be attributed to primary care and specialists.
Generally, specialty physician associations supported the multiple-
proportional attribution method, pointing out that there is shared
accountability in delivering preventive and many other services. One
commenter believed that the multiple-even method should be used, and in
the case of surgical episodes, the entire cost should be attributed to
the performing surgeon.
Other commenters believed that the plurality minimum method was
acceptable, but strongly urged CMS to continually analyze whether this
methodology results in fair and accurate reports under different
clinical scenarios, especially those where multiple co-morbidities are
present. In addition, these commenters urged CMS to statistically
examine the impact of changing the minimum thresholds. Several
commenters recommended that CMS test multiple attribution models and
evaluate the results. Another commenter recommended extensive chart
reviews in order to ensure that the claims data supports the
attribution model used. Several commenters pointed out that the choice
of attribution method will not influence patient behavior and suggested
incorporating patient accountability, including compliance. There were
several comments about hospital costs being attributed to physicians
that suggested alignment with other programs such as Hospital Value-
Based Purchasing. One commenter suggested using multiple models and not
a single model of attribution. One commenter noted that the problem of
small numbers may make it difficult to fairly assess the costs at the
individual level. Overall, commenters pointed out that the method(s)
used should be accurate, transparent, and not disadvantage small or
rural practices.
Response: We appreciate the input from commenters. We will continue
to consider and evaluate how to apply attribution methods to physician
feedback reports and seek stakeholder input. In Phase II reports, we
plan to use the plurality-minimum method with a minimum percentage
threshold of E&M services of 20 percent for individual physicians and a
minimum percentage threshold of E&M services of 30 percent of the E&M
services for physician group level reports.
c. Benchmarking and Peer Groups
Determining how to most relevantly compare physicians to a standard
or to their peers is also an important policy aspect of the program.
CMS' research conducted in Phase I of the program indicated that
physicians prefer to be compared only to those physicians most like
them (that is, the narrowest peer group). We recognize the importance
of fair comparison, but are also faced with the challenge that very
narrow peer groups, especially among specialist and subspecialists are
most often not large enough to make statistically significant
comparisons.
The individual-level reports in both phases of the program have
contained, or will contain, two peer group comparisons: (1) Physicians
in the same specialty in the same geographic area; and (2) physicians
in the same specialty across all 12 geographic areas. In each

[[Page 73382]]

of these peer groups, a physician is shown where he or she falls on a
distribution that specifically identified the 10th, 50th, and 90th
percentiles. These benchmarks were finalized on an interim basis in the
CY 2010 proposed rule (74 FR 33589).
In determining differences among providers for episode-based
measures in Phase I, we used a minimum frequency test. For per capita
measures in Phase I, a physician had to have a case size of 20 or more
beneficiaries to be measured and compared. There was no minimum peer
group size requirement.
The original MIPPA mandate requires us to make comparisons among
physicians on cost, and gives the Secretary the authority to include
comparisons on quality. The use of quality measures in the program was
finalized in the CY 2010 final rule (74 FR 61846). In Phase II,
comparisons with appropriate peer groups will be made for both measures
of cost and quality. Phase II reports will be provided only to those
physicians that have 30 or more patients for each of the cost measures.
For the quality measures, we plan to use the measure specifications in
the GEM project to define minimum case sizes, which are at least 11
beneficiaries. We also plan to impose a minimum peer group size of 30
in Phase II for each of the cost and quality measures. A minimum sample
size of 30 is generally accepted in the research community as the
minimum sample size to represent a group and make comparisons.
We solicited comment on the most appropriate and relevant peer
groups for comparison, including the appropriate minimum case sizes and
minimum peer group sizes. We were also interested in suggested
methodologies that could be applied to small case sizes. The comments
we received are summarized below.
Comment: Several commenters recommended that CMS establish separate
benchmark measures for teaching medical facilities. These commenters
argued that the proposed methodology should take into account the
multiple missions of academic clinical facilities because their cases
are often more complex. Other commenters recommended that CMS establish
benchmarks that compared physicians to other physicians with similar
practices and/or who perform similar procedures and additionally take
into account sub-specialties and geography as peer groups will vary.
These commenters suggested that CMS work with specialty groups and
communities to develop the best comparisons. Other commenters noted
that CMS needs to account for issues such as the difference between a
practicing surgeon and a surgeon who does little surgery but acts more
as a manager of care. These commenters asserted that this type of
differentiation can be identified through review of claims history and
data accessible through specialty organizations. Several commenters
recommended that hospitalists and hospital groups be benchmarked
against other hospital-based physicians or groups, preferably in
similar practice settings, for example, emergency departments. A number
of commenters suggested that CMS use metrics such as measures of
statistical precision, multiple metrics including mean, median,
percentiles in defining parameters for peer groups rather than use
arbitrary numbers for minimum sample size. One commenter recommended
that a power analysis be conducted to identify an appropriate sample
size to be used for benchmarking.
Response: We appreciate the feedback we received from commenters
and will take these into consideration for the future. While we will
continue to explore these issues, in Phase II reports, we will use the
peer group and minimum case size of 30 as outlined above and in the
proposed rule.
d. Cost and Quality Measures and Compositing Methods
As mentioned above, and in previous rules, section
1848(n)(1)(A)(ii) of the Act gives the Secretary the authority to
include both cost and quality information in the feedback reports. In
Phase I, we chose to use only cost information, and used both per
capita and episode cost measurements. As mentioned above, we previously
finalized the use of quality measures in Phase II (74 FR 61846), but
finalized our proposal to discontinue our use of episode cost
measurements. Accordingly, we have yet to include any composite
measures of cost or quality in the feedback reports.
Section 3007 of the ACA requires us to establish a value-based
payment modifier to pay physicians differentially based both on their
quality of care and their costs of care using composites of both
quality and cost measures. Accordingly, we will need to devise a
methodology in the future for compositing cost measures and quality
measures, including considering, among other things, possible
methodologies to develop the value-based payment modifier. In the
future, episode-based cost measures developed using the Medicare-
specific episode grouper software also may be considered in developing
a composite of cost measures. Other domains of measures that may be
considered include patient-level utilization statistics (for example,
emergency department visits per 1,000 patients) and structural measures
such as whether a provider has adopted an electronic health record. We
recognized that measure composites are methodologically and
operationally complex and, therefore, we sought early comments on this
topic (75 FR 40116). The comments we received are summarized below.
Comment: Many commenters stressed the importance of measuring both
quality and cost of care to ensure useful and meaningful comparisons of
physician work. Several commenters asserted that focusing on cost
measures alone was insufficient and urged CMS to include quality
measures in the comparison to resource utilization feedback reports.
These commenters asserted that composite measures of cost and quality
provide the most meaningful context to capture and review resource
utilization. Several comments focused on the challenge of measuring
quality at the physician level and the importance that the measures be
fair, meaningful and actionable, and accurately applied. Incorporation
of standards and measures endorsed by the National Quality Forum (NQF)
was also recommended as well as annual measure updates of quality
measures. A number of commenters stressed the importance of maintaining
the focus on quality and outcomes measurement. Types of quality
measures suggested for inclusion in the reports included structure,
patient safety, clinical processes of care, patient experience, care
coordination and clinical outcomes, weighted toward clinical outcomes,
care coordination, and patient experience. Several commenters remarked
on the limitation of claims-based measures for quality and one
recommended that outcomes measures be based on clinical rather than
administrative data. One commenter stated that ICD-10 will enhance
evaluation of physician performance and suggested evaluation of quality
be delayed until ICD-10 is implemented. One commenter suggested a
disease focus on peripheral vascular disease. Several commenters
suggested that CMS work with specialty societies on using available
registries of physician level data as a source of physician quality
performance. Many commenters stated that quality should be weighted
higher than cost, but agreed both need to be reported. Many commenters
encouraged CMS to work expeditiously with

[[Page 73383]]

stakeholders to improve quality measures for inclusion in the value-
based payment modifier. Some commenters acknowledged CMS' recognition
that measure composites are methodologically and operationally complex
and urged CMS to carefully test and evaluate different composite
methodologies before implementing the value-based payment modifier.
These commenters argued that the first step in creating a composite
measure is to identify the individual components (for example,
individual measures) that should go into the composite, and therefore
CMS should ensure that a reliable Medicare-specific episode grouper is
in place as it would be essential to this initial process. One
commenter suggested any composite measures developed by CMS should be
reviewed by the multi-stakeholder consultative partnership defined in
section 3014 of the ACA prior to any adoption into the physician
payment program.
Some commenters mentioned that the National Quality Forum and the
American Medical Association's Physician Consortium for Performance
Improvement (PCPI) had developed guidance on creating composite
measures. These commenters argued that CMS needed to engage in more
empirical work on creating composite measures before implementing a
modifier for physician payment. These commenters expressed concern that
an accurate value-based payment modifier based on resource use would be
ready for 2015, given the substantial statistical and methodological
hurdles that must be overcome in creating cost and quality composites
and a single cost and quality index. They concluded by saying that CMS
should continue to seek stakeholder comment throughout the composite
measure development process. One commenter urged CMS to ensure that
compliance with preventive health service measurements be taken into
account when developing the composite measures.
Response: As required under the statute, we plan to identify the
measures of resource use and quality that will comprise composites of
cost and quality for the physician feedback reports and for the value-
based payment modifier by January 1, 2012. We thank the commenters for
their many thoughtful suggestions and recommendations on cost and
quality measures and compositing methods. As we stated above, we
solicited public comment to inform potential future policies on these
issues, and the Physician Feedback Program in general. We thank the
public for their thoughtful comments and appreciate the feedback
received from stakeholders. In addition, a number of societies and
organizations volunteered support and also volunteered to share
research findings that they believe is applicable to this program.
We fully expect to draw on the expertise of stakeholders as we
continue to work on implementing the physician feedback program and
implementation of the value-based payment modifier. Moreover, we plan
to engage in open and continuing dialogue with stakeholders on both the
Physician Feedback Program and value-based payment modifier.
In addition to the comments we solicited and received on specific
methodological issues related to production of the feedback reports, we
also received a number of general comments and suggestions regarding
the development of reports to ensure access, utility, and relevance.
Comment: A number of commenters suggested that the reports be:
Interactive, easy to understand, timely, actionable, inclusive of
sufficient detail, inclusive of data on cost categories (for example,
imaging use, prescriptions, hospitalizations, etc.) and impactful. Some
commenters requested the capability to drill down on data, especially
if a physician is shown to be a high cost outlier. One commenter
requested that the physicians have the ability to review the reports
and correct any data that they believe is inaccurate. Others reiterated
that all methodologies and algorithms should be in the public domain
along with clear plans for evaluating the viability and impact of the
reports and reporting mechanisms. We received more than one suggestion
for alignment with the HITECH payment incentive program and other
programs, in order to alleviate reporting burden and variation. Another
commenter supported the creation of group reports, but suggested CMS
explore alternative ways to define and determine affiliation with a
medical practice group rather than relying solely on tax identification
numbers (TINs). Many strongly encouraged CMS to engage public
stakeholders intensely and specifically mentioned the importance of
working with specialists, specialty societies, clinical experts,
treatment guideline developers, and manufacturers on the issues that
specifically pertain to their respective interests and expertise in
creating measures, composite measures, and performance reporting.
Finally, a commenter requested that the reports include graphical and
numerical illustrations of data.
In addition, we received a number of comments on the value-based
payment modifier although we did not solicit specific comments or make
proposals. Our summary of these comments follows:
Comment: A number of commenters supported the idea of a value-based
payment modifier using the confidential feedback reports as the
foundation and applauded CMS' intentions for a transparent process
seeking stakeholder input on the methodology through rulemaking and
other public forums. However, other commenters expressed caution in
proceeding given the lack of experience with the quality and resource
measures which are yet to be published, and the evolutionary nature of
the methodology to develop quality and resource scores that will
comprise the value-based payment modifier. Several commenters
recommended that the value-based payment modifier program be delayed
until CMS could demonstrate that it has in place reliable and accurate
methodologies for implementation. Several of these commenters urged CMS
to thoroughly test out multiple models and methodologies and discuss
advantages and disadvantages with the multiple stakeholders.
Response: We appreciate the above input from stakeholders. We will
continue to seek further stakeholder input and comment through future
rulemaking and other venues, such as open door forums and listening
sessions, as we continue to implement the Physician Feedback Program
and develop the specifications to implement the value-based payment
modifier.

C. Section 3102: Extension of the Work Geographic Index Floor and
Revisions to the Practice Expense Geographic Adjustment Under the
Medicare Physician Fee Schedule, and Protections for Frontier States as
Amended by Section 10324

Section 1848(e)(1)(E) of the Act (as amended by section 3102(a) of
the ACA) extended application of the 1.0 work GPCI floor for services
furnished through December 31, 2010. In addition, section 1848(e)(1) of
the Act (as amended by section 3102(b) of the ACA) specified that for
CY 2010 and CY 2011, the employee wage and rent portions of the PE GPCI
must reflect only one-half of the relative cost differences for each
locality compared to the national average and includes a ``hold
harmless'' provision for any PFS locality that would receive a
reduction to its PE GPCI resulting from the limited recognition of cost
differences. Section 1848(e)(1) of the Act (as amended by section
3102(b) of the ACA) also required an analysis of the current methods
and data sources

[[Page 73384]]

used to determine the relative cost differences in office rent and
employee wages compared to the national average and the cost share
weights assigned to each PE GPCI component: employee wages, office
rent, and supplies. Finally, section 1848(e)(1) of the Act (as amended
by section 3102(b) of the ACA) required the Secretary to make
appropriate adjustments to the PE GPCI by no later than January 1,
2012. In addition, section 1848(e)(1) of the Act (as amended by section
10324(c) of the ACA) established a 1.0 PE GPCI floor for services
furnished in frontier states effective January 1, 2011. The provisions
of the ACA related to the GPCIs are discussed in detail in section
II.D. of this final rule with comment period.

D. Section 3103: Extension of Exceptions Process for Medicare Therapy
Caps

Section 1833(g)(5) of the Act (as amended by section 3103 of the
ACA) extended the exceptions process for spending limitations on
therapy services in certain outpatient settings through December 31,
2010. Therapy caps are discussed in detail in section III.A. of this
final rule with comment period.

E. Section 3104: Extension of Payment for Technical Component of
Certain Physician Pathology Services

Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), as
amended by section 732 of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173), section 104 of
division B of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA)
(Pub. L. 109-432), section 104 of the Medicare, Medicaid, and SCHIP
Extension Act of 2007 (MMSEA) (Pub. L. 110-173), and section 136 of the
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA)
(Pub. L. 110-275) was amended by section 3104 of the ACA to continue
payment to independent laboratories for the TC of physician pathology
services for fee-for-service Medicare beneficiaries who are inpatients
or outpatients of a covered hospital through CY 2010. The technical
component (TC) of physician pathology services refers to the
preparation of the slide involving tissue or cells that a pathologist
interprets. The professional component (PC) of physician pathology
services refers to the pathologist's interpretation of the slide.
When the hospital pathologist furnishes the PC service for a
hospital patient, the PC service is separately billable by the
pathologist. When an independent laboratory's pathologist furnishes the
PC service, the PC service is usually billed with the TC service as a
combined service.
Historically, any independent laboratory could bill the Medicare
contractor under the PFS for the TC of physician pathology services for
hospital patients even though the payment for the costs of furnishing
the pathology service (but not its interpretation) was already included
in the bundled inpatient stay payment to the hospital. In the CY 2000
PFS final rule with comment period (64 FR 59408 through 59409), we
stated that this policy has contributed to the Medicare program paying
twice for the TC service: (1) To the hospital, through the inpatient
prospective payment rate, when the patient is an inpatient; and (2) to
the independent laboratory that bills the Medicare contractor, instead
of the hospital, for the TC service. While the policy also permits the
independent laboratory to bill for the TC of physician pathology
services for hospital outpatients, in this case, there generally would
not be duplicate payment because we would expect the hospital to not
also bill for the pathology service, which would be paid separately to
the hospital only if the hospital were to specifically bill for it. We
further indicated that we would implement a policy to pay only the
hospital for the TC of physician pathology services furnished to its
inpatients.
Therefore, in the CY 2000 PFS final rule with comment period, we
revised Sec. 415.130(c) to state that for physician pathology services
furnished on or after January 1, 2001 by an independent laboratory,
payment is made only to the hospital for the TC furnished to a hospital
inpatient. Ordinarily, the provisions in the PFS final rule with
comment period are implemented in the following year. However, the
change to Sec. 415.130 was delayed 1 year (until January 1, 2001), at
the request of the industry, to allow independent laboratories and
hospitals sufficient time to negotiate arrangements.
Full implementation of Sec. 415.130 was further delayed by section
542 of the BIPA and section 732 of the MMA, which directed us to
continue payment to independent laboratories for the TC of physician
pathology services for hospital patients for a 2-year period beginning
on January 1, 2001 and for CYs 2005 and 2006, respectively. In the CY
2007 MPFS final rule with comment period (71 FR 69624 and 69788), we
amended Sec. 415.130 to provide that, for services furnished after
December 31, 2006, an independent laboratory may not bill the carrier
for the TC of physician pathology services furnished to a hospital
inpatient or outpatient. However, section 104 of the MIEA-TRHCA
continued payment to independent laboratories for the TC of physician
pathology services for hospital patients through CY 2007, and section
104 of the MMSEA further extended such payment through the first 6
months of CY 2008.
Section 136 of the MIPPA extended the payment through CY 2009. Most
recently, section 3104 of the ACA amended the prior legislation to
extend the payment through CY 2010.
Consistent with this legislative change, we proposed to revise
Sec. 415.130(d) to: (1) Amend the effective date of our payment policy
to reflect that for services furnished after December 31, 2010, an
independent laboratory may not bill the Medicare contractor for the TC
of physician pathology services furnished to a hospital inpatient or
outpatient; and (2) reformat this subsection into paragraphs.
Comment: One commenter urged CMS to implement the provision to
continue to pay independent laboratories for the TC of physician
pathology services for fee-for-service Medicare beneficiaries who are
inpatients or outpatients of a covered hospital on a permanent basis
which would eliminate the potential for complicated billing that occurs
each time the provision is set to expire and is subsequently extended
by.
Response: Payment for the costs of furnishing the pathology service
(but not its interpretation) is already included in the bundled
inpatient stay payment to the hospital. We continue to believe that
this payment provision represents a duplicate payment for the TC
service: (1) To the hospital, through the inpatient prospective payment
rate, when the patient is an inpatient; and (2) to the independent
laboratory that bills the Medicare contractor, instead of the hospital,
for the TC service.
After consideration of the public comment we received we are
finalizing the proposed policy to continue payment to independent
laboratories for the TC of physician pathology services for fee-for-
service Medicare beneficiaries who are inpatients or outpatients of a
covered hospital for CY 2010. Absent legislation that extends this
provision, for services furnished after December 31, 2010, an
independent laboratory may not bill the Medicare contractor for the TC
of physician pathology services for fee-for-service Medicare
beneficiaries who are inpatients or outpatients of a covered

[[Page 73385]]

hospital. Accordingly, we are finalizing the proposed revisions to
Sec. 415.130(d) to reflect this change.

F. Sections 3105 and 10311: Extension of Ambulance Add-Ons

1. Amendment to Section 1834(l)(13) of the Act
Section 146(a) of the MIPPA amended section 1834(l)(13)(A) of the
Act to specify that, effective for ground ambulance services furnished
on or after July 1, 2008 and before January 1, 2010, the ambulance fee
schedule amounts for ground ambulance services shall be increased as
follows:
For covered ground ambulance transports which originate in
a rural area or in a rural census tract of a metropolitan statistical
area, the fee schedule amounts shall be increased by 3 percent.
For covered ground ambulance transports which do not
originate in a rural area or in a rural census tract of a metropolitan
statistical area, the fee schedule amounts shall be increased by 2
percent.
Sections 3105(a) and 10311(a) of the ACA further amend section
1834(l)(13)(A) of the Act to extend the payment add-ons described above
for an additional year, such that these add-ons also apply to covered
ground ambulance transports furnished on or after January 1, 2010 and
before January 1, 2011. We stated in the CY 2011 PFS proposed rule (75
FR 40117) that we are revising Sec. 414.610(c)(1)(i) to conform the
regulations to this statutory requirement. This statutory requirement
is self-implementing. A plain reading of the statute requires only a
ministerial application of the mandated rate increase, and does not
require any substantive exercise of discretion on the part of the
Secretary. For further information regarding the extension of these
payment add-ons, please see Transmittal 706 (Change Request 6972) dated
May 21, 2010.
2. Amendment to Section 146(b)(1) of MIPPA
Section 146(b)(1) of the MIPPA amended the designation of rural
areas for payment of air ambulance services. The statute specified that
any area that was designated as a rural area for purposes of making
payments under the ambulance fee schedule for air ambulance services
furnished on December 31, 2006, shall continue to be treated as a rural
area for purposes of making payments under the ambulance fee schedule
for air ambulance services furnished during the period July 1, 2008
through December 31, 2009. Sections 3105(b) and 10311(b) of the ACA
amend section 146(b)(1) of MIPPA to extend this provision for an
additional year, through December 31, 2010. Accordingly, for areas that
were designated as rural on December 31, 2006, and were subsequently
re-designated as urban, we have re-established the ``rural'' indicator
on the ZIP Code file for air ambulance services, effective January 1,
2010 through December 31, 2010. We stated in the CY 2011 PFS proposed
rule (75 FR 40118) that we are revising Sec. 414.610(h) to conform the
regulations to this statutory requirement. This statutory requirement
is self-implementing. A plain reading of the statute requires only a
ministerial application of a rural indicator, and does not require any
substantive exercise of discretion on the part of the Secretary. For
further information regarding the extension of this MIPPA provision,
please see Transmittal 706 (Change Request 6972) dated May 21, 2010.
3. Amendment to Section 1834(l)(12) of the Act
Section 414 of the MMA added paragraph (12) to section 1834(l) of
the Act, which specified that in the case of ground ambulance services
furnished on or after July 1, 2004, and before January 1, 2010, for
which transportation originates in a qualified rural area (as described
in the statute), the Secretary shall provide for a percent increase in
the base rate of the fee schedule for such transports. The statute
requires this percent increase to be based on the Secretary's estimate
of the average cost per trip for such services (not taking into account
mileage) in the lowest quartile of all rural county populations as
compared to the average cost per trip for such services (not taking
into account mileage) in the highest quartile of rural county
populations. Using the methodology specified in the July 1, 2004
interim final rule (69 FR 40288), we determined that this percent
increase was equal to 22.6 percent. As required by the MMA, this
payment increase was applied to ground ambulance transports that
originated in a ``qualified rural area;'' that is, to transports that
originated in a rural area included in those areas comprising the
lowest 25th percentile of all rural populations arrayed by population
density. For this purpose, rural areas included Goldsmith areas (a type
of rural census tract). Sections 3105(c) and 10311(c) of the ACA amend
section 1834(l)(12)(A) of the Act to extend this rural bonus for an
additional year through December 31, 2010. Therefore, as directed by
the ACA, we are continuing to apply the rural bonus described above (in
the same manner as in previous years), to ground ambulance services
with dates of service on or after January 1, 2010 and before January 1,
2011 where transportation originates in a qualified rural area.
We stated in the CY 2011 PFS proposed rule (75 FR 40118) that we
are revising Sec. 414.610(c)(5)(ii) to conform the regulations to this
statutory requirement. This statutory requirement is self-implementing.
The statute requires a 1-year extension of the rural bonus (which was
previously established by the Secretary), and does not require any
substantive exercise of discretion on the part of the Secretary. For
further information regarding the extension of this rural bonus, please
see Transmittal 706 (Change Request 6972) dated May 21, 2010.
A summary of the comments we received and our responses are
included below.
Comment: Despite the extension of the ambulance payment add-ons
under the ACA as discussed above, one commenter stated that ``it has
become increasingly difficult to continue to operate with the
reimbursement cuts that went into effect January 1, 2010''. They
expressed concern that Medicare payment rates for ambulance services
are not keeping up with inflation in the industry. They were also
concerned that this is the first time in nearly a decade that the
ambulance industry will be experiencing negative growth.
Response: We are not sure what reimbursement cuts the commenter is
referring to in 2010. As discussed above, pursuant to sections 3105 and
10311 of the ACA, we are required to extend certain ambulance payment
add-ons through December 31, 2010. Thus, as discussed above, we are
revising our regulations to conform the regulations to these statutory
requirements. To date, Congress has not extended these payment add-ons
beyond December 31, 2010, and thus we are not authorized to provide
these add-ons beyond December 31, 2010.
Comment: One commenter stated that CMS must provide instructions to
its contractors that direct them to reprocess claims paid at the
original 2010 rates.
Response: Several provisions of the ACA require retroactive
adjustments to Medicare claims, including claims for ambulance
services, because these provisions have effective dates prior to the
ACA's enactment or shortly thereafter. We are currently developing the
best course of action for addressing past claims that were processed
under pre-ACA rules. The volume of claims that must be adjusted is
unprecedented

[[Page 73386]]

and a careful process must be deployed to ensure that new claims coming
into the Medicare program are processed timely and accurately, even as
we address making retroactive adjustments. Once this process has been
developed, we will provide instructions to our contractors regarding
adjusting ambulance claims that were paid under the pre-ACA rules in
order to apply the payment add-ons required by the ACA.
In this final rule with comment period, we are finalizing the
revisions to Sec. 414.610(c)(1)(i), (c)(5)(ii), and (h), as discussed
above and in the CY 2011 PFS proposed rule, in order to conform the
regulations to the requirements set forth in sections 3105 and 10311 of
the ACA. We note that in Sec. 414.610(c)(1), we have made minor
formatting revisions for clarification purposes. In addition, in Sec.
414.610(c)(1)(i), we have corrected a typographical error that appeared
in the CY 2011 PFS proposed rule (75 FR 40258) by changing ``December
21'' to ``December 31'' to conform with the ACA requirements. As we
discuss above, sections 3105 and 10311 of the ACA are self-implementing
and do not require any substantive exercise of discretion by the
Secretary.

G. Section 3107: Extension of Physician Fee Schedule Mental Health Add-
On

Section 3107 of the ACA amended section 138(a)(1) of the MIPPA to
continue the 5 percent increase in Medicare payment for specified
mental health services through December 31, 2010. This payment increase
was originally authorized under section 138 of the MIPPA from July 1,
2008 until December 31, 2009. Accordingly, payment for the 24
psychiatry CPT codes in Table 56, representing ``specified services,''
remains increased by 5 percent through December 31, 2010.

Table 56--Specified Mental Health Services Subject to the Five Percent
Increase in Medicare Payment Through December 31, 2010
------------------------------------------------------------------------

-------------------------------------------------------------------------
Office or Other Outpatient Facility
------------------------------------------------------------------------
Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy:
90804 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an office or outpatient facility,
approximately 20 to 30 minutes face-to-face with the patient;)
90805 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an office or outpatient facility,
approximately 20 to 30 minutes face-to-face with the patient; with
medical evaluation and management services)
90806 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an office or outpatient facility,
approximately 45 to 50 minutes face-to-face with the patient;)
90807 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an office or outpatient facility,
approximately 45 to 50 minutes face-to-face with the patient; with
medical evaluation and management services)
90808 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an office or outpatient facility,
approximately 75 to 80 minutes face-to-face with the patient;)
90809 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an office or outpatient facility,
approximately 75 to 80 minutes face-to-face with the patient; with
medical evaluation and management services)
------------------------------------------------------------------------
Interactive Psychotherapy:
90810 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an office or outpatient facility,
approximately 20 to 30 minutes face-to-face with the patient;)
90811 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an office or outpatient facility,
approximately 20 to 30 minutes face-to-face with the patient; with
medical evaluation and management services)
90812 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an office or outpatient facility,
approximately 45 to 50 minutes face-to-face with the patient;)
90813 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an office or outpatient facility,
approximately 45 to 50 minutes face-to-face with the patient; with
medical evaluation and management services)
90814 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an office or outpatient facility,
approximately 75 to 80 minutes face-to-face with the patient;)
90815 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an office or outpatient facility,
approximately 75 to 80 minutes face-to-face with the patient; with
medical evaluation and management services)
------------------------------------------------------------------------
Inpatient Hospital, Partial Hospital or Residential Care Facility
------------------------------------------------------------------------
Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy:
90816 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an inpatient hospital, partial
hospital or residential care setting, approximately 20 to 30
minutes face-to-face with the patient;)
90817 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an inpatient hospital, partial
hospital or residential care setting, approximately 20 to 30
minutes face-to-face with the patient; with medical evaluation and
management services)
90818 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an inpatient hospital, partial
hospital or residential care setting, approximately 45 to 50
minutes face-to-face with the patient;)
90819 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an inpatient hospital, partial
hospital or residential care setting, approximately 45 to 50
minutes face-to-face with the patient; with medical evaluation and
management services)
90821 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an inpatient hospital, partial
hospital or residential care setting, approximately 75 to 80
minutes face-to-face with the patient;)
90822 (Individual psychotherapy, insight oriented, behavior
modifying and/or supportive, in an inpatient hospital, partial
hospital or residential care setting, approximately 75 to 80
minutes face-to-face with the patient; with medical evaluation and
management services)
------------------------------------------------------------------------
Interactive Psychotherapy:
90823 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an inpatient hospital, partial hospital or
residential care setting, approximately 20 to 30 minutes face-to-
face with the patient;)

[[Page 73387]]

90824 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an inpatient hospital, partial hospital or
residential care setting, approximately 20 to 30 minutes face-to-
face with the patient; with medical evaluation and management
services)
90826 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an inpatient hospital, partial hospital or
residential care setting, approximately 45 to 50 minutes face-to-
face with the patient;)
90827 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an inpatient hospital, partial hospital or
residential care setting, approximately 45 to 50 minutes face-to-
face with the patient; with medical evaluation and management
services)
90828 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an inpatient hospital, partial hospital or
residential care setting, approximately 75 to 80 minutes face-to-
face with the patient;)
90829 (Individual psychotherapy, interactive, using play equipment,
physical devices, language interpreter, or other mechanisms of non-
verbal communication, in an inpatient hospital, partial hospital or
residential care setting, approximately 75 to 80 minutes face-to-
face with the patient; with medical evaluation and management
services)
------------------------------------------------------------------------

Comment: One commenter supported CMS' proposal to continue the
current 5 percent increase in Medicare payment for specified mental
health services through December 31, 2010.
Response: We appreciate the support of our efforts to implement
this mandated mental health add-on provision that extends the
expiration of the 5 percent increase in payment for specified
outpatient mental health services from January 1, 2010 to December 31,
2010.
After consideration of the public comment we received, we are
finalizing the extension of the 5 percent increase in Medicare payment
under the PFS from January 1, 2010 to December 31, 2010.

H. Section 3108: Permitting Physician Assistants To Order Post-Hospital
Extended Care Services

The ACA included a self-implementing provision relating to SNFs.
Section 3108 of the ACA adds physician assistants (PAs) to the list of
practitioners (that is, physicians, nurse practitioners (NPs), and
clinical nurse specialists) that can perform the required initial
certification and periodic recertification under section 1814(a)(2)(B)
of the Act with respect to the SNF level of care. Accordingly, we
proposed to make appropriate revisions to include PAs in Sec.
424.20(e)(2), in which we refer to NPs, clinical nurse specialists, and
PAs collectively as ``physician extenders.''
We received no comments on this proposal and, therefore, are
finalizing this provision as proposed without further modification.

I. Section 3111: Payment for Bone Density Tests

Section 1848(b) of the Act (as amended by section 3111 of the ACA)
changed the payment calculation for dual-energy x-ray absorptiometry
(DXA) services described by two specified DXA CPT codes for CYs 2010
and 2011. This provision required payment for these services at 70
percent of the product of the CY 2006 RVUs for these DXA codes, the CY
2006 conversion factor (CF), and the geographic adjustment for the
relevant payment year.
Effective January 1, 2007, the CPT codes for DXA services were
revised. The former DXA CPT codes 76075 (Dual energy X-ray
absorptiometry (DXA), bone density study, one or more sites; axial
skeleton (eg, hips, pelvis, spine)); 76076 (Dual energy X-ray
absorptiometry (DXA), bone density study, one or more sites;
appendicular skeleton (peripheral) (for example, radius, wrist, heel));
and 76077 (Dual energy X-ray absorptiometry (DXA), bone density study,
one or more sites; vertebral fracture assessment) were deleted and
replaced with new CPT codes 77080, 77081, and 77082 that have the same
respective code descriptors as the predecessor codes. Section 1848(b)
of the Act (as amended by section 3111 of the ACA) specifies that the
revised payment applies to two of the predecessor codes (CPT codes
76075 and 76077) and ``any succeeding codes,'' which are, in this case,
CPT codes 77080 and 77082.
Section 1848(b) (as amended by section 3111 of the ACA) revised the
payment for CPT codes 77080 and 77082 during CY 2010 and CY 2011. We
have provided payment in CY 2010 under the PFS for CPT codes 77080 and
77082 at the specified rates. (Additional information regarding the CY
2010 payment rates for these services is available in CR 6973,
published May 10, 2010.)
Because the statute specifies a payment amount for these services
as described previously, we proposed to impute RVUs for CY 2011 that
would provide the specified payment amount for these services when
multiplied by the CY 2011 CF. Specifically, we divided the payment
amount based on the statutory requirements by the CY 2011 CF for the
proposed rule and distributed the imputed total RVUs across the work,
PE, and malpractice components proportionately to their CY 2006
distribution. Therefore, these imputed RVUs for CPT codes 77080 and
77082 were displayed in Addendum B to the CY 2011 proposed rule.
Comment: Many commenters supported the ACA provision requiring a
specific payment amount for DXA services. Several commenters requested
that CMS include in the final rule a sample payment calculation for CPT
codes 77080 and 77082 to clarify the calculation for these two codes
and to facilitate proper processing of claims by Medicare contractors.
In addition, one commenter requested that CMS recalculate any imputed
RVUs for DXA services based on the final conversion factor reflected in
the CY 2011 PFS final rule with comment period.
Response: We appreciate the comments we received on our proposal.
We note that any changes to the proposed rule calculation that resulted
from changes between proposed rule values and final rule values have
been incorporated in the final determination of the RVUs for these
codes upon which PFS payment is based. That said, we are updating our
calculation for this final rule with comment period to reflect the
final CY 2011 conversion factor applicable under current law that is
discussed in section II.H.1.b. of this final rule with comment period.
A sample payment calculation for CPT code 77080 is included below.
Sample CY 2011 Calculation of Medicare Payment Rates for CPT Code 77080
(CY 2006 CPT Code 76075)
As discussed above, section 1848(b) of the Act (as amended by
section 3111 of

[[Page 73388]]

the ACA) required us to provide payment for CPT code 77080 at 70
percent of the product of the CY 2006 RVUs for the specified DXA code,
the CY 2006 CF, and the geographic adjustment for the relevant payment
year in which the service is furnished.
The CY 2006 RVUs for CPT code 76075 (77080) can be found in Table
57 below.

Table 57--CY 2006 RVUs for CPT Code 77080 (CY 2006 CPT code 76075)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2006 2006 2006
CY 2006 CPT Code Mod CY 2006 Short descriptor Physician work Nonfacility 2006 Facility Malpractice
RVUs PE RVUs PE RVUs RVUs
--------------------------------------------------------------------------------------------------------------------------------------------------------
76075.................................. 26............. Dxa bone density, axial....... 0.30 0.10 0.10 0.01
76075.................................. TC............. Dxa bone density, axial....... 0.00 3.10 NA 0.17
76075.................................. ............... Dxa bone density, axial....... 0.30 3.20 NA 0.18
--------------------------------------------------------------------------------------------------------------------------------------------------------

First, we multiplied the CY 2006 RVUs listed in Table 57 above by
the CY 2006 CF, which was $37.8975. These results are shown in Table 58
below.

Table 58--CY 2006 RVUs for CPT Code 77080 Multiplied by the CY 2006 CF
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2006 CY 2006 CY 2006 Facility CY 2006
CY 2006 CPT Code Mod Physician work Nonfacility PE PE RVUs* 2006 Malpractice
RVUs* 2006 CF RVUs* 2006 CF CF RVUs* 2006 CF
--------------------------------------------------------------------------------------------------------------------------------------------------------
76075.................................................... 26 $11.37 $3.79 $3.79 $0.38
76075.................................................... TC NA 117.48 NA 6.44
76075.................................................... ................. 11.37 121.27 NA 6.82
--------------------------------------------------------------------------------------------------------------------------------------------------------

Second, we took 70 percent of the result to arrive at the CY 2011
national payment amounts for each component of the CPT code. These
results are shown in Table 59 below.

Table 59--CY 2011 National Payment Amounts for CPT Code 77080
----------------------------------------------------------------------------------------------------------------
CY 2011 CY 2011 CY 2011
CY 2006 CPT Code Mod Physician work Nonfacility PE CY 2011 Facility Malpractice
payment amount payment amount PE payment amount payment amount
----------------------------------------------------------------------------------------------------------------
76075........................ 26... $7.96 $2.65 $2.65 $0.27
76075........................ TC... NA 82.24 NA 4.51
76075........................ ..... 7.96 84.89 NA 4.78
----------------------------------------------------------------------------------------------------------------

Third, in order to determine the CY 2011 RVUs for CPT code 77080
(76075) that are displayed in Addendum B to this final rule with
comment period, we divided the CY 2011 national payment amounts shown
in Table 59 by the CY 2011 CF (discussed in section II.G.1. of this
final rule with comment period) of $25.5217. These results are shown in
Table 60 and in Addendum B to this final rule with comment period.
We note that RVUs under the PFS are generally resource-based and,
therefore, are typically unaffected by changes to the CF. However,
because the statute essentially sets a fixed payment amount for DXA
services, the CF directly determines the RVUs for CPT code 77080 as we
must impute RVUs for the DXA services in CY 2011. Therefore, when there
are changes to the PFS CF, we must make corresponding changes to the
RVUs for CPT codes 77080 and 77082 for CY 2010 and CY 2011 in order to
maintain the fixed national payment amount specified in the statute,
which is then subject to geographic adjustment as indicated below.

Table 60--CY 2011 RVUs for CPT Code 77080
(NOTE: Calculated using the current law CY 2011 CF of $25.5217)
----------------------------------------------------------------------------------------------------------------
CY 2011 CY 2011 CY 2011 CY 2011
CY 2011 CPT Code Mod Physician Nonfacility Facility PE Malpractice
work RVUs PE RVUs RVUs RVUs
----------------------------------------------------------------------------------------------------------------
77080.............................. 26......... 0.31 0.10 0.10 0.01
77080.............................. TC......... 0.00 3.22 NA 0.18
77080.............................. ........... 0.31 3.32 NA 0.19
----------------------------------------------------------------------------------------------------------------

Finally, in order to provide payment for a specific DXA service
furnished by a practitioner, the RVUs listed in Table 60 would be
multiplied by the CY 2011 CF and subject to geographic adjustment based
on the CY 2011 GPCIs that apply

[[Page 73389]]

to the location where the service is furnished.
In summary, after consideration of the public comments we received,
we are finalizing our proposed CY 2011 payment methodology for CPT
codes 77080 and 77082 in accordance with the section 1848(b) of the Act
(as amended by section 3111 of the ACA). In CY 2011, payment for CPT
codes 77080 and 77082 will be made at 70 percent of the product of the
CY 2006 RVUs for the specified DXA codes, the CY 2006 CF, and the CY
2011 geographic adjustment.

J. Section 3114: Improved Access for Certified Nurse-Midwife Services

Section 1833(a)(1)(K) of the Act (as amended by section 3114 of the
ACA) increased the amount of Medicare payment made under the PFS for
certified nurse-midwife (CNM) services. Currently, section
1833(a)(1)(K) of the Act specifies that the payment amount for CNM
services is 80 percent of the lesser of the actual charge or 65 percent
of the PFS amount for the same service furnished by a physician. Under
section 1833(a)(1)(K) of the Act (as amended by section 3114 of the
ACA), effective for services furnished on or after January 1, 2011,
Medicare payment for CNM services is increased to 100 percent of the
PFS amount for the same service furnished by a physician (or 80 percent
of the actual charge if that is less). We proposed to revise our
regulations at Sec. 414.54 (Payment for certified nurse-midwives'
services) accordingly to reflect the increased payment for CNM services
effective for services furnished on or after January 1, 2011.
Although CNMs are currently paid under Medicare Part B for their
professional services, there is no mention of CNMs under the regulatory
provision that lists the providers and suppliers of services to whom
payment is made under the Medicare Part B program. Accordingly, we
proposed to make a technical revision to Sec. 410.150 (To whom payment
is made) to specify that Medicare Part B pays CNMs for professional
services in all settings, as well as services and supplies furnished
incident to those services.
CNMs are authorized under the statute to be paid directly for
services that they are legally authorized to furnish under State law
and that are of the type that would otherwise be covered if furnished
by a physician or incident to a physician's services. Additionally,
there is no requirement for physician oversight or supervision of CNMs.
Accordingly, CNMs are authorized to personally furnish diagnostic tests
that fall under their State scope of practice without regard to the
levels of physician supervision required under the diagnostic tests
benefit. Therefore, we proposed to revise Sec. 410.32(b)(2)
(Exceptions to the levels of physician supervision required for
diagnostic tests) to include CNMs who furnish diagnostic tests that
fall within their State scope of practice.
Comment: Several commenters welcomed the proposed increase in
Medicare payment for CNM services effective January 1, 2011, stating
that this policy would provide equitable payment under Medicare to
CNMs. These commenters claimed that Medicare payment to CNMs at 100
percent of the Medicare Part B PFS amount that would be paid to a
physician (or 80 percent of the actual charge if that is less)
represents policy reform resulting from advocacy over a number of
years. The commenters believe that the Medicare payment increase will
enable CNMs across the nation to expand services to women with
disabilities of childbearing age, as well as to senior women who are
Medicare patients. The commenters noted that previously the 35 percent
payment differential between CNMs and other health professionals
furnishing similar services limited the expansion of CNM services to
Medicare patients. Additionally, the commenters asserted that CNMs
serve a critical role as primary care providers for women throughout
their lifespan and claimed that regulatory changes to unleash the
potential of this group of providers were critically needed to fill the
gaps in primary care.
The commenters also supported CMS' proposed technical revisions to
Sec. 410.150 and Sec. 410.32. The proposed changes to Sec. 410.150
would include CNMs as a supplier of services to whom Medicare payment
can directly be made for their professional services in all settings
and for services and supplies furnished incident to their professional
services. Additionally, the commenters believe that the proposed
changes to Sec. 410.32 would clarify that when CNMs personally perform
diagnostic tests, these health professionals are not subject to
physician supervision for payment of diagnostic tests.
Response: We appreciate the commenters' support for implementing
the new statutory provision that increases Medicare Part B payment for
CNM services, effective January 1, 2011, from 80 percent of the lesser
of the actual charge or 65 percent of the PFS amount that would be paid
to a physician to 100 percent of the Medicare Part B PFS amount that
would be paid to a physician or 80 percent of the actual charge if that
is less.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to increase the Medicare Part B payment
amount for CNM services under the PFS from 65 percent of the PFS amount
that would be paid to a physician to 100 percent of the PFS amount that
would be paid to a physician, or 80 percent of the actual charge if
that is less. We are also finalizing our proposed modification to Sec.
414.54 to reflect this statutory change, with clarification to state
that the amount paid to a CNM may not exceed 100 percent of the PFS
amount that would be paid to a physician for the same service furnished
on or after January 1, 2011. In addition, we are finalizing, without
modification, our proposed revisions to Sec. 410.32 and Sec. 410.150.

K. Section 3122: Extension of Medicare Reasonable Costs Payments for
Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital
Patients in Certain Rural Areas

Section 416 of the MMA established a reasonable cost payment for
outpatient clinical diagnostic laboratory tests furnished by hospitals
with fewer than 50 beds that are located in qualified rural areas for
cost reporting periods beginning during the 2-year period beginning on
July 1, 2004.
Section 105 of the Tax Relief and Health Care Act of 2006 (Pub. L.
109-432) (TRHCA) extended the 2-year period in section 416(b) of the
MMA for an additional cost-reporting year.
Section 107 of the Medicare, Medicaid, and SCHIP Extension Act of
2007 (Pub. L. 110-173) (MMSEA) extended the time period for cost
reporting periods beginning on July 1, 2004 and ending on June 30,
2008. For some hospitals with cost reports that began as late as June
30, 2008, this extension affected services performed as late as June
29, 2009, because this was the date those cost reports would have
closed.
Section 3122 of the ACA reinstitutes reasonable cost payment for
clinical diagnostic laboratory tests performed by hospitals with fewer
than 50 beds that are located in qualified rural areas as part of their
outpatient services for cost reporting periods beginning on or after
July 1, 2010 through June 30, 2011. For some hospitals with cost
reports that begin as late as June 30, 2011, this reinstitution of
reasonable cost payment could affect services performed as late as June
29, 2012, because this is the date those cost reports will close.
We received no comments on this proposal and therefore are
finalizing this provision without modification.

[[Page 73390]]

L. Section 3134: Misvalued Codes Under the Physician Fee Schedule

Section 1848(c)(2)(K) of the Act (as added by section 3134 of the
ACA) required the Secretary to periodically review and identify
potentially misvalued codes and make appropriate adjustments to the
relative values of those services identified as being potentially
misvalued. Section 1848(c)(2)(K) of the Act (as added by section 3134
of the ACA) further specified that the Secretary may use existing
processes to receive recommendations on the review and appropriate
adjustment of potentially misvalued services, as well as conduct
surveys or implement other data collection activities, studies, or
other analyses as the Secretary determines to be appropriate to
facilitate the review and appropriate adjustment of the relative values
of potentially misvalued codes. Finally, section 1848(c)(2)(L) of the
Act (as added by section 3134 of the ACA) provided that the Secretary
shall establish a process to validate relative value units under the
PFS.
We note that over the past several years, we have been working with
the AMA RUC to identify approaches to addressing the issue of
potentially misvalued services. Our CY 2011 approaches to categories of
potentially misvalued codes are discussed in section II.C. of this
final rule with comment period.

M. Section 3135: Modification of Equipment Utilization Factor for
Advanced Imaging Services

1. Adjustment in Practice Expense To Reflect Higher Presumed
Utilization
Section 1848(b)(4)(C) of the Act (as added by section 3135(a) of
the ACA) adjusted the utilization rate beginning in CY 2011 for
expensive diagnostic imaging equipment to a 75 percent assumption in
the methodology for establishing the PE of the RVUs of procedures that
use this equipment.
In the CY 2010 PFS final rule with comment period (74 FR 61755), we
finalized a policy to increase the utilization rate to 90 percent for
expensive diagnostic equipment priced at more than $1 million (CT and
MRI scanners), providing for a 4-year transition to the 90 percent
utilization rate from the CY 2009 utilization rate of 50 percent.
Therefore, in CY 2010 we were transitioning to a 90 percent equipment
utilization rate assumption, applying a 25/75 blend of the new and old
PE RVUs, respectively, for the associated procedures. Section
1848(b)(4)(C) of the Act (as added by section 3135(a) of the ACA) does
not provide for any further transition and, therefore, we are assigning
a 75 percent equipment utilization rate assumption to CT and MRI
scanners, effective January 1, 2011. Under section 1848(b)(4) of the
Act (as amended by section 3135(a) of the ACA), this change in the
equipment utilization rate assumption from CY 2010 to CY 2011 is not
budget neutral under the PFS. The equipment utilization rate assumption
remains at 50 percent for all other equipment included in the PFS PE
methodology. Further discussion of our final CY 2011 policies regarding
the equipment utilization rate assumption can be found in section
II.A.3.a. of this final rule with comment period.
2. Adjustment in Technical Component ``Discount'' on Single-Session
Imaging to Consecutive Body Parts
Section 1848(b)(4)(D) of the Act (as added by section 3135(a) of
the ACA) increased the established PFS multiple procedure payment
reduction (MPPR) for the TC of certain single-session imaging services
to consecutive body areas from 25 to 50 percent, effective July 1,
2010, and section 1848(c)(2)(B)(v)(VI) of the Act (as added by section
3135(b) of the ACA) exempted this percent change from the PFS budget
neutrality provision. This policy is discussed in detail in section
II.C.4 of this final rule with comment period.
Effective January 1, 2006, we adopted an MPPR of 25 percent for the
TC of certain diagnostic imaging procedures, applied to the second and
subsequent services when more than one service in one of 11 imaging
families, defined by imaging modality and contiguous body area, is
furnished in a single session (70 FR 70261 through 70263). The
established imaging MPPR applies to TC services and to the TC of global
services. It does not apply to PC services or to the PC of global
services. Under this policy, full payment was made for the TC of the
highest priced procedure, while payment was made at 75 percent of the
TC for each additional procedure. As of July 1, 2010 and continuing in
CY 2011, payment is made at full payment for the TC of the highest
paying procedure, while at 50 percent of the TC for each additional
procedure, consistent with the new statutory provision. Further
discussion of the MPPR policies affecting nonsurgical PFS services can
be found in section II.C.4. of this final rule with comment period.

N. Section 3136: Revision for Payment for Power-Driven Wheelchairs

1. Payment Rules for Power Wheelchairs
Durable medical equipment (DME) is defined at section 1861(n) of
the Act and includes wheelchairs necessary for use in the patient's
home. Section 1861(n) of the Act provides that wheelchairs included in
the definition of DME ``may include a power-operated vehicle that may
be appropriately used as a wheelchair, but only where the use of such a
vehicle is determined to be necessary on the basis of the individual's
medical and physical condition.'' The general Medicare payment rules
for DME are set forth in section 1834(a) of the Act and 42 CFR part
414, subpart D of our regulations. Section 1834(a)(1) of the Act and
Sec. 414.210(a) of our regulations establish that the Medicare payment
for a DME item is generally equal to 80 percent of either the lower of
the actual charge or the fee schedule amount for the item less any
unmet Part B deductible. The beneficiary coinsurance is generally equal
to 20 percent of either the lower of the actual charge or the fee
schedule amount for the item once the deductible is met.
For Medicare payment purposes, power wheelchairs or power-driven
wheelchairs are classified under various HCPCS codes based on the level
of performance and functional characteristics of each power wheelchair
that accommodate the specific needs of patients. Power wheelchairs
classified under performance Groups 1 through 3 are covered under
Medicare for use in the patient's home. Power wheelchair groups were
established in 2006 with the release of the Power Mobility Device
Coding Guidelines published by the Durable Medical Equipment Regional
Carriers (DMERCs) currently called the Durable Medical Equipment
Medicare Administrative Contractors (DME MACs). The DMEPOS quality
standards define certain power wheelchairs falling as ``complex,
rehabilitative'' power wheelchairs, and these ``complex,
rehabilitative'' power wheelchairs are treated as a separate product
category for the purpose of implementing the DMEPOS Competitive Bidding
Program (CBP) mandated by section 1847(a) of the Act. In both the
quality standards and the DMEPOS CBP, complex, rehabilitative power
wheelchairs are defined or identified as power wheelchairs classified
as Group 2 power wheelchairs with power options that can accommodate
rehabilitative features (for example, tilt in space) or Group 3 power
wheelchairs. Section

[[Page 73391]]

1847(a)(2)(A) of the Act, as amended by section 154(a)(1)(B) of MIPPA,
excludes complex, rehabilitative power wheelchairs classified within
Group 3 from the DMEPOS CBP.
With the exception of power wheelchairs furnished during calendar
year 1990, power wheelchairs have been paid under the capped rental
category of DME since January 1, 1989. The payment rules for capped
rental DME are provided at section 1834(a)(7) of the Act and Sec.
414.229 of our regulations. Payment for these items is generally on a
monthly rental basis, with rental payments capped at 13 months. After a
13-month period of continuous use during which rental payments are
made, the statute and regulations require that the supplier transfer
title to the wheelchair to the beneficiary. In addition, effective for
power wheelchairs furnished on or after January 1, 1991, section
1834(a)(7) of the Act, as amended by section 4152(c)(2)(D) of the
Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508), mandates
that the supplier of the power wheelchair offer the patient the option
to purchase rather than rent the item. Since 1991, over 95 percent of
Medicare beneficiaries have exercised this lump-sum purchase option for
power wheelchairs.
Consistent with payment for other DMEPOS items, Sec. 414.210(f)(1)
permits payment for replacement of capped rental DME if the item has
been in continuous use for the equipment's reasonable useful lifetime
or is lost, stolen, or irreparably damaged. Section 414.210(f)(1)
states the reasonable useful lifetime for equipment is determined
through program instructions. In the absence of CMS program
instructions, the carrier may determine the reasonable useful lifetime
for equipment, but in no case can it be less than 5 years. Computation
is based on when the equipment is delivered to the beneficiary, not the
age of the equipment. If the beneficiary elects to obtain a new capped
rental item after the reasonable useful lifetime, a new 13-month rental
payment period would begin for the new equipment in accordance with the
requirements of Sec. 414.229.
Pursuant to section 1834(a)(7)(A)(i)(II) of the Act and Sec.
414.229(b), the current capped rental fee schedule amounts applicable
to wheelchairs for months 1 thru 3 of the 13-month capped rental period
are calculated to pay 10 percent of the purchase price recognized in
the statute for the item. The rental fee schedule amounts for months 4
through 13 of the 13-month capped rental period are calculated to pay
7.5 percent of the purchase price for the item. The purchase price is
determined consistent with section 1834(a)(8) of the Act and Sec.
414.229(c) and Sec. 414.220(e) and (f) and is calculated based on
average allowed payments for the purchase of new items, and is updated
by the covered item update, as required by section 1834(a)(14) of the
Act and Sec. 414.229(d). The purchase fee schedule amount for new
power wheelchairs acquired on a lump sum purchase basis is 100 percent
of the purchase price calculated for the item, as discussed above.
2. Revision of Payment Amounts for Power Wheelchairs
Section 3136(a) of the ACA made several changes to section
1834(a)(7)(A) of the Act. Section 3136(a)(1) of the ACA amends section
1834(a)(7)(A) of the Act by adding a new subclause (III) to section
1834(a)(7)(A)(i) of the Act. Subclause (III) revises the capped rental
fee schedule amounts for all power wheelchairs, modifying the current
payment structure of 10 percent of the purchase price for months 1
through 3 and 7.5 percent of that purchase price for months 4 through
13 that was previously discussed.
The rental fee schedule amount for months 1 through 3 of the 13-
month capped rental period for power wheelchairs is revised to 15
percent of the purchase price for the item. The rental fee schedule
amounts for months 4 through 13 of the 13-month capped rental period
for power wheelchairs is revised to 6 percent of the purchase price for
the item. The statutory provision does not change the methodologies
used to calculate and subsequently update the purchase price of power
wheelchairs. Therefore, the methodology described previously for
determining the purchase price amounts will continue to apply.
Pursuant to section 3136(c) of the ACA, the changes made by section
3136(a) of the ACA apply to power-driven wheelchairs furnished on or
after January 1, 2011. Furthermore, as discussed previously, section
3136(c)(2) of the ACA states that the changes made by section 3136(a)
of the ACA, including the new payment structure for power wheelchairs,
do not apply to payment made for items and services furnished pursuant
to contracts entered into under section 1847 of the Act for the DMEPOS
CBP prior to January 1, 2011, which applies to the implementation of
the first round of the DMEPOS CBP. As a result, contract suppliers
furnishing power wheelchairs in competitive bidding areas (CBA)
pursuant to contracts entered into prior to January 1, 2011, as part of
Round 1 of the DMEPOS CBP will continue to be paid based under the
current regulations using 10 percent of the purchase price for months 1
through 3 and 7.5 percent for each of the remaining months. We did not
receive public comment on our proposed changes to Sec. 414.202, Sec.
414.229, and Sec. 414.408, and therefore we are finalizing our
proposals without modification.
3. Elimination of Lump Sum Payment for Standard Power Wheelchairs
Section 3136(a)(2) of the ACA further amends section
1834(a)(7)(A)(iii) of the Act by inserting the term ``complex,
rehabilitative'' before the term ``power-driven wheelchairs.'' As a
result, section 1834(a)(7)(A)(iii) of the Act now extends the lump sum
purchase option only to complex, rehabilitative power wheelchairs. As
discussed above, ``complex, rehabilitative'' power wheelchairs are
power wheelchairs that are classified as: (1) Group 2 power wheelchairs
with power options that can accommodate rehabilitative features (for
example, tilt in space), or (2) Group 3 power wheelchairs. We consider
all other power wheelchairs to be standard power wheelchairs.
Therefore, we proposed to interpret the language ``complex,
rehabilitative'' in section 1834(a)(7)(A) of the Act consistent with
this longstanding classification. As a result, the changes made by
section 3136 of the ACA to section 1834(a)(7)(A)(iii) of the Act
eliminate the lump sum purchase option for standard power wheelchairs.
Pursuant to section 3136(c) of the ACA, the changes made to section
1834(a)(7)(A)(iii) of the Act apply to power-driven wheelchairs
furnished on or after January 1, 2011. The lump sum purchase payment
option will no longer extend to standard power driven wheelchairs
furnished on or after January 1, 2011.
Furthermore, section 3136(c)(2) of the ACA states that the changes
made by section 3136(a) of the ACA, including the limitation of the
lump sum purchase payment option to complex, rehabilitative power
wheelchairs, do not apply to payment made for items and services
furnished pursuant to contracts entered into under section 1847 of the
Act for the DMEPOS CBP prior to January 1, 2011, pursuant to the
implementation of the first round of the DMEPOS CBP. As a result,
contract suppliers furnishing power wheelchairs in CBAs in accordance
with contracts entered into prior to January 1, 2011 as part of Round 1
of the DMEPOS CBP must continue to offer beneficiaries the lump sum
purchase option for all power wheelchairs.

[[Page 73392]]

We proposed changes to Sec. 414.229 and Sec. 414.408 to reflect
our interpretation of these statutory requirements.
Comment: Several commenters stated that the changes regarding the
lump sum payment option will make it more difficult for many suppliers
to furnish standard power wheelchairs because suppliers usually
purchase wheelchairs from manufacturers using the full lump sum
payments. One commenter stated that some homecare providers will need
to arrange for loans to obtain sufficient finances to purchase
wheelchairs that are then paid for by the Medicare program and
beneficiaries over the longer 1-month payment period and if the recent
capital markets for loans do not improve, CMS should consider a delay
in implementing our regulations.
Response: While we recognize that the regulatory changes require
adjustments by standard power wheelchair suppliers, we do not believe
that section 3136(a)(2) of the ACA provides flexibility to delay the
implementation of this provision. Moreover, these concerns are related
to the financial relationships developed by manufacturers of standard
power wheelchairs with the suppliers who furnish patients with
wheelchairs, which is not within the purview of our regulations. As we
explained in the proposed rule (75 FR 40121), power wheelchairs have
been paid under the capped rental category of DME since 1989, and the
option to purchase in addition to the rental payment method was
established in 1991. Thus, section 3136(a)(2) of the ACA and the
regulatory changes implementing that provision are not establishing a
new rental payment methodology. We expect suppliers will be able to
adapt expeditiously to furnishing standard power wheelchairs under a
rental payment structure. Finally, we believe that there may be some
financial benefit to suppliers as a result of this change. As is the
case for manual wheelchairs furnished to Medicare beneficiaries,
suppliers of standard power wheelchairs furnished to Medicare
beneficiaries on or after January 1, 2011, may be able to rent these
items to multiple beneficiaries if the beneficiaries use the items for
fewer than 13 continuous months. In many cases where a power wheelchair
is rented to multiple beneficiaries, the supplier will receive more
than 13 monthly payments for the item, including payments based on 15
percent of the statutory purchase price for the first 3 months that
each beneficiary rents the item.
Comment: Several commenters raised a concern that the elimination
of the lump sum payment method will cause a significant increase in
monthly rental claims submitted for standard power wheelchairs;
thereby, increasing administrative claims processing costs. One
commenter noted that in the event claims processing contractors have
difficulty processing claims, we did not discuss how to apply interest
rates for Medicare overpayments or underpayments.
Response: We appreciate this comment regarding the efficient
implementation of the provision of section 3136 of the ACA, which
includes a requirement that payment for all standard power wheelchairs
be made on a monthly rental basis effective January 1, 2011. We are
working with our contractors to make the necessary changes to the
claims processing systems in order to be ready to process additional
standard power wheelchair rental claims with dates of service on or
after January 1, 2011. Also, we have coordinated within CMS and our
partners to update educational materials for our beneficiaries. With
regard to overpayments or underpayments, these issues will be handled
in the same manner as overpayments or underpayments are handled for
capped rental DME in general.
Comment: Several commenters stressed the need to clarify the
conditions of payment requirements for power wheelchairs that are
rented after a break in service or change in patient condition. These
commenters stated that because the majority of power wheelchairs have
been paid under the lump sum purchase payment method, physicians and
suppliers performed the documentation requirements set forth in Sec.
410.38(c)(2) prior to initial delivery of the standard power
wheelchairs. These documentation requirements specify the physician or
treating practitioner must conduct a face-to-face examination of the
patient to determine that the power wheelchair is medically necessary
before it is dispensed to the beneficiary. In addition, the supplier
must perform an on-site evaluation of the patient's home to develop
supporting documentation for the initial delivery and payment for a
power wheelchair. As a result of the elimination of the lump sum
purchase option for standard power wheelchairs, more power wheelchairs
will be paid under the rental payment method after January 1, 2011.
Thus, the commenters urged that the regulations should clarify whether
a new face-to-face examination and home evaluation must be performed
when a break in service of greater than 60 days occurs.
Response: This comment is outside the scope of the CY 2011 PFS
proposed rule. We did not propose any changes to the conditions of
payment set forth in Sec. 410.28(c)(2). We again note, however, that
payments on a rental basis for capped rental items, including power
wheelchairs, have been made since January 1, 1989. The payment and
coverage requirements identified by the commenters for power mobility
devices (PMDs), including power-operated vehicles or scooters and
standard and complex, rehabilitative power wheelchairs, must be met
before the item is furnished to the beneficiary on either a purchase or
rental basis. Section 3136 of the ACA, which in part eliminates the
purchase option for standard power wheelchairs furnished on or after
January 1, 2011, has no impact on these requirements. They remain in
effect for all PMDs furnished to Medicare beneficiaries on a purchase
or rental basis, including rented power wheelchairs. Payment for capped
rental items is limited to 13 months of continuous use, defined at
Sec. 414.230. Section 414.230(d) sets forth the criteria for a new
rental period: during this 13-month capped rental period, a break in
use of the equipment for more than 60 continuous days, plus the days
remaining in the rental month in which use ceases, would result in the
start of a new period of continuous use and a new 13-month capped
rental period if the supplier submits a new prescription, new medical
necessity documentation, and documentation that describes the reason
for the interruption in use and documents that medical necessity in the
prior rental episode ended. Section 3136 of the ACA has no impact on
the requirements set forth in Sec. 414.230 regarding continuous use of
capped rental items.
Comment: One commenter requested a revision to the billing
modifiers for Advance Beneficiary Notice of Noncoverage (ABN) to
utilize when a supplier bills for furnishing a wheelchair that has
features beyond what is covered by Medicare.
Response: This comment is outside the scope of the CY 2011 PFS
proposed rule because we did not propose any changes to the billing
modifiers for ABNs. Nevertheless, we encourage interested parties to
follow our HCPCS editorial process and submit coding recommendations by
following the instructions found at our Web site at http://www.cms.gov/MedHCPCSGenInfo.
Comment: One commenter requested clarification on whether the
beneficiary retains ownership of power wheelchair associated
accessories (for example

[[Page 73393]]

elevated leg rests or adjustable height arms rests) during or after the
rental period. These associated accessories are not included with the
rental of the standard power wheelchair base equipment.
Response: Payment for accessories for power wheelchairs that are
not included in the basic equipment package for the wheelchair and are
separately payable items under the inexpensive or routinely purchased
(IRP) DME category is made on either a rental or lump sum purchase
basis. If payment is made on a lump sum basis to the supplier for an
associated accessory, then the beneficiary owns the accessory for use
with the standard power wheelchair during and after the 13-month
wheelchair rental period. If payment is made on a rental basis for an
accessory in the IRP category and it appears that the beneficiary will
use the wheelchair for the full 13-month capped rental period, the
beneficiary may elect to purchase the accessory, and the Medicare
allowed payment for purchase of the accessory would be equal to the
lowed of the actual charge or the purchase fee schedule amount, less
cumulative paid rental amounts. Title to an accessory for a power
wheelchair that is not included in the basic equipment package for the
wheelchair and is a separately payable item under the capped rental DME
category is transferred to the beneficiary following the 13-month
capped rental period.
Comment: One commenter requested information on how to apply the
calculation of the reasonable useful lifetime to a standard power
wheelchair which had been in continuous use for 10 months prior to
being returned to a supplier and then after appropriate cleaning and
servicing is placed with a different beneficiary. Also, the commenter
requested how to apply the calculation of the reasonable useful
lifetime if the standard power wheelchair is assigned to several
beneficiaries under similar circumstances and remains in continuous use
beyond 13 months because of use by multiple beneficiaries prior to
title being transferred to the last beneficiary.
Response: The regulations applicable to calculation of the
reasonable useful lifetime are located at Sec. 414.210(f) and state
that computation of the reasonable useful lifetime of equipment is
based on when the equipment is delivered to the beneficiary, not the
age of the equipment. At the end of 13 months rental use of a DME item,
the supplier must transfer title to the item, such as a power
wheelchair, to the beneficiary in accordance with Sec. 414.229(f)(2).
If, following transfer of title, it is determined that the power
wheelchair will not last for the entire reasonable useful lifetime, the
supplier is required by Sec. 414.210(e)(4) to replace the equipment at
no cost to the beneficiary or the Medicare program.
Comment: One commenter expressed concern that the proposed changes
to Sec. 414.408(f)(1) will force suppliers to convert to a rental
payment model of furnishing standard power wheelchairs prior to the end
of the 3 year contract period for DMEPOS Round 1 Rebid CBAs although
their bids included an assumption that the lump sum payment method
would continue into subsequent years. Another commenter believed
inequalities occur by continuing the option of a lump sum payment
method for standard power wheelchairs in Round 1 Rebid CBAs but not in
other geographic areas.
Response: Section 3136(c)(2) of the ACA states that the change made
by section 3136(a) of the ACA, eliminating the lump sum payment method
for standard power wheelchairs, does not apply to payment made for
items and services furnished pursuant to contracts entered into under
section 1847 of the Act for the DMEPOS CBP prior to January 1, 2011
pursuant to the implementation of the first round of the DMEPOS
competitive bidding program (CBP). We noted that although these changes
will not apply to payment made for items and services furnished
pursuant to the contracts awarded following the Round 1 Rebid, contract
suppliers must prepare for the elimination of the lump sum payment
method for standard power wheelchairs that will take effect at the end
of the 3 year contract period. When the Round 1 contracts are
recompeted, suppliers will submit bids for furnishing power wheelchairs
on a rental only basis.
Comment: One commenter suggested Medicare should consider
implementing a serial number tracking program for power wheelchairs to
improve anti-fraud efforts.
Response: This comment is outside the scope of the CY 2011 PFS
proposed rule. We appreciate the commenter's suggestion and will
consider studying the feasibility of a nationwide serial tracking
program for power wheelchairs for future rulemaking efforts. We were
informed that nationwide there are more than 106 styles of power
wheelchairs available from 22 manufacturers. A nationwide serial
tracking program would require significant program resources and
stakeholder input which we would need to conduct prior to rulemaking.
After considering the comments received, we are adopting, without
modification, our proposed changes to Sec. 414.229 and Sec. 414.408
that eliminate the lump sum payment option for standard power
wheelchairs.

O. Section 3139: Payment for Biosimilar Biological Products

Section 3139 of the ACA amends section 1847A of the Act to provide
for Medicare payment of biosimilar biological products using the
average sale price (ASP) methodology.
Section 1847A(c)(6)(H) of the Act, as added by the ACA, defines a
biosimilar biological product as a biological product approved under an
abbreviated application for a license of a biological product that
relies in part on data or information in an application for another
biological product licensed under section 351 of the Public Health
Service Act (PHSA). The reference biological product for a biosimilar
biological product is defined by the statute as the biological product
licensed under such section 351 of the PHSA that is referred to in the
application of the biosimilar biological product.
The ACA also amends section 1847A(b) of the Act by adding paragraph
8 to specify that the payment amount for a biosimilar biological
product will be the sum of the following two amounts: The ASP of all
NDCs assigned to the biosimilar biological product determined using the
methodology in section 1847A(b)(6) of the Act, and 6 percent of the
payment amount determined using the methodology in section 1847A(b)(4)
of the Act for the corresponding reference biological product. Sections
7001 to 7003 of the ACA also established a licensing pathway for
biosimilar biological products, and in accordance with the statute, the
effective date for Medicare ASP statutory provisions is July 1, 2010.
We proposed to make conforming regulation text changes at Sec. 414.902
and Sec. 414.904 and we solicited comments regarding our conforming
changes.
We anticipate that as biosimilar biological drug products are
approved, we will receive ASP sales data through the ASP data
submission process and publish national payment amounts in a manner
that is consistent with our current approach to other drugs and
biologicals that are paid under section 1847A of the Act and set forth
in 42 CFR part 414 subpart J. Until we have collected sufficient sales
data as reported by manufacturers, payment limits will be determined in
accordance with the provisions in section

[[Page 73394]]

1847A(c)(4) of the Act. If no manufacturer data is collected, prices
will be determined by local contractors using any available pricing
information, including provider invoices. More information about the
ASP payment methodology and the data submission process may be found on
the CMS Web site at http://www.cms.gov/McrPartBDrugAvgSalesPrice/01_overview.asp and in section VII.A.1., ``Carry Over ASP,'' of this final
rule with comment period.
Comment: Several commenters supported the proposed regulation text
changes.
Response: Based on the comments that we received, we are finalizing
our proposal and regulation text without additional modification.
Comment: Several commenters requested that CMS assign biosimilars
and other brand name drugs and biologicals separate HCPCS codes in
order to facilitate the tracking of items paid under section 3139 of
the ACA, as well as branded drugs and biologicals subject to fees under
section 9008 of the ACA.
Response: We appreciate the comments; however, our proposal did not
address procedures for assignment of HCPCS codes, and so these comments
are outside the scope of this rule. For more information about the
HCPCS coding process, we refer you to http://www.cms.gov/MedHCPCSGenInfo/.
In summary, we are finalizing our proposed definitions of
biosimilar biological, reference biological and our proposed payment
methodology without additional modification.

P. Section 3401: Revision of Certain Market Basket Updates and
Incorporation of Productivity Improvements Into Market Basket Updates
That Do Not Already Incorporate Such Improvements

1. ESRD Market Basket Discussion
Section 3401(h) of the ACA amended section 1881(b)(14)(F) of the
Act and directs the Secretary to annually increase payment amounts
established under the ESRD market basket. Please see section VII.E. of
this final rule with comment for a detailed description of these
provisions.
2. Productivity Adjustment Regarding the Ambulatory Surgical Center
Payment System, and the Ambulance, Clinical Laboratory and DMEPOS Fee
Schedules
Section 3401 of the ACA requires that the update factor under
certain payment systems be annually adjusted by changes in economy-wide
productivity. The year that the productivity adjustment is effective
varies by payment system. Specifically, section 3401 of the ACA
requires that, in CY 2011 (and in subsequent years) update factors
under the ambulatory surgical center (ASC) payment system, the
ambulance fee schedule (AFS), the clinical laboratory fee schedule
(CLFS), and the DMEPOS fee schedules be adjusted by changes in economy-
wide productivity. Section 3401(a) of the ACA amends section
1886(b)(3)(B) of the Act to add clause (xi)(II) which sets forth the
definition of this productivity adjustment. The statute defines the
productivity adjustment to be equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multifactor
productivity (MFP) (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, year, cost reporting
period, or other annual period) (the ``MFP adjustment''). The Bureau of
Labor Statistics (BLS) is the agency that publishes the official
measure of private non-farm business MFP. Please see http://www.bls.gov/mfp which is the link to the BLS historical published data
on the measure of MFP.
As stated in the PFS proposed rule (75 FR 40123), the projection of
MFP is currently produced by IHS Global Insight (IGI), an economic
forecasting firm. As described in the CY 2011 PFS proposed rule, in
order to generate a forecast of MFP, IGI replicated the MFP measure
calculated by the BLS using a series of proxy variables derived from
the IGI US Macro-economic models. These models take into account a very
broad range of factors that influence the total U.S. economy. IGI
forecasts the underlying proxy components such as Gross Domestic
Product (GDP), capital, and labor inputs required to estimate MFP and
then combines those projections according to the BLS methodology.
In Table 34 of the proposed rule (75 FR 40123), we identified each
of the MFP component series employed by the BLS and the corresponding
concepts estimated by IGI that appeared to be the best measure at the
time of the proposed rule. IGI found that the historical growth rates
of the BLS components used to calculate MFP and the IGI components
identified and listed in the PFS proposed rule (75 FR 40123) were
consistent across all series and therefore suitable proxies for
calculating MFP. We proposed a method in which IGI uses the growth
rates of the forecasted IGI concepts to project BLS' components of MFP.
The resulting MFP adjustment derived from using this method was
proposed to be used under section 3401 of the ACA to adjust the updates
for the ASC payment system, the AFS, the CLFS, and the DMEPOS fee
schedules.
Since the proposed rule, BLS issued revised estimates of private
nonfarm business MFP (released on August 24, 2010). We also received
public comments on the proposed calculation of the MFP adjustment. We
summarize these comments and our responses below.
Comment: Several commenters stated that CMS provided no details in
the proposed rule on the data and calculations that it used in making
the MFP estimates, instead referring readers to the BLS, which only
provides historical data. The commenters stated that this level of
information is insufficient for public comment. The commenters
requested that CMS fully disclose the methods and data sources used for
the MFP estimate for public comment before implementing the multifactor
productivity adjustment to the ASC payment system and to the other
payment systems. Another commenter stated that transparency is needed
concerning the assumptions underlying the projection of MFP and the
commenter asked that CMS address this in the final rule so a better
understanding can be gained about how CMS arrived at its MFP
adjustment.
Response: The CY 2011 PFS proposed rule included a citation to the
BLS Web site. This link provided a lengthy detailed description of the
methodology that is used by the BLS to construct an estimate of MFP for
the private nonfarm business sector, including a discussion of the
underlying series used in the MFP calculation. For the forecasted
estimate of MFP, we then identified in Table 34 in the CY 2011 PFS
proposed rule (75 FR 40123) the forecasted series that closely align to
the series used by BLS. The data source for these forecasted series is
IGI, an economic forecasting firm. Following the methodology as
described in the BLS documentation that we provided in the CY 2011 PFS
proposed rule, a forecast of MFP was created using the IGI series.
Given the information that was presented in the CY 2011 PFS proposed
rule, we believe that we provided adequate information regarding the
methods, calculations, and data sources used for the MFP estimate. In
this final rule with comment period, we have included below a more
detailed description of this methodology for even greater transparency.
In response to the public comments we received requesting
additional information on the assumptions underlying the projection of
MFP, we note that the projection of MFP is not driven by specific
assumptions. The

[[Page 73395]]

underlying series forecasted by IGI are derived from a set of complex
economic forecasting models that project various components of the
total U.S. economy. These models are intended to capture many drivers
of economic growth in the U.S. economy. Therefore, the underlying
series that IGI uses to calculate a forecast of MFP are products of
this economy-wide macroeconomic model as opposed to being based on a
specific set of assumptions.
Comment: Several commenters expressed concern that current economic
conditions are distorting the factor used for the productivity
adjustment, potentially leading to unintended consequences. These
commenters claim that the original intent of the productivity
adjustment was to hold providers to a standard of productivity
improvement achieved by the rest of the economy. However, the
commenters stated that when productivity gains are driven by
undesirable trends in the economy, this adjustment could lead to
excessive cuts. The current ``jobless recovery'' is inflating
productivity as output increases but a key input--employment--continues
to stagnate. The commenters claim that cutting Medicare payments by
this inflated figure could hurt hospitals and other health care
providers and suppliers that have been one of the few sources of
continued job growth in this economy.
Response: We are required by law to implement section 3401 of the
ACA, which requires that in CY 2011 (and in subsequent years) update
factors under the ASC payment system, the AFS, the CLFS, and the DMEPOS
fee schedules be adjusted by the 10-year moving average of changes in
annual economy-wide multi-factor productivity for the private non-farm
business sector.
Although we believe that the IGI method of calculating a forecast
of MFP discussed in the CY 2011 PFS proposed rule (75 FR 40123) is
appropriate and accurately reflects the 10-year moving average of
changes in annual economy-wide multi-factor productivity, in response
to this comment, CMS and IGI reevaluated the series that are used to
calculate MFP to ensure that the underlying components that are
ultimately selected are those that will produce a measure of MFP that
most closely tracks the official measure of MFP as published by BLS.
While the concepts listed in Table 34 of the CY 2011 PFS proposed rule
were similar to the underlying concepts used by BLS (as discussed in
the proposed rule), CMS and IGI subsequently determined that there are
technically superior IGI series for output and labor that can be used
to derive a calculation of MFP (still using the method as described in
the proposed rule), that will ultimately result in a more appropriate
forecast of MFP. The IGI method is described in more detail below and
we note that the methodology is the same methodology as was described
in the CY 2011 PFS proposed rule, which is aligned closely with the
methodology employed by the BLS. For more information regarding the BLS
method for estimating productivity we refer the commenter to the
following link: http://www.bls.gov/mfp/mprtech.pdf.
Table 61 lists the MFP component series employed by the BLS and the
corresponding concepts estimated by IGI as specified in Table 34 of the
CY 2011 PFS proposed rule and in this final rule. Please note that, in
BLS' revised MFP estimates published on August 24, 2010, the index
series was rebased from 2000=100 to 2005=100. Thus, Table 61 refers to
the BLS series in 2005 dollars whereas Table 34 of the CY 2011 PFS
proposed rule referred to the BLS series in 2000 dollars.

Table 61--Multifactor Productivity Component Series Employed by the
Bureau of Labor Statistics and IHS Global Insight
------------------------------------------------------------------------
IGI series--proposed IGI series--final
BLS series rule rule
------------------------------------------------------------------------
Real value-added output, Real gross non-farm Non-housing non-
constant 2005 dollars. value added output, government non-farm
chained 2005 dollar real GDP, Billions
billions. of chained 2005
dollars--annual
rate.
Private non-farm business Hours of all Man-hours in private
sector labor input; persons--private nonfarm
2005=100.00. nonfarm business establishments,
sector; 1992=1.0. Billions of hours--
annual rate.
Aggregate capital inputs; Real effective Real effective
2005=100.00. capital stock used capital stock used
for full employment for full employment
GDP, chained 2005 GDP, Billions of
dollar billions. chained 2005
dollars.
------------------------------------------------------------------------

In this final rule with comment period, we are finalizing the same
IGI method as described in the CY 2011 PFS proposed rule, with minor
technical improvements to the underlying concepts used to calculate
MFP. We have also included a more detailed description below of the
methodology (which was described in the proposed rule and which we are
finalizing in this final rule with comment period) used to calculate
MFP in response to the public comments we received.
To create a forecast of BLS' MFP index, the forecasted annual
growth rates of the ``non-housing, non-government, non-farm, real
GDP'', ``man-hours in private nonfarm establishments'', and ``real
effective capital stock'' series (ranging from 2009 to 2020) are used
to ``grow'' the levels of the ``real value-added output,'' ``private
non-farm business sector labor input,'' and ``aggregate capital input''
series published by the BLS. Using these three key concepts, MFP is
derived by subtracting the contribution of labor and capital inputs
from output growth.
However, in order to estimate MFP, we need to understand the
relative contributions of labor and capital to total output growth.
Therefore, two additional measures are needed to operationalize the
estimation of the IGI MFP projection: Labor compensation and capital
income. The sum of labor compensation and capital income represents
total income. The BLS calculates labor compensation and capital income
(in current dollar terms) to derive the nominal values of labor and
capital inputs. IGI uses the ``non-government total compensation'' and
``flow of capital services from the total private non-residential
capital stock'' series as proxies for the BLS' income measures. These
two proxy measures for income are divided by total income to obtain the
shares of labor compensation and capital income to total income.
In order to estimate labor's contribution and capital's
contribution to the growth in total output, the growth rates of the
proxy variables for labor and capital inputs are multiplied by their
respective shares of total income. These contributions of labor and
capital to output growth are subtracted from total output growth to
calculate the ``change

[[Page 73396]]

in the growth rates of multifactor productivity'':
MFP = Total output growth--{(labor input growth*labor compensation
share) + (capital input growth * capital income share){time}
The change in the growth rates (also referred to as the compound
growth rates) of the IGI MFP are multiplied by 100 in order to
calculate the percent change in growth rates (the percent change in
growth rates are published by the BLS for its historical MFP measure).
Finally, the growth rates of the IGI MFP are converted to index levels
based to 2005 to be consistent with the BLS' methodology.
For benchmarking purposes, the historical growth rates of IGI's
proxy variables were used to estimate a historical measure of MFP,
which was compared to the historical MFP estimate published by the BLS.
The comparison revealed that the growth rates of the components were
consistent across all series, and therefore validated the use of the
proxy variables in generating the IGI MFP projections.
The resulting MFP index was then interpolated to a quarterly
frequency using the Bassie method for temporal disaggregation. The
Bassie technique utilizes an indicator (pattern) series for its
calculations. IGI uses the index of output per hour (published by the
BLS) as an indicator when interpolating the MFP index.
As discussed below, for each of these payment systems, the update
factor is the percentage increase (or percentage decrease for the CLFS)
in the consumer price index for all urban consumers (CPI-U) (referred
to as the ``CPI-U update factor'').
For all four payment systems, section 3401 of the ACA generally
states that the Secretary shall reduce the CPI-U adjustment by the MFP
adjustment. In order to calculate the MFP-adjusted updates to these
payment systems, we proposed that the MFP percentage adjustment would
be subtracted from the CPI-U update factor. For example, if the update
factor (CPI-U) is 4.0 percent, and the projected MFP is 1.3 percent,
the MFP-Adjusted update factor (or MFP-Adjusted CPI-U for these payment
systems) would be a 2.7 percent increase.
We proposed that the end of the 10-year moving average of changes
in the MFP should coincide with the end of this CPI-U timeframe (75 FR
40123). Since the CPI-U update factor is reduced by the MFP adjustment
to determine the annual update for these payment systems, we stated
that we believe it is appropriate for the numbers associated with both
parts of the calculation to be projected as of the same end date. In
this way, changes in market conditions are aligned.
In this final rule with comment period, we wanted to further
clarify how for each payment system, the end of the 10-year moving
average of changes in the MFP will coincide with the period on which
the CPI-U is calculated. In the case of the ASC payment system, the
CPI-U projected for the 12-month period ending with the midpoint of the
year involved, which is CY 2011 for this final rule with comment
period. Therefore, the end of the 10-year moving average of changes in
the MFP is projected so that it ends with the midpoint of the year
involves, which is CY 2011 for this final rule with comment period. In
the case of the AFS, CLFS, and DMEPOS fee schedules, the CPI-U is
estimated for the period ending June 30th of the year preceding the
update year itself, which is CY 2010 for this final rule with comment
period. Therefore, the end of the 10-year moving average of changes in
the MFP is estimated so that it ends June 30th of the year preceding
the update year itself, which is CY 2010 for this final rule with
comment period.
We proposed to round the final annual adjustment to the one-tenth
of one percentage point level up or down as applicable according to
conventional rounding rules (that is, if the number we are rounding is
followed by 5, 6, 7, 8, or 9, we will round the number up; if the
number we are rounding is followed by 0, 1, 2, 3, or 4, we will round
the number down).
In the following sections, we provide more information on the
statutory requirements and proposals for each of the four payment
systems. The statutory requirements for the ASC payment system were
also addressed in the CY 2011 OPPS/ASC final rule with comment period.
We note that, in the CY 2011 PFS proposed rule (75 FR 40123 through
40125), we described the legislative provision and outlined the
methodology used to calculate and apply the MFP adjustment to determine
the annual updates for ASC payment system, the AFS, the CLFS, and the
DMEPOS fee schedules for CY 2011 and each subsequent year. We stated
that we would set forth the final MFP adjustment for CY 2011 in this
final rule with comment period. Also, we stated in the CY 2011 PFS
proposed rule (75 FR 40123) that once we finalize the methodology for
determining and applying the MFP adjustment to the CPI-U update factors
for these payment systems, for subsequent calendar years, as we have
done in the past, we would notify the general public of the annual
update to the AFS, CLFS, and DMEPOS fee schedules via CMS instruction
and on the CMS Web site. These notifications would set forth both the
CPI-U percentage increase (or, for the CLFS, the percentage decrease)
and the MFP adjustment for the applicable year. For ASCs, for
subsequent calendar years, as we have done in the past, we stated that
we would continue to notify the general public of the annual update to
the ASC payment amount via the annual OPPS/ASC rulemaking process.
In summary, as discussed previously, we are finalizing the same IGI
method as described in the CY 2011 proposed rule to calculate the MFP
adjustment, with minor technical improvements to the underlying
concepts used to calculate the MFP adjustment. Furthermore, as
proposed, the MFP adjustment is calculated so that the end of the 10-
year moving average of changes in the MFP will coincide with the end of
the CPI-U timeframe for each of the four payment systems (that is, the
ASC payment system, AFS, CLFS, and DMEPOS fee schedules) so that market
conditions are aligned. Also, as proposed, we will round the final
annual adjustment to the one-tenth of one percentage point level up or
down as applicable according to conventional rounding rules. Using the
methodology finalized previously, the final MFP adjustment for CY 2011
is 1.3 percent for the ASC payment system, and 1.2 percent for the AFS,
CLFS, and DMEPOS fee schedules. We are also finalizing our proposal to
calculate the MFP-adjusted updates for the ASC payment system, the AFS,
the CLFS and the DMEPOS fee schedules for CY 2011 and each subsequent
year by subtracting the MFP adjustment from each payment system's CPI-U
update factor, as further described in the following sections.
a. Ambulatory Surgical Centers (ASCs)
Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary
has not updated the ASC payment amounts in a calendar year, the payment
amounts ``shall be increased by the percentage increase in the Consumer
Price Index for all urban consumers (U.S. city average) as estimated by
the Secretary for the 12-month period ending with the midpoint of the
year involved.'' Because the Secretary does update the ASC payment
amounts annually, we adopted a policy, which we codified at Sec.
416.171(a)(2)(ii), to update the ASC conversion factor using the CPI-U
for CY 2010 and subsequent calendar years. Therefore, the annual update
to the ASC payment system is the CPI-U (referred to as the CPI-U update
factor). Section 3401(k) of the ACA amends section

[[Page 73397]]

1833(i)(2)(D) of the Act by adding a new clause (v) which requires that
``any annual update under [the ASC payment] system for the year [after
application of any reduction in any update for failure to report on
quality measures, if the Secretary implements a quality reporting
program for ASCs] shall be reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act'' (which we refer
to as the MFP adjustment) effective with the calendar year beginning
January 1, 2011. Section 3401(k) of the ACA states that application of
the MFP adjustment to the ASC payment system may result in the update
to the ASC payment system being less than zero for a year and may
result in payment rates under the ASC payment system for a year being
less than such payment rates for the preceding year.
In accordance with section 1833(i)(2)(C)(i) of the Act, before
applying the MFP adjustment, the Secretary first determines the
``percentage increase'' in the CPI-U, which we interpret cannot be a
negative number. Thus, in the instance where the percentage change in
the CPI-U for a year is negative, we proposed to hold the CPI-U update
factor for the ASC payment system to zero. Section 1833(i)(2)(D)(v) of
the Act, as added by section 3401(k) of the ACA, then requires that the
Secretary reduce the CPI-U update factor (which would be held to zero
if the CPI-U percentage change is negative) by the MFP adjustment, and
states that application of the MFP adjustment may reduce this
percentage change below zero. If the application of the MFP adjustment
to the CPI-U percentage increase would result in an MFP-adjusted CPI-U
update factor that is less than zero, then the annual update to the ASC
payment rates would be negative and payments would decrease relative to
the prior year.
Table 62 provides illustrative examples of how we proposed the MFP
adjustment would be applied to the ASC payment system. These examples
show the implication of a positive CPI-U update factor with a smaller
MFP adjustment, a positive CPI-U update factor with a large MFP
adjustment, and a CPI-U update factor of zero. We discussed the
application of the MFP adjustment to the CPI-U update factor for the
ASC payment system under the OPPS/ASC CY 2011 proposed rule (75 FR
46359). We solicited comment on the specific mathematical calculation
of the MFP adjustment and noted that comments on the application of the
MFP adjustment to the CPI-U update factor under the ASC payment system
should be made to the OPPS/ASC CY 2011 proposed rule (75 FR 46359). As
discussed previously, we received and responded to comments on the
calculation of the MFP adjustment and have finalized this methodology
as described above. In the CY 2011 OPPS/ASC final rule with comment
period, we respond to any comments received and finalize the
methodology for applying the MFP adjustment to the CPI-U update factor
for ASCs.

Table 62--Multifactor Productivity Adjusted Payment Update: Illustrative
Example
------------------------------------------------------------------------
MFP-Adjusted CPI-U
CPI-U (percent) MFP Adjustment update factor
(percent) (percent)
------------------------------------------------------------------------
4.0 1.3 2.7
4.0 4.7 -0.7
0.0 0.2 -0.2
------------------------------------------------------------------------

b. Ambulance Fee Schedule (AFS)
In accordance with section 1834(l)(3)(B) of the Act, the AFS rates
are required to be increased each year by the percentage increase in
the CPI-U (U.S. city average) for the 12-month period ending with June
of the previous year. We refer to this update as the Ambulance
Inflation Factor (AIF). Section 3401(j) of the ACA amends section
1834(l)(3) of the Act to add a new subclause (C) which states that, for
CY 2011 and each subsequent year, after determining the percentage
increase under section 1834(l)(3)(B) of the Act (that is, the CPI-U
percentage increase, or AIF), the Secretary shall reduce such
percentage increase by the MFP adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (as discussed previously). Section
3401(j) of the ACA further amends section 1834(l)(3) of the Act to
state that the application of subclause (C) (that is, the reduction of
the CPI-U percentage increase by the MFP adjustment) may result in that
percentage increase being less than zero for a year, and may result in
payment rates for a year being less than such payment rates for the
preceding year.
In accordance with section 1834(l)(3) of the Act as amended by
section 3401(j) of the ACA, before applying the MFP adjustment, the
Secretary first determines the ``percentage increase'' in the CPI-U,
which we interpret cannot be a negative number. Thus, in the instance
where the percentage change in the CPI-U for a year is negative, we
proposed to hold the AIF to zero. The statute then requires that the
Secretary reduce the CPI-U percentage increase (which would be held to
zero if the CPI-U percentage change is negative) by the MFP adjustment,
and states that application of the MFP adjustment may reduce this
percentage increase below zero. If the application of the MFP
adjustment to the CPI-U percentage increase would result in an MFP-
adjusted AIF that is less than zero, then the annual update to the AFS
would be negative and payments would decrease relative to the prior
year.
Table 63 provides illustrative examples of how we proposed the MFP
adjustment would be applied to the AFS. Finally, we proposed to revise
Sec. 414.610(f) to require that the AIF be reduced by the MFP
adjustment as required by the statute in determining the annual update
under the ambulance fee schedule for CY 2011 and each subsequent year,
and to revise Sec. 414.620 to state that changes in payment rates
resulting from the incorporation of the AIF and the MFP adjustment will
be announced by CMS by instruction and on the CMS Web site, as we
previously discussed.

Table 63--Examples of the Application of the Multifactor Productivity
Adjustment to the Ambulance Fee Schedule
[In percent]
------------------------------------------------------------------------

------------------------------------------------------------------------
A B C D
CPI-U AIF MFP Adjustment Final
................. ................ update rounded
------------------------------------------------------------------------
2.0 2.0 1.3 0.7
0.0 0.0 1.3 -1.3
-2.0 0.0 1.3 -1.3
1.0 1.0 1.3 -0.3
------------------------------------------------------------------------

Comment: A few commenters stated that the payment rates for
ambulances have consistently fallen further behind the actual cost of
providing the service. One commenter stated that the annual update as
adjusted by the MFP adjustment would create a permanent disparity
between future increases in Medicare's reimbursement for ambulance
services and the increased costs of providing those services. The
commenter stated that the two largest operational costs for ambulance
services are personnel and fuel, neither of which readily lends itself
to operational efficiencies. In particular, they claim that small and
rural providers lack the volume of transports needed to obtain any
meaningful economies of scale. These commenters acknowledge that the
MFP adjustment is mandated by law, but they state that it will likely
result in a net decrease in the already insufficient base reimbursement
rate for air

[[Page 73398]]

ambulances. One commenter urged CMS to take whatever steps are within
its authority to mitigate the potentially devastating effects of this
new requirement.
Response: As discussed previously and in the CY 2011 PFS proposed
rule (75 FR 40124), we are required by law to implement section 3401(j)
of the ACA, which requires that for CY 2011 and each subsequent year,
after determining the percentage increase under section 1834(l)(3)(B)
of the Act (that is, the CPI-U percentage increase, or AIF), the
Secretary shall reduce such percentage increase by the MFP adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. In response to
the request that we ``mitigate'' any potentially negative effects of
the MFP adjustment, we reiterate that we are required to apply the MFP
adjustment to the AIF in the manner specified by the ACA, and we are
not authorized by statute to implement measures to mitigate the effects
of this adjustment. We note that certain temporary payment add-ons,
currently codified at section 1834(l)(12) and (13) of the Act and at
section 146(b)(1) of the MIPAA, were extended by the ACA through
December 31, 2010 (see section VI.F(1) and (3). of this final rule). To
date, Congress has not extended these payment add-ons beyond December
31, 2010. Therefore, we are finalizing the methodology for applying the
MFP adjustment to the AIF for the AFS as described in the proposed
rule. We did not receive any comments regarding the proposed changes to
Sec. 414.610(f) and Sec. 414.620 as discussed above. Therefore, we
are revising the regulation text in Sec. 414.610(f) and Sec. 414.620
as proposed, with the following minor technical change. In Sec.
414.610(f), for clarification purposes, we have made a technical
revision to refer to the definition of the productivity adjustment in
section 1886(b)(3)(B)(xi)(II) of the Act.
c. Clinical Laboratory Fee Schedule
Section 1833(h)(2)(A)(i) of the Act, as amended by section 3401(l)
of the ACA, states that the Secretary shall set the CLFS ``for the 12-
month period beginning July 1, 1984, adjusted annually (to become
effective on January 1 of each year) by, subject to clause (iv) [as
added by the ACA], a percentage increase or decrease equal to the
percentage increase or decrease in the Consumer Price Index for All
Urban Consumers (United States city average) minus, for each of the
years 2009 through 2010, 0.5 percentage points''. Therefore, the
adjustment to the fee schedule can be an increase or a decrease.
Section 3401(l) of the ACA also adds new clause (iv) that applies
in CY 2011 and each subsequent year. This clause requires the Secretary
to reduce the adjustment in clause (i): (1) By the MFP adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act for 2011 and each
subsequent year and (2) by 1.75 percentage points for each year of 2011
through 2015 (the ``percentage adjustment''). However, section 3401(l)
of the ACA states that the MFP adjustment will not apply in a year
where the adjustment to the fee schedule determined under clause (i) is
zero or a percentage decrease for a year. Further, the application of
the MFP adjustment shall not result in an adjustment to the fee
schedule under clause (i) of less than zero for a year.
Therefore, we proposed to apply the MFP adjustment as follows:
If the CPI-U update factor is positive, it would be
reduced by the MFP adjustment. However, if application of the MFP
adjustment would result in a negative update, the update would be held
to zero.
If the CPI-U update factor is zero or negative, the MFP
adjustment would not be applied.
Section 3401(l) of the ACA also states that the application of the
percentage adjustment may result in an adjustment to the fee schedule
under clause (i) being less than zero for a year and may result in
payment rates for a year being less than such payment rates for the
preceding year. Therefore, we are applying the percentage reduction of
1.75 percentage points to any adjustment to the fee schedule under the
CLFS as directed by section 3401(l) of the ACA.
Table 64 provides illustrative examples of how we proposed these
adjustments would be applied to fees under the CLFS.

Table 64--Examples of the Application of the Multifactor Productivity Adjustment to the Clinical Lab Fee
Schedule
----------------------------------------------------------------------------------------------------------------
A B C D E

CPI-U-------------------------MFP--------------Productivity------------------(-1.75%)------Resultant change to--
Adjustment adjusted update Percentage point CLFS
reduction
----------------------------------------------------------------------------------------------------------------
................. Greater of 0.0% or ....................... Col. C-Col. D
(Col. A)-(Col. B)
----------------------------------------------------------------------------------------------------------------
2.0% 1.3% 0.7% -1.75% -1.05%
0.0% N/A 0.0% -1.75% -1.75%
-2.0% N/A 0.0% -1.75% -1.75%
----------------------------------------------------------------------------------------------------------------

We did not receive any public comments on the proposed methodology
for applying the MFP adjustment and the percentage adjustment to the
CPI-U update factor for the CLFS. Therefore, we are finalizing the
methodology for applying the MFP adjustment and the percentage
adjustment to the CPI-U update factor for the CLFS as described in the
proposed rule.
d. DMEPOS Fee Schedule
Sections 1834(a)(14), 1834(h)(4), and 1842(s)(1) of the Act mandate
annual updates to the fee schedule amounts established in accordance
with these respective sections for covered items of durable medical
equipment defined in section 1834(a)(13) of the Act, prosthetic
devices, orthotics, and prosthetics defined in section 1834(h)(4)(B)
and (C) of the Act, and parenteral and enteral nutrients, equipment,
and supplies described in section 1842(s)(2)(D) of the Act. The annual
updates for 2011 for these sections are based on the percentage
increase in the CPI-U for the 12-month period ending with June 2010.
The annual updates for years subsequent to 2011 will be based on the
percentage increase in the CPI-U for the 12-month period ending with
June of the previous year (that is, June 2011 for 2012, June 2012 for
2013, etc.). Since 1990 for durable medical equipment, prosthetic
devices, orthotics, and prosthetics and since 2003 for

[[Page 73399]]

parenteral and enteral nutrients, equipment, and supplies, we have
notified the public of these annual fee schedule updates through
program instructions.
Section 3401(m) of the ACA amends section 1834(a)(14) of the Act to
add a new subparagraph (L) which provides that, for CY 2011 and each
subsequent year, the fee schedule update factor based on the CPI-U for
the 12-month period ending with June of the previous year is to be
reduced by the MFP adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (as discussed previously). Section
3401(m) of the ACA further amends section 1834(a)(14) of the Act to
state that the application of subparagraph (L) (that is, the reduction
of the CPI-U percentage increase by the MFP adjustment) may result in
that percentage increase being less than zero for a year, and may
result in payment rates for a year being less than such payment rates
for the preceding year.
Section 3401(n) of ACA amends section 1834(h)(4)(A) of the Act to
add a new clause (xi) which provides that, for CY 2011 and each
subsequent year, the fee schedule update factor based on the CPI-U for
the 12-month period ending with June of the previous year is to be
reduced by the MFP adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (as discussed previously). Section
3401(n) of the ACA further amends section 1834(h)(4) of the Act to
state that the application of subparagraph (A)(xi) (that is, the
reduction of the CPI-U percentage increase by the MFP adjustment) may
result in that percentage increase being less than zero for a year, and
may result in payment rates for a year being less than such payment
rates for the preceding year.
Section 3401(o) of ACA amends section 1842(s)(1) of the Act to add
a new subparagraph (B) and clause (ii) which provides that, for CY 2011
and each subsequent year, the fee schedule update factor based on the
CPI-U for the 12-month period ending with June of the previous year is
to be reduced by the MFP adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act (as discussed above). Section 3401(o)
of the ACA further amends section 1842(s)(1) of the Act to state that
the application of subparagraph (B)(ii) (that is, the reduction of the
CPI-U percentage increase by the MFP adjustment) may result in that
percentage increase being less than zero for a year, and may result in
payment rates for a year being less than such payment rates for the
preceding year.
The MFP adjustments to the CPI-U percentage increases used in
calculating the fee schedule adjustment factors for these DMEPOS items
and services as mandated by sections 3401(m), (n), and (o) of ACA are
simple mathematical calculations and are ministerial in nature.
Therefore, we plan to implement these adjustments for 2011 and
subsequent years as part of the annual program instructions related to
the DMEPOS fees schedule updates.
Comment: Several commenters stated that there were flawed
assumptions underlying the statutory requirements of section 3401 of
the ACA. Since the MFP measures the contributions to productivity of
all sectors involved in production, the commenters argued that the
indiscriminate application of the MFP to DMEPOS items was fundamentally
flawed.
Response: As discussed previously, sections 3401(m), (n), and (o)
of the ACA require us to implement the MFP adjustments to the CPI-U
percentage increases for DMEPOS items and services. Therefore, we are
finalizing our proposal to apply the MFP adjustments to the CPI-U
percentage increases for DMEPOS items and services for calendar year
2011 and subsequent years.

Q. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a
Personalized Prevention Plan

1. Background and Statutory Authority
a. Medicare Coverage of Preventive Physical Examinations and Routine
Checkups
Section 1862(a)(7) of the Act explicitly prohibits Medicare payment
for routine physical checkups with certain exceptions. One exception is
for the Initial Preventive Physical Exam (also referred to as the
``Welcome to Medicare'' exam) established for new beneficiaries
effective for services furnished on or after January 1, 2005. Section
4103 of the ACA has provided another exception to section 1862(a)(7) of
the Act. Congress expanded Medicare coverage under Part B to include an
Annual Wellness Visit (AWV) Providing Personalized Prevention Plan
Services (hereinafter referred to as the annual wellness visit) in
sections 1861(s)(2)(FF) and 1861(hhh) of the Act. This expanded benefit
is effective on January 1, 2011.
Preventive care has become an increasing focus of the Medicare
program. For instance, section 101 of the MIPPA expanded Medicare's
authority to establish coverage for additional preventive services that
meet specified criteria. Among other things, the AWV will encourage
beneficiaries to obtain the preventive services already covered by
Medicare, and that are appropriate for each individual beneficiary.
b. Requirements for Coverage of an Annual Wellness Visit
Section 4103 of the ACA provides for coverage of an AWV, which
includes and/or takes into account a health risk assessment (HRA), and
creates a personalized prevention plan for beneficiaries, subject to
certain eligibility and other limitations. Section 4103 of the ACA also
requires the identification of elements that must be provided to a
beneficiary as part of the first visit for personalized prevention plan
services and requires the establishment of a yearly schedule for
appropriate provision of such elements thereafter.
The ACA specifies elements to be included in a personalized
prevention plan, including establishment of, or update to, the
individual's medical and family history, a list of the individual's
current providers and suppliers and medications prescribed for the
individual; measurement of height, weight, body-mass index (BMI) or
waist circumference, and blood pressure; detection of any cognitive
impairment; establishment or update of an appropriate screening
schedule for the next 5 to 10 years; establishment or update of a list
of risk factors and conditions (including any mental health conditions)
for which interventions are recommended or underway; and furnishing of
personalized health advice and referral, as appropriate, to health
education or preventive counseling services or programs. The ACA also
permits the Secretary to add other elements to the AWV determined to be
appropriate.
2. Regulatory Revisions--Summary of Proposed Rule and Comments
The following is a summary of the provisions of the proposed rule
and of the comments received. We received 75 public comments on the
proposed rule regarding the AWV. Commenters included national and state
professional associations, medical societies and national medical
advisory groups, hospital associations and hospitals, physicians,
registered dietitians, occupational therapists, senior advisory groups,
health insurance associations, manufacturers, and others. While a
number of commenters expressed concern that the proposal was either too
prescriptive, not sufficiently targeted to development of an
individual's personalized prevention plan, or was

[[Page 73400]]

not broad enough to include additional screening or prevention
services; a large majority of commenters applauded CMS' efforts in
developing the rule and generally supported its major elements. Many
suggested clarification and revision of the rule in a number of
different areas, including the proposed definitions of ``detection of
any cognitive impairment,'' and ``health professional,'' and the
components of the first and subsequent AWVs. One special concern of a
number of commenters was related to the health risk assessment (HRA).
Some provisions of section 4103 of the ACA require the HRA be included
in the new AWV, which is effective January 1, 2011. Other provisions of
section 4103 of the ACA give the Secretary a longer period of time to
develop an HRA in consultation with relevant groups and entities.
a. Revisions to Sec. 411.15, Particular Services Excluded From
Coverage
To conform the regulations to the statutory requirements of the
ACA, we proposed to revise Sec. 411.15 by specifying an exception to
the routine physical checkups exclusion from coverage in Sec.
411.15(a)(1) and modifying Sec. 411.15(k)(15). We proposed to add a
provision to permit coverage of AWVs that meet the eligibility
limitations and the conditions for coverage we are specifying in Sec.
410.15 (Annual Wellness Visit Providing Personalized Prevention Plan
Services).
Coverage of the AWV is furnished under Medicare Part B only. As
provided in the statute, this new coverage allows payment for an AWV if
provided on or after January 1, 2011 for an individual who is no longer
within 12 months after the effective date of his or her first Medicare
Part B coverage period, and has not received either an IPPE or an AWV
within the past 12 months.
b. Revisions to Part 410, Subpart B--Medical and Other Health Services
We proposed to add Sec. 410.15, Annual wellness visits providing
Personalized Prevention Plan Services: Conditions for and limitations
on coverage, to codify the coverage of the annual wellness visit
providing personalized prevention plan services.
We proposed to define several terms in Sec. 410.15(a), including:
(1) Detection of any cognitive impairment; (2) Review of the
individual's functional ability and level of safety; (3) Health
professional; (4) Establishment of, or update to the individual's
medical and family history; (5) Eligible beneficiary; (6) First annual
wellness visit providing personalized prevention plan services; and (7)
Subsequent annual wellness visit providing personalized prevention plan
services.
Further, the ACA allows the addition of any other element
determined appropriate by the Secretary for inclusion in an AWV. We
reviewed the relevant medical literature, current clinical practice
guidelines, and the recommendations of the United States Preventive
Services Task Force (USPSTF). Pursuant to that review, we proposed to
add depression screening and functional status screening as elements of
the first AWV only. In its December 2009 Recommendation Statement, the
USPSTF recommends screening adults for depression when staff-assisted
depression care supports are in place to assure accurate diagnosis,
effective treatment and follow-up (Grade: B recommendation). That is,
the USPSTF recommends the service; there is high certainty that the net
benefit is moderate or there is moderate certainty that the net benefit
is moderate to substantial.
The USPSTF is currently updating its 1996 recommendation regarding
screening for hearing impairment in older adults as well as its
recommendation on falls in the elderly. Until those recommendations can
be published, functional status screening (including assessment of
hearing impairment, ability to successfully perform activities of daily
living, fall risk, and home safety) appears supportable by evidence
only for the first AWV.
We also proposed that the definition of the term ``Establishment
of, or an update to the individual's medical and family history''
include more than a list of all of an individual's prescribed
medications as provided in the statute, but also supplements such as
vitamins and calcium that an individual may be exposed to or use.
Supplements such as these are commonly used by many beneficiaries and
the medical literature supports that their use be closely monitored by
health professionals because they can interact with prescribed
medications and may result in unintended medical problems in individual
cases. The statute expressly permits the Secretary to add other
elements such as this to the AWVs.
To facilitate future consideration of coverage of additional
elements in the definitions of the first and subsequent AWVs in Sec.
410.15(a), we proposed that the determination of other required
elements for those purposes will be made through the national coverage
determination (NCD) process. The NCD process, as described in section
1862(l) of the Act, is evidence based, transparent, and furnishes the
opportunity for public comment.
(1) Definitions
We proposed to add the following definitions to Sec. 410.15(a):
Detection of any cognitive impairment, for purposes of
this section, means assessment of an individual's cognitive function by
direct observation, with due consideration of information obtained by
way of patient report, concerns raised by family members, friends,
caretakers, or others.
Comment: A number of commenters strongly supported the mandatory
inclusion of ``detection of any cognitive impairment'' in the new AWV,
but several suggested the proposed definition did not go far enough and
needed to be clarified. One commenter suggested that the definition was
``too vague and may be interpreted as optional by a provider unless a
subjective memory complaint is raised by the individual or a concern is
raised by family members, friends, caretakers, or others'', and that a
brief cognitive screening test was necessary ``to accurately identify
the presence of cognitive deficits, and to indicate whether additional
testing is necessary * * *'' Another commenter expressed concern that
``physicians cannot accurately assess cognitive function * * * by
relying on direct observation or by report of the patient or
knowledgeable informant.'' The commenter cited several recent
publications and their own experience in support of revising the
definition to include use of a standardized screening test. A number of
commenters supporting the importance of the ``detection of cognitive
impairment'' element, however, agreed with the definition that is used
in the proposed rule, which does not require a standardized screening
tool.
Response: We agree with the commenters that the ``detection of
cognitive impairment'' is an important element of the AWV. As Boustani
and colleagues (Ann Internal Medicine 2003;138:927-937) noted:
``Dementia causes a high burden of suffering for patients, their
families, and society. For patients, it leads to increased dependency
and complicates other comorbid conditions. For families, it leads to
anxiety, depression, and increased time spent caring for a loved one.
The annual societal cost of dementia is approximately $100 billion
(health care and related costs as well as lost wages for patients and
family caregivers).''
Several commenters suggested revising the proposed definition by
the

[[Page 73401]]

addition of a standardized screening tool. With the considerable
variability in the range and causes of cognitive impairment, it is
difficult to more specifically define this element without limiting it
to specific diseases such as Alzheimer's since dementia in and of
itself is broadly defined. The American Psychiatric Association stated:
``the essential features of a dementia are acquired multiple cognitive
deficits that usually include memory impairment and at least one of the
following phenomena in the absence of a delirium that might explain the
deficit: aphasia, apraxia, agnosia, or a disturbance in executive
functioning (the ability to think abstractly and to plan, initiate,
sequence, monitor, and stop complex behavior) (http://www.psychiatryonline.com/content.aspx?aID=152634#152634).'' However, an
evidence-based, standardized screening tool is not currently available.
The USPSTF noted: ``most screening tests have been evaluated in studies
with small sample sizes, and the populations of patients on whom
screening instruments have been tested have varied greatly, making it
difficult to determine the overall performance of screening tests for
dementia'' (http://www.uspreventiveservicestaskforce.org/3rduspstf/dementia/dementrr.pdf). They concluded ``that the evidence is
insufficient to recommend for or against routine screening for dementia
in older adults (I grade).'' Since there is no nationally recognized
screening tool for the detection of cognitive impairments at the
present time, we are adopting the language in Sec. 410.15(a) as
proposed.
We disagree with one of the commenter's assertions that, in
general, a physician cannot accurately assess cognitive function by
direct observation or report of the patient or by report of the patient
knowledgeable informant. We believe that physicians can use their best
clinical judgment in the detection and diagnosis of cognitive
impairments, along with determining whether additional resources may
need to be used in the course of screening and treatment of the
patient. We will continue to actively monitor advancements in
screening, collaborate with the USPSTF, and will consider revising this
element if the evidence is sufficient and a standardized screening test
becomes available.
Review of the individual's functional ability and level of
safety, for purposes of this section includes, at a minimum, assessment
of the following topics:

++ Hearing impairment;
++ Ability to successfully perform activities of daily living;
++ Fall risk;
++ Home safety.

Comment: One commenter asked CMS to add ``assessment of level of
support'' to the proposed definition of ``review of the individual's
functional ability and level of safety'' to recognize that the
availability of a caregiver is an important indication of a
beneficiary's ability to function and of their level of safety.
Response: We agree that family caregivers play an important role in
the lives of the individuals they care for and support. However, we
believe that the term as defined in the proposed rule is flexible
enough to include a discussion of the availability of a caregiver as
part of the review of functional ability and level of safety, if
determined appropriate by the health professional furnishing the AWV.
Therefore, we are not adopting this public comment and are adopting the
definition as proposed.
Health professional, for purposes of this section means:
++ A physician who is a doctor of medicine or osteopathy (as
defined in section 1861(r)(1) of the Act); or
++ A practitioner as described in clause (i) of section
1842(b)(18)(C) of the Act, that is, a physician assistant, nurse
practitioner, or clinical nurse specialist (as defined in section
1861(aa)(5) of the Act); or
++ A medical professional (including a health educator, registered
dietitian, or nutritionist) or a team of medical professionals, who are
working under the supervision of a physician as defined in this
definition.
Comment: A number of commenters requested clarification of specific
elements of the definition of the term ``Health professional'' and
offered specific suggestions for revisions that might be made in the
definition in the final rule. One commenter suggested that section 4103
of the ACA provided that the AWV could be performed by a health
professional or a team of health professionals such as a registered
nurse that works under the supervision of a physician. When registered
nurses or other medical professionals who are not Medicare-recognized
providers or practitioners perform the AWV under the supervision of a
physician, the commenter assumes that the visit ``would be billed by
the supervising physician who may or may not see the patient during the
visit.'' The commenter believed that because the AWV has its own
benefit category then Medicare payments would not fall under the
``incident to'' benefit (section 1861(s)(2)(B) of the Act and the
'incident to' criteria would not need to be met.
Response: We agree with the commenter that the AWV has its own
benefit category as provided in section 1861(s)(2)(FF) and section 1861
(hhh) of the Act and, therefore, is not subject to the ``incident to''
rules. The commenter is also correct that our intent is that where the
wellness visit is performed by a ``team of medical professionals
working under the supervision of a physician'' it is the supervising
physician who would bill Medicare Part B for the visit. In this final
rule, we are clarifying that the visit would be furnished under the
``direct supervision'' (as defined in 42 CFR 410.32(b)(3)(ii)), of a
physician (as defined in paragraph (i) of this definition). Direct
supervision in the office setting means that the physician must be
present in the office suite and immediately available to furnish
assistance and direction throughout the performance of the procedure.
It does not mean that the physician must be present in the room when
the procedure is performed. In response to the public comment, we are
amending the definition of the term ``health professional'' in the
final rule to read in paragraph (iii) as follows:
``A medical professional (including a health educator, a registered
dietitian, or nutrition professional, or other licensed practitioner or
a team of such medical professionals, working under the direct
supervision (as defined in 42 CFR 410.32(b)(3)(ii)) of a physician as
defined in paragraph (i) of this definition.''
Comment: A commenter asserted that the definition of ``health
professional'' should recognize other potential members of the team
beyond those listed in the examples in the statute. The commenter
recommends that CMS ``specify who may or should be a part of the team
and should define `medical professional' as licensed health
practitioners whose services are specifically covered and regulated by
Medicare. Otherwise, in the commenter's view, paraprofessionals, non-
licensed providers or others may be inappropriately used as part of the
team. The commenter supported the requirement ``that the team should be
directed by a physician,'' but believes ``CMS should provide some
standards for the members of the team as a protection for consumers and
to assure that funding for this visit will be spent on authentic,
appropriate and regulated services.'' The commenter also suggested that
occupational therapists be specifically included as a potential
component of the team.

[[Page 73402]]

Another commenter asked CMS to clarify ``how the required tasks in
the visit will be performed and how care coordination will occur among
the eligible medical professionals and/or team that provides the AWV.''
Response: While we appreciate the commenters' concerns, we are not
assigning particular tasks or restrictions for specific members of the
team in this final rule. We believe it is better for the supervising
physician to assign specific tasks to qualified team members (as long
as they are licensed in the State and working within their state scope
of practice). This approach gives the physicians and the team the
flexibility needed to address the beneficiary's particular needs on a
particular day. It also empowers the physician to determine whether
specific medical professionals (such as occupational therapists) who
will be working on his or her wellness team are needed on a particular
day. The physician is able to determine the coordination of various
team members during the AWV.
Comment: One commenter urged CMS to revise its proposed definition
of ``Health professional'' to include the phrase ``practicing in any
particular patient care setting.'' The commenter believed that this
clarification is needed to ``encourage retail based practitioners to
provide these services, thereby making this benefit more appealing for
patients.'' The commenter suggested that ``retail based health
practitioners are uniquely positioned to ensure the optimal utilization
of this new benefit.''
Response: Although we are interested in encouraging the maximum use
of the AWV and encourage all of the health professionals listed in
section 1861(hhh)(3) of the Act that are qualified to furnish this
service to participate in providing this part B service, we are not
adopting the commenter's suggestion to include the phrase ``practicing
an any particular patient care setting.'' This particular phrase is not
used in section 1861(hhh)(3) of the Act, which instead references
specific health professionals that may furnish the AWV without regard
to a particular physical location. Moreover, we note that the phrase
``any particular patient care setting'' is ambiguous, and may in fact
unintentionally narrow the availability of the benefit or raise
unnecessary questions regarding the setting. Therefore, we are not
adopting the commenter's suggested revision of that definition to
include language on specific patient care settings.
Comment: One commenter noted that certified nurse-midwives (CNMs)
are not specifically mentioned in the ACA as it relates to the AWV,
though nurse practitioners and clinical nurse specialists are
enumerated among practitioners eligible to participate. The commenter
requested that CMS review the education, background and scope of
practice services under the Medicare program and ensure that CNMs are
clearly eligible to provide the Medicare AWV.
Response: Congress defined the term ``health professional'' as
including certain practitioners ``described in clause (i) of section
1842(b)(18)(C)'' of the Act. Clause (i) specifically includes physician
assistants (PAs), nurse practitioners (NPs) and clinical nurse
specialists. CNMs, in contrast, are identified in clause (iii) of 1842
(b)(18)(C) of the Act. Given the specificity of the cross-reference to
only clause (i), we presume that Congress acted intentionally by not
including a reference to clause (iii). Thus, we believe additional
legislation would be needed to recognize CNMs as a ``health
professional'' under this section. However, we note, that it is
possible that a CNM could be chosen by a physician as a member of the
team of professionals under the physician's supervision.
Comment: One commenter requested that CMS clarify the language of
the proposed rule in the definition of ``medical professional'' in
Sec. 410.31(a). Section 4103 of the ACA uses the terms ``registered
dietitian'' or ``nutrition professional'' in its definition of
``medical professional'' eligible to be involved in the AWV. The
proposed rule used the term ``nutritionist'' instead of ``nutrition
professional.'' The commenter asks CMS to replace the term
``nutritionist'' with ``nutrition professional'' in Sec. 410.15(a).
Response: We agree with the commenter and we are replacing the term
``nutritionist'' with the term ``nutrition professional'' in Sec.
410.15(a) of the final rule, which is consistent with the language used
in section 4103 of the ACA.
Comment: One commenter is concerned about the CMS proposal to
require the term ``physician'' for purposes of the definition of
``health professional'' to be either a doctor of medicine or a doctor
of osteopathy as defined in section 1861(r)(1) of the Act. The
commenter suggests that we use the full definition of a ``physician as
defined in section 1861(r) of the Act.
Response: Section 4103 of the ACA does not specifically define what
type of physician is eligible for performing or supervising the team of
health professionals who will be performing or supervising the AWV. In
developing the proposed rule, we considered the various types of
physicians that are identified in section 1861(r)(2), (r)(3), (r)(4),
and (r)(5) of the Act. These include doctors of dental surgery, doctors
of podiatric medicine, doctors of optometry, and chiropractors, whose
scope of medical practice is generally limited by State law to a
particular part (or parts) of the human anatomy. Given the State
licensing restrictions, some individuals who are physicians for certain
limited purposes under section1861(r) of the Act could exceed their
scope of practice if they attempted to furnish the AWV. Based on this
information, we are leaving the definition of a physician unchanged in
the final rule.
Establishment of, or an update to the individual's medical
and family history, for purposes of this section, means, at minimum,
the collection and documentation of the following:
++ Past medical and surgical history, including experiences with
illnesses, hospital stays, operations, allergies, injuries, and
treatments.
++ Use or exposure to medications and supplements, including
calcium and vitamins.
++ Medical events experienced by the beneficiary's parents and any
siblings and children, including diseases that may be hereditary or
place the individual at increased risk.
Comment: A number of commenters requested that additional items be
included in the definition of the term ``Establishment of, or an update
to the individual's medical and family history,'' such as tobacco use,
sexual history, history and results of pelvic exams, and falls history.
Response: Our proposed definition at Sec. 410.15(a) was not
intended to establish an exhaustive list of the elements of an
individual's medical and family history. We included the phrase ``at
minimum'' to reflect that the listed criteria represent a floor and not
a ceiling on the items included in the medical and family history. We
agree that the items of additional information identified by the
commenters are relevant and could be included in the medical and family
history that is maintained by the health professional for the Medicare
beneficiary. However, we believe that the term as defined in the
proposed rule is flexible enough to encompass the additional items
requested by the commenters. Therefore, we are not adopting the
commenters' specific language and are implementing the proposed
definition in this final rule.
Eligible beneficiary, for purposes of this section, means
an individual who is no longer within 12 months after the

[[Page 73403]]

effective date of his or her first Medicare Part B coverage period, and
has not received either an initial preventive physical examination or
an AWV providing a personalized prevention plan within the past 12
months.
Comment: Several commenters suggested that CMS misinterpreted the
eligibility criteria for the AWV and its relationship to the one-time
initial preventive physical examination defined in section 1861(ww)(1)
of the Act, which is only covered during the first 12 months after a
beneficiary's enrollment in Medicare Part B takes effect.
In suggesting that CMS' proposed definition was inappropriate, one
commenter pointed to statutory language that states: ``A beneficiary
shall only be eligible to receive an initial preventive physical
examination (as defined under subsection (ww)(1)) at any time during
the 12-month period after the date that the beneficiary's coverage
begins under Part B and shall be eligible to receive personalized
prevention plan services under this subsection provided that the
beneficiary has not received such services within the preceding 12
month period.'' The commenter argued that this language intends either
an initial preventive physical examination or an AWV to be available
during the 12-month period after an individual's Part B coverage begins
provided the individual has not received either service within the
preceding 12-months. To further bolster this argument, the commenter
points to clause (ii) of paragraph (G) directing the Secretary to
``establish procedures to make beneficiaries aware of the option to
select an initial preventive physical examination or personalized
prevention plan services during the period of 12-months after the date
that a beneficiary's coverage begins under Part B, which shall include
information regarding any relevant differences between such services.''
Response: The statutory text cited by the commenter fails to
reflect a later Congressional amendment. Specifically, Congress
replaced the language of paragraph (G) by section 10402(b) of the ACA.
That amendment replaced the text cited by the commenter so that the
version of paragraph (G) that was enacted into law reads: ``A
beneficiary shall be eligible to receive only an initial preventive
physical examination (as defined under subsection (ww)(1)) during the
12-month period after the date that the beneficiary's coverage begins
under Part B and shall be eligible to receive personalized prevention
plan services under this subsection each year thereafter provided that
the beneficiary has not received either an initial preventive physical
examination or personalized prevention plan services within the
preceding 12-month period.''
This amendment clarifies that only an initial preventive physical
examination is covered during the 12-month period after an individual's
Part B coverage begins, and that coverage of the new AWVs begins during
the individual's second year of Part B coverage. In other words, they
were intended to be sequential, not concurrent, benefits. We believe
the proposed definition of ``eligible beneficiary'' included in the
proposed rule correctly implements this aspect of sections 4103 and
10402(b) of the ACA. Therefore, we are finalizing the proposed
definition without accepting the commenters' suggestion.
(2) Requirements of the First Annual Wellness Visit Providing
Personalized Prevention Plan Services
We proposed that the first AWV providing personalized prevention
plan services for purposes of this benefit include the following:
Establishment of an individual's medical and family
history.
Establishment of a list of current providers and suppliers
that are regularly involved in providing medical care to the
individual.
Measurement of an individual's height, weight, body mass
index (or waist circumference, if appropriate), blood pressure, and
other routine measurements as deemed appropriate, based on the
individual's medical and family history.
Detection of any cognitive impairment that the individual
may have.
Review of the individual's potential (risk factors) for
depression, including current or past experiences with depression or
other mood disorders, based on the use of an appropriate screening
instrument for persons without a current diagnosis of depression, which
the health professional as defined in this section may select from
various available screening questions or standardized questionnaires
designed for this purpose and recognized by national professional
medical organizations.
Review of the individual's functional ability and level of
safety, based on direct observation or the use of appropriate screening
questions or a screening questionnaire, which the health professional
as defined in this section may select from various available screening
questions or standardized questionnaires designed for this purpose and
recognized by national professional medical organizations.
Establishment of the following:
++ A written screening schedule, such as a checklist, for the next
5 to 10 years as appropriate, based on recommendations of the USPSTF
and the Advisory Committee on Immunization Practices, and the
individual's health status, screening history, and age-appropriate
preventive services covered by Medicare.
++ A list of risk factors and conditions for which primary,
secondary or tertiary interventions are recommended or are underway,
including any mental health conditions or any such risk factors or
conditions that have been identified through an initial preventive
physical examination (as described under Sec. 410.16), and a list of
treatment options and their associated risks and benefits.
Furnishing of personalized health advice to the individual
and a referral, as appropriate, to health education or preventive
counseling services or programs aimed at reducing identified risk
factors and improving self management, or community-based lifestyle
interventions to reduce health risks and promote self-management and
wellness, including weight loss, physical activity, smoking cessation,
fall prevention, and nutrition.
Any other element determined appropriate through the
National Coverage Determination process.
Comment: A number of commenters were supportive of the proposal to
use the national coverage determination process and rely on the USPSTF
recommendations in developing the definitions of the first and
subsequent AWV definitions, along with the addition of any other
elements in the future, since the services need to be based on
evidence. One commenter suggested that CMS publish a notice in the
Federal Register about consideration of other preventive services via
the NCD process. The commenter expressed concern that many groups and
members of the public were more familiar with the regulatory
notification process than the NCD process.
Response: We appreciate the commenter's concerns regarding
receiving timely information about topics that CMS is considering for
coverage of preventive services via the NCD process. As discussed in
the preamble, the NCD process is an evidence-based, transparent process
and furnishes the opportunity for public comment, and is described in
section 1862(l) of the Act. The CMS Web site at http://www.cms.gov/mcd/index_list.asp?list_type=nca contains a

[[Page 73404]]

list of all national coverage analyses that are currently under
consideration. Those interested in receiving information via e-mail
regarding national coverage analyses under consideration can sign up to
receive e-mail notifications via the CMS coverage listserv at http://www.cms.gov/InfoExchange/03_listserv.asp#TopOfPage. Given the
relatively fast timeline described in section 1862(l) of the Act, we do
not believe it is feasible to add a requirement for publication of a
notice in the Federal Register whenever an NCD is opened. Therefore, we
are not adopting the public comment. Please note that we do publish a
listing in the Federal Register of all NCDs that are issued. This
information is included in the quarterly notice issued pursuant to
section1871(c) of the Act.
Comment: Several commenters noted that we did not include the
health risk assessment (HRA) in our proposal that section 4103 of the
ACA ultimately requires to be part of the AWV. Several of these
commenters strongly supported the CMS approach of not immediately
implementing the HRA requirement on January 1, 2011. Some commenters
noted that a separate ACA provision also concerns the establishment of
an HRA, but used later deadlines. Specifically, section 1861(hhh)(4)(A)
of the Act requires consultation to develop publically available
guidelines for HRAs by March 23, 2011. One commenter noted that ``the
relative recent enactment of the Affordable Care Act provided CMS
little time to establish standard processes related to a health risk
assessment (HRA).'' Another commenter stressed the need for a
standardized HRA model or models that is/are recognized and accepted
nationally. Another commenter urged us to act as expeditiously as
possible in a consultative way by directly engaging the major medical
organizations and stakeholders who represent physicians and other
clinicians who see Medicare beneficiaries. One commenter recommended
that the ``HRA program should also be pilot-tested before widely
imposed to determine such critical factors as the effectiveness of the
guidelines and the administrative burden imposed on the physicians.''
However, other commenters expressed the view that the HRA is such a
fundamental element of the new AWV that it should be added to the final
rule and required beginning January 1, 2011. One commenter indicated
that the absence of an HRA ``will delay the opportunity to improve
beneficiaries' health and to control costs as a result. We believe that
the HRA is the lynchpin that makes the wellness visit more than another
office visit and should be included as a required element beginning
January 1, 2011.'' Several of these commenters suggested that CMS
should rely on the National Committee for Quality Assurance (NCQA)
certification process, the Utilization Review Accreditation Committee
(URAC) accreditation process, or another certification process that
already exists effective January 1, 2011, at least as an interim
measure.
Response: We agree with commenters that the HRA is an important
part of the AWV and we are working to fully implement this relevant
provision of the ACA. However, because the statute has specified a time
frame and procedures that require consultation with relevant groups and
entities prior to publication of the required HRA guidelines, it is not
possible to complete those procedures by January 1, 2011. Moreover, we
do not believe it would be prudent to mandate an interim HRA without
completing the consultation process that Congress has specifically
required. The point of the consultation is to achieve a greater
national consensus on the HRA to be used. As one of the large physician
specialty groups has noted during the public comment period, a
standardized HRA is needed to ``ensure use of appropriate and robust
HRA from a marketplace where considerable variation exists today.'' We
agree with this commenter that what is needed is an HRA ``that has been
standardized by the Department of Health and Human Services.'' The
development of an evidence-based, standardized model, nonetheless
requires extensive work and input from a number of public agencies,
professional societies and private organizations. It is important to
carefully complete that process so that the evidence-based standard
will have a sound scientific foundation and broad acceptance.
Consistent with the statutory deadlines, and one commenter's
suggestion ``that the Secretary of HHS expedite the development of a
standardized HRA,'' CMS is collaborating with the Centers for Disease
Control and Prevention (CDC) which is directed by section 4004(f) of
the ACA to develop a personalized prevention plan tool and has an in-
depth knowledge of HRAs. We understand that CDC is planning to convene
an open scientific meeting in Atlanta at the beginning of 2011 to
facilitate that development. This meeting should allow broad public
input into the development of an evidence-based standardized HRA, as
recommended by the American Medical Association (AMA) which urged ``CMS
to continue to develop the HRA guidelines, in consultation with the AMA
and other relevant stakeholders representing physicians,'' and the
American College of Physicians (ACP) which recommended ``that the
agency engage directly with the most relevant stakeholders * * * to
ensure that the HRA fulfills the vital role of promoting optimal
preventive care and related interventions envisioned by the ACA.'' CMS
has also commissioned a technology assessment from the Agency for
Healthcare Research and Quality (AHRQ) to be completed by the end of
2010 that will help in the development of the HRA guidelines and model.
While commenters have suggested that we require the use of one or
more currently available assessment tools until an evidence-based
standardized model is available, we believe it would be premature and
inefficient to make such a recommendation at this time without adequate
scientific review and broader stakeholder input. As noted in the
proposed rule, HRA guidelines and standards are being developed by the
CDC and when a model HRA instrument is available and determined by the
Secretary to be appropriate for the use of Medicare beneficiaries, we
will revise these regulations to include the HRA as an element in the
definition of the AWV.
Comment: Several comments expressed concern that there were too
many required elements in the definition of the ``First annual wellness
visit'' and that the definition should be modified so that some of the
elements are discretionary based on an individual's medical history or
the results of an HRA and one suggested that CMS should ``clarify the
role that the HRA care plan plays in addressing these elements as a
prelude to the office visit.'' This commenter noted that the proposed
CMS definition ``assumes that the physician does not already know the
patient's medical and family history or other providers and suppliers
involved in the patient's care'' which may not always be the case.
One commenter stated that the AWV ``is supposed to deliver a
service tailored to the specific needs of the patient based on some
combination of the HRA results, medical history, and practitioner
expertise. Some elements could be required for every patient because
the level of appropriateness does not vary much from patient to patient
based on age, gender, and other factors. However, there are some
elements the need for which varies greatly from patient to patient and
even over time.'' This commenter

[[Page 73405]]

recommended ``that CMS add general language stating that certain
elements can be addressed, at least to some degree, as part of the
HRA.''
Response: We agree that a physician's or other health
professional's need to include certain elements of the AWV may vary
with the professional's knowledge of the individual's medical and
family history and, in particular, with the results of an HRA, if
available. However, until HRA guidelines have been developed and a
standardized HRA model or models has/have been recognized and accepted
nationally by the Secretary for use by Medicare beneficiaries, we do
not believe it is appropriate to include more flexibility or
alternatives to the proposed elements of the first wellness visit.
Therefore, we are leaving the proposed elements (i) through (viii) of
the definition of the first AWV unchanged in this final rule.
(3) Requirements of Subsequent Annual Wellness Visits Providing
Personalized Prevention Plan Services
We proposed that subsequent AWVs providing personalized prevention
plan services for purposes of this benefit include the following:
An update of the individual's medical and family history.
An update of the list of current providers and suppliers
that are regularly involved in providing medical care to the
individual, as that list was developed for the first AWV providing
personalized prevention plan services.
Measurement of an individual's weight (or waist
circumference), blood pressure, and other routine measurements as
deemed appropriate, based on the individual's medical and family
history.
Detection of any cognitive impairment, as that term is
defined in this section, that the individual may have.
An update to both of the following:
++ The written screening schedule for the individual as that
schedule was developed at the first AWV providing personalized
prevention plan services.
++ The list of risk factors and conditions for which primary,
secondary or tertiary interventions are recommended or are under way
for the individual as that list was developed at the first AWV
providing personalized prevention plan services.
Furnishing of personalized health advice to the individual
and a referral, as appropriate, to health education or preventive
counseling services or programs as that advice and related services are
defined in paragraph (a) of this section.
Any other element determined through the NCD process.
We proposed that body-mass index (BMI) should be calculated at the
first AWV and may be recalculated at subsequent AWVs, if indicated.
Given the general stability of adult height, we would not expect the
BMI to meaningfully change in the absence of significant weight change.
In the proposed rule, we did not require measurement of the
individual's height in the subsequent annual visit.
We proposed to add two distinct elements to the definition of the
first AWV only: Depression screening and functional status and level of
safety assessment. Our review of the medical literature and the USPSTF
recommendations indicates that the optimum frequency for those services
is unknown. In the proposed rule, we stated we believe it would be
premature and beyond the current evidence to require depression
screening and functional status assessment included in the definition
of subsequent visits, but they may be performed at these visits, if
indicated.
Comment: A number of commenters expressed concern that the proposed
definition of the term ``Subsequent annual wellness visit * * *'' did
not include the depression screening and the functional ability and
level of safety screening, elements (v) and (vi), respectively, that
were included in the proposed definition of the term ``First annual
wellness visit.'' One commenter noted that ``while the USPSTF states
that the optimal interval for screening is unknown, it does recognize
that recurrent screening may be needed for certain patients.'' At a
minimum, the commenter suggested that ``the regulations should require
additional screening for depression after new chronic conditions are
diagnosed and when reduction in functioning is noted.'' The commenter
also indicated that yearly screening for functional ability and level
of safety ``is important to determine changes in functional impairments
identified in previous screening as well as any new limitations. Such
screening will assist in determining care plans, further assessments,
and other services to allow a beneficiary to remain in the community as
long as possible.''
Response: We agree that depression screening in older adults is
important. We have reviewed the USPSTF guidelines (http://www.uspreventiveservicestaskforce.org/uspstf09/adultdepression/addeprrs.htm) and have decided not to include it as a required element
for subsequent AWVs largely since the USPSTF states that ``the optimum
interval for screening for depression is unknown.'' In addition, the
USPSTF only recommends depression screening ``when staff-assisted
depression care supports are in place to assure accurate diagnosis,
effective treatment, and follow-up.'' It is unclear if these supports
are universally available in physician offices to allow adequate
routine screening at the AWV. The USPSTF further notes: ``recurrent
screening may be most productive in patients with a history of
depression, unexplained somatic symptoms, comorbid psychological
conditions (for example, panic disorder or generalized anxiety),
substance abuse, or chronic pain.'' If an individual is determined to
be in this category from prior screening, such as at the IPPE or
through an HRA, then it would appear appropriate on an individual basis
to continue screening and to tailor the AWV based on risk.
Regarding functional ability and safety, we agree that for certain
individuals, functional status and safety assessments (for example,
fall prevention) may be important to consider on a more routine basis.
For the general Medicare population, there are no A or B
recommendations by the USPSTF in these areas and thus we have decided
not to add functional status and safety assessments as universally
required elements for the subsequent AWV. The AWV does allow for an
individualized approach with a personalized prevention plan. For
certain individuals where these areas are determined to be priorities,
specific evaluations may be voluntary parts of subsequent visits. Since
we closely monitor the USPSTF recommendations for updates or changes,
if specific new or revised recommendations come out in the future, we
may consider modifications at that time.
Comment: Several commenters requested that we add additional
screening elements to the first and subsequent AWVs regarding: (1)
Alcohol use status; (2) Tobacco use or other substance use status; (3)
Sexual health and incontinence; (4) Physical activity level; (5) Risk
of falls; (6) Nutrition status including under nutrition and/or
malnutrition; (7) Vision and eye health; (8) an assessment for
osteoarthritis; and (9) assessment of gait and balance.
Response: We appreciate the suggestions provided. The intent of the
proposed definition for ``establishment of, or an update to the
individual's medical and family history'' means at a minimum the
collection and documentation of the information outlined in the
proposed definition of this term. Additional items like those

[[Page 73406]]

suggested by the commenters can be identified and discussed as part of
the establishment of, or an update to the individual's medical and
family history. We do not believe that it is necessary to outline an
exhaustive list of various items that may be included in the
definition. We believe that physical activity level and risk of falls
are adequately addressed in the definition of ``review of the
individual's functional ability and level of safety''.
We recognize that the health professional (or supervising physician
in the case of a team of medical professionals) furnishing the AWV is
qualified and would be able to determine the specific additional
information that needs to be discussed in order to establish a
comprehensive medical and family history and provide the best care
possible for the individual.
In the future, as the medical science continues to evolve, CMS may
consider adding other elements to the first and subsequent AWVs through
use of the national coverage determination process, if considered
appropriate.
Comment: One commenter requested that the first and subsequent AWVs
include a detailed current medications and supplements list as part of
the individual's medical and family history.
Response: We agree that medications and supplements such as
vitamins and calcium are an important part of an individual's medical
and family history. We included in the proposed definition of the
``Establishment of, or an update to the individual's medical and family
history'' provisions for the collection and documentation of use or
exposure to medications and supplements, including calcium and
vitamins. We believe the information included in the definition
addresses the commenter's concerns and, therefore, we are implementing
element (i) of the first AWV and element (i) of the subsequent AWV, as
proposed, in this final rule.
Comment: One commenter suggested that measurement of BMI be viewed
as a vital sign that should be included in both the first and
subsequent AWVs.
Response: We explained in the preamble to the proposed rule that
``body mass index (BMI) should be calculated at the first AWV and may
be recalculated at subsequent visits if indicated. Given the general
stability of adult height, we would not expect the BMI to meaningfully
change in the absence of significant weight change, and therefore we
are not requiring measurement of the individual's height during
subsequent AWVs. Accordingly, in this final rule, we are not adding the
BMI requirement to the subsequent AWV.
Comment: Several commenters suggested CMS should specify in the
final rule that an individual's family history of various diseases,
obesity, or risk factors for a disease such as diabetes should be
included in the list of risk factors and conditions for which primary,
secondary or tertiary interventions are recommended for an individual
as described in element (vii)(B) of the first AWV and element (v)(B) of
the subsequent AWV.
Response: We agree that the risk factors and conditions identified
by the commenters should be reflected in the list of risk factors
referenced in element (vii)(B) of the first AWV and element (V)(B) of
the subsequent AWV for possible referral if the individual's health
professional determines that it is appropriate to do so, based on the
information obtained during the first and/or subsequent AWV. Therefore,
we believe no additional changes to the description of ``individual's
medical and family history'' as part of the elements of the first and
subsequent AWVs are in order.
Comment: We received a number of comments from physicians, health
care providers, and others urging us to add voluntary advance care
planning as an element to the definitions of both the ``first annual
wellness visit'' and the ``subsequent annual wellness visit.'' They
base their recommendation upon a number of recent research studies, and
the inclusion by statute of a similar element in the existing initial
preventive physical examination (IPPE) benefit. One commenter noted
that ``the new wellness visit was wisely designed to build on the
initial preventive physical exam, providing an ongoing, systematic
focus on wellness and prevention by harmonizing Medicare services into
a coordinated benefit.'' Another commenter stated that ``the AWV
provides an appropriate setting for providers to initiate voluntary
conversations about future care wishes, as they counsel beneficiaries
on other aspects of their health and achieving their personal health
goals.'' The commenter added that the ``care plans discussed in the
'Welcome to Medicare visit' should not be frozen in time, but revisited
as an important component of patient wellness.''
Response: We agree that voluntary advance care planning should be
added as an element of the definitions of both the ``first annual
wellness visit'' and the ``subsequent annual wellness visit'' based on
the evidence described below, and the inclusion of a similar element in
the IPPE benefit (also referred to as the Welcome to Medicare visit),
since January 1, 2009. We believe that this will help the physician to
better align the personal prevention plan services with the patient's
personal priorities and goals.
Recently, Detering and colleagues (British Medical Journal 2010;
340:c1345) reported that ``advance care planning improves end of life
care and patient and family satisfaction and reduces stress, anxiety,
and depression in surviving relatives.'' Silveira and colleagues (New
England Journal of Medicine 2010; 362:1211-8) reported that ``data
suggest that most elderly patients would welcome these discussions.''
Lastly, a study by Fischer and colleagues (Journal of the American
Geriatric Society 2010; 58:400-401) found ``no evidence that these
(advance directive) discussions or completing an advance directive lead
to harm.''
Based on the available evidence and other relevant information, we
are adding to the final regulation a definition of the term ``voluntary
advance care planning'' to read as follows:
``Voluntary advance care planning'' means, for purposes of this
section, verbal or written information regarding the following areas:
(1) An individual's ability to prepare an advance directive in the
case where an injury or illness causes the individual to be unable to
make health care decisions.
(2) Whether or not the physician is willing to follow the
individual's wishes as expressed in an advance directive.
This definition is based on the definition of ``end-of-life
planning'', which is included as an element of the IPPE as described in
section 1861(ww)(3) of the Act. Thus, the addition of ``voluntary
advance care planning'' to the AWVs extends to those visits a similar
element to the one already in the one-time IPPE.
We are also revising the definitions of the terms ``First annual
wellness visit'' and ``Subsequent annual wellness visit'' by inserting
a new element (ix) to the definition of the term ``first annual
wellness visit'' and a new element (vii) to the definition of the term
``subsequent annual wellness visit'' in Sec. 410.15 (a) of the final
regulation text that would read as follows: ``Voluntary advance care
planning as that term is defined in this section upon agreement with
the individual.''
Comment: Commenters requested that we specifically require that
certain referrals for various services be included as part of the
personalized prevention plan including: (1) Community-based and other
lifestyle management services; (2) kidney disease education services;
(3) urogynecologist visits to discuss

[[Page 73407]]

incontinence issues; and (4) tobacco use cessation counseling and
related services.
Response: In the proposed rule, the definition for the first AWV
included provisions for the furnishing of personalized health advice
and a referral, as appropriate, to health education or preventive
counseling services or programs aimed at reducing identified risk
factors and improving self-management, including weight loss, physical
activity, smoking cessation, fall prevention, and nutrition. Under the
definition of the subsequent AWV, we included provisions for furnishing
of personalized health advice to the individual and a referral as
appropriate, to health education or preventive counseling services.
We believe that the health professionals who are furnishing the
AWVs whether they be first or subsequent visits are the most qualified
to determine an appropriate list of referrals for education services
and preventive counseling services for each individual. We believe that
the proposed definitions for the first and subsequent AWVs address
commenters' concerns regarding community-based and lifestyle management
services, kidney disease education services, referrals to further
discuss treatment for incontinence issues, and tobacco use cessation
counseling services.
Comment: One commenter suggested that CMS require the
identification of a family caregiver that provides care for and
supports a beneficiary with chronic conditions. The commenter states
that ``it is vitally important for medical professionals to know
whether the beneficiary has a family caregiver or has a family member/
friend who will fill that role.''
Response: We appreciate the role that family caregivers provide in
the lives of individuals with chronic conditions. We expect that the
identification of a family care giver will be addressed when the health
professional furnishing the AWV discusses the patient's ability to
successfully perform activities of daily living. However, we do not
believe the identification of a caregiver should be required of
beneficiaries who wish to take advantage of AWVs so we are not
requiring such identification in the final rule.
Comment: Several commenters suggested that CMS use its authority
under section 4105 of the ACA to expand Medicare coverage of certain
preventive services that are already available under Part B such as
screening for abdominal aortic aneurysms, HIV screening, colorectal
cancer screening, breast cancer screening (mammography), and
counseling/intensive behavioral (nutrition) counseling in accordance
with the USPSTF recommendations for these services. Other commenters
suggested using this authority to expand Medicare Part B coverage for
preventive immunizations to include vaccinations such as herpes zoster
and tetanus shots, which are currently covered under Part D in
accordance with the recommendations of the Advisory Committee on
Immunizations Practices (ACIP) for adults age 65 and older.
Response: We appreciate the commenters' support for expanded
coverage of preventive services under the Part B program. Section 4105
of the ACA grants the Secretary the authority to modify or eliminate
coverage of certain preventive services that are already available to
certain beneficiaries to the extent that such modification or
elimination of coverage is consistent with the recommendations of the
USPSTF. Many of the items requested (including coverage of ultrasound
screening for abdominal aortic aneurysms, medical nutrition therapy,
certain colorectal cancer screening tests, and mammography) are already
recognized as ``preventive services'' in section 1861(ww)(2) of the
Act. Because those items are already covered by Medicare, we will need
to further evaluate whether coverage for those items or services should
be modified in light of the specific grades of the USPSTF as permitted
under section 4105 of the ACA. Due to the complexities of considering
whether to modify or eliminate coverage of certain preventive services
under Medicare Part B, we decided not to address this subject in the
proposed rule, which focuses instead on implementation of section 4103
and 4104 of the ACA.
We note that we may consider other expansions in Medicare coverage
for ``additional preventive services'' in the future through section
1861(ddd)(1) of the Act. Under the ``additional preventive service''
statute, however, the recommendations of the Advisory Committee on
Immunizations Practices (ACIP) alone do not provide a basis for
expanded coverage. Additional information regarding Medicare coverage
for additional preventive services can be found in the Federal Register
(November 19, 2008, (73 FR 69869 through 69870 and 69933)) and Sec.
410.64. We will continue to monitor the USPSTF recommendations for
updates or changes, and when appropriate, consider possible coverage
through the NCD process. We also note that individuals can request a
NCD using the procedures set forth in our Guidance Document: ``Factors
CMS Considers in Opening a National Coverage Determination,'' available
at http://www.cms.gov/mcd/ncpc_view_document.asp?id=6. We also note
that the Secretary has exercised the authority granted by section
1861(ddd)(1) of the Act to add coverage under Part B of ``additional
preventive services'' such as HIV screening for individuals at high
risk consistent with the USPSTF recommendations. Since many of the
items that the commenters requested are already covered as ``preventive
services'' or ``additional preventive services,'' we are not making any
changes based on these comments at the present time. We will continue
to monitor access to these preventive services and may exercise the
authority granted by section 4105 of the ACA in the future.
Comment: A commenter requested CMS to ``consider whether there are
opportunities to leverage its `coverage with evidence development'
process to help build the evidence base for new preventive services.''
The commenter further suggested CMS ``review those preventive services
with a USPSTF grade of `I' (`insufficient evidence to recommend for or
against') and consider the development of a `coverage with evidence
development' initiative to help generate the data needed to fully
assess certain preventive services'' via partnerships with other
federal agencies.
Response: We are interested in increasing the evidence base
concerning new preventive services. We will need to further consider
whether the CED process could be used for items or services that
currently are rated with an ``I.'' We note that under Sec. 410.64 of
these regulations, an ``additional preventive service'' must have a
grade of A or B recommendation by the USPSTF. Because this suggestion
will require further study, we are not making any changes to our final
rule at this time.
Comment: Several commenters provided suggestions for continuing
education and outreach regarding issues related to the new AWV. One
commenter asked that we educate providers about evidence based
recommendations for colorectal cancer screening and monitor adherence
to guidelines via performance measures. Another commenter requested
education and outreach materials regarding the AWV and materials that
also explain the differences between the initial preventive physical
examination and the new AWV. An additional commenter requested that we
inform patients of the importance of preventive services including
colorectal cancer

[[Page 73408]]

screening options (colonoscopy, sigmoidoscopy, and fecal occult blood
tests).
Response: We agree that it is important to raise awareness
concerning the expanded Medicare coverage provided under the ACA. We
will issue appropriate manual instructions and other educational
information to the Medicare providers and beneficiaries, including an
MLN Matters article (Medicare Learning Network) and information in the
2011 Medicare and You Handbook regarding implementation of the new AWV
benefit.
Comment: One commenter recommended that we eliminate the initial
preventive physical examination since it is similar to the provisions
of the new AWV.
Response: We appreciate the attention being drawn to the similarity
between the initial preventive physical examination and the new AWV.
While we did model some of the elements of the new AWV after elements
in the initial preventive physical exam, we note that these statutory
provisions are separate and distinct benefits and that Medicare
beneficiaries will be eligible to receive both of these benefits in
sequence if the appropriate regulatory requirements are met.
In summary, as a result of the comments received, we are making the
following changes in this final rule:
We are amending the definition of the term ``health
professionals'' to read in paragraph (iii) as follows: ``A medical
professional (including a health educator, a registered dietitian, or
nutrition professional, or other licensed practitioner or a team of
such medical professionals, working under the direct supervision (as
defined in Sec. 410.32(b)(3)(ii)) of a physician as defined in
paragraph (i) of this definition.''
We are adding to the final regulation the definition of
the term ``voluntary advance care planning'' to read as follows:

``Voluntary Advance care planning'' means, for purposes of this
section, verbal or written information regarding the following areas:
(1) An individual's ability to prepare an advance directive in the
case where an injury or illness causes the individual to be unable to
make health care decisions.
(2) Whether or not the physician is willing to follow the
individual's wishes as expressed in an advance directive.
We are also revising the definitions of the terms ``First
AWV'' and ``Subsequent AWV'' by inserting a new element (ix) to the
definition of the term ``first AWV'' and a new element (vii) to the
definition of the term ``subsequent AWV'' in Sec. 410.15(a) of the
final regulation text that would read as follows: ``Voluntary advance
care planning as that term is defined in this section upon agreement
with the individual.''
3. Payment for the Annual Wellness Visit Providing Personalized
Prevention Plan Services (PPPS)
Section 4103 of the ACA created a new benefit for an ``annual
wellness visit'' (AWV) with personalized prevention plan services. The
ACA amended section 1861(s)(2) of the Act by adding a new subparagraph
(FF) to provide for coverage of the AWV beginning January 1, 2011.
Section 4103 of the ACA also added new subsection (hhh) to section 1861
of the Act to define ``personalized prevention plan services'' and to
specify who may furnish these services. Finally, section 4103 of the
ACA amended section 1848(j)(3) of the Act and provided for payment of
AWVs under the PFS, and specifically excluded the AWV from the hospital
OPPS. Therefore, a single payment under the PFS would be made when an
AWV is furnished by a physician, physician assistant, nurse
practitioner, or clinical nurse specialist, or by a medical
professional or team of medical professionals, as determined
appropriate by the Secretary, under the supervision of a physician.
To allow for Medicare reporting and payment of the AWV, we proposed
to create two new HCPCS G-codes for reporting the first wellness visit
and creation of a personalized prevention plan and the subsequent
visits available to the beneficiary every 12 months. Specifically, we
proposed to establish the following two new HCPCS codes for CY 2011:
GXXXA (AWV; includes a personalized prevention plan of service (PPPS),
first visit) and GXXXB (AWV; includes a personalized prevention plan of
service (PPPS), subsequent visit). A beneficiary's first AWV to any
practitioner would be reported to Medicare under HCPCS code GXXXA, even
if the beneficiary had previously received an initial preventive
physical examination (IPPE) that was covered by Medicare.
Beneficiaries, in their first 12 months of Part B coverage, would
continue to be eligible only for an IPPE. After the first 12 months of
Part B coverage, on or after January 1, 2011, beneficiaries would be
eligible for an AWV described by HCPCS code GXXXA or GXXXB, provided
that the beneficiary has not received an IPPE or AWV within the
preceding 12-month period.
Comment: Several commenters noted that the IPPE and the first AWV
are very similar services with significant overlap. These commenters
urged CMS not to develop a separate coding structure for the first AWV
as it would be a burden for practitioners to review and determine the
specific preventive service the beneficiary is eligible for on a given
date. In addition, the commenters noted that a delay in information
being available through the Common Working File (CWF) may cause
practitioners to inaccurately determine a beneficiary's eligibility for
a particular service, be it the IPPE, the first AWV, or a subsequent
AWV. One commenter requested that CMS clarify that a beneficiary may
choose either an IPPE or a first AWV during the beneficiary's first 12
months of Part B coverage.
Response: The set of services described by the IPPE is very
specific and while the services contained in the IPPE may be similar to
the services included in the AWV, these are two separate benefits under
Medicare. Just as there are component services specified for the IPPE,
there are component services specified for the AWV. Moreover, according
to section 1861(hhh)(4)(G) of the Act (as added by section 4103(b) of
the ACA), a beneficiary is eligible only for the IPPE during the 12-
month period after the date the beneficiary's coverage begins under
Part B and is only eligible for the AWV each year thereafter.
Therefore, in order to be able to identify the particular benefit and
services furnished to a beneficiary and ensure coverage of the
services, we believe that we must distinguish between the IPPE and the
AWV through the use of distinct HCPCS codes. We understand that there
may be instances where practitioners may experience a delay in the
information available through the CWF, but we expect the situations
where this would affect the services furnished (and subsequently
billed) by a practitioner would be uncommon. The CWF will reflect the
beneficiary's eligibility for the IPPE or first or subsequent AWV based
on all claims submitted to date to the Medicare contractors. Only under
the limited circumstances where a practitioner previously furnished an
IPPE or AWV to the beneficiary but had not yet submitted the claim to
Medicare would a practitioner inaccurately determine a beneficiary's
eligibility for the IPPE or first or subsequent AWV.
Comment: Several commenters urged CMS to recognize the CPT codes in
the Preventive Medicine Services series, ranging from 99381 (Initial
comprehensive preventive medicine

[[Page 73409]]

evaluation and management of an individual including an age and gender
appropriate history, examination, counseling/anticipatory guidance/risk
factor reduction interventions, and the ordering of laboratory/
diagnostic procedures, new patient; infant (age younger than 1 year))
through 99397 (Periodic comprehensive preventive medicine reevaluation
and management of an individual including an age and gender appropriate
history, examination, counseling/anticipatory guidance/risk factor
reduction interventions, and the ordering of laboratory/diagnostic
procedures, established patient; 65 years and older), for reporting and
payment of the AWV, rather than creating the two new HPCPCS G-codes as
proposed. The commenters noted that the practitioner could report the
appropriate CPT code based on the beneficiary's age and new or
established patient status, allowing specific reporting of the AWV with
a CPT code that would result in appropriate payment for the service
provided to the beneficiary. In addition, the commenters urged CMS to
use the existing CPT Editorial Panel and the AMA RUCs process to modify
these existing codes so they would be applicable for AWV services.
Response: Prior to the establishment of the IPPE benefit,
Preventive Medicine Services CPT codes in the range from 99381 through
99397 were excluded from Medicare coverage because preventive medicine
evaluation and management services were noncovered by Medicare. When
the IPPE benefit was implemented, we created HCPCS code G0402 (Initial
preventive physical examination; face-to-face visit, services limited
to new beneficiary during the first 12 months of Medicare enrollment)
as we have specifically defined through the regulatory process the
elements that are required for this service to be billed and paid by
Medicare. We refer readers to the Medicare Claims Processing Manual,
Pub. 100-04, chapter 18, section 80 for additional information
regarding the components of the IPPE. When implementing the IPPE, we
recognized that CPT codes describing preventive services were
available, but we did not believe it was appropriate to use these
existing CPT codes for the IPPE, given the general nature of the
services they describe in contrast to the specific nature of the IPPE
service.
Similarly, in section VI.Q.2. of this final rule with comment
period, we have adopted the final specific components of the AWV for CY
2011, consistent with the statutory requirements for the service. While
we acknowledge that the elements of the preventive medicine evaluation
and management (E/M) services reported by the CPT codes could
significantly overlap with the components of the AWV, we believe that
it is important to utilize specific HCPCS codes to identify the AWV as
there are coverage periodicity requirements that apply to the AWV, as
well as specific requirements regarding the elements of the AWV. While
we understand the commenters' request to use the established set of CPT
codes for the AWV, we do not believe that the existing CPT code
descriptors should be subject to adjustment and limitation based on
this new benefit as these CPT codes are currently used by many
practitioners to report noncovered preventive medicine E/M services
furnished to Medicare beneficiaries. In addition, coverage for the AWV
begins on January 1, 2011, and we believe that our authority to create
and maintain Level II HCPCS codes allows us a mechanism to implement
these codes quickly and effectively. While we would not necessarily be
opposed to the use of CPT codes to report the AWV in the future if CPT
codes existed that met our specific purposes, time does not allow for
the establishment of new CPT codes or the revision of existing codes
for the AWVs that are covered as of January 1, 2011.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to adopt two new HCPCS G-codes for
reporting the AWV in CY 2011. While we proposed these codes as GXXXA
and GXXXB for the first and subsequent AWVs, respectively, the final
codes and their descriptors are G0438 (Annual wellness visit; includes
a personalized prevention plan of service (PPPS), first visit) and
G0439 (Annual wellness visit; includes a personalized prevention plan
of service (PPPS), subsequent visit). We note that practitioners
furnishing a preventive medicine E/M service that does not meet the
requirements for the IPPE or the AWV would continue to report one of
the preventive medicine E[sol]M services CPT codes in the range of
99381 through 99397 as appropriate to the patient's circumstances, and
these codes continue to be noncovered by Medicare.
A beneficiary would be eligible for one first AWV covered by
Medicare that must include all of the required elements that we have
adopted in our final policy for CY 2011, as discussed in section
VI.Q.2. of this final rule with comment period. All subsequent AWVs
would include the required elements for those visits as also described
in section VI.Q.2. of this final rule with comment period. All AWVs
other than the beneficiary's first AWV would be reported as subsequent
visits, even if a different practitioner furnished the subsequent AWV.
We expect there to be continuity and communication among the
practitioners caring for beneficiaries over time with respect to AWVs,
and this would include the case where a different practitioner
furnishing a subsequent AWV would update the information in the
patient's medical record based on the patient's interval history since
the previous AWV.
As we stated in the CY 2011 PFS proposed rule (75 FR 40128), the
first AWV described by HCPCS code GXXXA (G0438) is similar to the IPPE
that is currently reported with HCPCS code G0402 (Initial preventive
physical examination; face-to-face visit, services limited to new
beneficiary during the first 12 months of Medicare enrollment). We
believe that the physician work and nonfacility PE of the IPPE and the
first AWV are very similar, given that both represent an initial
beneficiary visit focused on prevention. In the CY 2010 PFS final rule
with comment period discussion of payment for the IPPE (74 FR 61767),
we noted that in the context of physician work and intensity, HCPCS
code G0402 was most equivalent to CPT code 99204 (Level 4 new patient
office or other outpatient visit). Therefore, for CY 2011, we proposed
to crosswalk the same physician work RVUs of 2.43 from CPT code 99204
to HCPCS codes G0402 and GXXXA (G0438). Similarly, we believe the
direct PE inputs for all of these services are similar and, therefore,
we proposed to assign the same direct PE inputs to HCPCS codes G0402
and GXXXA (G0438) as are included for CPT code 99204. We noted that
currently, the direct PE inputs for HCPCS code G0402 also include
preventive assessment forms, and we proposed to add this supply to the
PE for HCPCS code GXXXA (G0438) as well because we believe it would be
used in the first AWV. The proposed CY 2011 PE and malpractice RVUs for
HCPCS code GXXXA (G0438) were displayed in Addendum B to the proposed
rule (75 FR 40640). We also noted that we proposed no facility PE RVUs
for HCPCS code GXXXA (G0438) because only a single payment would be
made under the PFS when this service is furnished. There is no separate
facility payment for GXXXA (G0438) when a practitioner furnishes this
service in the facility setting.
Moreover, in the CY 2011 PFS proposed rule (75 FR 40128), we also
indicated that we believe that a subsequent AWV described by HCPCS code
GXXXB (G0439) is most similar,

[[Page 73410]]

from the perspectives of physician work and PE, to CPT code 99214
(Level 4 established patient office or other outpatient visit). The
subsequent AWV is a patient visit for PPPS that includes certain
required elements, such as updating information regarding the patient's
history, risk factors, and regular medical care providers and suppliers
since the prior AWV, and obtaining routine measurements. We believe the
physician work and direct PE of a subsequent AWV are similar, in terms
of E/M visit level, to the first AWV, which we proposed to value like a
level 4 new patient office or other outpatient visit, as we had
previously valued the IPPE. However, the subsequent AWV would typically
be for an established patient and, as described earlier in this
section, we proposed that only certain AWV elements must be furnished
in the first AWV. As a result, in the CY 2011 PFS proposed rule (75 FR
40129), we stated that we believe it would be most appropriate to value
the subsequent AWV based upon an E/M visit for an established patient.
Therefore, for CY 2011 we proposed to crosswalk the same physician work
RVUs of 1.50 from CPT code 99214 to HCPCS code GXXXB (G0439).
Furthermore, we believe the direct PE inputs for these two services are
also similar and, therefore, we proposed to assign the same direct PE
inputs to HCPCS code GXXXB (G0439) as were assigned to CPT code 99214.
We note that we also proposed to add the same preventive assessment
forms to the PE for HCPCS code GXXXB (G0439) as we proposed to add for
HCPCS code GXXXA (G0438) because we believe this supply would be used
in both the first and subsequent AWVs. The proposed CY 2011 PE and
malpractice RVUs for HCPCS code GXXXB were displayed in Addendum B to
the CY 2011 PFS proposed rule (75 FR 40640). Similar to our treatment
of HCPCS code GXXXA (G0438) for the first AWV, we proposed no facility
PE RVUs for HCPCS code GXXXB (G0439) as only a single payment would be
made under the PFS when this service is furnished. There is no separate
facility payment for GXXXB (G0439) when a practitioner furnishes this
service in the facility setting.
Comment: A number of commenters supported the proposed payment for
the first and subsequent AWVs based on a crosswalk to level 4 new and
established patient office and other outpatient visits. Several
commenters recommended that CMS vary the payment for the AWV based on
the visit's complexity, arguing that beneficiaries with multiple health
risk factors would require additional practitioner time and intensity
for the AWV. One commenter recommended that CMS value the first and
subsequent AWVs based on the values applicable to level 5 new and
established patient office and other outpatient visits, arguing that
the typical Medicare beneficiary would have multiple health risk
factors that would need to be addressed in the AWV through a complex
plan specific to that beneficiary's situation. Other commenters argued
that CMS should recognize the preventive medicine E/M services CPT
codes from 99381 through 99387, whose values vary based on age and new
or established patient status, to ensure appropriate payment for the
first and subsequent AWVs. Furthermore, one commenter also pointed out
that the existing preventive medicine E/M services CPT codes are
currently being revalued by the AMA RUC as part of the Fourth 5-Year
Review of Work to ensure that the values for the services are
commensurate with the level of practitioner work involved in furnishing
the medical service.
A few commenters noted that they currently bill preventive medicine
services E/M CPT codes 99381 through 99397 which are noncovered in
Medicare, and indicated as such with status ``N'' (Noncovered service),
in conjunction with Medicare-covered E/M visits. The commenters
requested that CMS clarify whether practitioners would continue to be
able to bill additional preventive services in the CPT code range of
99381 through 99397 in conjunction with the AWV.
Response: As discussed earlier in this section, we are adopting the
final HCPCS codes G0438 and G0439 for reporting the first and
subsequent AWVs, rather than recognizing the CPT codes for preventive
medicine E/M services as covered only for purposes of the AWVs. With
respect to the values for those preventive medicine E/M services CPT
codes that some commenters believe would be appropriate for payment of
the first and subsequent AWVs, we have not adopted the values for
Medicare because the codes are noncovered by Medicare. Nevertheless, we
publish the AMA RUC-recommended work values and the PE RVUs that result
from application of our standard PE methodology to the AMA RUC-
recommended PE inputs in Addendum B for the CPT codes. We compared the
values we proposed for HCPCS codes G0438 and G0439 with the preventive
medicine E/M services CPT codes because of the commenters' reasoning
that these AMA RUC-recommended values would result in appropriate
payment for AWVs. The values we proposed for HCPCS codes G0438 based on
the work value and direct PE inputs for a level 4 new patient office or
other outpatient visit are actually slightly higher (2.43 work RVUs;
2.14 fully implemented nonfacilty PE RVUs) than the new patient, 65
years and older CPT preventive medicine E/M services code (2.06 work
RVUs; 1.87 nonfacility PE RVUs). In contrast, the values we proposed
for HCPCS code G0439 based on the work value and direct PE inputs for a
level 4 established patient office or other outpatient visit are
slightly lower (1.50 work RVUs; 1.59 nonfacilty PE RVUs) than the
establish patient, 65 years and old CPT preventive services code (1.71
work RVUs; 1.62 nonfacility RVUs). We note that if the AMA RUC provides
revised recommendations to us for these preventive medicine E/M
services CPT codes for a future year, we may conduct this analysis
again based on that new information.
As discussed above, we note that additional preventive medicine
services E/M CPT codes 99381 through 99397, noncovered by Medicare and
indicated with status ``N,'' may be furnished in conjunction with
Medicare-covered E/M visits, including the AWV. However, we believe
that it would be difficult to distinguish an AWV from another
preventive medicine E/M service furnished in the same encounter that
would be reported under a preventive medicine services E/M CPT code as
there is substantial overlap in the components of CPT codes 99381
through 99397 and HCPCS codes G0438 and G0439 reported for the AWV.
Based on the final elements of the first and subsequent AWVs as
adopted in section VI.Q.2. of this final rule, we do not believe that
the first and subsequent AWVs would usually require the 60 or 40
minutes of physician face-to-face time that is typically associated
with the level 5 new or established patient office or other patient
visit, respectively. We continue to believe, as we proposed, that the
typical physician time would be 45 or 25 minutes of face-to-face time,
like that of the level 4 new or established patient office or other
outpatient visit, respectively. We also believe the direct PE inputs
for the AWV may be appropriately crosswalked to the direct PE inputs
for the level 4 new or established patient office or other outpatient
visit, with the addition of preventive assessment forms to both HCPCS
codes G0438 and G0439, as we also proposed.
Comment: One commenter suggested that the upcoming definition of a
health risk assessment (HRA) may add more

[[Page 73411]]

work to the AWV. The commenter recommended that once the HRA has been
established, CMS should incorporate the RVUs from CPT code 99420
(Administration and interpretation of health risk assessment instrument
(eg, health hazard appraisal) into the RVUs associated with the AWV to
ensure that the costs of the HRA are recognized as part of the AWV
service.
Response: As discussed previously in this section, the HRA
guidelines and the model HRA tool are not yet available. As is our
standard process, when more information becomes available on the nature
of a particular service or the elements of the services change, we
reevaluate the valuation of the services. Therefore, when the HRA is
incorporated into the AWV, we will reevaluate the values for HCPCS
codes G0438 and G0439.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to crosswalk the physician work RVUs of
2.43 from CPT code 99204 (level 4 new patient office or other
outpatient visit) to HCPCS codes G0402 (IPPE) and G0438 (first AWV) and
the physician work RVUs of 1.50 from CPT code 99214 (level 4
established patient office or outpatient visit) to HCPCS code G0439
(subsequent AWV). Similarly, we believe the direct PE inputs for all of
these services are similar and, therefore, we are assigning the same
direct PE inputs to HCPCS codes G0402 and G0438 as are included for CPT
code 99204 and the same direct PE inputs to HCPCS code G0439 as are
assigned to CPT code 99214. Preventive assessment forms have been added
as supplies to both HCPCS codes G0438 and G0439. The final direct PE
inputs for these codes are included in the final CY 2011 direct PE
database available under downloads for the CY 2011 PFS final rule with
comment period on the CMS web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage. The final work, PE, and
malpractice RVUs for HCPCS codes G0438 and G0439 are displayed in
Addendum B to this final rule with comment period. There is no separate
facility payment for HCPCS code G0438 or G0439 when a practitioner
furnishes either service in the facility setting.
In the CY 2011 PFS proposed rule (75 FR 40129), we noted that while
we believe there could be overlap in the direct PE, malpractice
expense, and physician work in both history taking and examination of
the patient in the context of the initial or subsequent AWV and another
E/M service, we did not propose to limit the level of a medically
necessary E/M visit when furnished and billed with an AWV. As we stated
in the CY 2005 PFS final rule with comment period with respect to the
IPPE (69 FR 66289 through 66290), we do not want to prohibit the
reporting of an appropriate level of service when it is necessary to
evaluate and treat the beneficiary for acute and chronic conditions.
However, at the same time, we believe the practitioner is better able
to discuss health promotion, disease prevention, and the educational
opportunities available with beneficiaries when their health status has
been stabilized and the beneficiary is physically receptive. Therefore,
depending on the clinical circumstances, a CPT code for a medically
necessary E/M visit may be reported and appended with CPT modifier-25
(Significant, separately identifiable evaluation and management service
by the same physician on the same day of the procedure or other
service) to designate the E/M visit as a separately identifiable
service from the initial or subsequent AWV. However, in the CY 2011 PFS
proposed rule (75 FR 40129) we explained that we believe this scenario
would be uncommon, and that we expect that no components of an
encounter attributable to the AWV would be used in determining the
level of a separate E/M visit that would also be reported.
Comment: A few commenters disagreed with CMS' assertion that
reporting a significant, separately identifiable E/M visit for the same
encounter as an AWV would be unusual. The commenters believe that
reporting an E/M visit with an AWV would be typical, as the age and
health conditions of the typical Medicare beneficiary would likely
result in problem-oriented E/M services being furnished in association
with the AWV in order to fully address the medical problems that were
identified in the encounter. The commenters explained that providing
this care during the same encounter as the AWV would be both clinically
appropriate and convenient for the beneficiary.
Response: While we continue to believe that a practitioner is
better able to discuss health promotion, disease prevention, and health
education opportunities with beneficiaries when their health status has
been stabilized and the beneficiary is physically receptive to
prevention, the goal of the AWV, we acknowledge that the AWV encounter
may provide an annually recurring opportunity for a beneficiary to
receive medical care for his or her health problems. However, we
continue to believe that a beneficiary who has an acute medical problem
or condition would not receive optimal benefit from the AWV, which
focuses on health promotion in the longer term. We encourage
practitioners to be thoughtful regarding the best timing of the AWV to
maximize its impact on beneficiary health since the AWV is covered by
Medicare no more frequently than once every 12 months. Therefore, as we
proposed, depending on the clinical circumstances, a CPT code for a
medically necessary E/M visit may be reported and appended with CPT
modifier -25 (Significant, separately identifiable evaluation and
management service by the same physician on the same day of the
procedure or other service) to designate the E/M visit as a separately
identifiable service from the initial or subsequent AWV.
With respect to beneficiary cost-sharing, section 4103(c)(1) of the
ACA amended section 1833(a)(1) of the Act and added subparagraph (X),
referring to the PPPS to state that the amount paid shall be 100
percent of the lesser of the actual charge for the services or the
amount determined under the payment basis determined under section 1848
of the Act, thereby eliminating coinsurance for the AWV. Finally,
section 4103(c)(4) of the ACA amended section 1833(b) of the Act to
specify that the Part B deductible will not apply to the AWV.
Comment: Many commenters expressed support for CMS' proposal to
waive the beneficiary deductible and coinsurance for the AWV. The
commenters noted that this waiver would likely encourage more
beneficiaries to receive an AWV.
Response: We appreciate the commenters' support for our proposal to
eliminate the beneficiary cost-sharing for the AWV as the statute
requires. We refer readers to section VI.R. of this final rule with
comment period for further discussion of the waiver of the deductible
and coinsurance for preventive services beginning in CY 2011.
In summary, for CY 2011 we are adopting the following new HCPCS G-
codes for reporting the AWV: G0438 (Annual wellness visit; includes a
personalized prevention plan of service (PPPS), first visit); and G0439
(Annual wellness visit; includes a personalized prevention plan of
service (PPPS), subsequent visit). These codes are valued for payment
under the PFS using a crosswalk methodology for the work RVUs and
direct PE inputs from the level 4 new and established patient office or
other outpatient visit CPT codes. The final work, PE, and malpractice
RVUs for HCPCS codes G0438 and G0439 are displayed in

[[Page 73412]]

Addendum B to this final rule with comment period. The deductible and
coinsurance for the AWV is waived when coverage begins in CY 2011.
Finally, the CPT code for a medically necessary E/M visit may be
reported and appended with CPT modifier -25 (Significant, separately
identifiable evaluation and management service by the same physician on
the same day of the procedure or other service) to designate the E/M
visit as a separately identifiable service from the initial or
subsequent AWV when both are provided in the same encounter.

R. Section 4104: Removal of Barriers to Preventive Services in Medicare

1. Definition of ``Preventive Services''
Section 4104 of the ACA revised section 1861(ddd) of the Act and
added paragraph (3), which defined the term ``preventive services'' as
follows:
The specific services currently listed in section
1861(ww)(2) of the Act with the explicit exclusion of
electrocardiograms (as specified in section 1861(ww)(2)(M) of the Act);
The initial preventive physical examination (IPPE)
established by section 611 of the MMA and defined in section
1861(ww)(1) of the Act; and
The annual wellness visit including personalized
preventive plan services, as specified by section 1861(hhh) of the Act
as added by section 4103 of the ACA. We refer readers to section VI.Q.
of this final rule with comment period for the CY 2011 provisions
related to the coverage of and payment for the annual wellness visit.
The regulations regarding coverage of the IPPE are specified in Sec.
410.16 and remain unchanged by the ACA.
The specific preventive services included in the definition of
``preventive services'' in section 1861(ddd)(3)(A) of the Act as cross-
referenced to section 1861(ww)(2) of the Act, excluding
electrocardiograms, include the following:
Pneumococcal, influenza, and hepatitis B vaccine and
administration.
Screening mammography.
Screening pap smear and screening pelvic exam.
Prostate cancer screening tests.
Colorectal cancer screening tests.
Outpatient diabetes self-management training (DSMT).
Bone mass measurement.
Screening for glaucoma.
Medical nutrition therapy (MNT) services.
Cardiovascular screening blood tests.
Diabetes screening tests.
Ultrasound screening for abdominal aortic aneurysm (AAA).
Additional preventive services identified for coverage
through the national coverage determination (NCD) process.
In the CY 2011 PFS proposed rule (75 FR 41029), we indicated that
at that time the only additional preventive service identified for
coverage through the NCD process was HIV testing. A proposed NCD for
smoking cessation services for asymptomatic patients was released in
May 2010 on the CMS Web site at: http://www.cms.gov/mcd/index_list.asp?list_type=nca. We stated that we would address the
applicability of section 1861(ddd)(3)(A) of the Act (as added by
section 4104 of the ACA) to these services if an NCD establishing them
as additional preventive services was finalized. As of August 25, 2010,
CMS finalized an NCD for ``Counseling to Prevent Tobacco Use'' and
established smoking cessation services for asymptomatic patients, thus
qualifying them as ``additional preventive services'' as defined at
section 1861(ddd)(3)(A) of the Act, as cross-referenced to section
1861(ww)(2) of the Act.
We proposed to add the definition of ``preventive services'' in
Sec. 410.2 to implement the provisions of section 1861(ddd)(3) of the
Act (as added by section 4104 of the ACA).
Comment: Many commenters supported CMS' definition of ``preventive
services,'' observing that the definition was fully aligned with
section 1861(ddd)(3) of the Act (as added by section 4104 of the ACA).
Response: We appreciate the support of the commenters and are
adopting this definition of ``preventive services'' in this final rule
with comment period.
Comment: Several commenters expressed confusion about Medicare's
definition of ``preventive services'' and its relationship to those
services with a United States Preventive Services Task Force (USPSTF)
recommendation grade of A [An ``A'' rating means the USPSTF recommends
the service. There is high certainty that the net benefit is
substantial.] or B [A ``B'' rating means the USPSTF recommends the
service. There is high certainty that the net benefit is moderate or
there is moderate certainty that the net benefit is moderate to
substantial.].
Response: It appears that some of the commenters' confusion may be
due to the use of two similar terms in the Medicare Act. In section
1861(ddd) of the Act, Congress defined two terms of art. The term,
``preventive services,'' is described in section 1861(ddd)(3) of the
Act and in this final rule with comment period in Sec. 410.2. Congress
also defined the term ``additional preventive services'' and that term
was previously defined in Sec. 410.64 of our regulations. Under
section 1861(ddd)(1) of the Act, in order for the Secretary to add an
``additional preventive service,'' the Secretary is required to use the
national coverage determination process. Moreover, in addition to other
standards, the item or service must be recommended with a grade of A or
B by the USPSTF.
In section 1861(ddd)(3) of the Act (as added by section 4104 of the
ACA), Congress expanded Medicare coverage under Part B to encourage the
use of ``preventive services.'' Among other things, Congress removed
some of the Part B cost-sharing obligations to encourage patients to
obtain certain of these services. We note that ``additional preventive
services'' are one of the categories of specific services that are
covered under section 1861(ww)(2) of the Act and, therefore, also fall
within the term ``preventive services'' based on the cross-reference in
section 1861(ddd)(3)(A) of the Act. Other specific services that are
listed in section 1861(ww)(2) of the Act and that are included in the
definition of ``preventive services'' are not required to have a grade
A or B recommendation from the USPSTF. As we stated in the CY 2011 PFS
proposed rule (75 FR 40130), ``[n]ot all preventive services described
in subparagraph (A) of section 1861(ddd)(3) of the Act are recommended
by the USPSTF with a grade of A or B, and, therefore, some of the
preventive services do not meet the criteria in sections 1833(a)(1) and
(b)(1) of the Act for the waiver of the deductibles and coinsurance.''
We hope that this technical explanation helps to eliminate any
confusion concerning the two separate terms of art.
Comment: Several commenters observed that some services, such as
intensive behavioral (nutrition) counseling, have been given a grade A
or B recommendation by the USPSTF but are not listed as ``additional
preventive services'' in the CY 2011 PFS proposed rule. Another
commenter requested that CMS identify all USPSTF-recommended services
as ``additional preventive services'' and, therefore, recognize them as
having a benefit category under Medicare, even if their coinsurance and
deductible are not waived because their USPSTF recommendation is not a
grade A or B.
Response: Under section 1861(ddd)(1) of the Act and our regulations
in Sec. 410.64, an item or service must meet other standards in
addition to having received a grade of A or B recommendation by the
USPSTF in order for the Secretary to determine that an item is an
``additional preventive

[[Page 73413]]

service.'' As we previously noted, ``additional preventive services''
must also be established by using the NCD process. While some of the
services recommended by the commenters for addition to Medicare's list
of ``additional preventive services'' have a grade A or B
recommendation by the USPSTF, this recommendation alone is not
sufficient for those services to be included as ``additional preventive
services'' that are covered by Medicare Part B. For instance, some of
the USPSTF recommendations may be directed to a particular patient
population (for example, pediatric services) that may not include
Medicare beneficiaries.
However, we acknowledge the potential value to Medicare
beneficiaries of those preventive services recommended by the USPSTF
for populations covered by Medicare based on the medical evidence that
led to the grade A or B recommendation. While certain preventive
services with such a recommendation may not yet be covered by Medicare,
these services have the potential to improve the health of
beneficiaries. Therefore, we plan to proactively pursue Medicare
coverage of ``additional preventive services'' with a grade A or B
USPSTF recommendation through our current processes on our own
initiative in light of our commitment to the health and wellness of
Medicare beneficiaries.
Comment: A few commenters suggested the inclusion of additional
services in the definition of ``preventive services,'' including items
or services that have not been reviewed by the USPSTF or where there is
no NCD. In addition, several commenters urged CMS to recognize
recommendations from organizations other than the USPSTF when
considering services for inclusion as ``additional preventive
services.''
Response: Because the term ``preventive services,'' is specifically
defined by statute in section 1861(ddd)(3) of the Act, we do not have
unlimited authority to simply add items or services to this definition.
As we have noted, however, the Secretary may add items or services as
``additional preventive services'' if the item or service meets the
existing criteria in Sec. 410.64. Among other things, the statute
specifically requires that a new ``additional preventive service'' must
have a grade A or B recommendation by the USPSTF.
We do not have the authority under section 1861(ddd)(1)(B) of the
Act to add ``additional preventive services'' based on the
recommendations of other groups or organizations. We recognize that in
other sections of the ACA, Congress specifically recognized the
expertise of other organizations with respect to coverage of preventive
health services. For instance, in section 1001 of the ACA, Congress
amended section 2713 of the Public Health Service Act so that certain
group health plans and health insurance issuers must provide coverage
of preventive health services that were recommended by several other
organizations. The Medicare statute, however, does not permit
recommendations from other advisory bodies to substitute for
recommendations from the USPSTF regarding Medicare coverage of
``additional preventive services.''
Comment: A number of commenters supported CMS' inclusion of certain
vaccines in the definition of ``preventive services.'' Other commenters
were concerned that the USPSTF does not currently review or provide
recommendations regarding vaccine or vaccine administration and instead
urged CMS to consider recommendations from the CDC's Advisory Committee
on Immunization Practices (ACIP). Several commenters requested that
vaccines such as diphtheria, pertussis, herpes zoster, tetanus,
hepatitis A vaccine, meningococcal vaccine, measles-mumps-rubella, and
varicella be considered ``additional preventive services'' as they are
recommended by the ACIP. The commenters requested that CMS provide
coverage for all vaccines recommended by the ACIP under Part B, noting
that currently some vaccines are covered under Part B while others are
covered under Part D.
Response: Medicare has covered certain vaccines and their
administration under Part B, including influenza, pneumococcal, and
hepatitis B, as a result of a specific statute, section 1861(s)(10) of
the Act. Those services are specifically cross-referenced in section
1861(ww)(2)(A) of the Act, and are included in the definition of
``preventive services'' by section 1861(ddd)(3)(A) of the Act. While we
acknowledge that the ACIP currently makes recommendations concerning
immunizations, section 1861(ddd)(1) of the Act does not permit us to
use recommendations from the ACIP as the basis for coverage of vaccines
as ``additional preventive services.'' As the commenters observed,
vaccines that are not covered by Medicare Part B may be covered by Part
D.
Comment: Several commenters requested that CMS not wait for an NCD
for smoking cessation services but, instead, proactively identify
smoking cessation services as preventive services effective for CY
2011.
Response: The Medicare statute requires the Secretary to use the
national NCD process when considering adding services as an
``additional preventive service.'' Consistent with the public process
and timeframes required by section 1862(l) of the Act, our NCD
expanding coverage for counseling to prevent tobacco use for
asymptomatic patients was effective on August 25, 2010. Thus, the
``additional preventive services'' covered by Medicare Part B currently
include services described by HCPCS codes G0436 (Smoking and tobacco
cessation counseling visit for the asymptomatic patient; intermediate,
greater than 3 minutes, up to 10 minutes) and G0437 (Smoking and
tobacco cessation counseling visit for the asymptomatic patient;
intensive, greater than 10 minutes).
Comment: Several commenters requested coverage of routine HIV
testing for all individuals, including persons at low risk for HIV
infection, regardless of risk, based on more recent data, or based upon
the C rating of the USPSTF.
Response: We are not able to accept the public comment to extend
coverage for HIV screening for all individuals under the Medicare
program because the USPSTF grade A or B recommendation was limited to
specific populations and the USPSTF specifically made a grade C
recommendation about HIV screening for ``adolescents and adults who are
not at increased risk for HIV infection.'' Our statute and regulations
only permit coverage of ``additional preventive services'' which have
been recommended with a grade of A or B by the USPSTF and do not permit
coverage as ``additional preventive services'' of services with grade C
recommendations.
As a result of the NCD, Medicare covers screening of at risk
individuals for HIV described by three HCPCS codes, specifically G0432
(Infectious agent antigen detection by enzyme immunoassay (EIA)
technique, qualitative or semi-qualitative, multiple-step method, HIV-1
or HIV-2, screening); G0433 (Infectious agent antigen detection by
enzyme-linked immunosorbent assay (ELISA) technique, antibody, HIV-1 or
HIV-2, screening); and G0435 (Infectious agent antigen detection by
rapid antibody test or oral mucosa transudate, HIV-1 or HIV-2,
screening)). These HCPCS codes are all listed in Table 65 of the
following section because their beneficiary cost-sharing will be waived
in CY 2011.
Comment: Several commenters encouraged CMS to develop transparency
in its interactions with the USPSTF and CMS coverage

[[Page 73414]]

determinations. The commenters urged CMS to support increased
opportunities for stakeholders to participate in the USPSTF process.
Response: As required by section 1862(l) of the Act, the NCD
process includes an opportunity for public comment on a proposed
decision. With respect to any proposed NCD for an ``additional
preventive service,'' we include a summary of the USPSTF
recommendations in our proposed decision memorandum. The Secretary is
required to respond to the public comments when issuing a final
determination. We believe that this process is open and transparent and
that the public comments have improved the quality of our final
decisions.
While some commenters have requested greater opportunities for
public participation prior to the USPSTF recommendations, the process
that the USPSTF utilizes in making its expert recommendations is beyond
the scope of this rulemaking. The USPSTF, first convened by the U.S.
Public Health Service in 1984, and since 1998 sponsored by the AHRQ, is
an independent panel of private-sector experts in prevention and
primary care that makes recommendations that are independent of the
U.S. government. The USPSTF conducts impartial assessments of the
scientific evidence for the effectiveness of a broad range of clinical
preventive services, including screening, counseling, and preventive
medications. The mission of the USPSTF is to evaluate the benefits of
individual services based on age, gender, and risk factors for disease;
make recommendations about which preventive services should be
incorporated routinely into primary medical care and for which
populations; and identify a research agenda for clinical preventive
care. The USPSTF has partners from the fields of primary care, public
health, health promotion, policy, and quality improvement. Liaisons
from these groups and from Federal health agencies, including CMS,
contribute their expertise in the peer review of draft USPSTF documents
and help disseminate the work of the USPSTF to their members.
After consideration of the public comments we received, we are
finalizing our proposed definition of preventive services.
Specifically, preventive services include the IPPE; the AWV;
pneumococcal, influenza, and hepatitis B vaccine and administration;
screening mammography; screening pap smear and screening pelvic exam;
prostate cancer screening tests; colorectal cancer screening tests;
outpatient diabetes self-management training (DSMT); bone mass
measurement; screening for glaucoma; medical nutrition therapy (MNT)
services; cardiovascular screening blood tests; diabetes screening
tests; ultrasound screening for abdominal aortic aneurysm (AAA); and
additional preventive services identified for coverage through the NCD
process. To date, two items or services have been added as ``additional
preventive services'' by NCDs. These services are HIV screening for at
risk individuals and smoking and tobacco cessation counseling for
asymptomatic individuals.
We are adopting the proposed definition of ``preventive services''
in Sec. 410.2 to implement the provisions of section 1861(ddd)(3) of
the Act (as added by section 4104 of the ACA), with modification of
Sec. 410.2(3) to read ``Annual Wellness Visit (AWV), providing
Personalized Prevention Plan Services (PPPS) (as specified by section
1861(hhh)(1) of the Act)'' to utilize wording that is consistent with
final Sec. 410.15, Annual Wellness Visits Providing Personalized
Prevention Plan Services: Conditions for and Limitations on Coverage.
Furthermore, in this final rule with comment period, we are making
a technical revision to Sec. 410.64 (Additional Preventive Services)
to conform with section 1861(ddd)(1) of the Act, as amended by section
4104 of the ACA. We are revising Sec. 410.64(a) by removing the words
``not otherwise described in this subpart'' and adding the words ``not
described in subparagraphs (1) or (3) of Sec. 410.2 of this subpart''
in their place. This change reflects section 1861(ddd)(1) of the Act
(as amended by section 4104(a)(2) of the ACA).
2. Deductible and Coinsurance for Preventive Services
Section 4104(b)(4) of the ACA amended section 1833(a)(1) of the Act
by requiring 100 percent Medicare payment for the IPPE and for those
Medicare-covered preventive services recommended by the United States
Preventive Services Task Force (USPSTF) with a grade of A or B for any
indication or population and that are appropriate for the individual.
In other words, this provision waived any coinsurance that would
otherwise be applicable under section 1833(a)(1) of the Act for the
IPPE and for those items and services listed in section 1861(ww)(2) of
the Act (excluding electrocardiograms) to which the USPSTF has given a
grade of A or B recommendation. In addition, section 4103(c)(1) of the
ACA amended section 1833(a)(1) of the Act to waive the coinsurance for
the AWV. The coinsurance represents the beneficiary's share of the
payment to the provider or supplier for furnished services. Coinsurance
generally refers to a percentage (for example, 20 percent) of the
Medicare payment rate for which the beneficiary is liable and is
applicable under the PFS, while copayment generally refers to an
established amount that the beneficiary must pay that is not
necessarily related to a particular percentage of the Medicare payment,
and is applicable under the OPPS. We refer readers to the CY 2011 OPPS/
ASC final rule with comment period for provisions related to payment
for preventive services, including waiver of the deductible and
copayment, under the OPPS.
Section 4104(c) of the ACA amended section 1833(b)(1) of the Act to
waive the Part B deductible for preventive services described in
subparagraph (A) of section 1861(ddd)(3) of the Act that have a grade
of A or B recommendation from the USPSTF for any indication or
population and are appropriate for the individual. In addition, section
1833(b)(1) of the Act (as amended by section 4103(c)(4) of the ACA)
waived the Part B deductible for the AWV including personalized
prevention plan services. These provisions are effective for services
furnished on or after January 1, 2011. Section 101(b)(2) of the MIPPA
previously amended section 1833(b) of the Act to waive the deductible
for the IPPE effective January 1, 2009.
Not all preventive services described in subparagraph (A) of
section 1861(ddd)(3) of the Act are recommended by the USPSTF with a
grade of A or B and, therefore, some of the preventive services do not
meet the criteria in sections 1833(a)(1) and (b)(1) of the Act for the
waiver of the deductible and coinsurance. However, with certain
exceptions noted below, the changes made by section 4104 of the ACA do
not affect most of the preexisting provisions in sections 1833(a) and
1833(b) of the Act (codified in regulations in Sec. 410.160(b) and
Sec. 410.152) that waive the deductible and coinsurance for specific
services. For example, section 1833(a)(1)(D) of the Act already waives
the coinsurance and section 1833(b)(3) of the Act already waives the
deductible for clinical laboratory tests (including tests furnished for
screening purposes). Section 4104 of the ACA does not change these
provisions and, therefore, the waiver of both the deductible and
coinsurance remain in place for all clinical laboratory tests,
regardless of

[[Page 73415]]

whether the particular clinical laboratory test meets the USPSTF
grading criteria specified in sections 1833(a)(1) and 1833(b)(1) of the
Act (as amended by section 4104 of the ACA) for waiver of the
deductible and coinsurance as a preventive service. Similarly, both the
deductible and coinsurance were already waived, prior to the ACA, for
influenza and pneumococcal vaccines and their administration, and the
deductible (but not the coinsurance) was already waived for screening
mammography, screening pelvic exams, colorectal cancer screening
procedures, ultrasound screening for abdominal aortic aneurysms, and
the IPPE.
As discussed in the CY 2011 PFS proposed rule (75 FR 40130), the
following preventive services listed in section 1833(ddd)(3)(A) of the
Act (as added by section 4104 of the ACA) are not recommended by the
USPSTF with a grade of A or B for any indication or population: digital
rectal examination furnished as a prostate cancer screening service;
glaucoma screening; DSMT services; and barium enema furnished as a
colorectal cancer screening service.
Specifically, HCPCS code G0102 (Prostate cancer screening; digital
rectal exam), which does not have a grade of A or B from the USPSTF for
any indication or population, will continue to be subject to the
deductible and coinsurance as there is no statutory provision to the
contrary. However, the deductible and coinsurance for HCPCS code G0103
(Prostate cancer screening; prostate specific antigen test (PSA)) will
continue to be waived in accordance with sections 1833(a)(1)(D) and
1833(b)(3) of the Act (applying to clinical laboratory tests), even
though this service also does not have a grade of A or B from the
USPSTF.
Glaucoma screening services, described by HCPCS codes G0117
(Glaucoma screening for high risk patients furnished by an optometrist
or ophthalmologist) and G0118 (Glaucoma screening for high risk patient
furnished under the direct supervision of an optometrist or
ophthalmologist), will continue to be subject to the deductible and
coinsurance because these services are not recommended with a grade of
A or B by the USPSTF for any indication or population and there is no
other statutory provision to exempt them. Similarly, DSMT services are
currently not rated by the USPSTF, and there is no other statutory
provision to except them from applicability of the deductible and
coinsurance. Therefore the deductible and coinsurance requirements will
continue to apply.
Barium enemas furnished as colorectal cancer screening tests,
described by HCPCS codes G0106 (Colorectal cancer screening;
alternative to G0104, screening sigmoidoscopy, barium enema) and G0120
(Colorectal cancer screening; alternative to G0105, screening
colonoscopy, barium enema), do not have a grade of A or B from the
USPSTF for any indication or population. However, the deductible does
not apply to barium enemas furnished as colorectal cancer screening
tests, because colorectal cancer screening tests are explicitly
excluded from the deductible in section 1833(b)(8) of the Act. However,
there is no specific exclusion of barium enemas from the coinsurance
requirement in section 1833(b)(1) of the Act and, therefore, this
requirement, as applicable, continues to apply to barium enemas. We
note that the USPSTF has given a grade A recommendation to screening
colonoscopy, screening flexible sigmoidoscopy, and fecal occult blood
screening tests, and that, as a result, both the deductible and
coinsurance are waived for these colorectal cancer screening tests
under section 4104 of the ACA.
In developing recommendations regarding preventive services for the
CY 2011 PFS proposed rule, we recognized that the USPSTF may make
recommendations that are specific to a clinical indication or
population, at times including characteristics such as gender and age
in its recommendations. In accordance with section 4014 of the ACA, we
proposed to waive the deductible and coinsurance for a Medicare-covered
preventive service, with no limits on the indication or population, as
long as that service is recommended by the USPSTF with a grade of A or
B for at least one indication and/or population. However, we noted that
all existing Medicare coverage policies for such services, including
any limitations based on indication or population would continue to
apply. In some cases, national coverage policies may currently limit
Medicare coverage based on the indication or population, consistent
with the USPSTF recommendations with a grade of A or B for the
indication or population. In other cases where Medicare does not
explicitly noncover preventive services for a specific population or
indication, we stated that we would expect that, particularly in those
cases where the USPSTF recommendation grade is a D (that is, the USPSTF
recommends against the service because there is moderate or high
certainty that the service has no net benefit or that the harms
outweigh the benefits), practitioners would only order those preventive
services that are clinically appropriate for the beneficiary. We noted
that if we had concerns in the future about the appropriateness of
preventive services for an indication or population in light of the
USPSTF's recommendations, we may consider using our authority under
section 1834(n)(1) of the Act (as added by section 4105 of the ACA) to
modify Medicare coverage of any preventive service to be consistent
with the recommendations of the USPSTF.
We note also that the USPSTF ceased to make recommendations with
regard to vaccines and vaccine administration after CY 1996, so as not
to conflict with the recommendations of the CDC's ACIP. However, the
USPSTF's most recent vaccine recommendations gave a grade of B to
influenza and pneumococcal vaccines and their administration and a
grade of A to hepatitis B vaccine and its administration. While
sections 1833(a)(1) and 1833(b)(1) of the Act (as amended by section
4104 of the ACA) require that a preventive service receive a grade A or
B recommendation from the USPSTF for the coinsurance and deductible to
be waived, the statute does not specify that the recommended grade must
be furnished by the USPSTF within any given timeframe. The USPSTF
grades from 1996 for these vaccination services are the most current
USPSTF grades and have never been withdrawn. Therefore, we believe that
these preventive services meet the requirements of the statute for the
waiver of the deductible and coinsurance. We also noted that the CDC's
ACIP currently recommends influenza, pneumococcal, and hepatitis B
vaccines.
We proposed to update Sec. 410.160(b), which lists the services
for which expenses incurred are not subject to the Part B annual
deductible and do not count toward meeting that deductible.
Specifically, we proposed to revise Sec. 410.160(b)(2) to include
influenza and hepatitis B vaccines and their administration, in
addition to pneumococcal vaccine and its administration. In addition,
in Sec. 410.160(b), we also proposed to add exceptions for bone mass
measurement, MNT services, and the AWV.
In Sec. 410.152, we proposed to revise paragraph (l) to establish
the amount of payment under the applicable payment system for providers
and suppliers of the services listed in paragraph (1). Table 38 of the
CY 2011 PFS proposed rule (75 FR 40131 through 40135) identified the
HCPCS codes that we

[[Page 73416]]

proposed to identify as ``preventive services,'' in addition to the
IPPE and the AWV, as well as the most recent USPSTF grade, if any, that
was the basis for our policy with regard to waiver of the deductible
and coinsurance. Table 38 also identified the Medicare payment system
under which the HCPCS code would be paid when furnished outside of the
facility setting.
Comment: Many commenters supported CMS' proposal to waive the
deductible and coinsurance for those Medicare-covered preventive
services with a grade A or B USPSTF recommendation for any indication
or population, as well as for the IPPE and the AWV. The commenters
acknowledged that CMS did not propose to modify current Medicare policy
that may cover a preventive service only under specific circumstances.
The commenters supported CMS' proposal to rely on practitioners'
clinical judgment to order preventive services that are clinically
appropriate for specific beneficiaries. Many commenters noted that CMS'
``quick implementation'' of this provision underscores the agency's
commitment to removing barriers to preventive health care.
A few commenters expressed concern regarding how CMS may
incorporate USPSTF recommendations into the Medicare benefit structure
in the future and cautioned CMS not to adopt policies that would result
in Medicare not covering important preventive services for an older
population. For example, the USPSTF recommendations for mammography in
women do not apply to individuals age 75 or older, and the commenters
were concerned that future changes to CMS policies could result in
Medicare not covering important preventive services for an older
population.
Response: We appreciate the commenters' support for our proposal to
waive the beneficiary deductible and coinsurance for most preventive
services beginning in CY 2011. We continue to believe that is
appropriate to waive the beneficiary deductible and coinsurance for
preventive services with a grade A or B recommendation by the USPSTF
for any indication or population, if Medicare covers the particular
service under Part B. However, we reiterate that if we develop concerns
in the future about the appropriateness of preventive services for an
indication or population in light of the USPSTF's recommendations, we
may consider using our authority under section 1834(n)(1) of the Act
(as added by section 4105 of the ACA) to modify Medicare coverage of
any preventive service to be consistent with the recommendations of the
USPSTF.
Comment: Several commenters expressed concern over the USPSTF
rating of I for glaucoma screening [An ``I'' rating means that the
USPSTF concludes that the current evidence is insufficient to assess
the balance of benefits and harms of the service. Evidence is lacking,
of poor quality, or conflicting, and the balance of benefits and harms
cannot be determined]. Others were concerned about the rating of D for
prostate cancer screening [A ``D'' rating means that the USPSTF
recommends against the service. There is moderate or high certainly
that the service has no net benefit or that the harms outweigh the
benefits]. Other commenters noted the lack of a specific USPSTF rating
for DSMT services. The commenters argued that because these services
were covered by Medicare as preventive services, the beneficiary cost-
sharing should be waived to ensure access to these services.
Response: Glaucoma screening, digital prostrate screening, and DSMT
services are covered by Medicare under Part B and are specific
categories of ``preventive services'' included in section
1861(ddd)(3)(A) of the Act (as added by section 4014 of the ACA).
However, as these services do not have a USPSTF grade A or B
recommendation, the deductible and coinsurance cannot be waived. Thus,
the coinsurance and deductible will continue to apply to these services
when they are furnished to a Medicare beneficiary.
Comment: Some commenters were concerned that ultrasound screening
for abdominal aortic aneurysm (AAA), while a preventive service covered
by Medicare and with a grade B recommendation from the USPSTF, would
continue to require a physician referral in order for the preventive
service to be furnished and for the waiver of cost-sharing to apply.
Furthermore, the commenters objected to the current requirement that
coverage of ultrasound screening for AAA relies upon a referral as a
result of the IPPE because the IPPE is only available to beneficiaries
during their first 12 months of Part B enrollment.
Response: Ultrasound screening for AAA is a preventive service
covered by Medicare, with certain restrictions set forth in Sec.
410.19 of our regulations. Because this service has a grade B
recommendation from the USPSTF, the deductible and coinsurance will be
waived beginning in CY 2011 for covered services. While we appreciate
the commenters' concerns regarding the existing requirements for
ultrasound screening for AAA, the current requirement for a referral as
a result of the IPPE is required by section 1861(s)(2)(AA) of the Act
and continues to apply.
Comment: In the context of many commenters' recommendations to add
new preventive services for coverage under Part B as ``additional
preventive services,'' most commenters also recommended that the
beneficiary cost-sharing for these services be waived. The services
addressed by the commenters included services with current grade A or B
USPSTF recommendations, those with other grade USPSTF recommendations,
those that have never been reviewed by the USPSTF, those with
recommendations from other advisory organizations but the USPSTF, and
other vaccines for which the USPSTF no longer makes recommendations.
Response: As discussed earlier in this section, the statute permits
us to add ``additional preventive services'' to Medicare coverage only
if those services have a grade A or B recommendation from the USPSTF.
Other grade USPSTF recommendations or recommendations from other
advisory groups, including the ACIP, cannot substitute for the grade A
or B USPSTF recommendation. In the event that we add ``additional
preventive services'' in the future, as we have HIV screening for at
risk individuals and smoking and tobacco cessation counseling for
asymptomatic individuals in CY 2010, the Medicare deductible and
coinsurance will be waived for those services.
Comment: One commenter expressed concern that CMS was limiting the
waiver of beneficiary cost-sharing to only those vaccines covered under
Medicare Part B. The commenter contended that the ACIP recommends
vaccines that are covered under Medicare Part D, and not Part B, and
therefore not subject to the waiver.
Response: We recognize that many preventive vaccines such as herpes
zoster and hepatitis A are covered for beneficiaries under Medicare
Part D and the commenter is correct that Medicare Part D is not
included in section 1861(ddd) of the Act (as amended by section 4104 of
the ACA). Section 1861(ddd)(1)(C) of the Act limits ``additional
preventive services'' to those appropriate for individuals entitled to
benefits under Medicare Part A or enrolled under Medicare Part B only.
In addition, the statute only permits expansions if the item or
services based on a grade of A or B recommendation by the USPSTF.
Comment: Several commenters appreciated the clarity of Table 38 in
the

[[Page 73417]]

CY 2011PFS proposed rule (75 FR 40131 through 40135), and requested
that a table such as this be made available on the CMS Web site that
reflects CMS' final policies regarding preventive services and
beneficiary cost-sharing on a HCPCS code-specific basis. Other
commenters requested additional provider and beneficiary educational
materials to clarify preventive services benefits under Medicare, to
identify which preventive services would continue to be subject to
beneficiary cost-sharing, and to specify which preventive services
would meet the requirements for the waiver of deductible and
coinsurance where Medicare would make 100 percent payment.
Response: We are in the process of developing educational materials
that will reflect and communicate to beneficiaries and providers the CY
2011 changes to beneficiary cost-sharing for preventive services under
Medicare. We agree with the commenters that it is critical to
effectively educate beneficiaries and providers about the preventive
services covered by Medicare and specifically those services that will
be paid at 100 percent by Medicare beginning in CY 2011 to help expand
access to these important services. MLN Matters articles, quick
reference guides, and the Medicare and You Handbook will all be
developed and/or updated to reflect the provisions of the ACA and are
examples of some the provider and beneficiary educational materials
that will be available. We appreciate the recommendations of the
commenters regarding the format for specific information that we could
make available on the CMS web site, and we will keep these suggestions
in mind as we further refine our educational strategy.
After consideration of the public comments we received, we are
finalizing our proposal to waive the deductible and coinsurance for
most preventive services, and for the IPPE and the AWV, beginning in CY
2011.
Table 65 displays the HCPCS codes that we are finalizing as
``preventive services'' under section 1861(ddd)(3)(A) of the Act (as
added by section 4014 of the ACA) and identifies the HCPCS codes for
the IPPE and the AWV. Table 65 also indicates the most recent USPSTF
grade, if any, that is the basis for our policy with regard to waiver
of the deductible and coinsurance, as applicable, and the Medicare
payment system under which the HCPCS code would be paid when furnished
outside of the facility setting.
Since the publication of the CY 2011 PFS proposed rule, final Level
II HCPCS codes have been assigned for the AWV, as well as the
``additional preventive services'' for HIV screening for at risk
individuals and smoking and tobacco cessation counseling for
asymptomatic individuals. Therefore, these services and their
associated Level II HCPCS codes are all displayed in Table 65. In
addition, beginning in CY 2011, Medicare will no longer recognize CPT
code 90658 (Influenza virus vaccine, split virus, when administered to
individuals 3 years of age and older, for intramuscular use) but,
instead will use 5 new HCPCS Q codes to report influenza vaccines that
would otherwise have been reported under CPT code 90658. Therefore,
these HCPCS Q-codes are included in Table 65, and they will be
recognized as of January 1, 2011. CPT code 90658 is no longer displayed
in the table. Finally, it has come to our attention since publication
of the CY 2011 PFS proposed rule that CPT code 86689 (HTLV or HIV
antibody, confirmatory test (e.g., Western Blot)) describes a
diagnostic test, not specifically an HIV screening test that would be
reported for a screening service that is covered by Medicare, and,
therefore, this CPT is not included in Table 65.
We are adopting proposed Sec. 410.152 to specify the amounts of
payment, with modification of (13) to read ``Annual Wellness Visit
(AWV), providing Personalized Prevention Plan Services (PPPS)'' and
proposed Sec. 410.160 to specify exclusion from the Part B annual
deductible, with modification of (12) to read ``Annual Wellness Visit
(AWV), providing Personalized Prevention Plan Services (PPPS).'' These
modifications utilize wording that is consistent with final Sec.
410.15, Annual Wellness Visits Providing Personalized Prevention Plan
Services: Conditions for and Limitations on Coverage.
Section 10501(i)(2) of the ACA amended the definition of Federally
Qualified Health Center (FQHC) services as defined in section
1861(aa)(3)(A) of the Act by replacing the specific references to
services provided under section 1861(qq) and (vv) of the Act (diabetes
outpatient self-management training services and medical nutrition
therapy services, respectively) with preventive services as defined in
section 1861(ddd)(3) of the Act, as established by section 4014(a)(3)
of the ACA. These changes are effective for services provided on or
after January 1, 2011. Accordingly, we are proposing to conform the
regulations to the new statutory requirement by adding a new section
Sec. 405.2449 which would add the new preventive services definition
to the definition of FQHC services effective for services provided on
or after January 1, 2011.
Section 1861(ddd)(3) of the Act defines ``preventive services'' as
consisting of the following three components:
Screening and preventive services described in section
1861(ww)(2) of the Act (other than electrocardiograms described in
subparagraph (M) of that subsection).
An initial preventive physical examination, as defined in
section 1861(ww) of the Act.
Personalized prevention plan services as defined in
section 1861(hhh)(1) of the Act.
We proposed to add each of these three components into the new
Medicare FQHC preventive services definition in a new Sec. 405.2449.
Section 4104(b) of the ACA, as amended by section 10406 of the ACA,
waives coinsurance for preventive services by adding section
1833(a)(1)(Y) to the Act to require waiver of coinsurance for
preventive services that are recommended with a grade of A or B by the
USPSTF for any indication or population. This provision is specifically
designed to remove barriers to affording and obtaining such preventive
services under Medicare.
In addition, section 10501(i)(3)(B)(ii) of the ACA added section
1833(a)(1)(Z) to the Act to require a 20 percent coinsurance on all
FQHC services after implementation of the FQHC prospective payment
system. We believe we can give both section 1833(a)(1)(Y) and (Z) of
the Act, and the definition of FQHC services (revised to include the
broader scope of preventive services) their best effect by providing
Medicare payment at 100 percent for preventive services as defined at
section 1861 (ddd)(3) of the Act, effective January 1, 2011.
Section 1833(b)(4) of the Act stipulates that the Medicare Part B
deductible shall not apply to FQHC services. The ACA makes no change to
this provision; therefore Medicare will continue to waive the Part B
deductible for all FQHC services, including preventive services added
by the ACA.
We received a number of public comments on the addition of
preventive services to the Medicare FQHC benefit. These comments
included questions regarding how these benefits are paid and
clarification on the waiver of coinsurance on these benefits in the
Medicare FQHC setting. The comments are addressed individually below.
Comment: One commenter indicated that prior to enactment of the
ACA, many health centers provided added preventive services as part of
the

[[Page 73418]]

primary and preventive care offered at the center. Yet when provided to
Medicare beneficiaries, they received no additional reimbursement. The
commenter noted that since the inception of the Medicare FQHC benefit
in 1992, Medicare added thirteen new services to its coverage, yet
those services have not been included as FQHC services, except for
diabetes self management training and medical nutrition therapy which
were added by the Deficit Reduction Act.
Response: We recognize that prior to enactment of the ACA, many
FQHCs may have provided some or all of the same preventive services
since added to the Medicare FQHC benefit package by the ACA. We also
agree that many new preventive services have been added to Medicare
since 1992, and except for diabetes self management training and
medical nutrition therapy, which were added by the Deficit Reduction
Act of 2005, these services had not been specifically added to the
Medicare FQHC benefit package under the law. We believe the addition of
these preventive services to the Medicare FQHC benefit through
provisions in the ACA, along with the waiver of beneficiary cost
sharing for these services in the Medicare FQHC setting, eliminates
both prior statutory restrictions from Medicare coverage in the FQHC
setting as well as potential financial barriers beneficiaries might
otherwise face in obtaining these services.
Comment: One commenter requested further clarification in both this
preamble and the final regulation text at Sec. 405.2449 on the
application of the waiver of coinsurance in the FQHC setting and CMS'
statement that it will allow 100 percent reimbursement for these
preventive services. The commenter stated that health centers are
reimbursed 100 percent of their costs for the provision of influenza,
pneumococcal, and Hepatitis B vaccinations, in accordance with Section
1861(s)(10)(A) of the Act. The commenter further noted that this
reimbursement is done separately and outside the Medicare FQHC upper
payment limit. The commenter asserted that the payment limit negatively
impacts an overwhelming majority of health centers, and therefore
encouraged CMS to use a similar method to determine the reimbursement
for these new FQHC preventive services. The commenter further asserted
that using a similar method to determine reimbursement would allow for
health centers to provide more comprehensive preventive care to their
patients, alleviate the financial restrictions faced by health centers
in providing these critical services, and would be in the best
interests of CMS, health centers, and their patients. Finally, the
commenter noted that because the list of new preventive services
includes the provision of influenza, pneumococcal and hepatitis B
vaccinations, CMS must ensure that health centers do not lose their
current reimbursement structure for these services.
Response: No coinsurance will be imposed upon ACA-added preventive
services in Medicare FQHCs. Accordingly, final settlement with FQHCs
will reflect the policy that no coinsurance amounts will be subtracted
from the reasonable cost of ACA-added preventive benefits. Final
settlement is determined on the basis of the Medicare cost report, the
CMS-222-92. We made no proposal to exempt ACA-added preventive services
from tests of reasonableness such as the Medicare FQHC upper payment
limits. Further, we do not agree that CMS should use the same
methodology presently employed to pay FQHCs for influenza and
pneumococcal vaccinations (see discussion of Hepatitis B vaccinations
below) to pay for new Medicare FQHC preventive services added by the
ACA. We believe the average cost per-visit payment methodology, which
is the general payment methodology employed by Medicare to pay for
Medicare FQHC services, was implicit in the proposal as we proposed no
changes to Medicare FQHC payment regulations to implement this new
preventive services addition. In addition, we believe the general
payment methodology for Medicare FQHCs, which is based on an all-
inclusive-cost-per-visit, is better suited and most appropriate for
payment of new preventive services such as the annual wellness visit.
It is our belief that the Medicare FQHC per-visit upper payment limits
($126.10 urban and $109.14 rural in CY 2011) remain reasonable and
adequate not only for existing Medicare FQHC services but also for new
preventive services as well. Accordingly, we cannot accept the comment
to exclude new preventive services from the Medicare FQHC upper payment
limits. The Medicare FQHC upper payment limits and the general per-
visit payment methodology employed to pay for Medicare FQHC services
will apply to new Medicare FQHC preventive services.
While we clarify the waiver of coinsurance and application of
Medicare FQHC payment methodology and upper payment limits to new
preventive services in this preamble, we cannot accept the comment to
provide further clarification within the final regulation text at Sec.
405.2449. Section 405.2449 is placed within Medicare FQHC regulations
which pertain to the description of Medicare FQHC services and not
payment. We made no proposal to change payment and accordingly make no
changes to Medicare FQHC payment regulations.
Finally, we note that we did not propose, nor are we making any
changes to, how influenza, pneumococcal and hepatitis B vaccinations
are paid in Medicare FQHCs. Accordingly, health centers will not lose
their current reimbursement structure for these services. We agree that
health centers are reimbursed 100 percent of their costs for the
provision of influenza and pneumococcal vaccinations. We further agree
that payment for influenza and pneumococcal vaccinations in Medicare
FQHCs is done separately and outside the Medicare FQHC upper payment
limit. However, we note for clarification purposes that prior to the
effective date of the ACA provisions adding new preventive services to
the Medicare FQHC benefit, the waiver of Part B coinsurance did not
extend to Hepatitis B vaccinations. Hepatitis B vaccinations were
covered in Medicare FQHCs in accordance with Section 1861(aa)(3)(A) of
the Act which through reference to section 1861(aa)(1)(A) of the Act
included all section 1861(s)(10) of the Act services including section
1861(s)(10)(B) of the Act, Hepatitis B vaccinations. The waiver of the
20 percent Medicare Part B coinsurance in Section 1833(a)(3)(A) of the
Act extended only to Section 1861(s)(10)(A) of the Act services and not
to section 1861(s)(10)(B) of the Act Hepatitis B vaccinations. To
summarize this clarification, prior to the effective date of the ACA
provisions adding new preventive services to the Medicare FQHC benefit,
the waiver of Medicare Part B coinsurance did not extend to Section
1861(s)(10)(B) of the Act Hepatitis B vaccinations, hence these
services were subject to Medicare Part B coinsurance and paid at 80
percent (not 100 percent) of reasonable costs in accordance with the
provisions in section 1833(a)(3) of the Act. Effective with
implementation of ACA provisions on January 1, 2011, Part B coinsurance
on Hepatitis B vaccinations is waived as they are now included in the
definition of ``preventive services'' in section 1861(ddd)(3)(A) of the
Act as cross-referenced to section 1861(ww)(2) of the Act.
Consistent with our response to public comment above, and in
conformance with the preventive services definition in section

[[Page 73419]]

1861(ddd)(3) of the Act, we are finalizing this new Medicare FQHC
preventive services provision without modification. We will conform the
regulations to the new statutory requirements by adding a new section
Sec. 405.2449, adding the new preventive services definition to the
definition of FQHC services effective for services provided on or after
January 1, 2011.
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BILLING CODE 412-01-C
3. Extension of Waiver of Deductible to Services Furnished in
Connection With or in Relation to a Colorectal Cancer Screening Test
That Becomes Diagnostic or Therapeutic
Section 4104(c) of the ACA amended section 1833(b) of the Act to
waive the Part B deductible for colorectal cancer screening tests that
become diagnostic. Specifically, section 1833(b)(1) of the Act (as
amended by section 4104(c)(2) of the ACA) waived the deductible with
respect to a colorectal cancer screening test regardless of the code
that is billed for the establishment of a diagnosis as a result of the
test, or for the removal of tissue or other matter or other procedure
that is furnished in connection with, as a result of, and in the same
clinical encounter as a screening test. We proposed that all surgical
services furnished on the same date as a planned screening colonoscopy,
planned flexible sigmoidoscopy, or barium enema be considered to be
furnished in connection with, as a result of, and in the same clinical
encounter as the screening test. In the event of a legislative change
to this policy (for example, a statutory change that would waive the
coinsurance for these related services in addition to the deductible),
we would reassess the appropriateness of this proposed definition of
services that are furnished in connection with, as a result of, and in
the same clinical encounter as the colorectal cancer screening test
that becomes diagnostic. We also noted that the beneficiary's annual
deductible would likely be met when any surgical procedure (related or
not) is furnished on the same day as the scheduled screening test.
We proposed to implement this provision by creating a HCPCS
modifier that providers and practitioners would append to the
diagnostic procedure code that is reported instead of the screening
colonoscopy or screening flexible sigmoidoscopy HCPCS code or as a
result of the barium enema when the screening test becomes a diagnostic
service. The claims processing system would respond to the modifier by
waiving the deductible for all surgical services on the same date as
the diagnostic test. We proposed that coinsurance would continue to
apply to the diagnostic test and to other services furnished in
connection with, as a result of, and in the same clinical encounter as
the screening test.
Comment: Many commenters expressed support for CMS' proposal to
waive the deductible in cases where a screening colonoscopy for
colorectal cancer becomes diagnostic. The commenters believe that the
proposal to waive the Medicare deductible for any surgical service
performed on the same day and in the same clinical encounter as a
screening colonoscopy if the service is appended with a modifier is a
sound approach to implementing the policy.
However, a few commenters requested that CMS also waive the
coinsurance for a procedure that was a planned colorectal cancer
screening test, regardless of the code that is billed for the
establishment of a diagnosis as a result of the test, or for the
removal of tissue or other matter or other procedure that is furnished
in connection with, or as a result of, and in the same clinical
encounter as a screening test. The commenters were concerned that
beneficiaries may refrain from undergoing a covered colorectal cancer
screening test if coinsurance could apply to a resulting diagnostic
test and other services furnished in the same encounter as the planned
colorectal cancer screening test. As an alternative, several commenters
recommend that CMS not apply a coinsurance requirement to the part of
the procedure that is screening in nature.
Response: We appreciate the commenters' support for our proposal,
including the proposed administrative requirements for practitioners
and providers to identify the circumstances under which the waiver of
the deducible would apply. As stated above, section 1833(b)(1) of the
Act (as amended by section 4104(c)(2) of the ACA) waived the Part B
deductible for colorectal cancer screening tests that become
diagnostic. The statute does not currently permit waiver of coinsurance
for these circumstances as the 20 percent coinsurance applies to all
service furnished under the PFS unless there is a specific statutory
exception. We believe that a statutory change would be necessary in
order to waive the coinsurance for these related services, in addition
to the waiver of the deductible.
In response to those commenters who suggested, as an alternative,
that we identify the screening portion of the diagnostic test in order
to waive the coinsurance for only that portion, we are unable to
identify a portion of a diagnostic test that is ``screening'' because a
HCPCS code for a diagnostic test would be reported and, therefore, we
would consider the whole test to be diagnostic in nature.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to waive the deductible for colorectal
cancer screening tests that become diagnostic. Providers and
practitioners would append new HCPCS modifier -PT (Colorectal cancer
screening test, converted to diagnostic test or other procedure) to the
diagnostic procedure code that is reported instead of the screening
colonoscopy or screening flexible sigmoidoscopy HCPCS code or as a
result of the barium enema when the screening test becomes a diagnostic
service. The claims processing system would respond to the modifier by
waiving the deductible for all surgical services on the same date as
the diagnostic test. Coinsurance would continue to apply to the
diagnostic test and to other services furnished in connection with, as
a result of, and in the same clinical encounter as the screening test.

S. Section 5501: Expanding Access to Primary Care Services and General
Surgery Services

1. Section 5501(a): Incentive Payment Program for Primary Care Services
a. Background
Section 5501(a) of the ACA revised section 1833 of the Act by
adding a new paragraph (x), ``Incentive Payments for Primary Care
Services.'' Section 1833(x) of the Act states that in the case of
primary care services, furnished on or after January 1, 2011 and before
January 1, 2016 by a primary care practitioner, there shall also be
paid on a monthly or quarterly basis an amount equal to 10 percent of
the payment amount for such services under Part B.
Section 1833(x)(2)(A) of the Act (as added by section 5501(a) of
the ACA) defines a primary care practitioner as: (1) A physician, as
described in section 1861(r)(1) of the Act, who has a primary specialty
designation of family medicine, internal medicine, geriatric medicine,
or pediatric medicine; or (2) a nurse practitioner, clinical nurse
specialist, or physician assistant as defined in section 1861(aa)(5) of
the Act, and in all cases, for whom primary care services accounted for
at least 60 percent of the allowed charges under Part B for the
practitioner in a prior period as determined appropriate by the
Secretary.
Section 1833(x)(2)(B) of the Act (as added by section 5501(a)(2)(B)
of the ACA) defines primary care services as those services identified
by the following HCPCS codes as of January 1, 2009 (and as subsequently
modified by the Secretary, as applicable):
99201 through 99215 for new and established patient office
or other outpatient E/M visits;
99304 through 99340 for initial, subsequent, discharge,
and other nursing facility E/M services; new and

[[Page 73432]]

established patient domiciliary, rest home (eg, boarding home), or
custodial care E/M services; and domiciliary, rest home (eg, assisted
living facility), or home care plan oversight services; and
99341 through 99350 for new and established patient home
E/M visits. These codes are displayed in Table 66. All of these codes
remain active in CY 2011 and there are no other codes used to describe
these services.

Table 66--Primary Care Services Eligible for Primary Care Incentive Payments in CY 2011
----------------------------------------------------------------------------------------------------------------
CPT Code Description
----------------------------------------------------------------------------------------------------------------
99201........................ Level 1 new patient office or other outpatient visit.
99202........................ Level 2 new patient office or other outpatient visit.
99203........................ Level 3 new patient office or other outpatient visit.
99204........................ Level 4 new patient office or other outpatient visit.
99205........................ Level 5 new patient office or other outpatient visit.
99211........................ Level 1 established patient office or other outpatient visit.
99212........................ Level 2 established patient office or other outpatient visit.
99213........................ Level 3 established patient office or other outpatient visit.
99214........................ Level 4 established patient office or other outpatient visit.
99215........................ Level 5 established patient office or other outpatient visit.
99304........................ Level 1 initial nursing facility care.
99305........................ Level 2 initial nursing facility care.
99306........................ Level 3 initial nursing facility care.
99307........................ Level 1 subsequent nursing facility care.
99308........................ Level 2 subsequent nursing facility care.
99309........................ Level 3 subsequent nursing facility care.
99310........................ Level 4 subsequent nursing facility care.
99315........................ Nursing facility discharge day management; 30 minutes.
99316........................ Nursing facility discharge day management; more than 30 minutes.
99318........................ Other nursing facility services; evaluation and management of a patient involving
an annual nursing facility assessment.
99324........................ Level 1 new patient domiciliary, rest home, or custodial care visit.
99325........................ Level 2 new patient domiciliary, rest home, or custodial care visit.
99326........................ Level 3 new patient domiciliary, rest home, or custodial care visit.
99327........................ Level 4 new patient domiciliary, rest home, or custodial care visit.
99328........................ Level 5 new patient domiciliary, rest home, or custodial care visit.
99334........................ Level 1 established patient domiciliary, rest home, or custodial care visit.
99335........................ Level 2 established patient domiciliary, rest home, or custodial care visit.
99336........................ Level 3 established patient domiciliary, rest home, or custodial care visit.
99337........................ Level 4 established patient domiciliary, rest home, or custodial care visit.
99339........................ Individual physician supervision of a patient in home, domiciliary or rest home
recurring complex and multidisciplinary care modalities; 30 minutes.
99340........................ Individual physician supervision of a patient in home, domiciliary or rest home
recurring complex and multidisciplinary care modalities; 30 minutes or more.
99341........................ Level 1 new patient home visit.
99342........................ Level 2 new patient home visit.
99343........................ Level 3 new patient home visit.
99344........................ Level 4 new patient home visit.
99345........................ Level 5 new patient home visit.
99347........................ Level 1 established patient home visit.
99348........................ Level 2 established patient home visit.
99349........................ Level 3 established patient home visit.
99350........................ Level 4 established patient home visit.
----------------------------------------------------------------------------------------------------------------

b. Primary Care Incentive Payment Program (PCIP)
(1) Primary Specialty Designation
For primary care services furnished on or after January 1, 2011 and
before January 1, 2016, we proposed to provide a 10 percent incentive
payment to primary care practitioners, identified as the following: (1)
In the case of physicians, enrolled in Medicare with a primary
specialty designation of 08-family practice, 11-internal medicine, 37-
pediatrics, or 38-geriatrics; or (2) in the case of nonphysician
practitioners (NPPs), enrolled in Medicare with a primary care
specialty designation of 50-nurse practitioner, 89-certified clinical
nurse specialist, or 97-physician assistant; and (3) for whom the
primary care services displayed in Table 66 accounted for at least 60
percent of the allowed charges under Part B for such practitioner
during the time period that is specified by the Secretary, and proposed
in this section. Hereinafter, we refer to practitioners with these
primary Medicare specialty designations as potential primary care
practitioners and the potential primary care practitioner's ratio of
primary care allowed charges to allowed charges under Part B
(multiplied by 100) as the primary care percentage.
Comment: Many commenters expressed support for the PCIP and general
appreciation for the increased payment for primary care services. Some
commenters approved of the

[[Page 73433]]

proposed inclusion of nonphysician practitioners (NPPs) in the program,
but asked for clarification on the practice settings where these
practitioners may furnish PCIP-eligible services. However, several
commenters disagreed with the proposed specialty limitations for the
PCIP. The commenters recommended that several additional specialties be
eligible for the PCIP including, but not limited to, neurology,
chiropractics, infectious disease, endocrinology, and certified nurse-
midwives. The commenters contended that many practitioners in these
other specialties provide primary care services and have the requisite
education and training, similar to the potential primary care
practitioners in the designated specialties to which payment under the
PCIP was proposed.
Response: We appreciate the commenters' support of the PCIP. We
recognize that a variety of specialties may provide primary care
services as defined broadly under the statute by the E/M codes
displayed in Table 66 and, in some cases, these specialist
practitioners may truly function as ``primary care practitioners'' in
the common use of the term (providing first contact, coordinated,
continuous care for certain patients under their care). However,
section 1833(x) of the Act (as added by section 5501(a) of the ACA)
specifies in the definition of primary care practitioner the physician
specialties that are considered as primary care for purposes of the
PCIP. Under section 1833(x)(2)(A)(i)(I) of the Act, only physicians
with a primary specialty designation of family medicine, internal
medicine, geriatric medicine, or pediatric medicine are considered
potential primary care physicians. The provision does not authorize us
to add other Medicare specialty designations to the definition of a
primary care practitioner for purposes of the PCIP. Therefore, as
proposed, we will identify physicians that have a primary specialty
designation of family medicine, internal medicine, geriatric medicine,
or pediatric medicine (along with nurse practitioners, clinical nurse
specialists, and physician assistants) for further evaluation as
potential primary care practitioners for purposes of the PCIP.
We note that the PCIP does not place limitations on the setting of
the primary care services for which a primary care practitioner may be
paid an incentive payment. However, as a practical matter, the
statutorily defined primary care services to which the PCIP applies may
limit the setting of the services on which a PCIP payment is based. For
example, there are no inpatient hospital care E/M services on the list
of primary care services for purposes of the PCIP. The PCIP payment is
an amount equal to 10 percent of the payment for primary care services
furnished by the primary care practitioner.
Comment: Several commenters commended CMS for proposing that the
PCIP payment would be in addition to payments under other incentive
programs under Medicare, arguing that this policy is particularly
important to encourage the delivery of primary care services to
underserved Medicare populations. However, some commenters recommended
that CMS increase the amount of PCIP payments because the commenters
believe that 10 percent is an insufficient financial incentive to
encourage primary care practice over specialty practice as a career
path for medical and other health professional students.
Response: We appreciate the commenters' suggestions that primary
care should continue to be a Medicare priority and acknowledge that
payment incentives are one of many factors that may influence health
professional student career choice. While we recognize the importance
of encouraging primary care practice and ensuring the accessibility of
primary care services, section 1833(x) of the Act (as added by section
5501(a) of the ACA) explicitly states the incentive payment amount, and
does not grant authority to the Secretary to adjust the payment amount.
According to this provision, primary care practitioners (those who meet
the specialty designation and primary care percentage criteria) qualify
for an incentive payment equaling 10 percent of the payment amount
under Part B for the primary care services they furnish. Therefore, we
are maintaining the PCIP incentive payment amount at 10 percent, as we
proposed. The statute also specifies that the PCIP payment is to be
determined without regard to any payment for the primary care service
under section 1833(m) of the statute (currently, the HPSA physician
bonus payment program). Therefore, we are also adopting as final our
proposal to make any PCIP payment in addition to, but determined
without regard to, any HPSA physician bonus payment.
(2) Primary Care Percentage Calculation
In the CY 2011 PFS proposed rule (74 FR 10137), we proposed to use
the most current full year of claims data to identify primary care
practitioners eligible for the PCIP for a CY based on the
practitioner's primary specialty (as identified on claims) and the
practitioner's primary care percentage calculated based on the primary
care services displayed in Table 66. We commonly use the most recent
full year of claims data for purposes of establishing annual payment
amounts under a number of Medicare's fee-for-service programs. A
potential primary care practitioner would be eligible for the PCIP in a
CY if the practitioner's primary care percentage, calculated as the
practitioner's allowed charges for primary care services (identified in
Table 66) (the numerator) divided by his or total allowed charges under
Part B (the denominator) and multiplied by 100, meets or exceeds the 60
percent threshold. We note that the practitioner's specialty is applied
to the claim by the claims processing system and reflects the
practitioner's primary specialty designation for purposes of Medicare
enrollment on the date the claim is processed, which would usually be
close to the date on which the service was actually furnished to the
beneficiary. We would identify primary care practitioners eligible for
the PCIP for a year by the individual physician/practitioner national
provider identifier (NPI) number using the most current full year of
claims data available.
Comment: Many commenters described problems potential primary care
practitioners would likely encounter in meeting the 60 percent
eligibility threshold requirement for the PCIP. The commenters pointed
to a few reasons why a potential primary care practitioner's primary
care percentage may not meet the 60 percent threshold. Most commenters
believe that the denominator in the primary care percentage
calculation, or ``allowed charges under Part B'' as CMS proposed, was
too broad, and would limit the number of potential primary care
practitioners who would qualify for the PCIP. For example, the
commenters speculated that under the proposed threshold calculation,
more than one-third of family practitioners and more than 60 percent of
general internists would not qualify for the PCIP. Generally, the
commenters requested that CMS interpret the phrase ``allowed charges
under this part'' in section 1833(x) of the Act (as added by section
5501(a)(2)(A)(ii) of the ACA) more narrowly to decrease the denominator
in the primary care percentage calculation and thereby increase the
number of potential primary care practitioners who would qualify for
the PCIP.
Several commenters, including MedPAC, recommended that CMS use only
the total allowed charges under the PFS, rather than all charges under
Part B, as the denominator in the potential primary care practitioner's
primary care percentage calculation. The commenters

[[Page 73434]]

argued that a potential primary care practitioner's billings under his
or her NPI for Part B services not paid under the PFS (including
laboratory services, drugs, and durable medical equipment (DME)) would
depend upon the organizational structure of the potential primary care
practitioner's practice and, therefore, would be unrelated to whether
the practitioner was serving as a ``true primary care practitioner''
for Medicare beneficiaries under his or her care. The commenters
asserted that under other sections of the Act, ``allowed charges under
this part'' has been interpreted by CMS to mean ``allowed charges under
the PFS.'' The commenters did not believe that potential primary care
practitioners serving as ``true primary care practitioners'' should be
penalized with respect to PCIP eligibility because they furnish non-PFS
Part B services to their patients.
In addition, other commenters argued that ``true primary care
practitioners'' caring for their patients across all settings in
accordance with a traditional primary care model commonly furnish other
types of services to their patients that are paid under the PFS but
that are not defined as primary care services under the PCIP, such as
inpatient hospital care and emergency department visits. The commenters
were concerned that providing hospital care to their patients
consistent with the goal of improved continuity of care would
disadvantage ``true primary care practitioners'' with respect to the
primary care percentage calculation and, ultimately, eligibility for
the PCIP. Several commenters emphasized that potential primary care
practitioners in rural areas would be more likely to provide a wider
variety of services to their patients due to the lack of other more
specialized providers in their area, which could make them less likely
to qualify for the PCIP. Many commenters contended that the amount of
these specific non-primary care PFS allowed charges would be
sufficiently large to prevent ``true primary care practitioners'' from
meeting the 60 percent primary care percentage threshold. MedPAC and
several other commenters recommended that CMS remove hospital E/M
visits from the denominator of the primary care percentage calculation,
explaining that this approach would neither penalize nor reward
potential primary care practitioners who provide hospital care to their
patients with respect to eligibility for the PCIP.
Response: We understand commenters' concerns regarding the criteria
for the PCIP eligibility determination, and in particular the total
amount of allowed charges used in the denominator for calculation of
the potential primary care practitioner's primary care percentage. We
also believe that it is important that the eligibility determination be
based on a fair representation of potential primary practitioners'
services so that ``true primary care practitioners'' may meet or exceed
the qualifying primary care percentage threshold for the PCIP,
regardless of how they may have chosen to organize their medical
practice.
We agree with some commenters who suggested that section
1833(x)(2)(A)(ii) of the Act (as added by section 5501(a) of the ACA)
allows some flexibility in implementing the PCIP primary care
percentage calculation, based on the phrase in the 60 percent threshold
specification that states, ``at least 60 percent of the allowed charges
under this part for such physician or practitioner in a prior period as
determined appropriate by the Secretary.''
We considered several refinements to determine a potential primary
care practitioner's allowed charges consistent with the goal of
eliminating potential biases that could affect ``true primary care
practitioners'' who practice under certain conditions and structural
constraints. We reviewed recent Medicare claims data by specialty
designation to determine which Part B services accounted for the
highest allowed charges for primary care practitioners, focusing on
those services that are not defined as primary care services and,
therefore, contribute to increasing the magnitude of the denominator in
the primary care percentage. We found that many potential primary care
practitioners had significant allowed charges for hospital inpatient
care and emergency department visits, which are not considered primary
care services for purposes of the PCIP, consistent with the
observations of some commenters. Due to the high allowed charges for
these hospital visits compared to other primary care services, ``true
primary care practitioners'' providing hospital inpatient and emergency
department care for their patients would be less likely to qualify for
the PCIP. We also found that rural practitioners, specifically family
physicians, may be disproportionately unlikely to qualify for the PCIP
because they typically provide a wider variety of services, including
hospital inpatient care and emergency department visits, than their
urban counterparts. This difference in the profile of potential primary
care practitioners' services was even greater for family physicians in
frontier states.
Our review of non-PFS Part B services furnished by potential
primary care practitioners, including laboratory services, drugs, and
DME, showed that allowed charges for these services were typically only
a small percentage of the total amount of a potential primary care
practitioner's allowed charges under Part B. However, while less
influential than the inclusion of hospital visits in the denominator of
the primary care percentage for purposes of determining whether a
potential primary care practitioner meets the PCIP eligibility
threshold, we believe that the inclusion of the non-PFS services in the
denominator could also lead to bias against ``true primary care
practitioners'' who provide a full spectrum of care to their patients.
Therefore, in an effort to eliminate potential bias against
potential primary care practitioners who are ``true primary care
practitioners'' with certain primary care practice patterns, we are
modifying our proposal and will remove certain services from the total
allowed charges that is the denominator of the primary care percentage
calculation. In the CY 2011 PFS proposed rule (74 FR 40136), we
proposed to use all allowed charges under Part B as the denominator in
the calculation to determine whether a potential primary care
practitioner meets the 60 percent eligibility threshold requirement.
Following our analysis of Medicare claims data, we will remove all non-
PFS allowed charges and allowed charges for evaluation and management
(E/M) services furnished to hospital inpatients and outpatients by
potential primary care practitioners from the total allowed charges
under Part B. The specific E/M services that we are removing from the
denominator for purposes of the primary care percentage calculation are
displayed in Table 67. We note that we are not removing hospital
inpatient consultation E/M services from the denominator, either face-
to-face or via telehealth, because we believe these E/M services do not
reflect the types of services that would be furnished by ``true primary
care practitioners'' serving a primary care function for their patients
as reflected in their primary care practice patterns.
In other words, PFS charges excluding allowed charges for hospital
E/M services will be the denominator in the final primary care
percentage calculation for PCIP eligibility determination: [primary
care services/(PFS charges--hospital E/M charges)] multiplied by 100.
The potential primary care practitioner primary care percentage
calculation is subject to traditional rounding rules with respect

[[Page 73435]]

to the 60 percent eligibility threshold, meaning 59.5 percent and above
will be rounded to 60 percent.
These refinements remove the largest categories of non-primary care
allowed charges furnished by ``true primary care practitioners'' from
the primary care percentage calculation used for determination of PCIP
eligibility, typically decreasing the magnitude of the denominator and
resulting in a higher proportion of primary care to non-primary care
services for a given potential primary care practitioner. Limiting the
allowed charges to the PFS also removes drugs, laboratory services, and
DME from the denominator calculation. While these non-PFS allowed
charges are not a large percentage of most potential primary care
practitioners' allowed charges under Part B, we acknowledge the
commenters' assertions that many potential primary care practitioners
who are ``true primary care practitioners'' furnish these services to
their patients under certain primary care practice models. Therefore,
we also believe it is appropriate to remove the non-PFS allowed charges
from the denominator of the primary care percentage calculation. In
effect, removing allowed charges for hospital E/M and non-PFS services
from the total allowed charges in the denominator of the primary care
percentage calculation allows significantly more potential primary care
practitioners to qualify for the PCIP, while still limiting the payment
incentive to ``true primary care practitioners'' who predominantly
serve a primary care function for their patients. With use of this
revised denominator in the primary care percentage calculation, we
estimate that over 80 percent of physicians who currently are enrolled
in Medicare with a primary specialty designation of family medicine and
almost 60 percent of physicians with a designation of internal medicine
would qualify for the PCIP based on CY 2009 claims data. This revised
calculation removes bias with respect to eligibility of ``true primary
care practitioners'' for the PCIP based on the specific primary care
practice characteristics and model they utilize in caring for their
patients.

Table 67--Excluded Hospital Evaluation and Management Services From the Denominator for the PCIP Primary Care
Percentage Calculation
----------------------------------------------------------------------------------------------------------------
CPT Code Description
----------------------------------------------------------------------------------------------------------------
99217................................. Observation care discharge day management.
99218................................. Level 1 initial observation care, per day.
99219................................. Level 2 initial observation care, per day.
99220................................. Level 3 initial observation care, per day.
99221................................. Level 1 initial hospital care, per day.
99222................................. Level 2 initial hospital care, per day.
99223................................. Level 3 initial hospital care, per day.
99231................................. Level 1 subsequent hospital care, per day.
99232................................. Level 2 subsequent hospital care, per day.
99233................................. Level 3 subsequent hospital care.
99234................................. Level 1 observation or inpatient hospital care.
99235................................. Level 2 observation or inpatient hospital care.
99236................................. Level 3 observation or inpatient hospital care.
99238................................. Hospital discharge day management; 30 minutes or less.
99239................................. Hospital discharge day management; more than 30 minutes.
99281................................. Level 1 emergency department visit.
99282................................. Level 2 emergency department visit.
99283................................. Level 3 emergency department visit.
99284................................. Level 4 emergency department visit.
99285................................. Level 5 emergency department visit.
----------------------------------------------------------------------------------------------------------------

Comment: A number of commenters recommended that CMS add additional
services commonly furnished by ``true primary care practitioners'' to
the list of primary care services for purposes of calculation of the
primary care percentage and payment of the incentive payments
themselves, which are made at 10 percent of the Medicare payment for
primary care services. Among the numerous services recommended as
additions by the commenters are hospital E/M visits, preventive
services such as immunizations, certain diagnostic tests, and services
related to home health. The commenters argued that, by increasing the
numerator of the primary care percentage calculation used for
determining PCIP eligibility, more potential primary care practitioners
would qualify for the PCIP. Moreover, several commenters argued that,
when furnished by ``true primary care practitioners,'' these additional
services are, in fact, primary care services and therefore should be
subject to the incentive payment. The commenters suggested the phrase,
``and as subsequently modified by the Secretary'' in section
1833(x)(2)(B) of the Act (as added by section 5501(a) of the ACA)
following the HCPCS codes defined as primary care services, could be
read to provide CMS authority to add services to the list of primary
care services. However, some commenters expressed concern that adding
services, such as hospital E/M visits, to the list primary care
services would qualify many hospitalists for the PCIP with the result
that the PCIP would be applied inappropriately to practitioners
predominantly furnishing hospital services. If CMS were to contemplate
adding hospital E/M services to the list of primary care services, the
commenters argued that CMS should exclude clinicians with hospitalists'
claim patterns, even when those practitioners have a potential primary
care specialty designation.
Response: While we appreciate commenters' interest in increasing
the number of practitioners qualifying for the PCIP, we do not believe
that section 1833(x)(2)(B) of the Act (as added by section 5501(a) of
the ACA) authorizes us to add services to the list of primary care
services specified in the Act. Section 1833(x)(2)(B) of the Act (as

[[Page 73436]]

added by section 5501(a) of the ACA) clearly specifies the HCPCS codes
that are considered primary care services for purposes of the PCIP,
stating ``The term `primary care services' means services identified,
as of January 1, 2009, by the following HCPCS codes (and as
subsequently modified by the Secretary) * * *.'' This phrase appears in
other sections of the Act, and we have consistently interpreted it to
refer to the same services that may be reported under different HCPCS
codes when those codes change over time. We do not believe the phrase
``and as subsequently modified by the Secretary'' authorizes us to add
codes (additional services) to the definition of primary care services.
Comment: Several commenters expressed concern regarding the reduced
likelihood that ``true primary care practitioners'' in rural areas
would qualify for the PCIP because primary care practitioners in remote
areas commonly furnish a greater variety of services than those on the
list of specific primary care services. The commenters recommended that
rural practitioners be qualified for the PCIP based on another primary
care percentage threshold that better suits the practice patterns of
rural practitioners, including accounting for hospital E/M visits
without penalizing the practitioners. Some commenters asserted that the
PCIP would only benefit those practitioners furnishing services in
health professional shortage areas (HPSAs) based on their belief that
the PCIP was limited to primary care practitioners furnishing primary
care services in HPSAs or that primary care practitioners would benefit
at the cost of other specialty practitioners because of considerations
of budget neutrality under the PFS.
Response: We appreciate the concerns of the commenters regarding
rural practitioners and their special practice patterns. As discussed
earlier in this section, we have modified our primary care percentage
calculation for purposes of comparison with the 60 percent PCIP
eligibility threshold so that all potential primary care practitioners,
including potential primary care practitioners in rural areas, will not
miss the PCIP eligibility threshold as a result of furnishing hospital
visits to their patients. With regard to applying special criteria for
the primary care percentage calculation for rural practitioners, we
note that section 1833(x) of the Act does not include any provision
that would make the location of the primary care services or the
primary care practitioner a factor for PCIP eligibility; the same
eligibility determination is applicable to all potential primary care
practitioners.
In contrast to the HPSA physician bonus payment program and the
HPSA Surgical Incentive Program (HSIP), the PCIP does not consider
geographic location in determining practitioner eligibility or the
primary care services for which the incentive payments will be made.
Although practitioners in rural areas will benefit from the PCIP in the
same way as practitioners in other regions, as we note above, PCIP
payments will be made in addition to the regular Part B payments for
primary care services furnished by eligible primary care practitioners
and, if applicable, the HPSA physician bonus payment will also be made.
Finally, we note that primary care incentive payments are not subject
to the budget neutrality adjustment under the PFS, so PCIP payments
will not affect payment for other services for which payment is made
under the PFS.
After consideration of the public comments we received, we are
finalizing our policy for calculation of the primary care percentage,
with certain modifications from the proposed policy. The numerator of
the primary care percentage for each NPI is the sum of the allowed
charges for the primary care services listed in Table 66, as we
proposed. However, the denominator is the allowed charges under the PFS
minus the allowed charges for the hospital E/M services listed in Table
67, which is a change from our proposal. We will calculate the primary
care percentage for each NPI of a potential primary care practitioner
and, if the calculation rounds to 60 percent or greater, the potential
primary care practitioner with that NPI will qualify to receive PCIP
payments for the applicable year.
(3) Period of Claims Data for Primary Care Percentage Calculation
As we discussed in the CY 2011 PFS proposed rule (74 FR 40137), we
proposed to use CY 2009 PFS claims data, processed through June 30,
2010, for determining PCIP practitioner eligibility for CY 2011. This
would ensure analysis of about 99 percent of CY 2009 claims to
determine practitioner eligibility for PCIP payment beginning January
2011. We note that the MMA changed the requirements for critical access
hospital (CAH) billing for practitioners' professional services and,
therefore, modifications were made to the Medicare claims processing
system to require CAHs to identify the practitioner furnishing a
service on the CAH claim for that professional service. However,
because the rendering practitioner has only been identified on CAH
claims since July 1, 2009, for the first year of the PCIP we are
proposing to identify eligible practitioners using only 6 months of CAH
data for those CAHs paid under the optional method. Thereafter, we
would update the list of practitioners eligible for the PCIP annually
based on the most recent available full year of PFS and CAH claims
data.
To the extent practitioners were paid under the PFS during the
historical claims data year for some primary services, and CAHs were
paid under the optional method for those same practitioners' other
professional services, we would aggregate the historical claims data
from all settings by the practitioner's NPI in order to determine
whether the practitioner is eligible for PCIP payments. We proposed
that for all potentially eligible primary care practitioners (both
practitioners paid under the PFS and practitioners for whose
professional services CAHs are paid under the optional method), the
period of claims data used for the annual determination of the
practitioner's primary care percentage would lag the PCIP payment year
by 2 years (for example, CY 2010 claims data would be used for the CY
2012 PCIP). This 2-year lag is consistent with other areas of the
Medicare program where we rely on information from claims data to
inform payment in a future year, such as the use of CY 2009 PFS
utilization data in the establishment of certain aspects of CY 2011 PFS
payment rates.
Under the proposed PCIP eligibility determination method, it would
be necessary to revise the list of PCIP-eligible primary care
practitioners based on updated claims data regarding primary specialty
designation and primary care percentage each year. The revised list of
primary care practitioners developed prior to the beginning of the next
CY would establish a practitioner's eligibility for PCIP payments for
the full next CY. That is, once eligible for the PCIP for a given CY,
the practitioner would receive PCIP payments for primary care services
furnished throughout that full CY. We would then reassess the
practitioner's PCIP eligibility for the next year's payments. As a
result, under our proposal, a practitioner newly enrolling in Medicare
during a CY would not be eligible for the PCIP until Medicare claims
data reflecting the practitioner's primary care specialty and primary
care percentage that equals or exceeds the 60 percent threshold were
available to establish the practitioner's eligibility for the next PCIP
year. Similarly, an enrolled practitioner's change in primary specialty
designation (either to

[[Page 73437]]

or from a primary care specialty) would not affect that practitioner's
eligibility for the PCIP until the practitioner's claims reflecting the
change were available for analysis in preparation for the next
applicable CY PCIP. In the CY 2011 PFS proposed rule (74 FR 40138), we
indicated that, given the statutory requirement for PCIP eligibility
that a potential primary care practitioner's primary care services
account for at least 60 percent of the allowed charges under Part B for
the practitioner in a prior period as determined by the Secretary, we
saw no clear alternative methodologies that would allow PCIP payments
to be made to those practitioners newly enrolling in Medicare without
the 2-year lag in eligibility determination that was described
previously. However, given our general interest in supporting primary
care practitioners and entry into primary care practice by new
physicians and nonphysician practitioners in order to ensure that
Medicare beneficiaries have access to these important services, we
asked for public comments on alternative approaches for establishing
PCIP eligibility for newly enrolled practitioners that would be
consistent with the statutory requirement.
Comment: Several commenters opposed the proposed 2-year lag in the
data used for PCIP eligibility determination (for example, CY 2009
claims data for CY 2011 PCIP payment). The commenters contended that
the 2-year lag would not accurately represent changes in practice or
changes in specialty designation, and requested that CMS exercise
flexibility in determining the prior period in order to more closely
align the eligibility and payment periods. Some commenters recommended
that CMS decrease the timeframe of claims data used for eligibility
determination to less than a year in order to use claims data from the
year immediately prior to the incentive payment year. Other commenters
suggested that CMS repeat the eligibility determination for potential
primary care practitioners more frequently than annually, allowing
multiple opportunities for potential primary care practitioners to meet
the primary care percentage threshold because the commenters believe
that practitioners may experience seasonal variations in their practice
patterns.
The commenters were especially concerned about the eligibility
determination for practitioners who newly enroll in Medicare because
there would be no Medicare claims data for these practitioners from the
2 years prior to the PCIP payment year. The commenters were concerned
that all newly enrolled potential primary care practitioners would,
therefore, be ineligible for the PCIP for up to 2 years during their
initial period of practice. The commenters contended that the 2-year
interval would discourage, or at a minimum not encourage, primary care
practice as a career choice. A few commenters also raised concerns
about the corresponding 2-year lag time in PCIP eligibility for
practitioners who change their Medicare-enrolled specialty to one that
would make them potential primary care practitioners.
The commenters recommended a variety of approaches for CMS to
consider in addressing PCIP eligibility for newly enrolled potential
primary care practitioners. The commenters' recommendations included
using claims data for a 6-month prior period in order to limit the lag
time; making a lump sum PCIP payment after the conclusion of the PCIP
payment year once eligibility could be confirmed; placing PCIP payments
into escrow accounts to be paid after the potential primary care
practitioner's first year of practice if the primary care percentage
threshold was met; or presuming the eligibility of all practitioners
with the designated enrolled specialties until claims data demonstrated
that they did not qualify for the PCIP.
Response: We appreciate the commenters' interest in closely
aligning the period of claims data used to determine PCIP eligibility
with the time period where the primary care services subject to the
incentive payment would be furnished in order to identify those primary
care practitioners with the most current primary care practice patterns
for the PCIP. For practitioners who were enrolled in Medicare 2 years
prior to the PCIP payment year, as we proposed, we believe it is
important to consider a full year of claims data rather than a shorter
period, in order to account for seasonal variations in care patterns
and more accurately represent the totality of PFS services provided by
the potential primary care practitioner. Medical practices often
experience fluctuations in the services that they provide over a year.
A longer data period helps to smooth the variation and, therefore,
better represents the totality of the potential primary care
practitioner's practice. Due to the time necessary to receive and
process claims data, using the claims data from the full year prior to
the PCIP payment year for calculating the primary care percentage would
delay incentive payments until after the third quarter of the PCIP
payment year for all eligible primary care practitioners, a delay which
we believe is not desirable because the statute indicates that we
should make quarterly or monthly PCIP payments. Therefore, we believe
that the 2-year lag method, as described in the CY 2011 PFS proposed
rule (74 FR 40137), is the most appropriate approach to determining
eligibility for most potential primary care practitioners because it
allows for a review of a full year of claims data without delaying
incentive payments for most eligible primary care practitioners.
However, we recognize the special circumstances of newly enrolled
potential primary care practitioners, in that they do not have the
claims history from 2 years prior to the PCIP payment year to determine
their eligibility. We believe it is important to give potential primary
care practitioners newly enrolling in Medicare in the year immediately
preceding the PCIP payment year the opportunity to qualify for the PCIP
with minimal delay. Therefore, for these practitioners, we will
determine PCIP eligibility based on a different prior period than for
those practitioners who are already enrolled in Medicare and who have
Medicare claims data from 2 years prior to the PCIP payment year
available for analysis. Section 1833(x) of the Act (as added by Section
5501(a) of the ACA) gives the Secretary the authority to establish the
period of allowed charges used to assess the potential primary care
practitioner's primary care percentage with regard to the minimum 60
percent threshold required for PCIP eligibility. For newly enrolled
potential primary care practitioners only, we will use the available
claims data from the year immediately preceding the PCIP payment year
(for example, CY 2010 claims data for CY 2011 PCIP payment) to
determine PCIP eligibility. We will use all claims data available for
the newly enrolled potential primary care practitioner from that prior
year to determine PCIP eligibility, with no minimum time period that
the potential primary care practitioner must have been enrolled in
Medicare in that prior year. Therefore, a newly enrolled potential
primary care practitioner would need to wait no more than one year and
potentially significantly less than one year following enrollment and
first billing in order for the primary care services furnished by that
eligible primary care practitioner to be subject to the PCIP in the
year following the practitioner's initial enrollment.
Due to the processing lag for claims data from the previous CY,
PCIP payments for newly enrolled primary care practitioners will be
delayed until after the end of the third quarter of the PCIP payment
year, although the PCIP

[[Page 73438]]

payments will ultimately be made for all primary care services the
eligible practitioners furnished throughout the full PCIP payment year.
Following that first PCIP eligibility determination in the year
immediately following the potential primary care practitioner's
enrollment in Medicare, PCIP eligibility will be determined as
specified previously for a practitioner who was enrolled in Medicare 2
years prior to the PCIP payment year.
For example, if a practitioner newly enrolled in Medicare any time
during CY 2010 with a primary specialty designation of family medicine
and furnished services that were billed to Medicare, in CY 2011 we will
evaluate the family physician's CY 2010 claims data to determine
whether the physician meets the 60 percent primary care percentage
eligibility threshold for CY 2011 payment under the PCIP. We would not
be able to make this assessment until the CY 2010 claims data are
substantially complete and, therefore, would anticipate making a
determination regarding the physician's eligibility some time after the
midpoint of CY 2011. If the family physician is eligible for the PCIP,
we would make a lump sum payment for those primary care services
furnished earlier in CY 2011 prior to the determination of eligibility
and then we would begin making quarterly PCIP payments following the
third quarter of CY 2011. For the same physician for the CY 2012 PCIP
payment year, we would again refer to CY 2010 claims data to assess
whether the physician is eligible for the PCIP and, if applicable
(eligibility could potentially change with more complete CY 2010 data
than were available for the CY 2011 determination), make quarterly PCIP
payments to that physician in CY 2012.
The use of a different prior period in the case of newly enrolled
potential primary care practitioners will allow us more quickly to
assess whether the practitioner qualifies for the PCIP and make any
applicable PCIP payment, while allowing PCIP payments for established
primary care practitioners to be made timely for each quarter of the
PCIP payment year based on the use of a different prior period to
determine the eligibility of previously enrolled potential primary care
practitioners. The use of the more recent prior period for PCIP
eligibility determination will not apply to practitioners who are
already enrolled in Medicare 2 years prior to the PCIP payment year,
but switch their specialty designation to a potential primary care
specialty in the year immediately preceding the PCIP payment year. As
we explained in the CY 2011 PFS proposed rule (74 FR 40138) and discuss
further below, we do not want to encourage practitioners to change
their specialty designation merely for the purpose of garnering PCIP
payments. Moreover, if we were to make an accommodation for
practitioners enrolled in Medicare who change their specialty to a
potential primary care practitioner specialty after the data year used
for PCIP eligibility determination, we would also need to devise a
process to remove practitioners from PCIP eligibility if they changed
to a non-primary care specialty during that same period. We believe the
incentives and the practice challenges experienced by newly enrolling
practitioners are not the same as those for established practitioners
and, on balance, we continue to believe it is appropriate to establish
PCIP eligibility based upon claims data for a full CY. This policy will
also ensure greater predictability of payment, which is an important
objective of the PCIP and Medicare payment policy in general.
We do not agree with commenters who recommended that we make PCIP
payments to newly enrolled potential primary care practitioners based
on a self-certification process or presumptions about eligibility.
Making incentive payments prior to review of a practitioner's
eligibility based on claims data would inevitably result in
inappropriate PCIP payments to potential primary care practitioners.
Any such payments would constitute overpayments subject to recoupment,
which would place a burden on our claims processing systems and on the
practitioners themselves.
After consideration of the public comments we received, we are
finalizing our CY 2011 proposal to use Medicare claims data for the
year 2 years prior to the PCIP payment year to determine PCIP
eligibility for those potential primary care practitioners who were
enrolled in Medicare in that year. However, we are modifying the
proposed policy to use claims data from the year immediately preceding
the PCIP payment year in order to determine PCIP eligibility for
potential primary care practitioners who newly enroll in Medicare in
the year immediately preceding the PCIP payment year. The PCIP payments
to newly enrolled potential primary care practitioners, if applicable,
will be made as a lump sum for those primary care services furnished
earlier in the PCIP payment year by the eligible primary care
practitioner as a soon as an eligibility determination can be made in
the PCIP payment year. Quarterly PCIP payments for these eligible
primary care practitioners will begin following the third quarter of
the PCIP payment year.
In the CY 2011 PFS proposed rule (74 FR 40138), we stated that we
plan to monitor changes in the primary specialty designations of
enrolled practitioners over time and would expect not to see
significant changes in the specialties of currently enrolled
practitioners as a result of the PCIP payments. We would expect that
physicians changing their primary specialty to one of the primary care
specialties of family medicine, internal medicine, geriatric medicine,
or pediatric medicine and who would be newly eligible for the PCIP are
furnishing primary care services to the patients in their practices.
Consistent with our past policies, we would expect that physicians
changing their primary specialty designation under Medicare would make
such changes only so that their primary specialty designation is fully
consistent with the specific or unique type of medicine they practice.
If we find that physicians are changing their specialty designations
(for example, cardiologists who designate their primary specialty as
internal medicine, although they practice cardiology) in order to take
advantage of the PCIP payments, we would considering making future
revisions to eliminate such an outcome.
Comment: Several commenters agreed that CMS should review the
specialty designations of physicians and nonphysician practitioners to
ensure there is no gaming of the system in order for practitioners to
qualify for the PCIP.
Response: We appreciate the commenters' support and plan to follow
closely the changes in the Medicare primary specialty designations of
physicians and nonphysician practitioners. As we stated previously, if
we find that practitioners are changing their specialty designations in
order to become eligible for PCIP payments rather than to reflect their
actual practice, we may consider making future revisions to address
this problem.
(4) PCIP Payment
We proposed in the CY 2011 PFS proposed rule (74 FR 40138) that
PCIP payments would be calculated by the Medicare contractors and made
quarterly on behalf of the eligible primary care practitioner for the
primary care services furnished by the practitioner in that quarter,
consistent with the established Medicare HPSA physician bonus program
(Medicare Claims Processing Manual, Pub. 100-04, Chapter 12, Section
90.4.4) and the proposed HSIP described in section

[[Page 73439]]

III.S.2. of this final rule with comment period. The primary care
practitioners' professional services may be paid under the PFS based on
a claim for professional services or, where the practitioner has
reassigned his or her benefits to a CAH paid under the optional method,
to the CAH based on an institutional claim.
Comment: Several commenters supported CMS' proposal to make
incentive payments quarterly. These commenters agreed that quarterly
payments would mitigate the administrative burden and better account
for the practice patterns of the various types of primary care
practitioners submitting claims for primary care services.
Response: We appreciate the commenters' support of the quarterly
PCIP payments. We agree that the quarterly payments would work well
with the billing cycles of many practitioners and would be consistent
with Medicare payment policies for other incentive programs.
As discussed in CY 2011 PFS proposed rule (74 FR 40138), eligible
primary care practitioners would be identified on a claim based on the
NPI of the rendering practitioner. If the claim is submitted by a
practitioner's group practice or a CAH, the rendering practitioner's
NPI must be included on the line-item for the primary care service
(identified in Table 66) in order for a determination to be made
regarding whether or not the service is eligible for payment of the
PCIP. We note that, in order to be eligible for the PCIP, physician
assistants, clinical nurse specialists, and nurse practitioners must be
billing for their services under their own NPI and not furnishing
services incident to physicians' services. Regardless of the specialty
area in which they may be practicing, these specific NPPs would be
eligible for the PCIP based on their enrolled potential primary care
practitioner specialty if their historical primary care percentage
equals or exceeds the 60 percent threshold.
In the CY 2011 PFS proposed rule (75 FR 41038), we indicated that
section 1833(x)(4) of the Act (as added by section 5501(a) of the ACA)
specifies that ``there shall be no administrative or judicial review
under section 1869, or section 1878, or otherwise, respecting the
identification of primary care practitioners.'' We believe that the
inclusion of this language is intended to provide a means for the
practical implementation of this provision. We explained that we must
develop a process and identify primary care practitioners before we can
make payments under the PCIP to the eligible primary care
practitioners. The statute gives CMS the authority to make final
determinations of eligible primary care practitioners that are not
subject to appeal through the various channels normally available to
practitioners, in order for the timely payments under the PCIP to
occur. In contrast, if the eligibility determinations that we must make
under this provision were subject to appeal, the timely implementation
of this program could be jeopardized and payments under the PCIP could
be significantly delayed. However, we stated that we did not believe
that the ``no administrative or judicial review'' clause precludes CMS
from correcting errors resulting from clerical or mathematical
mistakes. Therefore, we indicated that practitioners would have the
opportunity to notify CMS of clerical or mathematical errors that may
have occurred during the process of identifying eligible primary care
practitioners for PCIP payment and that may have resulted in a mistaken
eligibility determination for the PCIP.
Comment: Several commenters supported the review of the PCIP
eligibility determinations for clerical or mathematical mistakes. The
commenters agreed that a review of the data calculations may be
necessary when errors are suspected. Some commenters further asked for
clarification and transparency regarding the formula and data that are
used for eligibility determinations. Finally, several commenters
requested that CMS provide notification to individual qualifying
primary care practitioners even if the PCIP payment is made to the
group practice under a reassignment arrangement.
Response: We appreciate the support of the commenters for a review
when suspected clerical or mathematical mistakes are identified. As
described earlier in this section, the formula used to determine the
primary care percentage for a potential primary care practitioner is
the practitioner's allowed charges from the applicable data year (the
prior period) for primary care services (listed in Table 66) divided by
the total allowed charges under the PFS, excluding hospital E/M visits
(listed in Table 67), and multiplied by 100. The specialty designation
and allowed charges used to identify a potential primary care
practitioner and calculate the primary care percentage are based on the
claims data that are submitted by the practitioner during the
applicable prior year for eligibility determination for the PCIP
payment year, which depends on whether the potential primary care
practitioner was newly enrolled in Medicare in the year immediately
prior to the PCIP payment year or previously enrolled in Medicare.
Those data will be reviewed when we are assessing a suspected mistake.
We note that Medicare contractors will post a list of individual
primary care practitioners eligible for the PCIP for a year, along with
their NPIs, on their web sites. We do not anticipate providing
individual notices to PCIP-eligible primary care practitioners for each
year. Rather, primary care practitioners, including those who have
reassigned their benefits, can confirm their eligibility for the PCIP
for a year without direct individual notification.
In the CY 2011 PFS proposed rule (75 FR 41038), we further noted
that section 1833(x)(3) of the Act (as added by section 5501(a) of the
ACA) authorizes payment under the PCIP as an additional payment amount
for specified primary care services without regard to any additional
payment for the service under section 1833(m) of the Act. Therefore, an
eligible primary care physician furnishing a primary care service in a
HPSA may receive both a HPSA physician bonus payment under the
established program and a PCIP payment under the new program beginning
in CY 2011, but the PCIP payment is made without regard to the HPSA
physician bonus payment amount. In addition, payments for outpatient
CAH services under section 1834(g)(2)(B) of the Act (as amended by
section 5501(a) of the ACA) would not be affected by the PCIP payment
amounts made to the CAH on behalf of the primary care practitioner.
(5) Summary of Final PCIP Policies
In summary, after consideration of the public comments we received,
we are finalizing our CY 2011 proposals for the PCIP, with
modification. Practitioners with a designated primary Medicare-enrolled
specialty of family medicine, internal medicine, geriatric medicine,
pediatric medicine, nurse practitioner, clinical nurse specialist, or
physician assistant and whose primary care percentage, calculated as
primary care allowed charges divided by PFS allowed charges excluding
hospital E/M visits, and then multiplied by 100, exceeds 60 percent
will be eligible for the PCIP. The primary care percentage will be
calculated based on claims data from 2 years prior to the PCIP payment
year for practitioners enrolled in Medicare in that year, and from the
year immediately prior to the PCIP payment year for practitioners newly
enrolling in that year. Beginning immediately following the first
quarter of CY 2011, incentive payments for primary care

[[Page 73440]]

services furnished by eligible practitioners will be paid quarterly
after the conclusion of the calendar quarter, in addition to payments
by Medicare for the primary care services and other incentive program
payments. The list of eligible primary care practitioners will be
updated annually based upon our analysis of claims data from the
subsequent reference period.
Accordingly, we are finalizing our regulation at new Sec. 414.80
to specify the requirements of the PCIP. While we are finalizing our
proposed definition of primary care services in Sec. 414.80(a), we are
revising our proposed definition of eligible primary care practitioners
in Sec. 414.80(a)(i)(B) and (ii)(B) to specify that at least 60
percent of the physician's or practitioner's allowed charges under the
PFS (excluding hospital evaluation and management visits) during a
reference period specified by the Secretary are for primary care
services. We are finalizing Sec. 414.80(b) as proposed to provide
eligible primary care practitioners a 10 percent incentive payment for
primary care services, in addition to the amount that would otherwise
be paid for their professional services under Part B. Quarterly PCIP
payments will be made to eligible practitioners or to CAHs paid under
the optional method that are billing on behalf of practitioners for
their professional services for identified primary care services.
2. Section 5501(b): Incentive Payment Program for Major Surgical
Procedures Furnished in Health Professional Shortage Areas
a. Background
Section 1833(m) of the Act provides for an additional 10 percent
incentive payment when physicians' services are furnished to a covered
individual in an area designated as a geographic Health Professional
Shortage Area (HPSA) as identified by the Secretary prior to the
beginning of such year. Section 5501(b) of the ACA revises section 1833
of the Act by adding new subparagraph (y), ``Incentive Payments for
Major Surgical Procedures Furnished in Health Professional Shortage
Areas.''
In the case of major surgical procedures furnished by a general
surgeon on or after January 1, 2011 and before January 1, 2016, in an
area designated under section 332(a)(1)(A) of the Act as a geographic
HPSA, they would be paid on a monthly or quarterly basis an amount
equal to 10 percent of the payment amount for eligible services under
Part B. Section 1833(y)(2)(A) of the Act (as added by section 5501(b)
of the ACA) defines a general surgeon as a physician who is described
in section 1861(r)(1) of the Act and who has designated a CMS specialty
code of 02-general surgery as his or her primary specialty code in the
physician's enrollment in Medicare under section 1866(j) of the Act.
Section 1833(y)(2)(B) of the Act (as added by section 5501(b) of
the ACA) defines major surgical procedures as surgical procedures for
which a 10-day or 90-day global period is used for payment under the
PFS under section 1848(b) of the Act. In Addendum B to the CY 2010 PFS
final rule with comment period (74 FR 62017 through 62143), as
corrected in the correction notice (74 FR 65455 through 65457), we
identified 489 10-day global procedure codes and 3,796 90-day global
procedure codes for a total of 4,285 surgical procedure codes that
would have met the surgical procedure criteria for the incentive
payment if it were applicable in CY 2010.
b. HPSA Surgical Incentive Payment Program (HSIP)
For services furnished on or after January 1, 2011 and before
January 1, 2016, in the CY 2011 PFS proposed rule (75 FR 40139) we
proposed to provide a 10 percent incentive payment to general surgeons,
identified by their enrollment in Medicare with a primary specialty
code of 02-general surgery, in addition to the amount they would
otherwise be paid for their professional services under Part B, when
they furnish a major surgical procedure in a location defined by the
Secretary as of December 31 of the prior year as a geographic HPSA. As
with the PCIP described above, we stated in the CY 2011 PFS proposed
rule (75 FR 40139) that we did not believe surgeons would change their
Medicare specialty designation in order to take advantage of the HSIP
payments. However, we described our plan to monitor the specialty
designations of enrolled physicians, and if we were to find that
surgeons were changing their primary specialty designation to general
surgery in order to take advantage of the HSIP payments, we would
consider making future revisions to eliminate such an outcome.
Consistent with the established Medicare HPSA physician bonus
program, we proposed that HSIP payments be calculated by Medicare
contractors based on the criteria for payment discussed earlier in this
section, and payments would be made quarterly on behalf of the
qualifying general surgeon for the qualifying major surgical
procedures. The surgeons' professional services would be paid under the
PFS based on a claim for professional services or, when a physician has
reassigned his or her benefits to a CAH paid under the optional method,
to the CAH based on an institutional claim.
Qualifying general surgeons would be identified on a claim for a
major surgical procedure based on the primary specialty of the
rendering physician, identified by his or her NPI, of 02-general
surgery. If the claim is submitted by a physician's group practice or a
CAH, the rendering physician's NPI must be included on the line-item
for the major surgical procedure in order for a determination to be
made regarding whether or not the procedure is eligible for payment
under the HSIP.
For HSIP payment to be applicable, the major surgical procedure
must be furnished in an area designated by the Secretary as of December
31 of the prior year as a geographic HPSA. We stated that we would
provide HSIP payments for major surgical procedures furnished by
general surgeons in the same HPSAs as we currently recognize for
purposes of payment of all physicians under the established Medicare
HPSA physician bonus program under section 1833(m) of the Act.
Each year, we publish a list of zip codes eligible for automatic
payment of the HPSA physician bonus payment at: http://www.cms.gov/hpsapsaphysicianbonuses/01_overview.asp. We proposed to use the same
list of zip codes for automatic payment of the incentive payment for
qualifying surgical procedures furnished by general surgeons. We also
proposed to create a new HCPCS code modifier to identify circumstances
when general surgeons furnish qualifying surgical procedures in areas
that are designated as HPSAs as of December 31 of the prior year, but
that are not on the list of zip codes eligible for automatic payment.
The new modifier would be appended to the major surgical procedure on
claims submitted for payment, similar to the current process for
payment of the Medicare HPSA physician bonus when the geographic HPSA
is not a HPSA identified for automatic payment.
Consistent with the statutory requirement, we would define major
surgical procedures as those for which a 10-day or 90-day global period
is used for payment under the PFS. For CY 2011, approximately 4,300 10-
day and 90-day global surgical procedures codes were identified in
Addendum B to the CY 2011 PFS rule (75 FR 40262 through 40641) under
the far right column labeled ``Global'' and designated with ``010'' or
``090,'' respectively.

[[Page 73441]]

We further noted that section 1833(y)(3) of the Act (as added by
section 5501(b)(1) of the ACA) authorizes payment under the HSIP as an
additional payment amount for specified surgical services without
regard to any additional payment for the service under section 1833(m)
of the Act. Therefore, a general surgeon may receive both a HPSA
physician bonus payment under the established Medicare HPSA physician
bonus program and a HSIP payment under the new program beginning in CY
2011, but the HSIP payment would be made without regard to the HPSA
physician bonus payment amount. In addition, payments for outpatient
CAH services under section 1834(g)(2)(B) of the Act (as amended by
section 5501(b) of the ACA) would not be affected by the HSIP payment
amounts made to the CAH on behalf of the general surgeon.
Accordingly, for CY 2011, we proposed to revise Sec. 414.2 and add
the definitions of ``HPSA'' and ``major surgical procedure.'' We also
proposed to revise Sec. 414.67 to move the existing provisions to
paragraph (a) to be grouped as the ``Health Professional Shortage Area
(HPSA) physician bonus program'' and adding a new paragraph (b) for the
``HPSA surgical incentive payment program'' provisions. Section
414.67(b) would state that general surgeons who furnish identified 10-
day and 90-day global period surgical procedures in an area designated
by the Secretary as of December 31 of the prior year as a geographic
HPSA that is recognized by Medicare for the HPSA physician bonus
program as specified under renumbered Sec. 414.67(a)(1) would receive
a 10 percent incentive payment in addition to the amount that would
otherwise be paid for their professional services under Part B.
Physicians furnishing services in areas that are designated as
geographic HPSAs prior to the beginning of the year but not included on
the published list of zip codes for which automated HPSA surgical
incentive payments are made would report a specified HCPCS code
modifier to receive the HSIP payment. Quarterly incentive payments
would be made to physicians or to CAHs paid under the optional method
when billing on behalf of physicians for their professional services.
Comment: A number of commenters supported CMS' proposal to
implement the HSIP. A few commenters recommended expanding the
geographic eligibility criteria for the HSIP to increase the number of
qualifying procedures furnished by general surgeons for which the
incentive payment would be made. These commenters suggested that CMS
introduce three modifications to the proposed criteria in order to
provide the incentive payment for major surgical procedures furnished
by general surgeons to Medicare beneficiaries who have limited access
to general surgical care. Specifically, the commenters recommended that
CMS additionally provide the incentive payment for: (1) Qualifying
surgical procedures performed by a general surgeon in a hospital
adjacent to a recognized HPSA; (2) qualifying surgical procedures
performed by a general surgeon who resides in a recognized HPSA; and
(3) qualifying surgical procedures performed by a general surgeon who
has an office in a recognized HPSA. The commenters argued that the
proposed policy would narrowly limit the availability of the general
surgery incentive payments by linking payments only to surgical
procedures furnished in established HPSAs. The commenters concluded
that the proposed policy would result in relatively fewer general
surgeons receiving the incentive payments and would not capture
surgical procedures furnished in all of the nation's geographic areas
in which there is a shortage of general surgeons.
Response: We appreciate the commenters' support for our proposal.
Regarding commenters' requests for expansion of the locations for
surgery when we would provide the incentive payment for major surgical
procedures furnished by general surgeons, we do not believe that we
have the authority to expand the care settings beyond the statutorily
prescribed location, that is, ``major surgical procedures * * * by a
general surgeon in an area that is designated (under section
332(a)(1)(A) of the Public Health Service Act) as a health professional
shortage area.'' Section 1833(y) of the Act (as added by section
5501(b) of the ACA) relies solely on section 332(a)(1)(A) of the Public
Health Service Act to identify qualifying HPSAs and expressly notes
that the HPSA must be identified by the Secretary prior to the
beginning of the HSIP payment year.
Comment: One commenter requested that CMS extend HSIP payment to
physician assistants who are trained as first assistants at surgery.
The commenter encouraged CMS to provide the 10 percent incentive
payment to physician assistants, trained in surgical specialties, who
ensure both that beneficiaries in rural areas have access to
appropriate surgical care and that general surgeons furnishing surgical
procedures in these locations are appropriately supported by physician
assistants trained in surgical specialties.
Response: Section 1833(y)(2) of the Act (as added by section
5501(b) of the ACA) specifically limits HSIP eligibility to those
physicians (a doctor of medicine or osteopathy legally authorized to
practice medicine and surgery by the State in which he performs such
function or action according to the definition in section 1861(r)(1))
of the Act who have designated 02-general surgery as their primary
specialty code in Medicare's physician enrollment. On the other hand,
physician assistants are not doctors of medicine or osteopathy and
these practitioners are identified in Medicare enrollment with the
specialty code 97-physician assistant. Therefore, we do not believe we
have the statutory authority to extend HSIP payment to physician
assistants who provide surgical support for major surgeries furnished
by general surgeons in recognized HPSAs.
After consideration of the public comments we received, we are
finalizing our CY 2011 HSIP proposal, with modification regarding the
proposal to create a new HCPCS code modifier to identify circumstances
when general surgeons furnish services in areas that are designated as
HPSAs as of December 31 of the prior year, but that are not on the list
of zip codes eligible for automatic payment. Under our final policy,
under these circumstances practitioners would report the existing
modifier-AQ (Physician providing a service in a HPSA) that is used for
the established Medicare HPSA physician bonus program because we would
make incentive payments under the HSIP for surgical procedures
furnished by general surgeons in the same HPSAs that are recognized for
the Medicare HPSA physician bonus program.
In summary, the HSIP provides a 10 percent incentive payment
quarterly to qualifying physicians enrolled as general surgeons in
Medicare (or to the CAHs to which they have reassigned their benefits)
for qualifying 10-day and 90-day global surgical procedures furnished
on or after January 1, 2011 and before January 1, 2016 by those general
surgeons in recognized geographic HPSAs. CMS will make automatic
payments when the zip code for the location of service is found in the
applicable file for the payment year on the CMS web site for the HPSA
physician bonus program at: http://www.cms.gov/hpsapsaphysicianbonuses/01_overview.asp. Existing HCPCS modifier-AQ should be appended to the
major surgical procedure on claims submitted for payment to identify
circumstances when general surgeons

[[Page 73442]]

furnish services in areas that are designated as HPSAs as of December
31 of the prior year, but that are not on the list of zip codes
eligible for automatic payment.
We are also finalizing our proposed revisions to the Code of
Federal regulations related to the HSIP, with minor modification. We
are revising Sec. 414.2 as we proposed to add the definitions of
``HPSA'' and ``major surgical procedure.'' We also are revising Sec.
414.67 as we proposed to move the existing provisions to paragraph (a)
to be grouped as the ``Health Professional Shortage Area (HPSA)
physician bonus program'' and adding new paragraph (b) for the ``HPSA
surgical incentive payment program'' provisions. We are finalizing our
proposal for Sec. 414.67(b) to state that general surgeons who furnish
identified 10-day and 90-day global period surgical procedures in an
area designated by the Secretary as of December 31 of the prior year as
a geographic HPSA that is recognized by Medicare for the HPSA physician
bonus program as specified under renumbered Sec. 414.67(a)(1) would
receive a 10 percent incentive payment in addition to the amount that
would otherwise be paid for their professional services under Part B.
We are modifying the proposal to specify in Sec. 414.67(b)(3) that
physicians furnishing services in areas that are designated as
geographic HPSAs prior to the beginning of the year but not included on
the published list of zip codes for which automated HPSA surgical
incentive payments are made would report HCPCS modifier-AQ to receive
the HSIP payment and to change the term ``bonus'' to ``incentive'' when
referring to the HSIP. Quarterly incentive payments will be made to
physicians or to CAHs paid under the optional method when billing on
behalf of physicians for their professional services.
3. Sections 5501(a) and (b) of the ACA and Payment for Critical Access
Hospital Professional Services Under the Optional Method
Section 1834(g) of the Act established the payment rules for
outpatient services furnished by a CAH. In 1999, section 403(d) of the
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) (BBRA) amended
section 1834(g) of the Act to provide for two methods of payment for
outpatient services furnished by a CAH. Specifically, section
1834(g)(1) of the Act, as amended by the BBRA, specifies that the
amount of payment for outpatient services furnished by a CAH is equal
to the reasonable costs of the CAH in furnishing such services. (The
physician or other practitioner furnishing the professional service
receives payment under the PFS.) In the alternative, the CAH may make
an election, under section 1834(g)(2) of the Act, to receive amounts
that are equal to ``the reasonable costs'' of the CAH for facility
services plus, with respect to the professional services, the amount
otherwise paid for professional services under Medicare, less the
applicable Medicare deductible and coinsurance amount. The election
made under section 1834(g)(2) of the Act is sometimes referred to as
``method II'' or ``the optional method.'' Throughout this section we
refer to this election as ``the optional method.''
In 2000, section 202 of the Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA) amended
section 1834(g)(2)(B) of the Act to increase the payment for
professional services under the optional method to 115 percent of the
amount otherwise paid for professional services under Medicare. In
addition, in 2003 section 405(a)(1) of the MMA amended section
1834(g)(1) of the Act by inserting the phrase ``equal to 101 percent
of'' before the phrase ``the reasonable costs.'' However, section 405
of the MMA did not make a corresponding change to section 1834(g)(2)(A)
of the Act regarding the amount of payment for facility services under
the optional method. In 2010, section 3128 of the ACA amended section
1834(g)(2)(A) of the Act by inserting the phrase ``101 percent of''
before ``the reasonable costs.''
Section 5501(a) of the ACA amends section 1833 of the Act by adding
a new paragraph (x), ``Incentive Payments for Primary Care Services,''
that authorizes additional Part B payments to primary care
practitioners for primary care services. Section 5501(b) of the ACA
further amends section 1833 of the Act by adding new paragraph (y),
``Incentive Payments for Major Surgical Procedures Furnished in Health
Professional Shortage Areas,'' that authorizes additional Part B
payments for major surgical procedures furnished by general surgeons in
HPSAs. Sections 5501(a)(3) and 5501(b)(3) of the ACA make conforming
amendments to section 1834(g)(2)(B) of the Act, which refers to payment
to the CAH for professional services under the optional method, by
adding at the end of section 1834(g)(2)(B) of the Act the following
phrase, ``Subsections (x) and (y) of 1833 of the Act shall not be taken
into account in determining the amounts that would otherwise be paid
pursuant to the preceding sentence.'' As such, section 1834(g)(2)(B) of
the Act (as amended by sections 5501(a)(2) and 5501(b)(2) of the ACA)
requires that under the optional method, the 115 percent adjustment
payment to the CAH for professional services is calculated without
considering the incentive payments for primary care services furnished
by primary care practitioners and major surgical procedures furnished
by general surgeons in HPSAs as these terms are defined under sections
1833(x) and (y) of the Act.
The regulations implementing section 1834(g)(2)(B) of the Act,
payment to the CAH for professional services under the optional method,
are in Sec. 413.70(b)(3)(ii)(B). In order to implement the amendments
to section 1834(g)(2)(B) of the Act as specified by sections 5501(a)(2)
and 5501(b)(2) of the ACA, we are proposing to amend the regulations in
Sec. 413.70(b)(3)(ii)(B) to state that, effective for primary care
services furnished by primary care practitioners and major surgical
procedures furnished by general surgeons in HPSAs on or after January
1, 2011 and before January 1, 2016, the additional incentive payment
amounts as specified in Sec. 414.67 and Sec. 414.80 are not included
in the determination of the payment for professional services made to
the CAH under the optional method. Accordingly, we are proposing that
payment for professional services to the CAH at 115 percent of the PFS
amount under the optional method would not take into account the
additional Part B incentive payments for primary services furnished by
primary care practitioners and major surgical procedures furnished by
general surgeons in HPSAs as provided in Sec. 414.67 and Sec. 414.80.
Comment: Several commenters supported CMS' proposal to make HSIP
and PCIP payments to CAHs paid under the optional method for qualifying
services furnished by eligible practitioners who have reassigned their
billing rights to the CAHs. No commenters addressed CMS' proposal to
calculate the 115 percent adjustment payment to the CAH for
professional services without considering the incentive payments for
primary care services furnished by primary care practitioners and major
surgical procedures furnished by general surgeons in HPSAs.
Response: We appreciate the commenters' support for our proposal to
include qualifying professional services billed by CAHs paid under the
optional method furnished by eligible practitioners in the PCIP and
HSIP.
After considering the public comments we received, we are
finalizing our CY 2011 proposal to

[[Page 73443]]

include CAHs paid under the optional method in the PCIP and HSIP.
Payment to a CAH paid under the optional method, will be made
quarterly, for eligible professional services furnished by qualifying
physicians and nonphysician practitioners who have reassigned their
billing rights to the CAH. Furthermore, we are finalizing our CY 2011
proposal to specify that payment for professional services to the CAH
at 115 percent of the PFS amount under the optional method would not
take into account the additional Part B incentive payments for primary
services furnished by primary care practitioners and major surgical
procedures furnished by general surgeons in HPSAs. We are amending
Sec. 413.70(b)(3)(ii)(B) as we proposed to reflect this final policy.

T. Section 6003: Disclosure Requirements for In-Office Ancillary
Services Exception to the Prohibition on Physician Self-Referral for
Certain Imaging Services

1. Background
Section 1877 of the Act (also known as the physician self-referral
law): (1) Prohibits a physician from making referrals for certain
``designated health services'' (DHS) payable by Medicare to an entity
with which he or she (or an immediate family member) has a financial
relationship (ownership or compensation), unless an exception applies;
and (2) prohibits the entity from submitting claims to Medicare (or
billing another individual, entity, or third party payer) for those DHS
rendered as a result of a prohibited referral. The statute establishes
a number of exceptions and grants the Secretary the authority to create
regulatory exceptions that pose no risk of program or patient abuse.
Section 1877(b)(2) of the Act, entitled ``In-office Ancillary
Services'' sets forth the exception that permits a physician in a solo
or group practice to order and provide designated health services
(DHS), other than most durable medical equipment and parenteral and
enteral nutrients, in the office of the physician or group practice,
provided that certain criteria are met. The requirements of the in-
office ancillary services exception are described at Sec. 411.355(b).
Section 6003 of the ACA amended section 1877(b)(2) of the Act by
creating a new disclosure requirement for the in-office ancillary
services exception to the prohibition on physician self-referral.
Specifically, section 6003 of the ACA provided that, with respect to
referrals for magnetic resonance imaging (MRI), computed tomography
(CT), positron emission tomography (PET), and any other DHS specified
under section 1877(h)(6)(D) of the Act that the Secretary determines
appropriate, the referring physician inform a patient in writing at the
time of the referral that the patient may obtain the service from a
person other than the referring physician or someone in the physician's
group practice and provide the patient with a list of suppliers who
furnish the service in the area in which the patient resides.
In the CY 2011 PFS proposed rule, we proposed regulations related
to section 6003 of the ACA. We are finalizing that proposal with
modification. We received approximately 45 comments related to this
section. Most commenters offered support for the proposed rule and some
stated that it was consistent with the intent of the legislation, which
was to provide choice for patients, as well as a degree of protection
against conflicts of interest. Others stated that disclosure might be a
first step towards ending abuses in self referral, but questioned the
overall effectiveness of the disclosure requirement in reducing
overutilization. These commenters were nonetheless supportive of the
reasonable mechanisms used to implement the requirement.
We are finalizing some elements of the proposal without
modification. Elements that remain unchanged from the proposed rule
include: application of the disclosure requirement to advanced imaging
services only; the general disclosure requirements that the notice
should be written in a manner sufficient to be reasonably understood by
all patients and be given to the patient at the time of the referral;
the list must include the requisite number of suppliers; the
information about these suppliers must include name, address, and phone
number; these suppliers are to be located within a 25-mile radius of
the physician's office location at the time of the referral; and the
effective date of January 1, 2011.
Elements that we are finalizing with changes include: reducing the
number of suppliers that must be included from 10 to 5; removing the
requirement that the supplier's distance from the physician's office be
listed on the disclosure; clarifying that as long as the requisite
number of suppliers are included in the alternate list, the physician
may also list providers on the notice; and removing the requirement
that the physician obtain the patient's signature on the notice and
retain a copy of the disclosure in the patient's medical record.
2. Disclosure Requirement
Based upon the comments received, we have finalized Sec.
411.355(b)(7) in a manner that addresses concerns of the industry while
also maintaining the intended purpose of the provision. The comments
received during the public comment period are discussed more fully
below.
a. Services That Trigger the Disclosure Requirement
We proposed that the disclosure requirement should apply to only
the advanced imaging services listed in section 6003 of the ACA (MRI,
CT, and PET). We solicited comments regarding whether other radiology
or imaging services under section 1877(h)(6)(D) of the Act should be
included in the requirement. We are finalizing this element as
proposed.
Comment: Most commenters were supportive of our proposal to apply
the disclosure requirement only to those advanced imaging services
listed in section 6003 of the ACA. A commenter stated that expanding
application of the provision beyond the named services would add to
confusion and increase negative effects on physician practices. The
commenter noted that creating lists of alternate suppliers for the
named services will be less burdensome than adding any other radiology
services. Multiple commenters who were opposed to expanding the
disclosure requirement stated that a disclosure requirement for
diagnostic services such as x-rays or ultrasound services would place
significant burden on physician groups and could interrupt continuity
of care for patients, as these tests are often performed in the office
immediately after the physician has ordered the test.
Only one commenter urged CMS to fully exercise the authority
granted by the Affordable Care Act and apply the disclosure requirement
to all radiology services covered by section 1877(h)(6)(D) of the Act.
The commenter stated that the disclosure requirement benefits Medicare
beneficiaries through greater transparency regarding their freedom to
choose a supplier of medical services and that there is no reason to
draw a distinction between MRI, CT, and PET referrals and referrals for
other radiology services. This commenter also did not believe that the
burden on the referring physicians would be materially different if the
list of affected imaging services is expanded to cover all radiology
services, as it would only entail expanding the list that will serve as
the notice to patients.
Response: We are finalizing this requirement as proposed and
applying

[[Page 73444]]

the disclosure requirement to only the advanced imaging services
specified in section 6003 of the ACA, which are MRI, CT, and PET
services. We decline to expand the disclosure requirement to any of the
other radiology or imaging services that fall under section
1877(h)(6)(D) of the Act. X-ray and ultrasound services in particular
are much more likely to be performed on the same day as the original
visit compared to many advanced imaging services. Therefore,
disclosures related to these additional services would not be as useful
to the patient. We do not find that the benefit of expanding this
disclosure requirement to other radiology services would outweigh the
additional burden that would be placed on physicians.
Comment: One commenter requested that CMS clarify that any CT
imaging service that is furnished integral to a procedure defined as a
radiation therapy service for purposes of the physician self-referral
law is exempt from this disclosure requirement. The commenter provided
the example of CT guidance used to localize tumors and focus the beam
during the delivery of external beam radiation therapy treatments. Such
imaging, although involving CT, is integral to the performance of
radiation therapy treatments that are included in the DHS category of
radiation therapy services and supplies.
Response: The disclosure requirement applies to all in-office
referrals for CT imaging services that are categorized as ``radiology
and certain other imaging services'' by the list of CPT/HCPCS Codes (as
defined in Sec. 411.351). We note, however, that the request by a
radiation oncologist for radiation therapy or ancillary services
necessary for, and integral to, the provision of radiation therapy does
not constitute a ``referral,'' as defined in Sec. 411.351, if certain
criteria are satisfied. The disclosure requirement would not apply to
any request that is not a ``referral'' as defined in Sec. 411.351.
Comment: A commenter requested that CMS remove CPT code 77014
(computed tomography guidance for placement of radiation therapy
fields) from the DHS category of ``radiology and certain other imaging
services,'' and add it to the category of ``radiation therapy services
and supplies,'' as such categories are set forth in the list of CPT/
HCPCS Codes. The commenter asserts that this would be appropriate
because while the code is for a service that involves imaging, the
service is distinct from the other radiology codes and integral to the
delivery of radiation therapy. The commenter noted that when a
radiation oncologist performs radiation therapy services, it is not
considered a referral under the law. However, if CPT code 77014 is
included in the list of radiology services, it could be considered a
referral and therefore radiation oncologists could be required to
fulfill the disclosure requirements for this service if it remains on
the list of radiology services codes subject to the new disclosure
requirements. According to the commenter, because CPT code 77014 is so
integral to the delivery of certain radiation therapy treatments, it
would be completely impractical, if not impossible, for a radiation
oncologist to fulfill the disclosure requirements for this service.
Response: As noted in section X.B.3 of this preamble, we are
removing CPT code 77014 from the list of CPT/HCPCS Codes because the
service is always integral to, and performed during, a nonradiological
medical procedure. Therefore, under Sec. 411.351, this service is
excluded from the definition of ``radiology and certain other imaging
services'' and is not subject to the disclosure requirement. We are not
adding this code to the radiation therapy services category on the list
of CPT/HCPCS Codes because it does not satisfy the definition of
``radiation therapy services and supplies'' as set forth in Sec.
411.351. As a practical matter, in many cases the service would not
constitute a ``referral'' (as defined in Sec. 411.351) if requested by
a radiation oncologist pursuant to a consultation.
Comment: A commenter requested that CMS stipulate that CPT code
77011, currently defined as ``computed tomography guidance for
stereotactic localization,'' is not subject to this disclosure
requirement whenever it is furnished as part of a therapeutic or
palliative radiation therapy service. This commenter stated that this
clarification is essential since CPT code 77011 is not listed in
Addendum I to the 2010 PFS final rule with comment period either as a
radiology service or as a radiation therapy service.
Response: This code is for a service that is integral to the
performance of a nonradiological medical procedure and is performed
either during the nonradiological procedure or immediately after the
procedure to confirm placement of an item. Therefore, the service is
excluded from the DHS category of ``radiology and certain other imaging
services'' and is not subject to the disclosure requirement. The
disclosure requirement applies only to MRI, CT, and PET services
identified as ``radiology and certain other imaging services'' on the
list of CPT/HCPCS Codes; MRI, CT, and PET services not identified as
such on that list are not subject to the disclosure requirement.
Comment: Other commenters urged CMS to expand the disclosure
requirement to other DHS that they perceive to be subject to abuse
under the in-office ancillary services exception. These DHS included:
physical therapy, anatomic pathology and radiation therapy services.
Response: Section 6003 of the ACA does not grant the Secretary the
authority to expand application of this disclosure requirement to DHS
other than those in section 1877(h)(6)(D) of the Act. We did not
propose expansion beyond these services and did not solicit comments
regarding other DHS categories that should have this requirement. The
requested expansion to other DHS is beyond the Secretary's authority
under this provision and cannot be accomplished in this rulemaking.
Comment: One commenter suggested that CMS expand the disclosure
requirement to radiology practices and IDTFs so that they are also
required to provide a list of alternate suppliers when self-referring
for imaging studies in order to offer a more level playing field. Two
commenters suggested that we require the same disclosure for hospitals
to avoid the perception of conflict of interest in all settings.
Response: The first comment appears to incorrectly assume that
section 6003 of the ACA would never apply to radiology practices and
IDTFs. Section 6003 of the ACA applies to physicians who make a
``referral'' (as defined in section 1877(h)(5) of the Act and Sec.
411.351 of our regulations) for certain advanced imaging services and
rely on the in-office ancillary services exception to ensure their
compliance with the physician self-referral prohibition. While many
requests by radiologists for diagnostic imaging services will not
constitute a ``referral'' as defined in the statute and our
regulations, some requests by radiologists for advanced imaging
services could implicate the self-referral prohibition, and such
referrals would be subject to the disclosure requirement if the
referring physician relies on the in-office ancillary services
exception to ensure compliance with the physician self-referral
prohibition. Similarly, the disclosure requirement would also apply
when a physician relies on the in-office ancillary services exception
to protect referrals for advanced imaging services furnished and billed
by an IDTF that is wholly owned by the physician or his or her group
practice.
We have no statutory authority to make the disclosure requirement
apply

[[Page 73445]]

to requests for advanced imaging services that are not ``referrals.''
Mandating a similar disclosure requirement for hospitals would have to
be accomplished under separate rulemaking and authority.
b. General Disclosure Requirements
We proposed that the disclosure notice should be written in a
manner sufficient to be reasonably understood by all patients and must,
as the ACA requires, be given to the patient at the time of the
referral. The notice must indicate to the patient that the services may
be obtained from a person other than the referring physician or his or
her group practice and include a list of other suppliers who provide
the service being referred (MRI, CT, or PET). We are finalizing this
proposal without modification.
Comment: One commenter requested CMS to clarify how often the
disclosure notice needs to be provided. The commenter asked if a
physician can meet the requirement by giving patients the list of
suppliers upon initiation of the physician-patient relationship and
annually thereafter to ensure updated information is given, or if the
information must be disclosed each time a patient is referred for MRI,
CT or PET. Another commenter expressed concern regarding informing a
patient in person at the time of the referral. This commenter described
the situation where diagnostic tests are ordered after the patient has
a previous abnormal diagnostic test; often they communicate this to the
patient via phone call and do not want to require the patient to come
into the office to receive the disclosure. The commenter asked if the
disclosure could be mailed to the patient after the verbal notification
via phone call.
Response: The statute requires the disclosure to be made ``in
writing at the time of the referral.'' In order to satisfy this element
of the statute, we believe the disclosure must be presented to the
patient each time one of the listed advanced imaging services is
referred. Patients should receive the disclosure each time these
services are needed, not just for the initial service. The patient
should be made aware that he or she may obtain the services from
another supplier any time advanced imaging is ordered. For subsequent
referrals made via phone call, the written disclosure must still be
provided to the patient and adequately documented as further described
in the Documentation of Disclosure subsection below. Mailing or e-
mailing the disclosure to the patient would be acceptable if verbal
notification has also occurred.
Comment: Some commenters requested that CMS post a draft disclosure
document that physicians can use as a model to ensure that all notices
are drafted in a neutral, comprehensive, and consistent manner.
Response: We do not plan to post standard disclosure language to be
used for this requirement. Each physician office will be responsible
for drafting the language employed in the notice. Because we are not
setting out specific language that must be included in the disclosure,
physicians will have more flexibility in drafting the notice.
Comment: Several commenters requested that CMS allow physicians to
make it clear on the disclosure that there is no intended endorsement
or recommendation of the facilities named on the list furnished by the
referring physician.
Response: If the physician chooses to include language informing
patients that inclusion of other suppliers is not intended as an
endorsement or recommendation of those suppliers, there is nothing in
section 6003 of the ACA or this final rule with comment that would
preclude him or her from doing so.
c. List of Alternate Suppliers
We proposed that the notice list 10 alternate suppliers (as defined
in section 1861(d) of the Act) located within a 25-mile radius of the
physician's office at the time of the referral, unless there are fewer
than 10 suppliers in the 25-mile radius, in which case the physician
must list all suppliers up to ten in that area. In the proposed rule,
we required the notice to include the name, address, phone number, and
distance from the physician's office at the time of the referral. In
this final rule with comment, we are decreasing the number of suppliers
that must be listed to 5; and removing the distance from the
physician's office from the information about the suppliers that must
be listed in the disclosure notice. The final rule does not expand the
list of alternate suppliers to include providers as part of the 5
required suppliers but is discussed further below. We are finalizing
our proposal that the suppliers be located within a 25-mile radius of
the physician's location at the time of the referral.
We solicited comments related to whether there are procedures or
circumstances in which it may be difficult or impractical to provide
the written disclosure prior to the provision of advanced imaging
services. We are finalizing this rule without creating such an
exception.
We also solicited comments regarding an alternative notice that
includes a ``reasonable'' list of other suppliers with general
requirements for the disclosure to patients, while providing that if
the physician meets the more specific requirements set forth in the
proposed rule he or she will be deemed to have a ``reasonable''
disclosure. We are not finalizing this in the final rule as we did not
receive comments in support of this alternative.
Comment: A number of commenters asked that the list of alternate
suppliers include hospitals. Two commenters stated CMS has taken an
overly literal interpretation of ``suppliers'' and has incorrectly
excluded hospitals from the list of alternate sites. The commenters
also noted that in many areas, especially rural, the community hospital
is the largest or only remaining independent provider of imaging
services. Another pair of commenters stated that providing a partial
list of options is inconsistent with transparency, inconsistent with
collaborative alignment between providers and suppliers, and that
including both providers and suppliers would be more consistent with
``informing a patient's decision-making regarding his or her own
care.''
Several commenters urged CMS to allow, and even to require, that
physicians include hospitals and CAHs in the written list of alternate
suppliers who provide imaging services. The commenters stated that
hospitals are often the only provider of this service within the 25-
mile radius of the physician's office and allowing physicians to
include hospitals and CAHs would provide patients with more options.
Finally, one commenter pointed out that including hospitals in the
list of alternate suppliers would be consistent with the integrated and
coordinated care models that are of interest to the Federal government,
health plans, members of Congress and healthcare delivery reformers.
The commenter also believes that this would increase convenience for
its patients while preserving their ability to make decisions about
their care.
One commenter supported CMS' proposal to limit the required
disclosure list to suppliers of services. The commenter stated that
this would protect the Medicare program from the higher imaging costs
and Part B co-pays for beneficiaries associated with imaging services
provided by hospital outpatient departments. The commenter encouraged
CMS to finalize the proposed supplier only list.

[[Page 73446]]

Response: Section 6003 of the ACA requires physicians to provide
patients with a written list of alternate ``suppliers'' (as defined in
section 1861(d) of the Act). The ACA does not afford the flexibility
requested by commenters to allow physicians to satisfy the disclosure
requirement by furnishing a list that includes hospitals and other
providers. However, physicians are not precluded from listing hospitals
in the disclosure notice as long as the required number of suppliers is
also included. For example, in rural areas where no other suppliers
exist in the 25-mile radius, we encourage physicians to list a hospital
on the disclosure notice as an alternate location for the patient to
receive the referred imaging service if the hospital is the closest
option.
Comment: Many of the commenters supported our proposal that the
disclosure notice include suppliers located within a 25-mile radius of
the physician's location at the time of the referral, rather than in
the area in which the patient resides.
Two commenters suggested that CMS set different radii requirements
for rural versus urban areas. One of the two commenters stated that in
an urban setting, there could be many more than 10 suppliers within a
25-mile setting placing making it difficult for the referring physician
to make a decision regarding which providers to include in the written
notification. The commenter noted that in a rural setting with fewer
than 10 suppliers, the burden of identifying and providing all of the
suppliers in the 25-mile radius is excessive for the physician.
Finally, a commenter objected to our concern in the proposed rule
preamble that ``physicians located in large metropolitan areas will
draft a list that includes suppliers located mostly at the edges of the
25-mile radius, thereby increasing the chances that the patient will
choose to receive imaging services from the referring physician's
practice.'' The commenter asserted that physicians will strive to
create lists that include the highest quality suppliers in the area.
Response: We are finalizing this requirement as proposed. We
believe a list of suppliers located within a 25-mile radius of the
physician's office is reasonable and large enough to generate a list
that will be useful for patients. This same distance has also been used
in other physician self-referral exceptions including the intra-family
rural referrals exception (Sec. 411.355(j)) and the physician
recruitment exception (Sec. 411.357(e)). In addition, we are reducing
the number of required suppliers on the disclosure notice and believe
this will help address the issue in some rural area settings where
there may only be a few suppliers within a 25-mile radius.
Comment: One commenter indicated that requiring a list of 10
suppliers was excessive. Several commenters requested that we decrease
the required number of alternate suppliers from 10 to 5 and one
commenter suggested we reduce it to 3 in order to meet patient choice
and reduce the compliance burden for medical groups and smaller
practices. The commenters stated that listing 10 suppliers would be too
burdensome on physicians and might be confusing for beneficiaries if
too many choices are presented.
Response: We agree with the commenters and are decreasing the
required number of alternate suppliers from 10 to 5. We believe a list
of 5 suppliers is reasonable, not burdensome, and supports patient
choice.
Comment: A commenter supported the inclusion of the proposed
information of the disclosure notice because it is easily understood
and contains useful information. One commenter recommended that the
referring physician provide the name and telephone number for the
alternate suppliers and that other information, such as the address and
distance, should be included at the referring physician's discretion. A
different commenter stated that the distance from the referring
physician's office location at the time of the referral should not be
included in the notice because it can be measured in a variety of ways
and may vary greatly depending on the route taken between the listed
supplier and the physician's offices. The commenter believes patients
may get upset if the distance noted on the supplier list is different
from what they actually encountered and recommends that the list simply
state that all of the suppliers are within a 25-mile radius of the
referring physician's office.
Response: We are modifying the proposal in the final rule to remove
the requirement that the distance from the referring physician's office
at the time of the referral be included on the list provided to the
patient. All alternate suppliers listed must be located within the 25-
mile radius of the physician's office location at the time of the
referral. Any reasonable method for measuring distance will be
acceptable.
We are finalizing the other information required in the notice as
proposed so that it must include the name, address and phone number of
each supplier. This provides patients with the most useful information
in making a decision about receiving the service from the referring
physician or from another supplier.
Comment: Two commenters requested that CMS provide an exception to
providing the disclosure notice to the patient at the time of referral,
especially for services furnished on an emergency or time-sensitive
basis as the commenters believe it is impractical to think that the
list will be given and signed by the patient in an emergency or other
time-sensitive case.
Response: We do not believe it is necessary to grant an exception
to the disclosure requirement in cases of an emergency or time-
sensitive nature. In those situations, physicians should make a
reasonable attempt to provide the notice to the patient and document
that the attempt was made. We believe the occurrence of emergencies in
physician offices that require a referral for advanced imaging under
the in-office ancillary services exception is rare enough that it does
not warrant granting an exception. We believe having the physician make
a reasonable attempt would not prevent or impede beneficiaries from
receiving the necessary services. In most emergencies that arise in a
physician's office, patients will be transferred to the emergency
department of the nearest hospital rather than referred for imaging at
the physician's office.
Comment: A commenter asked about compilation of the list of
alternate suppliers and how physicians should go about this task. The
commenter asked if a search of the internet or a telephone directory
would be adequate. Also the commenter asked if Medicare contractors
will have a list of entities providing such services. Another commenter
recommended that CMS create a publicly available database of providers
of the specified services and maintain this information online and in
the Medicare provider directory that is published annually because,
according to the commenter, it should be less work for CMS to create
this list than it is for practices, since much of this information can
be gleaned from information already furnished by practitioners to
Medicare.
Response: We are not prescribing any one method for physicians to
craft the list of alternate suppliers. A physician is able to use any
reasonable means that he or she chooses in order to compile the list of
five alternate suppliers. We do not plan to create a standard form or a
publicly available database for this disclosure requirement nor will we
require Medicare contractors to furnish lists of all entities providing
such services. Some physicians may choose

[[Page 73447]]

to compile the list of suppliers from an internet search, others may
know suppliers in the 25-mile radius who provide quality imaging and
list these. We are not limiting a physician's methods of creating the
list so long as the other requirements of this disclosure requirement
are satisfied.
Comment: A commenter requested that CMS emphasize that the list of
alternate suppliers must provide the same service for which the patient
has been referred, for example a 64-slice CT as opposed to a 16-slice
CT.
Response: The disclosure is meant to inform patients that they
``may obtain the services for which the individual is being referred''
from another supplier who furnishes such services in the area. The
referring physician should list suppliers that are able to perform the
services for which the patient is being referred. Listing suppliers
that are unable to perform the needed test does not provide the patient
with meaningful choices about his or her care.
Comment: Several commenters suggested that the quality of alternate
suppliers should be indicated on the information provided to patients.
Other commenters recommended that only credentialed facilities are
listed on the notice, or that credentialed facilities be given special
designation on the disclosure notice.
Response: We are not requiring any quality indication on the list
of alternate suppliers at this time. Because the referring physician
will most likely be reviewing the results of the advanced imaging
service that the patient receives, it is reasonable to think that the
physician will include quality suppliers on the list. We are not
convinced to limit the list of suppliers to those who receive
accreditation. Nothing in the statute or this final rule with comment
prevents physicians from furnishing a list that designates a supplier's
credentialing status.
Comment: Two commenters requested that CMS provide clarification on
the frequency with which the physician must review and update the list
of suppliers. For example, commenters asked if the notice should be
reviewed for accuracy if a supplier relocates or any contact
information changes. In addition, one of the commenters asked about the
obligation of the referring physician to ensure that the suppliers
listed are accepting new Medicare patients.
Response: We suggest that the list of suppliers should be reviewed
annually for accuracy and updated at that time, if necessary. We do not
believe an annual update would be overly burdensome for physicians. We
believe an inaccurate list of alternate facilities would lead to
beneficiary confusion and that annually reviewing and modifying the
notice as needed would ensure that patients receive complete and
accurate information in accordance with this disclosure requirement.
In addition, referring physicians are not obligated to list only
suppliers that are accepting new Medicare patients; however, as the
disclosure notice is intended to allow patients to make informed
choices, referring physicians should make a reasonable effort to ensure
that the suppliers listed in the disclosure are viable options for all
of their patients for the services being referred.
d. Documentation of Disclosure
We proposed that, in order to document that this disclosure notice
was satisfied, a record of the patient's signature on the disclosure
notification must be maintained as an element of the patient's medical
record. We are modifying this proposal in this final rule with comment
to remove the patient signature requirement.
Comment: Many commenters stated that the burden of obtaining and
retaining the patient's signature in the medical record is burdensome.
Other commenters noted that, as suppliers move toward maintaining
electronic health records, an additional paperwork requirement seems
counter to these goals and recommended that CMS include an electronic
alternative to the maintenance of a signed copy of the disclosure
notice in patients' medical records. Another commenter noted that
because the notification of alternate suppliers is not a clinical
document, it might not belong in a patient's medical record. A
commenter asked if the disclosure document must be maintained in the
patient's main medical record or if it could be maintained instead with
the patient's radiological documentation, which can be maintained
electronically in a PACS system with the physician's orders for the
study.
A commenter recommended that CMS accept as sufficient
documentation, a note in the patient's chart that a member of the staff
provided the letter and explained it to the patient. Another suggestion
from a commenter was that physicians maintain a dated notification log
at the front desk that patients will sign once they have received and
reviewed their disclosure lists. These logs will then be retained and
filed by the office for potential review by regulators or accreditors.
One commenter supported the requirement to maintain a copy of the
disclosure in the patient's medical record.
Response: We acknowledge that obtaining the patient's signature and
maintaining a copy of such in the medical record may be burdensome. In
this final rule with comment we are removing the requirement to obtain
the patient's signature on the disclosure and to maintain this
documentation in the medical record. Nevertheless, as a matter of
prudent business practices, physicians should be able to document or
otherwise establish that they have complied with the disclosure
requirement. For example, the physician could document in the patient's
chart that the notice was given to the patient.
e. Effective Date
We proposed that the new disclosure requirement shall apply only to
services furnished on or after the effective date of these final
regulations, January 1, 2011. We did not receive any comments
suggesting any alternate effective date. We are finalizing the
effective date as proposed.
f. Other Comments
Comment: Some commenters submitted comments addressing topics
beyond the scope of this proposal. These comments included detailed
discussions of the in-office ancillary services exception, services
that should be excluded from that exception, MedPAC's analysis on the
issue, as well as questions about the anti-markup payment limitation
(Sec. 414.50) and a request that we respond to comments we requested
regarding incentive payment or shared savings arrangements.
Response: These comments are beyond the scope of this rulemaking
and are not addressed in this final rule with comment. If these issues
are addressed in the future, we will publish a notice of proposed
rulemaking that will be open to public comment at that time.

U. Section 6404: Maximum Period for Submission of Medicare Claims
Reduced to Not More Than 12 Months

1. Background
Sections 1814(a)(1), 1835(a), and 1842(b)(3)(B) of the Act
establish time limits for filing Medicare Part A and B claims. Prior to
the enactment of the ACA, under sections 1814(a)(1) and 1835(a) of the
Act, providers could file for Part A and Part B claims, respectively,
``* * * no later than the close of the period of 3 calendar years
following the year in which such services are furnished (deeming any
services furnished in the last 3 calendar

[[Page 73448]]

months of any calendar year to have been furnished in the succeeding
calendar year) except that, where the Secretary deems that efficient
administration so requires, such period may be reduced to not less than
1 calendar year* * *''. Prior to the enactment of the ACA, CMS was
authorized to establish a minimum time limit for provider-submitted
Part A and Part B claims of at least 1 calendar year from the date of
service, and a maximum time limit not to exceed 4 years and 3 months
after the date of service.
Additionally, prior to the enactment of the ACA, under section
1842(b)(3)(B) of the Act, Part B claims for physician and other
supplier services could be filed with Medicare ``* * * no later than
the close of the calendar year following the year in which such service
is furnished (deeming any service furnished in the last 3 months of any
calendar year to have been furnished in the succeeding calendar year) *
* *''. Therefore, prior to the enactment of the ACA, we were authorized
to establish a minimum time limit for filing Part B claims of 15 months
and a potential maximum of 27 months after the service was furnished,
depending on what month of the year the service was furnished.
Section 424.44 of the regulations implements sections 1814(a)(1),
1835(a), and 1842(b)(3)(B) of the Act. In order to effectively
administer the Medicare Program, we, through regulations, modified the
potential minimum and maximum time periods for filing Part A claims. At
Sec. 424.44(a), we adopted the minimum time limit of 15 months and
potential maximum of 27 months after the service was furnished that was
permitted under section 1842(b)(3)(B) of the Act for Part B claims and
uniformly applied that 15 to 27 month time limit to both Part A and B
claims. Also, under Sec. 424.44(b), we allowed providers and suppliers
the opportunity to file claims after the 15 to 27 month deadline for
filing claims expired when the failure to file `` * * * was caused by
error or misrepresentation of an employee, intermediary, carrier, or
agent of the Department that was performing Medicare functions and
acting within the scope of its authority.''
2. Provisions of the ACA
Section 6404 of the ACA amended sections 1814(a)(1), 1835(a), and
1842(b)(3)(B) of the Act regarding Medicare fee-for-service (FFS)
claims for services furnished on or after January 1, 2010. Under
section 6404(b)(1) of the ACA, all claims for services furnished on or
after January 1, 2010 must be filed within 1 calendar year after the
date of service. Section 6404 of the ACA did not amend sections
1814(a)(1), 1835(a), and 1842(b)(3)(B) of the Act for services
furnished before January 1, 2010. However, section 6404(b)(2) of the
ACA created a new requirement that claims for services furnished before
January 1, 2010 must be filed on or before December 31, 2010. Thus, the
statutory provisions prior to the enactment of the ACA remain in effect
for pre-2010 services, subject to this new requirement. The practical
effect of this change is that any claims for services furnished before
October 1, 2009 will follow the existing regulations. But for services
furnished during the last 3 months of 2009, providers and suppliers
must file claims no later than December 31, 2010. For services
furnished between October 1, 2009 and December 31, 2009, providers and
suppliers will only have 12 to 15 months to file a claim, whereas
before the ACA amendments, they would have had an additional year to
file their claims, or 24 to 27 months.
The majority of the comments that we received for the proposed rule
were supportive of our proposed exceptions at Sec. 424.44(b)(2) and
(3) concerning retroactive entitlement situations and dual-eligible
beneficiary situations. However, some commenters encouraged us to
either expand those proposed exceptions or suggested other new
exceptions.
Comment: One commenter stated that CMS should instruct Medicare
Intermediaries to process claims where provider representatives are
submitting retroactive claims within 6 months from the Social Security
Administration's (SSA) notification date due to SSA's delay in
processing beneficiaries' retroactive Medicare entitlement. Moreover,
the commenter cited to an OIG evaluation report dated January 2006 (A-
13-05-15028), which stated that the average number of years where
beneficiaries are awarded retroactive Medicare benefits is about 8
years. Therefore, the commenter asserted that when SSA corrects the
error and sends a notification letter to beneficiaries, providers
should be allowed to submit claims to Medicare Intermediaries as long
as the claims are submitted within 6 months from the notification
letter from SSA and as long as supporting documentation is attached to
the claims.
Response: As stated in the CY 2011 PFS proposed rule, if CMS or one
of its contractors determines that one of the exceptions to the time
limits for filing claims applies, then the time to file a claim will be
extended. We will update its internet only manual instructions to its
contractors so that Medicare's contractors are aware of the new timely
filing requirements, the exceptions to those requirements, and process
claims in accordance with these new requirements.
Comment: Two commenters disagreed that services furnished between
October 1, 2009 through December 31, 2009 must be billed by December
31, 2010 and asserted that our proposed language at Sec. 424.44(a) is
in contravention of explicit statutory language.
Response: We disagree with the commenter because section 6404(b)(2)
of the ACA clearly states that--``In the case of services furnished
before January 1, 2010, a bill or request for payment under section
1814(a)(1), 1842(b)(3)(B), or 1835(a) of the Act shall be filed not
later than December 31, 2010''. Therefore, because the statute
specifically addresses this issue, we must require that services
furnished between October 1, 2009 through December 31, 2009 be filed by
December 31, 2010.
Comment: Two commenters suggested that CMS create an additional
exception to the timely filing rules to permit providers to submit
claims for services at the request of a Medicaid State Agency or its
agent under the terms of the regulation prior to these current
revisions; that is, by the end of the calendar year following the year
in which the services were delivered (with services delivered in the
last quarter of a calendar year being treated as though they were
delivered in the next calendar year). The commenters believe that this
type of additional exception would permit Medicaid State Agencies to
assure proper billing of services to Medicare, as an appropriate third
party payer, without overtaxing providers or Medicare contractors by
requiring them to submit multiple claims at varying times.
Additionally, a third commenter stated that the third condition of the
exception at Sec. 424.44(b)(3) could be interpreted to mean that the
Medicaid agency must recover their payment from a provider or supplier
prior to the provider or supplier billing Medicare. The commenter
believes that it would be a better practice to notify providers of the
Medicaid agency's intention to recover prior to performing the actual
recovery.
Response: We were not persuaded to modify the rule in order to
create an additional exception to permit providers and suppliers to
submit claims for services at the request of a Medicaid State Agency
prior to the State Medicaid Agency actually recovering the payment.
Providers and suppliers do not necessarily have to wait for

[[Page 73449]]

Medicaid to recover its payment (see Sec. 424.44(b)(3)) in order to
utilize an exception to the timely filing rules in retroactive
entitlement situations because the proposed exception at Sec.
424.44(b)(2) may be used by providers and suppliers in order to file
claims prior to a State Medicaid Agency recovering its payments. As we
stated in Sec. 424.44(b)(2), if CMS or one of its contractors
determines that at the time the service was furnished the beneficiary
was not entitled to Medicare and the beneficiary subsequently received
notification of Medicare entitlement effective retroactively to the
date of the furnished service, then the time limit to file a claim may
be extended.
Comment: Three commenters suggested that an exception to the timely
filing rules should be created for Medicare beneficiaries who are
retroactively disenrolled from a Medicare Advantage plan so that all
claims for services provided to the beneficiary while enrolled in the
Medicare Advantage plan (upon retroactive disenrollment) can be
submitted for coverage and payment to original Medicare. The commenters
stated that a beneficiary may be retroactively disenrolled from that
plan under a variety of circumstances. Moreover the commenters asserted
that if a retroactively disenrolled beneficiary is unable to have
claims for services submitted to original Medicare because some of
those services were delivered more than a year prior to the date of
actual disenrollment, then the beneficiary will be unable to be made
whole and the ability to disenroll from a Medicare Advantage plan will
be rendered pyrrhic at best.
Response: We modified the final rule based on these comments and
created an additional exception for retroactive disenrollment from
Medicare Advantage plans at Sec. 424.44(b)(4). Although we did not
receive a comment requesting an exception for retroactive disenrollment
from Program of All-inclusive Care for the Elderly (PACE) provider
organizations, we included retroactive disenrollment from PACE in the
exception at Sec. 424.44(b)(4) because beneficiaries, providers, and
suppliers could also be disadvantaged in retroactive disenrollment PACE
situations.
Comment: Two commenters suggested that an exception to the timely
filing rules should be created when a private payer recovers its
payment from the provider 11 months or more after the date of service.
The commenters stated that hospitals routinely experience payment
retractions from private payers that are outside the hospitals' control
and that may prevent a Medicare claim from being filed within one year
of the date of service.
Response: We were not persuaded to modify the rule by these
comments because providers are already required ``to maintain a system
that, during the admission process, identifies any primary payers other
than Medicare, so that incorrect billing and Medicare overpayments can
be prevented''. See Sec. 489.20(f). Also, section 1862(b)(6) of the
Act states--``* * * no payment may be made for any item or service
furnished under part B unless the entity furnishing such item or
service completes (to the best of its knowledge and on the basis of
information obtained from the individual to whom the item or service is
furnished) the portion of the claim form relating to the availability
of other health benefit plans''. Therefore, we are not modifying the
rule based on this comment because creating an exception to the timely
filing limitations for these situations would allow providers and
suppliers to circumvent the statutory and regulatory requirements
stated above.
Comment: Two commenters suggested that CMS create an exception to
the timely filing rules for Medicare Secondary Payer (MSP) claims when
the initial payment determination by the primary payer is not received
by the hospital in sufficient time to permit timely filing of the MSP
claim. A third commenter recommended that in cases where Medicare is
not the primary payer, the filing deadline be extended to 12 months
from the date the payment is made for the products or services by the
payer immediately primary to Medicare (that is, the primary payer when
Medicare is the secondary payer, and the secondary payer when Medicare
is tertiary).
Response: We were not persuaded to modify the rule by these
comments because Medicare may make conditional payments for services
when a payer that is primary to Medicare does not pay promptly.
``Prompt'' or ``promptly'', when used in connection with primary
payments, except as provided in Sec. 411.50, for payments by liability
insurers, means payment within 120 days after receipt of the claim. See
42 CFR part 411 subparts B through H and 411.21 and 411.24 for the
definitions of conditional payment and promptly. Moreover, because
providers are already required ``to maintain a system that, during the
admission process, identifies any primary payers other than Medicare,
so that incorrect billing and Medicare overpayments can be prevented''
(See Sec. 489.20(f)) we do not believe a provider's ability to meet
the new 1 calendar year timely filing requirement will be compromised
by the commenter's concerns.
Comment: Three commenters suggested that CMS create an exception to
the timely filing rules so that hospitals are permitted to file
inpatient Part B only claims for any inpatient cases that are
retrospectively reviewed by a Medicare Recovery Audit Contractor (RAC)
or other review entity and determined not to be medically necessary in
an inpatient setting. The commenters pointed out that with the
reduction of the timely filing period to one year from the date of
service, legitimate rebilling opportunities are limited since Medicare
RAC's may audit Medicare claims that were paid up to 3 years ago.
Response: We were not persuaded to modify the rule by these
comments because Medicare's billing guidelines instruct providers
regarding what types of inpatient services may be billed to Part A and
to Part B. Therefore, it is the responsibility of a provider to
correctly submit claims to Medicare by coding the services
appropriately.
Comment: In the CY 2011 PFS proposed rule, CMS solicited comments
regarding whether CMS should provide a regulatory definition of ``date
of service'' and, if so, how should it define this term. One commenter
suggests that the ``date of service'' be defined through administrative
instructions as the ``through date'' on the Medicare claim (UB-04 form
locator 6, statement covers period). A second commenter stated that CMS
should adopt as a final rule the guidance on ``Date of Service''
provided in MLN Matters Number 7080 and Transmittal 734, Change Request
7080. CMS Manual System, Pub 100-20 One-Time Notification, July 30,
2010. This guidance provides that for institutional claims that include
span dates, the ``Through'' date on the claim will be used to determine
the date of service for claims filing timeliness; for professional
claims (CMS-1500 Form and 837P) submitted by physicians and other
suppliers that include span dates of service, the guidance states that
the line item ``From'' date will be used to determine the date of
service and filing.
Response: We decided not to define ``date of service'' in the final
rule because, as we stated in the CY 2011 PFS proposed rule, we
recognize that for many Part A and B services it is difficult to craft
a uniform rule that will apply a consistent date of service standard.
Therefore, we decided to address the ``date of service'' issue via sub-
regulatory guidance. We issued sub regulatory guidance on what
constitutes the ``date

[[Page 73450]]

of service'' for some items and services on May 7, 2010 via Change
Request 6960 and on July 30, 2010 via Change Request 7080 to our
Medicare contractors and it is our intention to provide additional sub-
regulatory guidance as the need arises for different Part A and B
services.
Comment: One commenter believed an exception should be created for
claims for consumers who retroactively enroll in original Medicare Part
B, such as consumers who successfully apply for equitable relief. For
example, a person may choose to take Part A (because it is premium
free) but may mistakenly choose not to enroll in Medicare Part B due to
cost or because they believe that other insurance for which they
already pay a premium, such as retiree coverage or coverage through a
group health plan provided by a small employer, will pay medical costs.
As a result, insurance that is supposed to pay secondary to Medicare
incorrectly pays primary. The commenter goes on to assert that if the
insurance plan discovers that a person was eligible for Medicare Part B
but did not enroll and therefore the plan was supposed to pay
secondary, the insurer can recoup payments made back to the date the
enrollee became Medicare Part B eligible. In some instances, a person
may obtain a retroactive Medicare Part B start date back to the
original date of Medicare eligibility. This retroactive start date can
be a few months to a few years and is not limited by statute. As a
result, providers from which secondary insurer's recouped payment would
need the ability to submit claims to Medicare for services provided
over one year in the past. In these cases, because the consumer is
already enrolled in Medicare Part A and not Part B, the commenter is
concerned that claims would not fall under the language of Sec.
424.44(2)(ii) as the consumer is already entitled to Medicare.
Response: Although this comment was unclear, we believe the
commenter wants CMS to create an exception to the time limits for
filing claims specifically for Part B services. We were not persuaded
to modify the rule by these comments because if a beneficiary is
granted equitable relief under section 1837(h) of Act, the beneficiary
may still be able to use the exception at Sec. 424.44(b)(2). Of
course, all of the conditions for Sec. 424.44(b)(2) will need to be
satisfied in order for an exception to be granted in a particular case.
It is important to note that all of the exceptions in Sec. 424.44(b)
(including the exception for Sec. 424.44(b)(2)) are not limited to
just Part A services; the exceptions may also be granted for Part B
services when applicable.
Comment: One commenter asked whether the 4 years from date of
service limitation specified in Sec. 424.44(b)(1) applies when the SSA
makes an administrative error in determining a beneficiary's
retroactive entitlement decision since the SSA is not considered an
agent or contractor to CMS. Or, would this be covered under Sec.
424.44(b)(2) or Sec. 424.44(b)(3) without the 4 year limitation? The
commenter recommended that CMS clarify in the final rule that the 4
year limitation does not apply when the result of a retroactive
Medicare decision was due to SSA's administrative error in incorrectly
and untimely processing of beneficiaries eligibility determinations.
Response: Section 424.44(b)(1) only applies to errors or
misrepresentations that are made by an employee, Medicare contractor
(including Medicare Administrative Contractor, intermediary, or
carrier), or agent of the Department that was performing Medicare
functions and acting within the scope of its authority. It does not
apply to errors or misrepresentations made by the SSA; therefore, the 4
year restriction for Sec. 424.44(b)(1) would not apply because Sec.
424.44(b)(2) and (3) could be used in situations where the SSA makes an
error. However, it is important to note that errors or
misrepresentations by the SSA are not one of the conditions that must
be met in order for an extension of time to be granted under Sec.
424.44(b)(2) and (3).
Comment: Two commenters recommended that if the SSA cannot locate a
copy of the original retroactive notification letter that was sent to
the beneficiary, then CMS should allow providers or beneficiaries to
submit the notification letter that they received from SSA that clearly
indicates the beneficiary's retroactive entitlement date and the date
in which the notification of SSA's retroactive decision was made.
Therefore, the regulations and guidelines should address alternate
proof of coverage in the event a copy of the actual Notice of Award is
unavailable.
Response: We were not persuaded to modify the rule by these
comments because we believe these types of documentation or proof of
retroactive entitlement issues should be addressed via sub-regulatory
guidance. Therefore, we will consider these comments when we update our
internet only manual instructions to our contractors.
Comment: One commenter suggested that there should be an exception
to account for claims filed for beneficiaries granted Medicare
entitlement retroactively because of the 30+ years of systemic errors
of SSA's Special Disability Workload (SDW). The commenter stated that
this issue is currently in bill form before both houses of Congress and
that failing a legislative solution this proposed rule would bar States
from perfecting rightful claims for services provided over the years
under Medicaid that should have been provided by Medicare. The
commenter goes on to state that States will have great difficulty in
reaching out to providers over 30 years of services to recoup third
party liability from Medicare. Despite such difficulty, States should
retain the right to file claims and they should not be barred by this
proposed rule. The proposed rule states that ``we believe that limiting
this exception to 4 years after the dates of service strikes an
appropriate balance between fairness and equity for providers,
suppliers, and beneficiaries and administrative finality for the
Medicare program''. The commenter asserts that the proposed rule does
not show any consideration of States' interests in pursuing third party
liability against Medicare based on systemic failures by SSA, the
agency responsible for determining Medicare eligibility.
Response: The commenter's statement that States should retain the
right to file claims is outside the scope of this rule; therefore, we
will not address that particular comment. We were not persuaded to
modify the rule by the other comments because Sec. 424.44(b)(1) only
applies to errors or misrepresentations that are made by an employee,
Medicare contractor (including Medicare Administrative Contractor,
intermediary, or carrier), or agent of the Department that was
performing Medicare functions and acting within the scope of its
authority. It does not apply to errors or misrepresentations made by
the SSA; therefore, the 4 year restriction for Sec. 424.44(b)(1) would
not apply in the situation described by the commenter, but Sec.
424.44(b)(2) and (3) could be used in situations where the SSA makes an
error. However, it is important to note that errors or
misrepresentations by the SSA are not one of the conditions that must
be met in order for an extension of time to be granted under Sec.
424.44(b)(2) and (3).
Comment: One commenter suggested that CMS consider allowing the
exception for dually-eligible beneficiaries at Sec. 424.44(b)(3) to
apply if any one of the three conditions are met as opposed to all of
the conditions.
Response: We were not persuaded to modify the rule by this comment
because it would make the dual-eligible

[[Page 73451]]

exception meaningless. The first condition of Sec. 424.44(b)(3)
states--``At the time the service was furnished the beneficiary was not
entitled to Medicare''. That first condition could apply to every
service a person has ever received during his or her lifetime prior to
becoming a Medicare beneficiary. Therefore, under the commenter's
suggestion the exception would be meaningless.
Comment: One commenter suggested that the first condition of the
exception at Sec. 424.44(b)(3) include cases in which Medicare
coverage is unknown to the Medicaid agency at the time of service
instead of using the condition that at the time the service was
furnished the beneficiary was not entitled to Medicare.
Response: We were not persuaded to modify the rule by this comment
because if the beneficiary was already entitled to Medicare at the time
the service was furnished, then the provider or supplier could have
taken the necessary actions to find out that the individual was a
Medicare beneficiary. For example, the provider could have asked the
beneficiary prior to admission, checked with CMS, etc.
Comment: One commenter stated that the second condition of the
exception at Sec. 424.44(b)(3) assumes that because the beneficiary is
notified about retroactive Medicare coverage that the provider of
service and the State Medicaid Agency is concurrently notified, which
may not always be the case. Because this is a direct communication
between the Medicare program and its beneficiary, CMS should address
how providers and the Medicaid agency will evidence dual eligibility to
Medicare's contractors in an effort to meet this condition.
Response: We were not persuaded to modify the rule by these
comments even though we agree that it is possible that providers,
suppliers, and State Medicaid Agencies may not be notified concurrently
about a beneficiary's retroactive Medicare entitlement. However, the
exception at Sec. 424.44(b)(3) does not prevent providers and
suppliers from requesting an exception to the time limits for filing a
claim because the provider or supplier will always be notified about a
beneficiary's retroactive entitlement whenever a State Medicaid Agency
recovers its payment.
Pursuant to Sec. 424.44(b)(5)(iii), the date when the State
Medicaid Agency actually recovers its payment from the provider or
supplier is when the extension of time to file the claim through the
last day of the 6th calendar month is triggered. In other words,
assuming that all three of the conditions for Sec. 424.44(b)(3) are
met, providers and suppliers will possess the ability to file a claim
through the last day of the 6th calendar month after the date the State
Medicaid Agency recovers its payment. Unlike the 4 year restriction
(Sec. 424.44(b)(5)(i)) placed on the exception at Sec. 424.44(b)(1),
which is commonly referred to as the exception for ``administrative
error,'' there is no similar time restriction regarding when a provider
or supplier may request an exception under Sec. 424.44(b)(3).
Therefore, providers and suppliers should note that once the State
Medicaid Agency recovers its payment for the services, providers and
suppliers will only have through the last day of the 6th calendar month
after that recovery date to file a claim (assuming that all three of
the conditions for Sec. 424.44(b)(3) are met).
Comment: One commenter recommends that CMS define ``retroactive
Medicare'' for the purpose of these proposed exceptions. The commenter
stated that they understand retroactive Medicare to be the extension of
benefits to a date in the past but believe that confirmation or
clarification of this definition should be issued by CMS.
Response: Although this comment was unclear, we believe the
commenter wants CMS to clarify what Medicare entitlement effective
retroactively to or before the date of the furnished service means. We
were not persuaded to modify the rule by this comment because we did
not use the term ``retroactive Medicare'' in the regulation text.
Instead, the regulation text used the following language--``the
beneficiary subsequently received notification of Medicare entitlement
effective retroactively to or before the date of the furnished
service''-- which we believe makes it clear that a beneficiary is
receiving his or her Medicare entitlement beginning at some date in the
past.
Comment: One commenter recommends that in States which have a
contract with the SSA to determine eligibility for Medicaid at the same
time a determination is made for receipt of Social Security Income
(SSI) benefits (see section 1634(a) of the Act), that CMS should
clarify if Medicare retroactivity will include requests for prior month
premium payments.
Response: Although this comment was unclear, we believe the
commenter wants to know whether the exceptions to the time limits for
filing claims is limited to just Part A services. Because the commenter
refers to requests for prior month premium payments, we believe that
the commenter is concerned about what happens when State Medicaid
Agencies pay Part B premiums on behalf of dual-eligible beneficiaries.
If a beneficiary receives notification of Medicare entitlement (Part A)
effective retroactively to or before the date of a furnished service
and a State Medicaid Agency (or the beneficiary or anyone else) pays
for that beneficiary's Part B monthly premium retroactively to or
before the date of a Part B furnished service, then those ``old'' Part
B services for that beneficiary may be granted an extension to the time
limits for filing as long as the other conditions for that particular
exception are also met. In other words, the exceptions for Sec.
424.44(b)(2) and (3) are not limited to just Part A services; the
exceptions may also be granted for Part B services when applicable.
Comment: One commenter stated that the ACA provision essentially
provides providers with a 12 month period in which to file claims for
services for which they have reason to believe Medicare may be
responsible. However, in the exceptions proposed by CMS, a provider
only has 6 months to file a claim. Consistency with the ACA would
suggest that the time to file a claim under each exception should be
extended through the last day of the 12th month following the month in
which the exception applies. The commenter also stated that with regard
to the proposed exceptions, the time limit should be based on the month
in which the error or misrepresentation is corrected and the provider
is notified of that fact. There may be some time between when the error
or misrepresentation is corrected and when the provider is notified of
that fact and the extended time limit should begin when the provider
becomes aware of the correction. A second commenter stated that the
timeframe for filing claims applicable to services provided to
beneficiaries who become retroactively entitled to Medicare (regardless
of whether they are dual-eligible beneficiaries) should be extended to
the later of: (1) The date that is 12 months after the date that the
beneficiary is notified of retroactive Medicare entitlement, or (2) the
date that is 12 months after the provider or supplier becomes aware of
retroactive Medicare entitlement.
Response: We are modifying Sec. 424.44(b)(5)(ii) based on these
comments because we agree that in retroactive entitlement situations
there could be situations where a provider or supplier may not be
notified of a beneficiary's retroactive entitlement in order to utilize
the exception at Sec. 424.44(b)(2). Therefore, we are modifying Sec.
424.44(b)(5)(ii) so that

[[Page 73452]]

notification to either party (that is, the beneficiary or the provider/
supplier) for the first time about a beneficiary's retroactive
entitlement will trigger when the extension of time to file the claim
through the last day of the 6th calendar month begins. We understand
that this rule may result in two extension of time triggers if the
beneficiary and the provider/supplier are not notified on the same day
(one for when the beneficiary is first notified and one for when the
provider or supplier is first notified); however, we agree with the
commenter that it would be unfair to providers and suppliers to limit
the exception based only on when the beneficiary receives notification.
We are also modifying Sec. 424.44(b)(5)(i) based on these comments
because we agree that there may be situations where a provider or
supplier may be able to utilize the exception under Sec. 424.44(b)(1)
commonly referred to as the ``administrative error'' exception, but the
provider or supplier is not notified about the correction until it is
too late to utilize the exception. Therefore, we are modifying Sec.
424.44(b)(5)(i) so that notification to either party (that is, the
beneficiary or the provider/supplier) for the first time about the
administrative error correction will trigger when the extension of time
to file the claim through the last day of the 6th calendar month
begins. We understand that this rule may result in two extension of
time triggers if the beneficiary and the provider/supplier are not
notified on the same day (one for when the beneficiary is first
notified and one for when the provider or supplier is first notified);
however, we agree with the commenter that it would be unfair to
providers and suppliers to limit the exception based only on when the
``administrative error'' is actually corrected.
However, we were not persuaded to modify the rule for dual-eligible
situations (see Sec. 424.44(b)(3)) because the extension of time to
file a claim through the last day of the 6th calendar month is
triggered in dual-eligible situations when the State Medicaid Agency
recovers its payment from the provider or supplier. Therefore,
providers and suppliers will always receive sufficient notification in
dual-eligible situations because the date that the State Medicaid
Agency recovers its payment will be the provider's or supplier's notice
that they have through the last day of the 6th calendar month in order
to file a claim (assuming of course that CMS or its contractors
determines that all the conditions in Sec. 424.44(b)(3) are met and
grants an extension).
Also, we were not persuaded to modify the rule based on the comment
that the time to file a claim under each exception should be extended
through the last day of the 12th month following the month in which the
exception applies. Because the triggering events for the exceptions at
Sec. 424.44(b)(1), (2), and (3) cannot occur without the provider or
supplier actually being notified, we believe that an extension of time
to file a claim through the last day of the 6th calendar month after
those triggering events gives providers and suppliers sufficient time
to submit their claims.
Comment: Two commenters requested that CMS create an additional
exception for those instances where the issuance of new Medicare
provider numbers are delayed due to no fault of the provider. The
commenter stated that numerous Medicare contractors are taking 60 to
120 days or longer to process and finalize CMS enrollment applications.
Additionally, and more importantly, many State survey agencies are
extremely behind on initial Medicare State surveys. In some cases, it
is taking 2 years for the State to conduct the required survey for the
providers. These delays significantly restrict a provider's ability to
submit claims for services furnished prior to the effective date of the
Medicare billing privileges and the commenter hopes that CMS would work
with the provider community to process claims under these
circumstances. Another commenter recommended that CMS should provide an
exception for provider enrollment delays caused by the MAC or CMS
Regional Office that are outside the control of the provider. The
commenter recommended that CMS should extend the time to file a claim
through the last day of the 6th calendar month following the month in
which provider enrollment was completed with an additional 30 days
allowed for each full or partial month between the effective date of
the provider enrollment and the approval date of the provider
enrollment. This additional time is necessary to accommodate Medicare's
sequential billing requirement.
Response: We were not persuaded to modify the rule based on these
comments because regulations at Sec. 424.520, Sec. 424.521, and Sec.
489.13 already establish an effective billing date for providers and
suppliers and those regulations have already established limitations on
retroactive billing for providers and suppliers.
Comment: Two commenters stated that the Medicare Secondary Payer
rules do allow a provider to file with Medicare if the otherwise
primary payer is going to take awhile to pay. Notwithstanding, there
have been situations which would warrant enumeration in an exceptions
regulation. Providers have experienced situations where an insurance
company has executed a retroactive denial of a previously paid claim
after a year. When this happens, the timely filing clock should start
with the denial date. Thus, the commenter recommends that:
CMS should continue to allow for payment when a primary
payer may take a substantial amount of time to pay;
CMS should allow for a claim to be considered timely if it
is filed within 1 year from the date that the primary payer has made
its payment determination; and
CMS should allow for a claim to be considered timely if it
is filed within 1 year from the date that the primary payer
retroactively denied a prior previously paid claim.
Response: We were not persuaded to modify the rule by these
comments because Medicare may make conditional payments for services
when a payer that is primary to Medicare does not pay promptly.
``Prompt'' or ``promptly'', when used in connection with primary
payments, except as provided in Sec. 411.50, for payments by liability
insurers, means payment within 120 days after receipt of the claim. See
42 CFR part 411 subparts B through H and 411.21 for the definitions of
conditional payment and promptly.
Also, section 1862(b)(6) of the Act states--``* * * no payment may
be made for any item or service furnished under part B unless the
entity furnishing such item or service completes (to the best of its
knowledge and on the basis of information obtained from the individual
to whom the item or service is furnished) the portion of the claim form
relating to the availability of other health benefit plans''. Moreover,
because providers are already required ``to maintain a system that,
during the admission process, identifies any primary payers other than
Medicare, so that incorrect billing and Medicare overpayments can be
prevented'' (See 489.20(f)) we do not believe a provider's ability to
meet the new 1 calendar year timely filing requirement will be
compromised by the commenter's concerns.
Comment: One commenter stated that providers have reported that
they are experiencing a need to cancel previously processed Part B
claims in order to submit benefits exhaust claims. Depending on the
time frame for this, providers may be unable to resubmit the Part B
charges. Providers need either a mechanism for submitting benefits
exhaust claims for older dates of service

[[Page 73453]]

that does not require the cancelling of previously processed claims or
they need an exception granted for resubmitting claims that had been
processed timely but needed to be cancelled to submit benefits exhaust
claims. The commenter recommends that CMS should provide a mechanism
for submitting benefits exhaust claims for older dates of service that
does not require the cancelling of previously processed claim.
Response: We are not aware of the specific scenario described by
the commenter; however, we will monitor this issue and determine
whether any additional sub-regulatory guidance is needed in this area.
Comment: One commenter stated that there have been cases in which a
facility has been under a payment ban and the lifting of the remedy was
not communicated to the facility in a timely manner, thus prohibiting
the timely filing of claims. The commenter recommended that CMS should
start the timely filing clock with the date that the lifting of a
payment ban is communicated to the provider.
Response: We were not persuaded to modify the rule by this comment
because if the failure to file a claim timely was the result of an
error or misrepresentation that was made by an employee, Medicare
contractor (including Medicare Administrative Contractor, intermediary,
or carrier), or agent of the Department that was performing Medicare
functions and acting within the scope of its authority, then the
provider may be able to utilize the exception under Sec. 424.44(b)(1)
commonly referred to as the ``administrative error'' exception in order
to file a claim.
Comment: One commenter stated that when a provider is trying to
adjust a claim for the purpose of returning money to the Medicare
program, timely filing should not apply. Conversely, when a provider
finds an error that had caused an underpayment, the provider should be
allowed to file an amended claim and receive the increased
compensation. Therefore, the commenter recommends that CMS should
provide that timely filing under amended Sec. 424.44 not apply when a
provider is trying to adjust a claim for the purpose of returning money
to the Medicare program, or, conversely, when a provider finds an error
that had caused an underpayment.
Response: We were not persuaded to modify the rule by these
comments because the timely filing provision of section 6404 of the ACA
and subsequent final rule amending Sec. 424.44 is not intended to
address requests for re-determinations of initial determinations by
Medicare contractors such as those described by the commenter. The
regulations for such requests are detailed in 42 CFR part 405, subparts
G, H, and I.
Comment: One commenter stated that they regularly file claims
within 1 calendar year after the date of service that are either
rejected or denied and that are subsequently approved after being re-
filed. In certain instances, the date of re-filing, because of the time
period before the rejection or denial, is more than one year after the
date of service. The commenter recommends that the timely filing rule
should be and is satisfied when an original claim is timely filed
within 1 calendar year after the date of service, regardless of the
date of any resubmission.
Response: We were not persuaded to modify the rule by this comment
because, for example, if a provider or supplier fails to include a
particular item or service on its initial claim, fails to include all
the necessary information in order for an initial determination to be
made on that claim or fails to file the claim on a form prescribed by
us, then a provider or supplier cannot attempt to re-file that claim
more than 1 calendar year after the date that the service was
furnished. An incomplete or rejected claim cannot act as a placeholder
for a claim that has yet to be filed because that would clearly be a
way for providers and suppliers to avoid the 1 calendar year
requirement stated in section 6404 of the ACA. Moreover, it would
create a multitude of problems for CMS to deal with operationally or
administratively because CMS would need to have the ability to track
all rejected claims or all claims that failed to receive an initial
determination and be able to match those rejected or incomplete claims
up with all of the complete or valid claims that would eventually be
filed months or years later so that an initial determination could be
made.
Comment: One commenter stated that it is unnecessary to impose an
additional restriction to the exception for claims filed for services
provided to dual-eligible individuals. The third condition for the
exception at Sec. 424.44(b)(3) that a State Medicaid Agency recovers
the Medicaid payment for the furnished service from a provider or
supplier 11 months or more after the date of service is too restrictive
and CMS should have used a different time period.
Response: We agreed with the commenter that the 11 months or more
after the date of service requirement in Sec. 424.44(b)(3)(iii) was
too restrictive and therefore we modified the final rule based on these
comments by changing the time period from 11 months to 6 months or more
after the service was furnished.
Comment: One commenter suggests that CMS amend the third condition
of Sec. 424.44(b)(3) to read as follows-- ``A State Medicaid agency or
Provider recovered the Medicaid payment for the furnished service from
the provider or supplier 11 months or more after the date of service.''
The commenter stated that occasionally providers identify retroactive
Medicare coverage after Medicaid has paid without receiving
notification from the State Medicaid agency. The provider needs to have
the ability to correct the payer order when necessary before their
existing payment is recouped.
Response: We were not persuaded to modify the rule by these
comments because when a provider refunds a payment that is made to it
by a State Medicaid Agency, the provider is not recovering a State
Medicaid payment. Instead, when the State Medicaid Agency accepts that
refunded payment from the provider, we consider the State Medicaid
Agency to actually be recovering that Medicaid payment. Therefore, when
a State Medicaid Agency accepts a provider's refunded payment 6 months
or more after the service was furnished, then the third condition of
Sec. 424.44(b)(3) will be met. Of course, the first two conditions of
Sec. 424.44(b)(3) will also need to be met in order for an extension
to be granted under Sec. 424.44(b)(3).
Comment: One commenter stated that due to the limited home infusion
benefit under Medicare Part B, home infusion suppliers often bill
Medicare for the purpose of obtaining Medicare denial billing
remittance advices, which are required by other payers. It would be
unreasonably costly and confusing for home infusion suppliers to
receive timely filing limit denials for services provided to
individuals for whom the supplier is unaware of retroactive Medicare
entitlement during the allowable filing period. The commenter urged CMS
to ensure that infusion suppliers do not have to face this situation.
Response: Although this comment was unclear, we believe the
commenter is concerned that home infusion suppliers will be
disadvantaged by the exception at Sec. 424.44(b)(2). If the conditions
for Sec. 424.44(b)(2) are met, then home infusion suppliers will be
able to utilize that exception the same as any other provider or
supplier and therefore will not be adversely impacted by this rule.

[[Page 73454]]

Comment: One commenter urges CMS to make communication about this
new deadline a priority for the Agency. This should include a prominent
banner on the CMS Web site home page as well as clear and concise
written communications with Medicare providers. It is important that
providers not have claims rejected due to lack of awareness of new
claims submission deadlines.
Response: Although this comment is outside the scope of this rule,
we issued sub-regulatory guidance regarding section 6404 of the ACA on
May 7, 2010 via Change Request 6960 and on July 30, 2010 via Change
Request 7080. As a result of issuing that sub-regulatory guidance, two
provider education articles were posted to CMS's Medlearn Matters Web
site educating providers and suppliers about the new 1 calendar year
timely filing requirement.
In order to effectuate the changes made by the ACA, we are
finalizing our proposed changes to Sec. 424.44, with four
modifications. First, we are including another exception at Sec.
424.44(b) by re-designating Sec. 424.44(b)(4) of the proposed rule to
Sec. 424.44(b)(5) and designating the new exception for retroactive
disenrollment from Medicare Advantage plans or Program of All-inclusive
Care for the Elderly (PACE) provider organizations as Sec.
424.44(b)(4). We are adding this new exception so that beneficiaries,
providers, and suppliers may be granted an extension to file claims in
Medicare Advantage situations when the following conditions are met:
At the time the service was furnished the beneficiary was
enrolled in a Medicare Advantage plan or PACE provider organization.
The beneficiary was subsequently disenrolled from the
Medicare Advantage plan or Program of All-inclusive Care for the
Elderly (PACE) provider organization effective retroactively to or
before the date of the furnished service.
The Medicare Advantage plan or Program of All-inclusive
Care for the Elderly (PACE) provider organization recovered its payment
for the furnished service from a provider or supplier 6 months or more
after the service was furnished.
In these situations, if we or one of our contractors determines
that all of the conditions are met, then the time to file a claim will
be extended through the last day of the 6th calendar month following
the month in which the Medicare Advantage plan or Program of All-
inclusive Care for the Elderly (PACE) provider organization recovered
its payment for the furnished service from the provider or supplier.
The second modification changes Sec. 424.44(b)(5)(ii) because in
retroactive entitlement situations there could be situations where a
provider or supplier may not be notified of a beneficiary's retroactive
entitlement in order to utilize the exception at Sec. 424.44(b)(2).
Therefore, we are modifying Sec. 424.44(b)(5)(ii) so that notification
to either party (that is, the beneficiary or the provider/supplier) for
the first time about a beneficiary's retroactive entitlement will
trigger when the extension of time to file the claim through the last
day of the 6th calendar month begins.
The third modification changes Sec. 424.44(b)(5)(i) because there
may be situations where a provider or supplier may be able to utilize
the exception under Sec. 424.44(b)(1) commonly referred to as the
``administrative error'' exception, but the provider or supplier is not
notified about the correction until it is too late to utilize the
exception. Therefore, we are modifying Sec. 424.44(b)(5)(i) so that
notification to either party (that is, the beneficiary or the provider/
supplier) for the first time about the administrative error correction
will trigger the beginning of the extension of time to file the claim
through the last day of the 6th calendar month.
The fourth modification changes the 11 months or more after the
date of service requirement in Sec. 424.44(b)(3)(iii) to 6 months or
more after the date of service because the 11 months or more
requirement was too restrictive.

V. Section 6410 of the Affordable Care Act and Section 154 of MIPPA:
Adjustments to the Metropolitan Statistical Areas (MSA) for Medicare
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
Competitive Acquisition Program

In the July 13, 2010 proposed rule we proposed a number of
revisions to the DMEPOS CBP as a result of changes to the statute made
by both the Medicare Improvements for Patients and Provider Act of 2008
(MIPPA) and the ACA of 2010. Since both MIPPA and the ACA specify
requirements for Metropolitan Statistical Area (MSA) selection for
Round 2 and subsequent rounds, we outlined our proposals for
implementing the statutory requirements related to MSA selection and
the phase in of competitive bidding areas under the DMEPOS CBP. First,
we proposed to use the authority provided by the statute at section
1847(a)(1)(D)(ii) of the Act, as amended by MIPPA, to subdivide MSAs
with populations of greater than 8,000,000 under Round 2 of the DMEPOS
CBP. Second, we proposed to exclude certain areas from competitive
bidding after Round 2 as mandated by section 1847(a)(1)(D)(iii) of the
Act, as amended by MIPPA. Third, we proposed to implement the
requirement of section 6410 of the ACA to expand Round 2 of the program
by adding 21 of the largest MSAs based on total population to the
original 70 already selected for Round 2.
1. Background
Section VII.H of this final rule provides background on the DMEPOS
CBP, including a description of many of the changes made to the program
by section 154 of the MIPPA. In this section, we provide additional
information regarding changes made by both section 154(a) of the MIPPA
and section 6410 of the ACA. In addition to the changes discussed
previously in this final rule, MIPPA also added subparagraph (D) to
section 1847(a)(1) of the Act. Section 1847(a)(1)(D)(ii) of the Act, as
added by MIPPA, addresses Round 2 of the DMEPOS CBP, and section
1847(a)(1)(D)(iii) of the Act addresses subsequent rounds of the
Program.
Section 1847(a)(1)(D)(ii)(II) of the Act specifies that the
Secretary shall implement DMEPOS competitive bidding in the areas
previously selected for Round 2 of the program and also allows the
Secretary, in implementing Round 2 of the program, to subdivide MSAs
with populations of greater than 8,000,000 into separate CBAs. Section
1847(a)(1)(D)(iii) of the Act imposes new requirements on the Secretary
for competitions occurring before 2015 in subsequent rounds of the
program. For such competitions (other than national mail order), the
following areas are to be excluded from the program: (I) rural areas;
(II) MSAs not selected under Round 1 or 2 with a population of less
than 250,000; and (III) certain areas with low population density
within a selected MSA. These requirements do not apply to a national
mail order program.
Finally, MIPPA required that we implement Round 2 of the DMEPOS CBP
in the same MSAs that were designated as of June 1, 2008. In 2010,
section 6410(a) of the ACA amended sections 1847(a)(1)(B)(i)(II) and
(D)(ii) of the Act to expand Round 2 of the program from 70 MSAs to 91
MSAs by adding the next 21 largest MSAs by total population not already
selected for Rounds 1 or 2.

[[Page 73455]]

2. Subdividing Large MSAs Under Round 2
We have selected MSAs for Round 1 and for Round 2 consistent with
MIPPA's requirement. For Round 1, CBAs generally were comparable to
MSAs, however, for Round 2 we proposed to subdivide MSAs of 8,000,000
or more in population. The authority to subdivide MSAs into separate
areas for competitive bidding purposes is set forth in section
1847(a)(1)(D)(ii)(II) of the Act which states, ``[t]he Secretary may
subdivide metropolitan statistical areas with populations (based upon
the most recent data from the Census Bureau) of at least 8,000,000 into
separate areas for competitive acquisition purposes.'' We have
identified three MSAs which, based on the 2009 estimate from the Census
Bureau data, we subdivided under section 1847(a)(1)(D)(ii)(II) of the
Act: (1) Chicago-Naperville-Joliet, Illinois-Indiana-Wisconsin (IL-IN-
WI) MSA with a population of 9,569,624; (2) Los Angeles-Long Beach-
Santa Ana, California (CA) MSA with a population of 12,872,808; and (3)
New York-Northern New Jersey-Long Island, New York-New Jersey-
Pennsylvania (NY-NJ-PA) MSA with a population of 19,006,798. We
proposed to divide these MSAs into separate CBAs because we believe
this approach would create more manageable CBAs for contract suppliers
to serve and allow more small suppliers to be considered for
participation in the program.
We considered certain factors when deciding whether to subdivide
the MSAs with populations of at least 8,000,000. We considered the
geographic, social, and economic integration of each of the MSAs. We
applied all of these factors when grouping counties into CBAs and we
believe it is also appropriate to use these factors to determine: (1)
Whether or not to subdivide an MSA into separate CBAs, and (2) if the
decision is made to subdivide the MSA, how to subdivide the MSA. We
considered the following factors, generally in the order in which they
are listed:
Geographic size of the MSA and the location of the
counties within each MSA compared to neighboring counties.
The driving distances from north to south and east to west
within each MSA and county.
The total population and the population of FFS Medicare
beneficiaries using DMEPOS items subject to competitive bidding.
The DMEPOS allowed charges for items subject to
competitive bidding.
Comparably sized Round 1 and Round 2 MSAs based on
beneficiary counts and allowed charges for competitive bid items.
The interstate highway infrastructures of the MSAs.
The current service patterns of suppliers in each county
of the MSA.
We used each of the factors to the extent practical to develop
initial proposals for reasonable and workable subdivisions of these
highly and densely populated MSAs. We believe consideration of these
factors will help us meet our goal of subdividing large and densely
populated MSAs and creating CBAs that are attractive to suppliers and
incentivize them to bid competitively for a contract. With this goal in
mind, we proposed to establish CBAs that provide for a good volume of
DMEPOS business for winning bidders, avoid obvious geographic
obstacles, mimic existing supplier service patterns, and, to the extent
possible, do not cross State lines. We stated that we believed the
factors we have selected will achieve those objectives.
We found that counties clearly delineate areas within a MSA, and as
we have done for Round 1 by identifying CBAs by counties and zip codes,
we proposed to subdivide the MSAs at a county level. Since the Office
of Management and Budget (OMB) defines the MSAs by counties and county-
based subdivisions are stable, we use counties to subdivide CBAs. When
subdividing an MSA into counties, we consider counties that share
social, economic, and geographic integration. We have first summarized
the proposed subdivisions, then summarized the comments and finalized
the CBAs.
The Chicago-Naperville-Joliet, IL-IN-WI MSA comprises 14 counties
within 3 States: Illinois, Indiana, and Wisconsin. This MSA has 207,106
beneficiaries and $218,161,562 of DMEPOS allowed charges subject to the
DMEPOS CBP. Using the factors that we indentified, we proposed to
subdivide the Chicago-Naperville-Joliet, IL-IN-WI MSA into four
separate CBAs: Indiana-Chicago Metro CBA; South-West-Chicago-Metro CBA;
Central-Chicago Metro CBA; and Northern-Chicago Metro CBA.
The Los Angeles-Long Beach-Santa Ana, CA MSA comprises two
counties: Los Angeles County and Orange County. The MSA has 173,631
fee-for-service beneficiaries receiving DMEPOS subject to competitive
bidding and $244,523,957 in DMEPOS allowed charges subject to the
DMEPOS CBP. As mentioned previously, we proposed to subdivide MSAs
using counties, and since the Los Angeles-Long Beach-Santa Ana, CA MSA
only has two counties, it offers only one subdivision along the county
lines. Hence, we proposed to divide the MSA by the two counties
creating two CBAs: Los Angeles County CBA and Orange County CBA. We
also proposed to use the authority in section 1847(a)(3)(A) of the Act
to exclude certain areas within the Los Angeles-Long Beach-Santa Ana,
CA MSA. We believe these areas meet the requirement of section
1847(a)(3)(A) of the Act; they are rural areas with a low population
density within an urban area that are not competitive. In the April 10,
2007 DMEPOS CBP final rule (72 FR 17992), we finalized our regulations
at Sec. 414.410(c) that defined the factors we consider when
determining an area is considered a low population density area or an
area that would not be competitive. Based on our review of the County
Subdivision Population from the 2000 Census from the U.S. Census
Bureau, and using the factors set forth in the April 10, 2007 final
rule, we proposed to exclude the area of Los Angeles County north of
the San Gabriel Mountains. This large geographic area has a population
of about 357,000, which is only 4 percent of the total population of
Los Angeles County, and is separated from the rest of the county by the
San Gabriel Mountains. The area north of the San Gabriel Mountains has
one major road and many terrains which make this area remote. The
majority of the population in Los Angeles County lives south of the San
Gabriel Mountains. We believe that excluding this area will create a
more manageable CBA that still provides sufficient volume of DMEPOS
items while avoiding the geographic obstacle of the mountains. We
believe including this area in the DMEPOS CBP would result in fewer
small suppliers being considered for participation under the program,
because we would not expect small suppliers to have the resources to
serve these more remote areas. As a result, we expect that it will
increase the number of bids submitted for the CBAs within the Los
Angeles-Long Beach-Santa Ana, CA MSA.
The Los Angeles County includes the two islands of Santa Catalina
and San Clemente off the west coast. We proposed that the two islands
be included as a part of the Los Angeles County CBA in order to ensure
that beneficiaries presently residing on these islands or who move to
these islands in the future are ensured access to competitively bid
items by contract suppliers. San Clemente Island is a military base
with a current population of zero; and therefore, the inclusion of

[[Page 73456]]

this area in the CBA would not result in this island being a part of
the supplier service area at this time.
The New York-Northern New Jersey-Long Island, NY-NJ-PA MSA
comprises 23 counties in three States: New York, New Jersey and
Pennsylvania. The MSA has 344,879 FFS beneficiaries receiving DMEPOS
subject to the DMEPOS CBP and $350,449,795 in allowed charges for
DMEPOS items subject to competitive bidding. We proposed to subdivide
the New York-Northern New Jersey-Long Island, NY-NJ-PA MSA into five
CBAs. The proposed Nassau-Brooklyn-Queens CBA would be contiguous to
Suffolk County and would consist of the western part of Long Island and
extend to the eastern part of New York City. The proposed Suffolk
County CBA would consist of the eastern part of Long Island and would
encompass most of Long Island. The proposed Bronx-Manhattan NY CBA
would include the entire area of Manhattan and the Bronx. The proposed
North-West NY Metro CBA would be situated north and west of New York
City and would extend into New Jersey and Pennsylvania. The proposed
Southern NY Metro CBA included Staten Island and would extend south to
Ocean County, New Jersey.
At the March 17, 2010 meeting of the Program Advisory and Oversight
Committee (PAOC), we presented these proposals for subdividing these
three large MSAs. Various members of the PAOC had the following
suggestions for subdividing these MSAs:
Draw the boundaries of CBAs using the interstate highways
rather than the divisions by County.
Determine the current servicing areas of suppliers by MSA
and product category by using a scatter plot.
Use the Hudson River to divide the CBAs for the New York
MSA.
Carve out Pike and Putnam Counties from the New York MSA
due to their location and their low population density.
Include Manhattan as a separate CBA, due to its unique
nature as a self contained area.
Consider State licensure requirements when we divide the
MSAs into CBAs.
In the LA County CBA, exclude the area north of the San
Gabriel Mountains from the CBA.
Consider traffic patterns when dividing the Los Angeles
MSAs into CBAs.
In the July 13, 2010 proposed rule, we stated that we would
consider the PAOC's advice and recommendations and further invited
comments on the proposed subdivision of the three MSAs.
Comment: One commenter suggested that CMS use main travel arteries
to subdivide MSAs. The commenter further explained that using zip codes
or county boundaries may be unworkable across a large MSA if the travel
arteries do not correspond to the physical boundary lines for counties
and zip codes.
Response: We examined travel arteries used by suppliers and
supplier service and traffic patterns closely in developing the
proposed CBAs. The commenter provided no rationale for use of travel
arteries alone to establish CBA boundaries, nor did the commenter
provide a specific methodology or information to use in making
selections regarding which of the various highways to use as
boundaries. We believe it is appropriate to consider travel arteries as
one factor when designing CBAs. However, using this factor alone would
result in unworkable CBAs. For example, if the interstate highway
system in the Chicago-Naperville-Joliet, IL-IN-WI MSA, consisting of 11
different interstate highways (I-55, I-57, I-65, I-80, I-88, I-90, I-
94, I-190, I-290, I-294, and I-355), were used as boundaries for CBAs,
this would result in approximately 30 different, very small CBAs. As
noted above, the numerous highway systems that cut through the MSAs
were considered in determining which counties to include in each
proposed CBA; therefore, travel arteries were considered and used to
develop the CBAs.
In phasing in the competitive bidding program, we adopted the
definition of the term ``Metropolitan Statistical Area'' consistent
with that issued by the OMB. The MSA comprises the central county or
counties containing the core, plus adjacent outlying counties having a
high degree of social and economic integration with the central county
as measured through commuting. Using OMB's standards for MSAs, we have
found that counties clearly delineate areas within a MSA. Therefore, as
we have done for Round 1, we will continue to identify CBAs by counties
and zip codes. For the large MSAs, although we used the counties as the
basis for determining the CBAs, we considered various factors when
determining how to subdivide and group each county within the MSA,
including which major travel arteries serve which counties or group of
counties in a geographic location.
Comment: One commenter suggested that CMS should not finalize
regulations expanding the DMEPOS CBP to implement Round 2 until the
impact of implementation of Round 1 of the program on Medicare
beneficiaries, suppliers and providers is fully evaluated and
understood.
Response: Section 1847(a)(1)(B)(i)(II) of the Act mandates that
competitions occur in 2011 for Round 2 of the CBP.
We did not receive comments on the specific CBAs proposed for the
Chicago-Naperville-Joliet, IL-IN-WI MSA and are finalizing the CBAs in
that MSA as proposed. The counties that comprise each of the final CBAs
for this MSA are shown in Table 68. The DMEPOS allowed amount,
beneficiary count subject to competitive bidding, and the general
population that comprise these four final CBAs are shown in this table.

Table 68--Chicago-Naperville-Joliet, IL-IN-WI
----------------------------------------------------------------------------------------------------------------
DMEPOS
beneficiary
CBA name/county DMEPOS allowed count subject General
Charles \*\ to competitive population \**\
bidding \*\
----------------------------------------------------------------------------------------------------------------
Indiana-Chicago Metro CBA:
Lake, IN.............................................. $18,600,917 16,637 493,800
Jasper, IN............................................ 1,238,119 1,191 32,544
Newton, IN............................................ 580,842 393 13,933
Porter, IN............................................ 4,856,838 4,526 162,181
-----------------------------------------------------
CBA Total......................................... 25,276,716 22,747 702,458
South-West-Chicago-Metro CBA:
Will, IL.............................................. 13,523,185 12,522 681,097

[[Page 73457]]

Grundy, IL............................................ 1,417,511 1,405 47,958
Kendall, IL........................................... 978,215 1,052 103,460
DeKalb, IL............................................ 2,358,319 2,323 106,321
Kane, IL.............................................. 9,273,504 9,082 507,579
-----------------------------------------------------
CBA Total......................................... 27,550,734 26,384 1,446,415
Central-Chicago Metro CBA:
Cook, IL.............................................. 124,854,279 116,360 5,294,664
DuPage, IL............................................ 16,945,135 18,492 930,528
-----------------------------------------------------
CBA Total......................................... 141,799,414 134,852 6,225,192
Northern-Chicago Metro CBA:
Lake, IL.............................................. 12,352,802 12,482 712,453
McHenry, IL........................................... 7,020,768 6,852 318,641
Kenosha, WI........................................... 4,161,128 3,789 164,465
-----------------------------------------------------
CBA Total......................................... 23,534,698 23,123 1,195,559
MSA Total..................................... 218,161,562 207,106 9,569,624
----------------------------------------------------------------------------------------------------------------
\*\ Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding.
\**\ Source U.S. Census Bureau 2009 population estimates.

We did not receive comments on the specific CBAs proposed for the
Los Angeles-Long Beach-Santa Ana, CA MSA and are finalizing the CBAs in
that MSA as proposed, with one exception, based on further
consideration of issues raised by the PAOC. We will not include Santa
Catalina Island and San Clemente Island in the Los Angeles County CBA
as initially proposed. We discussed the factors to consider when
excluding low population density areas from a CBA in the April 10, 2007
DMEPOS CBP final rule (72 FR 17992). Exclusion of low population
density areas results in smaller CBAs that may reduce supplier costs in
servicing the CBAs. Lower supplier costs may result in lower bids,
which would increase savings under the program. Although an area may be
a low population density area, in accordance with existing regulations
at Sec. 414.410(c), it cannot be excluded from a CBA unless a
determination is made that the area is non-competitive based on one or
more of the following factors: Low utilization of DMEPOS items by
Medicare beneficiaries receiving fee-for-service benefits relative to
similar geographic areas; low number of DMEPOS suppliers relative to
similar geographic areas; or low number of Medicare fee-for-service
beneficiaries relative to similar geographic areas. The island of San
Clemente has a population of zero and including the island in the
program would therefore result in no savings. Approximately 70 Medicare
beneficiaries receiving $57,000 in DMEPOS items and services reside on
the island of Santa Catalina. This area can therefore be considered a
non-competitive area given the low number of Medicare beneficiaries and
low level of DMEPOS utilization, especially considering that the total
allowed charges for DMEPOS for Los Angeles County as a whole is over
$200 million. We took into consideration, when deciding whether to
finalize this proposal, comments from the March 17, 2010, meeting of
the PAOC, during which a supplier of DMEPOS highlighted the high costs
of furnishing items to Santa Catalina Island, 20 miles off the coast of
mainland California and accessible only by boat, helicopter, or
amphibious aircraft. Contract suppliers, and in particular small
suppliers, that do not have a location near the ferry ports for this
island would be burdened by having to serve this area in accordance
with their contract, and we expect that this may have an impact on the
bids submitted for this CBA. Medicare beneficiaries who are residents
of Santa Catalina Island and require delivery of DMEPOS items must
currently make special arrangement with suppliers for delivery of those
DMEPOS items. Suppliers are not currently obligated to serve this
island, so it is the beneficiary and not the supplier that bears the
cost of any additional expense associated with delivery of items. Under
the DEMPOS CBP, the supplier would be obligated to serve this island,
if it were included in the CBA, and the additional expense of
delivering items to this remote island are therefore transferred from
the beneficiary to the supplier. Although we originally proposed to
include Santa Catalina Island in the Los Angeles CBA to ensure access
to DMEPOS items for these beneficiaries, we have further examined this
issue and believe that beneficiaries will continue to have the ability
to make special arrangements for delivery of these items if this area
is not included in the CBA. We therefore believe that excluding the
islands of San Clemente and Santa Catalina from the Los Angeles CBA is
consistent with existing regulations at Sec. 414.410(c).
The counties that comprise each of the final CBAs for this MSA are
shown in Table 69. The DMEPOS allowed amount, beneficiary count subject
to competitive bidding, and the general population that comprise these
two final CBAs are shown in this table.

[[Page 73458]]

Table 69--Los Angeles-Long Beach-Santa Ana, CA
----------------------------------------------------------------------------------------------------------------
DMEPOS
CBA name DMEPOS allowed beneficiary General
amount \*\ count \*\ population \**\
----------------------------------------------------------------------------------------------------------------
Los Angeles County CBA \***\.............................. $201,244,121 137,408 9,862,049
-----------------------------------------------------
CBA Total............................................. 201,244,121 137,408 9,862,049 \*\
Orange County CBA......................................... 43,279,836 36,223 3,010,759
-----------------------------------------------------
CBA Total............................................. 43,279,836 36,223 3,010,759
-----------------------------------------------------
MSA Total......................................... 244,523,957 173,631 12,872,808
----------------------------------------------------------------------------------------------------------------
\*\ Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding.
\**\ Source U.S. Census Bureau 2009 population estimates.
\***\ The counts and amounts are not adjusted for the area excluded north of the San Gabriel Mountains.

We did not receive comments on the specific CBAs proposed for the
New York-Northern New Jersey-Long Island, NY-NJ-PA MSA. However, we
have decided to make three changes based on further consideration of
issues raised by the PAOC. We carefully considered the PAOC suggestion
noted in the proposed rule to exclude Pike and Putnam counties from the
New York-Northern New Jersey-Long Island, NY-NJ-PA MSA in order to
result in a smaller and more manageable CBA than the proposed North-
West NY Metro CBA. This proposed North-West NY Metro CBA is a large
area situated north and west of New York City and covering the three
states of New York, New Jersey, and Pennsylvania. Pike County,
Pennsylvania is a low population density area and makes up only 0.3
percent of the total DMEPOS utilization for the New York-Northern New
Jersey-Long Island, NY-NJ-PA MSA. Therefore, we believe that excluding
Pike County from the North-West NY Metro CBA is consistent with
existing regulations at Sec. 414.410(c). In addition, the PAOC pointed
out that excluding Pike County, PA, would help reduce the burden of
suppliers having to comply with different state licensure requirements.
As noted in the proposed rule, the PAOC also suggested that CMS
consider state licensure requirements when dividing the MSAs into CBAs.
To eliminate the complexity of complying with different state licensure
requirements, we have decided to split the proposed North-West NY Metro
CBA into two CBAs: One containing the New Jersey counties of Bergen,
Essex, Hudson, Morris, Passaic, and Sussex; and one containing the New
York counties of Putnam, Rockland, and Westchester. To summarize, with
regard to the proposed North-West NY Metro CBA, the PAOC suggested
excluding Pike and Putnam counties to reduce the size of this large CBA
we proposed for the area in the north and west of the MSA. It was noted
by the PAOC that removing Pike County would also reduce complications
of multi-state licensing as Pennsylvania licensing rules and
requirements would no longer be an issue. Based on the advice to reduce
the size of the proposed North-West NY Metro CBA and reduce multi-state
licensure complexities, we are removing Pike County from the CBA and
are splitting the CBA into two new CBAs: A fairly large CBA containing
the New Jersey counties from the proposed North-West NY Metro CBA; and
a smaller CBA containing the New York counties from the proposed North-
West NY Metro CBA. As a result of this change, there is now no need to
remove Putnam County from the CBA as the three county area of Putnam,
Rockland, and Westchester counties in New York will be served by
suppliers contracted to furnish items in this area, which is now
significantly smaller than the proposed North-West NY Metro CBA.
In further response to the PAOC's advice to consider State
licensure requirements when subdividing the MSAs into separate CBAs, we
have decided to remove Richmond County, NY from the proposed South New
York Metro, leaving this CBA to be comprised of six counties in New
Jersey. We are therefore moving Richmond County, NY to the Nassau-
Brooklyn-Queens-County Metro CBA and have changed the name of the CBA
to Nassau-Brooklyn-Queens-Richmond County Metro CBA. We note that
Hudson River is in between Richmond County and the other counties in
the Nassau-Brooklyn-Queens-Richmond County Metro CBA but we took into
consideration the social integration of this area in that there is a
major bridge/highway connecting Richmond County to Long Island. Also,
we believe that for each final CBA set forth in this rule, the supplier
servicing patterns supports our decision. We determined that both large
and small suppliers in the MSA generally furnish items within the CBAs
we proposed. The counties, DMEPOS allowed amount and beneficiary count
subject to competitive bidding and the general populations that
comprise each CBAs based on our final provisions are shown in Table 70.

Table 70--New York-Northern New Jersey-Long Island, NY-NJ-PA
----------------------------------------------------------------------------------------------------------------
DMEPOS
CBA name/county DMEPOS allowed beneficiary General
amount \*\ count \*\ population \**\
----------------------------------------------------------------------------------------------------------------
Nassau-Brooklyn-Queens-Richmond County Metro CBA:
Nassau, NY............................................ $30,888,889 29,857 1,351,625
Kings, NY............................................. 47,044,915 44,893 2,556,598
Queens, NY............................................ 33,406,236 32,798 2,293,007
Richmond, NY.......................................... 7,054,863 6,626 487,407
-----------------------------------------------------
CBA Total......................................... 118,394,903 114,174 6,688,637
Suffolk County CBA:

[[Page 73459]]

Suffolk, NY........................................... 31,950,806 31,476 1,512,224
-----------------------------------------------------
CBA Total......................................... 31,950,806 31,476 1,512,224
Bronx-Manhattan NY CBA:
Bronx, NY............................................. 19,791,646 17,002 1,391,903
New York, NY.......................................... 26,483,792 26,414 1,634,795
-----------------------------------------------------
CBA Total......................................... 46,275,438 43,416 3,026,698
Northern NJ Metro CBA:
Hudson, NJ............................................ 13,622,910 12,644 595,419
Bergen, NJ............................................ 19,948,837 20,278 894,840
Passaic, NJ........................................... 10,266,137 10,233 490,948
Essex, NJ............................................. 9,911,767 10,735 770,675
Morris, NJ............................................ 9,094,758 9,830 487,548
Sussex, NJ............................................ 2,905,240 2,819 150,909
-----------------------------------------------------
CBA Total......................................... 65,749,650 66,540 3,390,339
North East NY CBA Metro:
Putnam, NY............................................ 1,997,668 1,876 99,244
Rockland, NY.......................................... 6,421,317 6,265 298,545
Westchester, NY....................................... 16,971,210 17,220 953,943
-----------------------------------------------------
CBA Total......................................... 25,390,195 25,361 1,351,732
Southern NY Metro CBA:
Hunterdon, NJ......................................... 2,709,880 2,356 129,031
Union, NJ............................................. 10,466,838 10,654 523,249
Middlesex, NJ......................................... 15,803,473 16,649 789,102
Monmouth, NJ.......................................... 14,979,747 15,110 642,448
Ocean, NJ............................................. 20,913,022 21,600 569,111
Somerset, NJ.......................................... 4,941,838 5,425 324,563
-----------------------------------------------------
CBA Total......................................... 69,814,798 71,794 2,977,504
MSA Total......................................... 358,968,794 354,235 19,006,798
----------------------------------------------------------------------------------------------------------------

In summary, we are finalizing our proposal to divide the Chicago-
Naperville-Joliet, IL-IN-WI MSA into four CBAs. We are finalizing, with
the modification discussed above, two CBAs in the Los Angeles-Long
Beach-Santa Ana, CA MSA. Lastly, we are finalizing, with modifications
discussed above, six CBAs in the New York-Northern New Jersey-Long
Island, NY-NJ-PA MSA.
3. Exclusions of Certain Areas after Round 2 and Prior to 2015
Section 154(a) of MIPPA amended the statute by requiring that
competition under Round 2 takes place in 2011 and by adding section
1847(a)(1)(D)(iii) of the Act that requires us to exclude the following
areas from the competitive bid program for competitions after Round 2
of the program and before 2015:
Rural Areas.
Metropolitan Statistical Areas not selected under Round 1
or Round 2 with a population of less than 250,000.
Areas with a low population density within a MSA that is
otherwise selected consistent with section 1847(a)(3)(A) of the Act.
We proposed to incorporate these requirements and timeframes in
proposed Sec. 414.410(c).
We received no comments on this proposal and therefore are
finalizing this provision without modification.
4. Expansion of Round 2
Section 6410(a) of the ACA expanded the areas to be included in
Round 2 of the program. As amended by section 6410(a) of the ACA,
section 1847(a)(1)(B)(i)(II) of the Act requires that the competition
for Round 2 of the program occur in 91 of the largest MSAs in 2011.
Prior to this change, Round 2 was to include 70 MSAs. Section
1847(a)(1)(D)(ii)(II) of the Act, as added by section 6410(a) of the
ACA, specifies that the additional 21 MSAs to be included in Round 2
``include the next 21 largest metropolitan statistical areas by total
population'' (after those already selected Round 2). The 2009 annual
population estimates from the U.S. Census Bureau are the most recent
estimates of population that will be available prior to the Round 2
competition mandated to take place in 2011. Therefore, we proposed to
use these estimates to determine the additional 21 MSAs to be included
in Round 2 of the program. Table 71 is a list of the additional 21 MSAs
added to Round 2.

Table 71--Additional 21 MSAs Added to Round 2
------------------------------------------------------------------------
2009 Total
21 Additional MSAs population
------------------------------------------------------------------------
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD................ 5,968,252
Washington-Arlington-Alexandria, DC-VA-MD-WV............... 5,476,241
Boston-Cambridge-Quincy, MA-NH............................. 4,588,680
Phoenix-Mesa-Scottsdale, AZ................................ 4,364,094

[[Page 73460]]

Seattle-Tacoma-Bellevue, WA................................ 3,407,848
St. Louis, MO-IL........................................... 2,828,990
Baltimore-Towson, MD....................................... 2,690,886
Portland-Vancouver-Beaverton, OR-WA........................ 2,241,841
Providence-New Bedford-Fall River, RI-MA................... 1,600,642
Buffalo-Niagara Falls, NY.................................. 1,123,804
Rochester, NY.............................................. 1,035,566
Tucson, AZ................................................. 1,020,200
Honolulu, HI............................................... 907,574
Albany-Schenectady-Troy, NY................................ 857,592
Worcester, MA.............................................. 803,701
Oxnard-Thousand Oaks-Ventura, CA........................... 802,983
Springfield, MA............................................ 698,903
Bradenton-Sarasota-Venice, FL.............................. 688,126
Poughkeepsie-Newburgh-Middletown, NY....................... 677,094
Stockton, CA............................................... 674,860
Boise City-Nampa, ID....................................... 606,376
------------------------------------------------------------------------

We received no comments on this proposal and therefore are
finalizing this provision without modification.

W. Section 10501(i)(3): Collection of HCPCS Data for Development and
Implementation of a Prospective Payment System for the Medicare
Federally Qualified Health Center Program

The Omnibus Budget Reconciliation Act (OBRA) of 1989 amended the
Act by creating new FQHC benefit programs under both Medicare and
Medicaid. The Medicare FQHC benefit provides coverage for a full range
of primary care services, including physician and certain nonphysician
services (PAs, NPs), clinical social worker, psychologist services, and
preventive services. FQHCs are ``safety net'' providers (for example,
community health centers and programs serving migrants, the homeless,
public housing centers, and tribal groups). The main purpose of the
FQHC program is to enhance the provision of primary care services in
underserved urban and rural communities. FQHCs typically enhance the
availability of care to vulnerable populations, including Medicare,
Medicaid, SCHIP, and the uninsured. Most of these health centers
receive HRSA grants for services to the uninsured.
Medicare pays FQHCs on the basis of reasonable cost, subject to an
upper payment limit on the reasonableness of incurred cost. Actual
Medicare reasonable cost is determined based upon a Medicare cost
report filed by the FQHC after the end of its fiscal year. Prior to the
start of the year, an interim all-inclusive per-visit payment amount,
based upon an estimate of Medicare reasonable costs, is calculated for
each Medicare FQHC. During the year, this interim all-inclusive per-
visit payment amount is paid for each covered visit between a Medicare
beneficiary and an FQHC health professional. After the end of the
Medicare FQHC's cost reporting year, interim per-visit payments are
reconciled to actual Medicare reasonable costs based upon the Medicare
cost report filed by the FQHC. Section 10501(i)(3) of the ACA now
amends this current Medicare FQHC payment policy with an entirely
different payment system, effective with cost reporting periods
beginning on or after October 1, 2014.
Section 10501(i)(3)(A) of the ACA amended section 1834 of the Act
by adding a new subsection (o), Development and Implementation of
Prospective Payment System. This subsection provides the statutory
framework for development and implementation of a prospective payment
system for Medicare FQHCs. Section 1834(o)(1)(B) of the Act, as
established by the ACA, addresses collection of data necessary to
develop and implement the new Medicare FQHC prospective payment system.
Specifically, section 1834(o)(1)(B) of the Act, Collection of Data and
Evaluation, grants the Secretary of HHS the authority to require FQHCs
to submit such information as may be required in order to develop and
implement the Medicare FQHC prospective payment system, including the
reporting of services using HCPCS codes. Section 1834(o)(1)(B) of the
Act requires that the Secretary impose this data collection submission
requirement no later than January 1, 2011. Accordingly, we proposed to
add a new paragraph (d) to Sec. 405.2470 to require Medicare FQHCs to
begin reporting all services furnished using HCPCS codes for these
services starting January 1, 2011. Beginning January 1, 2011, we
proposed that the Medicare FQHC would be required to report on Medicare
FQHC claims all pertinent service(s) provided for each Medicare FQHC
visit (defined in Sec. 405.2463). This additional reporting would
include the information needed to develop and implement a PPS for
FQHCs. For example, corresponding HCPCS code(s) would be required to be
reported along with the presently required Medicare revenue code(s) for
the Medicare FQHC visit(s). We noted in our proposal that our Medicare
FQHC claims processing system would be revised to accept the addition
of the new reporting requirements effective January 1, 2011. In our
proposal, we also noted that the proposed new data collection effort
would be for informational and data gathering purposes only, and would
not be utilized to determine Medicare payment to the FQHC. Until the
FQHC prospective payment system is implemented in 2014 and the Medicare
claims processing system is revised to reflect such a system, we noted
that Medicare FQHC payment would continue in the current manner
(utilizing revenue codes and the interim per-visit payment rate
methodology).
In our proposed rule, we further noted that Medicare FQHCs would be
required to adhere to the information collection requirements in
accordance with the content and terms of their Medicare agreement as
stipulated at Sec. 405.2434. We indicated in the proposed rule that
failure to do so could result in the termination of the FQHC's Medicare
agreement in accordance with Sec. 405.2436 of the Medicare FQHC
regulations.

[[Page 73461]]

At the time of publication of the proposed rule, we noted that we
did not foresee additional claims or other information collection needs
beyond collection of HCPCS codes. Accordingly, we did not propose
additional information collection requirements at that time. However,
we solicited public comment on any additional information FQHCs believe
may be necessary in order to develop and implement a prospective
payment system for Medicare FQHCs.
We received a number of comments on the proposed information
collection requirements. We address these comments as follows:
Comment: One commenter requested that CMS ensure that its systems
are appropriately updated to be able to accept HCPCS codes from
Medicare FQHCs.
Response: CMS will work to assure that its contracts are provided
with adequate notice allowing for claims processing systems to accept
these new reporting requirements.
Comment: One commenter requested that health centers be given
adequate time to learn the new reporting requirements, and to work with
health centers that might need additional assistance.
Response: CMS, through its Contractors, presently works to assist
and train all providers in Medicare reporting requirements,
particularly new requirements such as the collection of HCPCS
information from Medicare FQHCs. Medicare contractors have a variety of
assistance measures at their disposal to train Medicare FQHCs in HCPCS
coding. Assistance measures include seminars, web learning portals, and
telephone information lines. We note that there are numerous private
sector training and educational opportunities in HCPCS coding as well.
With the specific language regarding HCPCS data collection from
Medicare FQHCs included in the ACA itself, and the resultant lead time
prior to January 1, 2011 implementation of the reporting requirements,
we believe health centers have had sufficient time to prepare
themselves to meet these requirements.
Comment: One commenter suggested that data collection begin with a
representative sample of health centers, and that it generally be
phased in across the nation, in order to ensure that CMS not penalize
health centers that might need additional assistance.
Response: With the tight ACA implementation time frames for
implementation of a Medicare FQHC prospective payment system, as well
as the limited total number of FQHCs, we believe both provider sampling
and phase-in approaches to information collection requirements would
jeopardize CMS' ability to meet statutory requirements for the Medicare
FQHC PPS. Accordingly, we cannot accept comments to delay or limit
collection of Medicare FQHC data we believe necessary to meet the
statutory requirements.
Comment: One commenter suggested that HHS estimate the additional
administrative burden placed on FQHCs and, if that is significant,
increase reimbursement proportionately during the proposed collection
period.
Response: Medicare FQHCs are paid on the basis of reasonable cost.
Administrative costs attributable to added information collection
requirements that might be incurred by Medicare FQHCs are already to be
reported by the Medicare FQHC on its Medicare costs report and included
as part of its Medicare FQHC all-inclusive rate.
Comment: One commenter suggested that HHS use the quality measures
reported to CMS as part of its meaningful use of electronic health
record requirements, instead of coding additional information into the
claims.
Response: We do not believe that quality measures reported to CMS
as part of meaningful use requirements would be sufficient in scope or
representative in breadth in order to establish a National Medicare PPS
sample which would be representative of the entire population of
Medicare FQHCs. Accordingly, we cannot accept this comment.
As a result of these comments, we are making no changes to our
proposal to require FQHCs to begin the reporting of services using
HCPCS codes. Accordingly, we are finalizing this provision without
modification. We will add a new paragraph (d) to Sec. 405.2470 to
require Medicare FQHCs to begin reporting all services furnished using
HCPCS codes for these services starting January 1, 2011.
We received no public comment suggesting collection of additional
information collection requirements beyond HCPCS codes. Therefore we
add no additional Medicare FQHC information collection requirements,
beyond the collection of the aforementioned HCPCS data requirements, in
this final rule.

VII. Other Provisions of the Proposed Regulation

A. Part B Drug Payment: Average Sales Price (ASP) Issues

1. ``Carry Over'' ASP
The average sales price (ASP) payment methodology is authorized
under section 303(c) of the MMA, which amends Title XVIII of the Act by
adding section 1847A. This section establishes the use of the ASP
methodology for payment for Medicare Part B drugs and biologicals
described in section 1842(o)(1)(C) of the Act furnished on or after
January 1, 2005. For purposes of this part, unless otherwise specified,
the term ``drugs'' will hereafter refer to both drugs and biologicals.
The ASP methodology applies to most drugs furnished incident to a
physician's service, drugs furnished under the DME benefit, certain
oral anti-cancer drugs, and oral immunosuppressive drugs.
Sections 1847A and 1927(b) of the Act specify quarterly ASP data
reporting requirements for manufacturers. Specific ASP reporting
requirements are set forth in section 1927(b) of the Act. Although
delays in reporting have been uncommon, they create a risk that: (1)
Could result in the publication of payment limits that do not reflect
prices for drug products, and (2) could result in inaccurate payments,
the need for correction of files and unintentional ASP payment limit
variability.
As a result of these concerns, we sought to establish a process for
addressing situations where manufacturers fail to report manufacturer
ASP data in a timely fashion, that is within 30 days after the end of a
quarter. The proposal in CY 2011 PFS proposed rule was intended to
allow us to calculate and report ASP payment limits for a given quarter
within the existing timelines and would not affect CMS or the OIG's
authority to assess civil monetary penalties associated with untimely
or false ASP reporting. Manufacturers who misrepresent or fail to
report manufacturer ASP data will remain subject to civil monetary
penalties, as applicable and described in sections 1847A and 1927(b) of
the Act.
For the purposes of reporting under section 1847A of the Act, the
term ``manufacturer'' is defined in section 1927(k)(5) of the Act and
means any entity engaged in the following: production, preparation,
propagation, compounding, conversion, or processing of prescription
drug product, either directly or indirectly by extraction from
substances of natural origin, or independently by means of chemical

[[Page 73462]]

synthesis, or by a combination of extraction and chemical synthesis; or
packaging, repackaging, labeling, relabeling, or distribution of
prescription drug products. The term manufacturer does not include a
wholesale distributor of drugs or a retail pharmacy licensed under
State law. However, manufacturers that also engage in certain
wholesaler activities are required to report ASP data for those drugs
that they manufacture. Note that the definition of manufacturers for
the purposes of ASP data reporting includes repackagers.
In accordance with section 1847A of the Act, manufacturers are
required to report data on the National Drug Code (NDC) level, which
include the following elements: the manufacturer ASP for drugs; the
Wholesale Acquisition Cost (WAC) in effect on the last day of the
reporting period; the number of units sold; and the NDC. Currently,
when manufacturer ASP data or specific data elements are not available,
we calculate an ASP price for a billing code based on other applicable
and available pricing data from manufacturers for that drug. This
alternative method used when manufacturer data are not available for a
billing code includes WAC prices from compendia. WAC prices tend to be
higher than manufacturer ASP prices.
Although problems with reporting have been uncommon, we have
recently encountered situations where delays in manufacturer ASP
reporting could have led to significant ASP payment limit fluctuations
for highly used HCPCS codes. The greatest potential impact occurs when
data for high volume drug products within a HCPCS code that is
represented by a limited number of NDCs have not been reported and
cannot be included in the ASP volume weighted calculations described in
section 1847A(b) of the Act. For multisource drugs, such a situation is
likely to artificially increase or decrease Medicare ASP payment
limits, which in turn would affect beneficiary cost sharing amounts.
Such artificial fluctuations of the ASP payment limit could provide the
appearance of instability unrelated to market forces and could also
create access issues for providers and beneficiaries and confusion that
could ultimately affect product demand in the marketplace.
In order to minimize the possibility of ASP payment limit
fluctuations due to missing data, we proposed a process, consistent
with our authority in section 1847A(c)(5)(B) of the Act, to update ASPs
based on the manufacturer's ASP calculated for the most recent quarter
for which data is available. Specifically, we proposed to carry over
the previously reported manufacturer ASP for an NDC(s) when missing
manufacturer ASP and/or WAC data could cause significant changes or
fluctuations in ASP payment limits for a billing code, and efforts by
CMS to obtain manufacturer-reported ASP before Medicare ASP payment
limits publication deadlines are not successful. For example, the most
recently reported manufacturer ASP prices for products on the market
would be carried over to the next quarter if a manufacturer's entire
submission were not received, manufacturer ASP price data for specific
NDCs have not been reported, or when only WAC data has been reported;
however, NDCs that have zero sales or are no longer being manufactured
will not be subjected to this process. Also, we proposed to apply the
carryover process only in cases where missing data results in a 10
percent or greater change in the ASP payment limit compared to the
previous quarter. Based on experience with ASP methodology since 2004,
we believe that this percentage threshold constitutes significant
change. We specifically sought comments on our use of 10 percent as the
threshold amount. In order to better represent actual market trends,
that is, actual increases or decreases in manufacturer reported ASP for
the group of NDCs that represent the HCPCS code, we also proposed that
the manufacturer ASP payment amounts for the individual NDCs that are
carried over will be adjusted by the weighted average of the change in
the manufacturer ASP for the NDCs that were reported during both the
most recently available quarter and the current quarter. We requested
comments about whether other methods to account for marketplace price
trends could be a better substitute for applying the weighted average
change. The previous quarter's sales volumes will be carried over. An
example of the proposed process appears in Table 72.
We proposed to apply this process to both single source drugs and
multiple source drugs. However, we are concerned that including single
source drugs in the carry over process could create an incentive for
nonreporting in situations where ASPs for a single source drug are
falling and the manufacturer stops reporting ASPs in an effort to
preserve a higher payment amount despite the risk of significant
statutory penalties for such an action. Therefore, we specifically
requested comments on this option and the effect of limiting this
proposal to multiple source drugs only. We noted that we would consider
these comments carefully before including both single source and
multisource drugs in the process.

Table 72--ASP Carryover Example for NDCs in a Specific HCPCS Code
--------------------------------------------------------------------------------------------------------------------------------------------------------
Previous Current Current Current
quarter Previous Current quarter quarter Current Current quarter quarter quarter
Previous quarter reported NDCs reported quarter ASP reported NDCs reported quarter ASP NDCs for volume for price for
volume volume calculation calculation calculation
--------------------------------------------------------------------------------------------------------------------------------------------------------
12345-6789-10......................... 2000 $1.000 12345-6789-10 2500 $0.980 12345-6789-10 2500 $0.980
12345-6789-11......................... 3000 1.000 12345-6789-11 1700 0.980 12345-6789-11 1700 0.980
12345-6789-12......................... 5000 1.000 12345-6789-12 5500 0.980 12345-6789-12 5500 0.980
45678-1234-90......................... 9000 1.100 (\2\) (\2\) (\2\) 45678-1234-90 9000 \1\ 1.078
45678-1234-99......................... 27000 1.100 (\2\) (\2\) (\2\) 45678-1234-99 27000 \1\ 1.078
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This result is obtained by calculating the weighted average price change in NDCs available (that is, 12345-6789-10 thru 12345-6789-12) in both the
previous and current quarters, which is -2% [(0.98-1.00)*100], and applying that change to the previous quarter's manufacturer ASP for the missing
NDCs (that is, 45678-1234-90 and 45678-1234-99). The last two columns on the right would be used to calculate the weighted ASP and payment limits for
the 5 NDCs as a HCPCS code and accounts for missing prices for two high volume NDCs that represent most of the units sold within the HCPCS code and
therefore heavily influence the price calculation for the HCPCS code.
\2\ Missing.

Our proposed approach was intended to establish a straightforward
and transparent solution that minimizes the effect of missing
manufacturer ASP data on Medicare ASP payment limits. We believe that
the availability of a

[[Page 73463]]

mechanism to minimize non-market-related price fluctuations is
desirable when efforts to obtain manufacturer's ASP data by deadlines
have not been successful. Our proposed mechanism was not intended to
alter or adjust reported prices and will not be used to do so, but
instead is intended to more accurately represent prices in the
marketplace in the rare circumstance where manufacturer ASP data for
particular drug product(s) is missing. Based on our experience with ASP
reporting since 2004, we do not believe that this process will be used
frequently. However, as we stated previously, recent concerns about
delays in reporting of manufacturer ASP data have led to this proposal.
We also remind manufacturers that significant civil monetary
penalties (CMP) for not reporting or misrepresenting manufacturer ASP
data are authorized under sections 1847A(d)(4) and 1927(b)(3)(C) of the
Act and codified in regulations at Sec. 414.806. This proposal should
not be interpreted to mean that CMS and the OIG will refrain from
collecting such penalties for ASP reporting violations. Late or missing
reports will not be tolerated. This proposed policy would be
implemented regardless of any efforts by the OIG to impose CMPs for
nonreporting.
We would also like to remind manufacturers that additional specific
information about reporting ASP data to us is available. (For examples,
see the following: 69 FR 17936, 69 FR 66299, 70 FR 70215, 71 FR 69665,
72 FR 66256, 73 FR 69751, and 74 FR 61904.) Also, Frequently Asked
Questions are posted in the related links inside CMS section of the ASP
Overview Web page at http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01_overview.asp#TopOfPage, and the downloads section of the same Web
page contains a link to the ASP Data Form (Addendum A), which includes
examples of how ASP data must be reported and formatted for submission.
In particular, we would like to remind manufacturers to report sales
volume in quantities of NDC units sold (not vials or other units of
sale), and to use a zero (that is, the character ``0'') instead of a
blank when reporting items that did not have any sales in a particular
quarter. In addition, manufacturers should report both the ASP and the
WAC for each NDC, the expiration date for the last lot sold, if
applicable, and the date of first sale for an NDC.
We received several comments about our proposals. In general,
comments supported our proposal, including the use of a weighted
average when calculating the carry over amounts, but the comments also
requested clarification about certain details. We did not receive any
comments that would lead us to reconsider the 10 percent threshold that
we proposed.
Comment: Several commenters specifically requested that CMS clarify
what will be done to obtain a manufacturer's ASP information before
carrying over previous manufacturer ASP information. The comments
recommended that CMS establish contact with manufacturers using contact
information from the manufacturer's submission before applying the
carryover policy.
Response: We follow a routine internal quality check process that
prompts communication with contacts listed on manufacturers' ASP
submissions when we believe that ASP data may be late, missing, or
incomplete. The process includes contacting the manufacturer as
recommended above. Our experience with using the reported contact
information to reach the manufacturer generally has been satisfactory,
and we plan to continue using it to manage and track submissions and to
coordinate follow-up action by CMS or other agencies. However, we also
believe that the carryover policy will serve as a backup in the event
information cannot be obtained in a timely manner. Again, we reiterate
that sections 1847A and 1927 of the Act require manufacturers to report
ASP quarterly, and that that section 1847A(d)(5) of the Act provides
for significant CMPs in situations when misreporting of ASP data
occurs.
Comment: A few commenters requested that we clarify how we
determine whether products are no longer being sold. The comments
agreed with our approach to exclude from the carryover process products
with no sales or those products that are no longer manufactured.
Response: In most cases, the manufacturers' ASP reports clearly
establish whether a product is still being sold because manufacturers
are required to report NDCs with zero sales. As noted above, CMS also
contacts the manufacturers, as needed, in order to clarify information.
If a situation arises where the product's sales status is not clear and
we are unable to get clarification from the manufacturer, we use
multiple sources of information, including but not limited to internal
quality checks, compendia data, and public information about drug
products to determine the product's status. Our experience has shown
that this approach is effective, and we would use this approach to
determine whether to apply the carryover policy if information supplied
by the manufacturer was not available or not clear. Based on our
experience, we believe that this approach will be sufficient to prevent
the use of carryover data from products that are not sold during a
quarter. We also would like to reiterate that manufacturers have a
reporting obligation for NDCs with zero sales (71 FR 69676). In other
words, the reporting obligation for an NDC ends only after the
expiration date of the last lot sold. As mentioned above, a zero (the
character ``0'') should be used to report the number of units of a drug
product sold if that product had no reportable sales for a quarter.
Comment: A commenter requested that CMS announce the exact deadline
for the application of the carryover policy each quarter.
Response: The ASP reporting deadline is specified in regulation
text at Sec. 414.804, which states that data must be submitted to CMS
within 30 days after the close of a quarter. We decline to provide an
additional ``grace period'' beyond the stated statutory and regulatory
deadline--not only have we not proposed such a grace period, but also
we believe such a policy could be misconstrued as permitting late
submission of manufacturer data. As we stated earlier, our proposal was
not intended (nor should it be construed) to affect manufacturers'
obligations to submit ASP data timely, and penalties for noncompliance
with the timely reporting requirement continue to apply. For these
reasons, we decline to adopt the commenter's suggestion.
Comment: A commenter recommended that the carryover policy not be
used for more than one quarter due to a concern about the accuracy of
payment amounts based on data that is more than 2 quarters old.
Response: We will not specify the duration for the carryover policy
at this time in order to prevent a situation where prolonged
nonreporting of ASP data could influence ASP payment limit
calculations. Based on our experience, reporting problems and delays
with a duration of 2 or more quarters would be unlikely.
Comment: Commenters recommended that CMS carry over prices only if
there is a manufacturer rebate agreement in place and a ``track
record'' of four or more quarters of data have been reported.
Response: We disagree with these comments. First of all, the
carryover process is unrelated to the manufacturer's reporting
obligations under sections 1847A and 1927 and the

[[Page 73464]]

ASP regulations--in other words, our proposal does not serve to relieve
manufacturers of any reporting obligations. Rather, our proposal is
intended to solve the problem of how to accurately calculate ASP in
instances where we do not have complete information. Thus, applying the
carryover process only to certain manufacturers as the commenter
suggests is not only unnecessary, but also, in our view, not
appropriate. In addition, although we appreciate the commenter's desire
to establish a baseline, for the reasons stated above, we do not
believe that implementing a standard whereby we apply the carryover
process only after a manufacturer has submitted four or more quarters
of data is advisable. Such a policy would be contrary to our intent in
making this proposal, which is to provide us with a standard procedure
for addressing missing data. Further, we have no information indicating
that manufacturers with four or more quarters of reporting are any more
or less likely to fail to submit data for a particular product in
future reporting periods. Therefore, we will not be modifying our
policy based on these comments.
Comment: One commenter agreed with carrying over a weighted average
price, but suggested that the carryover weighting calculation be based
on the manufacturer's own NDCs within the given HCPCS code rather than
the NDCs for all manufacturers within a given HCPCS code instead of
weighting based on all manufacturers NDCs in the HCPCS code. The
commenter believes that price changes for the manufacturer's own NDCs
in the same HCPCS code will better represent price changes for the
manufacturer's missing NDCs.
The commenter also recommended that CMS only use all other
manufacturers' NDCs in the carryover weighting calculation as proposed
if a manufacturer has not reported any data for any NDCs in the code.
Response: We disagree with these comments. We believe that basing
weighting calculations on all of the reported NDCs in the code is the
best approach because it permits us to maintain ASP stability without
potentially providing manufacturers with an incentive not to report
their ASP data. We are concerned that basing the carryover weighting
calculation solely on the manufacturer's own NDCs in the applicable
code could incentivize manufacturer non-reporting, particularly in
situations where a manufacturer has multiple NDCs that comprise a large
share of sales for a HCPCS code. Indeed, we are aware of situations
where a very wide variety of price changes have been reported for a
single manufacturer's multisource products for a single code. If we
were to calculate the weight for the carryover data using only the NDCs
that the manufacturer reported, then a manufacturer might decide to
risk sanction and purposefully report only a subset of NDCs for the
quarter in order to increase the ASP payment limit for the HCPCS code,
and this would result in inaccurate payment limits. For example, if a
manufacturer omitted data for a single NDC in a code that had a price
decrease and only reported one or two NDCs in that code that had price
increases, the carryover weighting calculations could be skewed toward
overpayment if only the manufacturer's own price changes were used in
the carryover calculation. Again, we reiterate that that Section 1847A
of the statute requires manufacturers to report ASP quarterly, and that
that section 1847A(d)(5) of the Act provides for significant CMPs in
situations when misreporting of ASP data occurs.
Comment: Two commenters recommended that CMS expand our proposed
regulation text at Sec. 414.904(i) to include more detail such as the
10 percent threshold, a requirement that we make contact with a
manufacturer before applying the carryover policy, and that the policy
not be applied to products with zero sales or products that are no
longer being manufactured.
Response: Based on these comments, we will update the regulation
text at Sec. 414.904(i) to state that the carryover policy will apply
only if the ASP payment limit change due to missing data is
significant. Our threshold for a ``significant'' change is 10 percent
up or down. We do not believe that adding further detail to the
regulation text is necessary at this time because the preamble language
and the clarifications sufficiently detail our approach.
Comment: In the proposed rule, we specifically requested comments
about the applicability of our proposals to single source and multiple
source drugs. One commenter agreed with our concerns that despite the
potential for civil monetary penalties, single source drug
manufacturers still could perceive an incentive not to report ASPs in
order to maximize the margin between the ASP payment and the actual
price for which providers acquire drugs. The commenter stated that the
carryover process, if applied to single source drugs, could provide
purchasers with an incentive to buy increased quantities of the product
because of the widening gap between their purchase price and Medicare
payments. Further, because of the potential for increased sales volume,
manufacturers of single source drugs may determine that the gains in
volume outweigh the statutory penalties. The commenter recommended
applying the carryover policy only to multiple source drugs because the
absence of data for one product within a multiple source code could
result in payment rate instability from quarter to quarter unrelated to
market forces.
Response: We are persuaded by the comment to finalize our proposal
with limitation that the carryover policy applies to multiple source
drugs only because we agree that including single source drugs in the
policy could result in inappropriate ASP payment limits for a HCPCS
code and may unintentionally provide an incentive for nonreporting of
single source drugs despite the likelihood of CMPs. In contrast, we
believe that for multiple source drugs the carryover process can
improve payment stability and keep the payment calculation more in line
with market forces. Moreover, multiple source drugs present less risk
for nonreporting because data from more than one manufacturer is used
in pricing calculations and thus, the impact of one manufacturer's
missing data is decreased. For these reasons and based on the comment
we received, we will limit our carryover policy to multisource drugs.
However, we will continue to monitor manufacturers' reporting practices
for single source drugs, biologicals, and multiple source drugs.
In summary, we are finalizing our proposal as follows: When a
manufacturer's reported data for a multiple source drug product with
sales during a quarter is missing, and efforts by us to obtain
manufacturer reported ASP data before Medicare ASP payment limits
publication deadlines have not been successful, we will use the
following process to calculate the payment limit for that drug
product's billing code: First, we will determine whether calculating
the payment limit without accounting for the missing data would result
in a 10 percent or greater change in the ASP payment limit compared to
the previous quarter. In that event, we will use (that is, carry
forward) the most recent data available for that multiple source drug
product(s) (that is, the individual NDCs), adjusted by the weighted
average of the change in the manufacturer ASP for the NDCs that were
reported during both the most recently available quarter and the
current quarter. The previous quarter's sales volumes also will be
carried over for the NDCs with missing data. The

[[Page 73465]]

carryover process as described above applies, for example, if a
manufacturer's entire submission was not received, manufacturer ASP
price data for specific multiple source NDCs has not been reported, or
when WAC data only has been reported. However, single source drugs and
biologicals, and multiple source drug NDCs that have zero sales or that
have been permanently discontinued by the manufacturer will not be
subject to this process. We are also finalizing Sec. 414.804(i) with
minor modifications as described elsewhere in this section.
Our process is intended to more accurately represent prices in the
marketplace if manufacturer ASP data for particular drug product(s) is
missing. Based on our experience with ASP reporting since 2004, we do
not believe that this process will be used frequently.
2. Partial Quarter ASP Data
Section 1847A(c)(4) of the Act states that, ``In the case of a drug
or biological during an initial period (not to exceed a full calendar
quarter) in which data on the prices for sales for the drug or
biological is not sufficiently available from the manufacturer to
compute an average sales price for the drug or biological, the
Secretary may determine the amount payable under this section for the
drug or biological based on--(A) the wholesale acquisition cost; or (B)
the methodologies in effect under this part on November 1, 2003, to
determine payment amounts for drugs or biologicals.''
When a new drug product enters the market, the first date of sale
rarely coincides with the beginning of a calendar quarter. Therefore,
the ASP data for many new drug products falls into partial quarter
status during the first quarter of sales. We are taking this
opportunity to describe our policy regarding how we use data from the
first quarter of sales in the calculation of ASP payment limits.
In accordance with section 1847A(c)(4)(A) of the Act, our policy
has been to price new single source drugs and biologicals at WAC for
the first quarter (unless the date of first sale is on the first day of
the quarter), and to add new NDCs for multisource drugs and product
line expansions of single source drugs and biologicals to the ASP
calculation for a quarter as soon as these products are reported.
We believe that the approaches for single source drugs,
biologicals, and multisource drugs are consistent with the statute,
particularly section 1847A(c)(4) of the Act, and we intend to continue
this policy.
Although this section of the rule did not contain any proposals, we
received several comments about our description of current policy.
Comment: Several commenters asked that CMS clarify how our policy
coincides with previously published preamble language from the CY 2005
PFS rule (69 FR 66302) that states that the initial period ``start[s]
on the date that sales of the drug begin and end[s] at the beginning of
the quarter after we receive information from the manufacturer
regarding ASP for the first full quarter of sales.''
Response: We believe our clarification is consistent with
previously published materials referenced by the commenters, and we
appreciate the opportunity to better explain our approach. The CY 2011
PFS proposed rule discussion pertains to our determination of the ASP-
based payment limits under section 1847A of the Act using data from the
drug's first quarter of sales--in other words, how we calculate payment
once we have received ASP data from the manufacturer for a drug. These
payment limits become effective two quarters after the drug's first
quarter of sales. In contrast, our preamble discussion in the CY2005
PFS rule pertained to payment under section 1847A of the Act in
quarters before sufficient ASP data that is needed to calculate payment
limits has been reported to CMS--that is, the CY2005 preamble discusses
payment for drugs that are administered on dates of service during
their first or second quarter of sales.
The ASP reporting and publishing time table has a two quarter lag,
so payment limits calculated using data reported from the first quarter
of sales become effective two quarters later. By way of example only, a
manufacturer's prices for a new single source drug first sold on
January 10 would be reflected in the ASP data that a manufacturer
reports to CMS no later than April 30, and that data would be
considered partial quarter data because sales began after the first day
of the quarter. If CMS determines that the drug should be added to the
national price files (that is, the drug is not priced by a contractor/
MAC), payment limits using the data from January 10 to March 31 would
then be calculated and become effective for the first quarter of sales
from July 1 to September 30 of that year. In this example, the first
full quarter of sales of the new drug would take place between April 1
and June 30. ASP data from the new drug's first full quarter of sales
would be reported to CMS no later than July 30, and payment limits
calculated using this data would become effective for the period
October 1 to December 31. Our approach is consistent with the initial
period for ASP based payment limit calculations described in the CY
2005 PFS final rule (69 FR 66302), which states that the ``time period
will start on the date that sales of the drug begin and end at the
beginning of the quarter after we receive information from the
manufacturer regarding ASP for the first full quarter of sales.''
Comment: Commenters also requested that CMS clarify whether we use
100 percent or 106 percent of WAC to set payment limits after new drugs
are introduced.
Response: As we mentioned above, our discussion of partial quarter
data in the 2011 PFS proposed rule is limited to situations where
national payment limit determinations under section 1847A of the Act
are being made using reported data from the first quarter of a drug's
sales.
The national payment limits for single source drugs that are
calculated from partial quarter data and are published in CMS's
quarterly ASP price files use 106 percent of WAC. This percentage is
consistent with sections 1847A(c)(4)(A) and 1847A(b) of the Act and is
also described in Chapter 17 Section 20.1.3 of the Medicare Claims
Processing Manual.
Comment: Commenters requested that CMS make regulation text changes
to clarify that 106 percent of WAC is applied as a payment limit for
the period that starts on the date that sales of the drug begin and
ends at the beginning of the quarter after we receive information from
the manufacturer regarding ASP for the first full quarter of sales.
Response: Our policy is consistent with existing regulation text
language at Sec. 414.904, the manual, and preamble language.
Therefore, we are not making any regulation text changes.
Comment: One commenter asked that CMS clarify what ``product line
expansions of single source drugs'' means.
Response: For the purpose of the discussion of partial quarter ASP
data above, the term ``line expansion'' refers to an additional package
size or sizes of a single source drug or biological; by way of example
only, a new larger vial size of a new antibiotic that is introduced for
sale nine months after the drug's initial sales begin would represent a
line expansion. Sales data for such new, additional NDCs is
incorporated into the weighted ASP payment limit calculation for single
source drugs beginning with the first quarter of sales that is reported
to CMS. In other words, data for NDCs added to

[[Page 73466]]

a single source drug code that is already priced using the weighted
average calculations is not considered partial quarter data.
Comment: CMS received several comments that request other changes
to the regulations in connection with the first quarter of sales. These
comments included recommendations that CMS--
Develop regulation text changes that describes an apparent
expansion of the initial period described in section 1847A(c)(4)(A) of
the Act;
Define when invoice pricing may be used if payments are
made under section 1847A;
Discuss the determination of payment amounts made under
section 1847A for dates of service during the first or second quarter
of a drug's sales;
Add additional information requirements to ASP reporting
templates used by manufacturers; and
Clarify how payments are calculated when a drug leaves the
market.
Response: As noted previously, our discussion of partial quarter
data is limited to and pertains to the use of less than a full
quarter's worth of data to calculate an ASP-based payment limit, not to
other issues such as the payment limit for drugs administered during
the first quarter of sales, or reporting procedures. Thus, these
comments are outside the scope of this rule.
We will continue to apply the policy as previously clarified in
this section and described in the proposed rule.
3. Determining the Payment Amount for Drugs and Biologicals Which
Include Intentional Overfill
The methodology for developing Medicare drug payment allowances
based on the manufacturers' submitted ASP data is specified in 42 CFR
part 414, subpart K. We initially established this regulatory text in
the CY 2005 PFS final rule with comment period (69 FR 66424). We
further described the formula used to calculate the payment amount for
each HCPCS billing code in the CY 2006 PFS proposed rule (70 FR 45844)
and final rule with comment period (70 FR 70217). With enactment of the
Medicare, Medicaid and SCHIP Extension Act (MMSEA) (Pub. L. 110-173),
the formula we use changed beginning April 1, 2008. Section 112(a) of
the MMSEA amended section 1847A(b) of the Act to require CMS to
calculate payment amounts using a specified volume-weighting
methodology. In addition, section 112(b) of the MMSEA sets forth a
special rule for determining the payment amount for certain drugs and
biologicals. We addressed these changes in the CY 2009 PFS proposed and
final rules (73 FR 38520 and 69571, respectively).
For each billing code, we calculate a volume weighted, ASP based
payment amount using the ASP data submitted by manufacturers.
Manufacturers submit ASP data to CMS at the 11-digit National Drug Code
(NDC) level, including the number of units of the 11-digit NDC sold and
the manufacturer's ASP for those units. We determine the number of
billing units in an NDC based on the amount of drug in the package. For
example: A manufacturer sells a box of 4 vials of a drug. Each vial
contains 20 milligrams (mg); the billing code is per 10 MG. The number
of billing units in this NDC for this billing code is (4 vials x 20mg)/
10mg = 8 billable units.
Beginning April 1, 2008, we use a two step formula to calculate the
payment amount for each billing code. We sum the product of the
manufacturer's ASP and the number of units of the 11 digit NDC sold for
each NDC assigned to the billing and payment code, and then divide this
total by the sum of the product of the number of units of the 11 digit
NDC sold and the number of billing units in that NDC for each NDC
assigned to the billing and payment code. This process is discussed
further in the CY2009 Physician Fee Schedule rule at 73 FR 69752.
The provisions in section 112 of the MMSEA were self implementing
for services on and after April 1, 2008. Because of the limited time
between enactment and the implementation date, it was not feasible to
undertake and complete rulemaking on this issue prior to implementing
the required changes. As a result of the legislation, we revised Sec.
414.904 to codify the changes to the determination of payment amounts
consistent with section 112 of the MMSEA.
Since that time, we have become aware of situations where
manufacturers, by design, include a small amount of ``intentional
overfill'' in containers of drugs. We understand that this
``intentional overfill'' is intended to compensate for loss of product
when a dose is prepared and administered properly. For instance, a
hypothetical drug is intended to be delivered at a 0.5 mg dose that
must be drawn into a syringe from a vial labeled for single use only.
The vial is labeled to contain 0.5 mg of product but actually contains
1.5mg of product. The additional 1.0 mg of product is included, by
design, and is intended to be available to the provider so as to ensure
a full 0.5 mg dose is administered to the patient.
Our ASP payment calculations are based on data reported to us by
manufacturers. This data includes the ``volume per item''. In our
``Appendix A--Average Sales Price Reporting Data Elements'' available
on our Web site at http://www.cms.gov/McrPartBDrugAvgSalesPrice/, we
define ``volume per item'' as, ``The amount in one item (ex., 10 ml in
one vial, or 500 tablets in one bottle). Enter ``1'' for certain forms
of drugs (for example, powders and sheets) when ``Strength of the
Product'' indicates the amount of the product per item.'' In order to
accurately calculate Medicare ASP payment limits under section 1847A of
the Act, we interpret ``the amount in one item'' to be the amount of
product in the vial or other container as indicated on the FDA approved
label.
It has been longstanding Medicare policy that in order to meet the
general requirements for coverage under the ``incident to'' provision,
services or supplies should represent an expense incurred by the
physician or entity billing for the services or supplies (See Medicare
Benefit Policy Manual (Publication 100-02), Chapter 15,
Sections 50.3, 60.1.A). Such physicians' services and supplies include
drugs and biologicals under section 1861(s)(2)(A) of the Act. In
accordance with this policy, providers may only bill for the amount of
drug product actually purchased and that the cost of the product must
represent an expense to the physician.
We further understand that when a provider purchases a vial or
container of product, the provider is purchasing an amount of drug
defined by the product packaging or label. Any excess product (that is,
overfill) is provided without charge to the provider. In accordance
with our current policy as explained above, providers may not bill
Medicare for overfill harvested from single use containers, including
overfill amounts pooled from more than one container, because that
overfill does not represent a cost to the provider. Claims for drugs
and biologicals that do not represent a cost to the provider are not
reimbursable, and providers who submit such claims may be subject to
scrutiny and follow up action by CMS, its contractors, and OIG.
Because such overfill is currently not included in the calculation
of payment limits under the methodology in section 1847A of the Act and
does not represent an incurred cost to a provider, we proposed to
update our regulations at 42 CFR part 414 Subpart K to clearly state
that Medicare ASP payment limits are based on the amount of product in
the vial or container as reflected on the FDA-approved label. We also
proposed to update our regulations at Subpart J to clearly state that
payment for amounts

[[Page 73467]]

of free product, or product in excess of the amount reflected on the
FDA-approved label, will not be made under Medicare.
We received several comments supporting our proposal. Several other
comments raised concerns about whether our proposal attempts to
regulate or even prohibit the use of overfill. Our policy is not
intended to limit the use of intentional overfill during the care of
beneficiaries or in medical practice; such measures are beyond CMS'
authority. Rather, we are clarifying our ASP pricing and payment
policies, describing how we utilize manufacturer reported data, and
updating our regulations at 42 CFR part 414. The following is a summary
of the comments we received and our responses.
Comments: Several commenters supported our proposal, agreeing that
a provider does not incur a cost in obtaining the intentional overfill
amount. One commenter noted that statute, regulations, and policies
effective since CY 1965 regarding the ``incident to'' provision have
required the provider to incur costs in order to receive Medicare
payment. Another commenter supported the proposal because it protects
the Medicare Trust Fund and the taxpayer, reduces fraud and abuse, and
ensures quality patient care by reducing the influence of profit rather
than clinical efficacy on medical decisions for the patient. One
commenter agreed with the CMS proposal because of the variations in the
amount of overfill that could be found in each vial or packaging. This
commenter also noted previous OIG reports that expressly excluded
intentional overfill in the calculation of acquisition costs because of
variability in the amount of and different practices for the use of
overfill. Some commenters, in support of the proposal, mentioned
ongoing litigation which alleges that some manufacturers provided
kickbacks to providers by marketing and furnishing intentional overfill
and encouraging providers to bill federal health care programs to
increase the providers' profits and sales volumes for the drugs.
Response: We appreciate the comments in support of our proposal. We
believe these comments help to illustrate the variety of perspectives
regarding overfill.
Comments: Several commenters expressed concern that our proposed
regulation changes are, in effect, a restriction on providers' ability
to use intentional overfill. Comments emphasized that intentional
overfill is provided to account for loss of drug during dosage
preparation, and some comments noted that the FDA allows for
intentional overfill to be included in the packaging to account for
this loss of drug. Similarly, comments noted that current United States
Pharmacopeia (USP) 797 standards for compounding sterile injections
also allow for the use of overfill during drug preparation. Some
comments suggested we work closely with the FDA and the USP to address
the issue of intentional overfill in the manufacturing and packaging of
the drugs. One comment suggested that we require providers to comply
with USP 797 standards regarding the use of overfill. Commenters
asserted that any regulation of intentional overfill should be imposed
upon manufacturers rather than providers.
Response: We disagree with the commenters that believe our proposal
would restrict the clinical use of intentional overfill. The comments
that suggest that we impose requirements or implement standards
regarding the amount or clinical use of overfill are beyond the scope
of this rulemaking. In response to the commenters' concerns, however,
we believe it is necessary to reiterate the distinction between the
amount of drug product that is contained in a vial or other packaging
for use in the care of a beneficiary and the amount of drug product
that manufacturers report to CMS for pricing purposes and used to
calculate payment limits under section 1847A of the Act. Our policy
discussion is limited to the latter issue. Our policy is not intended
to allow, prohibit, or otherwise regulate the amount of overfill that
manufacturers include in a container, or how that overfill is used in
clinical practice. Indeed, we do not have the authority to regulate the
manufacturing of drugs or biologicals or the practice of medicine. The
appropriate use of drug products, including sterile products, depends
on numerous factors, including, but not limited to: approved labeling,
State law, the setting in which the product is prepared and used, how
the product is stored, sterility, and chemical stability. For many
drugs, overfill quantities are small and are not completely used. In
many settings, harvesting small amounts of overfill, when appropriate,
can make up for doses that are lost or are discarded because of an
error, short stability, or accidental contamination, for example. Our
proposal does not pertain to, or apply to, any of these issues. The
intent of this proposal is merely to clarify that the Medicare ASP
payment limit is based on the amount of drug conspicuously indicated on
the FDA label, and that no payment will be made for any intentional
overfill included as free drug for the proper preparation of a single
therapeutic dose.
Comments: Some commenters estimated significant increases in
Medicare costs if the proposal is finalized. These estimates were based
on concerns that our policy would prohibit the use of overfill. These
commenters emphasized that providers would be required to use
additional vials and drugs if the use of intentional overfill were
prohibited. They stated that the proposal will not reduce Medicare
costs, but will transfer the costs associated with intentional overfill
from the pharmaceutical companies to the providers and, in turn, to the
Medicare and its beneficiaries. Several commenters stated that
providers minimize wastage and cost through the use of intentional
overfill and efforts to schedule patients efficiently.
Response: Because we disagree that our proposal limits utilization
of overfill, we accordingly disagree that our proposal will increase
costs. We are not prohibiting the use of overfill, thus we do not
anticipate providers or other entities buying additional amounts of
drug as a result of this policy. Further, we do not believe that our
policy will require significant changes in procedures or practices for
most providers and suppliers because most providers and suppliers use
overfill in clinically appropriate circumstances, and we therefore do
not believe that our policy will cause them to incur significant costs
on that basis.
However, as we stated in our proposal, we believe it is
inappropriate for a provider or supplier to bill Medicare for any
amount of intentional overfill beyond the labeled amount in a single-
use vial or package, and we agree with the commenters that such
inappropriate billing does not occur routinely.
Comments: Several commenters expressed concern that the proposed
intentional overfill policy may cause lower reimbursement rates for
overhead costs relating to procurement, preparation, and dispensing of
affected drugs. Several comments expressed concern about the burden of
tracking doses that are prepared as a service for providers who bill
under Medicare Part B. Some commenters stated that the intentional
overfill proposal is impossible to apply to multi-dose vials or
packages, and will cause unnecessary administrative burden to maintain
accurate inventory and medical records regarding overfill and drug
wastage from single-dose vials.

[[Page 73468]]

Response: We disagree with these comments. As we stated previously,
our policy on intentional overfill pertains to payment under section
1847A of the Act--it is not an attempt to mandate or direct how the
contents of a drug product package are used. Our policy relates to the
providers and suppliers who furnish drugs or biologicals under Part B
and who bill for such services. We have no authority under section
1847A of the Act to dictate how entities that prepare and sell doses of
drugs for use in various clinical settings set their rates. We would
expect that providers and suppliers who purchase prepared doses from
these entities have incurred a cost for them. For these reasons, we do
not anticipate that our policy will affect entities that do not bill
separately for Part B drugs, such as entities that prepare doses of
sterile products for sale to providers or suppliers who bill Medicare
for the drug.
This proposal also is not intended to affect the current cost or
waste-saving batch processes in place when using multiple-dose vials or
packages. Instead, the intent of this proposal is to clarify that the
ASP payment limit is currently based on the amount of drug indicated on
the FDA label, and that no payment will be made for any intentional
overfill.
We expect that providers will continue to maintain accurate medical
records for all beneficiaries as well as accurate inventory records of
all drugs that were actually purchased and appropriately billed to
Medicare.
Comment: One commenter noted an increased burden upon CMS to
examine the beneficiaries' records to verify that no intentional
overfill was billed to Medicare.
Response: For the reasons stated above, we do not believe that our
proposal will significantly affect procedures used in most clinical
settings. We therefore do not expect an additional burden for the
agency to track and monitor this policy beyond the procedures that are
in place right now.
Comment: One commenter noted that the proposal is contrary to our
current policy regarding discarded drugs and specifically stated that
billing Medicare for discarded drug is only appropriate for single-use
vials, and that the provider must make good faith efforts to schedule
patients to efficiently deliver the drugs to patients in a clinically
appropriate manner, and that any discarded drug amount billed to
Medicare must not be used on any other patient.
Response: We disagree with this comment. Although our policy on
discarded drugs may appear to be similar to our proposed policy for
overfill (in that they both pertain to how providers and suppliers deal
with drug product that remains in a package after a dose has been
administered), there is a key distinction. Our policy on discarded
drugs acknowledges that providers and suppliers acting in good faith to
minimize wastage should not be financially burdened when, for clinical
reasons, it is not possible or advisable to use the full labeled amount
of drug product in a single-use vial--in other words, we permit, in
limited circumstances, billing for drugs for which the provider or
supplier incurred a cost, but that the provider or supplier did not
administer. In contrast, our policy on intentional overfill applies to
drug product for which the provider or supplier did not incur a cost,
that is, amounts of drug that are beyond the labeled amount. Thus, in
addition to complying with the overfill policy, we expect providers to
continue to make good faith efforts to efficiently minimize the amount
of discarded drug by facilitating clinically appropriate methods of
administering the required dose to each beneficiary and is consistent
with the discarded drug policy in Chapter 17 Section 40 of the Medicare
Claims Processing Manual (http://www.cms.gov/manuals/downloads/clm104c17.pdf).
Comments: Several commenters agreed with our position that
intentional overfill is considered free product for which the provider
did not incur a cost. However, other commenters stated that the
purchase of a drug includes not only the amount of drug identified on
the FDA label, but also encompasses the entire package including
accompanying items such as syringes, diluents, and intentional overfill
that is required to assure the drug is prepared and administered
properly. One commenter suggested that it is more appropriate to see
any excessive overfill as an in-kind discount that reduces the per-unit
price of a drug. This commenter believes that manufacturers have
factored overfill into the pricing of their products and that providers
indirectly pay for overfill regardless of its use. Some commenters also
that intentional overfill is within the Discount Exception and Safe
Harbor under the Anti-Kickback statute. These commenters believe that
CMS should similarly interpret intentional overfill as a discount and
require accurate reporting of the price of the item (taking into
consideration the discount) by the manufacturer, but not should not
require the provider to reduce the amount billed or refrain from
billing for the overfill.
Response: We acknowledge that drugs and biologicals are supplied in
various containers or kits that include accessories and diluents, as
well as a variable amount of intentional overfill to ensure that the
single dose is prepared and administered appropriately. Sections
1847A(b)(2) and (b)(5) of the Act require that payment limit
calculations be carried out without regard to any diluents or special
packaging for the drug. We believe these statutory provisions support
our position that overfill is not an in-kind discount. Further, we have
authority under section 1847A(c)(3) of the Act to identify price
concessions that must be included in the ASP calculation. However, we
have a practical reason for declining to consider overfill to be a
discount for purposes of the ASP calculation--namely, operational
feasibility. The amount of overfill in vials varies from drug to drug
and often is not easily or consistently quantifiable because actual
fill amounts may also vary slightly due to the manufacturing process.
In contrast, manufacturer sales data, ASP calculations, and ASP payment
limits use exact quantities of drug that are represented by exact
monetary values. Payment limits are currently calculated using the
amount of drug that is reported by manufacturers to CMS each quarter.
We base our price, in part, on the quantity indicated on the drug
package, which does not indicate an overfill amount. The calculation of
the Medicare payment limit is based on the reported data from the
manufacturer. We do not have access to information that would permit us
to account for overfill in the ASP calculation. Further, we are
concerned that attempting to account for a variable amount of overfill
could result in price instability or inaccuracy.
The application of safe harbor provisions to this proposal is
outside the scope of this rule.
Comments: Some commenters suggested the issue of intentional
overfill should be addressed in the ASP calculations. One commenter
specifically suggested that the ASP calculation methodology be changed
to consider intentional overfill when defining the units relevant to
the calculation of the Medicare payment limit per billing code.
Response: Manufacturers are currently reporting ASP and sales data
based on the labeled amount of the drug product. The intent of this
proposal is to clarify that the ASP payment limit is based on the
amount of drug clearly identified as the amount on the FDA label and
packaging. We do not intend to change the ASP calculation

[[Page 73469]]

methodology to include intentional overfill because of the operational
difficulty in accurately identifying the amount of overfill.
Comments: Many commenters suggested CMS clarify the applicability
of the proposal to specific providers. Other commenters suggested that
the proposal be applied and enforced prospectively only in the
physician office setting and not in hospitals or other provider
settings. Another commenter noted that drugs furnished in the
outpatient department are reimbursed based on ASP when separately
payable, and requests clarification regarding whether this proposal
must be required of hospital outpatient clinics paid under the Hospital
Outpatient Prospective Payment System (OPPS). This commenter also
requested that CMS clarify whether this proposal applies to acute care
hospitals, skilled nursing facilities, dialysis facilities and other
providers or suppliers of services under bundled payment methodologies.
Another commenter requested the proposal not be applied to dialysis
facilities. The commenter stated that intentional overfill is included
in their costs reports, that the ``incident-to'' provision does not
apply to dialysis facilities, and that the policy may cause confusion
during the transition into the new End Stage Renal Disease payment
bundle.
Response: Section 1847A(a)(1) of the Act specifies that the ASP
methodology applies to drugs or biologicals described in section
1842(o)(1)(C) of the Act, which indicates that the ASP-based payment
limit in 1847A of the Act affects a physician, supplier or any other
person that bills for Part B covered drugs that are not paid under a
cost or prospective payment system. We did not propose to change the
manner in which we calculate ASP-based payment limits to reflect the
setting in which the drug was provided, and we believe that not only
would such a policy be unduly complicated, but also would likely be
beyond our authority under the ASP statute. We note that regardless of
the benefit category for a drug or biological, if it is paid under
section 1847A of the Act, we calculate the payment limit without regard
to overfill--thus, the fact that certain providers or suppliers do not
furnish drugs on an ``incident to'' basis is irrelevant to our policy
for the ASP calculation. This rule's scope is limited to the payment of
overfill under section 1847A of the Act.
Comment: One comment suggested that we encourage providers to the
use intentional overfill and bill Medicare only for the amount
administered to the patient, but not the wasted amount. The commenter
also suggested that drug billing code increments be reduced for those
drugs that are dosed in smaller amounts than what is currently on the
billing code. For example, if a patient dose is 710mg but the billing
increment is 100mg, then the provider must bill Medicare for 800mg and
waste the left over 90mg.
Response: We are continuing to work closely to review all billing
codes to assure that such codes describe drugs at the most clinically
appropriate dosage descriptors. As stated in the discarded drug policy
(Chapter 17 Section 40 of the Medicare Claims Processing Manual; http://www.cms.gov/manuals/downloads/clm104c17.pdf), Medicare will continue
to make payment for the administered amount of drug plus any
appropriately discarded drug that sums to the labeled amount on a
single-use vial or package.
Comments: Some commenters disagree that Medicare has a longstanding
policy that an expense must be incurred by the provider in order for
payment to be made by Medicare. One commenter stated that there is no
existing law or regulation that prohibits a provider from billing for
intentional overfill or for any free product. This commenter further
discussed previous OIG reports that identified providers were using
intentional overfill which would alter their costs, and added that CMS
did not express any concerns about these overfill utilization
practices. Another commenter recommended that CMS determine overfill
amounts for all injectable drugs and validate whether excess product
pooled from more than one container and billed to Medicare does not
represent a cost to the provider.
Response: We believe our preamble adequately describes the
longstanding Medicare policy based upon section 1861(s)(2)(A) of the
Act. We maintain that services or supplies reimbursed by Medicare under
the ``incident-to'' provision should represent an expense incurred by
the physician or entity billing for the drugs, services or supplies.
Our policy clarifies that we will not pay for intentional overfill. For
reasons described elsewhere in this preamble, we do not intend to track
overfill amounts for injectable drugs.
Comments: Some commenters requested that CMS define what is meant
by ``intentional'' overfill since many injectable drugs include a
variable amount of overfill to allow the labeled dose to be
appropriately prepared and administered to the patient. One comment
cited that the USP recommends a 10 percent overfill by volume for
liquid medicines, and stated that the example in the proposal
describing a 100 percent overfill is inconsistent with USP guidelines.
Response: We described ``intentional'' overfill in the proposed
rule (75 FR 40155) and we agree that the amount of intentional overfill
may vary from product to product; however, we are not aware of an
absolute limit on the amount of overfill. In summary, the preamble
describes intentional overfill as any amount of drug greater than the
amount identified on the conspicuous FDA approved label on the outside
of the package, and characterizes overfill as excess or free product
that does not represent a cost to the provider.
After reviewing the public comments, we are finalizing our proposal
to update our regulations at 42 CFR part 414 Subpart J to clearly state
that Medicare ASP payment limits are based on the amount of product in
the vial or container as reflected on the FDA-approved label, and
Subpart K to clearly state that payment for amounts of product in
excess of the amount reflected on the FDA-approved label, will not be
made under Medicare. We are finalizing the regulations as proposed.
These provisions will be effective January 1, 2011.
4. Widely Available Market Price (WAMP)/Average Manufacturer Price
(AMP)
Section 1847A(d)(1) of the Act states that ``The Inspector General
of HHS shall conduct studies, which may include surveys to determine
the widely available market prices (WAMP) of drugs and biologicals to
which this section applies, as the Inspector General, in consultation
with the Secretary, determines to be appropriate.'' Section 1847A
(d)(2) of the Act states, ``Based upon such studies and other data for
drugs and biologicals, the Inspector General shall compare the ASP
under this section for drugs and biologicals with--
The widely available market price (WAMP) for these drugs
and biologicals (if any); and
The average manufacturer price (AMP) (as determined under
section 1927(k) (1) of the Act) for such drugs and biologicals.''
Section 1847A(d)(3)(A) of The Act states, ``The Secretary may
disregard the ASP for a drug or biological that exceeds the WAMP or the
AMP for such drug or biological by the applicable threshold percentage
(as defined in subparagraph (B)).'' Section 1847A(d)(3)(C) of the Act
states that if the Inspector General (OIG) finds that the ASP for a
drug or

[[Page 73470]]

biological is found to have exceeded the WAMP or AMP by this threshold
percentage, the OIG ``shall inform the Secretary (at such times as the
Secretary may specify to carry out this subparagraph) and the Secretary
shall, effective as of the next quarter, substitute for the amount of
payment otherwise determined under this section for such drug or
biological, the lesser of--(i) the widely available market price for
the drug or biological (if any); or (ii) 103 percent of the average
manufacturer price.* * *''
The applicable threshold percentage is specified in section
1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and
subsequent years, section 1847A(d)(3)(B)(ii) of the Act establishes
that the applicable threshold percentage is ``the percentage applied
under this subparagraph subject to such adjustment as the Secretary may
specify for the WAMP or the AMP, or both.'' In the CY 2006 (70 FR
70222), CY 2007 (71 FR 69680), CY 2008 (72 FR 66258), CY 2009 (73 FR
69752), and CY 2010 (74 FR 61904) PFS final rules with comment period,
we specified an applicable threshold percentage of 5 percent for both
the WAMP and AMP. We based this decision on the fact that data was too
limited to support an adjustment to the current applicable threshold
percentage.
For CY 2011, we proposed to specify two separate adjustments to the
applicable threshold percentages. When making comparisons to the WAMP,
we proposed the applicable threshold percentage to remain at 5 percent.
The applicable threshold percentage for the AMP is addressed below in
this section of the preamble. Although the latest WAMP comparison was
published in 2008, the OIG is continuing to perform studies comparing
ASP to WAMP. Based on available OIG reports that have been published
comparing WAMP to ASP, we do not have sufficient information to
determine that the 5 percent threshold percentage is inappropriate. As
a result, we believe that continuing the 5 percent applicable threshold
percentage for the WAMP is appropriate for CY 2011. Therefore, we
proposed to revise Sec. 414.904(d)(3) to include the CY 2011 date.
As we noted in the CY 2010 PFS final rule with comment period (74
FR 61904), we understand that there are complicated operational issues
associated with this policy. We continue to proceed cautiously in this
area. We remain committed to providing stakeholders, including
providers and manufacturers of drugs impacted by potential price
substitutions with adequate notice of our intentions regarding such,
including the opportunity to provide input with regard to the processes
for substituting the WAMP for the ASP.
We solicited comments on our proposal to continue the applicable
threshold percentage at 5 percent for the WAMP for 2011.
The following is a summary of the comments we received and our
responses:
Comment: Several commenters supported maintaining the threshold at
5 percent. Other commenters commended CMS for the cautious approach
toward determining price substitutions based on WAMP to ASP
comparisons, and supported the exclusion of WAMP from the price
substitution proposal discussed elsewhere in this rule. One comment
suggested the AMP threshold be increased to reflect recent changes to
the definition of AMP but did not provide a specific percentage. One
commenter suggested that OIG also review whether existing discrepancies
in the various reporting rules for bundled arrangements and price
concessions have impacted the reported pricing for the same products
under AMP and ASP.
Response: We appreciate the comments supporting the continuation of
the 5 percent threshold. As we noted in the CY 2010 PFS rule (74 FR
61904), we understand there are complex operational issues associated
with potential payment substitutions. We will continue to proceed
cautiously in this area and provide stakeholders, particularly
manufacturers of drugs impacted by potential price substitutions, with
adequate notice of our intentions regarding such, include the
opportunity to provide input with regard to the processes for
substituting the WAMP or the AMP for the ASP. As part of our approach
we intend to continue to work closely with the OIG to develop a better
understanding of the issues that may be related to certain drugs for
which the WAMP and AMP may be lower than the ASP over time.
After reviewing the public comments, we are finalizing our proposal
to continue the 5 percent WAMP threshold for CY2011.
5. AMP Threshold and Price Substitutions
As mentioned elsewhere in this final rule with comment period, when
making comparisons of ASP to AMP, the applicable threshold percentage
for CY 2005 was specified in statute as 5 percent. Section 1847A(d)(3)
of the Act allows the Secretary to specify adjustments to this
threshold percentage for years subsequent to 2005, and to specify the
timing for any price substitution. For CY 2006 (70 FR 70222) CY 2007
(71 FR 69680), CY 2008 (72 FR 66258), CY 2009 (73 FR 69752), and CY
2010 (74 FR 61904), the Secretary made no adjustments to the threshold
percentage; it remained at 5 percent.
For CY 2011, we proposed with respect to AMP substitution to apply
the applicable percentage subject to certain adjustment such that
comparisons of ASP to AMP will only be made when the ASP exceeds the
AMP by 5 percent in two consecutive quarters immediately prior to the
current pricing quarter, or three of the previous four quarters
immediately prior to the current quarter. We further proposed to apply
the applicable AMP threshold percentage only for those situations where
AMP and ASP comparisons are based on the same set of NDCs for a billing
code (that is, ``complete'' AMP data).
Furthermore, we proposed a price substitution policy to substitute
103 percent of AMP for 106 percent of ASP for both multiple and single
source drugs and biologicals as defined respectively at section
1847(A)(c)(6)(C) and (D) of the Act. Specifically, we proposed that
this substitution:
Would occur when the applicable percentage has been
satisfied for a number of calendar quarters as discussed elsewhere in
this rule (that is, for two consecutive quarters immediately prior to
the current pricing quarter, or three of the previous four quarters
immediately prior to the current quarter);
Would permit for a final comparison between the OIG's
volume-weighted 103 percent of AMP for a billing code (calculated from
the prior quarter's data) and the billing code's volume weighted 106
percent ASP, as calculated by CMS, for the current quarter to avoid a
situation in which the Secretary would inadvertently raise the Medicare
payment limit through this price substitution policy; and
That the duration of the price substitution would last for
only one quarter.
We also sought comment on other issues related to the comparison
between ASP and AMP, such as:
Any effect of definitional differences between AMP and
ASP, particularly in light of the revised definition of AMP per the
ACA;
The impact of any differences in AMP and ASP reporting by
manufacturers on price substitution comparisons; and,
Whether and/or how general differences and similarities
between

[[Page 73471]]

AMP and manufacturer's ASP would affect comparisons between these two.
Comment: CMS received a number of comments pertaining to its
proposals regarding the AMP threshold. Some commenters generally agreed
that any proposal should be transparent, cautious, and should account
for inter-quarter price fluctuations. Some commenters also supported
our proposal to limit the price substitution to those HCPCS codes for
which ASP and AMP comparisons are based on the same set of NDCs. One
commenter requested that CMS specifically note that the volume used to
calculate the volume-weighted AMP is identical to that used in the
calculation of the volume-weighted ASP. Other commenters supported
maintaining the applicable threshold at 5 percent for CY 2011.
Response: We appreciate the comments regarding our proposed AMP
threshold policies. Since the publication of the PFS proposed rule, the
preliminary injunction issued by the United States District Court for
the District of Columbia in National Association of Chain Drug Stores
et al. v. Health and Human Services, Civil Action No. 1:07-cv-02017
(RCL) is still in effect. Additionally, CMS continues to expect to
develop regulations that will implement the provisions of section 2503
of the ACA, which amended the definition of AMP. Moreover, section 202
of the Federal Aviation Administration Air Transportation Modernization
and Safety Improvement Act (Pub. L. 111-226), (enacted on August 10,
2010) has further amended section 1927(k) of the Act. Finally, on
September 3, 2010, we proposed to withdraw certain provisions of the
AMP final rule published on July 17, 2007 (75 FR 54073).
In light of these factors and comments received, we are finalizing
our proposal that the AMP applicable threshold be 5 percent for CY
2011. However, we are not finalizing our proposed adjustments to the 5
percent AMP threshold that would specifically apply the applicable
percentage such that comparisons of ASP to AMP will only be made when--
The ASP exceeds the AMP by 5 percent in two consecutive
quarters immediately prior to the current pricing quarter, or three of
the previous four quarters immediately prior to the current quarter;
and
For those situations where AMP and ASP comparisons are
based on the same set of NDCs for a billing code (that is, ``complete''
AMP data).
We appreciate the submitted comments and will take them into
account when we revisit the price substitution and AMP threshold issues
in future rulemaking.
Comment: We received a number of comments regarding our price
substitution proposed policies. Some commenters supported our proposal
that any substitution would last only for a single quarter. The
majority of commenters requested that any proposal should not be
implemented until after CMS published regulations on the revised
definition of AMP. A few commenters also recommended that CMS provide
adequate notice to manufacturers prior to making a price substitution.
One commenter suggested that additional OIG comparison studies are
needed to examine the impact of the new definition of AMP. Several
commenters requested clarification on and suggested changes to our
proposed regulatory language. Another commenter requested clarification
on the timing of price substitutions and suggested that any price
substitution policies should not be implemented until the lag time
between when the comparison is made and when the substitution would be
implemented was decreased. One commenter noted that the OIG studies are
not a reliable indicator of predicted savings since the substitution
timeframes within the studies differed from that in our proposal. All
commenters agreed that any price substitution policy should not be
implemented until after the preliminary injunction is vacated.
Moreover, several commenters provided additional information
related to the comparison between ASP and AMP, including:
How ASP and AMP each encompass different sales and rebate
data and are calculated based on differing statutory definitions;
The impact of restated AMP data on comparisons; and
The effect of price substitutions on physician acquisition
of drugs.
Response: We appreciate the comments submitted regarding our price
substitution proposal. As discussed above, recent legislative and
regulatory changes have further affected this issue.
After careful review and consideration of the comments received, we
will not be finalizing our price substitution proposal at this time and
thus we will not be finalizing the proposed regulation text at section
414.904(d). Specifically, we are not finalizing our proposal for a
policy to substitute 103 percent of AMP for 106 percent of ASP for both
multiple and single source drugs and biologicals as defined
respectively at section 1847(A)(c)(6)(C) and (D) of the Act. This
proposal specifically would have--
Occurred when the applicable percentage had been satisfied
for a number of calendar quarters as discussed elsewhere in this rule;
Permitted for a final comparison between the OIG's volume-
weighted 103 percent of AMP for a billing code (calculated from the
prior quarter's data) and the billing code's volume weighted 106
percent ASP, as calculated by CMS, for the current quarter to avoid a
situation in which the Secretary would inadvertently raise the Medicare
payment limit through this price substitution policy; and
Had the duration of the price substitution lasting for
only one quarter.
We are finalizing the portion of our proposal that sets the AMP
threshold at 5 percent CY2011 and have revised the regulations text
accordingly. We remain committed to proceeding cautiously as we
continue to evaluate the impact of any future policy developments in
this area.
6. Out of Scope Comments
We received comments pertaining to: (1) Part B payment for insulin;
(2) bona fide service fees; (3) price concessions and bundled
arrangements in the calculation of manufacturer ASP data; (4) updating
supplying and dispensing fees for Part B drugs; (5) developing
standards for manufacturers to not submit related ASP data; (6) low
reimbursement in a HCPCS-based claims systems for pharmacies; (7)
claims processing, claims rejection, and payment delays in Medicare
Part B as compared to Part D; and (8) publishing reimbursement rates
for radiopharmaceuticals on contractor Web sites. These comments are
outside the scope of this rule, and therefore are not addressed in this
final rule with comment period.

B. Ambulance Fee Schedule Issue: Policy for Reporting Units When
Billing for Ambulance Fractional Mileage

Under the ambulance fee schedule, the Medicare program pays for
transportation services for Medicare beneficiaries when other means of
transportation are contraindicated and all other applicable medical
necessity requirements are met. Ambulance services are classified into
different levels of ground (including water) and air ambulance services
based on the medically necessary treatment provided during transport.
These services include the following levels of service:
For Ground--
++ Basic Life Support (BLS) (emergency and nonemergency).
++ Advanced Life Support, Level 1 (ALS1) (emergency and
nonemergency).

[[Page 73472]]

++ Advanced Life Support, Level 2 (ALS2).
++ Specialty Care Transport (SCT).
++ Paramedic ALS Intercept (PI).
For Air--
++ Fixed Wing Air Ambulance (FW).
++ Rotary Wing Air Ambulance (RW).
1. History of Medicare Ambulance Services
a. Statutory Coverage of Ambulance Services
Under sections 1834(l) and 1861(s)(7) of the Act, Medicare Part B
(Supplementary Medical Insurance) covers and pays for ambulance
services, to the extent prescribed in regulations, when the use of
other methods of transportation would be contraindicated by the
beneficiary's medical condition. The House Ways and Means Committee and
Senate Finance Committee Reports that accompanied the 1965 Social
Security Amendments suggest that the Congress intended that--
The ambulance benefit cover transportation services only
if other means of transportation are contraindicated by the
beneficiary's medical condition; and
Only ambulance service to local facilities be covered
unless necessary services are not available locally, in which case,
transportation to the nearest facility furnishing those services is
covered (H.R. Rep. No. 213, 89th Cong., 1st Sess. 37 and Rep. No. 404,
89th Cong., 1st Sess. Pt 1, 43 (1965)).
The reports indicate that transportation may also be provided from
one hospital to another, to the beneficiary's home, or to an extended
care facility.
b. Medicare Regulations for Ambulance Services
Our regulations relating to ambulance services are set forth at 42
CFR part 410, subpart B, and 42 CFR part 414, subpart H. Section
410.10(i) lists ambulance services as one of the covered medical and
other health services under Medicare Part B. Therefore, ambulance
services are subject to basic conditions and limitations set forth at
Sec. 410.12 and to specific conditions and limitations as specified in
Sec. 410.40 and Sec. 410.41. Part 414, subpart H, describes how
payment is made for ambulance services covered by Medicare.
2. Mileage Reporting--Provisions of the CY 2011 Proposed Rule
In the CY 2011 PFS proposed rule (75 FR 40159-40161, issued July
13, 2010), we proposed that, effective for claims with dates of service
on and after January 1, 2011, ambulance providers and suppliers would
be required to report mileage rounded up to the nearest tenth of a mile
on all claims for mileage totaling up to 100 covered miles, as further
discussed below. We stated that we would revise the instructions set
forth in our Claims Processing Manual to reflect the revised billing
procedures. In this section, we describe our proposals in the CY 2011
PFS proposed rule, including the background and current process for
reporting ambulance mileage, the proposed fractional mileage billing
policy, and our reasons for proposing revisions to the current mileage
reporting policy.
a. Background and Current Process for Reporting Ambulance Mileage
Historically, the Medicare FFS claims processing system lacked the
capability to accept and process fractional unit amounts reported in
any claim format. Therefore, the standard for reporting units for
ambulance mileage was to bill in whole number increments. Thus, if the
total units of service for ambulance mileage included a fractional
amount, providers and suppliers of ambulance services (hereafter
referred to collectively as ``providers and suppliers'') were
instructed to round the fraction up to the next whole number. Claims
billed with fractional units of service were, at that time, returned as
unprocessable as CMS' claims processing systems could not accept nor
adjudicate fractional unit amounts properly.
Consequently, in Change Request (CR) 1281 (Transmittal AB-00-88,
issued on September 18, 2000), we instituted an operational procedure
requiring whole-unit reporting of mileage on ambulance claims.
Specifically, we instructed providers and suppliers that ``If mileage
is billed, the miles must be whole numbers. If a trip has a fraction of
a mile, round up to the nearest whole number.'' Our instructions also
stated that ``1'' should be reported for trips totaling less than a
single mile. This was an operational instruction based on Medicare's
FFS system limitations and capabilities at the time, as our claims
processing systems were not capable of accepting and processing claims
submitted with fractional units of service. Since then, our claims
processing system functionality has evolved to the point where this
rounding process is no longer necessary for ambulance transports, as it
is now possible for our FFS systems to capture and accurately process
fractional units on both paper and electronic forms.
Based on our prior instructions, providers and suppliers continue
to report loaded mileage as whole-number units on both paper and
electronic claims. Providers and suppliers utilize the appropriate
HCPCS code for ambulance mileage to report the number of miles traveled
during a Medicare-covered trip rounded up to the nearest whole mile at
a minimum of 1 unit for the purpose of determining payment for mileage.
Transmittal AB-00-88 established a list of HCPCS codes accepted by
Medicare for the purpose of billing mileage. Providers and suppliers
were instructed to use these specific HCPCS codes and enter the total
number of covered miles in the ``units'' field of the claim form. For
example, if a covered trip from the point of pickup (POP) to the
Medicare-approved destination (see Sec. 414.40 for a list of approved
destinations) totaled 9.1 miles, the provider would enter the
appropriate HCPCS code for covered mileage and a ``10'' in the units
field. Providers and suppliers billing for trips totaling, for example,
0.5 covered miles, would enter ``1'' in the units field along with the
appropriate HCPCS code for mileage.
b. Concerns Regarding the Potential for Inaccuracies in Reporting Units
and Associated Considerations
Often an ambulance provider will transport a distance that is
either not an exact whole number of miles or less than one whole mile
during a covered trip. Based on our current instructions, providers and
suppliers billing for ambulance services must round up the total
billable mileage to the nearest whole mile for trips that include a
fraction of a mile or less than one whole mile. Because of those
instructions, a provider or supplier is required to bill as much as 0.9
of a mile more than what was actually traveled.
We have been contacted by suppliers on several occasions with
concerns regarding our current instructions for reporting ambulance
mileage. Certain suppliers believe that our instructions require them
to bill inaccurately. One company in particular stated that they
routinely need to bill for trips totaling less than 1 mile. The
beneficiaries that are being transported by this company live in the
immediate vicinity of the facility to which they are being transported,
and therefore, the number of loaded miles for each trip totals
approximately one half of a mile. The company was concerned that since
Medicare requires that they enter a ``1'' in the units field of their
claims for mileage, they are being overpaid by Medicare for mileage
based on the service they actually provided.

[[Page 73473]]

However, the company's main concern revolved around the risk of
creating an appearance of impropriety. Although our instructions
clearly state that providers and suppliers should, as a matter of
procedure, round up fractional mileage amounts to the nearest whole
mile, some providers and suppliers indicated that they wanted to bill
as accurately as possible and that they only wanted to be paid for the
service they actually provided. We thoroughly considered these concerns
while reevaluating the procedure for reporting units for fractional
mileage amounts.
As we stated in the CY 2011 PFS proposed rule (75 FR 40160), our
first priority in considering the issues raised by ambulance providers
and suppliers was to ascertain the basis for the current mileage
reporting instructions. As previously discussed, the original
instructions for reporting fractional mileage were published in
Transmittal AB-00-88, issued on September 18, 2000. We instructed
providers and suppliers to round fractional mileage amounts ``up to the
nearest whole mile'' and to enter ``1'' for fractional mileage totaling
less than one mile. This particular process had also been in place
prior to issuance of the transmittal. The reason for the procedure was
that our claims processing systems were not capable of accepting and
processing claims submitted with fractional units of service--even if
the service was commonly measured in fractional amounts, as with
ambulance mileage.
In the CY 2011 PFS proposed rule (75 FR 40160), we then explored
whether a change in our procedure would be: (1) Appropriate; (2)
possible considering our current system capabilities and industry
standards of measurement; and (3) applicable to any service other than
ambulance mileage. As to the appropriateness of changing the procedure
for reporting units of service on provider claims for fractional
ambulance mileage, we stated in the proposed rule (75 FR 40160) that we
believe that we should make every effort to create and implement
policies and processes that create the best opportunity for accuracy in
billing. It is not our intention to put providers and suppliers in a
position where they are required to bill inaccurately for the service
they provide. We continue to strive toward ensuring that providers and
suppliers bill and are paid only for services actually provided. In the
CY 2011 PFS proposed rule (75 FR 40160), we stated that we believe that
changing our current procedure for reporting units of service to
require reporting of fractional mileage will help to ensure that
providers and suppliers can submit claims that more precisely reflect
actual mileage, and are reimbursed more accurately for the services
they actually provided. We originally instituted a policy of accepting
and processing only whole units because at that time system limitations
prevented us from accepting and processing fractional ambulance
mileage.
Second, we considered in the CY 2011 PFS proposed rule (75 FR
40160) whether it is currently possible for our claims processing
systems to accept and process fractional unit amounts on both paper and
electronic claims. Upon reevaluating our system capabilities, we found
that technological advancements in Optical Character Recognition (OCR)
and electronic claim submission have made it possible for our FFS
systems to capture and accurately process fractional units on both
paper and electronic claims. We note that our systems currently have
the capability to accept fractional units with accuracy up to as much
as one thousandth of a unit (that is, to 3 decimal places).
We also considered in the CY 2011 PFS proposed rule (75 FR 40160)
whether ambulance providers and suppliers have the capability to
measure fractional mileage. This was an important point because if
providers and suppliers are not able to measure mileage with any more
specificity than the nearest whole number mile, then there would be no
need to modify the current procedure for billing fractional mileage. In
that case, providers and suppliers would continue to report mileage as
whole numbers since they could measure no more accurately than that. We
stated in the proposed rule that both analog and digital motor vehicle
odometers are designed to measure mileage accurately to within a
minimum of a tenth of a mile. While we found that some vehicle
odometers measure mileage more accurately than a tenth of a mile, most
odometers are accurate to the nearest tenth of a mile. Additionally,
aircraft geographic positioning system (GPS) technology provides the
means to accurately determine billable mileage to the tenth of a mile.
Third, we considered whether a policy of billing fractional units
would be applicable to any other service besides ambulance mileage. The
units of service field on both the electronic and paper claim is used
to report the quantity of services or supplies provided to Medicare
beneficiaries and is used to report a wide range of services and
supplies including, but not limited to: number of office visits;
anesthesia minutes; quantity of drugs administered; covered miles.
Although Medicare currently makes payment based on fractional units for
some services (for example, calculation of payment after conversion of
anesthesia time reported in minutes to time units), there is currently
no requirement that providers bill fractional units on the claim. We
stated that if we were to implement a policy of requiring reporting of
fractional units for other types of services or supplies, we would
first need to evaluate whether it is possible to do so considering
industry standards of measurement. As discussed in the CY 2011 PFS
proposed rule (75 FR 40160), we found that providers and suppliers of
ambulance services have the capability to determine fractional mileage
using standard onboard equipment, that is, an odometer, GPS, and/or
other similar equipment used to measure distance traveled. We stated
that this would enable us to readily implement a fractional unit
billing policy for ambulance mileage; whereas applicability to other
areas (such as anesthesia, drugs, etc.) would require more analysis to
determine whether a fractional unit billing policy is feasible,
efficacious, and cost effective. Additionally, this issue was first
raised by ambulance suppliers who were concerned about overbilling and
being overpaid by Medicare. Therefore, we stated in the proposed rule
(75 FR 40160) that we believe it is most reasonable to first address
the area where concerns have been raised (that is, ambulance mileage)
and consider applicability of this procedure to other types of services
and items in the future.
Finally, and perhaps most importantly, we considered that our
claims processing system should be configured to process claims as
accurately as possible so as to provide for more accurate payments and
to safeguard Medicare dollars. As previously discussed, we found that
ambulance providers and suppliers currently have the capability to
measure mileage accurately to within a minimum of a tenth of a mile
using devices (for example, odometers, and GPS technology, etc.)
already equipped onboard their vehicles. We stated in the CY 2011 PFS
proposed rule (75 FR 40160) that we believe that requiring ambulance
providers and suppliers to round (and report) fractional ambulance
mileage up to the next tenth of a mile strikes a proper balance between
ensuring that the claims processing system adjudicates a claim as
accurately as the system will permit without unduly burdening the
ambulance community.

[[Page 73474]]

Based on all of the considerations noted previously, we proposed
that our claims processing instructions for submission of claims for
ambulance mileage should be revised to reflect the current
functionality of our claims processing systems so as to maximize the
accuracy of claims payment, as further discussed in this section (75 FR
40160).
c. Billing of Fractional Units for Mileage
It is both reasonable and prudent that, in order to ensure accuracy
of payment, we facilitate and allow submission of the most accurate
information on all Medicare ambulance claims. Furthermore, since our
claims processing systems are currently capable of accepting and
processing fractional units of service, we believe that ambulance
mileage should be billed to and paid by Medicare in fractional amounts
to enhance payment accuracy. Based on all the considerations discussed
previously, in the CY 2011 PFS proposed rule (75 FR 40161), we proposed
to require that claims for mileage submitted by ambulance providers and
suppliers for an ambulance transport (ground and air) be billed in
fractional units, by rounding up to the nearest tenth of a mile (with
the exception discussed below). As previously discussed, we believe
that requiring ambulance providers and suppliers to round (and report)
fractional mileage up to the next tenth of a mile would allow us to
provide for more accurate claims payment without unduly burdening the
ambulance community.
Therefore, in the CY 2011 PFS proposed rule (75 FR 40161), we
proposed that, effective for claims with dates of service on and after
January 1, 2011, ambulance providers and suppliers would be required to
report mileage rounded up to the nearest tenth of a mile for all claims
for mileage totaling up to 100 covered miles. Providers and suppliers
would submit fractional mileage using a decimal in the appropriate
place (for example, 99.9). Since standard vehicle mileage (analog,
digital, and GPS) is or can be calculated accurately to the nearest
tenth of a mile, we proposed that the mileage billed to Medicare by
ambulance providers and suppliers be reported by rounding up to the
next tenth of a mile.
We also stated in the proposed rule (75 FR 40161) that although the
electronic claim formats can accommodate fractional mileage when
mileage is equal to or greater than 100 covered miles (for example,
100.0), the paper claim cannot. Because the Form CMS-1500 paper claim
currently only supports four characters (including the decimal point)
in the units field (Item 24G), we also proposed that mileage equal to
or greater than 100 covered miles continue to be reported in whole
number miles on both paper and electronic claims. We proposed that
providers and suppliers would round up fractional mileage to the next
whole number for mileage that exceeds 100 covered miles and report the
resulting whole number in the units' field. We stated that we would
revise the instructions set forth in our Claims Processing Manual to
reflect the revised procedures for submitting and paying claims for
fractional ambulance mileage.
3. Analysis of and Responses to Public Comments
We received approximately 131 comments in response to the proposed
rule. We received comments from, among others, public and private
ambulance companies, national ambulance organizations, local fire and
EMS departments as well as other interested parties such as attorneys
and consultants. The responses we received pertained primarily to the
proposed rule's financial and administrative impact, the impact on
patient care, and the overall impact on the ambulance services
industry. A summary of the comments and our responses are included
below.
a. Basis for Reconsideration of the Ambulance Mileage Reporting
Requirements
Comment: A few commenters believed that the concerns discussed in
the proposed rule regarding certain suppliers' belief that the current
mileage reporting requirement forced them to bill inaccurately, were an
attempt by CMS to achieve budgetary savings by using the concerns of a
few companies as justification. These commenters stated that CMS should
have addressed the suppliers' concerns by educating providers and
suppliers about its current policy of rounding up to the next whole
mile so that they would be aware that this billing practice is
appropriate, and suggested that CMS include the current whole mile
billing policy in the regulations to further reinforce this, rather
than implement the new fractional mileage policy. They stated that any
change to the ambulance mileage reporting requirement would be
unreasonable and unfounded. The commenters believed that if accuracy
was a priority, then CMS should have implemented the fractional mileage
billing policy in Transmittal AB-00-88, issued September 18, 2000.
Response: While the impetus for reconsidering our policy on
ambulance mileage billing was the concerns raised by ambulance
suppliers wishing to bill accurately, our basis for moving forward with
the proposed policy was that the conditions that dictated the original
mileage billing policy have now changed. As we stated in the proposed
rule (75 FR 40160), technological advancements in our system
capabilities enabled us to reconsider our policy for reporting
ambulance mileage. We were originally not capable of receiving or
processing fractional unit amounts on electronic or paper claims, and
thus, initially, it was necessary to implement a policy that required
providers and suppliers to round mileage up to the nearest whole mile--
even though that amount exceeded the miles actually traveled. As
discussed in the CY 2011 PFS proposed rule (75 FR 40159), under the
current policy, the result could be overpayment for mileage of up to
0.9 of a mile.
Therefore, this change to our policy regarding ambulance mileage
billing represents a reasonable and appropriate change to improve
payment accuracy. The fact that we did not implement such a policy in
the Transmittal cited by commenters does not negate the fact that the
change is both needed and appropriate. Again, the original policy for
rounding mileage up to the nearest whole number mile was based on the
fact that we could not capture and process fractional mileage on a
Medicare claim. To ignore the current systems' capability to more
accurately process claims than what was possible 10 years ago would
unnecessarily perpetuate a less accurate method of processing claims
and would result in less accurate payments than is possible with
current system capabilities.
For the reasons discussed previously and in the CY 2011 PFS
proposed rule, we continue to believe that it is reasonable and
appropriate to revise our claims processing instructions as discussed
in the proposed rule to require that ambulance mileage be reported in
fractional amounts by rounding up to the next tenth of a mile.
b. Appropriateness of Fractional Mileage Reporting Policy
As we discussed in the CY 2011 PFS proposed rule (75 FR 40160), we
believe that reporting of and payment based on fractional ambulance
mileage is appropriate because it permits ambulance providers and
suppliers to submit claims that more precisely reflect actual mileage
and to be reimbursed more accurately for the services they provide.
Although many

[[Page 73475]]

commenters agreed that billing and payment accuracy are important,
commenters cited various concerns regarding the appropriateness of the
policy.
(1) Statutory Compliance and Financial Impact of Fractional Mileage
Policy
Comment: Many commenters believed that the fractional mileage
reporting policy does not adhere to the ``budget neutrality
principles'' set forth in 42 U.S.C. 1395m(l)(3)(B). These commenters
interpreted 42 U.S.C.1395m(l)(3)(B) as requiring that CMS pay the same
amount for ambulance services after implementation of the fee schedule
as it did prior to the fee schedule with an inflation adjustment, and
stated that in order to comply with this statute, the fractional
mileage policy must be implemented in a manner such that any savings
generated by this policy are reinvested in the ambulance fee schedule.
Furthermore, commenters asked that CMS comply with the
``requirement and commitment made during negotiated rulemaking to
ensure that no money is taken out of the system.'' Commenters cited to
the February 27, 2002 final rule implementing the ambulance fee
schedule, in which we stated that we would monitor payment data and
make adjustments to the conversion factor (CF) if the actual experience
under the fee schedule is significantly different from the assumptions
used to establish the original CF. (67 FR 9102 and 9102). Several
commenters stated that the fractional mileage policy alters the fee
schedule and therefore requires reconsideration of the conversion
factor (CF) used to set the ambulance fee schedule payment amounts so
that no money is removed from the system. Some commenters believed that
the policy will have a greater effect on ground ambulance services and
recommended a greater proportional increase to the CF for ground
ambulance transports versus air ambulance rates.
Response: Section 1834(l)(3)(B) of the Act (42 U.S.C.
1395m(l)(3)(B)) does not require that we pay the same aggregate amount
for ambulance services after implementation of the fee schedule as we
did before implementation of the ambulance fee schedule, or that we
ensure that any savings generated by the fractional mileage policy be
put back into the ambulance fee schedule. Rather, this statutory
section sets forth the ambulance inflation factor to be used to update
the ambulance fee schedule rates each year. Section 1834(l)(3)(B) of
the Act requires that we set the ambulance fee schedule rates each year
at the same level as the previous year increased by the percentage
increase in the CPI-U (U.S. city average) for the 12-month period
ending in June of the previous year (as discussed in section VI.P. of
this final rule with comment period, effective January 1, 2011, the
annual update to the fee schedule rates is subject to a productivity
adjustment). We have interpreted this provision at Sec. 414.610(f) as
requiring that the CF, the air ambulance rates and the mileage rates be
updated annually by the ambulance inflation factor set forth in the
statute. The fractional mileage billing policy does not alter the
payment rates set under the ambulance fee schedule; rather, it is a
change to our operational instructions for reporting ambulance mileage
intended to improve billing and payment accuracy. After implementation
of the fractional mileage billing policy, we will continue to update
the rates each year as required by section 1834(l)(3)(B) of the Act,
and thus we believe this policy is consistent with section
1834(l)(3)(B) of the Act. Furthermore, we note that while section
1834(l)(3)(A) of the Act required the Secretary to ensure that the
aggregate amount of payments made for ambulance services during 2000
(originally expected to be the first year of the ambulance fee
schedule) did not exceed the aggregate amount of payments that would
have been made for such services during such year absent the fee
schedule, it did not set forth a budget neutrality requirement for
subsequent years.
While some commenters stated that the fractional mileage billing
policy alters the fee schedule and therefore requires reconsideration
of the conversion factor (CF) used to set the ambulance fee schedule
payment amounts so that no money is removed from the system (citing to
the February 27, 2002 final rule implementing the ambulance fee
schedule), we believe that commenters have misunderstood our statements
in the February 27, 2002 final rule. In the February 27, 2002 final
rule, we stated that we would monitor payment data and make adjustments
to the conversion factor (CF) if the actual experience under the fee
schedule is significantly different from the assumptions used to
establish the original CF as discussed in the February 27, 2002 final
rule (67 FR 9102 and 9103).
As stated previously, the fractional ambulance mileage billing
policy does not change the rates under the ambulance fee schedule.
Rather, it is a change to our operational procedures for reporting
ambulance mileage intended to improve billing and payment accuracy. We
do not believe that it is appropriate to adjust the CF or air ambulance
rates as a result of this policy, as further discussed below.
In the February 27, 2002 final rule implementing the ambulance fee
schedule (67 FR 9102-9103, 9127, 9134), we stated that we would monitor
the payment data and adjust the CF and the air ambulance rates if
actual experience under the fee schedule proved to be significantly
different from the assumptions used to determine the initial CF and air
ambulance rates (for example, the relative volumes of the different
levels of service (service mix) and the extent to which providers and
suppliers charge below the fee schedule (low billers)). Thus, in the
February 27, 2002 final rule, we finalized Sec. 414.610(g), which at
that time stated, in part, that the ``Secretary will annually review
rates and will adjust the CF and air ambulance rates if actual
experience under the fee schedule is significantly different from the
assumptions used to determine the initial CF and air ambulance rates.''
In each of the 4 years following implementation of the ambulance
fee schedule, we reevaluated the effects of the relative volume of
different levels of ambulance service (service mix) and the extent to
which ambulance providers and suppliers bill less than the ambulance
fee schedule (low billers) to determine whether the assumptions used to
set the CF were accurate when compared to actual billing data. We found
only insignificant differences in the observed data versus our
assumptions. The differences observed in any single year were not
significant enough to warrant a change to the CF in any of the years we
monitored. (See 71 FR 69624, 69717, and 69718). Consequently, in the
December 1, 2006 final rule (71 FR 69717-69718), we discontinued our
annual review of the original CF assumptions and the air ambulance
rates, and revised Sec. 410.610(g) to state, in part, that the
``Secretary monitors payment and billing data on an ongoing basis and
adjusts the CF and air ambulance rates as appropriate to reflect actual
practices under the fee schedule.''
We do not believe that adjustments to the CF or the air ambulance
rates are appropriate as a result of the fractional mileage billing
policy. First, as discussed previously, the fractional mileage billing
policy has no effect on the fee schedule rates; rather, it is an
operational procedure for reporting ambulance mileage. Second, the
purpose of this policy is to improve billing and payment accuracy for
ambulance mileage. As discussed

[[Page 73476]]

previously, under the current whole mile reporting policy, ambulance
providers and suppliers are billing as much as 0.9 of a mile more than
what is actually traveled. Commenters suggest that adjustments to the
CF and the air ambulance rates are necessary to make up for the fact
that ambulance providers and suppliers will be permitted to round up
only to the nearest tenth of a mile rather than the nearest whole mile,
resulting in lower mileage reimbursement on some claims compared to
under the current policy. The purpose of the fractional mileage billing
policy is to provide for more accurate billing and payment for
ambulance transports, which we do not believe can be achieved if we
were to make the adjustments suggested by commenters. Furthermore, we
note that the current regulation at Sec. 410.610(g) requires us to
monitor billing and payment data and adjust the CF and air ambulance
rates ``as appropriate'' to reflect actual practices under the fee
schedule. This regulation does not require that we adjust the fee
schedule rates prospectively each time we adopt operational procedures
that differ from those in place prior to implementation of the fee
schedule.
Furthermore, we believe that the policy does not have a significant
bearing on the original CF assumptions that were discussed in the
February 27, 2002 final rule (67 FR 9102-03, 9115-16), and for this
reason too, we do not believe that adjustments to the CF and air
ambulance rates would be appropriate. Having reevaluated the CF during
the 4 years after implementation of the ambulance fee schedule and
finding no significant differences in the observed data versus our
original assumptions, we believe that we will continue to find
insignificant differences, if any at all, after implementation of the
fractional mileage billing policy, such that changing the CF or air
ambulance rates would be unnecessary.
However, as required by Sec. 410.610(g), we will continue to
monitor the billing and payment data on an ongoing basis, and will
consider adjusting the CF and air ambulance rates in the future if (and
to the extent) we determine appropriate to reflect actual experience
under the fee schedule after the policy is implemented.
Comment: The commenters believed that the proposed rule would lower
ambulance reimbursement that is already too low and noted that the fee
schedule rates have not been increased in the last 2 years. Most of the
same commenters cited a May 2007 Government Accountability Office (GAO)
report detailing GAO's research findings which indicated that
Medicare's reimbursement for ambulance services averages between 6
percent and 17 percent less than the cost to ambulance companies for
the services they provide.
Response: We reiterate that the fractional ambulance mileage
billing policy does not change the ambulance fee schedule rates. The
base payment rate and mileage reimbursement rate will not be changed by
the fractional mileage billing policy. The fractional mileage billing
policy is strictly an effort to improve billing and payment accuracy,
and as such, we believe that it is both reasonable and appropriate to
implement this policy.
In response to the comment that the fee schedule rates have not
been increased in the past 2 years, we note that the ambulance
inflation factor for CY 2008 was 2.7 percent and in CY 2009 it was
increased to 5 percent, and thus the CF, air ambulance rates and
mileage rates were increased by 2.3 percent over the previous calendar
year in accordance with the section 1834(l)(3)(B) of the Act. However,
we recognize that the fee schedule rates were not increased in CY 2010
because the CPI-U for the 12 month period ending with June 2009 was
negative, resulting in no increase to the rates under the statutory
formula set forth in section 1834(l)(3)(B) of the Act.
The 2007 GAO report cited by commenters estimated that between 39
percent and 56 percent of ambulance providers and suppliers will
realize a profit under the ambulance fee schedule after expiration of
the temporary payment provisions in the MMA. The GAO also noted in the
same report that providers' expected Medicare margins will vary greatly
depending on their ability to keep their operating cost low, and
because of that variance, they were not able to conclude with any
certainty whether providers and suppliers would see a decrease,
increase, or no change in their profitability as it relates to the
Medicare reimbursement rates after expiration of the temporary payment
provisions in the MMA.
We seriously considered the findings in the May 2007 GAO report
and, although we were not bound to the GAO findings, we agreed with
their recommendation that CMS monitor utilization of ambulance
transports to ensure that Medicare payments are adequate to provide for
beneficiary access to ambulance services, particularly in ``super
rural'' areas. We note that in the years since the May 2007 GAO report,
certain temporary payment provisions originally set forth in Sec. 414
of the MMA have been increased and extended in subsequent legislation
to address these issues. Specifically, Sec. 414(d) of the MMA added
section 1834(l)(13) of the Act which set forth payment increases of 1
percent and 2 percent for urban and rural ground transports,
respectively. Section 146(a) of the MIPPA modified section 1834(l)(13)
of the Act to increase these percentages to 2 percent and 3 percent for
urban and rural transports, respectively, and to extend these increases
through December 31, 2009. Subsequently, sections 3105(a) and 10311(a)
of the ACA extended these increases through December 31, 2010.
Furthermore, section 414(c) of the MMA added section 1834(l)(12) of the
Act which provided a ``super rural'' bonus for certain ground
transports that originate in qualified rural areas effective through
December 31, 2009. Sections 3105(c) and 10311(c) of the ACA extended
this super rural bonus through December 31, 2010. Finally, we note that
section 146(b)(1) of the MIPPA, as amended by sections 3105(b) and
10311(b) of the ACA, provides that any area that was designated as a
rural area for purposes of making payment for air ambulance services
furnished on December 31, 2006, shall continue to be treated as a rural
area for purposes of making payment for air ambulance services
furnished during the period July 1, 2008 through December 31, 2010. We
have implemented these payment add-ons in Sec. 414.610(c)(1),
(c)(5)(ii) and (h), respectively.
Comment: Several commenters stated that cutting already low
reimbursement rates for ambulance providers and suppliers would result
in cutbacks that would make it difficult to stay in business and would,
therefore, have a negative impact on patient care. Many commenters also
noted that smaller companies would be impacted the most by lowered
reimbursement rates, stating that small companies need the extra
revenue to stay in business. Some commenters suggested that mileage
charges are the only means ambulance providers and suppliers have of
recovering increasing, variable costs for ancillaries--such as oxygen
supplies, disposable supplies, etc.--that are not separately payable
under the fee schedule. Other commenters believed that reporting
mileage more accurately will be too costly and would increase the cost
of doing business. Another commenter responded that the payment made
for mileage represents payment for the variable cost of transporting
patients and that even short trips have a cost associated with them.
The same

[[Page 73477]]

commenter pointed out that lowering the mileage reimbursement would not
adequately reimburse ambulance providers and suppliers for the cost of
transporting their patients.
Response: As previously stated, the fractional mileage billing
policy is an effort to improve billing and payment accuracy. The policy
does not modify the reimbursement rates under the ambulance fee
schedule. While we remain cognizant of the need for ambulance providers
and suppliers to remain financially solvent, we must also ensure that
providers and suppliers bill accurately and that we pay accurately. We
believe the payment implications of the fractional mileage billing
policy are modest when considering the difference in reimbursement on a
claim by claim basis, and should not have a significant impact on the
overall financial viability of individual ambulance providers and
suppliers or on patient care. We recognize that there is a cost of
doing business. However, as discussed previously, we believe that it is
both reasonable and appropriate to implement the policy to provide for
more accurate billing and payment for ambulance mileage under Medicare.
We do not believe that it is appropriate to continue the current whole
mileage reporting procedure, which results in less accurate billing and
payment, in order to provide extra revenue for providers and suppliers.
Comment: One commenter responded that the lower reimbursement would
``trickle down'' to other payers. In other words, the commenter
believes that other payers would follow CMS' lead by adopting similar
mileage reporting requirements, thereby potentially lowering
reimbursement from other payers as well.
Response: While other payers may choose to adopt similar
requirements for reporting ambulance mileage, we would not have any
involvement in that decision. As previously discussed, we believe that
it is reasonable and appropriate to implement the fractional mileage
billing policy under Medicare to provide for more accurate billing and
payment for Medicare ambulance services.
c. Administrative Impact
Comment: Many commenters stated that the fractional mileage policy
would be administratively burdensome for medical and billing staff and
would distract their medical staff from their first priority which is
caring for the patient. The same commenters also suggested that the
policy would be particularly burdensome for small ambulance companies.
One commenter stated that imposing a requirement to capture fractional
mileage would complicate the already overwhelming documentation
requirements that they face. Another commenter believed that the
fractional mileage billing policy creates undue hardship on an
ambulance industry which is already overburdened and underfunded.
Response: We believe that capturing fractional mileage amounts in
trip documentation and on claims will not create any undue burden on
the ambulance industry. Proper documentation of trip details, including
mileage traveled, is already a longstanding Medicare requirement that
remains unchanged and, we believe, uncompromised by the requirement to
capture the additional digit beyond the decimal point. As we stated in
the proposed rule, we believe that implementation of the policy is a
reasonable and appropriate measure to ensure that claims are
adjudicated and paid as accurately as possible.
Comment: Many commenters responded that the fractional mileage
billing policy would make it difficult for ambulance providers and
suppliers to comply with State and local laws which prohibit billing
fractional mileage. Several commenters cited the City of Los Angeles as
an example of a locality requiring that mileage be rounded to a whole
number.
Response: We are not aware of any State or local law(s) that
regulate how claims must be submitted to Medicare. We did not find any
language in the City of Los Angeles or the Los Angeles County
ordinances that governs claims submission to other payers, including
Medicare. Further, even if there were a State or local law that
specified a billing requirement that differed from Medicare's
requirement, the Medicare requirement would, nevertheless, be
controlling for claims submitted for Medicare payment. We note that the
fractional mileage billing policy applies only to claims submitted to
Medicare and does not dictate how a provider or supplier reports
mileage to other payers. Thus, while we recognize the possibility that
the requirements for billing ambulance mileage to State-funded or other
payers may differ, we believe that the fractional mileage billing
policy is reasonable and appropriate to ensure that claims submitted to
Medicare more accurately reflect the service(s) rendered and that our
payments to providers and suppliers are as accurate as possible.
Comment: Several commenters stated that, if the fractional mileage
billing policy is implemented, the requirements for billing ambulance
mileage to Medicare will be different than for other payers, and it
would make it difficult for ambulance providers and suppliers to
maintain compliance with the differing billing requirements. One
commenter stated that since other payers allow whole number reporting
of mileage, their ambulance company would be forced to manually change
claims in order to submit fractional mileage to Medicare.
Response: We understand that payer requirements may, and often do,
vary, and that providers and suppliers may need to comply with
different payer billing requirements. Each payer sets its own
requirements for billing and payment. We believe that most billing
systems are capable of accommodating the reality of varying billing
requirements amongst different payers. While additional changes to
billing systems or procedures may be necessary in some cases to enable
mileage to be reported differently for different payers, as we stated
previously, we continue to believe that implementation of the
fractional mileage billing policy is reasonable and appropriate to
ensure more accurate reporting and payment of ambulance mileage under
Medicare.
After considering the comments, for the reasons discussed
previously and in the CY 2011 PFS proposed rule, we continue to believe
that it is reasonable and appropriate to revise our claims processing
instructions to require reporting of and payment based on fractional
mileage, as further discussed below.
(2) Technical and Other Considerations
(A) Ability To Measure Fractional Miles
Comment: Many commenters responded that most ambulance companies do
not have the ability to measure fractional mileage because their
odometer does not show tenths of a mile. These commenters stated that
67 percent of all new ambulances are Ford models which do not have a
tenths display on the odometer. One commenter stated that digital
odometers, in particular, only show whole miles. Another commenter
asked that CMS prove its assertion that most vehicle odometers display
tenths of a mile. Yet another commenter suggested that we provide
guidance for ambulances that do not display tenths of a mile on the
odometer. We also received a response from a commenter who believed
that GPS can sometimes be unreliable.
Response: Based on the statement from many commenters that most new
ambulances are Ford models, we reviewed owner's manuals for the Ford
E250, E350, E450 as well as the F350

[[Page 73478]]

and F450 vehicles. Our research revealed that Ford E series and F
series vehicle (typically trucks or vans) chassis typically provide the
base for the Ford ambulance prep package. We reviewed Ford's gauge
specifications for model years 1996 through 2010. In model years prior
to 2004, the standard analog odometer reflected tenths of a mile. Model
years 2004 and later include standard digital odometers that show
fractional miles as well as a separate trip odometer that also displays
mileage to the tenth of a mile. Additionally, the ambulance prep
package includes an optional onboard trip computer and navigation
system.
We also researched other vehicle chassis models that may provide
the base for other ambulance prep packages and may currently be in use
by some providers or suppliers. We reviewed owner's manuals for the
Dodge Ram 3500 and 4500 for model years 2008 and 2009 and we also
researched GM/Chevrolet G4500 and 3500 for model years 2009 and 2010.
We found that both Dodge and Chevrolet model vehicle gauges include
odometers and/or trip odometers that display fractional mileage.
Chevrolet models also include a retroactive reset feature on the trip
odometer that will calculate the distance traveled since the engine was
last started in the event the trip odometer is not reset at the
beginning of the trip.
We found through our research that in many cases, trip odometers
are mentioned as separate devices from the basic odometer, particularly
in newer model cars that utilize both digital gauges. We also found
that in some cases, the basic digital odometer does not, in fact, have
a tenths display. In those cases, we found that the tenths display
appears only on the trip odometer. In the proposed rule, we did not
specify the types of odometers that that may be used to measure
fractional mileage, and thus we are clarifying in this final rule with
comment period that mileage may be measured using a separate trip
odometer as well.
In light of our review of Ford vehicle chassis and the assertion
that most new ambulances are Ford vehicles as well as our review of the
other vehicle chassis models as discussed above, we believe that most
ambulance companies have the ability to measure fractional mileage to
the tenth of a mile. However, we recognize that there may be some
ambulance companies that have a small number of vehicles wherein the
gauges are damaged, missing, or otherwise unusable, or that may be
using non-standard vehicles that do not have a fractional mileage
display on the odometer, trip odometer, GPS navigation, trip computer,
or other onboard device that measures distance traveled. We believe
that tools used to measure distance traveled (such as GPS navigation
equipment) are readily available to the average consumer at a low cost.
As such, ambulance providers and suppliers are responsible for ensuring
that they have the necessary equipment to measure fractional mileage to
the tenth of a mile, and ensuring that onboard vehicle gauges measuring
trip mileage are in working order. If they are not able to repair said
gauges, they are responsible for ensuring that they have the necessary
equipment to measure mileage accurately to the tenth of a mile.
Additionally, for those ambulance providers and suppliers who have
vehicles that include a separate trip odometer, ambulance providers and
suppliers are still responsible for ensuring that trip mileage is
measured and reported accurately--even if they fail to reset the trip
odometer at the beginning of a trip. For example, if the driver fails
to reset the trip odometer at the beginning of the trip, he or she
would simply document the mileage at the end of the trip and subtract
the mileage for the previous trip from the total which would leave a
remaining balance that should correspond to the distance of the current
trip.
With regard to the statement that GPS can sometimes be unreliable,
CMS is not aware of data that confirms or refutes this statement.
However, in order to continue to provide ambulance providers and
suppliers with flexibility in how they can measure fractional mileage,
use of GPS devices will continue to be acceptable for the purpose of
measuring fractional mileage.
(B) Ambulance Provider Versus Supplier Billing
Comment: We received responses from several commenters who believe
that the fractional mileage billing policy establishes different
requirements for Part A versus Part B ambulance providers and
suppliers. These commenters stated that neither electronic nor paper
institutional claims can accommodate fractional unit amounts. They
cited 42 U.S.C. 1395m(l)(1) which requires that all ambulance services
be paid under the same fee schedule. Many commenters believed that Part
A providers and Part B suppliers, respectively, will be treated
differently under the fractional mileage billing policy and will,
therefore, be paid differently.
Response: Per the version 4010A1 Implementation Guide and the
version 5010 TR3 specifications, the ANSI 837I (institutional)
electronic claim format has the capability to accept fractional unit
amounts up to 3 decimal places, and thus both ambulance providers and
suppliers will be able to bill fractional mileage on electronic claims.
The commenters are correct that the Form UB-04 paper institutional
claim does not currently support fractional unit amounts. However, the
National Uniform Billing Committee (NUBC) has recently approved a
change to the Form UB-04 that will allow fractional unit billing, and
this change is scheduled to take effect in July 2011. Currently, less
than 0.5 percent of all institutional providers bill Medicare using the
paper Form UB-04. Based on the low number of providers billing
ambulance services on the Form UB-04 and the fact that the form is
expected to be capable of accepting fractional unit amounts in July
2011, we are delaying the implementation date for ambulance providers
billing on the paper Form UB-04. If the Form UB-04 is capable of
accepting fractional mileage unit amounts by the end of July 2011 as
scheduled, ambulance providers billing on the paper Form UB-04 will be
required to submit fractional mileage in accordance with this final
rule with comment period for dates of service on and after August 1,
2011. If paper Form UB-04 is not capable of accepting fractional
mileage by July 31, 2011, then implementation of the fractional mileage
policy for these ambulance providers will be further delayed until
January 1, 2012 to allow ample time for any changes to the UB-04 to be
implemented. As with other claim types, ambulance providers billing on
the paper Form UB-04 will report fractional mileage on all claims for
mileage totaling up to 100 miles.
We note that delayed implementation of the fractional mileage
billing policy for the small number of providers using Form UB-04 does
not result in suppliers and providers receiving different rates under
the ambulance fee schedule. As discussed previously, the fractional
mileage billing policy does not change the rates under the ambulance
fee schedule for providers or suppliers. It is strictly a change to our
operational instructions for reporting ambulance mileage intended to
improve billing and payment accuracy. Thus, after implementation of the
fractional mileage billing policy, providers and suppliers will
continue to be paid under the same fee schedule and there will be no
differentiation in rates between providers and suppliers.

[[Page 73479]]

(C) Billing Software
Comment: We received a few comments stating that billing systems
will need to be modified to accommodate the fractional mileage billing
policy. Three commenters stated that modification of billing software
would be too costly, with one commenter further stating that the change
would create a hardship for the billing software developer. Another
commenter believed that changing their billing system would mean that
they would have to report fractional mileage to all payers, not just
Medicare.
Response: While minor changes to billing software may be required,
any billing software that is compliant with ANSI 837 electronic claim
standards should have the capability to accept and submit fractional
unit amounts in the appropriate field. For providers and suppliers
using paper claim forms to submit claims to Medicare, again, we believe
that only minor changes to the units field will be required in order to
submit fractional mileage amounts.
As discussed previously, we understand that payer requirements
may--and often do--vary, and that providers and suppliers may need to
comply with different payer billing requirements. However, the
requirement to bill fractional mileage to Medicare does not necessarily
mean that providers and suppliers will have to also submit fractional
mileage to other payers. Each payer sets its own requirements for
billing and payment. We believe that most billing systems are capable
of accommodating the reality of varying billing requirements amongst
different payers. While additional changes to billing systems or
procedures may be necessary in some cases to enable mileage to be
reported differently for different payers, as we stated previously, we
continue to believe that implementation of the fractional mileage
billing policy is reasonable and appropriate to ensure more accurate
reporting of and payment for ambulance mileage under Medicare.
(D) Enforcement and Compliance
Comment: One commenter stated that the fractional mileage billing
policy would be impossible to verify and/or enforce.
Response: Upon implementation of the fractional mileage billing
policy, ambulance providers and suppliers will still be subject to the
same statutory and regulatory requirements regarding documentation,
fraudulent billing, and pre- and post-payment review.
Comment: One commenter requested guidance for providers and
suppliers who cannot comply with the fractional mileage billing policy.
Response: We believe that providers and suppliers are capable of
complying with the new policy. As discussed above, we believe that most
ambulance companies have the ability to measure fractional mileage
using standard onboard devices. Furthermore, we believe that tools used
to measure distance traveled (such as GPS navigation) are readily
available to the average consumer at a low cost. Thus, in those
instances where gauges are damaged, missing or otherwise unusable, or
where companies are using non-standard vehicles that do not include a
device to measure fractional mileage, ambulance providers and suppliers
are responsible for ensuring that they have the necessary equipment to
measure fractional mileage to the tenth of a mile. Furthermore, billing
software that is compliant with the ANSI 837 electronic claim format is
capable of capturing and submitting fractional unit amounts, and
fractional mileage units can be captured on paper claims (with the
exception of paper Form UB04 claims as discussed previously). We
believe that implementing the fractional mileage policy is a reasonable
and appropriate measure to ensure more accurate billing and payment of
Medicare ambulance transports and thus, ambulance providers and
suppliers (except for providers billing on Form UB-04 as discussed
previously) are expected to comply effective January 1, 2011 with the
fractional mileage billing policy finalized in this final rule with
comment period.
(E) Air Ambulance
Comment: One commenter responded that the air ambulance segment of
the ambulance industry is overpaid by Medicare and suggested that we
look to generate savings by changing the reimbursement for air
ambulance mileage to be based on nautical miles instead of statutory
miles.
Response: As we stated in the proposed rule, our claims processing
system should be configured to process claims as accurately as possible
so as to provide more accurate Medicare payments. Thus, we believe that
the fractional mileage billing policy is a reasonable and appropriate
measure to enhance billing and payment accuracy for both air and ground
transports. The issue of basing air ambulance reimbursement on nautical
miles versus statutory miles was not discussed or proposed in the CY
2011 PFS proposed rule, and thus we are not addressing this issue in
this final rule with comment period.
Comment: A few commenters suggested that the fractional mileage
billing policy will affect ground ambulance transports but not air
ambulance transports.
Response: The fractional mileage billing policy will be applied in
the same manner to, and will affect, both ground and air ambulance
transports. However, since the fractional mileage billing policy does
not apply to mileage exceeding 100 miles, we recognize that it may
impact a greater percentage of ground transports than air transports,
as a larger percentage of air transports may exceed 100 miles. We
analyzed claim payment data for all Part B ambulance claims paid in
2008. If the fractional mileage billing policy had been implemented in
2008, approximately 92 percent of all claims for air ambulance mileage
would have been impacted versus 99 percent of all claims for ground
ambulance mileage. However, since air ambulance companies receive
higher mileage reimbursement rates, we found that the average financial
impact per claim would have been greater for air ambulance versus
ground ambulance transports. Thus, when we consider both factors
together, it is not clear whether the overall impact will be greater
for ground ambulance companies than for air ambulance companies.
Regardless of any potential differential impact, we believe that
implementation of the fractional mileage billing policy is a reasonable
and appropriate measure to ensure more accurate reporting of mileage
and more accurate payments under Medicare for both ground and air
transports.
(F) Miscellaneous Comments
Comment: One commenter questioned whether the new rounding rule
would create no reimbursement for 0.49 miles.
Response: No. The correct rounding, based on the fractional mileage
billing policy, would be to always round up the hundredths place.
Therefore, the provider or supplier in the commenter's example would
bill 0.5 miles. Likewise, if the provider or supplier traveled 0.43
miles, they would bill 0.5 miles on their claim. CMS would apply the
normal calculations for determining the payment amount using the
fractional mileage units reported.
4. Applicability of the Fractional Billing Policy to Other Services
We received no comments regarding the applicability of the
fractional unit billing policy to other services. Therefore, for the
reasons discussed in the CY 2011 PFS proposed rule (75 FR

[[Page 73480]]

40160), we are applying the fractional unit billing policy only to
ambulance mileage.
5. Final Fractional Mileage Billing Policy
For the reasons discussed above and in the CY 2011 PFS proposed
rule (75 FR 40159), we believe that it is reasonable and appropriate to
implement the fractional mileage billing policy as proposed in the CY
2011 PFS proposed rule effective for claims with dates of service on
and after January 1, 2011 (with the exception discussed below relating
to providers billing on paper Form UB-04).
Therefore, effective for claims with dates of service on and after
January 1, 2011, ambulance providers and suppliers (except for
providers billing on paper Form UB-04) are required to report mileage
rounded up to the nearest tenth of a mile on all claims for mileage
totaling up to 100 covered miles. Providers and suppliers must submit
fractional mileage using a decimal in the appropriate place (for
example, 99.9). For example, if the total miles traveled equals 1.59
miles, then the provider or supplier must report ``1.6'' on the claim
for mileage. Likewise, if the total mileage equals 1.53 miles, the
provider or supplier must report ``1.6'' on the claim.
Although the electronic claim formats can accommodate fractional
mileage when mileage is equal to or greater than 100 covered miles (for
example, 100.0), as discussed in the proposed rule, the paper claim
cannot. The Form CMS-1500 paper claim currently only supports four
characters (including the decimal point) in the units field (Item 24G).
Therefore, we are finalizing our proposal that mileage equal to or
greater than 100 covered miles must continue to be reported in whole
number miles on both paper and electronic claims. Providers and
suppliers must round up fractional mileage to the next whole number for
mileage that exceeds 100 covered miles and report the resulting whole
number in the unit field. The instructions set forth in our Claims
Processing Manual will be updated to reflect the revised procedures for
submitting and paying claims for fractional ambulance mileage.
Because the changes to the paper Form UB-04 necessary to
accommodate fractional units are scheduled to be completed in July
2011, implementation of this policy for ambulance providers that are
permitted to bill using the Form UB-04 is delayed until August 1, 2011
(that is, ambulance providers permitted to bill on paper form UB-04
will be required to report fractional mileage in accordance with this
final rule with comment period for dates of service on and after August
1, 2011). If the paper Form UB-04 is not capable of accepting
fractional mileage by July 31, 2011, then implementation of this policy
for these ambulance providers will be further delayed until January 1,
2012. As with other claim types, upon implementation of the fractional
mileage policy for providers billing on the paper Form UB-04, these
providers will report fractional mileage on all claims for mileage
totaling up to 100 miles.
As discussed previously, providers and suppliers are responsible
for ensuring that they have the necessary equipment to measure
fractional mileage to the tenth of a mile, and ensuring that onboard
vehicle gauges measuring trip mileage are in working order. If they are
not able to repair said gauges, they are responsible for ensuring that
they have the necessary equipment to measure mileage accurate to the
tenth of a mile. Tools that may be used to measure trip mileage
include, but are not limited to: Digital or analog odometers, trip
odometers, GPS navigation, onboard trip computers or navigation
systems.

C. Clinical Laboratory Fee Schedule: Signature on Requisition

In the March 10, 2000 Federal Register, we published the ``Medicare
Program; Negotiated Rulemaking: Coverage and Administrative Policies
for Clinical Diagnostic Laboratory Services'' proposed rule (65 FR
13082) announcing and soliciting comments on the results of our
negotiated rulemaking committee tasked to establish national coverage
and administrative policies for clinical diagnostic laboratory tests
under Part B of Medicare. In our final rule published in the November
23, 2001 Federal Register (66 FR 58788), we explained our policy on
ordering clinical diagnostic laboratory services and amended Sec.
410.32 to make our policy more explicit. Our regulation at Sec.
410.32(a) states the requirement that ``[a]ll diagnostic x-ray tests,
diagnostic laboratory tests, and other diagnostic tests must be ordered
by the physician who is treating the beneficiary.'' In the November 23,
2001 final rule, we added paragraph (d)(2) to Sec. 410.32 to require
that the physician or qualified nonphysician practitioner (NPP) (that
is, clinical nurse specialists, clinical psychologists, clinical social
workers, nurse-midwives, nurse practitioners (NPs), and physician
assistants (PAs)) who order the service must maintain documentation of
medical necessity in the beneficiary's medical record (66 FR 58809). In
the preamble discussions to the March 10, 2000 proposed rule and
November 23, 2001 final rule (65 FR 13089 and 66 FR 58802,
respectively), we noted that ``[w]hile the signature of a physician on
a requisition is one way of documenting that the treating physician
ordered the test, it is not the only permissible way of documenting
that the test has been ordered.'' In those preambles, we described the
policy of not requiring physician signatures on requisitions for
clinical diagnostic laboratory tests, but implicitly left in place the
existing requirements for a written order to be signed by the ordering
physician or NPP for clinical diagnostic laboratory tests, as well as
other types of diagnostic tests. We further stated in the preambles of
the proposed and final rules that we would publish an instruction to
Medicare contractors clarifying that the signature of the ordering
physician is not required for Medicare purposes on a requisition for a
clinical diagnostic laboratory test (65 FR 13089 and 66 FR 58802).
On March 5, 2002, we published a program transmittal implementing
the administrative policies set forth in the final rule, including the
following instruction: ``Medicare does not require the signature of the
ordering physician on a laboratory service requisition. While the
signature of a physician on a requisition is one way of documenting
that the treating physician ordered the service, it is not the only
permissible way of documenting that the service has been ordered. For
example, the physician may document the ordering of specific services
in the patient's medical record.'' (Transmittal AB-02-030, Change
Request 1998, dated March 5, 2002).
On January 24, 2003, we published a program transmittal in order to
manualize the March 5, 2002 Transmittal. (Transmittal 1787, Change
Request 2410, dated January 24, 2003). The cover note to the
transmittal states, ``Section 15021, Ordering Diagnostic Tests,
manualizes Transmittal AB-02-030, dated March 5, 2002. In accordance
with negotiated rulemaking for outpatient clinical diagnostic
laboratory services, no signature is required for the ordering of such
services or for physician pathology services.'' In the manual
instructions in that transmittal in a note, we stated: ``No signature
is required on orders for clinical diagnostic services paid on the
basis of the physician fee schedule or for physician pathology
services.'' The manual instructions did not explicitly reference
clinical diagnostic laboratory tests as the cover note did. Rather, the
transmittal seemed to extend the policy set forth in the Federal
Register (that no

[[Page 73481]]

signature is required on requisitions for clinical diagnostic
laboratory tests paid under the CLFS) to also apply to clinical
diagnostic tests paid on the basis of the PFS and physician pathology
services. In addition, the manual instructions used the term ``order''
instead of ``requisition,'' which some members of the industry have
asserted caused confusion.
When we transitioned from paper manuals to the current electronic
Internet Only Manual system, these manual instructions were
inadvertently omitted from the new Benefit Policy Manual (BPM).
In August 2008, we issued a program transmittal (Transmittal 94,
Change Request 6100, dated August 29, 2008) to update the BPM to
incorporate language that was previously contained in section 15021 of
the Medicare Carriers Manual. The reissued language states, ``No
signature is required on orders for clinical diagnostic tests paid on
the basis of the CLFS, the physician fee schedule, or for physician
pathology services.'' Based on further review, we determined that there
are no clinical diagnostic laboratory tests paid under the PFS. After
Transmittal 94 was published, we received numerous inquiries from
laboratory, diagnostic testing, and hospital representatives who had
questions about whether the provision applied to all diagnostic
services, including x-rays, MRIs, and other nonclinical laboratory fee
schedule diagnostic services.
To resolve any existing confusion surrounding the implementation of
the policy in 2001 and subsequent transmittals, we restated and
solicited public comments on our policy in the CY 2010 PFS proposed
rule (74 FR 33641). Our current policy is that a physician's signature
is not required on a requisition for clinical diagnostic laboratory
tests paid on the basis of the CLFS. However, it must be evident, in
accordance with our regulations at Sec. 410.32(d)(2) and (3), that the
physician ordered the services.
We note that we solicited and received comments on this signature
requirement during the notice and comment period for the March 10, 2000
proposed rule in the context of our proposal to add paragraph (d)(2)(i)
to Sec. 410.32 to require that the practitioner who orders a
diagnostic laboratory test must maintain documentation of medical
necessity in the beneficiary's medical record. The majority of comments
supported the adoption of a policy that the signature of the
practitioner on a requisition for a clinical diagnostic laboratory test
paid under the CLFS is not the only way of documenting that the test
has been ordered and, thus, should not be required provided such
documentation exists in an alternate form.
This policy regarding requisitions for clinical diagnostic
laboratory tests does not supersede other applicable Medicare
requirements (such as those related to hospital Conditions of
Participation (CoPs)) which require the medical record to include an
order signed by the physician who is treating the beneficiary. Nor do
we believe that anything in our policy regarding signatures on
requisitions for clinical diagnostic laboratory tests supersedes other
requirements mandated by professional standards of practice or
obligations regarding orders and medical records promulgated by
Medicare, the Joint Commission (TJC), or State law; nor do we believe
the policy would require providers to change their business practices.
We also restated and solicited public comment on our longstanding
policy consistent with the principle in Sec. 410.32(a) that a written
order for diagnostic tests including those paid under the CLFS and
those that are not paid under the CLFS (for example, that are paid
under the PFS or under the OPPS), such as X-rays, MRIs, and the TC of
physician pathology services, must be signed by the ordering physician
or NPP. That is, the policy that signatures are not required on
requisitions for clinical diagnostic laboratory tests paid based on the
CLFS applies only to requisitions (as opposed to written orders) (74 FR
33642).
Additionally, we solicited public comments about the distinction
between an order and a requisition (74 FR 33642). We note that an
``order'' as defined in our IOM, 100-02, Chapter 15, Section 80.6.1, is
a communication from the treating physician/practitioner requesting
that a diagnostic test be performed for a beneficiary. The order may
conditionally request an additional diagnostic test for a particular
beneficiary if the result of the initial diagnostic test ordered yields
to a certain value determined by the treating physician/practitioner
(for example, if test X is negative, then perform test Y). As set forth
in the CY 2010 PFS final rule (FR 74 61930), an order may be delivered
via any of the following forms of communication:
A written document signed by the treating physician/
practitioner, which is hand-delivered, mailed, or faxed to the testing
facility.
A telephone call by the treating physician/practitioner or
his or her office to the testing facility.
An electronic mail, or other electronic means, by the
treating physician/practitioner or his or her office to the testing
facility.
If the order is communicated via telephone, both the treating
physician/practitioner, or his or her office, and the testing facility
must document the telephone call in their respective copies of the
beneficiary's medical records.
In the CY 2010 PFS proposed rule (74 FR 33642), we defined a
``requisition'' as the actual paperwork, such as a form, which is
provided to a clinical diagnostic laboratory that identifies the test
or tests to be performed for a patient. It may contain patient
information, ordering physician information, referring institution
information, information about where to send reports, billing
information, specimen information, shipping addresses for specimens or
tissue samples, and checkboxes for test selection. We believe it is
ministerial in nature, assisting laboratories with billing and handling
of results, and serves as an administrative convenience to providers
and patients. We believe that a written order, which may be part of the
medical record, and the requisition, are two different documents,
although a requisition that is signed may serve as an order. We
welcomed comments from the public about the distinction between
requisitions and orders.
During the proposed and final rulemaking process for CY 2010, we
received numerous comments on these issues, including, among others:
Expressions of continued confusion over the difference between an
``order'' and a ``requisition''; requests that we develop a single
policy for all outpatient laboratory services, without the distinction
for those paid under the CLFS or the PFS; and concerns about reference
laboratory technicians who believed compelled to perform a test in
order to protect the viability of the specimen although they did not
have the proper documentation. (See 74 FR 61929 through 61931 for a
complete discussion of the comments received and responses to these
issues.) In the CY 2010 PFS final rule with comment period (74 FR
61931), we stated that, in light of the issues and concerns raised
during the comment period, and our desire to create policy that will
address the concerns in a meaningful, clear and thoughtful way, we
would continue to carefully consider the issues of physician signatures
on requisitions and orders and that we plan to revisit these issues in
the future paying particular attention to the definitions of order and
requisition.

[[Page 73482]]

Since the publication of the CY 2010 PFS final rule with comment
period, we have considered an approach that would address the concerns
raised. Therefore, in the CY 2011 PFS proposed rule (75 FR 40162), we
proposed to require a physician's or NPP's signature on requisitions
for clinical diagnostic laboratory tests paid on the basis of the CLFS.
We stated that we believe that this policy would result in a less
confusing process because a physician's signature would then be
required for all requisitions and orders, eliminating uncertainty over
whether the documentation is a requisition or an order, whether the
type of test being ordered requires a signature, or which payment
system does or does not require a physician or NPP signature. We also
stated that we believe that it would not increase the burden on
physicians because it is our understanding that, in most instances,
physicians are annotating the patient's medical record with either a
signature or an initial (the ``order''), as well as providing a
signature on the paperwork that is provided to the clinical diagnostic
laboratory that identifies the test or tests to be performed for a
patient (the ``requisition'') as a matter of course. Further, we stated
that this policy would make it easier for the reference laboratory
technicians to know whether a test is appropriately requested, and
potential compliance problems would be minimized for laboratories
during the course of a subsequent Medicare audit because a signature
would be consistently required. We stated in the CY 2011 OPPS/ASC
proposed rule that this minimizes confusion and provides a
straightforward directive for laboratories to meet.
Comment: Some commenters stated that physicians continue to be
unfamiliar with when a signature is required and when it is not
required on requisitions for physician pathology services, x-ray
services, and services other than clinical diagnostic laboratory tests
paid under the CLFS. The commenters also asked for consistency in
signature requirements between services required under the CLFS and the
Physician Fee Schedule (PFS).
Response: We proposed to require a physician's or NPP's signature
on requisitions for clinical diagnostic laboratory tests paid under the
CLFS. We did not propose to change, and we are not changing, the
signature requirements for other services. One of the reasons we made
this proposal is because we believed that it would be less confusing
for a physician's signature to be required for all requisitions and
orders, eliminating uncertainty over whether the documentation is a
requisition or an order, whether the type of test being ordered
requires a signature, or which payment system does or does not require
a physician or NPP signature.
Comment: Some commenters were supportive of our proposal.
Response: We appreciate the commenters' support of our proposed
policy, which we are finalizing in this rule.
Comment: The commenters seemed to interpret the proposed policy to
mean that clinical diagnostic laboratory tests requested by telephone
or electronic means would not be acceptable because they would not
contain a signature. The commenters stated that there must be a way to
validate electronic requests for services by the physician or NPP and
that, as the medical world moves toward electronic records, everything
must be annotated (that is, ``signed'') in some way to authenticate
that the service is ordered by the physician.
Response: Our proposed policy does not concern electronic or
telephonic requests, because we do not consider these types of requests
to be requisitions. As we discussed previously, a requisition is the
actual paperwork, such as a form, that is provided to a clinical
diagnostic laboratory that identifies the test or tests to be performed
for a patient. It may contain patient information, ordering physician
information, referring institution information, information about where
to send reports, billing information, specimen information, shipping
addresses for specimens or tissue samples, and checkboxes for test
selection. We believe it is ministerial in nature, assisting
laboratories with the billing and handling of results, and serves as an
administrative convenience to providers and patients. When a physician
or NPP chooses to use a requisition to request a clinical diagnostic
laboratory test paid under the CLFS, under the policy we are adopting
in this rule, the physician or NPP must sign the requisition.
Comment: The commenters pointed out that it should be evident from
the medical record that the physician actually ordered the service.
Response: We did not propose to change any requirements with
respect to orders. As discussed above, a requisition is the actual
paperwork, such as a form, which is provided to a clinical diagnostic
laboratory that identifies the test or tests to be performed for a
patient. Our proposal only applies to signatures on requisitions for
clinical diagnostic laboratory tests paid under the CLFS. A signature
on a requisition should be sufficient for a clinical diagnostic
laboratory to verify that a physician or NPP is requesting a clinical
diagnostic laboratory test.
Comment: The commenters stated that the patient rarely takes the
requisition to the laboratory himself/herself because the patient does
not go to the laboratory. These commenters seemed to believe that, in
those cases, a paper request for clinical diagnostic laboratory
services would have to be created where there may not have been a need
for one to exist. The commenters suggested that only the medical
record, and not any other paper materials, should be signed or
initialed by the physician.
Response: As stated previously, a requisition is the actual
paperwork, such as a form, which is provided to a clinical diagnostic
laboratory that identifies the test or tests to be performed for a
patient. Under our proposed policy, which we are finalizing in this
rule, if a physician or NPP chooses to use a requisition to request a
clinical diagnostic laboratory test paid under the CLFS, the physician
or NPP must sign the form. However, this policy does not require a
physician or NPP to use a requisition to request a clinical diagnostic
laboratory test paid under the CLFS. Many physicians and NPPs currently
request clinical diagnostic laboratory tests using an order, such as an
annotated medical record or documented telephonic request, and they may
continue to do so without being impacted by our new policy for
requisitions.
Comment: The commenters suggested that physicians would need to be
educated about the new signature requirement on requisitions for
clinical diagnostic laboratory tests paid under the CLFS to alleviate
problems such as physician non-compliance with this policy because they
are unaware of it or do not understand it. Some commenters stated that
they firmly believe that the physician will neglect to sign any
document that directs the clinical diagnostic laboratory to perform a
service. In order to incentivize physicians to provide a signature,
some commenters suggested tying the physician's ability to bill for a
service to the requirement to provide a signature.
Response: We understand the need to educate physicians and NPPs. As
such, in addition to updating our manuals, we will direct the Medicare
contractors to educate physicians and NPPs concerning this issue. We
did not propose to adopt a policy linking the physician's ability to
bill for a service to the requirement to provide a signature

[[Page 73483]]

and we are not adopting such policy in this final rule.
Comment: The commenters believe that medical personnel are already
required to provide an extensive amount of identifying information on
the requisition. The commenters stated that either the physician or NPP
is completing the paperwork but then, in most cases, not signing it or
initialing it to confirm that the required service was documented by a
medical practitioner.
Response: If physicians and NPPs are completing extensive written
documentation concerning each beneficiary on requisitions, the addition
of a signature should not be an issue.
Comment: The commenters expressed continued confusion over the
terms ``requisition'' and ``order.'' The commenters stated that CMS
should define ``requisition'' and ``order'' in the CMS Internet Only
Manual (IOM) system.
Response: We recognize that there is confusion around the
definition of these terms. However, as we stated above, we define an
``order'' (IOM, 100-02, Chapter 15, Section 80.6.1) as a communication
from the treating physician/practitioner requesting that a diagnostic
test be performed for a beneficiary. We further provided that an order
may be delivered via any of the following forms of communication: (1) A
written document signed by the treating physician/practitioner, which
is hand-delivered, mailed, or faxed to the testing facility; (2) a
telephone call by the treating physician/practitioner or his or her
office to the testing facility; or (3) an electronic mail, or other
electronic means, by the treating physician/practitioner or his or her
office to the testing facility. If the order is communicated via
telephone, both the treating physician/practitioner, or his or her
office, and the testing facility must document the telephone call in
their respective copies of the beneficiary's medical records. We define
a ``requisition'' as the actual paperwork, such as a form, which is
provided to a clinical diagnostic laboratory that identifies the test
or tests to be performed for a patient. It may contain patient
information, ordering physician information, referring institution
information, information about where to send reports, billing
information, specimen information, shipping addresses for specimens or
tissue samples, and checkboxes for test selection. We believe it is
ministerial in nature, assisting laboratories with billing and handling
of results, and serves as an administrative convenience to providers
and patients. We believe that a written order, which may be part of the
medical record, and the requisition, are two different documents,
although a requisition that is signed may serve as an order. We are
revising our manuals to reflect our new requirement for physicians' and
NPPs' signatures on requisitions for clinical diagnostic laboratory
tests paid under the CLFS.
Comment: The commenters note that there is no corresponding
suggested change in the language of the Code of Federal Regulations
(CFR) concerning the physician signature issue.
Response: We have determined that a change to Sec. 410.32(d)(2) is
not necessary with respect to this issue because this provision
involves orders not requisitions. We articulated our policy regarding
requisitions for clinical diagnostic laboratory tests in our manuals
and in preamble language. Therefore, we are changing our manuals to
reflect our new policy.
Comment: The commenters suggested that the requirement to provide
some type of signature represents an undue burden on the clinical
diagnostic laboratory, especially in the long term care world where
standing orders in the form of a ``plan of care'' are maintained in the
beneficiary's records onsite and tests are ordered by the long term
care staff as required based on directions provided by the physician.
The commenters asserted that the physician rarely appears onsite at the
facility to sign requests for medical services and, as a result, an
exception for these types of facilities is warranted. However,
commenters also pointed to a Drug Enforcement Administration (DEA)
requirement for long term care facilities which states that, ``The
facility must provide or obtain laboratory services only when ordered
by the attending physician.''
Response: Again, the change in policy discussed in this final rule
only affects requisitions and does not affect orders. The policy that
we proposed and are adopting as final in this rule is that a
physician's or NPP's signature is required on requisitions for clinical
diagnostic laboratory tests paid under the CLFS.
Comment: The commenters suggested that the following language was
clear and should stand as the entire policy here: ``A physician's
signature is not required on a requisition for clinical diagnostic
laboratory tests paid on the basis of the Clinical Laboratory Fee
Schedule (CLFS); however, it must be evident, in accordance with
regulations at Sec. 410.32(d)(2) and (3), that the physician ordered
the services.''
Response: We appreciate the commenters' viewpoint. However, for the
reasons discussed previously, we are finalizing our proposal, without
modification, to require a physician's or NPP's signature on
requisitions for clinical diagnostic laboratory tests paid under the
CLFS.
Comment: The commenters suggested that a pre-printed physician
signature or letterhead showing the physician's name should serve in
the place of a ``signature.''
Response: A pre-printed signature or letterhead cannot be construed
as a document, the contents of which a physician or NPP has affirmed.
In order to discourage fraud and abuse, and to affirm that a medical
service was ordered by a medical practitioner who currently works in
the practice, a signature is required.
Comment: The commenters stated that the services are transcribed
from the medical record onto the requisition by office staff, not
written and signed by the physician. The commenters seemed to indicate
that the medical record that would be maintained in the physician's
office, but not necessarily the requisition, would be signed or
annotated in some way.
Response: It seems that the commenters believe that a physician or
his/her representative has no problem providing a signature or
annotation for the medical record. In addition, some commenters
consider the ``requisition'' to be the medical record and use it for a
dual purpose--as the beneficiary's file and as the request for
services.
After careful consideration of all the comments received, we are
finalizing our proposed policy without modification to require a
physician's or NPP's signature on requisitions for clinical diagnostic
laboratory tests paid under the CLFS. This policy does not affect
physicians or NPPs who choose not to use requisitions to request
clinical diagnostic laboratory tests paid under the CLFS. Such
physicians or NPPs can continue to request such tests by other means,
such as by using the annotated medical records, documented telephonic
requests, or electronically. We will make changes to our manuals to
reflect this final policy.

D. Discussion of Budget Neutrality for the Chiropractic Services
Demonstration

Section 651 of MMA requires the Secretary to conduct a
demonstration for up to 2-years to evaluate the feasibility and
advisability of expanding coverage for chiropractic services under
Medicare. Current Medicare coverage for chiropractic services is
limited to manual manipulation of the spine to correct a subluxation
described in section 1861(r)(5) of the Act. The

[[Page 73484]]

demonstration expanded Medicare coverage to include ``A) care for
neuromusculoskeletal conditions typical among eligible beneficiaries;
B) and diagnostic and other services that a chiropractor is legally
authorized to perform by the State or jurisdiction in which such
treatment is provided'' and was conducted in four geographically
diverse sites, two rural and two urban regions, with each type
including a Health Professional Shortage Area (HPSA). The two urban
sites were 26 counties in Illinois and Scott County, Iowa, and 17
counties in Virginia. The two rural sites were the States of Maine and
New Mexico. The demonstration, which ended on March 31, 2007, was
required to be budget neutral as section 651(f)(1)(B) of MMA mandates
the Secretary to ensure that ``the aggregate payments made by the
Secretary under the Medicare program do not exceed the amount which the
Secretary would have paid under the Medicare program if the
demonstration projects under this section were not implemented.''
In the CY 2006, 2007, and 2008 PFS final rules with comment period
(70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we included a
discussion of the strategy that would be used to assess budget
neutrality (BN) and the method for adjusting chiropractor fees in the
event the demonstration resulted in costs higher than those that would
occur in the absence of the demonstration. We stated BN would be
assessed by determining the change in costs based on a pre-post
comparison of total Medicare costs for beneficiaries in the
demonstration and their counterparts in the control groups and the rate
of change for specific diagnoses that are treated by chiropractors and
physicians in the demonstration sites and control sites. We also stated
that our analysis would not be limited to only review of chiropractor
claims because the costs of the expanded chiropractor services may have
an impact on other Medicare costs for other services.
In the CY 2010 PFS final rule with comment period (74 FR 61926), we
discussed the evaluation of this demonstration conducted by Brandeis
University and the two sets of analyses used to evaluate budget
neutrality. In the ``All Neuromusculoskeletal Analysis,'' which
compared the total Medicare costs of all beneficiaries who received
services for a neuromusculoskeletal condition in the demonstration
areas with those of beneficiaries with similar characteristics from
similar geographic areas that did not participate in the demonstration,
the total effect of the demonstration to Medicare was a $114 million
increase in costs. In the ``Chiropractic User Analysis,'' which
compared the Medicare costs of beneficiaries who used expanded
chiropractic services to treat a neuromusculoskeletal condition in the
demonstration areas, with those of beneficiaries with similar
characteristics who used chiropractic services as currently covered by
Medicare to treat a neuromusculoskeletal condition from similar
geographic areas that did not participate in the demonstration, the
total effect of the demonstration to Medicare was a $50 million
increase in costs.
As explained in the CY 2010 PFS final rule, we based the BN
estimate on the ``Chiropractic User Analysis'' because of its focus on
users of chiropractic services rather than all Medicare beneficiaries
with neuromusculoskeletal conditions, including those who did not use
chiropractic services and who may not have become users of chiropractic
services even with expanded coverage for them (74 FR 61926 through
61927). Users of chiropractic services are most likely to have been
affected bythe expanded coverage provided by this demonstration. Cost
increases and offsets, such as reductions in hospitalizations or other
types of ambulatory care, are more likely to be observed in this group.
As explained in the CY 2010 PFS final rule (74 FR 61927), because
the costs of this demonstration were higher than expected and we did
not anticipate a reduction to the PFS of greater than 2 percent per
year, we finalized a policy to recoup $50 million in expenditures from
this demonstration over a 5-year period, from CYs 2010 through 2014 (74
FR 61927). Specifically, we are recouping $10 million for each such
year through adjustments to the chiropractic CPT codes. Payment under
the PFS for these codes will be reduced by approximately 2 percent. We
believe that spreading this adjustment over a longer period of time
will minimize its potential negative impact on chiropractic practices.
We are continuing the implementation of the required budget
neutrality adjustment by recouping $10 million in CY 2011. Our Office
of the Actuary estimates chiropractic expenditures in CY 2011 to be
approximately $524 million based on actual Medicare spending for
chiropractic services for the most recent available year. To recoup $10
million in CY 2011, the payment amount under the PFS for the
chiropractic CPT codes (that is, CPT codes 98940, 98941, and 98942)
will be reduced by approximately 2 percent. We are reflecting this
reduction only in the payment files used by the Medicare contractors to
process Medicare claims rather than through adjusting the relative
value units (RVUs). Avoiding an adjustment to the RVUs would preserve
the integrity of the PFS, particularly since many private payers also
base payment on the RVUs.
We received no comments on this policy and we will continue the
implementation of the required budget neutrality adjustment in CY 2011
by reducing the payment amount under the PFS for chiropractic codes
(that is, CPT codes 98940, 98941, and 98942) by approximately 2 percent
resulting in a $10 million recoupment. This is the second year of an
adjustment which is required in order to satisfy the budget neutrality
requirement in section 651 of MMA and that is being made over a 5-year
period to recoup the costs of a demonstration that expanded Medicare
coverage for chiropractic services. This reduction will only be
reflected in the payment files used by Medicare contractors to process
Medicare claims and not through an adjustment to the RVUs.

E. Provisions Related to Payment for Renal Dialysis Services Furnished
by End-Stage Renal Disease (ESRD) Facilities

Subsequent to the July 13, 2010 publication of the CY 2011 PFS
proposed rule (75 FR 40040) we published in the Federal Register, on
August 12, 2010 a final rule entitled ``End-Stage Renal Disease
Prospective Payment System'' (75 FR 49030). In that rule, we
established a case-mix adjusted bundled PPS for renal dialysis services
furnished beginning January 1, 2011, in accordance with the statutory
provisions set forth in section 153(b) of MIPPA. The ESRD PPS is
mandated to replace the current basic case-mix adjusted composite
payment system and the methodologies for the reimbursement of
separately billable outpatient ESRD services.
As explained in the ESRD PPS final rule (75 FR 49162), section
1881(b)(14)(E)(i) of the Act requires a 4-year transition (phase-in)
from the current composite payment system to the ESRD PPS, and section
1881(b)(14)(E)(ii) of the Act allows ESRD facilities to make a one-time
election to be excluded from the transition. Electing to be excluded
from the 4-year transition means that the ESRD facility receives
payment for renal dialysis services based on 100 percent of the payment
rate established under the ESRD PPS, rather than a blended rate for
each year of the transition based in part on the payment rate under the
current

[[Page 73485]]

payment system and in part on the payment rate under the ESRD PPS.
For renal dialysis services furnished during CY 2011, ESRD
facilities that elect to go through the ESRD PPS the transition would
be paid a blended amount that will consist of 75 percent of the basic
case-mix adjusted composite payment system and the remaining 25 percent
would be based on the ESRD PPS payment. Thus, we must continue to
update the basic case-mix adjusted composite payment system during the
ESRD PPS 4-year transition (CYs 2011 through 2013).
For a historical perspective of the basic case-mix adjusted
composite rate payment system for ESRD facilities that furnish
outpatient dialysis services, see the following PFS final rules with
comment period:
CY 2005 (69 FR 66319 through 66334).
CY 2006 (70 FR 70161 through 70171).
CY 2007 (71 FR 69681 through 69688).
CY 2008 (72 FR 66280 through 66285).
CY 2009 (73 FR 69754 through 69761).
CY 2010 (74 FR 61921 through 61926).
In the CY 2011 PFS proposed rule (75 FR 40165 through 40168), we
outlined the proposed updates to the basic case-mix adjusted composite
payment system established under section 1881(b)(12) of the Act, which
included updates to the drug add-on, as well as the wage index values
used to adjust the labor component of the composite rate. Specifically,
as described in more detail below in this section, we proposed the
following:
A zero growth update to the drug add-on, resulting in a
proposed 14.7 percent add-on adjustment to the composite rate for 2011
required by section 1881(b)(12)(F) of the Act to maintain a $20.33 per
treatment drug add-on amount.
An update to the wage index adjustment to reflect the
latest available wage data, including a revised budget neutrality (BN)
adjustment factor of 1.056929.
A reduction to the ESRD wage index floor from 0.6500 to
0.6000.
We received very few comments on our proposals. The ESRD payment
related comments are discussed below in this section.
1. Update to the Drug Add-on Adjustment to the Composite Rate
In the CY 2011 PFS proposed rule (75 FR 40165), we described the
drug payment methodology used to update the drug add-on adjustment to
the composite rate. Since we now have 4 years of drug expenditure data
based on ASP pricing, we proposed to continue estimating growth in drug
expenditures based on the trends in available data.
We did not receive any comments objecting to the drug add-on update
methodology, and therefore, we used the proposed update methodology to
compute the drug add-on adjustment for CY 2011. We used trend analysis
from drug expenditure data to update the per treatment drug add-on
adjustment. We then removed growth in enrollment for the same time
period from the expenditure growth, so that the residual reflects per
patient expenditure growth (which includes price and utilization
combined).
To estimate drug expenditure growth using trend analysis, we looked
at the average annual growth in total drug expenditures between 2006
and 2009. First, we estimated the total drug expenditures for all ESRD
facilities in CY 2009. For this final rule, we used the final CY 2006
through CY 2009 ESRD claims data with dates of service for the same
timeframe updated through June 30, 2010 (that is, claims with dates of
service from January 1 through December 31, 2009, that were received,
processed, paid, and passed to the National Claims History File as of
June 30, 2010).
Using the full-year 2009 drug expenditure figure, we calculated the
average annual change in drug expenditures from 2006 through 2009. This
average annual change showed an increase of 1.9 percent for this
timeframe. We used this 1.9 percent increase to project drug
expenditures for both CY 2010 and CY 2011.
2. Estimating Per Patient Growth
Once we had the projected growth in drug expenditures from 2010 to
2011 (1.9 percent), to calculate the per patient expenditure growth
between CYs 2010 and 2011, we removed the enrollment component by using
the estimated growth in enrollment data between CY 2010 and CY 2011,
which was approximately 3.6 percent. Specifically, we divided the total
drug expenditure factor between 2010 and 2011 (1.019) by enrollment
growth of 3.6 percent (1.036) for the same timeframe. The result is a
per patient growth factor equal to 0.984 (1.019/1.036=0.984). Thus, we
are projecting a 1.6 percent decrease in per patient growth in drug
expenditures between 2010 and 2011.
3. Update to the Drug Add-on Adjustment
As previously discussed, we estimate a 1.9 percent increase in drug
expenditures between CY 2010 and CY 2011. Combining this reduction with
a 3.6 percent increase in enrollment, as described above, we are
projecting a 1.6 percent decrease in per patient growth of drug
expenditures between CY 2010 and CY 2011. A 1.6 percent decrease in the
per patient drug add-on of $20.33 would result in a decrease of 33
cents (.016*20.33=.33). Hence a decrease of 33 cents in the drug add-on
would result in negative update equal to 0.2 percent (.33/138.53,
138.53 is the 2011 base composite rate). Therefore, we are projecting
that the combined growth in per patient utilization and pricing for CY
2011 would result in a negative update equal to 0.2 percent. However,
as we have done previously, we proposed a zero update to the drug add-
on adjustment. We believe this approach is consistent with the language
under section 1881(b)(12)(F) of the Act which states in part that ``the
Secretary shall annually increase'' the drug add-on amount based on the
growth in expenditures for separately billed ESRD drugs. Our
understanding of the statute contemplates ``annually increase'' to mean
a positive or zero update to the drug add-on.
Also, as required by section 1881(b)(14)(F), as amended by section
3401(h) of the Affordable Care Act, a 2.5 percent ESRD market basket
increase, as established in the ESRD PPS final rule (75 FR 49161), is
applied to the current basic case-mix adjusted composite rate portion
of the blended payment amount, resulting in a CY 2011 composite rate of
$138.53 ($135.15*1.025). This 2.5 percent market basket increase does
not apply to the drug add-on adjustment to the composite rate. Since
the drug add-on is calculated as a percentage of the composite rate, we
note that the drug add-on percentage would be reduced from 15.0 to 14.7
as a result of the increase to the composite rate in CY 2011.
Comment: Several commenters agreed with CMS' decision to apply a
zero update to the drug add-on adjustment.
Response: We appreciate the commenters' support that we continue
with a zero update to the drug add-on adjustment.
Accordingly, after a review of the public comments, we are
finalizing the proposed policy decisions to apply a zero update to the
drug add-on, maintain a $20.33 per treatment drug add-on amount, as
well as apply a 14.7 percent add-on adjustment to the

[[Page 73486]]

composite rate for CY 2011. Also, as previously discussed a 2.5 percent
ESRD market basket increase is applied to the current basic case-mix
adjusted composite rate portion of the blended payment amount,
resulting in a CY 2011 composite rate of $138.53 ($135.15*1.025).
Comment: One commenter agreed with our decision to continue to use
the ASP+6 percent methodology for separately billable drugs.
Response: This comment is out of the scope of the proposed ESRD
provisions, however, we appreciate the commenters' support of our use
of the ASP+6 percent methodology.
4. Update to the Geographic Adjustments to the Composite Rate
In the CY 2011 PFS proposed rule (75 FR 40165), we proposed to
update the wage index adjustment to reflect the latest available wage
data. The purpose of the wage index is to adjust the composite rates
for differing wage levels covering the areas in which ESRD facilities
are located. The wage indexes are calculated for each urban and rural
area. In addition, we generally have followed wage index policies used
under the inpatient hospital prospective payment system (IPPS), but
without regard to any approved geographic reclassification authorized
under sections 1886(d)(8) and (d)(10) of the Act or other provisions
that only apply to hospitals paid under the IPPS (70 FR 70167).
Therefore, for purposes of the ESRD wage index methodology, the
hospital wage data we use is pre-classified, pre-floor hospital data
and unadjusted for occupational mix.
5. Updates to Core-Based Statistical Area (CBSA) Definitions
In the CY 2006 PFS final rule with comment period (70 FR 70167), we
announced our adoption of the OMB's CBSA-based geographic area
designations to develop revised urban/rural definitions and
corresponding wage index values for purposes of calculating ESRD
composite rates. The CBSA-based geographic area designations are
described in OMB Bulletin 03-04, originally issued June 6, 2003, and is
available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html. In addition, OMB has published subsequent bulletins regarding
CBSA changes, including changes in CBSA numbers and titles. We note
that this and all subsequent ESRD rules and notices are considered to
incorporate the CBSA changes published in the most recent OMB bulletin
that applies to the hospital wage index used to determine the current
ESRD wage index. The OMB bulletins may be accessed online at http://www.whitehouse.gov/omb/bulletins/index.html.
6. Updated Wage Index Values
In the CY 2007 PFS proposed rule (71 FR 69685), we proposed to
update the ESRD wage index values annually. The ESRD wage index values
for CY 2011 were developed from FY 2007 wage and employment data
obtained from the Medicare hospital cost reports. As we indicated, the
ESRD wage index values are calculated without regard to geographic
classifications authorized under sections 1886(d)(8) and (d)(10) of the
Act and utilize pre-floor hospital data that is unadjusted for
occupational mix.
Comment: One commenter wanted CMS to consider the wage index
policies that are adopted under the IPPS and that similar wage index
policies should be developed for ESRD facilities.
Response: We appreciate the commenters concern as to how ESRD are
geographically classified and although we did not propose a change in
the geographic reclassification for ESRD facilities at this time, we
will take the commenters suggestions into consideration in future
rulemaking.
Comment: MedPAC commented that the statutory update to the
composite rate for CY 2011 will benefit both rural and urban
facilities, and they urge CMS to monitor access to dialysis care
especially in rural areas.
Response: We agree with MedPAC's recommendation and we plan to
continue to monitor access to dialysis care in rural areas and the
impact or influence these effects may have for the ESRD basic case-mix
adjusted composite payment rate system wage index.
7. Wage Index Values for Areas With No Hospital Data
In the CY 2011 PFS proposed rule (75 FR 40167), we proposed to use
the methodology established in CY 2006 for wage index values for areas
with no hospital data. While adopting the CBSA designations, we
identified a small number of ESRD facilities in both urban and rural
geographic areas where there are no hospital wage data from which to
calculate ESRD wage index values. The affected areas were rural Puerto
Rico, rural Massachusetts (Barnstable Town, MA (CBSA 12700), and
Providence-New Bedford-Fall River, RI-MA (CBSA 39300)), and the urban
area of Hinesville, GA (CBSA 25980). As with prior years, for CY 2011,
we calculated the ESRD wage index values for those areas as follows:
For the urban area of Hinesville-Fort Stewart, GA (CBSA
25980), which is an urban area without specific hospital wage data, we
applied the same methodology used to impute a wage index value that we
used in CY 2010. Specifically, we used the average wage index value for
all urban areas within the State of Georgia.
For rural Massachusetts, we adopted an alternative
methodology we used for CY's 2008, 2009 and 2010, which we proposed to
use to determine the wage index value for rural Massachusetts for CY
2011. Specifically, for rural areas without hospital wage data, we
proposed to use the average wage index values from all contiguous CBSAs
as a reasonable proxy for that rural area. In determining the imputed
rural wage index, we interpreted the term ``contiguous'' to mean
sharing a border. In the case of Massachusetts, the entire rural area
consists of Dukes and Nantucket Counties. We determined that the
borders of Dukes and Nantucket counties are contiguous with CBSA 12700,
Barnstable Town, MA, and Providence-New Bedford-Fall River, RI-MA. For
purposes of rural Massachusetts, we proposed to use the same
methodology for CY 2011.
For rural Puerto Rico, because all geographic areas in
Puerto Rico were subject to the wage index floor in CY 2011, we
proposed to apply the ESRD wage index floor to rural Puerto Rico as
well. For CY 2011, the ESRD wage index floor is 0.60. Therefore, we
proposed to apply the ESRD wage index floor to 0.60 to facilities that
are located in rural Puerto Rico. We note, however, that there are
currently no ESRD facilities located in rural Puerto Rico.
We received no comments on our proposals for the wage areas as
previously discussed with no hospital data. Therefore, we are
finalizing our policies for wage areas with no hospital data. Also, we
will continue to evaluate existing hospital wage data and possibly wage
data from other sources such as the Bureau of Labor Statistics, to
determine if other methodologies might be appropriate for imputing wage
index values for areas without hospital wage data for CY 2010 and
subsequent years. To date, no data from other sources, superior to that
currently used in connection with the IPPS wage index has emerged.
Therefore, for ESRD purposes, we continue to believe this is an
appropriate policy. Also, the wage index values associated with these
areas are located in the addenda section of this final rule.
Also, in the CY 2011 PFS proposed rule (75 FR 40167), we reported
an additional urban area--Anderson, SC

[[Page 73487]]

(CBSA 11340)--with no hospital data. For this urban area, we proposed
to use the same methodology we have used for the other urban area with
no hospital data, that is, Hinesville-Fort Stewart, GA (CBSA 25980).
However, since the publication of the CY 2011 PFS proposed rule, we
have received hospital wage data for this area, and therefore, the
methodology we proposed no longer applies.
8. Reduction to the ESRD Wage Index Floor
In the PFS proposed rule (75 FR 40167), we proposed to continue to
reduce the wage index floor to the composite rate portion of the blend
during the transition. For CY 2011, we proposed that the ESRD wage
index floor would be reduced from 0.65 to 0.60. We believe maintaining
the wage index floor provides some relief for ESRD facilities going
through the transition that have low wage index values.
For CY 2011, all urban areas in Puerto Rico that have a wage index
are eligible for the ESRD wage index floor of 0.60. Currently there are
no ESRD facilities located in rural Puerto Rico, however, should any
facilities open in rural Puerto Rico, as previously discussed, we
intend to apply the CY 2011 wage index floor of 0.60 to these rural
facilities.
We received no comments on our proposal regarding the reduction to
the ESRD wage index floor with regard to the composite rate portion of
the blend during the transition. Therefore, we are finalizing our
policy to reduce the wage index floor as proposed.
9. Budget Neutrality Adjustment
We have previously interpreted the statute as requiring that the
geographic adjustment be made in a budget neutral manner. Given our
application of the ESRD wage index, this means that aggregate payments
to ESRD facilities in CY 2011 would be the same as aggregate payments
that would have been made if we had not made any changes to the
geographic adjustments. We note that this BN adjustment only addresses
the impact of changes in the geographic adjustments. A separate BN
adjustment was developed for the case-mix adjustments required by the
MMA.
Since we did not propose any changes to the case-mix measures for
basic case-mix adjusted payment system for CY 2011, the current case-
mix BN adjustment of 0.9116 would remain in effect for CY 2011.
Consistent with prior rulemaking, for CY 2011, we will apply the wage-
index BN adjustment factor of 1.056929 directly to the ESRD wage index
values to the composite rate portion of the blend. Because the ESRD
wage index is only applied to the labor-related portion of the
composite rate, we computed the BN adjustment factor based on that
proportion (53.711 percent).
To compute the CY 2011 wage index BN adjustment factor, we used the
FY 2007 pre-floor, pre-reclassified, non-occupational mix-adjusted
hospital data to compute the wage index values, 2009 outpatient claims
(paid and processed as of June 30, 2010), and geographic location
information for each facility which may be found through Dialysis
Facility Compare Web page on the CMS Web site at http://www.cms.hhs.gov/DialysisFacilityCompare/. The FY 2011 hospital wage
index data for each urban and rural locale by CBSA may also be accessed
on the CMS Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The wage index data are located in the section entitled, ``FY
2011 Occupational Mix Adjusted and Unadjusted Average Hourly Wage and
Pre-Reclassified Wage Index by CBSA.''
Using treatment counts from the 2009 claims and facility-specific
CY 2010 composite rates, we computed the estimated total dollar amount
each ESRD provider would have received in CY 2010. The total of these
payments became the target amount of expenditures for all ESRD
facilities for CY 2011. Next, we computed the estimated dollar amount
that would have been paid for the same ESRD facilities using the ESRD
wage index for CY 2011. The total of these payments becomes the new CY
2011 amount of wage-adjusted composite rate expenditures for all ESRD
facilities.
After comparing these two dollar amounts (target amount divided by
the new CY 2011 amount), we calculated an adjustment factor that, when
multiplied by the applicable CY 2011 ESRD wage index value, would
result in aggregate payments to ESRD facilities that would remain
within the target amount of composite rate expenditures. When making
this calculation, the ESRD wage index floor value of 0.60 is applied
whenever appropriate. The wage BN adjustment factor for CY 2011 is
1.056929.
To ensure BN, we also must apply the BN adjustment factor to the
wage index floor 0.60, which results in an adjusted wage index floor of
0.6342 (0.6000 x 1.056929) for CY 2011. This budget neutrality factor
is not applied to the wage index values for the ESRD PPS portion of the
blend.
10. ESRD Wage Index Tables
The CY 2011 ESRD final wage index tables are located in Addenda K
and L of this final rule with comment period. Also, we indicated in the
ESRD PPS final rule (75 FR 49117), we would finalize the CY 2011 ESRD
PPS wage index tables in this final rule. The wage index tables lists
two separate columns of wage index values. The first column lists the
wage index values will be applied under the composite rate portion and
includes the budget neutrality adjustment of 1.056929. The second
column lists the wage index values that will be applied under the ESRD
PPS beginning January 1, 2011.

F. Issues Related to the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA)

1. Section 131: Physician Payment, Efficiency, and Quality
Improvements--Physician Quality Reporting System
a. Program Background and Statutory Authority
Section 101 of Division B of the Tax Relief and Health Care Act of
2006--the Medicare Improvements and Extension Act of 2006 (Pub. L. 109-
432) (MIEA-TRHCA), which was enacted on December 20, 2006, required us
to implement a physician quality reporting system in 2007, which we
named the Physician Quality Reporting Initiative (PQRI). The Physician
Quality Reporting System is a quality reporting program that provides
an incentive payment to identified eligible professionals who
satisfactorily report data on quality measures for covered professional
services furnished during a specified reporting period. Under section
1848(k)(3)(B) of the Act, the term ``eligible professional'' means any
of the following: (1) A physician; (2) a practitioner described in
section 1842(b)(18)(C); (3) a physical or occupational therapist or a
qualified speech-language pathologist; or (4) a qualified audiologist.
The PQRI was extended and further enhanced as a result of the
MMSEA, which was enacted on December 29, 2007, and the MIPPA, which was
enacted on July 15, 2008. Changes to the PQRI as a result of these
laws, as well as information about the PQRI in 2007, 2008, 2009, and
2010, are discussed in detail in the CY 2008 PFS proposed and final
rules (72 FR 38196 through 38204 and 72 FR 66336 through 66353,
respectively), CY 2009 PFS proposed and final rules (73 FR 38558
through 38575 and 73 FR 69817 through 69847, respectively), and CY 2010
PFS proposed and final rules (74 FR 33559 through 33600 and 74 FR 61788
through 61861, respectively). Further detailed information, about the
PQRI program, related laws, and help desk resources, is

[[Page 73488]]

available on the CMS Web site at http://www.cms.gov/PQRI.
The ACA makes a number of changes to the PQRI, including the
following: Authorizing incentive payments through 2014; requiring a
payment adjustment beginning in 2015 for eligible professionals who do
not satisfactorily report data on quality measures in the applicable
reporting period for the year; requiring timely feedback to
participating eligible professionals; requiring the establishment of an
informal appeals process whereby eligible professionals may seek a
review of the determination that an eligible professional did not
satisfactorily submit data on quality measures for purposes of
qualifying for a PQRI incentive payment; making available an additional
incentive payment for those eligible professionals satisfactorily
reporting data on quality measures for a year and having such data
submitted on their behalf through a Maintenance of Certification
Program and participating in a Maintenance of Certification Program
practice assessment more frequently than is required to qualify for or
maintain board certification status; requiring the establishment of a
Physician Compare Web site; and requiring the development of a plan to
integrate reporting on quality measures relating to the meaningful use
of electronic health records (EHRs). Whereas in the past we only had
the authority to continue the PQRI incentive payments for a specified
period of time, we believe the changes authorized by the ACA
(particularly the fact that the payment adjustments are authorized for
2015 and each subsequent year) lend permanency to the PQRI. To reflect
this transition from the PQRI being a temporary initiative to a
permanent quality reporting program, we are hereafter referring to the
PQRI as the ``Physician Quality Reporting System.'' We will be updating
our documents and the relevant Web sites to reflect this name change
over time.
In the CY 2011 PFS proposed rule (75 FR 40162) we proposed to add
Sec. 414.90 to title 42 of the Code of Federal Regulations to
implement the provisions of the Physician Quality Reporting System.
We received several comments from the public on the CY 2011 PFS
proposed rule related to the Physician Quality Reporting System.
General comments about the Physician Quality Reporting System are
addressed as follows.
Comment: We received positive feedback supporting the Physician
Quality Reporting System program as a whole, particularly efforts that
encourage eligible professional reporting through registries,
Maintenance of Certification Programs, and EHRs. We also received
positive feedback regarding our proposals for providing timely feedback
and the establishment of an informal appeals process.
Response: We appreciate the commenters' positive feedback. We
believe that these options provide eligible professionals with greater
flexibility.
Comment: We received one comment expressing dissatisfaction with
the Physician Quality Reporting System program as a whole. The
commenter stated that while they have been reporting Physician Quality
Reporting System data for the past few years, they have not received
the incentive payment. As a result, the commenter feels that their
clinical professionalism and patient service is not improved by the
program and that it diminishes the time they spend on direct patient
care.
Response: We are sorry that the commenter has not received a
Physician Quality Reporting System incentive. We are hopeful that the
improvements that we are making to the Physician Quality Reporting
System will make it easier for eligible professionals to participate
satisfactorily. We recommend that all participating eligible
professionals review their Physician Quality Reporting System feedback
report. In addition to providing performance information, eligible
professionals who are not incentive eligible will be able to use their
feedback report to determine why they did not qualify for an incentive
payment. We encourage any eligible professional who has questions about
the information contained in their feedback report to contact the
QualityNet Help Desk at 866-288-8912 or [email protected]. The Help
Desk is available from 7 a.m. to 7 p.m. Central Time to answer a
variety of questions about the Physician Quality Reporting System from
general program questions to feedback report availability and access.
The help desk can provide detailed information about the reasons that
an eligible professional failed to earn an incentive as well.
Comment: Some commenters urged us to aggressively provide
additional Physician Quality Reporting System education and training
opportunities. One commenter requested we provide more ``hands-on''
Physician Quality Reporting System education and training opportunities
at the local level by the state/regional contractors.
Response: We appreciate the commenters' valuable input. We will
continue to work with national and regional stakeholder organizations
to educate their members on Physician Quality Reporting System program
requirements. We also expect to continue to host monthly national
provider calls in which we would provide guidance on specific topics
and provide updated educational materials and resources. To augment our
portfolio of educational materials and resources, we also anticipate
providing a series of educational videos to help educate eligible
professionals on Physician Quality Reporting System program
requirements.
Comment: One commenter expressed disappointment with the exclusion
of eligible professionals in institutional settings. Other commenters
urged us to identify and adopt a Physician Quality Reporting System
reporting mechanism that could apply to all eligible professionals in
all settings, including eligible therapists providing services in
CORFs, SNFs Part B, and outpatient departments of a hospital.
Response: As we stated in the CY 2010 PFS final rule with comment
period (74 FR 61791), for professionals who practice in an
institutional setting where the provider of service is an institution
and not a physician or other professional paid under the PFS or where
claims submission does not identify the professional by his or her NPI,
we are unable to make the determination of satisfactory reporting and
calculate earned incentive payment amounts at the individual eligible
professional level without extensive modifications to the claims
processing systems of CMS and providers, which would represent a
material administrative burden to us and to providers. It would also
require modifications to the industry standard claims formats, which
would require substantial time to effect through established processes
and structures that we do not maintain or control. We have also found
that most institutions that employ eligible professionals do not tie
the individual professional to the service rendered to an individual
patient. In this case, there are no individual provider identifiers
available to use in processing these claims.
Comment: One commenter was concerned that one of the analytical
changes that was made to facilitate satisfactory Physician Quality
Reporting System reporting may have had an unintended consequence on
radiologists by overly inflating their eligible cases, or reporting
denominator. Specifically, the commenter is requesting that, for
radiology, we look at the CPT/ICD-9 combinations only for the specific
line item in which the CPT/ICD-9

[[Page 73489]]

combination is present rather than across any dates of service.
Response: We are aware of this issue and are currently analyzing
the impact. We believe there are only a handful of measures where this
is a concern because the measure specifications tie a procedure to a
diagnosis. We are working with the appropriate measure developers/
owners to analyze the specifications for these measures to see if they
can be changed for 2011 to lessen the impact.
Comment: One commenter encouraged us to consider strategies to move
the Physician Quality Reporting System toward a more robust role in
quality improvement. Individual clinicians and smaller group practices'
self-selection of measures, the small number of measures required to be
reported, and variations in the required sample sizes make the measures
less meaningful than they could be if the program was more structured
and rigorous.
Response: The commenter brings up a number of valid points. As the
program matures and we phase out the incentives for satisfactory
reporting and phase in payment adjustments for failing to
satisfactorily report, we envision continuing to make further
refinements to the program to address the commenter's concerns. Any
such changes would be described in notice and comment rulemaking prior
to implementation.
Comment: Another commenter urged us to transition to rewarding
performance, not just reporting. Changes made now should lay the
groundwork for moving towards this goal.
Response: As we noted in the CY 2011 PFS proposed rule (75 FR 40114
through 40115), section 3007 of the ACA requires the Secretary to apply
a separate, budget-neutral payment modifier to the FFS PFS payment
formula. The payment modifier, which will be phased in beginning
January 1, 2015 through January 1, 2017, will provide for differential
payment under the fee schedule to a physician or groups of physicians,
and later, possibly to other eligible professionals, based upon the
relative quality and cost of care of their Medicare beneficiaries.
Comment: One commenter was concerned that eligible professionals
would not decide to participate in the Physician Quality Reporting
System. The commenter was concerned that given the current status of
the industry in trying to meet 5010/ICD10 regulations and incentive
requirements for achieving the meaningful use of EHR adoption, the
additional reporting requirements will serve as a disincentive.
Response: We are unclear what additional reporting requirements the
commenter is referring to nor are we clear on how they relate to the
5010/ICD10 regulations and the incentive requirements for achieving the
meaningful use of EHR adoption. However, if the commenter is concerned
that eligible professionals may not be motivated to participate in the
Physician Quality Reporting System in light of other quality programs
and/or requirements, we agree that this is a valid concern.
Upon consideration of the comments, we are finalizing our proposal
to add Sec. 414.90 to title 42 of the Code of Federal Regulations to
implement the provisions of the Physician Quality Reporting System as
discussed in this section. We made certain technical changes to Sec.
414.90 as appropriate to reflect the change in the name of the PQRI to
``Physician Quality Reporting System,'' to eliminate the unnecessary
use of acronyms, and to add cross-references to relevant statutory or
regulatory provisions where appropriate, to specify the particular
program year addressed in this rulemaking, and to make other technical
changes as noted.
b. Incentive Payments for the 2011 Physician Quality Reporting System
For years 2011 through 2014, section 3002(a) of the ACA extends the
opportunity for eligible professionals to earn a Physician Quality
Reporting System incentive payment for satisfactorily reporting
Physician Quality Reporting System quality measures. For the 2011
Physician Quality Reporting System, section 1848(m)(2)(B) of the Act,
as amended by section 3002(a) of the ACA, authorizes a 1.0 percent
incentive, and for 2012 through 2014, a 0.5 percent incentive, for
qualified eligible professionals who satisfactorily submit Physician
Quality Reporting System quality measures data.
The following is a summary of the comments we received regarding
the 2011 Physician Quality Reporting System incentive payment amount.
Comment: One commenter expressed support for the extension of the
Physician Quality Reporting System incentives through 2014 for eligible
professionals who satisfactorily report.
Response: We appreciate the commenters' positive feedback.
Comment: Some commenters expressed concern that the incentive
payment is too small to motivate eligible professionals to report
Physician Quality Reporting System measures, even if they are providing
quality care in their practice, or to drive quality. The commenters
stated that added administrative cost and time should be considered
when setting the incentive and disincentive rates, in an effort to
better reflect the financial incentive to begin utilizing the measures
and financial disincentives to maintain such practice. Commenters were
specifically concerned that the incentives are not commensurate with
the burden of reporting.
Response: While we understand commenters' concerns with the costs
and burdens associated with satisfactory reporting under the Physician
Quality Reporting System, we have neither the authority to change the
basis for calculation of the incentive payment nor the authority to
change the incentive amount. We continue to seek ways to minimize
impact on eligible professionals, such as by continuing to offer
multiple reporting options in order to give eligible professionals the
flexibility to choose the option that best fits their practice.
Furthermore, we note that under section 1848(a)(8) of the Act,
beginning 2015, eligible professionals who do not satisfactorily report
Physician Quality Reporting System measures will be subject to a
payment adjustment. Eligible professionals who participate in the
Physician Quality Reporting System prior to 2015 receive the added
benefit of familiarizing themselves with the Physician Quality
Reporting System prior to the implementation of the payment adjustment.
Moreover, beginning 2015, eligible professionals who satisfactorily
report under the Physician Quality Reporting System will avoid the
payment adjustment.
Comment: One commenter requested clarification and examples on how
the incentive payment calculations are determined and an explanation of
what is meant by ``allowable.''
Response: As stated in the CY 2011 PFS proposed rule (75 FR 40169),
the Physician Quality Reporting System incentive payment amount is
calculated using estimated Medicare Part B PFS allowed charges for all
covered professional services, not just those charges associated with
the reported quality measures. ``Allowed charges'' refers to total
charges, including the beneficiary deductible and coinsurance, and is
not limited to the 80 percent paid by Medicare or the portion covered
by Medicare where Medicare is secondary payer. Amounts billed above the
PFS amounts for assigned and non-assigned claims will not be included
in the calculation of the incentive payment amount. In addition, since,
by definition

[[Page 73490]]

under section 1848(k)(3)(A) of the Act, ``covered professional
services'' are limited to services for which payment is made under, or
is based on, the PFS and which are furnished by an eligible
professional, other Part B services and items that may be billed by
eligible professionals, but are not paid under or based upon the
Medicare Part B PFS, are not included in the calculation of the
incentive payment amount.
Therefore, eligible professionals and group practices that
satisfactorily report quality data under the 2011 Physician Quality
Reporting System will qualify for an incentive payment equal to 1.0
percent of their total estimated Medicare Part B PFS allowed charges
for the all covered professional services furnished by the eligible
professional during the applicable 2011 Physician Quality Reporting
System reporting period. For satisfactory reporting at the individual
level in 2011, 1.0 percent of allowed charges will be paid at the TIN/
NPI level. For satisfactory reporting at the group practice level in
2011, 1.0 percent of allowed charges will be paid at the TIN level.
c. 2011 Reporting Periods for Individual Eligible Professionals
Under section 1848(m)(6)(C) of the Act, the ``reporting period''
for the 2008 Physician Quality Reporting System and subsequent years is
defined to be the entire year, but the Secretary is authorized to
revise the reporting period for years after 2009 if the Secretary
determines such revision is appropriate, produces valid results on
measures reported, and is consistent with the goals of maximizing
scientific validity and reducing administrative burden. For the 2011
Physician Quality Reporting System, we proposed the following reporting
periods: (1) 12-Month reporting period for claims-based reporting and
registry-based reporting (that is, January 1, 2011 through December 31,
2011); (2) 12-month reporting period for EHR-based reporting (that is,
January 1, 2011 through December 31, 2011; and (3) 6-month reporting
period for claims-based reporting and registry-based reporting (that
is, July 1, 2011 through December 31, 2011). Additionally, we proposed
the 12-month reporting period for the group practice reporting option
(GPRO) for both the Physician Quality Reporting System and the
Electronic Prescribing (eRx) Incentive Program Prescribing Incentive
Program (January 1, 2011 through December 31, 2011).
The following is a summary of the comments we received regarding
the proposed reporting periods.
Comment: We received comments generally supporting the proposed
reporting periods as well as comments specifically supporting the 6-
month reporting period for registry-based reporting.
Response: We appreciate the commenters' positive feedback. As these
comments support our proposed reporting periods and for the reasons
discussed, we are finalizing the reporting periods, as proposed.
Comment: One commenter was opposed to the elimination of the 6-
month reporting period for claims-based reporting as this would create
an unnecessary obstacle for the reporting mechanism that is available
to nearly all eligible professionals.
Response: We agree with the commenter's urging of the preservation
of the 6-month reporting period for 2011, and, as such, we did not
propose to eliminate the 6-month reporting period for claims-based
reporting. In an effort to encourage participation by eligible
professionals who may not be ready to do so at the beginning of the
year, for the 2011 Physician Quality Reporting System, there will
continue to be both a 12-month and 6-month reporting period for all
reporting options except for EHR reporting and the group practice
reporting option.
Comment: Another commenter requested that we consider a 6-month
reporting period for registry-based reporting.
Response: We proposed a 6-month reporting period for registry-based
reporting in the CY 2011 PFS proposed rule (75 FR 40169). As previously
stated, for the 2011 Physician Quality Reporting System, there will
continue to be a 12-month and 6-month reporting period for all
reporting options except for EHR reporting and the group practice
reporting option.
Comment: One commenter requested that we consider providing both 6-
month and 12-month EHR-based reporting options, consistent with the 6-
month reporting period options available for the claims-based and
registry-based reporting mechanisms.
Response: As we stated in the CY 2010 PFS final rule with comment
period (74 FR 61794), we may consider including a 6-month reporting
period for EHR reporting in future years once we have additional
experience with EHR reporting in the Physician Quality Reporting
System. At this time, no data has yet been collected from EHRs for the
Physician Quality Reporting System. EHR data submission for the 2010
Physician Quality Reporting System will not occur until early 2011.
Therefore, we are not adding a 6-month reporting period for EHR-based
reporting at this time.
Comment: One commenter opposed tying the incentive amount to the
reporting period in which the eligible professional satisfactorily
reports.
Response: Section 1848(m)(1)(A) of the Act specifies that the
incentive payment is based on the covered professional services
furnished during the reporting period for which the eligible
professional or group practice satisfactorily reports. Therefore, we
are obligated to tie the incentive amount to the reporting period in
which the eligible professional satisfactorily reports. We note,
however, the incentive is not limited to the charges for the services
associated with the measures being reported. Rather the incentive is
calculated based on all of covered professional services furnished
during the applicable reporting period.
Upon consideration of the comments received, we will finalize the
2011 reporting periods as proposed. As discussed previously, if an
eligible professional only satisfactorily reports for the 6-month
reporting period, then the professional's incentive payment will be
calculated based on the eligible professional's charges for covered
professional services furnished between July 1, 2011 and December 31,
2011 only. Services furnished prior to July 1, 2011 would not be
included in the professional's incentive payment calculation.
We are also deleting the definition for the term ``quality
reporting period'' proposed at Sec. 414.90(b) since the reporting
period is defined at Sec. 414.90(g)(1).
d. 2011 Physician Quality Reporting System Reporting Mechanisms for
Individual Eligible Professionals
For the 2011 Physician Quality Reporting System, we proposed to
retain the claims-based, registry-based, and EHR-based reporting
mechanism from 2010 and invited comments on other options that could be
included in the 2011 Physician Quality Reporting System. We also
discussed in the CY 2011 PFS proposed rule that we continue to consider
significantly limiting the claims-based mechanism of reporting clinical
quality measures in future program years (75 FR 40170).
The following is a summary of the comments received with regard to
the proposed 2011 Physician Quality Reporting System reporting
mechanisms and our intent to lessen reliance on the claims-based
reporting mechanism beyond 2011.
Comment: Several commenters supported the proposed reporting

[[Page 73491]]

mechanisms for the 2011 Physician Quality Reporting System, including
strong support for the continuation of claims-based reporting and
continued availability of multiple reporting mechanisms. Many
commenters noted that claims-based reporting is the only reporting
mechanism available to all eligible professionals. One commenter
believes claims-based reporting may be a more accurate reporting method
overall and that it would be unduly burdensome and costly to force
practitioners into changing their established reporting methods.
Another commenter thought CMS should not totally discontinue claims-
based reporting as some practitioners, such as radiologists, work at
several different locations where they may not consistently have access
to a registry or EHR. One commenter noted that many small practices may
not yet be linked to EHR systems. Commenters also noted that registry
reporting frequently requires additional costs, which adds another
burden on eligible professionals who wish to participate in the
Physician Quality Reporting System. Another commenter stated that in
the transition to payment adjustments beginning in 2015, where it is
crucial to encourage greater participation, it would be premature to
eliminate claims-based reporting. Other commenters urged us to delay
eliminating or lessening our reliance on claims-based reporting until
eligible professionals can demonstrate that they understand how to use
and capture quality data via EHRs or registers and can consistently and
successfully do so. Finally, another commenter encouraged us to provide
a one or two year transition period if we want to proceed with
eliminating claims-based reporting in future years.
Response: We appreciate the commenters' positive feedback. We agree
with some of the reasons cited by commenters for retaining claims-based
reporting and/or retaining multiple reporting mechanisms. For these
reasons and in the discussion that follows, we are retaining, for 2011,
the three 2010 Physician Quality Reporting System reporting mechanisms
for individual eligible professionals, including claims-based
reporting.
Comment: While a majority of commenters requested that we delay or
reconsider lessening our reliance on claims-based reporting after 2011,
some commenters recommended that the claims-based reporting option be
phased out with the expectation that registry-based and EHR-based
reporting will become the mainstay of the program, especially as EHR
adoption increases. Commenters noted that claims-based reporting has
been problematic for eligible professionals and that transitioning the
Physician Quality Reporting System away from claims-based reporting
would maximize the potential of registries and EHRs for quality
measurement reporting. One commenter requested clarification around the
timing for phasing out claims-based reporting in order to assist
eligible professionals' decision-making around how and when to
implement various parts of an EHR or registry.
Response: In addition to the reasons offered by commenters, our
ability to lessen our reliance on the claims-based reporting mechanism
is dependent on there being an adequate number and variety of
registries available and/or EHR reporting options. We believe that it
would be premature to eliminate the claims-based reporting mechanism
for 2011 and doing so would create a barrier to participation. For
2009, approximately 75 percent of eligible professionals used claims-
based reporting. We do not anticipate phasing out claims-based
reporting while it continues to be actively used by eligible
professionals.
Comment: One commenter requested that we allow certified registered
nurse anesthetists (CRNAs) to submit Physician Quality Reporting System
data through an EHR-based reporting mechanism.
Response: CRNAs are not precluded from reporting via a qualified
Physician Quality Reporting System EHR. However, CRNAs may find the
current measures available for Physician Quality Reporting System EHR
reporting to be beyond their scope of practice. Additionally, CRNAs
tend to collect the majority of their data in operating rooms and may
require specific EHR products which, due to their specialization, may
have Physician Quality Reporting System qualification later on their
timeline.
Comment: One commenter expressed support for the use of registries
as a recognized instrument to leverage existing clinical data
collection efforts.
Response: We appreciate the supportive comment and agree that
registries may be able to augment data collection efforts, particularly
for measures that are more difficult to collect and require longer time
horizons to get complete data information.
Comment: One commenter expressed concern about the discrepancy
between claims-based reporting and registry reporting. Physician
Quality Reporting System analysis for 2007 and 2008 showed that
providers who did registry reporting had a 90 percent success rate for
earning a Physician Quality Reporting System bonus and claims-based
reporting had a 50 percent success rate. Due to this large discrepancy,
the commenter believed that it will be very important to know which
reporting method results in actual performance improvement based on
patient outcomes and whether methods are subject to manipulation. The
commenter encouraged us to ensure the processes and resulting data of
the reporting methods are reliable and not susceptible to manipulation.
Response: We understand the commenter's concerns about the
differences in the registry results compared to the claims results. We
are continually assessing the accuracy and reliability of all data
submitted under the Physician Quality Reporting System. We compare the
data that is submitted to us from registries against claims data and
are exploring reasons for any discrepancies found.
Comment: Some commenters, in the spirit of harmonization, noted
that several aspects of the Physician Quality Reporting System are
different from the Hospital Inpatient Quality Reporting Program,
formerly known as the Reporting Hospital Quality Data Annual Payment
Update Program (RHQDAPU). One commenter stated that while we are moving
away from claims-based quality measures for eligible professionals,
they are moving toward claims-based quality measures for hospitals. The
commenter strongly encouraged us to harmonize their programs and make
this same conclusion for the Hospital Inpatient Quality Reporting
Program.
Response: We understand the commenters' desire for harmonization of
our various quality reporting programs and we attempt to do so when
practical and feasible. We note, however, that the Physician Quality
Reporting System and the Hospital Inpatient Quality Reporting Program
are separate and distinct programs. The two programs apply to two
different types of providers, have different goals, and are governed by
different laws and requirements.
Claims-based submission for the Physician Quality Reporting System
provides a means to submit additional data, using QDCs, beyond what is
required for billing. Claims as used for hospital quality reporting
does not require the submission of additional QDCs to be added to
applicable patient claims.
Based upon consideration of the comments received and for the
reasons previously explained, we are retaining the claims, registry,
and EHR reporting mechanisms for use by individual eligible
professionals for the 2011 Physician Quality Reporting System. As

[[Page 73492]]

in previous years, depending on which Physician Quality Reporting
System individual quality measures or measures groups an eligible
professional selects, one or more of the 2011 reporting mechanisms may
not be available for reporting a particular 2011 Physician Quality
Reporting System individual quality measure or measures group. In
addition, while eligible professionals can attempt to qualify for a
Physician Quality Reporting System incentive under multiple reporting
mechanisms, an eligible professional must satisfy the 2011 criteria for
satisfactory reporting with respect to a single reporting mechanism to
qualify for a 2011 incentive. For example, an eligible professional who
starts submitting individual Physician Quality Reporting System
measures via claims in January 2011 and then switches to registry-based
reporting for services furnished after April 2011 would be able to
qualify for a 2011 Physician Quality Reporting System incentive based
on a 12-month reporting period only if he or she satisfies the
appropriate reporting criteria for either claims-based reporting or
registry-based reporting for this reporting period. We will not combine
data submitted via multiple reporting mechanisms to determine incentive
eligibility.
(1) Final Requirements for Individual Eligible Professionals Who Choose
the Claims-Based Reporting Mechanism
For eligible professionals who choose to participate in the 2011
Physician Quality Reporting System by submitting data on individual
quality measures or measures groups through the claims-based reporting
mechanism, we proposed the eligible professional would be required to
submit the appropriate Physician Quality Reporting System quality data
codes (QDCs) on the professionals' Medicare Part B claims. QDCs for the
eligible professional's selected individual Physician Quality Reporting
System quality measures or measures group may be submitted to CMS at
any time during 2011. However, as required by section 1848(m)(1)(A) of
the Act, all claims for services furnished between January 1, 2011 and
December 31, 2011, would need to be processed by no later than February
28, 2012, to be included in the 2011 Physician Quality Reporting System
analysis.
We did not receive any comments specific to the requirements for
individual eligible professionals who choose claims-based reporting.
Therefore, we are finalizing the requirements as proposed (75 FR 40171)
and previously discussed. Eligible professionals should refer to the
``2011 Physician Quality Reporting System Implementation Guide'' to
facilitate satisfactory reporting of QDCs for 2011 Physician Quality
Reporting System individual measures on claims and to the ``Getting
Started with 2011 Physician Quality Reporting System Reporting of
Measures Groups'' to facilitate satisfactory reporting of QDCs for 2011
Physician Quality Reporting System measures groups on claims. By no
later than December 31, 2010, both of these documents will be posted on
the Physician Quality Reporting System section of the CMS Web site at
http://www.cms.gov/pqri.
(2) Final Requirements for Individual Eligible Professionals Who Choose
the Registry-Based Reporting Mechanism
We proposed that in order to report quality data on the 2011
Physician Quality Reporting System individual quality measures or
measures groups through a qualified clinical registry, an eligible
professional must enter into and maintain an appropriate legal
arrangement with a qualified 2011 Physician Quality Reporting System
registry. Such arrangements would provide for the registry's receipt of
patient-specific data from the eligible professional and the registry's
disclosure of quality measures results and numerator and denominator
data on Physician Quality Reporting System quality measures or measures
groups on behalf of the eligible professional to CMS. Thus, the
registry would act as a Health Insurance Portability and Accountability
Act of 1996 (Pub. L. 104-191) (HIPAA) Business Associate and agent of
the eligible professional. Such agents are referred to as ``data
submission vendors.'' The ``data submission vendors'' would have the
requisite legal authority to provide clinical quality measures results
and numerator and denominator data on individual quality measures or
measures groups on behalf of the eligible professional for the
Physician Quality Reporting System.
We proposed that the registry, acting as a data submission vendor,
would submit CMS-defined registry-derived measures information to our
designated database for the Physician Quality Reporting System, using a
CMS-specified record layout, which would be provided to the registry by
CMS. Similarly, we proposed that eligible professionals choosing to
participate in the Physician Quality Reporting System through the
registry-based reporting mechanism for 2011 would need to select a
qualified Physician Quality Reporting System registry and submit
information on Physician Quality Reporting System individual quality
measures or measures groups to the selected registry in the form and
manner and by the deadline specified by the registry.
In addition to meeting the proposed requirements specific to
registry-based reporting, we proposed that eligible professionals who
choose to participate in the Physician Quality Reporting System through
the registry-based reporting mechanism would need to meet the relevant
criteria proposed for satisfactory reporting of individual measures or
measures groups that all eligible professionals must meet in order to
satisfactorily report for the Physician Quality Reporting System 2011.
We did not receive any comments specific to the requirements for
individual eligible professionals who choose registry-based reporting.
Therefore, we are finalizing the requirements for individual eligible
professionals who choose the registry-based reporting mechanism as
proposed (75 FR 40171 through 40173) and previously discussed.
We will post a list of qualified registries for the 2011 Physician
Quality Reporting System on the Physician Quality Reporting System
section of the CMS Web site at http://www.cms.gov/pqri, which will
include the registry name, contact information, and the 2011 measures
and/or measures group and eRx reporting (if qualified) for which the
registry is qualified and intends to report. However, we do not
anticipate making this list available prior to the start of the 2011
program year as we had proposed. We proposed to post the names of the
2011 Physician Quality Reporting System qualified registries in 3
phases starting with a list of those registries qualified for the 2011
Physician Quality Reporting System based on: (1) Being a qualified
registry for a prior Physician Quality Reporting System program year
that successfully submitted 2008 and/or 2009 Physician Quality
Reporting System quality measures results and numerator and denominator
data on the quality measures; (2) having received a letter indicating
their continued interest in being a Physician Quality Reporting System
registry for 2011 by October 31, 2010; and (3) the registry's
compliance with the 2011 Physician Quality Reporting System registry
requirements. As discussed further in section VII.F.1.j. of this final
rule with comment period, we proposed and are finalizing new
requirements for the 2011 Physician Quality Reporting System
registries. Since there are new requirements that did not apply to
previously qualified

[[Page 73493]]

registries, we will need to ensure that the previously qualified
registries meet the new requirements for 2011. While we fully expect
all of the previously qualified registries to meet the new registry
requirements for the 2011 Physician Quality Reporting System, we do not
expect to be able to determine previously qualified registries'
compliance with these new registry requirements for 2011 until the
middle of 2011. Thus, by Summer 2011, we expect to post a list of
registries (this list will include both registries that were previously
qualified and those that self-nominate to be newly qualified for 2011)
that are conditionally qualified to submit numerator and denominator
data on 2011 Physician Quality Reporting System measures and measures
groups and Physician Quality Reporting System measure results. After we
receive a test file from the registries, we will finalize the list of
2011 Physician Quality Reporting System registries. We anticipate
finalizing the list of 2011 Physician Quality Reporting System
registries by Fall 2011.
An eligible professional's ability to report Physician Quality
Reporting System quality measures results and numerator and denominator
data on Physician Quality Reporting System quality measures or measures
groups using the registry-based reporting mechanism should not be
impacted by the list of qualified registries for the 2011 Physician
Quality Reporting System being made available after the start of the
reporting period. First, registries will not begin submitting eligible
professionals' Physician Quality Reporting System quality measures
results and numerator and denominator data on the quality measures or
measures groups to CMS until 2012. Second, if an eligible professional
decides that he or she is no longer interested in submitting quality
measures results and numerator and denominator data on Physician
Quality Reporting System individual quality measures or measures groups
through the registry-based reporting mechanism after the complete list
of qualified registries becomes available, this does not preclude the
eligible professional from attempting to meet the criteria for
satisfactory reporting through another 2011 Physician Quality Reporting
System reporting mechanism.
In any event, even though a registry is listed as ``qualified,'' we
cannot guarantee or assume responsibility for the registry's successful
submission of the required Physician Quality Reporting System quality
measures results or measures group results or required data elements
submitted on behalf of a given eligible professional.
(3) Final Requirements for Individual Eligible Professionals Who Choose
the EHR-Based Reporting Mechanism
For 2011, in addition to meeting the criteria for satisfactory
reporting of at least 3 individual measures, we proposed the following
requirements associated with EHR-based reporting: (1) Selection of a
Physician Quality Reporting System qualified EHR product; and (2)
submission of clinical quality data extracted from the EHR to a CMS
clinical data warehouse in the CMS-specified manner and format (75 FR
40172). Similar to the 2010 Physician Quality Reporting System, a test
of quality data submission from eligible professionals who wish to
report 2011 quality measure data directly from their qualified EHR
product will be required and is anticipated to occur in early 2012
immediately followed by the submission of the eligible professional's
actual 2011 Physician Quality Reporting System data. This entire final
test/production 2011 data submission timeframe is expected to be
January 2012 through March 2012. As discussed in the CY 2010 PFS final
rule with comment period (74 FR 61801 through 61802), we are currently
vetting newly self-nominated EHR vendor products for possible
qualification for the 2011 Physician Quality Reporting System program
year. We expect to list any additional Physician Quality Reporting
System qualified EHR products by January 2011. It is expected that
these newly qualified products would be able to submit 2011 Physician
Quality Reporting System data in early 2012.
The following is a summary of the comments we received regarding
the proposed requirements for individual eligible professionals whose
choose the EHR-based reporting mechanism for the 2011 Physician Quality
Reporting System.
Comment: One commenter recommended that we consider accepting
measure rates from EHRs rather than just numerator and denominator
data. Rates generated within the system will be more readily available
for local quality improvement purposes and timely feedback to eligible
professionals and office staff. Timely feedback has been and will
continue to be a problem for this program. System characteristics that
promote and facilitate local improvement efforts should be designed in
from the outset.
Response: We agree that an EHR's ability to calculate measure
results locally will provide useful and timely information to eligible
professionals who are participating in the Physician Quality Reporting
System. However, receiving individual data elements allows us to ensure
that measure results are calculated in a more standardized fashion
across eligible professionals. Individual data elements can also more
readily be combined with other data from other sources. Additionally,
if measure specifications change, there would be no need to recode the
EHR to account for these specification changes. Rather we can make one
change to the measures engine to obviate the need for a change to the
EHR itself.
Comment: One commenter finds problematic the definition of a
qualified EHR as one incorporating eRx functionality. Such
functionality is unnecessary and costly for eligible professionals who
do not prescribe. As a result, the current proposed definition of EHR
could disenfranchise practitioners lacking prescriptive authority by
automatically denying them the opportunity to use EHRs for reporting
performance measures. Another commenter requested clarification on
whether the electronic prescription function is E-Prescribing, which
requires the patient's pharmacy benefits information, or E-Prescription
Writing, which does not.
Response: We believe the commenters are referring to the eRx
functionality required of a certified EHR for the EHR Incentive
Program, which is beyond the scope of this final rule with comment
period. This final rule is limited to the use of EHRs in the Physician
Quality Reporting System and eRx Incentive Programs as one of multiple
reporting mechanisms available to eligible professionals to report on
Physician Quality Reporting System measures and/or the electronic
prescribing quality measure.
Upon consideration of the comments and for the reasons we
highlighted based on our experience thus far with EHR-based reporting,
eligible professionals who choose the EHR-based reporting mechanism for
the 2011 Physician Quality Reporting System will be required to (in
addition to meeting the appropriate criteria for satisfactory reporting
of individual measures):
Have a Physician Quality Reporting System qualified EHR
product;
Have access to the identity management system specified by
CMS (such as, but not limited to, the Individuals Authorized Access to
CMS Computer Systems, or IACS) to submit clinical quality data
extracted from the EHR to a CMS clinical data warehouse;

[[Page 73494]]

Submit a test file containing real or dummy clinical
quality data extracted from the EHR to a CMS clinical data warehouse
via an identity management system specified by CMS during a timeframe
specified by CMS;
Submit a file containing the eligible professional's 2011
Physician Quality Reporting System clinical quality data extracted from
the EHR for the entire reporting period (that is, January 1, 2011
through December 31, 2011) via the CMS-specified identify management
system during the timeframe specified by CMS in early 2012.
Measures groups reporting continues to not be an option for EHR-
based reporting of quality measures for the 2011 Physician Quality
Reporting System.
We also cannot assume responsibility for the successful submission
of data from eligible professionals' EHRs. Any eligible professional
who chooses to submit Physician Quality Reporting System data extracted
from an EHR should contact the EHR product's vendor to determine if the
product is qualified and has been updated to facilitate 2011 Physician
Quality Reporting System quality measures data submission. Such
professionals also should begin attempting submission soon after the
opening of the clinical data warehouse in order to assure the
professional has a reasonable period of time to work with his or her
EHR and/or its vendors to correct any problems that may complicate or
preclude successful quality measures data submission through that EHR.
The specifications for the electronic transmission of the 2011
Physician Quality Reporting System measures identified in Tables 81 and
82 of this final rule with comment period as being available for EHR-
based reporting in 2011 are posted in the Alternative Reporting
Mechanisms page of the Physician Quality Reporting System section of
the CMS Web site. The requirements that an EHR vendor must meet in
order for one or more of its products to be considered qualified for
purposes of an eligible professional submitting 2011 Physician Quality
Reporting System data extracted from the EHR product(s) were described
in the CY 2010 PFS final rule with comment period (74 FR 61800 through
61802) and are posted on the Alternative Reporting Mechanisms page of
the Physician Quality Reporting System section of the CMS Web site. We
expect to post the names of the EHR vendors and the specific product(s)
and version(s) that are qualified for the 2011 Physician Quality
Reporting System on the Alternative Reporting Mechanisms page of the
Physician Quality Reporting System section of the CMS Web site by
January 2011.
(4) Final Qualification Requirements for Registries
For the 2011 Physician Quality Reporting System, we proposed to
require a self-nomination process for registries wishing to submit 2011
Physician Quality Reporting System quality measures or measures groups
on behalf of eligible professionals for services furnished during the
applicable reporting periods in 2011 (75 FR 40173). To be considered a
qualified registry for purposes of submitting individual quality
measures and measures groups on behalf of eligible professionals who
choose this reporting mechanism, we proposed that both registries new
to the Physician Quality Reporting System and those previously
qualified must:
Be in existence as of January 1, 2011;
Have at least 25 participants by January 1, 2011;
Provide at least 1 feedback report per year to
participating eligible professionals;
Not be owned and managed by an individual locally-owned
single-specialty group (in other words, single-specialty practices with
only 1 practice location or solo practitioner practices would be
prohibited from self-nominating to become a qualified Physician Quality
Reporting System registry);
Participate in ongoing 2011 Physician Quality Reporting
System mandatory support conference calls hosted by CMS (approximately
1 call per month), including an in-person registry kick-off meeting to
be held at CMS headquarters in Baltimore, MD. Registries that miss more
than one meeting will be precluded from submitting Physician Quality
Reporting System data for the reporting year (2011);
Be able to collect all needed data elements and transmit
to CMS the data at the TIN/NPI level for at least 3 measures in the
2011 Physician Quality Reporting System (according to the posted 2011
Physician Quality Reporting System Measure Specifications);
Be able to calculate and submit measure-level reporting
rates or the data elements needed to calculate the reporting rates by
TIN/NPI;
Be able to calculate and submit, by TIN/NPI, a performance
rate (that is, the percentage of a defined population who receive a
particular process of care or achieve a particular outcome) for each
measure on which the TIN/NPI reports or the data elements needed to
calculate the reporting rates;
Be able to separate out and report on Medicare Part B FFS
patients;
Provide the name of the registry;
Provide the reporting period start date the registry will
cover;
Provide the reporting period end date the registry will
cover;
Provide the measure numbers for the Physician Quality
Reporting System quality measures on which the registry is reporting;
Provide the measure title for the Physician Quality
Reporting System quality measures on which the registry is reporting;
Report the number of eligible instances (reporting
denominator);
Report the number of instances of quality service
performed (numerator);
Report the number of performance exclusions;
Report the number of reported instances, performance not
met (eligible professional receives credit for reporting, not for
performance);
Be able to transmit this data in a CMS-approved XML
format.
Comply with a CMS-specified secure method for data
submission, such as submitting the registry's data in an XML file
through an identity management system specified by CMS or another
approved method such as over the NHIN (national health information
network) if technically feasible;
Submit an acceptable ``validation strategy'' to CMS by
March 31, 2011. A validation strategy ascertains whether eligible
professionals have submitted accurately and on at least the minimum
number (80 percent) of their eligible patients, visits, procedures, or
episodes for a given measure. Acceptable validation strategies often
include such provisions as the registry being able to conduct random
sampling of their participant's data, but may also be based on other
credible means of verifying the accuracy of data content and
completeness of reporting or adherence to a required sampling method;
Perform the validation outlined in the strategy and send
the results to CMS by June 30, 2012 for the 2011 reporting year's data;
Enter into and maintain with its participating
professionals an appropriate Business Associate agreement that provides
for the registry's receipt of patient-specific data from the eligible
professionals, as well as the registry's disclosure of quality measure
results and numerator and denominator data on behalf of eligible
professionals who wish to participate in

[[Page 73495]]

the Physician Quality Reporting System program;
Obtain and keep on file signed documentation that each
holder of an NPI whose data are submitted to the registry has
authorized the registry to submit quality measures and numerator and
denominator data to CMS for the purpose of Physician Quality Reporting
System participation. This documentation must be obtained at the time
the eligible professional signs up with the registry to submit
Physician Quality Reporting System quality measures data to the
registry and must meet any applicable laws, regulations, and
contractual business associate agreements;
Provide CMS access (if requested for validation purposes)
to review the Medicare beneficiary data on which 2011 Physician Quality
Reporting System registry-based submissions are founded or provide to
CMS a copy of the actual data (if requested);
Provide the reporting option (reporting period and
reporting criteria) that the eligible professional has satisfied or
chosen; and
Provide CMS a signed, written attestation statement via
mail or e-mail which states that the quality measure results and any
and all data including numerator and denominator data provided to CMS
are accurate and complete.
For registries that intend to report on 2011 Physician Quality
Reporting System measures groups, we proposed that both registries new
to the Physician Quality Reporting System and those previously
qualified must:
Indicate the reporting period chosen for each eligible
professional who chooses to submit data on measures groups;
Base reported information on measures groups only on
patients to whom services were furnished during the 12-month reporting
period of January through December 2011 or the 6-month reporting period
of July 1, 2011 through December 31, 2011;
Agree that the registry's data may be inspected or a copy
requested by CMS and provided to CMS under our oversight authority;
Be able to report data on all applicable measures in a
given measures group on either 30 or more Medicare Part B FFS patients
from January 1, 2011 through December 31, 2011, or on 80 percent of
applicable Medicare Part B FFS patients for each eligible professional
(with a minimum of 15 patients during the January 1, 2011, through
December 31, 2011, reporting period or a minimum of 8 patients during
the July 1, 2011, through December 31, 2011, reporting period).
Although these proposed qualification requirements for 2011
registries are similar to those in previous years, we noted that
registries would no longer be permitted to include non-Medicare
patients for measures group reporting. Additionally, in an effort to
reduce the variation in measures results across registries and better
allow eligible professional comparisons, we also proposed that all
current and future registries would have to meet the following new
requirements:
Use Physician Quality Reporting System measure
specifications and the CMS provided measure calculation algorithm, or
logic, to calculate reporting rates or performance rates unless
otherwise stated. CMS will provide registries a standard set of logic
to calculate each measure and/or measures group they intend to report
in 2011.
Provide a calculated result using the CMS supplied measure
calculation logic and XML file for each measure that the registry
intends to calculate. The registries will be required to show that they
can calculate the proper measure results (that is, reporting and
performance rates) using the CMS-supplied logic and send the calculated
data back to CMS in the specified format.
Provide us the individual data elements used to calculate
the measures if so requested by CMS for validation purposes, if
aggregated data submission is still the selected method of data
collection. Registries that are subject to validation will be asked to
send discrete data elements for a measure (determined by CMS) in the
required data format for us to recalculate the registries' reported
results. Validation will be conducted for several measures at a
randomly selected sample of registries in order to validate their data
submissions.
We also invited comments on an alternative considered in which
registries would be required to send CMS beneficiary-level data
provided to the registry by the eligible professional and CMS would use
the data to calculate the eligible professional's measure results (that
is, reporting and performance rates).
The following is a summary of the comments we received regarding
the proposed qualification requirements and self-nomination process for
registries for the 2011 Physician Quality Reporting System.
Comment: One commenter supported the CMS proposal to limit
registries based on size and sophistication. The intent of allowing
registry reporting was to allow physicians to benefit from an
infrastructure that could enable real time reporting and comparison
with other groups. A registry from a single physician practice does not
meet the intent of why registry reporting was allowed and should not be
allowed for registry reporting.
Response: We believe that the costs (time and money) associated
with creating and testing a registry for Physician Quality Reporting
System qualification are not insignificant. This and the increased
potential for individual practices to ``game'' Physician Quality
Reporting System has influenced our decision to require registries to
report on larger numbers of eligible professionals or be third party
vendors.
Comment: One commenter indicated that it is not clear if reporting
needs to be at both the TIN and NPI level or the TIN or NPI level and
recommended that all quality reporting be required to include NPI
information and feedback at that level.
Response: Reporting from registries is to be submitted at the
individual TIN/NPI level. Feedback is available at the individual NPI
level as well as a TIN's rolled-up NPI report, that is, all NPIs under
a particular TIN. For reporting 2011 measures groups via a registry, we
will no longer accept data from non-Medicare beneficiaries. This will
allow a better comparison of registry-submitted data and measure
calculations to ensure accurate reporting and meaningful feedback
reports to eligible professionals.
Comment: Some commenters supported the proposal that registries
would no longer use their own measure calculation logic or measure
flows to calculate measure results but instead use a CMS-specified
standard set of logic for calculating measures. Some commenters
supported the proposal based on the fact that registry data results
have been inconsistent in the past, and the results do not yield
reliable information for eligible professionals to analyze their
performance results for practice improvement.
Response: We agree with the commenter and plan to provide
registries with a calculation flow diagram for each measure they intend
to report and also provide the registry with a use case. As part of
their qualification process, registries will need to calculate the
measure reporting and performance rates and send this information to
CMS or our contractor in the specified XML format.
Comment: One commenter, while supporting the use of a CMS-specified

[[Page 73496]]

measure calculation logic, suggested that at least three months be
provided to account for the development time necessary to convert
measures to use CMS's algorithms. The actual development effort for a
registry, however, would be proportionate to the quantity of measures
supported by a registry.
Response: We respect and appreciate the time requirements of
registries as they attempt qualification. We try to balance the needs
of the registries with the importance of letting eligible professionals
know which registries are qualified so they can begin selecting and
reporting to their registry of choice.
Comment: Another commenter who supported the use of a CMS-specified
measure calculation logic, suggested that we make the logic public
prior to implementation in order to determine the best logic and
calculations for measure results.
Response: We do not believe that public input for measure logic
calculation beyond what is already allowed for measure development and
endorsement is prudent. We attempt to use the measures as the developer
intended and only make changes when necessary for implementation
purposes or as required by Medicare policy.
Comment: Some commenters opposed the proposal for registries to use
a CMS-specified logic to calculate measures results. One commenter
stated they do not believe requiring registries to use a CMS-specified
measure calculation logic will lessen the observed variation in measure
results. The commenter believes the rate calculation from the numerator
and denominator data involves simple arithmetic and is unlikely to be
the cause of the observed variation. The more likely cause is a
variation in how the data is collected or defined within the system.
Another commenter was concerned that a CMS-developed logic might not
accurately calculate measure reporting or performance rates in all
instances for all eligible professionals since it will likely be based
on claims and may not be appropriate to examine the data that is
submitted to registries.
Response: We appreciate these comments and agree that a CMS-
specified logic may not eliminate all of the data variations or
inconsistencies but believe providing a specific logic calculation will
help reduce these data differences.
Comment: One commenter believes that registries should have
reasonable latitude in interpreting the measure flows or logic provided
by us to account for variability in the ways that data are collected by
the registries.
Response: While this may seem like a good idea on the surface, this
proposal would allow too much data variation and prevent us and outside
stakeholders from comparing an eligible professional's performance.
This is contrary to our desire to increase standardization in the way
registries calculate measure reporting and performance rates.
Comment: A few commenters did not support the alternative approach
in which registries would be required to send us discrete data elements
and we would calculate the results for eligible professionals.
Response: We do not intend to adopt this method of registry data
submission for the 2011 Physician Quality Reporting System.
Comment: One commenter requested that we publish the list of
registries and EHR products qualified for purposes of submitting
Physician Quality Reporting System data prior to the beginning of the
reporting year.
Response: We strive to qualify registries and EHRs in as timely a
manner as is possible, however while we do not guarantee successful
submission of data by an EHR or a given registry, we want to be as
thorough as possible in vetting these systems to increase the
likelihood of successful data submission. To date, we have not had any
qualified registries who have not successfully reported data to us. We
do try to post a partial list of qualified registries (based on
successful participation in a prior year) prior to the start of the
next reporting period.
Comment: One commenter urged us to include additional information
related to the registries such as the physician participants' success
rate, the number of participants and the cost.
Response: We agree that providing cost information may be helpful
to eligible professionals as they choose a qualified registry. There
has been considerable objection by the registries to listing this
information on our Web site as the registries report that comparison of
their fees is misleading since some of the registries solely report
Physician Quality Reporting System information on behalf of eligible
professionals to us while others provide additional information and
tools to their participants.
Upon considering the comments received, we are finalizing the 2011
qualification requirements as proposed (75 FR 40173 through 40175),
including the new requirements for registries to:
Use Physician Quality Reporting System measure
specifications and a standard set of measure calculation logic provided
by CMS to calculate reporting rates or performance rates unless
otherwise stated;
Provide a calculated result using the CMS-supplied logic
and XML file for each measure that the registry intends to calculate;
and
Provide us the individual data elements used to calculate
the measures if so requested by CMS for validation purposes.
We intend to post the final 2011 Physician Quality Reporting System
registry requirements on the Physician Quality Reporting System section
of the CMS Web site at http://www.cms.gov/PQRI by November 15, 2010 or
shortly thereafter. We anticipate that new registries that wish to
self-nominate for 2011 would be required to do so by January 31, 2011.
Similar to the 2010 Physician Quality Reporting System, registries
that were ``qualified'' for 2010 and wish to continue to participate in
2011 will not need to be ``re-qualified'' for 2011 but instead
demonstrate that they can meet the new 2011 data submission
requirements. For technical reasons, however, we do not expect to be
able to complete this vetting process for the new 2011 data submission
requirements until mid-2011. Therefore, we will not be able to post the
names of registries that are qualified for the 2011 Physician Quality
Reporting System until we have determined the previously qualified
registries that wish to be qualified for the 2011 Physician Quality
Reporting System are in compliance with the new registry requirements.
Nevertheless, registries ``qualified'' for 2010, who were
successful in submitting 2010 Physician Quality Reporting System data,
and wish to continue to participate in 2011 will need to indicate their
desire to continue participation for 2011 by submitting a letter to CMS
indicating their continued interest in being a Physician Quality
Reporting System registry for 2011 and their compliance with the 2011
Physician Quality Reporting System registry requirements by no later
than October 31, 2010. Additionally, registries that are unsuccessful
submitting 2010 Physician Quality Reporting System data (that is, fail
to submit 2010 Physician Quality Reporting System data per the 2010
Physician Quality Reporting System registry requirements) will need to
go through a full self-nomination vetting process for 2011.
Similar to the 2010 Physician Quality Reporting System, if a
qualified 2010 Physician Quality Reporting System registry fails to
submit 2010 Physician Quality Reporting System data per the 2010
Physician Quality Reporting

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System registry requirements, the registry will be considered
unsuccessful at submitting 2010 Physician Quality Reporting System data
and will need to go through the full self-nomination process again to
participate in the 2011 Physician Quality Reporting System. By March
31, 2011, registries that are unsuccessful at submitting quality
measures results and numerator and denominator data for 2010 will need
to be able to meet the 2011 Physician Quality Reporting System registry
requirements and go through the full vetting process again. This would
include CMS receiving the registry's self-nomination by March 31, 2011.
As discussed in another section of this final rule with comment period,
the aforementioned registry requirements will also apply for the
purpose of a registry qualifying to submit the electronic prescribing
measure for the 2011 Electronic Prescribing Incentive Program.
(5) Final Qualification Requirements for EHR Vendors and Their Products
The EHR vendor qualification process for the 2011 Physician Quality
Reporting System was finalized in the 2010 PFS final rule with comment
period (74 FR 61800 through 61802) and is currently underway. We
anticipate the 2011 EHR vendor vetting process will be complete in
early 2011, at which point those EHR products meeting all of the 2011
vendor requirements will be listed on the Physician Quality Reporting
System section of the CMS Web site as a ``qualified'' Physician Quality
Reporting System EHR product.
During 2011, we proposed to use the same self-nomination process
described in the ``Requirements for Electronic Health Record (EHR)
Vendors to Participate in the 2011 Physician Quality Reporting System
EHR Testing Program'' posted on the Physician Quality Reporting System
section of the CMS Web site at http://www.cms.gov/PQRI/20_AlternativeReportingMechanisms.asp#TopOfPage, to qualify additional EHR
vendors and their EHR products to submit quality data extracted from
their EHR products to the CMS clinical quality data warehouse for the
2012 Physician Quality Reporting System. Specifically, we proposed that
the 2011 Physician Quality Reporting System EHR test vendors, who, if
their testing is successful, may report 2012 Physician Quality
Reporting System data to CMS, must meet the following requirements:
Be able to collect and transmit all required data elements
according to the 2012 EHR Specifications.
Be able to separate out and report on Medicare Part B FFS
patients only.
Be able to include TIN/NPI information submitted with an
eligible professional's quality data.
Be able to transmit this data in the CMS-approved format.
Comply with a secure method for data submission.
Not be in a beta test form.
Have at least 25 active users.
Additionally, we proposed that previously qualified Physician
Quality Reporting System EHR vendors and 2012 EHR test vendors must
participate in ongoing Physician Quality Reporting System mandatory
support conference calls hosted by CMS (approximately one call per
month). These requirements would apply not only for the purpose of a
vendor's EHR product being qualified so that the product's users may
submit data extracted from the EHR for the 2012 Physician Quality
Reporting System in 2013, but also for the purpose of a vendor's EHR
product being qualified so that the product's users may electronically
submit data extracted from the EHR for the electronic prescribing
measure for the 2012 eRx Incentive Program in 2013. We proposed that if
a vendor misses more than one mandatory support call or meeting, the
vendor and their product would be disqualified for the Physician
Quality Reporting System reporting year, which is covered by the call.
We proposed that previously qualified vendors and new vendors will
need to incorporate any new EHR measures (that is, electronically-
specified measures) added to the Physician Quality Reporting System for
the reporting year they wish to maintain their Physician Quality
Reporting System qualification, as well as update their electronic
measure specifications and data transmission schema should either or
both change.
The following is a summary of the comments received regarding the
proposed 2012 EHR vendor qualification requirements and/or process.
Comment: We received a comment disagreeing that an EHR should be
required to support all new measures. The commenter noted that an EHR
might not collect all the necessary data points for all measures and
that this is not required for the EHR Incentive Program.
Response: While the commenter makes a valid point, selecting an
appropriate EHR can be challenging for eligible professionals. As such,
we are requiring qualified EHRs to be able to report all Physician
Quality Reporting System measures with electronic specifications. We
believe that this will lessen the burden on eligible professionals in
deciding which system to purchase. That is, either the EHR is qualified
for the Physician Quality Reporting System (completely) or not at all.
Upon consideration of these comments, we are finalizing the 2012
EHR vendor qualification requirements that will be used to vet EHR
vendors in 2011 for 2012 Physician Quality Reporting System data
submission in 2013 as proposed in the CY 2011 PFS proposed rule (75 FR
40175 through 40176). Any EHR vendor interested in having one or more
of their EHR products ``qualified'' to submit quality data extracted
from their EHR products to the CMS clinical quality data warehouse for
the 2012 Physician Quality Reporting System will be required to submit
their self-nomination letter by January 31, 2011. Instructions for
submitting the self-nomination letter will be provided in the 2012 EHR
vendor requirements, which we expect to post in the 4th quarter of CY
2010. Specifically, for the 2012 Physician Quality Reporting System,
only EHR vendors that self-nominate to participate in the 2012 EHR Test
Program will be considered qualified EHR vendors for the 2012 Physician
Quality Reporting System.
e. Criteria for Satisfactory Reporting of Individual Quality Measures
for Individual Eligible Professionals
Section 1848(m)(3)(A) of the Act established the criteria for
satisfactorily submitting data on individual quality measures as at
least 3 measures in at least 80 percent of the cases in which the
measure is applicable. If fewer than 3 measures are applicable to the
services of the professional, the professional may meet the criteria by
submitting data on 1 or 2 measures for at least 80 percent of
applicable cases where the measures are reportable. For years after
2009, section 1848(m)(3)(D) of the Act provides additional authority to
the Secretary, in consultation with stakeholders and experts, to revise
the criteria for satisfactorily reporting data on quality measures.
Based on this authority and the input we have previously received from
stakeholders, we proposed (75 FR 40176), for 2011, the following 2
criteria for claims-based reporting of individual measures by
individual eligible professionals:
Report on at least 3 measures that apply to the services
furnished by the professional; and
Report each measure for at least 50 percent of the
eligible professional's Medicare Part B FFS patients for whom

[[Page 73498]]

services were furnished during the reporting period to which the
measure applies.
To the extent that an eligible professional has fewer than 3
Physician Quality Reporting System measures that apply to the eligible
professional's services, we proposed the eligible professional would be
able to meet the criteria for satisfactorily reporting data on
individual quality measures by meeting the following 2 criteria:
Report on all measures that apply to the services
furnished by the professional (that is 1 to 2 measures); and
Report each measure for at least 50 percent of the
eligible professional's Medicare Part B FFS patients for whom services
were furnished during the reporting period to which the measure
applies.
We also proposed for 2011 the requirement that an eligible
professional who reports on fewer than 3 measures through the claims-
based reporting mechanism may be subject to the Measure Applicability
Validation (MAV) process, which would allow us to determine whether an
eligible professional should have reported quality data codes for
additional measures. This process was applied in prior years. Under the
proposed MAV process, when an eligible professional reports on fewer
than 3 measures, we propose to review whether there are other closely
related measures (such as those that share a common diagnosis or those
that are representative of services typically provided by a particular
type of eligible professional). We further proposed that if an eligible
professional who reports on fewer than 3 measures in 2011 reports on a
measure that is part of an identified cluster of closely related
measures and did not report on any other measure that is part of that
identified cluster of closely related measures, then the eligible
professional would not qualify as a satisfactory reporter in the 2011
Physician Quality Reporting System or earn an incentive payment. In
2011, we proposed that these criteria for satisfactorily reporting data
on fewer than 3 individual quality measures would apply for the claims-
based reporting mechanism only.
For the 2011 Physician Quality Reporting System, we proposed the
following 2 criteria for satisfactory reporting of data on individual
Physician Quality Reporting System quality measures for registry-based
and EHR-based reporting:
Report on at least 3 measures that apply to the services
furnished by the professional; and
Report each measure for at least 80 percent of the
eligible professional's Medicare Part B FFS patients for whom services
were furnished during the reporting period to which the measure
applies.
We also proposed, in 2011, not to count measures that are reported
through a registry or EHR that have a zero percent performance rate.
That is, if the recommended clinical quality action is not performed on
at least 1 patient for a particular measure or measures group reported
by the eligible professional via a registry or EHR, we will not count
the measure (or measures groups) as a measure (or measures group)
reported by an eligible professional. We proposed to disregard measures
(or measures groups) that are reported through a registry or EHR that
have a zero percent performance rate in the 2011 Physician Quality
Reporting System because we are assuming that the measure was not
applicable to the eligible professional and was likely reported from
EHR-derived data (or from data mining) and was unintentionally
submitted from the registry or EHR to CMS. We also seek to avoid the
possibility of intentional submission of spurious data solely for the
purpose of receiving an incentive payment for reporting.
The following is a summary of the comments received regarding the
criteria for satisfactory reporting of individual quality measures for
individual eligible professionals.
Comment: We received several comments in support of the proposal to
decrease the reporting sample from 80 percent to 50 percent of
applicable cases where the measures are reportable as this would
encourage greater Physician Quality Reporting System participation. One
commenter expressed support for the lower percentage due to the errors
and complexity seen to date with claims-based reporting in the
Physician Quality Reporting System. Other commenters noted that a less
restrictive requirement is a step forward in decreasing the costs and
burdens associated with Physician Quality Reporting System
participation.
Response: We appreciate the commenters' positive feedback. In
lowering the reporting threshold for claims-based reporting from 80
percent to 50 percent, we are, as indicated by a commenter,
acknowledging the complexity of claims-based reporting. As stated in
the CY 2011 PFS proposed rule (75 FR 40176), a major reason that
eligible professionals who participate in the Physician Quality
Reporting System via claims-based reporting fail to do so
satisfactorily is that they fail to report at the required 80 percent.
As shown in the quarterly QDC Error Reports that we post on the CMS
Physician Quality Reporting System Web site at http://www.cms.gov/PQRI,
eligible professionals often do not report QDCs on claims that are
eligible for inclusion in a measure's denominator or report QDCs on
claims that are not eligible for inclusion in a measure's denominator.
When an eligible professional fails to report QDCs on eligible cases,
it negatively impacts their reporting rate for that measure or measures
group. When an eligible professional reports QDCs on ineligible cases,
it neither improves nor negatively impacts their reporting rate for
that measure or measures group. Thus, while lowering the reporting
threshold may decrease the number of cases on which an eligible
professional is required to report, it is still crucial that eligible
professionals carefully review and understand the measure
specifications for each measure or measures group they intend to report
in order to be able to properly identify eligible cases.
Comment: A few commenters supportive of the proposal to reduce the
reporting sample requirement from 80 percent to 50 percent recommended
we also use our existing authority to apply the new 50 percent
threshold retrospectively to the 2010 Physician Quality Reporting
System.
Response: We finalized the 2010 Physician Quality Reporting System
criteria for satisfactory reporting by individual eligible
professionals in the CY 2010 PFS final rule with comment (74 FR 61802
through 61807). Therefore, we are not applying the 50 percent threshold
retrospectively to the 2010 Physician Quality Reporting System. Any
eligible professional who would have participated in the 2010 Physician
Quality Reporting System had they known that we were lowering the
reporting threshold for claims-based reporting to 50 percent would be
disadvantaged. Such eligible professionals are not likely to be able to
start participating in the 2010 Physician Quality Reporting System and
meet the 2010 criteria for satisfactory reporting in the time between
publication of this final rule with comment period and December 31,
2010.
Comment: A couple of commenters requested that the threshold for
registry-based and EHR-based reporting also be reduced to 50 percent in
order to facilitate overall participation via an EHR or registry.
Response: As we stated in the CY 2011 PFS proposed rule (75 FR
40177), we do not believe that reducing the reporting sample to 50
percent for

[[Page 73499]]

registry-based reporting and EHR-based reporting would substantially
impact the portion of participating eligible professionals who qualify
for the Physician Quality Reporting System incentive. Over 90 percent
of eligible professionals submitting data through registries were
incentive eligible. The level of effort for EHR-reporting should be the
same regardless of whether the reporting threshold is 50 percent, 80
percent, or 100 percent since the EHR could theoretically be programmed
to submit data on all eligible cases to CMS.
Comment: A few commenters opposed the proposal to weaken the
standard for claims-based reporting from 80 percent to 50 percent. The
commenters stated it was unclear why we would suggest that we want to
move toward more meaningful reporting mechanisms such as registries and
EHRs, while at the same time lowering the bar for claims-based
reporting. Another commenter suggested that we strengthen the reporting
requirements.
Response: In light of the Physician Quality Reporting System
payment adjustments that are required by section 1848(a)(8) of the Act
beginning in 2015 for eligible professionals who do not satisfactorily
report and the fact that claims-based reporting still remains the only
reporting mechanism that is available to all eligible professionals, we
believe that it is important to take steps to facilitate Physician
Quality Reporting System reporting where feasible. As we have seen from
Physician Quality Reporting System results from prior years, meeting
the 80 percent reporting threshold for claims-based reporting is
challenging because of the multiple billing codes as specified by the
measure developer, that can place patients in the denominator of a
measure combined with the inability to resubmit claims solely for the
purpose of adding a QDC. Thus far, we have not experienced the same
issues with other reporting mechanisms. As we stated in the CY 2011 PFS
proposed rule (75 FR 40176), we believe that lowering the reporting
threshold for claims-based reporting will encourage greater
participation in the Physician Quality Reporting System without
increasing the likelihood that professionals will selectively report
based on whether the performance expectation of a measure is met for
that particular patient. Once a substantial proportion of eligible
professionals begin participating in the Physician Quality Reporting
System, we envision that we will gradually strengthen the reporting
requirements.
Comment: A few commenters recommended we remove the restriction on
registry reporting for those eligible professionals that cannot report
3 measures, especially given that our results show that those who
report via a registry are roughly twice as successful as those who
report via claims.
Response: We have received similar comments to this effect in the
past. We continue to maintain that permitting an eligible professional
to report fewer than 3 measures through the registry-based reporting
mechanism (if fewer than 3 measures apply to him or her) would be
inefficient. It would be analytically difficult in that if an eligible
professional submits fewer than 3 measures via registries, we would not
know whether the eligible professional did so because only 2 measures
applied to him or her or because the registry only accepts data for 2
of the professional's measures and he or she is reporting the third
measure via claims. We also look for the most favorable method of
reporting (that is, did the eligible professional report via a
different method for a longer reporting period as well as whether an
eligible professional satisfactorily reported under a different
reporting option if he or she did not satisfactorily report for a
particular reporting period. Accepting fewer than 3 measures from
registries would increase the amount of cross-checking already
required, which would impact the timeline for paying incentives.
Comment: Some commenters recommended we change the reporting
requirements for individual eligible professionals with respect to
increasing the number of required measures and/or requiring reporting
on a standard cluster of measures. One commenter recommended that we
create a standard risk-adjusted list of Physician Quality Reporting
System quality measures for all eligible professionals that we would
update annually. Similarly, another commenter suggested that we assign
a core set of measures that applies across eligible professions. The
commenter also suggested that we assign sets of measures for individual
and small group practice participants for high-volume conditions, based
on services provided to their patient population. Additional
recommendations for strengthening the reporting requirements include,
requiring eligible professionals to stratify measures by patient race,
ethnicity, preferred language and gender, constructing composites for
the current measures groups, using a reliability threshold of 0.70 in
lieu of, or in conjunction with, a minimum sample size, increasing the
sample size for larger group practices, and maintaining the reporting
threshold of 80 percent for claims-based reporting.
Response: We appreciate the constructive feedback and agree with
the potential benefit of core measures, moving to more sets or groups
of measures, and being more specific as to which measures eligible
professionals should report in order to achieve more consistency of
reporting across eligible professionals in the future.
After consideration of the comments and for the reasons we
previously explained, the final 2011 criteria for satisfactory
reporting of data on individual Physician Quality Reporting System
quality measures for individual eligible professionals are summarized
in Table 73 and are arranged by reporting mechanism and reporting
period.

Table 73--2011 Criteria for Satisfactory Reporting of Data on Individual Physician Quality Reporting System
Quality Measures, by Reporting Mechanism and Reporting Period
----------------------------------------------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
----------------------------------------------------------------------------------------------------------------
Claims-based reporting........ Report at January 1, 2011-December 31, 2011.
least 3 PQRI
measures, or 1-2
measures if less
than 3 measures
apply to the
eligible
professional; and
Report each
measure for at least
50% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to which the measure
applies.
Claims-based reporting........ Report at July 1, 2011-December 31, 2011.
least 3 PQRI
measures, or 1-2
measures if less
than 3 measures
apply to the
eligible
professional; and
Report each
measure for at least
50% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to which the measure
applies.

[[Page 73500]]

Registry-based reporting...... Report at January 1, 2011-December 31, 2011.
least 3 PQRI
measures (measures
with a 0%
performance rate
will not be
counted); and
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to which the measure
applies.
Registry-based reporting...... Report at July 1, 2011-December 31, 2011.
least 3 PQRI
measures (measures
with a 0%
performance rate
will not be
counted); and
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to which the measure
applies.
EHR-based reporting........... Report at January 1, 2011-December 31, 2011.
least 3 PQRI
measures (measures
with a 0%
performance rate
will not be
counted); and
Report each
measure for at least
80% of the eligible
professional's
Medicare Part B FFS
patients seen during
the reporting period
to which the measure
applies.
----------------------------------------------------------------------------------------------------------------

For the 2011 Physician Quality Reporting System, we are finalizing
a total of 5 reporting options, or ways, in which an eligible
professional may meet the criteria for satisfactory reporting on
individual measures. Each reporting option consists of the criteria for
satisfactory reporting such data and results on individual quality
measures relevant to a given reporting mechanism and reporting period.
Eligible professionals must meet the requirements for at least 1 of
these 5 reporting options using a single reporting mechanism in order
to qualify for a 2011 Physician Quality Reporting System incentive for
satisfactorily reporting individual measures. CMS will not combine data
received via different reporting mechanisms to determine whether the
reporting criteria are met. It is possible, however, for eligible
professionals to potentially qualify as satisfactorily reporting
individual quality measures under more than one of the reporting
criteria, reporting mechanisms, and/or for more than one reporting
period. In this case, only one incentive payment will be made to an
eligible professional based on the longest reporting period for which
the eligible professional satisfactorily reports.
f. Criteria for Satisfactory Reporting Measures Groups for Individual
Eligible Professionals
For the 2011 Physician Quality Reporting System, we proposed that
individual eligible professionals have the option to report measures
groups instead of individual quality measures to qualify for the 2011
Physician Quality Reporting System incentive, using claims or
registries. The criteria that we proposed for 2011 for satisfactory
reporting of measures groups through claims-based or registry-based
reporting for either the 12-month or 6-month reporting period are as
follows: (1) For claims-based reporting, the reporting of at least 1
measures group for at least 50 percent of patients to whom the measures
group applies, during the reporting period; or (2) for registry-based
reporting, the reporting of at least 1 measures group for at least 80
percent of patients to whom the measures group applies during the
reporting period. Eligible professionals, for both claims-based and
registry-based reporting under these criteria, would be required to
submit data on a minimum of 15 unique Medicare Part B FFS patients for
the 12-month reporting period and a minimum of 8 Medicare Part B FFS
patients for the 6-month reporting period.
Additionally for 2011, we proposed to retain the criteria,
available only for the 12-month reporting period, based on reporting on
at least 1 measures group for at least 30 unique patients for whom
services were furnished between January 1, 2011, and December 31, 2011,
to whom the measures group applies. As in previous years, we proposed
that for 2011, the patients, for claims-based reporting, would be
limited to Medicare Part B FFS patients. Finally, for registry-based
reporting in 2011, in contrast to prior program years, we proposed to
require that the minimum patient numbers or percentages must be met by
Medicare Part B FFS patients exclusively and not non-Medicare Part B
FFS patients.
The following is a summary of the comments received regarding the
proposed criteria for reporting measures groups for individual eligible
professionals.
Comment: One commenter strongly supported the proposed Physician
Quality Reporting System measures group reporting option for claims-
based and registry reporting, especially the change in the reporting
threshold for claims-based reporting from 80 percent to 50 percent .
Response: We appreciate the commenter's positive feedback.
Comment: A few commenters supported the proposal that for registry
reporting of measures groups for 2011 that the minimum patient numbers
or percentages must be met by Medicare Part B FFS patients exclusively
and exclude data on non-Medicare Part B FFS patients. It is thought
that this will reduce the difficulty of analyzing the data we received
from registries where patients other than Medicare Part B FFS patients
are included. Another commenter was concerned that this change
eliminates any benefit that eligible professionals had for using the
registry more broadly than just for Medicare patients. The commenter
also noted that registries are most useful for improved patient care
when all patients in the practice with a particular condition are
included in the system.
Response: We appreciate the supportive comment. We believe that
limiting the reporting sample for registry-based reporting of measures
groups to Medicare Part B FFS patients will facilitate validation of
registry-submitted data against the Medicare claims data.
Comment: One commenter supported our proposal to eliminate the
requirement for reporting on consecutive patients for registry-based
reporting of measures groups.
Response: We appreciate the commenter's support. We assume that the
commenter is referring to a requirement in the 2008 and 2009 Physician
Quality Reporting System where eligible professionals were required to
report on patients seen consecutively by date of service. We

[[Page 73501]]

note that we removed the requirement for reporting on consecutive
patients for registry-based reporting of measures groups for the 2010
Physician Quality Reporting System. We did not propose nor are we
requiring eligible professionals to report on consecutive patients when
reporting measures groups for the 2011 Physician Quality Reporting
System.
Based on the comments, the final 2011 criteria for satisfactory
reporting of data on measures groups are summarized in Table 74 and are
arranged by reporting mechanism and reporting period.

Table 74--2011 Criteria for Satisfactory Reporting on Measures Groups, by Reporting Mechanism and Reporting
Period
----------------------------------------------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
----------------------------------------------------------------------------------------------------------------
Claims-based reporting........ Report at least 1 PQRI January 1, 2011-December 31, 2011.
measures group;
Report each measures
group for at least 30 Medicare
Part B FFS patients.
Claims-based reporting........ Report at least 1 PQRI January 1, 2011-December 31, 2011.
measures group;
Report each measures
group for at least 50% of the
eligible professional's
Medicare Part B FFS patients
seen during the reporting
period to whom the measures
group applies; and
Report each measures
group on at least 15 Medicare
Part B FFS patients seen
during the reporting period to
which the measures group
applies.
Claims-based reporting........ Report at least 1 PQRI July 1, 2011-December 31, 2011.
measures group;
Report each measures
group for at least 50% of the
eligible professional's
Medicare Part B FFS patients
seen during the reporting
period to whom the measures
group applies; and
Report each measures
group on at least 8 Medicare
Part B FFS patients seen
during the reporting period to
which the measures group
applies.
Registry-based reporting...... Report at least 1 PQRI January 1, 2011-December 31, 2011.
measures group (measures
groups with a 0% performance
rate will not be counted);
Report each measures
group for at least 30 Medicare
Part B FFS patients.
Registry-based reporting...... Report at least 1 PQRI January 1, 2011-December 31, 2011.
measures group (measures
groups with a 0% performance
rate will not be counted);
Report each measures
group for at least 80% of the
eligible professional's
Medicare Part B FFS patients
seen during the reporting
period to whom the measures
group applies; and
Report each measures
group on at least 15 Medicare
Part B FFS patients seen
during the reporting period to
which the measures group
applies.
Registry-based reporting...... Report at least 1 PQRI July 1, 2011-December 31, 2011.
measures group (measures
groups with a 0% performance
rate will not be counted);
Report each measures
group for at least 80% of the
EP's Medicare Part B FFS
patients seen during the
reporting period to whom the
measures group applies; and
Report each measures
group on at least 8 Medicare
Part B FFS patients seen
during the reporting period to
which the measures group
applies.
----------------------------------------------------------------------------------------------------------------

As illustrated in Table 74, there are a total of 6 reporting
options, or ways in which eligible professionals may meet the criteria
for satisfactory reporting of measures groups for the 2011 Physician
Quality Reporting System. As we stated previously, eligible
professionals may potentially qualify as satisfactorily reporting for
the 2011 Physician Quality Reporting System on measures groups under
more than one of the reporting criteria, reporting mechanisms, and/or
for more than one reporting period; however, only one incentive payment
will be made to an eligible professional based on the longest reporting
period for which the eligible professional satisfactorily reports. In
addition, although an eligible professional could submit data under
multiple reporting mechanisms, CMS will not combine data received from
different reporting mechanisms to determine whether the eligible
professional satisfactorily reported. Similarly, an eligible
professional could also potentially qualify for the Physician Quality
Reporting System incentive payment by satisfactorily reporting both
individual measures and measures groups. However, only one incentive
payment will be made to the eligible professional based on the longest
reporting period for which the eligible professional satisfactorily
reports.
g. Reporting Option for Satisfactory Reporting on Quality Measures by
Group Practices
(1) Background and Authority
Section 1848(m)(3)(C)(i) of the Act required the Secretary to
establish and have in place a process by January 1, 2010 under which
eligible professionals in a group practice (as defined by the
Secretary) shall be treated as satisfactorily submitting data on
quality measures under the Physician Quality Reporting System if, in
lieu of reporting measures under the Physician Quality Reporting
System, the group practice reports measures determined appropriate by
the Secretary, such as

[[Page 73502]]

measures that target high-cost chronic conditions and preventive care,
in a form and manner, and at a time specified by the Secretary. Section
1848(m)(3)(C)(ii) of the Act requires that this process provide for the
use of a statistical sampling model to submit data on measures, such as
the model used under the Medicare Physician Group Practice (PGP)
demonstration project under section 1866A of the Act. A group practice
reporting option (GPRO) was established for the 2010 Physician Quality
Reporting System in the CY 2010 PFS final rule with comment period (74
FR 61807 through 61811).
For the 2011 Physician Quality Reporting System, we proposed to
continue to allow a group practice, as a whole (that is, for the
TIN(s)), to participate in the 2011 Physician Quality Reporting System
and to submit Physician Quality Reporting System quality measures for
2011 and qualify to earn an incentive (75 FR 40178-40183). If, however,
an individual eligible professional is affiliated with a group practice
participating in the GPRO and the group practice satisfactorily reports
under the GPRO, the eligible professional will be considered as
satisfactorily reporting Physician Quality Reporting System quality
measures data at the individual level under that same TIN (that is, for
the same TIN/NPI combination).
(2) Definition of ``Group Practice''
As stated previously, section 1848(m)(3)(C)(i) of the Act
authorized the Secretary to define ``group practice.'' For purposes of
determining whether a group practice satisfactorily submits Physician
Quality Reporting System quality measures data, we proposed that for
the 2011 Physician Quality Reporting System a ``group practice'' would
consist of a physician group practice, as defined by a TIN, with 2 or
more individual eligible professionals (or, as identified by NPIs) who
have reassigned their billing rights to the TIN. This proposed
definition for group practice is different from the 2010 Physician
Quality Reporting System definition of group practice in that we
proposed to change the minimum group size from 200 to 2 to enable more
group practices to participate in the Physician Quality Reporting
System GPRO in 2011.
As our intent is to build on an existing quality reporting program
with which group practices may already be familiar, we proposed to be
consistent with the PGP demonstration and use one GPRO process, which
we refer to as ``GPRO I'' that would be available only to similar large
group practices. For group practices that have fewer than 200 members,
we proposed, if technically feasible, an alternative GPRO process which
we refer to as ``GPRO II''.
In order to participate in the 2011 Physician Quality Reporting
System through the GPRO, we proposed to require group practices to
complete a self-nomination process and to meet certain technical and
other requirements. For 2011, we proposed that group practices must
participate in the Physician Quality Reporting System group practice
reporting option in order to be eligible to participate in the eRx
group practice reporting option for the 2011 Physician Quality
Reporting System. As this is the current requirement under the 2010
Physician Quality Reporting System and eRx Incentive Program, we
proposed that a group practice wishing to participate in both the
Physician Quality Reporting System group practice reporting option and
the electronic prescribing group practice reporting option must notify
CMS of its desire to do so at the time that it self-nominates to
participate in the Physician Quality Reporting System group practice
reporting option.
In addition, we proposed that group practices that are
participating in Medicare demonstration projects, as approved by the
Secretary, would also be considered group practices for purposes of the
2011 Physician Quality Reporting System GPRO. Specifically, for the
2011 Physician Quality Reporting System we proposed to deem group
practices participating in the PGP, Medicare Care Management
Performance (MCMP), and EHR demonstrations to be participating in the
Physician Quality Reporting System GPRO since many of the measures
being reported under these demonstration programs are similar to
Physician Quality Reporting System measures. As a result, such
practices do not need to separately self-nominate to participate in the
Physician Quality Reporting System GPRO, although it would be necessary
for such groups to meet the requirements for incentive qualification
under their respective approved demonstration project. For example, the
MCMP demonstration sites would be required to meet the requirements for
earning a Physician Quality Reporting System incentive specified under
the MCMP demonstration.
For purposes of the 2011 eRx Incentive Program, however, we
proposed that group practices participating in CMS-approved
demonstration projects previously discussed would be required to meet
the proposed 2011 eRx Incentive Program GPRO requirements or the
proposed 2011 eRx Incentive Program requirements for individual
eligible professionals in order to qualify for a 2011 eRx incentive.
Such group practices would not be able to qualify for a 2011 eRx
incentive via participation in an approved demonstration project since
there is no eRx requirement under these demonstrations.
We also sought comment on alternatives for expanding GPRO in 2011.
One option that we considered was to expand GPRO I to include smaller
group practices. Specifically, we considered allowing groups of 100 or
more eligible professionals to participate in the Physician Quality
Reporting System under GPRO using the same reporting mechanism and
reporting criteria required under the 2010 Physician Quality Reporting
System GPRO and proposed for the 2011 Physician Quality Reporting
System GPRO I. We also considered modifying the definition of ``group
practice'' to include groups that have and use multiple TINs.
The following is a summary of the comments received regarding the
proposed definition of ``group practice'' and the alternatives that
were considered.
Comment: Several commenters expressed support for the proposed 2011
definition of a group practice as 2 or more individual eligible
professionals who have reassigned their billing rights to the
appropriate TIN, as opposed to a group practice with 200 or more
individual eligible professionals as was the case in 2010. Commenters
believed that this will greatly expand the opportunities for
participation in the group practice reporting option and aligns with
the current environment.
Response: We agree that our proposed definition of ``group
practice'' will expand opportunities to participate in the group
practice reporting option. To allow for expanded use of the group
practice reporting option, we are finalizing our proposal to define
``group practice'' as 2 or more individual eligible professionals.
However, as noted in the discussed that follows, we are modifying the
definition of ``group practice'' with respect to group practices
participating in Medicare demonstration projects approved by the
Secretary.'' Rather than including such group practices in the
definition of ``group practice'' at Sec. 414.90(b), we are indicating
that such practices are deemed to be participating in the Physician
Quality Reporting System at Sec. 414.90(g)(1).

[[Page 73503]]

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Part II--Continued

Book 2 of 2 Books

Pages 73503-73934

Department of Health and Human Services

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

Center for Medicare & Medicaid Services

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42 CFR Parts 405, 409, 410 et al.

Medicare Program; Payment Policies Under the Physician Fee Schedule and
Other Revisions to Part B for CY 2011; Final Rule

[[Page 73504]]

Federal Register / Vol. 75 , No. 228 / Wednesday, November 24, 2010 /
Rules and Regulations
Comment: One commenter believes that the GPRO requirement that
physicians reassign their billing rights to the taxpayer identification
number (TIN) could be problematic for some practices where individual
physicians continue billing Medicare on their behalf rather than
reassigning to the group practice. Yet, these practices still function
as a group and use the same data systems. It was recommended that we
reconsider the reassignment requirement, as well as continue to add
more specialty-specific measures groups in an effort to make the GPRO a
more viable and attractive option.
Response: We understand that there are various scenarios that may
occur that would result in an individual eligible professional not
reassigning his or her billing rights to a group TIN as required for
inclusion in the GPRO I group. However, Physician Quality Reporting
System GPRO I patient assignment, sample selection and incentive
calculations are based at the TIN/NPI level. We believe it would be
burdensome on the GPRO as well as the individual eligible professionals
to track all individual NPIs who may practice periodically with their
group while accounting for the instances when the NPI is not providing
services to beneficiaries assigned to the group.
Comment: One commenter requested that we expand the definition of
``group practice'' to include non-physician providers.
Response: We are finalizing our proposal to define ``group
practice'' as a single TIN with 2 or more eligible professionals, as
identified by their individual NPI, who have reassigned their billing
rights to the TIN, but as noted in the following discussion, we are
modifying our definition with respect to group practices participating
in Medicare demonstration projects approved by the Secretary.
Therefore, although the term ``physician group'' may sometimes be used
when referring to group practices, it is not intended to infer that
group practices are only physicians.
Comment: A couple of commenters commended us for taking positive
steps to reduce the reporting burden for eligible professionals. The
commenters were specifically referring to our proposal to deem group
practices participating in the PGP, MCMP, and EHR demonstrations to be
participating in the Physician Quality Reporting System such that all
eligible professionals participating in these demonstrations
automatically will receive Physician Quality Reporting System bonus
payments. The commenters requested that we extend this same waiver to
all types of providers who participate in demonstrations. One commenter
noted that the majority of participants in the PGP demonstration are
hospitals and, like the Physician Quality Reporting System program,
many of the measures that hospitals report to the RHQDAPU program
overlap with the measures required for participation in the
demonstration.
Response: We agree with trying to lessen the burden on eligible
professionals who are participating in demonstrations when practical
and feasible. We specifically focused on these three demonstrations
because their participants are required to report on measures that are
very similar to the Physician Quality Reporting System GPRO I measures
and to do so using a process very similar to the Physician Quality
Reporting System GPRO I process for their demonstrations. At this time,
we are not aware of other demonstrations that require the same measures
and reporting processes. Therefore, we are not granting waivers with
regard to the group practice reporting option to providers who are
participating in demonstrations other than the PGP, MCMP, and EHR
demonstrations. In addition, this waiver does not apply to any quality
reporting program other than the Physician Quality Reporting System. We
also further note that demonstration participants will not
automatically receive Physician Quality Reporting System incentive
payments. Rather, they must meet the requirements for Physician Quality
Reporting System incentive qualification under their respective
approved demonstration project.
Comment: One commenter noted that practices participating in either
the MCMP or EHR demonstrations could consist of solo practitioner
practices. In addition, practices participating in the PGP, MCMP, or
EHR demonstrations could consist of multiple TINs. The commenter
requested clarification on whether such practices would still be
considered a ``group practice'' for purposes of the Physician Quality
Reporting System GPRO.
Response: Our intent, in proposing to include practices that are
participating in these demonstrations in the definition of ``group
practice'' was to reduce the burden on eligible professionals who are
already reporting using a process similar to the Physician Quality
Reporting System GPRO I method and on similar measures, regardless of
the composition of the actual group. Therefore, we are modifying the
definition of ``group practice'' with respect to group practices
participating in Medicare demonstration projects approved by the
Secretary.'' Rather than including such group practices in the
definition of ``group practice'' at Sec. 414.90(b), we are indicating
that such practices are deemed to be participating in the Physician
Quality Reporting System at Sec. 414.90(g)(1). In addition, we are
clarifying at Sec. 414.90(g)(1) that such practices are ``group
practices of any size (including solo practitioners) or comprised of
multiple TINs participating in a Medicare demonstration project
approved by the Secretary.''
Based on these comments, we are finalizing the proposed definition
of ``group practice'' with the changes discussed previously for
purposes of the 2011 Physician Quality Reporting System group practice
reporting option. We recognize that a group's size can fluctuate
throughout the year as professionals move from practice to practice.
Therefore, a group practice's size, for purposes of determining which
reporting criteria the group must satisfy, will be the size of the
group at the time the group's participation in one of the 2011 GPRO
options is approved by CMS.
We also recognize that, for various reasons, there potentially
could be a discrepancy between the number of eligible professionals
(that is, NPIs) submitted by the practice during the self-nomination
process and the number of eligible professionals billing Medicare under
the practice's TIN. Therefore, if we find more NPIs in the Medicare
claims than the number of NPIs submitted by the practice during the
self-nomination process and this would result in the practice being
subject to different criteria for satisfactory reporting, then we will
notify the practice of this finding as part of the self-nomination
process. At this point, the practice will have the option of either
agreeing to being subject to the different criteria for satisfactory
reporting, justifying why they should not be subject to the different
criteria for satisfactory reporting, or opting out of participation in
the Physician Quality Reporting System as a group practice. For
example, if we determine that a group practice that self-nominates for
GPRO II has more than 199 eligible professionals billing Medicare under
the practice's TIN, the practice would have the option of agreeing to
participate in the Physician Quality Reporting System under GPRO I,
explaining why the

[[Page 73505]]

practice actually has fewer than 200 eligible professionals (for
example, some of the eligible professionals who billed Medicare have
since retired), or opting out of participation in the Physician Quality
Reporting System GPRO for 2011. If a group practice that self-nominates
for GPRO I has fewer than 200 NPIs billing Medicare under the
practice's TIN, then we will give the practice the opportunity to
participate in GPRO II.
(3) Process for Physician Group Practices To Participate as Group
Practices and Criteria for Satisfactory Reporting
(A) Group Practice Reporting Option for Physician Group Practices With
200 or More NPIs--GPRO I
As stated previously, we proposed that group practices interested
in participating in GPRO I must self-nominate to do so. For group
practices selected to participate in the Physician Quality Reporting
System GPRO I for 2011, we proposed to retain the existing 12-month
reporting period beginning January 1, 2011. We proposed that group
practices participating in GPRO I submit information on a proposed
common set of 26 NQF-endorsed quality measures using a data collection
tool based on the GPRO Tool used in the 2010 Physician Quality
Reporting System GPRO by 36 participating group practices to report
quality measures under the Physician Quality Reporting System. As part
of the data submission process for 2011 GPRO I, we proposed that during
2012, each group practice would be required to report quality measures
with respect to services furnished during the 2011 reporting period
(that is, January 1, 2011, through December 31, 2011) on an assigned
sample of Medicare beneficiaries.
Once the beneficiary assignment has been made for each group
practice, which we anticipate will be done during the fourth quarter of
2011, we proposed to provide each group practice selected to
participate in the Physician Quality Reporting System GPRO I with
access to a database (that is, a data collection tool) that will
include the group's assigned beneficiary samples and the final GPRO I
quality measures. We proposed to pre-populate the data collection tool
with the assigned beneficiaries' demographic and utilization
information based on all of their Medicare claims data. The group
practice will be required to populate the remaining data fields
necessary for capturing quality measure information on each of the
assigned beneficiaries. Identical to the sampling method used in the
PGP demonstration, we proposed that the random sample must consist of
at least 411 assigned beneficiaries. If the pool of eligible assigned
beneficiaries is less than 411, then the group practice must report on
100 percent, or all, of the assigned beneficiaries to satisfactorily
participate in the group practice reporting option. For each disease
module or preventive care measure, the group practice would be required
to report information on the assigned patients in the order in which
they appear in the group's sample (that is, consecutively). These
proposed reporting criteria are identical to the reporting criteria
used in the PGP demonstration and in the 2010 Physician Quality
Reporting System GPRO.
For 2011, we proposed an exclusive reporting mechanism for eligible
professionals identified as part of the group practice with respect to
the group as identified by the TIN. However, eligible professionals who
are part of the group practice, and who separately practice with
respect to another TIN to which the eligible professional has
reassigned benefits, could separately qualify as individual eligible
professionals with respect to the other practice (TIN).
We invited comments on our proposal for 2011 to retain 200 as the
number of NPIs for a TIN required for each group practice under the
GPRO I. We also invited comment on our proposal to allow those
``qualified'' for 2010 GPRO to be rolled over for automatic
qualification for 2011 GPRO I.
The following is a summary of the comments received regarding the
proposed process for physician group practices with 200 or more NPIs
(that is, GPRO I).
Comment: A commenter expressed support for continuation of GPRO I.
Response: We appreciate the commenter's support. We are finalizing
the GPRO I as proposed. We believe that this process provides an
effective means of collecting quality data from large group practices.
Comment: A commenter expressed support for our proposal that 2010
GPRO participants would not need to go through the self-nomination
process to participate in 2011.
Response: We appreciate the time and effort taken by the commenter
to state support of our proposal to not have 2010 GPRO participants go
through self nomination process for GPRO I participation for 2011. We
will not require 2010 GPRO participants to go through the self-
nomination process for 2011 but they will need to inform us of their
desire to participate in the 2011 GPRO I.
Comment: To encourage group reporting for large practices, and to
reduce the risk to individual eligible professionals if the practices
do not qualify for an incentive, one commenter requested that we allow
the individual eligible professionals within GPRO I to continue
reporting through traditional methods. Thus, those participants might
be eligible for incentives if the group practice does not
satisfactorily submit data.
Response: We considered the feasibility of analyzing Physician
Quality Report System data submissions for GPRO I participants at the
individual NPI level, but we decided against this option. Analyzing
Physician Quality Reporting System data submissions for GPRO I
participants at the individual NPI level would require individual
eligible professionals who are part of a group practice participating
in GPRO I to collect and report quality data in multiple ways, which
would be inefficient. In addition, doing so would require additional
CMS resources and potentially delay availability of the incentive
payments for all participants. Furthermore, we believe that a group
practice should have little difficulty in satisfactorily reporting
under GPRO I since they will receive feedback prior to submission of
the data to CMS.
Comment: We received a few comments on the proposed reporting
criteria for GPRO I. One commenter suggested that the GPRO reporting
requirements be limited to 411 patients in total, rather than 411
patients per measure, in order to reduce the associated resource
burdens to participation. Another commenter was concerned with the
considerable resources required to complete the data collection tool
for this sample in such a short time frame. Given the methodology used,
the commenter believes a smaller sample size would provide an accurate
representation of a group's performance and urges us to reevaluate the
sample sizes required.
Response: The sample size for GPRO I is based on research done
through the PGP demonstration. Since 2010 is the first year that GPRO
was used for the Physician Quality Reporting System, there is
insufficient data to warrant changing the sample size at this time. We
note, however, that the GPRO I is for group practices with 200 or more
eligible professionals. On average, these group practices typically
have 20,000 patients assigned to each group practice. Thus, the number
of measures and the required sample size is considered to be equitable
for practices with this volume of patients and eligible professionals.
We will continue to evaluate the

[[Page 73506]]

number and types of measures and modules for future program years.
Comment: One commenter recommended that group practices with 50 or
more eligible professionals be eligible to participate in GPRO I.
Response: The GPRO I is based on the methodology researched through
the PGP demonstration project. We would like to further explore the
impact of a smaller patient sample size before implementing GPRO I for
group practices less than 200 NPI's. We are, however, finalizing a
group practice option for groups with less than 200 eligible
professionals (GPRO II) that group practices with 2-199 eligible
professionals can participate in for 2011. With the implementation of
GPRO II for 2011 it would be a potential drain on resources to also
implement GPRO I for smaller practice at the same time.
For the reasons discussed previously and after taking into
consideration the comments, we are finalizing the process group
practices will be required to use to report data on quality measures
for the 2011 as a group practice under GPRO I and the associated
criteria for satisfactory reporting of data on quality measures by GPRO
I practices, which are summarized in Table 75. Group practices
participating in the Physician Quality Reporting System GPRO I as a
group practice will be required to report on all of the measures listed
in Table 75 of this final rule with comment period. These quality
measures are grouped into preventive care measures and four disease
modules: heart failure, diabetes, coronary artery disease, and
hypertension.

Table 75--2011 Process for Physician Group Practices To Participate as Group Practices and Criteria for
Satisfactory Reporting of Data on Quality Measures by Group Practices for GPRO I
----------------------------------------------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
----------------------------------------------------------------------------------------------------------------
A pre-populated data Report on all measures January 1, 2011-December 31, 2011.
collection tool provided by included in the data
CMS. collection tool (26 measures);
and.
Complete the tool for
the first 411 consecutively
ranked and assigned
beneficiaries in the order in
which they appear in the
group's sample for each
disease module or preventive
care measure. If the pool of
eligible assigned
beneficiaries is less than
411, then report on 100% of
assigned beneficiaries.
----------------------------------------------------------------------------------------------------------------

As stated in the CY 2011 PFS proposed rule (75 FR 40179), group
practices interested in participating in GPRO I must submit a self-
nomination letter accompanied by an electronic file submitted in a
format specified by CMS (such as, a Microsoft Excel file) that includes
the group practice's TIN(s) and name of the group practice, the name
and e-mail address of a single point of contact for handling
administrative issues, as well as the name and e-mail address of a
single point of contact for technical support purposes. We will
validate that the group practice consists of a minimum of 200 NPIs and
will supply group practices with this list. The self-nomination letter
must also indicate the group practice's compliance with the following
requirements:
Agree to attend and participate in all mandatory GPRO
training sessions; and
Have billed Medicare Part B on or after January 1, 2010
and prior to October 29, 2010.
We are not finalizing our proposal requiring group practices to
indicate in their self-nomination letter that they have an active IACS
user account. This was a requirement that we proposed to retain from
the 2010 Physician Quality Reporting System GPRO self-nomination
process. However, since an active IACS user account will not be needed
to submit 2010 Physician Quality Reporting System GPRO data to us, we
have decided not to require an IACS user account for the 2011 Physician
Quality Reporting System GPRO I. Although access to a CMS identity
management system will not be required for submitting 2011 PQRI GPRO I
data to us, a group practice will need to have access to a CMS identity
management system in order to access their 2011 PQRI feedback report.
We intend to post the final 2011 Physician Quality Reporting System
GPRO I participation requirements for group practices, including
instructions for submitting the self-nomination letter and other
requested information, on the Physician Quality Reporting System
section of the CMS Web site at http://www.cms.gov/PQRI by November 15,
2010 or shortly thereafter. Group practices that wish to self-nominate
for 2011 will be required to do so by January 31, 2011. Upon receipt of
the self-nomination letters we will assess whether the participation
requirements were met by each self-nominated group practice using 2010
Medicare claims data. We will not preclude a group practice from
participating in the GPRO I if we discover, from analysis of the 2010
Medicare claims data, that there are some eligible professionals
(identified by NPIs) that are not established Medicare providers (that
is, have not billed Medicare Part B on or after January 1, 2010 and
prior to or on October 29, 2010) as long as the group has at least 200
established Medicare providers. NPIs who are not established Medicare
providers, however, would not be included in our incentive payment
calculations. Group practices that were selected to participate in the
2010 Physician Quality Reporting System GPRO will automatically be
qualified to participate in the 2011 Physician Quality Reporting System
GPRO I and will not need to complete the 2011 Physician Quality
Reporting System GPRO I self-nomination process.
The 2010 Physician Quality Reporting System GPRO Tool will be
updated as needed to include the 2011 Physician Quality Reporting
System GPRO I measures. We believe that use of the GPRO data collection
tool allows group practices the opportunity to calculate their own
performance rates for reporting quality measures.
As stated in the CY 2011 PFS proposed rule (75 FR 40180 through
40181), we intend to provide the selected physician groups with access
to this pre-populated database by no later than the first quarter of
2012. For purposes of pre-populating this GPRO I tool, we will assign
beneficiaries to each group practice using a patient assessment
methodology modeled after the patient assignment methodology used in
the PGP demonstration. Based on our desire to model the Physician
Quality Reporting System GPRO I after the PGP demonstration, we will
also consider applying any refinements made to the methodology used in
the PGP demonstration prior to January 1, 2011 to the 2011 Physician
Quality Reporting System. We anticipate using Medicare claims data for
dates of service

[[Page 73507]]

on or after January 1, 2011 and submitted and processed by
approximately October 31, 2011 (that is, the last business day of
October 2011) to assign Medicare beneficiaries to each group practice.
Assigned beneficiaries will be limited to those Medicare Part B FFs
beneficiaries with Medicare Parts A and B for whom Medicare is the
primary payer. Assigned beneficiaries will not include Medicare
Advantage enrollees. A beneficiary will be assigned to the group
practice that provides the plurality of a beneficiary's office or other
outpatient office evaluation and management allowed charges.
Beneficiaries with only 1 office visit to the group practice will be
eliminated from the group practice's assigned patient sample for
purposes of the 2011 Physician Quality Reporting System GPRO I. We will
pre-populate the GPRO I tool with the assigned beneficiaries'
demographic and utilization information based on their Medicare claims
data.
Upon receipt of the pre-populated data collection tool, the group
practice will need to populate the remaining data fields necessary for
capturing quality measure information on each of the assigned
beneficiaries up to 411 beneficiaries for each disease module and
preventive care measure. If the pool of eligible assigned beneficiaries
for any disease module or preventive care measure is less than 411,
then the group practice must populate the remaining data files for 100
percent of eligible assigned beneficiaries for that disease module or
preventive care measure. For each disease module or preventive care
measure, the group practice must report information on the assigned
patients in the order in which they appear in the group's sample (that
is, consecutively).
(B) Group Practice Reporting Option for Group Practices of 2-199 NPIs--
GPRO-II
As discussed previously, section 1848(m)(3)(C) of the Act
authorized us to define the term ``group practice'' and required us to
establish a process under which eligible professionals in group
practices shall be treated as satisfactorily submitting data on
Physician Quality Reporting System quality measures, but was not
prescriptive with regard to the characteristics of this process.
Although for 2010 we did not provide a process for groups of less than
200 NPIs to report under the GPRO, we believe that there are
significant potential benefits to allowing reporting at the group level
generally. Thus, based on this authority we proposed a new group
practice reporting option (GPRO II) for groups of 2-199 NPIs in a TIN
for 2011 (75 FR 40181). For GPRO II in 2011, we proposed to require
groups of eligible professionals who decide to report as a group to
self-nominate. We did not propose to preclude a group practice from
participating in the GPRO II if we discover, from analysis of the 2010
Medicare claims data, that there are some eligible professionals
(identified by NPIs) that are not established Medicare providers (that
is, have not billed Medicare Part B on or after January 1, 2010 and
prior to or on) as long as the group has at least 2 established
Medicare providers. October 29, 2010 NPIs who are not established
Medicare providers, however, would not be included in our incentive
payment calculations.
We also proposed that self-nominating groups would need to indicate
in this letter if the group intends to report as a group for the eRx
Incentive Program and the reporting mechanism the group intends to use
to report as a group for the eRx Incentive Program.
Since GPRO II would be a new process available to groups in 2011,
we proposed to initially pilot the GPRO II process with a limited
number of groups. We proposed to select the first 500 groups that meet
the proposed eligibility requirements to participate in the 2011 GPRO
II. We proposed to use the postmark to determine the order in which
groups self-nominated for GPRO II. We proposed to consider only self-
nomination letters postmarked between January 3, 2011 and January 31,
2011. We did not propose to consider letters postmarked prior to
January 3, 2011 to prevent groups from self-nominating before the GPRO
II requirements are finalized and to discourage groups from self-
nominating for GPRO II prior to reviewing the final GPRO II
requirements.
For purposes of quality data submission, we proposed, for the GPRO
II, to allow eligible professionals to submit their data through claims
or through a qualified GPRO registry to the extent registries are
technically capable of collecting, calculating and transmitting the
required data to CMS and that we are able to accept such data from
registries.
For GPRO II, we proposed that in addition to reporting a specific
number of individual measures, the group would have to report one or
more proposed 2011 Physician Quality Reporting System measures groups
depending on the size of the group practice.
For purposes of satisfying the requirements under section
1848(m)(3)(C)(i) of the Act for groups of 2-199 NPIs, we proposed that
in order to be treated as satisfactorily reporting under GPRO II, the
group practice would be required to report on 50 percent or more (if
submitting through claims) of all Medicare Part B patients who fit into
the measures group denominator or 80 percent or more of Medicare
patients if using a registry to report.
Additionally, to earn a Physician Quality Reporting System
incentive payment for all allowed Medicare Part B services that are
provided by the TIN, we proposed that a group practice must report on
three to six individual 2011 Physician Quality Reporting System
measures, depending on the size of the group. We proposed that the
group practice may select from among any of the 2011 Physician Quality
Reporting System measures on which to submit data, provided the
measures selected are not duplicated in the measures group(s) reported.
We proposed that, to satisfactorily report individual Physician
Quality Reporting System measures, a group must report each measure at
the same rate (percentage) as determined by the method of submission as
individual eligible professionals. For example, if reporting via
claims, to satisfactorily report individual measures, each measure
would need to be reported on at least 50 percent of eligible Medicare
Part B FFS patients.
An alternative which we considered and sought comment on was to
require that the individual measures be selected from a more limited
set of measures, such as measures closely linked to improved population
health, or other measures perceived to address the greatest potential
benefit from improved performance. A second alternative that we
considered and sought comment on was to require group practices, as
part of the self-nomination process, to designate whether they were a
multispecialty group with primary care, a multispecialty group without
primary care, or a single specialty group, and if so, the specialty.
Depending on what type of specialty the group is, we would identify a
set of Physician Quality Reporting System measures pertaining to the
group's specialty and require the group practice to report on the
identified set of specialty-specific Physician Quality Reporting System
measures.
If a group practice participating in the 2011 Physician Quality
Reporting System GPRO II wants to also participate in the 2011 eRx
Incentive Program as a small group, we proposed that the group would
need to indicate

[[Page 73508]]

that preference in their self-nomination letter and would need to
report on a specified number of unique encounters based on their group
size. For GPRO II reporting in the 2011 eRx Incentive Program, we
proposed the following reporting mechanisms: claims, a GPRO eRx
qualified registry or a GPRO qualified EHR. As with the 2011 eRx
Incentive Program for individual eligible professionals and the 2011
eRx Incentive Program GPRO I, at least 10 percent of a GPRO II group's
charges would need to be comprised of codes in the denominator of the
electronic prescribing measure and the group would need to use an
electronic prescribing system that meets the requirements of the 2011
electronic prescribing measure. Similar to proposed GPRO I, if a GPRO
II group self-nominates to report the electronic prescribing measure as
a group, we proposed that all members of the group practicing under the
group's TIN would be ineligible to report as an individual electronic
prescriber.
The following is a summary of the comments received regarding our
proposal on the GPRO II option and process for group practices to
report Physician Quality Reporting System quality data measures.
Comment: We received favorable support for the proposed addition of
GPRO II as a group reporting option, including the requirement to self-
nominate and report a measures group along with 3 individual relevant
performance measures. One commenter stated that GPRO II will help spur
more eligible professionals, specifically those with 2-199 member
practices, to participate in the Physician Quality Reporting System.
Response: We appreciate the commenters' support and are finalizing
our proposal to add GPRO II as a group reporting option. We note,
however, that the number of measures groups and individual measures on
which a group practice will be required to report will vary by the
group practice's sizes. The specific requirements are described in
Table 76 of this final rule with comment period.
Comment: Some commenters opposed the proposed cap of the first 500
groups that self-nominate for GPRO II. Commenters were primarily
concerned that this would be too limiting. Another commenter noted that
this reporting option has the advantage of mid-year interim feedback
reports to assist participating groups in determining whether their
Physician Quality Reporting System data is being captured
appropriately. One commenter recommended that all self-nominations
postmarked in the month of January 2011 be accepted for this reporting
option. Another commenter urged us to expand GPRO II quickly beyond the
initial cap of 500 practices.
Response: We appreciate the commenters' enthusiasm for this new
reporting option and would like to be able to make it available to as
many groups as possible, but will need to initially limit the number of
groups participating in GPRO II for operational reasons. We will accept
at least 500 groups, but could potentially accept more depending on our
ability to handle a higher volume of groups participating in this
option. We expect that we will be able to expand this option further in
future years to make it available to more groups. In addition, we would
like to clarify that we did not propose to provide interim feedback
reports for group practices participating in GPRO II. Rather, we
proposed to provide interim feedback reports for individual eligible
professionals who submitted measures group data via claims during the
first 2 months of 2011. However, as noted in this section, we are not
finalizing this proposal.
Comment: Since we proposed to limit participation in GPRO II to 500
groups in 2011, it was recommended that we strive for diversity of
specialty representation rather than just a first-come, first-served
approach.
Response: We appreciate the commenter's suggestions. As stated
previously, we will accept as many groups as resources allow and select
a minimum of 500 GPRO II practices for 2011.
Comment: One commenter requested that GPRO II be made available to
groups of any size. The commenter believed this would allow group
practices to decide whether to participate in GPRO I or GPRO II
depending on which option works best for their practice.
Response: We appreciate the commenter's valuable input. As we
explore ways to further expand the GPRO II in future years we may
consider making it available to groups of any size.
Comment: One commenter suggested that we reduce the number of
individual and group measures required to report for GPRO II. Other
commenters stated that the requirement to report at least 1 measures
group would disadvantage those group practices for which none of the
existing measures groups applies or there are a limited number of
applicable measures groups.
Response: We understand the commenters' concerns and are revising
the criteria for satisfactory reporting. Whereas we proposed to require
group practices to report on a specified percentage of patients for
both individual measures and measures groups, we are requiring, for
2011, that group practices report on a specified percentage of patients
for the individual measures only. For measures groups, group practices
will need to report on only the specified minimum number of patients
(see Table 76 of this final rule with comment period). In addition, we
believe that, on average, the total reporting burden per eligible
professional in a group practice is less than the reporting burden for
eligible professionals reporting individually. For example, for a group
of 5 eligible professionals that is required to report on 1 measures
group and 3 individual measures, this means that the group is required
to report on less than 2 measures per eligible professionals compared
to 3 measures or 1 measures group per individual eligible professional.
With respect to the commenter's concerns that groups with a limited
number of applicable measures groups could be disadvantaged, we believe
that as we increase the numbers of measures groups available, this
would be less of a concern over time. In the meantime, eligible
professionals in group practices that do not have any applicable
measures groups are still able to report individual measures as
individual eligible professionals and meet the criteria for
satisfactory reporting individually.
Comment: One commenter requested that we not restrict the selection
of Physician Quality Reporting System measures (for example, only
population health measures) for GPRO II, given that multi-specialty
groups with primary care, multi-specialty groups without primary care,
and single specialty groups will be participating in this reporting
option. Restrictions to select Physician Quality Reporting System
measures may limit the diversity of practices that elect to report
through this option. Similarly, another commenter was concerned that
requiring so many primary care measures will make it difficult for
specialists, such as psychiatrists, to participate in large numbers.
Response: The commenters appear to be suggesting that we are
placing restrictions on the selection of measures for the GPRO II,
which is not correct. While GPRO I groups are required to report on a
standard set of 26 measures, the GPRO II groups can select any 2011
Physician Quality Reporting System individual measures and measures
groups that are relevant to their practice

[[Page 73509]]

as long as they report the required number of individual measures and
measures groups for their group size (see Table 76 of this final rule
with comment period). However, in future years and in future rulemaking
we expect to reconsider alternative reporting requirements, including
the alternatives of identifying a core set of measures for which broad
reporting may be required.
Comment: One commenter requested that we clearly indicate how we
derived the performance results for each individual professional if we
post performance information derived from the GPRO II on the Physician
Compare Web site. The commenter was concerned that the reported
performance that will be attributed to an individual eligible
professional through GPRO II will not necessarily reflect individual
performance.
Response: We appreciate the commenter's feedback. To date, we have
not made any Physician Quality Reporting System performance rates
publicly available. We value input from external stakeholders. Opinions
and alternatives that are provided will assist us in future policy
decisions as we develop our plans for the Physician Compare Web site.
With respect to the commenter's concern that performance information
derived from GPRO II will be attributed to an individual eligible
professional, group practice reporting is attributed to the entire
group, not to the individual. Additionally, we do not intend to
publicly report Physician Quality Reporting System performance results
for 2011.
Upon consideration of the comments received, group practices that
wish to participate in the GPRO II will need to self-nominate. The
self-nomination process will consist of sending a letter with the name
of the group, the TIN, an e-mail address of the contact person, and the
names and NPIs of all of the eligible professionals practicing under
that group's TIN. The self-nomination letter must also be accompanied
by an electronic file submitted in a format specified by CMS (such as
Microsoft Excel) with the group practice's TIN and NPIs. Self-
nomination letters should be sent to: GPRO II, c/o CMS, 7500 Security
Blvd., Mail Stop S3-02-01, Baltimore, MD 21244, and must be postmarked
by January 31, 2011, for consideration in the program. We are also
finalizing our proposal to initially limit the number of groups
participating in GPRO II. We seek to make this option available to as
many groups as possible but have limited resources. Therefore, as
stated previously, we will accept at least 500 groups, but could
potentially accept more depending on our ability to handle a higher
volume of groups participating in this option. We expect that we will
be able to expand this option further in future years to make it
available to more groups.
Table 76 sets forth the final criteria for satisfactory reporting
under the 2011 Physician Quality Reporting System GPRO II and
requirements for each group based on their respective group size
(number of eligible professionals). As stated previously, GPRO II
groups will be required to report on a specified percentage of patients
for reporting the individual measures only. To satisfactorily report
measures groups for the 2011 Physician Quality Reporting System GPRO
II, the group practice need only report on the minimum number of
patients specified in Table 76 for their group size. In addition, since
we will not have the ability to determine whether the registries can
ensure that only unique patients are counted, GPRO II groups must
report the 2011 Physician Quality Reporting System data via claims
unless the only measures groups that apply to the practice are one of
the four registry-only measures groups listed in section
VII.F.2.(i).(5). of this final rule with comment period. Group
practices that must report on one of the four registry-only measures
groups in order to meet the criteria for satisfactory reporting will be
able to use the registry-reporting mechanism to submit their 2011
Physician Quality Reporting System data and must submit all of their
2011 Physician Quality Reporting System GPRO II data via the registry
reporting mechanism. However, we anticipate that the list of registries
qualified to submit 2011 Physician Quality Reporting System GPRO II
data will not be available until summer 2011. Group practices will need
to indicate the reporting mechanism they intend to use for the 2011
Physician Quality Reporting System GPRO II in their self-nomination
letter.

Table 76--2011 Process for Physician Group Practices To Participate as Group Practices and Criteria for Satisfactory Reporting of Data on Quality
Measures by Group Practices for GPRO II
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum Percent of Percent of
number of medicare part medicare part Required number of
medicare part b patients in b patients in unique visits where
Number of b patients in Number of denominator denominator an
measures denominator individual for for e[dash]prescription
Group size (number of eligible professionals) groups for measures satisfactory satisfactory was generated to be
required to be satisfactory required to be reporting of reporting of a successful
reported reporting of reported individual individual electronic
measures measures via measures via prescriber
groups claims (%) registries (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2-10............................................... 1 35 3 50 80 75
11-25.............................................. 1 50 3 50 80 225
26-50.............................................. 2 50 4 50 80 475
51-100............................................. 3 60 5 50 80 925
101-199............................................ 4 100 6 50 80 1875
--------------------------------------------------------------------------------------------------------------------------------------------------------

We are not finalizing our proposal to analyze the individual
professional's data to see if they satisfactorily reported at the
individual TIN/NPI level if the group does not satisfactorily report as
a GPRO II group. We have determined that this is neither practical nor
feasible for us. This should have no impact on how groups will report
Physician Quality Reporting System data under GPRO since claims will
identify both the TIN and the individual eligible professional
rendering the service regardless of whether we analyze the claims at
the group or individual level. Although there will be some risk to
eligible professionals who are part of a GPRO II group if the group
fails to satisfactorily report, we believe this risk is outweighed by
the additional resources that would be required to process a group's
data at both the group and individual levels and the fact that

[[Page 73510]]

all participants' incentive payments could potentially be delayed.
h. Statutory Requirements and Other Considerations for 2011 Physician
Quality Reporting System Measures
(1) Statutory Requirements for 2011 Physician Quality Reporting System
Measures
Under section 1848(k)(2)(C)(i) of the Act, the Physician Quality
Reporting System quality measures shall be such measures selected by
the Secretary from measures that have been endorsed by the entity with
a contract with the Secretary under subsection 1890(a) of the Act
(currently, that is the National Quality Forum, or NQF). However, in
the case of a specified area or medical topic determined appropriate by
the Secretary for which a feasible and practical measure has not been
endorsed by the NQF, section 1848(k)(2)(C)(ii) of the Act authorizes
the Secretary to specify a measure that is not so endorsed as long as
due consideration is given to measures that have been endorsed or
adopted by a consensus organization identified by the Secretary, such
as the AQA alliance. In light of these statutory requirements, we
believe that, except in the circumstances specified in the statute,
each proposed 2011 Physician Quality Reporting System quality measure
would need to be endorsed by the NQF. Additionally, section
1848(k)(2)(D) of the Act requires that for each 2011 Physician Quality
Reporting System quality measure, ``the Secretary shall ensure that
eligible professionals have the opportunity to provide input during the
development, endorsement, or selection of measures applicable to
services they furnish.''
The statutory requirements under section 1848(k)(2)(C) of the Act,
subject to the exception noted previously, require only that the
measures be selected from measures that have been endorsed by the
entity with a contract with the Secretary under section 1890(a) (that
is, the NQF) and are silent with respect to how the measures that are
submitted to the NQF for endorsement were developed. The basic steps
for developing measures applicable to physicians and other eligible
professionals prior to submission of the measures for endorsement may
be carried out by a variety of different organizations. We do not
believe there needs to be any special restrictions on the type or make
up of the organizations carrying out this basic development of
physician measures, such as restricting the initial development to
physician-controlled organizations. Any such restriction would unduly
limit the basic development of quality measures and the scope and
utility of measures that may be considered for endorsement as voluntary
consensus standards.
(2) Other Considerations for 2011 Physician Quality Reporting System
Measures
As stated previously, in addition to reviewing the 2010 Physician
Quality Reporting System measures for purposes of developing the
proposed 2011 Physician Quality Reporting System measures, we reviewed
and considered measure suggestions including comments received in
response to the CY 2010 PFS proposed and final rules with comment
period. Additionally, suggestions and input received through other
venues, such as an invitation for measures suggestions via the
Listening Session held February 2, 2010, were also reviewed and
considered for purposes of our development of the list of proposed 2011
Physician Quality Reporting System quality measures.
With respect to the selection of new measures, we applied the
following considerations, which include many of the same considerations
applied to the selection of 2009 and 2010 Physician Quality Reporting
System quality measures for inclusion in the 2011 Physician Quality
Reporting System quality measure set previously described:
High Impact on Healthcare.
++ Measures that are high impact and support CMS and HHS priorities
for improved quality and efficiency of care for Medicare beneficiaries.
These current and long term priority topics include the following:
Prevention; chronic conditions; high cost and high volume conditions;
elimination of health disparities; healthcare-associated infections and
other conditions; improved care coordination; improved outcomes;
improved efficiency; improved patient and family experience of care;
improved end-of-life/palliative care; effective management of acute and
chronic episodes of care; reduced unwarranted geographic variation in
quality and efficiency; and adoption and use of interoperable HIT.
Measures that are included in, or facilitate alignment
with, other Medicare, Medicaid, and CHIP programs in furtherance of
overarching healthcare goals.
NQF Endorsement.
++ Measures must be NQF-endorsed by June 1, 2010, in order to be
considered for inclusion in the 2011 Physician Quality Reporting System
quality measure set except as provided under section 1848(k)(2)(C)(ii)
of the Act.
++ Section 1848(k)(2)(C)(ii) of the Act provides an exception to
the requirement that the Secretary select measures that have been
endorsed by the entity with a contract under section 1890(a) of the Act
(that is, the NQF).
++ The statutory requirements under section 1848(k)(2)(C) of the
Act, subject to the exception noted previously, require only that the
measures be selected from measures that have been endorsed by the
entity with a contract with the Secretary under section 1890(a) (that
is, the NQF) and are silent with respect to how the measures that are
submitted to the NQF for endorsement are developed. The basic steps for
developing measures applicable to physicians and other eligible
professionals prior to submission of the measures for endorsement may
be carried out by a variety of different organizations. We do not
believe there needs to be any special restrictions on the type or make
up of the organizations carrying out this basic development of
physician measures, such as restricting the initial development to
physician-controlled organizations. Any such restriction would unduly
limit the basic development of quality measures and the scope and
utility of measures that may be considered for endorsement as voluntary
consensus standards. The requirements under section 1848(k)(2)(C) of
the Act pertain only to the selection of measures and not to the
development of measures.
Address Gaps in the Physician Quality Reporting System
Measure Set.
++ Measures that increase the scope of applicability of the
Physician Quality Reporting System measures to services furnished to
Medicare beneficiaries and expand opportunities for eligible
professionals to participate in the Physician Quality Reporting System.
Measures of various aspects of clinical quality including
outcome measures, where appropriate and feasible, process measures,
structural measures, efficiency measures, and measures of patient
experience of care.
Other considerations that we applied to the selection of measures
for 2011, regardless of whether the measure was a 2010 Physician
Quality Reporting System measure or not, were--
Measures that are functional, which is to say measures
that can be technically implemented within the capacity of the CMS
infrastructure for data collection, analysis, and calculation of
reporting and performance rates. For example, we proposed to replace
existing 2010 Physician Quality Reporting System measures 114
and 115 with updated and improved measure TBD

[[Page 73511]]

(Preventive Care and Screening: Tobacco Use: Screening and Cessation
Intervention), which is less technically challenging to report.
In the 2011 Physician Quality Reporting System, as in the
2010 Physician Quality Reporting System, for some measures that are
useful, but where data submission is not feasible through all otherwise
available Physician Quality Reporting System reporting mechanisms, a
measure may be included for reporting solely through specific reporting
mechanism(s) in which its submission is feasible.
In the proposed rule, we invited comments on the implication of
including or excluding any given measure or measures for our proposed
2011 Physician Quality Reporting System quality measure set, as well as
feedback relative to our proposed approach in selecting measures (75 FR
40185). We indicated that while we welcome all constructive comments
and suggestions, and may consider such recommended measures for
inclusion in future measure sets for the Physician Quality Reporting
System and other programs to which such measures may be relevant, we
were not able to consider such additional measures for inclusion in the
final 2011 measure set.
As discussed previously, section 1848(k)(2)(D) of the Act requires
that the public have the opportunity to provide input during the
selection of measures. We also are required by other applicable
statutes to provide opportunity for public comment on provisions of
policy or regulation that are established via notice and comment
rulemaking. Measures that were not included in the proposed rule for
inclusion in the 2011 Physician Quality Reporting System that are
recommended to CMS via comments on the proposed rule have not been
placed before the public to comment on the selection of those measures
within the rulemaking process. Even when measures have been published
in the Federal Register, but in other contexts and not specifically
proposed as Physician Quality Reporting System measures, such
publication does not provide true opportunity for public comment on
those measures' potential inclusion in the Physician Quality Reporting
System. Thus, such additional measures recommended for selection for
the 2011 Physician Quality Reporting System via comments on the CY 2011
PFS proposed rule cannot be included in the 2011 measure set. However,
as discussed previously, we will consider comments and recommendations
for measures, which may not be applicable to the final set of 2011
Physician Quality Reporting System measures, for purposes of
identifying measures for possible use in the Physician Quality
Reporting System in future years or other initiatives to which those
measures may be pertinent.
In addition, as in prior years, we again note that we do not use
notice and comment rulemaking as a means to update or modify measure
specifications. Quality measures that have completed the consensus
process have a designated party (usually, the measure developer/owner)
who has accepted responsibility for maintaining the measure. In
general, it is the role of the measure owner, developer, or maintainer
to make changes to a measure. Therefore, comments requesting changes to
a specific proposed Physician Quality Reporting System measure's title,
definition, and detailed specifications or coding should be directed to
the measure developer identified in Tables 78 through 96. Contact
information for the 2010 Physician Quality Reporting System measure
developers is listed in the ``2010 PQRI Quality Measures List,'' which
is available on the Physician Quality Reporting System section of the
CMS Web site at http://www.cms.gov/PQRI.
However, we stress that inclusion of measures that are not NQF
endorsed or AQA adopted is an exception to the requirement under
section 1848(k)(2)(C)(i) of the Act that measures be endorsed by the
NQF. We may exercise this exception authority in a specified area or
medical topic for which a feasible and practical measure has not been
endorsed by NQF, so long as due consideration is given to measures that
have been endorsed by the NQF.
(3) Summary of Comments and Responses
The following is summary of the comments we received regarding the
statutory requirements and other considerations for the selection of
2011 Physician Quality Reporting System measures.
Comment: Some commenters strongly support the adoption of NQF-
endorsed measures only. One commenter stated that the AQA is no longer
doing measure evaluation work and should not be allowed to approve
measures for the Physician Quality Reporting System as a way to
sidestep the well-designed and well-executed process of the NQF.
Response: We agree that endorsement of measures by the NQF is an
important criteria for inclusion in the Physician Quality Reporting
System. However, section 1848(k)(2)(C)(i) of the Act provides an
exception to the requirement that measures be endorsed by the NQF. We
may exercise this exception authority in a specified area or medical
topic for which a feasible and practical measure has not been endorsed
by NQF, so long as due consideration is given to measures that have
been endorsed by the NQF. For this reason, we retain the ability to
include non-NQF endorsed measures in the Physician Quality Reporting
System. Once those measures work through the NQF process, we may remove
those that were not endorsed by the NQF from the program.
Comment: A few commenters opposed our conclusion that any
organization can develop quality measures. The AMA-specialty society
quality consortium, the PCPI, should be recognized by us to specify the
quality measures and adequately test them for inclusion in the
Meaningful Use program.
Response: We do not believe there needs to be any special
restrictions on the type or make up of the organizations carrying out
the basic development of measures for physicians and other eligible
professionals, such as restricting the initial development to
physician-controlled organizations. While we agree that expertise in
measure development is important in the measure development and
consensus processes, any such restriction would unduly limit the basic
development of quality measures and the scope and utility of measures
that may be considered for endorsement as voluntary consensus
standards. In addition, physicians are not the only types of
professionals eligible to participate in the Physician Quality
Reporting System.
Comment: Another commenter encouraged us to allow for other means
for measure endorsement due to NQF's lack of timeliness and consistency
issues.
Response: As stated previously, section 1848(k)(2)(C)(i) of the Act
provides an exception to the requirement that measures be endorsed by
the NQF. We may exercise this exception authority in a specified area
or medical topic for which a feasible and practical measure has not
been endorsed by NQF, so long as due consideration is given to measures
that have been endorsed by the NQF. In certain circumstance, we have
exercised this exception authority to include measures that have not
yet gone through the NQF endorsement process to address measure gaps.
Comment: Many commenters requested that we encourage the
development and use of measures in

[[Page 73512]]

specific areas or topics. The specific areas or topics that commenters
recommended as priorities included sub-specialty specific measures,
measures that reflect the day-to-day treatment of cancer patients,
risk-adjusted outcome measures (as opposed to process measures),
measures that better reflect patient preferences, patient experience,
functional status, and care coordination, measures that capture
demographic data in ways that enable measures to be stratified and used
to identify and address health disparities, measures that address high-
burden disease areas especially prevalent in the Medicare beneficiary
population, broader measures to enhance accurate identification and
treatment of atrial fibrillation, measures that will be retooled for
future use in EHR reporting, measures that must be retooled for the
impending ICD-10-CM/PCS compliance date, and measures to capture
whether patients have received preventive vaccinations.
Response: We appreciate the commenters' recommendations for
expanding criteria for measure selection and prioritization. We note,
however, that we largely depend on the development of measures by
professional organizations and other measure developers and encourage
professional organizations and other measure developers to fund and
develop measures that address the priority areas identified by the
commenters. In addition, if there are specific measures that commenters
would like us to consider for future years to address these areas, we
urge them to submit the specific measure suggestions via the 2012 Call
for Measures. Information on the 2012 Call for Measures will be posted
on the Physician Quality Reporting System section of the CMS Web site
when it becomes available. We anticipate conducting the 2012 Call for
Measures in late 2010 or early 2011.
Comment: One commenter suggested the proposed addition of Physician
Quality Reporting System measures for 2011 be re-visited in context
with the August 2010 publication of 69 NQF-endorsed[supreg] ambulatory
performance measures.
Response: We appreciate the commenter's valuable input. As stated
previously and in the proposed rule (75 FR 40185), we are not able to
consider additional measures for inclusion in the final 2011 Physician
Quality Reporting System measure set beyond what we proposed. However,
we may consider them for inclusion in future measure sets for the
Physician Quality Reporting System.
Comment: A few commenters recommended that we implement more
meaningful and impactful measures. Some of the actions specifically
recommended by the commenters include:
Require the collection of patient experience surveys, if
there is an NQF-endorsed survey available for that professional;
Remove measures that ``document'' the presence of
evaluation, assessment, and counseling as there is no relationship
between such measures and patient outcome;
Consider adding measures from NQF's Ambulatory Care
Measures Using Clinically Enriched Administrative Data that are
appropriate for the Medicare population; and
Develop measures that will fill gaps in the Physician
Quality Reporting System measure set and that adhere to key criteria
for robust measures.
Response: We appreciate the commenter's feedback regarding the use
of more meaningful and impactful measures in the Physician Quality
Reporting System. We appreciate the time and effort taken in providing
your recommendation and, as stated previously, we urge the commenter to
work with professional organizations and other measure developers to
fund and develop measures that address the priority areas identified by
the commenter and/or submit recommendations for specific measures that
the commenter would like us to consider for future years via the 2012
Call for Measures.
Comment: One commenter urged us to be mindful of the resources
required to translate quality data into improved provider performance.
Therefore, we should ensure appropriate phasing-in of new measures into
our current quality reporting programs.
Response: We appreciate the commenter's valuable input. While we
strive to identify gaps of care and ensure that specialties have
measures to report, we also recognize that there is a level of effort
associated with translating the quality data reported into better care.
As such, we are adding a limited set of new measures that focuses on
identified gaps and ensures specialties have measures to report.
Comment: One commenter requested that we further explore and
discuss the phase-in dates in context with the ICD-10-CM/PCS transition
date.
Response: We are planning for implementation of ICD-10 and are
working in collaboration with the Physician Quality Reporting System
measure developers/owners towards the coding transition. More
information on the phase-in dates for this transition will be provided
once it becomes available.
i. The Final 2011 Physician Quality Reporting System Quality Measures
for Individual Eligible Professionals
For 2011, we proposed to include a total of 200 measures (this
includes both individual measures and measures that are part of a
proposed 2011 measures group) on which individual eligible
professionals can report for the 2011 Physician Quality Reporting
System (75 FR 40185 through 40198).
The following is a summary of the comments received on the proposed
2011 Physician Quality Reporting System measures in general and
comments on the measures from the 2010 Physician Quality Reporting
System not proposed for inclusion in the 2011 Physician Quality
Reporting System.
Comment: One commenter suggested that we consider publishing a list
of reportable measures for each eligible profession. This would make
the reporting process more clear and accessible to professionals trying
to participate in the program by helping them quickly determine which
measures are relevant to their practices.
Response: In August 2010, we posted on the Analysis and Payment
page of the Physician Quality Reporting System section of the CMS Web
site http://www.cms.gov/pqri, a 1st quarter 2010 aggregate QDC error
report by specialty. For each 2010 Physician Quality Reporting System
measure, this report lists the specialties that submitted valid QDCs
for the measure during the 1st quarter of 2010. Thus, an eligible
professional could use this report to ascertain whether a measure is
reportable by his or her profession.
Comment: One commenter suggested that it would be useful for
participating eligible professionals, as well as other stakeholders, if
we developed a table that clearly summarizes the status of a measure's
NQF endorsement, AQA endorsement, owner, and how the measure aligns
with meaningful use clinical quality measure requirements.
Response: Tables 78 through 97 of this final rule with comment
period includes the status of each measure's NQF endorsement, as well
as AQA endorsement if applicable and the measure is not NQF endorsed.
In addition, Tables 55 and 56 of the CY 2011 PFS proposed rule (75 FR
40193), which lists the measures available for EHR reporting in 2011,
includes information as to whether a measure is included in the EHR
Incentive Program for program years 2011 and 2012. We

[[Page 73513]]

note, however, that the electronic specifications for measures that are
included in the Physician Quality Reporting System and Electronic
Health Record Incentive Program may be different. Eligible
professionals should refer to the measure specifications for the
appropriate program.
Comment: We received numerous comments in support of the 2010
Physician Quality Reporting System quality measures proposed for
inclusion in the 2011 Physician Quality Reporting System. Specific
measures or measures topics on which we received favorable support
include the measures on osteoporosis, audiology, speech-language
pathology, and measures 9, 106, 107, 124, 126, 127, 128, 130, 131, 134,
148, 149, 150, 151, 154, 155, 173, 181, 188, 189, 190, and 200.
Commenters often cited the applicability of a specific measure to their
specialty and/or profession.
Response: We appreciate the feedback and are finalizing our
proposals to include these measures in the 2011 Physician Quality
Reporting System measure set. These measures address one or more of the
considerations for measures selected for inclusion in the 2011
Physician Quality Reporting System previously discussed.
Comment: A couple of commenters asked us to reconsider the proposal
to retire Measure 135, Chronic Kidney Disease (CKD): Influenza
Immunization. Although the measure was considered for endorsement by
NQF but was ultimately not endorsed, the measure is adopted by the AQA.
Response: On August 26, 2010, we published a correction notice in
the Federal Register (75 FR 52487) indicating we inadvertently included
this measure in the table that lists the 2010 Physician Quality
Reporting System measures not proposed to be included in the 2011
Physician Quality Reporting System. As such, we are including Measure
135 in the 2011 Physician Quality Reporting System individual
measures set only. We are not, however, finalizing our proposal to
include Measure 135 from the CKD Measures Group. The reporting
requirements for Measure 135 are different from the other
measures in the CKD measures group.
Comment: A couple of commenters recommended keeping Measure
136, Melanoma: Follow-Up Aspects of Care, for purposes of
reporting to the 2011 Physician Quality Reporting System. The
commenters believe that although the measure is no longer endorsed by
the National Quality Forum, it is still a valuable tool in clinician
quality improvement. The commenters also noted that this measure is
most effective as part of a set with Measures 137: Melanoma:
Continuity of Care--Recall System and 138: Melanoma:
Coordination of Care, which are maintained in the list of measures
available for 2011 Physician Quality Reporting System.
Response: We are finalizing our proposal to not include Measure
136 in the 2011 Physician Quality Reporting System measure
set. As stated in the proposed rule, (75 FR 40186) and by the
commenter, Measure 136 was considered by NQF for possible
endorsement but ultimately was not NQF-endorsed. We note, also, that we
proposed and are finalizing a new melanoma measure, Melanoma:
Overutilization of Imaging Studies in Stage 0-1A Melanoma, for the 2011
Physician Quality Reporting System. This measure meets one or more of
the considerations for measures selected for inclusion in the 2011
Physician Quality Reporting System.
Comment: We received one comment in support of our proposal to
retire Measure 139 Cataracts: Comprehensive Preoperative
Assessment for Cataract Surgery with Intraocular Lens (IOL) Placement.
Another commenter, however, requested that this measure be retained
because it evaluates safe and appropriate use of cataract surgery.
Response: We appreciate the commenters' feedback. Based on the fact
that the measure was reviewed for endorsement by the NQF and ultimately
not endorsed, we are finalizing our proposal to not include this
measure in the 2011 Physician Quality Reporting System measure set.
Comment: In addition to the quality measures and measures groups
for individual eligible professionals we had proposed in Tables 52
through 54 of the CY 2011 PFS proposed rule (75 FR 40186 through
40192), several commenters suggested quality measures, measures groups,
and/or topics for which additional measures or measures groups should
be added for the 2011 Physician Quality Reporting System. Specifically,
commenters recommended that we adopt--
A measure for AAA ultrasound screening;
A COPD measures group;
A stroke measures group comprised of the following 5
measures: (1) Deep vein thrombosis (DVT) prophylaxis; (2) Discharged on
antithrombotic therapy; (3) Patients with atrial fibrillation/flutter
receiving anticoagulant therapy; (4) Thrombolytic therapy; and (5)
Discharged on statin medication;
A measures group that focuses on quality measures common
to every long-term care resident, which could include Physician Quality
Reporting System measures 47, 110, 111, 130, 154, and 155;
Appropriate Follow-Up Interval for Normal Colonoscopy in
Average Risk Patients; and
Comprehensive Colonoscopy Documentation.
Response: As stated previously, we have not included in this final
rule with comment period for the 2011 Physician Quality Reporting
System any individual and measures groups that were not identified in
the CY 2011 PFS proposed rule as proposed 2011 Physician Quality
Reporting System measures. We are obligated by section 1848(k)(2)(D) of
the Act to give eligible professionals an opportunity to provide input
on measures recommended for selection, which we do via the proposed
rule. Thus, such additional measures recommended via comments on the
proposed rule cannot be included in the 2011 Physician Quality
Reporting System quality measure set. However, we have captured these
recommendations and will have them available for consideration in
identifying measure sets/groups for the Physician Quality Reporting
System for future years and other initiatives to which those measures
or measures groups may apply.
Comment: Some commenters asked that we reconsider measures or
measures groups that had been previously submitted to us as suggestions
for 2011 Physician Quality Reporting System measures but were not
proposed for inclusion in the 2011 Physician Quality Reporting System
measure set. Specifically, commenters requested that we reconsider
inclusion of the Parkinson's disease and epilepsy measurement sets in
the Physician Quality Reporting System program, a diabetic retinopathy
measures group with 2 measures, and a cataracts measures group with 2
measures.
Response: All measures or measures groups that were previously
submitted to us as suggestions for 2011 Physician Quality Reporting
System measures were reviewed for possible inclusion in the 2011
Physician Quality Reporting System measure set. Upon review, however,
some measures either failed to meet the threshold criteria for
inclusion in the 2011 Physician Quality Reporting system measure set
(as described previously) or did not meet the definition of ``measures
group'' proposed and finalized at 42 CFR 414.90. These measures that
did not pass the review process were not proposed for inclusion in the
2011 Physician Quality Reporting System measure set.

[[Page 73514]]

Comment: Several commenters recommended changes to the detailed
specifications or coding for one or more of the proposed measures or
measures groups. Many of the requests were specifically concerned that
measures be expanded to include additional professionals to whom the
measure(s) may apply.
Specifically, one commenter requested that any measure used by
primary care physicians be expanded to include not just the office, but
home and domiciliary codes as well. One commenter requested that the
denominator codes for the CAP measures group be expanded to include
other infectious pneumonia ICD-9-CM diagnostic codes than ``acute''
pneumonia diagnosis codes so pulmonologists can have sufficient numbers
of patients to report this measures group. A few commenters requested
that the age range for the proposed asthma measures group be expanded,
instead of being restricted to 5 to 50 years of age. One commenter
requested that the Initial Hospital Admit Evaluation and Management
codes (99221, 99222, and 99223) be removed from the denominators of
measures 32, 33 and 36 and added to measures
56-59 for 2011. The commenter also requested that an exemption
be given to eligible professionals penalized for not reaching an 80
percent reporting threshold on measures 32, 33, and
36 because of the unintended effect of substituting the 99221,
99222, and 99223 series codes for the consultation 99251-99255 series
that had been eliminated from the Medicare program. Lastly, another
commenter requested that allowable performance exclusion codes be
created for measures 201 and 202.
Response: Although the Secretary is required to provide
opportunities for public comment on selected measures and do so through
notice and comment rulemaking, we do not use notice and comment
rulemaking as a means to update or modify measure specifications. In
general, it is the role of the measure owner, developer, or maintainer
to make substantive changes to the measures, such as the changes
suggested by the commenters. The measure maintainer and/or the
developer/owner of a measure included in the final set of 2011
Physician Quality Reporting System measures is identified in the
``Measure developer'' column of Tables M6 through M24. In addition, for
those measures which are NQF-endorsed, the NQF has an established
maintenance process that could be accessed to recommend the changes
suggested by the commenters.
Comment: One commenter supported our proposal to replace Physician
Quality Reporting System Measures 114 and 115 with
the Preventive Care and Screening: Tobacco Use: Screening and Cessation
Intervention measure (NQF Measure Number 0028). Another commenter,
however, requested that Physician Quality Reporting System Measures
114 and 115 be included in the 2011 Physician Quality
Reporting System as these measures are included in the EHR Incentive
Program clinical quality measures and thus will be of great interest
for eligible professionals to report on.
Response: Although Physician Quality Reporting System Measures
114 and 115 are included as clinical quality measures
under the EHR Incentive Program, we have decided, for the Physician
Quality Reporting System, to replace Physician Quality Reporting System
Measures 114 Preventive Care and Screening: Inquiry Regarding
Tobacco Use and 115 Preventive Care and Screening: Advising
Smokers and Tobacco Users to Quit with an NQF-endorsed measure,
Preventive Care and Screening: Tobacco Use: Screening and Cessation
Intervention. We believe this measure is more comprehensive and less
technically challenging than Physician Quality Reporting System
Measures 114 and 115. We may consider aligning the
preventive care and screening measures related to tobacco use and
smoking under these 2 programs in future years.
Comment: One commenter stressed the importance of publishing the
detailed Physician Quality Reporting System specifications for
individual measures and measures groups by November 15, 2010.
Response: We will make every attempt to post the detailed
specifications and specific instruction for reporting 2011 individual
and measures groups on the Physician Quality Reporting System section
of the CMS Web site at http://www.cms.hhs.gov/PQRI as close to November
15, 2010 as possible. In any event, the detailed specifications will be
posted by no later than December 31, 2010.
Based on the criteria previously discussed and our review of these
comments, we are including the individual measures listed in Tables M6
through M10 in the final 2011 Physician Quality Reporting System
individual quality measure set. We are also including 14 measures
groups in the final 2011 Physician Quality Reporting System quality
measure set, which are listed in Tables M11 through M24. The individual
measures selected for the 2011 Physician Quality Reporting System can
be categorized as follows:
2011 Individual Quality Measures Selected From the 2010
Physician Quality Reporting System Quality Measures Set Available for
Claims-based Reporting and Registry-based Reporting;
2011 Individual Quality Measures Selected From the 2010
Physician Quality Reporting System Quality Measures Set Available for
Registry-based Reporting Only;
New Individual Quality Measures for 2011; and
2011 Measures Available for EHR-based Reporting.
In addition, we are retiring the 5 measures in Table 77 because
they did not meet one or more of the considerations for selection of
2011 measures. Specifically, we retired Physician Quality Reporting
System Measures 136, 139, and 174 for 2011
because they were considered by NQF for possible endorsement but
ultimately were not NQF-endorsed. In addition, we are replacing 2010
Physician Quality Reporting System Measures 114 and
115 with an updated and improved measure (TBD
``Preventive Care and Screening: Tobacco Use: Screening and Cessation
Intervention''), which is less technically challenging to report.

TABLE 77--2011 Physician Quality Reporting System Quality Measures Not
Included in the 2011 Physician Quality Reporting System
------------------------------------------------------------------------
Physician Quality Reporting
System Measure No. Measure title
------------------------------------------------------------------------
114.......................... Preventive Care and Screening: Inquiry
Regarding Tobacco Use.
115.......................... Preventive Care and Screening: Advising
Smokers and Tobacco Users to Quit.
136.......................... Melanoma: Follow-Up Aspects of Care.
139.......................... Cataracts: Comprehensive Preoperative
Assessment for Cataract Surgery with
Intraocular Lens (IOL) Placement.

[[Page 73515]]

174.......................... Pediatric End-Stage Renal Disease (ESRD):
Plan of Care for Inadequate
Hemodialysis.
------------------------------------------------------------------------

(1) 2011 Individual Quality Measures Selected From the 2010 Physician
Quality Reporting System Quality Measures Set Available for Claims-
Based Reporting and Registry-Based Reporting
For 2011, we proposed to retain 171 measures currently used in the
2010 Physician Quality Reporting System. These 171 proposed measures
include 45 registry-only measures currently used in the 2010 Physician
Quality Reporting System, and 126 individual quality measures for
either claims-based reporting or registry-based reporting (75 FR 40186
through 40190 and 52489 through 52490). These 171 proposed measures did
not include any measures that are proposed to be included as part of
the 2011 Back Pain measures group. Similar to the 2010 Physician
Quality Reporting System, for 2011, we proposed that any 2011 Physician
Quality Reporting System measures that are included in the Back Pain
measures group would not be reportable as individual measures through
claims-based reporting or registry-based reporting.
Although they were ultimately not NQF-endorsed, we proposed to
exercise our exception authority under section 1848(k)(2)(C)(ii) of the
Act and include measures 188, 189, and 190,
since we are not aware of any other NQF-endorsed measures that are
available to audiologists.
The following is a summary of the comments received on the proposed
2011 individual quality measures selected from the 2010 Physician
Quality Reporting System quality measures set available for claims-
based reporting and registry-based reporting.
Comment: A commenter urged us to continue to allow reporting of
measure 175, Plan of Care for Inadequate Hemodialysis in 2011,
regardless of NQF endorsement since this was approved by the AQA in
2008.
Response: We are unclear whether the commenter is referring to
measure 174, which is the Pediatric ESRD: Plan of Care for
Inadequate Hemodialysis measure or measure 175, which is the
Pediatric ESRD: Influenza Immunization measure since both of these are
AQA adopted measures. For the reasons described previously, we are not
retaining measure 174 for the 2011 Physician Quality Reporting
System. We are, however, retaining measure 175 for the 2011
Physician Quality Reporting System.
Comment: A commenter supported the 2011 proposed measures selected
from the 2010 Physician Quality Reporting System measure set available
for either claims-based reporting or registry-based reporting but noted
there have been inquiries about how the process component of Measure
193: Perioperative Temperature Management is defined. As a
result, the commenter pointed out that this measure is undergoing
revision.
Response: We appreciate the commenter's valuable input and will
continue to monitor the status of this measure.
For the reasons discussed previously and based on the comments
received, we are finalizing in the 2011 Physician Quality Reporting
System quality measure set the 171 2010 Physician Quality Reporting
System measures that were proposed to be available in the 2010
Physician Quality Reporting System for claims and registry reporting
identified in Table 78. The 171 individual 2010 Physician Quality
Reporting System measures selected for inclusion in the 2011 Physician
Quality Reporting System quality measure set as individual quality
measures for either claims-based reporting or registry-based reporting
are listed by their Physician Quality Reporting System Measure Number
and Title in Table 78, along with the name of the measure's developer/
owner and NQF measure number, if applicable. The Physician Quality
Reporting System Measure Number is a unique identifier assigned by CMS
to all measures in the Physician Quality Reporting System measure set.
Once a Physician Quality Reporting System Measure Number is assigned to
a measure, it will not be used again to identify a different measure,
even if the original measure to which the number was assigned is
subsequently retired from the Physician Quality Reporting System
measure set. A description of the measures listed in Table 78 can be
found in the ``2010 PQRI Quality Measures List,'' which is available on
the Measures and Codes page of the Physician Quality Reporting System
section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
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BILLING CODE 4120-01-C
Please note that detailed measure specifications, including the
measure's title, for 2010 individual Physician Quality Reporting System
quality measures may have been updated or modified during the NQF
endorsement process or for other reasons prior to 2011. The 2011
Physician Quality Reporting System quality measure specifications for
any given individual quality measure may, therefore, be different from
specifications for the same quality measure used in prior years.
Specifications for all 2011 individual Physician Quality Reporting
System quality measures, whether or not included in the 2010 Physician
Quality Reporting System program, must be obtained from the
specifications document for 2011 individual Physician Quality Reporting
System quality measures, which will be available on the Physician
Quality Reporting System section of the CMS Web site on or before
December 31, 2010.
(2) 2011 Individual Quality Measures Selected From the 2010 Physician
Quality Reporting System Quality Measures Set Available for Registry-
Based Reporting Only
We proposed to include 45 registry-only individual measures from
the 2010 Physician Quality Reporting System (75 FR 40191). As in the
2010 Physician Quality Reporting System, we proposed to designate these
measures as registry-only measures for 2011 to relieve ongoing
analytical difficulties encountered with claims-based reporting of
these measures in prior program years. The following is a summary of
the comments received on the proposed registry-only measures.
Comment: One commenter expressed concern over our proposal to limit
measure 174, Pediatric End-Stage Renal Disease (ESRD): Plan of
Care for Inadequate Hemodialysis, to registry-based reporting for 2011.
The commenter stated that since there are only two pediatric ESRD
measures included in the Physician Quality Reporting System for 2010
and we require eligible professionals who report via a registry to
report 3 measures, it is difficult for pediatric nephrologists to
participate in this valuable program. Further, the commenter indicated
that even if participation could be based on the reporting of two
measures, the registry process itself is not available to the vast
majority of pediatric nephrologists who practice in small, academic
departments, none of whose other members care for Medicare
beneficiaries. Thus, the commenter suggested that similar to the
provision that allows one of the pediatric ESRD measures (influenza
immunization) to be reported in this individual manner, a mechanism be
made available allowing pediatric dialysis centers to report adequacy
results separately. In the absence of changes in the requirement to
report at least three measures, separate reporting of individual
measures would allow more pediatric nephrologists to participate in the
Physician Quality Reporting System and advance the ultimate goal of
quality improvement.
Response: We appreciate the comment and interest expressed on
behalf of the pediatric nephrology community. For the 2011 Physician
Quality Reporting System, we have decided not to include Physician
Quality Reporting System Measure 174, since this measure was
recently reviewed by NQF but not endorsed. As a result, only 1 of the 2
individual measures identified by the commenter as being relevant to
pediatric nephrologists, 175, Pediatric End-Stage Renal
Disease (ESRD): Influenza Immunization, is included in the final 2011
Physician Quality Reporting System measure set. This measure is
available for claims-based reporting. Eligible professionals who have
fewer than 3 applicable measures can still participate in the 2011
Physician Quality Reporting System via claims. Such eligible
professionals would need to report on the applicable measure available
for claims-based reporting via claims and meet the appropriate criteria
for satisfactory reporting of individual measures in order to qualify
for a 2011 Physician Quality Reporting System incentive payment.
For the reasons discussed previously and based on the comments
received, we are finalizing in the 2011 Physician Quality Reporting
System quality measure set 44 of the 45 proposed 2010 Physician Quality
Reporting System measures identified in Table 78 of the proposed rule
for registry reporting only. As stated previously, we are not
finalizing Physician Quality Reporting System Measure 174
because the measure was reviewed for endorsement by NQF but not
ultimately endorsed.
The 44 2010 Physician Quality Reporting System measures selected
for the 2011 Physician Quality Reporting System that are available for
registry reporting only are listed in Table 79 of this final rule with
comment period. These measures are listed by their Physician Quality
Reporting System Measure Number and Title, along with the name of the
measure's developer/owner and NQF endorsement status, if applicable. A
description of the measures listed in Table 79 can be found in the
``2010 PQRI Quality Measures List,'' which is available on the Measures
and Codes page of the Physician Quality Reporting System section of the
CMS Web site at http://www.cms.hhs.gov/PQRI.
BILLING CODE 4120-01-P

[[Page 73523]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.302

[[Page 73524]]

[GRAPHIC] [TIFF OMITTED] TR29NO10.303

BILLING CODE 4120-01-C
Although we are designating certain measures as registry-only
measures, we cannot guarantee that there will be a registry qualified
to submit each registry-only measure for 2011. We rely on registries to
self-nominate and identify the measures for which they would like to be
qualified to submit quality measures results and numerator and
denominator data on quality measures. If no registry self-nominates to
submit measure results and numerator and denominator data on a
particular measure for 2011, then an eligible professional would not be
able to report that particular measure.
We note also that detailed measure specifications, including a
measure's title, for 2010 Physician Quality Reporting System quality
measures may have been updated or modified during the NQF endorsement
process or for other reasons prior to 2011. Therefore, the 2011
Physician Quality Reporting System quality measure specifications for
any given quality measure may be different from specifications for the
same quality measure used for 2010. Specifications for all 2011
individual

[[Page 73525]]

Physician Quality Reporting System quality measures, whether or not
included in the 2010 Physician Quality Reporting System, must be
obtained from the specifications document for 2011 individual Physician
Quality Reporting System quality measures, which will be available on
the Physician Quality Reporting System section of the CMS Web site on
or before December 31, 2010.
(3) New Individual Quality Measures for 2011
We proposed to include in the 2011 Physician Quality Reporting
System quality measure set 20 measures that were not included in the
2010 Physician Quality Reporting System quality measures set provided
that each measure obtains NQF endorsement by June 1, 2010 and its
detailed specifications are completed and ready for implementation in
the Physician Quality Reporting System by August 15, 2010 (75 FR
40192). Besides having NQF endorsement, we proposed that the
development of a measure is considered complete for the purposes of the
2011 Physician Quality Reporting System if by August 15, 2010: (1) The
final, detailed specifications for use in data collection for the
Physician Quality Reporting System have been completed and are ready
for implementation, and (2) all of the Category II Current Procedural
Terminology (CPT II) codes required for the measure have been
established and will be effective for CMS claims data submission on or
before January 1, 2011.
Due to the complexity of their measure specifications, we proposed
that 8 of these 20 measures would be available as registry-only
measures for the 2011 Physician Quality Reporting System. The remaining
15 measures were proposed to be available for reporting through either
claims-based reporting or registry-based reporting.
The following is a summary of the comments received on the 20 new
individual quality measures proposed for 2011.
Comment: We received numerous comments in support of the proposed
additional quality measures for the 2011 Physician Quality Reporting
System. One commenter stated that the new Physician Quality Reporting
System measures will help to spur additional eligible professional
participation in the Physician Quality Reporting System. Several
comments were received specifically in support of the following `Change
in Risk-Adjusted Functional Status' measures, developed by FOTO:
Change in Risk-Adjusted Functional Status for Patients
with Knee Impairments
Change in Risk-Adjusted Functional Status for Patients
with Hip Impairments
Change in Risk-Adjusted Functional Status for Patients
with Lower Leg, Foot or Ankle Impairments
Change in Risk-Adjusted Functional Status for Patients
with Lumbar Spine Impairments
Change in Risk-Adjusted Functional Status for Patients
with Shoulder Impairments
Change in Risk-Adjusted Functional Status for Patients
with Elbow, Wrist or Hand Impairments
Change in Risk-Adjusted Functional Status for Patients
with a Functional Deficit of the Neck, Cranium, Mandible, Thoracic
Spine, Ribs or other General Orthopedic Impairment
Commenters stated these measures support ``improved quality and
efficiency of care for Medicare beneficiaries including: High cost and
high volume conditions; improved outcomes; improved efficiency;
improved patient and family experience of care; reduced unwarranted
variation in quality and efficiency.'' We also received support for the
inclusion of the following measures:
Hypertension (HTN): Plan of Care;
Heart Failure (HF): Left Ventricular Function (LVF)
Testing;
Reminder System for Mammograms measure;
Preventive Care and Screening: Tobacco Use: Screening and
Cessation Intervention;
Recording of Performance Status Prior to Lung or
Esophageal Cancer Resection; and
Pulmonary Function Tests Before Major Anatomic Lung
Resection.
Response: We appreciated the commenters' support of the proposed
measures and agree with the reasons stated by the commenters. We are
finalizing all of the proposed new measures supported by the
commenters. The new individual quality measures for the 2011 Physician
Quality Reporting System are identified in Table 80 of this final rule
with comment period.
Comment: Several commenters expressed support for the inclusion of
the new care transitions measures developed by the AMA-PCPI as these
measures are based on evidence-based processes that have been shown to
reduce readmissions, limit medication errors, and improve the patient
perspective of their care. The measures' developer, however, commented
that the measures were not designed for individual physician level
measurement. The measures are specified at the facility (hospital)
level, using the UB04 administrative data to identify the denominator
population.
Response: We appreciate the commenters' support for the new care
transitions measures. Based on the measure developer's comments,
however, we are not finalizing our proposal to include the following
measures in the final 2011 Physician Quality Reporting System measure
set:
Care Transitions: Reconciled Medication List Received by
Discharged Patients (Inpatient Discharges to Home/Self Care or Any
Other Site of Care);
Care Transitions: Transition Record with Specified
Elements Received by Discharged Patients (Inpatient Discharges to Home/
Self Care or Any Other Site of Care);
Care Transitions: Timely Transmission of Transition Record
(Inpatient Discharges to Home/Self Care or Any Other Site of Care); and
Care Transitions: Transition Record with Specified
Elements Received by Discharged Patients (Emergency Department
Discharges to Ambulatory Care [Home/Self Care] or Home Health Care.
Comment: One commenter recommended that the proposed Hypertension
(HTN): Plan of Care measure not be included in the final set of 2011
Physician Quality Reporting System measures, claiming that this measure
was developed as a ``test measure'' and was not designed for individual
physician accountability, but rather internal quality improvement.
Response: We appreciate the commenter's input but are finalizing
our proposal to include this measure in the 2011 Physician Quality
Reporting System measure set. This measure meets the considerations for
the selection of 2011 Physician Quality Reporting System measures and
is also a clinical quality measure under the EHR Incentive Program.
Based on the reasons discussed previously and upon consideration of
the comments received, we are finalizing in the 2011 Physician Quality
Reporting System quality measure set 16 of the 20 proposed 2011
Physician Quality Reporting System measures identified in Table 80 of
the proposed rule. In addition to not finalizing our proposal to
include the 4 new care transitions measures previously listed, we note
that 3 measures--Thoracic Surgery: Recording of Performance Status
Prior to Lung or Esophageal Cancer Resection; Thoracic Surgery:
Pulmonary Function Test Before Major Anatomic Lung Resection

[[Page 73526]]

(Pneumonectomy, Lobectomy, or Formal Segmentectomy); and Melanoma:
Overutilization of Imaging Studies in Stage 0-1A Melanoma--that were
proposed to be available for either registry or claims reporting will
be made available for registry reporting only for the 2011 Physician
Quality Reporting System. Upon further analysis of these measures, we
have determined that these measures would be analytically challenging
to collect via claims and, therefore, are not finalizing such measures
for the claims-based reporting option for the 2011 Physician Quality
Reporting System.
The titles of the 16 additional, or new, Physician Quality
Reporting System measures for 2011 are listed in Table 80 along with
the name of the measure developer, the reporting mechanism(s) available
(that is, whether the measure will be reportable using claims,
registries, or both), and the NQF Measure Number, if applicable.

Table 80--New Individual Quality Measures for 2011
----------------------------------------------------------------------------------------------------------------
NQF measure
Measure title number Measure developer Reporting mechanism(s)
----------------------------------------------------------------------------------------------------------------
Functional Deficit: Change in Risk-Adjusted 0422 FOTO Registry.
Functional Status for Patients with Knee
Impairments.
Functional Deficit: Change in Risk-Adjusted 0423 FOTO Registry.
Functional Status for Patients with Hip
Impairments.
Functional Deficit: Change in Risk-Adjusted 0424 FOTO Registry.
Functional Status for Patients with Lower
Leg, Foot or Ankle Impairments.
Functional Deficit: Change in Risk-Adjusted 0425 FOTO Registry.
Functional Status for Patients with Lumbar
Spine Impairments.
Functional Deficit: Change in Risk-Adjusted 0426 FOTO Registry.
Functional Status for Patients with
Shoulder Impairments.
Functional Deficit: Change in Risk-Adjusted 0427 FOTO Registry.
Functional Status for Patients with Elbow,
Wrist or Hand Impairments.
Functional Deficit: Change in Risk-Adjusted 0428 FOTO Registry.
Functional Status for Patients with Neck,
Cranium, Mandible, Thoracic Spine, Ribs, or
Other General Orthopedic Impairment.
Hypertension (HTN): Plan of Care............ 0017 AMA-PCPI Claims, Registry.
Heart Failure (HF): Left Ventricular 0079 CMS Registry.
Function (LVF) Testing.
Melanoma: Overutilization of Imaging Studies 0562 AMA-PCPI Registry.
in Stage 0-IA Melanoma.
Radiology: Reminder System for Mammograms... 0509 AMA-PCPI Claims, Registry.
Asthma: Tobacco Use: Screening--Ambulatory Not applicable AMA-PCPI Claims, Registry.
Care Setting.
Asthma: Tobacco Use: Intervention-- Not applicable AMA-PCPI Claims, Registry.
Ambulatory Care Screening.
Preventive Care and Screening: Tobacco Use: 0028 AMA-PCPI Claims, Registry.
Screening and Cessation Intervention.
Thoracic Surgery: Recording of Performance 0457 Society of Thoracic Registry.
Status Prior to Lung or Esophageal Cancer Surgery (STS)
Resection.
Thoracic Surgery: Pulmonary Function Tests 0458 Society of Thoracic Registry.
Before Major Anatomic Lung Resection. Surgery (STS)
----------------------------------------------------------------------------------------------------------------

(4) 2011 Measures Available for EHR-Based Reporting
For 2011, we proposed to again accept Physician Quality Reporting
System data from EHRs for a limited subset (22) of the proposed 2011
Physician Quality Reporting System quality measures, contingent upon
the successful completion of our 2010 EHR data submission process and a
determination that accepting data from EHRs on quality measures for the
2011 Physician Quality Reporting System continues to be practical and
feasible. The 22 measures we proposed to be available for EHR-based
reporting in the 2011 Physician Quality Reporting System include the 10
measures available for EHR-based reporting in the 2010 Physician
Quality Reporting System and 12 additional measures that overlap with
the clinical quality measures used in the EHR incentive program
established by the American Recovery and Reinvestment Act (ARRA) (75 FR
40193).
The following is a summary of the comments received on the proposed
electronic submission of these 22 measures.
Comment: Commenters were pleased that we proposed the addition of
new measures for EHR-based reporting as this will permit additional
physician specialties to participate using this reporting mechanism. We
specifically received support for the following proposed measures for
EHR-based reporting:
Measure 1: Diabetes Mellitus: Hemoglobin A1c Poor
Control in Diabetes Mellitus;
Measure 2: Diabetes Mellitus: Low Density
Lipoprotein (LDL-C) Control in Diabetes Mellitus;
Measure 3: Diabetes Mellitus: High Blood Pressure
Control in Diabetes Mellitus;
Measure 5: Heart Failure: Angiotensin-Converting
Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy
for Left Ventricular Systolic Dysfunction (LVSD);
Measure 7: Coronary Artery Disease (CAD): Beta-
Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI);
Measure 110: Preventive Care and Screening:
Influenza Immunization for Patients >=50 Years Old;
Measure 111: Preventive Care and Screening:
Pneumonia Vaccination for Patients 65 Years and Older;
Measure 128: Preventive Care and Screening: Body
Mass Index (BMI) Screening and Follow-Up;

[[Page 73527]]

Measure 173: Preventive Care & Screening:
Unhealthy Alcohol Use--Screening;
Measure TBD: Hypertension (HTN): Blood Pressure
Measurement;
Measure TBD: Preventive Care and Screening:
Tobacco Use: Screening and Cessation Intervention;
Measure TBD: Body Mass Index (BMI) 2 Through 18
Years of Age.
Response: We appreciate the commenters' support of our proposal to
expand the number of measures available for EHR reporting and for the
measures previously listed. We are finalizing our proposal to have all
of the measures previously listed available for 2011 Physician Quality
Reporting System EHR reporting.
Comment: One commenter was concerned by the limited number of
quality measures available for EHR reporting. The commenter stated that
the current list of quality measures for reporting via EHR does not
facilitate widespread participation because the 22 measures proposed
for EHR reporting will restrict the number and type of eligible
professionals able to report with their EHR system. This commenter
believed the future requirements to align the Physician Quality
Reporting System and EHR incentive programs highlight the importance of
expanding this list.
Response: We agree with the commenter and are working to expand the
list of electronically specified measures for future years. However,
EHR-derived measures data will be accepted for the Physician Quality
Reporting System directly from a qualified EHR for the first time in
early 2011 (with 2010 Physician Quality Reporting System data). For
this reason, we believe that a limited set of measures this early in
the process will increase the program's chance of being successful in
accepting this quality data.
Comment: A few commenters noted that many current measures are not
specified for electronic reporting and that additional resources are
needed to work with measure developers to re-specify or ``retool''
measures to be effectively collected via EHRs. One commenter noted that
a hybrid approach of data collected via EHR and manual abstraction may
potentially be needed.
Response: As noted previously, we are planning to continue to
electronically specify measures to add to the list of those measures
that are currently electronically specified for future years.
Comment: Because the following measures were not included in the
Final Rule for Stage 1 of the EHR Incentive Program, one commenter
suggested that they be removed from the list of 2011 EHR-based measures
in favor of measures that are included in the EHR Incentive Program:
Measures 39, 41, 47, 48, 142, 173, and Drugs to Be Avoided in
the Elderly.
Response: While we are required to develop a plan to integrate the
reporting of quality measures under the Physician Quality Reporting
System with reporting under the EHR Incentive Program, they are two
distinct programs. Therefore, we believe that it may be appropriate to
have different measures in each of them and are retaining such measures
in the Physician Quality Reporting System for 2011. However, we note
that we are not finalizing our proposal to have Physician Quality
Reporting System Measures 41 and 142 available for
2011 Physician Quality Reporting System EHR reporting. The electronic
specifications and Quality Reporting Document Architecture (QRDA) for
submitting these measures electronically were not fully developed.
Based on the reasons discussed previously and upon consideration of
the comments received, we are finalizing the option of accepting
clinical quality data extracted from qualified EHRs on 20 of the 22
proposed 2011 Physician Quality Reporting System quality measures
identified in Tables 81 and 82 of the proposed rule. We are not
finalizing our proposal to have Physician Quality Reporting System
Measures 41 and 142 available for 2011 Physician
Quality Reporting System EHR reporting because the specifications for
submitting these measures electronically are not ready. The final 2011
measures available for EHR-based reporting are identified in Tables 81
and 82 of this final rule with comment period.

Table 81--2011 Measures Available for EHR-Based Reporting From 2010 Physician Quality Reporting System
----------------------------------------------------------------------------------------------------------------
Physician Quality Reporting System Measure title Measure developer NQF Measure No.
----------------------------------------------------------------------------------------------------------------
1.................................. *** Diabetes Mellitus: NCQA................. 0059
Hemoglobin A1c Poor
Control in Diabetes
Mellitus.
2.................................. *** Diabetes Mellitus: Low NCQA................. 0064
Density Lipoprotein (LDL-
C) Control in Diabetes
Mellitus.
3.................................. *** Diabetes Mellitus: High NCQA................. 0061
Blood Pressure Control in
Diabetes Mellitus.
5.................................. *** Heart Failure: AMA-PCPI............. 0081
Angiotensin-Converting
Enzyme (ACE) Inhibitor or
Angiotensin Receptor
Blocker (ARB) Therapy for
Left Ventricular Systolic
Dysfunction (LVSD).
7.................................. *** Coronary Artery Disease AMA-PCPI............. 0070
(CAD): Beta-Blocker
Therapy for CAD Patients
with Prior Myocardial
Infarction (MI).
110................................ ** Preventive Care and AMA-PCPI............. 0041
Screening: Influenza
Immunization for Patients
>= 50 Years Old.
111................................ *** Preventive Care and NCQA................. 0043
Screening: Pneumonia
Vaccination for Patients
65 Years and Older.
112................................ *** Preventive Care and NCQA................. 0031
Screening: Screening
Mammography.
113................................ *** Preventive Care and NCQA................. 0034
Screening: Colorectal
Cancer Screening.
124................................ Health Information CMS/QIP.............. 0488
Technology (HIT): Adoption/
Use of Electronic Health
Records (EHR).
----------------------------------------------------------------------------------------------------------------
\*\ This measure is a Core clinical quality measure for the Electronic Health Record Incentive Program under the
ARRA HITECH regulation for program years 2011-2012. The electronic specifications for measures that are
included in the PQRI and Electronic Health Record Incentive Program may be different. Eligible professionals
should refer to the measure specifications for the appropriate program.
\**\ This measure is an Alternate Core clinical quality measure for the Electronic Health Record Incentive
Program under the ARRA HITECH regulation for program years 2011-2012. The electronic specifications for
measures that are included in the PQRI and Electronic Health Record Incentive Program may be different.
Eligible professionals should refer to the measure specifications for the appropriate program.

[[Page 73528]]

\***\ This measure is included in the Electronic Health Record Incentive Program under the ARRA HITECH
regulation for program years 2011-2012. The electronic specifications for measures that are included in the
PQRI and Electronic Health Record Incentive Program may be different. Eligible professionals should refer to
the measure specifications for the appropriate program.

Table 82--Additional Measures Available for EHR-Based Reporting in 2011
----------------------------------------------------------------------------------------------------------------
Physician Quality Reporting System Measure title Measure developer NQF Measure No.
----------------------------------------------------------------------------------------------------------------
39................................. Screening or Therapy for AMA-PCPI/NCQA........ 0046
Osteoporosis for Women
Aged 65 Years and Older.
47................................. Advance Care Plan.......... AMA-PCPI/NCQA........ 0326
48................................. Urinary Incontinence: AMA-PCPI/NCQA........ 0098
Assessment of Presence or
Absence of Urinary
Incontinence in Women Aged
65 Years and Older.
128................................ * Preventive Care and CMS/Quality Insights 0421
Screening: Body Mass Index of Pennsylvania.
(BMI) Screening and Follow-
up.
173................................ Preventive Care and AMA-PCPI............. AQA Adopted
Screening: Unhealthy
Alcohol Use--Screening.
TBD................................ * Hypertension (HTN): Blood AMA-PCPI............. 0013
Pressure Measurement.
TBD................................ Drugs to be Avoided in the NCQA................. 0022
Elderly.
TBD................................ ** Weight Assessment and NCQA................. 0024
Counseling for Children
and Adolescents.
TBD................................ * Preventive Care and AMA-PCPI............. 0028
Screening: Tobacco Use:
Screening and Cessation
Intervention.
TBD................................ ** Childhood Immunization NCQA................. 0038
Status.
----------------------------------------------------------------------------------------------------------------
* This measure is a Core clinical quality measure for the Electronic Health Record Incentive Program under the
ARRA HITECH regulation for program years 2011-2012. The electronic specifications for measures that are
included in the PQRI and Electronic Health Record Incentive Program may be different. Eligible professionals
should refer to the measure specifications for the appropriate program.
** This measure is an Alternate Core clinical quality measure for the Electronic Health Record Incentive Program
under the ARRA HITECH regulation for program years 2011-2012. The electronic specifications for measures that
are included in the PQRI and Electronic Health Record Incentive Program may be different. Eligible
professionals should refer to the measure specifications for the appropriate program.
*** This measure is included in the Electronic Health Record Incentive Program under the ARRA HITECH regulation
for program years 2011-2012. The electronic specifications for measures that are included in the PQRI and
Electronic Health Record Incentive Program may be different. Eligible professionals should refer to the
measure specifications for the appropriate program.

(5) Measures Proposed for Inclusion in 2011 Measures Groups
We proposed to retain the following 13 2010 Physician Quality
Reporting System measures groups for the 2011 Physician Quality
Reporting System: (1) Diabetes Mellitus; (2) CKD; (3) Preventive Care;
(4) CABG; (5) Rheumatoid Arthritis; (6) Perioperative Care; (7) Back
Pain; (8) CAD; (9) Heart Failure; (10) IVD; (11) Hepatitis C; (12) HIV/
AIDS; and (13) CAP. For 2011, we proposed that the CABG, CAD, Heart
Failure, and HIV/AIDS measures groups continue to be reportable through
the registry-based reporting mechanism only, while the remaining
Diabetes Mellitus, CKD, Preventive Care, Rheumatoid Arthritis,
Perioperative Care, Back Pain, IVD, Hepatitis C, and CAP measures
groups will continue to be reportable through either claims-based
reporting or registry-based reporting for the 2011 Physician Quality
Reporting System (75 FR 40193).
In addition to the 13 measures groups that we proposed to retain
from the 2010 Physician Quality Reporting System, we proposed 1 new
Asthma Measures Group, which could be reported through either claims-
based reporting or registry-based reporting.
Finally, as in previous program years, for 2011, we proposed that
the measures included in any proposed 2011 measures group be reportable
either as individual measures or as part of a measures group, except
for the Back Pain measures group, which will continue to be reportable
only as part of a measures group and not as individual measures in 2011
(75 FR 40193 through 40197).
As with measures group reporting in the 2008, 2009, and 2010
Physician Quality Reporting System, we proposed that each eligible
professional electing to report a group of measures for 2011 must
report all measures in the group that are applicable to each patient or
encounter to which the measures group applies at least up to the
minimum number of patients required by the applicable reporting
criteria. The following is a summary of the comments received on the
proposed 2011 measures groups.
Comment: One commenter expressed support for the movement to
greater use of measures groups as a method of Physician Quality
Reporting System participation, as they are easier to manage and
monitor.
Response: We appreciate the commenter's positive feedback and
continue to encourage eligible professionals to report on measures
groups. As we have stated in prior years, we believe that measures
groups can present a more complete picture of the quality of care
provided clinical condition or clinical focus than individual measures
reporting.
Comment: We received favorable support for the proposed inclusion
of the following measures groups:
Asthma.
Back Pain.
CAD.
CAP.
CABG.
Diabetes Mellitus.
Heart failure.
Some of the reasons stated by commenters include that these are
important chronic conditions and collecting information on the
treatment of these conditions could lead to improved care and
treatment, which would result in reduced costs.
Response: We agree. For these reasons, we are finalizing our
proposal to include all of these measures groups in the 2011 Physician
Quality Reporting System.
Comment: One commenter proposed the removal of Measure
135, Chronic Kidney Disease (CKD): Influenza Immunization,
from the CKD Measures Group to ensure maximum satisfactory reporting.
The commenter noted that Measure 135 differs from other
measures in the CKD Measures Group in its method of reporting. Whereas
measures in the CKD Measures Group are Patient Process (where the
measures are reported once per reporting period), Measure 135
is now Patient Periodic (where the measure is reported during certain
periods of time). The commenter is concerned that this difference in
reporting methods may be too confusing for satisfactory reporting.
Response: We agree with the commenter's recommendation and are

[[Page 73529]]

removing Measure 135, Influenza, from the CKD Measures Group
for the reasons cited by the commenter. However, the CKD Influenza
Measure 135 will still be reportable as an individual measure.
Comment: One commenter supported the proposed retention of the 2010
HIV/AIDS Physician Quality Reporting System measures group for the 2011
Physician Quality Reporting System, but encouraged, to the extent
feasible, HIV/AIDS quality measures that can be reported through the
claims-based method in addition to the registry-based method.
Response: We are pleased with the commenter's support for the HIV/
AIDS measures group. Based on the current processing of claims data, it
was determined that the claims system will not accurately capture these
measures. Registry reporting provides an intricate process to capture
these measures accurately.
Comment: For the 2011 Physician Quality Reporting System measures
group on preventive care, the addition of a process measure for HIV
screening of ``high-risk'' patients, as endorsed by the National
Quality Forum and USPSTF previously (level ``A'' recommendation), be
added. The commenter urged that this measure be modified if and when
coverage is expanded to include routine HIV screening, consistent with
the recommendations of the Centers for Disease Control and Prevention
(CDC).
Response: We appreciate the commenter's suggestion to add HIV
screening of ``high risk'' patients into the Preventive Care Measures
Group. Measure groups are created based on measures with a particular
clinical condition or focus. The current Preventive Care Measures Group
is intended for a more general patient population and would not be
appropriate for the addition of the HIV measure(s) suggested by the
commenter. The commenter should consider utilizing the 2012 Call for
Measures as an avenue for submitting suggestions for possibly creating
a new measure group for screening ``high risk'' patients. We also urge
the commenter to direct such suggestions to the appropriate measure
developer/owner(s) for consideration.
Based on the reasons discussed previously and upon consideration of
the comments received, we are finalizing the following proposed 2011
measures groups: (1) Diabetes Mellitus; (2) Preventive Care; (3) CABG;
(4) Rheumatoid Arthritis; (5) Perioperative Care; (6) Back Pain; (7)
CAD; (8) Heart Failure; (9) IVD; (10) Hepatitis C; (11) HIV/AIDS; (12)
CAP; and (13) Asthma. We are also finalizing the proposed CKD measures
group for 2011 with one modification. As stated previously, we are
removing Measure 135: Chronic Kidney Disease (CKD): Influenza
Immunization from the CKD measures group for 2011 because the reporting
requirements for this measure are different from the reporting
requirements for the other measures in this measures group. The
following 4 measures groups are reportable through the registry-based
reporting mechanism only: (1) CABG; (2) CAD; (3) Heart Failure; and (4)
HIV/AIDS.
The measures selected for inclusion in each of the 2011 measures
groups are identified in Tables 83 through 96 of this final rule with
comment period. Some measures selected for inclusion in these 14
measures groups are current 2010 individual Physician Quality Reporting
System measures. The title of each such measure is preceded with its
Physician Quality Reporting System Measure Number in Tables 83 through
96. As stated previously, the Physician Quality Reporting System
Measure Number is a unique identifier assigned by CMS to all measures
in the Physician Quality Reporting System measure set. Once a Physician
Quality Reporting System Measure Number is assigned to a measure, it
will not be used again, even if the measure is subsequently retired
from the Physician Quality Reporting System measure set. Measures that
are not preceded by a number (in other words, those preceded by
``TBD'') in Tables 83 through 96 were never part of a Physician Quality
Reporting System measure set prior to 2011. A number will be assigned
to such measures for 2011.
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As with measures group reporting in the 2008, 2009, and 2010
Physician Quality Reporting System, each eligible professional electing
to report a group of measures for 2011 must report all measures in the
group that are applicable to each patient or encounter to which the
measures group applies at least up to the minimum number of patients
required by the applicable reporting criteria. The measures selected
for the Back Pain Measures Group continue to be reportable only as part
of a measures group and not as individual measures for the 2011
Physician Quality Reporting System. Measures selected for inclusion in
all other 2011 Physician Quality Reporting System measures groups are
reportable either as individual measures or as part of a measures
group.
We note that the specifications for measures groups do not
necessarily contain all the specification elements of each individual
measure making up the measures group. This is based on the need for a
common set of denominator specifications for all the measures making up
a measures group in order to define the applicability of the measures
group. Therefore, the specifications and instructions for measures
groups will be provided separately from the specifications and
instructions for the individual 2011 Physician Quality Reporting System
measures. We will post the detailed specifications and specific
instructions for reporting measures groups on the Physician Quality
Reporting System section of the CMS Web site at http://www.cms.hhs.gov/PQRI by no later than December 31, 2010.
Additionally, the detailed measure specifications and instructions
for submitting data on those 2011 measures groups that were also
included as 2010 Physician Quality Reporting System measures groups may
be updated or modified prior to 2011.
Therefore, the 2011 Physician Quality Reporting System measure
specifications for any given measures group could be different from
specifications and submission instructions for the same measures group
used for 2010. These measure specification changes do not materially
impact the intended meaning of the measures or the strength of the
measures.
j. 2011 Physician Quality Reporting System Quality Measures for Group
Practices Selected To Participate in the Group Practice Reporting
Option (GPRO I)
For 2011, we proposed that group practices selected to participate
in the 2011 Physician Quality Reporting System GPRO I would be required
to report on 26 proposed measures listed in Table 97 of the proposed
rule (75 FR 40197 through 40198). We proposed these measures because
they are NQF-endorsed measures currently collected as part of the PGP
and/or MCMP demonstrations and in the 2010 Physician Quality Reporting
System GPRO.
The following is a summary of the comments received on the proposed
2011 Physician Quality Reporting System quality measures for group
practices selected to participate in the group practice reporting
option (GPRO I).
Comment: We received a comment noting general support for the 26
proposed GPRO I measures. Another commenter expressed specific support
for the diabetes measures proposed for the Group Practice Reporting
Option (GPRO), ``Diabetes Mellitus: Hemoglobin A1c Testing'' and
``Diabetes Mellitus: Lipid Profile.''
Response: We appreciate the positive feedback and are finalizing
the 26 GPRO I measures as proposed. We believe these measures target
high-cost chronic conditions and preventive care.
Comment: A couple of commenters encouraged us to expand the list of
GPRO I measures and/or develop different measure sets to address the
care delivered in different group practices. One commenter encouraged
us to adopt additional diabetes measures into the GPRO to ensure the

[[Page 73536]]

most comprehensive evidence-based assessment of diabetes care.
Response: We agree that in order to make GPRO I more broadly
applicable we would need to expand the list of GPRO I measures and/or
develop different measures to address the care delivered in different
group practices. As we stated in the proposed rule (75 FR 40180), we
hosted a listening session on February 2, 2010, to solicit input on a
number of aspects of the Physician Quality Reporting System, including
the measures for the 2011 Physician Quality Reporting System GPRO. We
did not, however, receive any suggestions for additional disease
modules for GPRO I. Therefore, we encourage commenters to use the 2012
Call for Measures as an avenue to submit specific measures for us to
consider for future expansion of the GPRO I measure set. As stated
previously, additional measures recommended for selection for the 2011
Physician Quality Reporting System via comments to the proposed rule
cannot be included in the 2011 Physician Quality Reporting System
measure set.
Comment: With regard to the 26 GPRO measures, one commenter asked
us to consider whether some of the testing and patient education
measures are sufficiently proximate to the desired clinical outcome to
justify the effort of data collection, analysis, and comparative
reporting.
Response: We value the commenter's thoughtful input and agree that
as we expand the Physician Quality Reporting System measure set,
including the GPRO I measure set, in future years we may want to
consider whether the measures lead to the desired outcomes.
Based on the reasons discussed previously and after considering the
comments, for the 2011 Physician Quality Reporting System, group
practices selected to participate in the Physician Quality Reporting
System GPRO I will be required to report on all measures listed in
Table 97.
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A separate measures specifications manual and other supporting
documents will be available for group practices participating in the
2011 Physician Quality Reporting System GPRO I. We anticipate that the
group practice measures specifications manual will be available by
November 15, 2010 or shortly thereafter on the Physician Quality
Reporting System section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
k. Public Reporting of Physician Quality Reporting System Data
Section 1848(m)(5)(G) of the Act requires the Secretary to post on
the CMS Web site, in an easily understandable format, a list of the
names of eligible professionals (or group practices) who satisfactorily
submitted data on quality measures for the Physician Quality Reporting
System and the names of the eligible professionals (or group practices)
who are successful electronic prescribers. In addition, section
10331(a)(1) of the ACA, requires the Secretary to develop a Physician
Compare Internet Web site by January 1, 2011, on which information on
physicians enrolled in the Medicare program and other eligible
professionals who participate in the Physician Quality Reporting System
would be posted.
In accordance with section 1848(m)(5)(G) of the Act, we proposed to
continue to make public the names of eligible professionals and group
practices that satisfactorily submit quality data for the 2011
Physician Quality Reporting System. Previously, we intended to post
such information on the Healthcare Provider Directory. To meet the ACA
deadline of January 1, 2011, we proposed to use the current Healthcare
Provider Directory (previously known as the Physician and Other Health
Care Professional Directory) as a foundation for the Physician Compare
Web site. Therefore, we proposed to post the names of the 2011
Physician Quality Reporting System satisfactory reporters on the
Physician Compare Web site that must be developed by January 1, 2011.
Specifically, we proposed to post the names of eligible
professionals who: (1) Submit data on the 2011 Physician Quality
Reporting System quality measures through one of the reporting
mechanisms available for the 2011 Physician Quality Reporting System;
(2) meet one of the proposed satisfactory reporting criteria of
individual measures or measures groups for the 2011 Physician Quality
Reporting System as previously described; and (3) qualify to earn a
Physician Quality Reporting System incentive payment for covered
professional services furnished during the applicable 2011 Physician
Quality Reporting System reporting period, for purposes of satisfying
the requirements under section 1848(m)(5)(G)(i) of the Act, on the
Physician Compare Web site (75 FR 40198). Similarly, for purposes of
publicly reporting the names of group practices, on the Physician
Compare Web site, for 2011, we proposed to post the names of group
practices that: (1) Submit data on the 2011 Physician Quality Reporting
System quality measures through one of the proposed group practice
reporting options; (2) meet the proposed criteria for satisfactory
reporting under the respective group practice reporting option; and (3)
qualify to earn a Physician Quality Reporting System incentive payment
for covered professional services furnished during the applicable 2011
Physician Quality Reporting System reporting period for purposes of
satisfying the requirements under section 1848(m)(5)(G)(i) of the Act.
We did not propose to make performance information publicly
available at either the group practice or individual level for 2011
Physician Quality Reporting System. However, we note that section 10331
of the ACA requires that not later than January 1, 2013, and with
respect to reporting periods that begin no earlier than January 1,
2012, we implement a plan for making publicly available through
Physician Compare, information on physician performance, including
measures collected under the Physician Quality Reporting System.
Consistent with section 10331 of the ACA, we expect, in the future, to
publicly report performance information based on the Physician Quality
Reporting System.
The following is a summary of the comments we received regarding
the public reporting of Physician Quality Reporting System data
required under section 1848(m)(5)(G)(i) of the Act and Physician
Compare Web site required under section 10331 of the ACA.
Comment: Many commenters supported the development of a Physician
Compare Web site. Some commenters supported public reporting of the
names of eligible professionals who satisfactorily report Physician
Quality Reporting System measures and/or who are successful e-
prescribers, noting that this is an appropriate first step in CMS'
efforts to further transparency. Another commenter supported public
reporting of the names of eligible professionals who participate in the
Physician Quality Reporting System or Maintenance of Certification
Programs as a way to enhance informed consumer choice based on quality
and outcomes.
Response: We appreciate the commenters' support. We note, however,
that we did not propose to publicly report the names of eligible
professionals who participate in the Physician Quality Reporting System
or Maintenance of Certification Programs. Instead, we proposed to
publicly report the names of eligible professionals who satisfactorily
report 2011 Physician Quality Reporting System measures and are
finalizing our proposal to post the names of eligible professionals who
satisfactorily report 2011 Physician Quality Reporting System measures
on the Physician Compare Web site.
Comment: Some commenters agreed with CMS' decision to not publicly
report individual or group level Physician Quality Reporting System
performance results at this time. Many

[[Page 73539]]

of the commenters believe that it would be premature to do so. One
commenter believed that CMS' decision to not post 2011 Physician
Quality Reporting System performance data will allow eligible
professionals to analyze their 2010 data and resolve any identified
concerns with the GPRO reporting and analysis process. Another
commenter noted that a different level of scrutiny is required to
report performance rates. A commenter generally opposes the use of
quality data for the purpose of physician profiling because it could
exacerbate gaps in quality and access through risk avoidance and by
inhibiting collaborative efforts by the profession to improve care for
all patients.
Response: Although we are not planning to post 2011 Physician
Quality Reporting System performance results, we note that section
10331 of the ACA requires that not later than January 1, 2013, and with
respect to reporting periods that begin no earlier than January 1,
2012, we implement a plan for making publicly available through
Physician Compare, information on physician performance, including
measures collected under the Physician Quality Reporting System.
Therefore, consistent with section 10331 of the ACA, we expect, in the
future, to publicly report performance information based on the
Physician Quality Reporting System. It is conceivable that we could
begin publicly reporting performance information based on the Physician
Quality Reporting System starting with 2012 Physician Quality Reporting
System performance results. If and when we move towards public
reporting of physician performance information, as contemplated under
section 10331 of the ACA, we will need to consider and address the
commenters' concerns.
Comment: As we move towards posting performance information, one
commenter urged us to start with posting measure results on group
practices only until there is sufficient experience and data to
determine which, if any, measures can be reported at the individual
practitioner level with relative certainty that the information
portrayed is accurate. Specifically, we should monitor the group
practice level reporting for unintended consequences before reporting
performance information at the individual practitioner level.
Response: We appreciate the commenter's valuable input. We are
committed to taking steps to ensure that the information portrayed is
accurate. As we develop our plans for posting performance information
on the Physician Compare Web site, we may consider initially limiting
the performance information to measure results at the group practice
level as suggested by the commenter. As stated previously, we will
discuss our plans for posting performance information in more detail in
future notice and comment rulemaking.
Comment: Some commenters suggested that we work with stakeholders
to--
Identify how best to relay this information in a user-
friendly manner to the public;
Develop reliable, comparable benchmarks, with a sufficient
sample size to ensure validity;
Ensure that specific reporting and performance results are
indeed quality indicators;
Ensure that the site accurately represents physician
performance and facilitates consumer decision-making;
Provide an opportunity for physicians, other eligible
professionals, and group practices to review their data before it is
made public. As with Hospital Compare, eligible professionals should
have the right to suppress any data that are inaccurate; and
Establish a method for ensuring that any publicly reported
information is--
++ Correctly attributed to those involved in the care;
++ Appropriately risk-adjusted; and
++ Accurate, user-friendly, relevant and helpful to the consumer/
patient. CMS must educate consumers/patients about the publicly
reported performance measures and corresponding benchmarks.
Response: We agree with commenters on the importance of receiving
stakeholder input on the Physician Compare Web site. We are required,
by section 10331(d) of the ACA to take into consideration input
provided by multi-stakeholder groups, consistent with section
1890(b)(7) and 1890(A) of the Act, as added by section 3014 of the ACA,
in selecting quality measures for the Physician Compare Web site. In
addition, on October 27, 2010, we held a Town Hall Meeting to solicit
input from stakeholders on the further expansion of the Physician
Compare Web site (75 FR 58411 and 58412). Finally, as we stated in the
CY 2011 PFS proposed rule, we will be working on a plan to expand the
information that is publicly reported on the Physician Compare in
future years, which will be described in future rulemaking.
Stakeholders would have an opportunity to comment on any plans
described in future rulemaking as well.
Comment: One commenter voiced concerns about various issues and
challenges that need to be resolved before any performance information
is made public. Specific issues include measure gaps, challenges
associated with risk adjustment and attribution, accuracy of the data,
and eligible professionals' ability to control the factors that
influence their performance.
Response: We agree that these issues will need to be addressed as
we move towards public reporting of performance information on
individual eligible professionals. We look forward to receiving input
from stakeholders on these and other important methodological
considerations as we develop our plans for the expansion of the
Physician Compare Web site to include performance information.
Comment: A few commenters suggested that physicians be given an
opportunity to review and appeal any data that will be made public
prior to the data being made public. Commenters stated that physicians
also should be given an opportunity to comment and make changes to the
data on the Physician Compare Web site should the information be
incorrect.
Response: With respect to the development and implementation of a
plan for making physician performance information publicly available on
the Physician Compare Web site, section 10331(b) of the ACA
specifically requires the Secretary, to the extent practicable, to
include processes by which a physician or other eligible professional
whose performance measures is being publicly reported has a reasonable
opportunity, as determined by the Secretary, to review his or her
individual results before they are made public. Thus, as we describe
our plans for making physician performance information publicly
available on the Physician Compare Web site in future notice and
comment rulemaking, we anticipate addressing the commenter's
suggestions in further detail.
Comment: Some commenters had concerns about the posting of the
names of eligible professionals and group practices who satisfactorily
report Physician Quality Reporting System measures. Some commenters
requested that CMS delay posting this information until problems with
the Physician Quality Reporting System are addressed and both success
rates and participation rates improve significantly. Commenters were
concerned that this information could be misinterpreted or misperceived
by the public. Some commenters noted that successful reporting of the
mostly process measures that comprise the Physician Quality Reporting
System would not be a valid surrogate for patients to evaluate the
actual quality of

[[Page 73540]]

care or quality of service provided by an individual practitioner.
Furthermore, consumers already face a challenge when attempting to
evaluate providers. The commenter thinks it will be even more confusing
for consumers to understand the difference between claims-based or
registry reporting and which is more accurate or reflects actual
quality of care. Commenters stressed the importance of educating
consumers about why eligible professionals may choose not to
participate in the Physician Quality Reporting System. Another
commenter noted that consumers must be made aware that non-
participation in the Physician Quality Reporting System is not an
indication that an eligible professional or group practice provides low
quality care. Finally, a commenter also suggested that this information
be accompanied with explanatory language regarding the limitations of
posting this data.
Response: While we understand the commenters' concerns, section
1848(m)(5)(G)(i) of the Act requires us to post on a CMS Web site the
names of eligible professionals and group practices that satisfactorily
submit data on quality measures under the Physician Quality Reporting
System. We intend to provide explanatory language on the Web site that
would address many of the commenters' concerns, including information
about the intended uses and/or limitations of the information being
presented in the form of a disclaimer.
Comment: One commenter urged CMS to consider how the appeals
process will be connected to the Physician Compare Web site. The
commenter questioned whether the Web site would be updated if
professionals are successful during the appeals process.
Response: We are assuming that the commenter is referring to the
informal appeals process required under section 1848(m)(5)(I) of the
Act and discussed in section VII.F.1.e. of this final rule with comment
period. To the extent that an eligible professional seeks a review of
our determination that he or she did not satisfactorily report and our
review results in a determination that the professional did
satisfactorily report, we anticipate that we would update the Physician
Compare Web site to indicate that the professional satisfactorily
reported Physician Quality Reporting System quality measures.
Comment: We received a few comments related to public reporting and
maintenance of certification. One commenter offered to work with us to
provide information on Maintenance of Certification Program status for
posting on the Physician Compare Web site and the value as it relates
to quality, safety, efficiency, and patient experiences of physician
care. The commenter would also like the Physician Compare Web site to
include a link to ABMS. Another commenter urged us to make available
information on whether a physician received an additional bonus for
successfully meeting Maintenance of Certification Program requirements.
A third commenter was concerned that public reporting of physicians who
satisfy the Physician Quality Reporting System requirements through the
Maintenance of Certification Program Part IV pathway could
inadvertently lead to confusion about whether those same physicians
have satisfied all of the requirements of the Boards' Maintenance of
Certification Program programs.
Response: We agree that it may be valuable to consumers to have
information on an eligible professional's Maintenance of Certification
Program status and would be interested in exploring the feasibility of
posting this information on the Physician Compare Web site in the
future. We could also explore posting information on whether a
physician or other eligible professional received the additional 0.5
percent incentive associated with participation in a Maintenance of
Certification Program. However, as noted by one of the commenters, we
feel that this information could be misinterpreted and would not be as
valuable as information on an eligible professional's Maintenance of
Certification Program status. As we describe in section VII.F.1.l.(1)
of this final rule with comment period, in order for an eligible
professional to qualify for this additional 0.5 percent incentive, not
only does he or she have to satisfactorily participate in the Physician
Quality Reporting System, participate in a qualified Maintenance of
Certification Program, and successfully complete a Maintenance of
Certification Program practice assessment, but he or she must
participate in the qualified Maintenance of Certification Program and
successfully complete a Maintenance of Certification Program practice
assessment more frequently than is required to qualify for or maintain
board certification status.
After considering the comments, we intend to post the names of
eligible professionals who: (1) Submit data on the 2011 Physician
Quality Reporting System quality measures through one of the reporting
mechanisms available for the 2011 Physician Quality Reporting System;
(2) meet one of the satisfactory reporting criteria of individual
measures or measures groups for the 2011 Physician Quality Reporting
System; and (3) qualify to earn a Physician Quality Reporting System
incentive payment for covered professional services furnished during
the applicable 2011 Physician Quality Reporting System reporting period
for purposes of satisfying the requirements under section
1848(m)(5)(G)(i) of the Act, on the Physician Compare Web site that
will be developed by January 1, 2011.
Similarly, for purposes of satisfying the requirements under
section 1848(m)(5)(G)(i) of the Act with respect to group practices, on
the Physician Compare Web site, we intend to post the names of group
practices that: (1) Submit data on the 2011 Physician Quality Reporting
System quality measures through GPRO I or GPRO II; (2) meet the
criteria for satisfactory reporting under the GPRO I or GPRO II; and
(3) qualify to earn a Physician Quality Reporting System incentive
payment for covered professional services furnished during the
applicable 2011 Physician Quality Reporting System reporting period for
group practices.
We will discuss our plans for further expansion of the Physician
Compare Web site in future notice and comment rulemaking.
l. Other Relevant ACA Provisions
(1) Section 3002(b)--Incentive Payment Adjustment for Quality Reporting
Beginning 2015, a payment adjustment will apply under the Physician
Quality Reporting System. Specifically, under section 1848(a)(8) of the
Act, as added by section 3002(b) of the ACA, with respect to covered
professional services furnished by an eligible professional during 2015
or any subsequent year, if the eligible professional does not
satisfactorily submit data on quality measures for covered professional
services for the quality reporting period for the year, the fee
schedule amount for services furnished by such professionals during the
year shall be equal to the applicable percent of the fee schedule
amount that would otherwise apply to such services. The applicable
percent for 2015 is 98.5 percent and for 2016 and each subsequent year
it is 98.0 percent. In the proposed rule, we stated that we will
address this provision of the ACA in future notice and comment
rulemaking (75 FR 40199).
The following is a summary of comments received regarding the
incentive payment adjustment for

[[Page 73541]]

quality reporting required under section 3002(b) of the ACA.
Comment: Some commenters expressed opposition to the use of payment
adjustments under the Physician Quality Reporting System program. One
commenter believes participation should remain voluntary as the
Physician Quality Reporting System has not yet been shown to improve
patient outcomes and therefore does not warrant penalties for
nonparticipating eligible professionals. Other commenters stated that,
to be successful, performance measurement should be nonpunitive and
transparent.
Response: While we acknowledge the commenters' concerns, we note
that section 1848(a)(8) of the Act, as added by the ACA, requires us to
implement a payment adjustment for eligible professionals who do not
satisfactorily report Physician Quality Reporting System measures
beginning in 2015. In the meantime, we will continue to assess whether
we can make additional improvements to the Physician Quality Reporting
System to facilitate satisfactory reporting and to encourage greater
participation prior to implementation of the payment adjustments
required under section 1848(a)(8) of the Act beginning for 2015. We
will address our plans for implementing the payment adjustment that
begins in 2015 in future notice and comment rulemaking.
(2) Section 3002(c)--Maintenance of Certification Programs and Section
10327 Improvements to the Physician Quality Reporting System
Section 3002(c) of the ACA amends section 1848(k)(4) of the Act to
require a mechanism whereby an eligible professional may provide data
on quality measures through a maintenance of certification program
(Maintenance of Certification Program) operated by a specialty body of
the American Board of Medical Specialties (ABMS). In addition, section
1848(m)(7) of the Act (``Additional Incentive Payment''), as added by
section 10327(a) of the ACA, provides for an additional 0.5 percent
incentive payment for years 2011 through 2014 if certain requirements
are met. In accordance with section 1848(m)(7)(B) of the Act, in order
to qualify for the additional incentive payment, an eligible
professional must--
Satisfactorily submit data on quality measures under the
Physician Quality Reporting System for a year and have such data
submitted--
++ On their behalf through a Maintenance of Certification Program
that meets the criteria for a registry under the Physician Quality
Reporting System; or
++ In an alternative form and manner determined appropriate by the
Secretary; and
More frequently than is required to qualify for or
maintain board certification status:
++ Participate in such a Maintenance of Certification Program for a
year and
++ Successfully completes a qualified Maintenance of Certification
Program practice assessment for such year.
Section 1848(m)(7)(C)(i) of the Act defines ``Maintenance of
Certification Program'' as a continuous assessment program, such as a
qualified ABMS Maintenance of Certification Program, or an equivalent
program (as determined by the Secretary), that advances quality and the
lifelong learning and self-assessment of board certified specialty
physicians by focusing on the competencies of patient care, medical
knowledge, practice-based learning, interpersonal and communications
skills and professionalism. Such a program shall require a physician to
do the following:
(1) Maintain a valid, unrestricted medical license in the United
States;
(2) Participate in educational and self-assessment programs that
require an assessment of what was learned;
(3) Demonstrate, through a formalized, secure examination, that the
physician has the fundamental diagnostic skills, medical knowledge, and
clinical judgment to provide quality care in their respective
specialty;
(4) Successful completion of a qualified Maintenance of
Certification Program practice assessment.
As defined in section 1848(m)(7)(C)(ii) of the Act, a ``qualified
Maintenance of Certification Program practice assessment'' means an
assessment of a physician's practice that--
(1) Includes an initial assessment of an eligible professional's
practice that is designed to demonstrate the physician's use of
evidence-based medicine;
(2) Includes a survey of patient experience with care; and
(3) Requires a physician to implement a quality improvement
intervention to address a practice weakness identified in the initial
assessment and then to remeasure to assess performance after such
intervention.
To qualify for the additional incentive payment, section
1848(m)(7)(B)(iii) of the Act also requires the Maintenance of
Certification Program to submit to CMS, on behalf of the eligible
professional, information:
(1) In a form and manner specified by the Secretary, that the
eligible professional more frequently than is required to qualify for
or maintain board certification status, participates in the Maintenance
of Certification Program for a year and successfully completes a
qualified Maintenance of Certification Program practice assessment for
such year;
(2) If requested by the Secretary, information on the survey of
patient experience with care; and
(3) As the Secretary may require, on the methods, measures, and
data used under the Maintenance of Certification Program and the
qualified Maintenance of Certification Program practice assessment.
Section 1848(m)(7) of the Act (``Additional Incentive Payment'')
further specifies that the additional 0.5 percent incentive payment is
available only for years 2011, 2012, 2013, and 2014. For years after
2014, if the Secretary determines it to be appropriate, the Secretary
may incorporate participation in a Maintenance of Certification Program
and successful completion of a qualified Maintenance of Certification
Program practice assessment into the composite of measures of quality
for care furnished pursuant to the physician fee schedule payment
modifier.
To implement the provisions under sections 1848(k)(4) and
1848(m)(7) of the Act (``Additional Incentive Payment''), we proposed
for 2011 to require the following (75 FR 40199 and 40200):
An eligible professional wishing to be eligible for the
additional Physician Quality Reporting System incentive payment of 0.5
percent must meet the proposed requirements for satisfactory Physician
Quality Reporting System reporting, for program year 2011, based on the
12-month reporting period, due to the statutory language that the
eligible professional must satisfactorily report ``for a year.'' For
purposes of satisfactory reporting under the Physician Quality
Reporting System, we proposed that the eligible professional may
participate as an individual eligible professional using either
individual Physician Quality Reporting System measures or measures
groups and submitting the Physician Quality Reporting System data via
claims, a registry, or an EHR or participate under one of the GPRO
options (I or II). Alternatively, eligible professionals may
satisfactorily report under the Physician Quality Reporting System
based on submission of Physician Quality Reporting System data by a
Maintenance of Certification Program, provided that the Maintenance of
Certification Program has qualified as a

[[Page 73542]]

Physician Quality Reporting System registry for 2011. As indicated
previously, an eligible professional would not necessarily have to
qualify for the Physician Quality Reporting System through a
Maintenance of Certification Program serving as a registry. Rather, we
proposed that an eligible professional may qualify for the additional
incentive, without regard to the method by which the eligible
professional has met the basic requirement of satisfactory reporting
under the Physician Quality Reporting System.
In addition to meeting the proposed requirements for
satisfactory reporting for the Physician Quality Reporting System for
program year 2011, the eligible professional must have data submitted
on his or her behalf through a Maintenance of Certification Program,
for the Maintenance of Certification Program in which the eligible
professional participates. Although the Maintenance of Certification
Program need not become a qualified registry for data submission for
Physician Quality Reporting System purposes, the Maintenance of
Certification Program must meet the criteria for a registry for
submission of the Maintenance of Certification Program data as
specified below.
An eligible professional must, more frequently than is
required to qualify for or maintain board certification, participate in
a Maintenance of Certification Program for a year and successfully
complete a qualified Maintenance of Certification Program practice
assessment for such year. We believe that the ``more frequently''
requirement applies both to the elements of the Maintenance of
Certification Program itself and the requirement to successfully
complete a qualified Maintenance of Certification Program practice
assessment. With regard to the elements other than completing a
qualified Maintenance of Certification Program practice assessment, we
proposed to require that the Maintenance of Certification Program
certify that the eligible professional has ``more frequently'' than is
required to qualify for or maintain board certification ``participated
in a Maintenance of Certification Program for a year'' as required by
section 10327 of the ACA. We did not propose to specify with respect to
participation how an eligible professional must meet the ``more
frequently'' requirement, but rather that the Maintenance of
Certification Program so certify that the eligible professional has met
this requirement. We noted that we did not believe that the ``more
frequently'' requirement is applicable to the licensure requirement,
given that one cannot be licensed ``more frequently'' than is required.
However, we stated that the eligible professional must ``more
frequently'' than is required to qualify for or maintain board
certification, participate in educational and self-assessment programs
that require an assessment of what was learned; demonstrate, through a
formalized, secure examination, that the physician has the fundamental
diagnostic skills, medical knowledge, and clinical judgment to provide
quality care in their respective specialty; and successfully complete a
qualified Maintenance of Certification Program practice assessment.
With respect to the Maintenance of Certification Program practice
assessment, which is specifically delineated in section
1848(m)(7)(B)(ii) of the Act as being required more often than is
necessary to qualify for or maintain board certification, we stated
that we believe we needed to be more specific regarding our
interpretation of the phrase ``more frequently'' (75 FR 40200).
Additionally, we stated that we were aware that some specialty boards
have varying Maintenance of Certification Program requirements for
physicians to maintain board certification, based on the date of
original certification. Some, we believe, may not be required to
participate in a Maintenance of Certification Program at all in order
to maintain board certification. Accordingly, we recognize that ``more
often'' may vary among physicians certified by the same specialty
board. We interpreted the statutory provisions as requiring
participation in and successful completion of at least one Maintenance
of Certification Program practice assessment. Therefore, we proposed,
as a basic requirement, participation in and successful completion in
at least one Maintenance of Certification Program practice assessment.
For physicians who are not required to participate in a Maintenance of
Certification Program to maintain board certification, ``more often''
would be more than 0, and therefore only once. For physicians, however,
who are otherwise required by the specialty board to participate in a
Maintenance of Certification Program to maintain board certification
status, these physicians would need to complete the Maintenance of
Certification Program practice assessment a second time in order to
qualify for the additional incentive payment. If a Maintenance of
Certification Program practice assessment were required more than once
during a particular cycle, the eligible professional would be required
to complete the Maintenance of Certification Program practice
assessment a third time in order to qualify for the additional
incentive.
We are also aware that ABMS boards are at various stages in
implementing the practice assessment modules, and some may not have
such assessment modules in place. However, inasmuch as we interpret the
statute to require a Maintenance of Certification Program practice
assessment at least once as part of the Maintenance of Certification
Program, eligible professionals who do not have available, through
their boards or otherwise, a Maintenance of Certification Program
practice assessment are not eligible for the 0.5 percent incentive.
We believe that the experience of care survey provides particularly
valuable information and proposed that a qualified Maintenance of
Certification Program practice assessment must include a survey of
patient experience with care. The Secretary may request information on
the survey of patient experience with care, under section
1848(m)(7)(B)(iii) of the Act. In view of the importance of this
information, and the lack of readily available alternative sources, we
proposed to require that Maintenance of Certification Programs submit
information as to the survey of patient experience with care for the
eligible professional regarding whom information is being submitted by
the Maintenance of Certification Program.
We proposed that Maintenance of Certification Programs wishing to
enable their members to be eligible for an additional Physician Quality
Reporting System incentive payment for the 2011 Physician Quality
Reporting System will need to go through a self-nomination process by
January 31, 2011. We proposed the board will need to include all of the
following information in their self-nomination letter to CMS:
Provide detailed information regarding the Maintenance of
Certification Program with reference to the statutory requirements for
such program.
Indicate the organization sponsoring the Maintenance of
Certification Program, and whether the Maintenance of Certification
Program is sponsored by an ABMS board. If not an ABMS board, indicate
whether the program is substantially equivalent to the ABMS Maintenance
of Certification Program process.
The frequency of a cycle of Maintenance of Certification
Program for the specific Maintenance of

[[Page 73543]]

Certification Program of the sponsoring organization; including what
constitutes ``more frequently'' for the Maintenance of Certification
Program practice assessment for the specific Maintenance of
Certification Program of the sponsoring organization.
What was, is, or will be the first year of availability of
the Maintenance of Certification Program practice assessment for
completion by an eligible professional.
What data is collected under the patient experience of
care survey and how this information would be provided to CMS.
How the Maintenance of Certification Program monitors that
an eligible professional has implemented a quality improvement process
for their practice.
Describe the methods, and data used under the Maintenance
of Certification Program, and provide a list of all measures used in
the Maintenance of Certification Program for 2010 and to be used for
2011, including the title and descriptions of each measure, the owner
of the measure, whether the measure is NQF endorsed, and a link to a
Web site containing the detailed specifications of the measures, or an
electronic file containing the detailed specifications of the measures.
We proposed that sponsoring organizations who desire to participate
as a Maintenance of Certification Program will need to be able to
provide CMS the following information in a CMS-specified file format by
no later than the end of the first quarter of 2012:
The name, NPI and applicable TIN(s) of the eligible
professional who would like to participate in this process;
Attestation from the board that the information provided
to CMS is accurate and complete;
The board has signed documentation from the eligible
professional that the eligible professional wishes to have the
information released to CMS;
Information from the experience of care survey;
Information certifying that the eligible professional has
participated in a Maintenance of Certification Program for a year, more
frequently than is required to qualify for or maintain board
certification status, including the year that the physician met the
board certification requirements for the Maintenance of Certification
Program, and the year the eligible professional participated in a
Maintenance of Certification Program ``more frequently'' than is
required to maintain or qualify for board certification; and
Information certifying that the eligible professional has
completed the Maintenance of Certification Program practice assessment
one additional time more than is required to qualify for or maintain
board certification, including the year of the original Maintenance of
Certification Program practice assessment or that a Maintenance of
Certification Program practice assessment is not required for the
eligible professional, and the year of the additional Maintenance of
Certification Program practice assessment completion.
We proposed that specialty boards that also desire to send
Physician Quality Reporting System information to CMS on behalf of
eligible professionals should be able to meet the proposed requirements
for registry data submission and should follow the directions for self-
nomination to become a qualified registry. Boards may also participate
as registries for Physician Quality Reporting System data provided that
they meet the registry requirements. As an alternative to requiring
boards to either operate a qualified Physician Quality Reporting System
registry or to self-nominate to submit Maintenance of Certification
Program data to CMS on behalf of their members, we also considered
having the various boards submit the Maintenance of Certification
Program data to the ABMS and having ABMS channel the information from
the various boards to CMS (75 FR 40200).
The following is a summary of the comments received on the proposed
requirements for qualifying for the additional 0.5 percent incentive
for 2011, the proposed mechanism for receiving Maintenance of
Certification Program data from the specialty boards, as well as on the
alternative mechanism that we considered.
Comment: Commenters raised concerns as to whether the CY 2011 PFS
proposed rule uses the term ``Maintenance of Certification Program'' in
a manner that may be confusing to the public and unnecessarily raises
trademark concerns. Specifically, the commenter recommended changes
related to the use of the acronym ``MOCP,'' such as referring to
``maintenance of certification program'' (all lower-case letters) or
using different letters for the acronym.
Response: We appreciate the commenter's input. We will not use any
acronym, including ``MOCP.'' Instead, we will spell out the term
``Maintenance of Certification Program'' using capital letters as it is
done in section 1848(m)(7) of the Act (``Additional Incentive
Payment'').
Comment: Several commenters provided positive feedback regarding
the availability of an additional 0.5 percent incentive payment for
meeting specific maintenance of certification requirements, including
support for the inclusion of patient experience of care surveys as a
required element of the Maintenance of Certification Program practice
assessment component.
Response: We appreciate the commenter's support of the additional
Maintenance of Certification Program incentive for eligible
professionals participating in the 2011 Physician Quality Reporting
System, authorized by the ACA.
Comment: One commenter believes that the ``maintenance of
certification'' reporting option is premature. The commenter noted that
the state of New Jersey may not currently have operational and tested
``practice assessment'' capability and funding for this program may not
be available.
Response: While we recognize that this option may not be a feasible
option for all eligible professionals, we are required to have this
option available for the 2011 Physician Quality Reporting System under
section 1848(m)(7) of the Act (``Additional Incentive Payment''). We
note that participation in this option is voluntary and is not required
to participate in the Physician Quality Reporting System or earn the
Physician Quality Reporting System incentive. Therefore, eligible
professionals who do not have the ability to participate in a
maintenance of certification program can still participate in the
Physician Quality Reporting System for 2011 and potentially qualify for
a 1 percent incentive payment by satisfactorily reporting 2011
Physician Quality Reporting System measures. Participation in a
maintenance of certification program provides eligible professionals an
opportunity to earn an additional 0.5 percent incentive above and
beyond what they could earn by satisfactorily reporting Physician
Quality Reporting System measures.
Comment: One commenter urged us to implement regulations that would
ensure that all eligible professionals have access to the additional
0.5 percent incentive.
Response: While we appreciate the commenter's support for the
additional 0.5 percent incentive, we note that section 1848(m)(7) of
the Act (``Additional Incentive Payment'') explicitly ties the
additional 0.5 percent incentive to participation in a Maintenance of
Certification Program. Section 1848(m)(7)(C)(i) of the Act specifies
that the term ``Maintenance of

[[Page 73544]]

Certification Program'' means ``a continuous assessment program * * *
that advances quality and the lifelong learning and self-assessment of
board certified specialty physicians * * *.'' This suggests that
Maintenance of Certification Programs apply only to physicians and only
physicians can participate in a Maintenance of Certification Program
and qualify for this additional 0.5 percent incentive payment. We do
not believe we have the authority to broaden the applicability of this
additional 0.5 percent incentive payment.
Comment: One commenter recommended that we allow eligible
professionals who complete a Part IV Maintenance of Certification
practice assessment be eligible for an additional 0.5 percent bonus if
they are also satisfactorily report Physician Quality Reporting System
measures, regardless of whether they satisfactorily reported through
claims or another registry method. In contrast, other commenters
believe the requirements for receiving a Maintenance of Certification
Program payment are too onerous for both eligible professionals and
Maintenance of Certification Program boards and should not be tied to
satisfactorily reporting Physician Quality Reporting System measures.
Response: Section 1848(m)(7)(B)(i)(I) of the Act specifically
requires that ``* * * in order to qualify for the additional incentive
payment* * *, an eligible professional shall* * *satisfactorily submit
data on quality measures for [the Physician Quality Reporting System]
for a year.'' As stated in the proposed rule (75 FR 40199), we proposed
that an eligible professional ``* * * may participate as an individual
eligible professional using either individual Physician Quality
Reporting System measures or measures groups and submitting the
Physician Quality Reporting System data via claims, a registry, or an
EHR or participate under one of the GPRO options (I or II).'' We also
proposed that an eligible professional ``may qualify for the additional
incentive, without regard to the method by which the [eligible
professional] has met the basic requirement of satisfactorily reporting
under the PQRI [that is, the Physician Quality Reporting System].''
Therefore, eligible professionals wishing to qualify for the additional
0.5 percent incentive payment can satisfactorily report Physician
Quality Reporting System measures using any available Physician Quality
Reporting System method and are not limited to a specific one.
Comment: Although the ABMS has issued guidelines for Maintenance of
Certification Program, one commenter believes that the individual
boards have a fair amount of latitude in how they implement those
guidelines. As a result, the commenter favors the plan to have
individual specialty boards meet the CMS criteria if they wish to be
deemed to verify individual eligible professional qualification for
Physician Quality Reporting System incentives.
Response: We recognize the variability in the boards' maintenance
of certification program requirements and appreciate the commenter's
support of our proposal to allow individual boards to verify that their
eligible professionals have met the appropriate maintenance of
certification program requirements for the additional 0.5 percent
incentive. Accordingly, we are finalizing the requirement to have the
various boards submit information to us on eligible professionals'
behalf attesting that an eligible professional has more frequently than
is required to qualify for or maintain board certification status,
participated in a maintenance of certification program for a year and
successfully completed a qualified Maintenance of Certification Program
practice assessment for such year.
Comment: Some commenters requested additional clarification on the
requirements for qualifying for the additional 0.5 percent incentive so
that eligible professionals can understand the necessary processes
needed to qualify. One commenter requested more information on how
Maintenance of Certification Program would work for specialty boards,
such as the American Board of Internal Medicine (ABIM), that oversee
the maintenance of certification processes for multiple subspecialties.
Response: As discussed previously, we recognize that there is
variability in the boards' maintenance of certification program
requirements. Therefore, eligible professionals will need to work with
their specific Maintenance of Certification Program for information as
to the processes of that program as it relates to qualifying for the
additional 0.5 percent incentive.
We did not propose any requirements for self-nomination of each
subspecialty of a board. Rather the board would have to provide
information to CMS on each Maintenance of Certification Program that
the board sponsors, where it sponsors more than one.
Comment: In response to the request in the proposed rule for input
on an alternative to requiring Boards to either operate a qualified
Physician Quality Reporting System registry or to self-nominate to
submit Maintenance of Certification Program data to CMS on behalf of
their members (75 FR 40201), one commenter noted that many of the ABMS
member boards do not have the capacity to develop and implement CMS-
approved registries to support their diplomates' participation in the
Maintenance of Certification Program pathway for Physician Quality
Reporting System reporting. The commenter suggested that developing a
registry that can be shared across multiple Boards will allow for an
efficient and cost-effective approach to facilitate participation in
Physician Quality Reporting System reporting for their diplomates. Such
a registry could collect and submit physician quality improvement data,
provide attestation that the quality improvement data was collected as
part of a qualified ABMS MOC[supreg] Part IV activity, and also serve
as an intermediary in transmitting successful maintenance of
certification participation in the Physician Quality Reporting System
to CMS. Depending upon the vendor(s) identified to support the registry
function, the commenter felt that this may also provide a mechanism for
submission of patient experience of care surveys.
Response: We note that we did not propose to require boards to
implement Physician Quality Reporting System qualified registries to
support their diplomates' participation in the Maintenance of
Certification Program pathway for Physician Quality Reporting System
reporting. We merely highlighted that boards may wish to self-nominate
to become a qualified Physician Quality Reporting System registry to
facilitate eligible professionals' reporting of Physician Quality
Reporting System data, as well as participation in the Maintenance of
Certification Pathway. To the extent that a board or other entity
wishes to become a qualified registry for the purposes of Physician
Quality Reporting System data submission, the board or other entity
must self-nominate to do so and meet all of the registry qualification
requirements described in section VII.F.1.(4). of this final rule with
comment period. In addition, to the extent an entity wishes to submit
Physician Quality Reporting System data and/or data regarding
participation in Maintenance of Certification Program(s) on behalf
multiple boards, the entity will need to comply with the appropriate
registry and/or Maintenance of Certification Program qualification
requirements. More specifically, in order to submit data on
participation in the Maintenance of Certification Pathway for multiple
boards, the entity, must include the following information for each
Maintenance of Certification

[[Page 73545]]

Program that it wishes to submit data on in their self-nomination
letter to CMS:
Provide detailed information regarding the Maintenance of
Certification Program with reference to the statutory requirements for
such program.
Indicate the organization sponsoring the Maintenance of
Certification Program, and whether the Maintenance of Certification
Program is sponsored by an ABMS board. If not an ABMS board, indicate
whether the program is substantially equivalent to the ABMS Maintenance
of Certification Program process.
The frequency and cycle of Maintenance of Certification
for the specific Maintenance of Certification Program of the sponsoring
organization; including what constitutes ``more frequently'' for the
Maintenance of Certification Program practice assessment for the
specific Maintenance of Certification Program of the organization.
What was, is, or will be the first year of availability of
the Maintenance of Certification Program practice assessment for
completion by an eligible professional.
What data is collected under the patient experience of
care survey and how information on the survey would be provided to CMS.
How the Maintenance of Certification Program monitors that
an eligible professional has implemented a quality improvement process
for their practice.
Describe the methods, and data used under the Maintenance
of Certification Program, and provide a list of all measures used in
the Maintenance of Certification Program for 2010 and to be used in
2011, including the title and descriptions of each measure, the owner
of the measure, whether the measure is NQF-endorsed, and a link to a
Web site containing the detailed specifications of the measures, or an
electronic file containing the detailed specifications of the measures.
With respect to submitting data on Maintenance of Certification
Program participation, the qualified entity must submit:
The name, NPI, and applicable TIN(s) of the eligible
professional who would like to participate in this process;
Attestation from each board that the information provided
to CMS is accurate and complete;
Signed documentation from the eligible professional that
the eligible professional wishes to have their information released to
CMS;
Information on the patient experience of care survey;
Information from the appropriate board attesting that the
eligible professional has participated in a Maintenance of
Certification Program for a year, more frequently than is required to
qualify for or maintain board certification status, including the year
that the physician met the board certification requirements for the
Maintenance of Certification Program and the year the eligible
professional participated in a Maintenance of Certification Program
``more frequently'' than is required to qualify for board
certification; and
Information from the appropriate board certifying that the
eligible professional has completed the Maintenance of Certification
Program practice assessment one additional time more than is required
to qualify or maintain board certification, including the year of the
original Maintenance of Certification Program practice assessment or
that a Maintenance of Certification Program practice assessment is not
required for the eligible professional, and the year of the additional
Maintenance of Certification Program practice assessment completion.
Comment: Several comments indicated that we misinterpreted the
intent of the ``more frequently'' requirement under section
1848(m)(7)(B)(ii) of the Act. Specifically, some commenters believe the
intent of the ``more frequently'' requirement applies specifically to
the Maintenance of Certification Program Part IV, practice assessment,
requirement only and not to Parts II or III of the Maintenance of
Certification Program (that is, the educational and self-assessment
programs and the formalized, secure examination portion of the
Maintenance of Certification Program). To that end, commenters
requested the final rule provide additional clarification regarding the
implementation of the ``more frequently'' requirement. One commenter
also requested that we work closely with the ABMS to determine a means
for implementing this provision which would be the least disruptive to
existing maintenance of certification programs. One commenter noted
that adding a requirement to participate in a maintenance of
certification program ``more frequently'' than is required by the
specialty board undermines the boards' standards and their expertise.
Response: As discussed in the proposed rule (75 FR 40199 through
40201), we believe that, as constructed, sections 1848(m)(7)(C)(i)(II)
and 1848(m)(7)(C)(i)(III) of the Act applies the ``more frequently''
requirement to both the Maintenance of Certification Program itself and
the successful completion of a Maintenance of Certification Program
practice assessment. While we understand the commenter's question of
this interpretation, we do not interpret the legislation as applying
the ``more frequently'' requirement simply to the practice assessment
activity. Rather we interpret the legislation as providing an
additional incentive for eligible professionals who are actively
pursuing activities involved in a continuous assessment program, such
as a qualified ABMS Maintenance of Certification Program or an
equivalent program. However, with respect to the ``more frequently''
requirement as it relates to the Maintenance of Certification Program
itself, as opposed to the ``more frequently'' requirement for the
practice assessment, we do not specify how an eligible professional
must meet the more frequently requirement. Rather, we require only that
the Maintenance of Certification Program indicate that the eligible
professional has met the requirement.
Comment: A few comments opposed linking payers to the Maintenance
of Certification Program.
Response: We are unclear what the commenters mean with respect to
linking Medicare to the Maintenance of Certification Program. As we
noted previously, participation in a Maintenance of Certification
Program is not required for an eligible professional to earn a
Physician Quality Reporting System incentive. Rather, participation in
a Maintenance of Certification Program provides eligible professionals
an opportunity to earn an additional 0.5 percent incentive above and
beyond what they could earn under the Physician Quality Reporting
System.
Comment: Several commenters suggested the ``more frequently''
requirement be based on the March 2009 ABMS MOC[supreg] Standards
adopted by the ABMS, which applies to the 24 ABMS member boards. Under
these standards, ``more frequently'' would mean that a Part IV activity
must be completed every 1 to 4 years, by physicians who voluntarily
decide to participate in the Maintenance of Certification Program
Physician Quality Reporting System pathway. One of the commenters
believes that diplomates should not be expected to participate more
frequently than once a year in a process of collecting and reporting
performance data and then acting on those results.
Response: With regard to the commenters' suggestion to adopt the
standards adopted by ABMS in 2009,

[[Page 73546]]

we believe that by requiring the Maintenance of Certification Program
to confirm that their eligible professionals meet the requirements
``more frequently'' than required will allow flexibility for the
Maintenance of Certification Programs that have differing cycles of
completion. Since we are looking to see that both the Maintenance of
Certification Program itself and the practice assessment completed once
more than required, we feel that a broader interpretation rather than
an exact instance provides a greater opportunity for participation. For
example, if an eligible professional's cycle states that they must
complete one practice assessment activity every two to five years, more
frequently would be completion of an additional activity within that
cycle. If an eligible professional's cycle states they must complete
two practice assessment activities during a cycle (for example, every
two to five years), they would have to complete an additional activity
(total of three) within their cycle.
Comment: Although several commenters favor measuring patients'
experience with care, some suggested that we waive the requirement for
reporting patient experience until 2012, once a definitive ABMS
standard has been adopted. One commenter suggested that we work with
the Boards to monitor the adoption of accurate and applicable patient
experience methodologies. Another commenter requested clarification on
why the patient experience is required for the Physician Quality
Reporting System Maintenance of Certification Program practice
assessment when many specialty boards do not require a survey of
patient experience to satisfy practice assessment or maintenance of
certification requirements.
Response: We agree that the survey of patient experience is an
important mechanism for improving quality of care. While we appreciate
the intent of the comments of ensuring a standard is available under
ABMS Maintenance of Certification Programs, this additional 0.5 percent
incentive is also available to non-ABMS boards as long as the process
is substantially similar to the ABMS Maintenance of Certification
Program process. The survey of patient experience with care is a
required part of the practice assessment as defined under section
1848(m)(7)(B)(iii) of the Act. Therefore, we will finalize this
requirement of a survey of patient experience with care as a required
element of the practice assessment.
Comment: One commenter requested that we provide CRNAs with the
opportunity to report quality measures through a nursing maintenance of
certification program mechanism. Conversely, other commenters expressed
that the rule should clearly state that physicians who are not
participating in the ABMS MOC[supreg] are not eligible for the
additional 0.5 percent incentive via the Maintenance of Certification
pathway. One commenter specifically objected to the proposed rule
language that, if not an ABMS Board, a program that is ``substantially
equivalent'' to the ABMS Maintenance of Certification Program process
may participate. The commenter noted that to be ``substantially
equivalent'' to the ABMS Maintenance of Certification Program, any
other program would have to first assure that its physicians had (1)
successfully completed an Accreditation Council for Graduate Medical
Education (ACGME)-approved training in their specialty, (2)
successfully completed all the requirements of the ABMS Member Board to
be certified, and (3) engaged in the ABMS Maintenance of
Certification[supreg] program that is sponsored by the relevant Member
Board. Items one and two are essential and should be included in any
reference to the concept of ``substantially equivalent.''
Response: Under section 1848(m)(7)(C)(i) of the Act, a Maintenance
of Certification Program is ``a continuous assessment program such as a
qualified American Board of Medical Specialties Maintenance of
Certification Program or an equivalent program (as determined by the
Secretary).'' Therefore, eligible professionals participating in an
equivalent program (that is, one that satisfies the definition of
``Maintenance of Certification Program'' under section 1848(m)(7)(C)(i)
of the Act and Sec. 414.90(b), that has a ``qualified Maintenance of
Certification Program practice assessment'' as defined under section
1848(m)(7)(ii) of the Act and Sec. 414.90(b), and meets the self-
nomination process as proposed and previously described) will be able
to submit Maintenance of Certification Program data on behalf of
eligible professionals for purposes of the eligible professional
qualifying for the additional 0.5 percent incentive. This additional
0.5 percent incentive payment is not limited to only those eligible
professionals who participate in an ABMS MOC[supreg]. However, as
previously stated, we believe that the definition of the term
``Maintenance of Certification Program'' under section 1848(m)(7)(C)(i)
of the Act limits applicability of Maintenance of Certification
Programs to physicians. Therefore, this additional 0.5 percent
incentive would not apply to other eligible professionals, such as
CRNAs.
Comment: One commenter supports creation of a mechanism whereby an
eligible professional may provide data on quality measures through a
Maintenance of Certification Program operated by a member specialty
body of the American Board of Medical Specialties or American
Osteopathic Association. Specifically, the commenter expressed support
for the American Board of Radiology (ABR) and American Osteopathic
Board of Radiology (AOBR) Maintenance of Certification Programs.
Response: We appreciate the commenter's support of the additional
0.5 incentive for eligible professionals participating in the 2011
Physician Quality Reporting System, authorized by the ACA. With respect
to the specific Maintenance of Certification Programs that the
commenter is in support of, these entities must follow the self-
nomination process finalized in this final rule with comment period.
After considering the comments received and for the reasons we
previously articulated, we are implementing the requirements that an
eligible professional must meet to qualify for the additional 0.5
percent incentive authorized by section 1848(m)(7) of the Act
(``Additional Incentive Payment''), previously described. We are also
implementing the requirements for entities to self-nominate to submit
Maintenance of Certification Program data on behalf of eligible
professionals as proposed and previously described. We do not
anticipate completing the qualification process until mid-2011. We will
conditionally qualify entities until we complete testing of the
entities' ability to submit Maintenance of Certification Program data
to us in the specified manner. We anticipate posting the names of these
conditionally qualified entities on the Physician Quality Reporting
System section of the CMS Web site in Spring 2011 and we will update
this list with the entities qualified for 2011 as soon as we finish
testing the entities' ability to submit Maintenance of Certification
Program data to us in the specified manner.
To the extent an eligible professional participates in multiple
Maintenance of Certification Programs and meets the requirements under
section 1848(m)(7) of the Act (Additional Incentive Payment) under
multiple programs, the eligible professional can qualify for only one
additional 0.5 percent incentive per year.

[[Page 73547]]

(3) Section 3002(d)--Integration of Physician Quality Reporting and EHR
Reporting
Section 1848(m)(7) of the Act (``Integration of Physician Quality
Reporting and EHR Reporting''), as added by section 3002(d) of the ACA
requires us to move towards the integration of EHR measures with
respect to the Physician Quality Reporting System. Section 1848(m)(7)
of the Act specifies that by no later than January 1, 2012, the
Secretary shall develop a plan to integrate reporting on quality
measures under the Physician Quality Reporting System with reporting
requirements under subsection (o) relating to the meaningful use of
EHRs. Such integration shall consist of the following:
(A) The selection of measures, the reporting of which would both
demonstrate--
(i) Meaningful use of an EHR for purposes of the EHR incentive
program; and
(ii) Quality of care furnished to an individual; and
(B) Such other activities as specified by the Secretary.
In an effort to align the Physician Quality Reporting System with
the EHR Incentive Program, we proposed and finalized many ARRA core
clinical quality measures for inclusion in the 2011 Physician Quality
Reporting System (see section VII.F.1.i.(4)) of this final rule with
comment period), to demonstrate meaningful use of EHR and quality of
care furnished to individuals. We are working towards a plan to
integrate reporting on quality measures to make available by January 1,
2012.
The following is a summary of comments received regarding the
integration of Physician Quality Reporting System and EHR reporting.
Comment: With respect to the integration of the Physician Quality
Reporting System and the EHR Incentive Program, one commenter requested
clarification on how we will deal with eligible professionals excluded
from one program or the other in the alignment process. The commenter
noted that we have not provided a feasible way for physicians excluded
from the EHR Incentive Program to be able to participate in a program
that combines these two initiatives. For example, pathologists employed
at independent laboratories may be eligible for the EHR incentive but
cannot participate in the Physician Quality Reporting System because of
the billing mechanism they use.
Response: While we appreciate the commenter's interest in
participating in both the Physician Quality Reporting System and the
EHR Incentive Program, we note that these are two different, distinct
programs. In addition, the term ``eligible professional'' is defined
differently under these programs. We understand that, as a consequence,
professionals may be eligible for one program but not the other. While
we encourage participation in both the Physician Quality Reporting
System and the EHR Incentive Program, we are not able to change the
criteria for participation eligibility in each program in order to
accommodate professionals who would like to participate in both
programs, but do not meet the eligibility requirements for both.
Regarding the specific concern that pathologists who bill through
independent laboratories are unable to participate in the Physician
Quality Reporting System, independent laboratories are suppliers and do
not fit into the Physician Quality Reporting System definition of
``eligible professional'' under section 1848(k)(3)(B) of the Act.
Pathologists who bill directly to Medicare, however, are eligible to
participate in the Physician Quality Reporting System.
Comment: Many commenters expressed support for linking the
Physician Quality Reporting System with the EHR Incentive Program as it
will reduce the burden and variability of reporting and streamline
administrative processes for health care providers and for CMS and
offered suggestions for us to consider as we develop our plan to
integrate quality measures reporting under the two programs. One
commenter, while favoring alignment of measures between the Physician
Quality Reporting System and EHR Incentive Program, points out that the
purpose of each is different, which will make it difficult to achieve
this integration. The commenter stated that quality reporting is only
one of the meaningful use features, so Physician Quality Reporting
System measures should qualify for that objective. Commenters stated
that Physician Quality Reporting System incentives should not require
participation in meaningful use, and meaningful use incentives should
not specifically require participation in the Physician Quality
Reporting System. Commenters particularly supported alignment of the
quality measures, noting that the degree to which any of the measures
could share a dual purpose would be an added advantage for those who
are trying to implement these programs. Another commenter suggested
that we consult with specialty societies on a phased-in approach for
integrating Physician Quality Reporting System and meaningful use
measures that allow attestation in 2012 followed by incremental
targeted percentage requirements would promote a smooth transition to
full integration of Physician Quality Reporting System and meaningful
use measures. Another commenter requested that we make it clear how we
plan to update the outpatient measures required for meaningful use
based on any changes implemented in the Physician Quality Reporting
System.
Response: We appreciate the commenters' valuable input and will
take the opinion offered by the commenters into consideration as we
work towards making a plan to integrate reporting on quality measures
available by January 1, 2012.
Comment: One commenter expressed concern that if we use the same
proposed methodology for excluding measures with a zero percent
performance rate in the Physician Quality Reporting System program that
it does for assessing compliance with HITECH Meaningful Use measures
then many physicians will be deemed ``not capable'' when attempting to
demonstrate reporting capability of quality data. This is because
eligible professionals are allowed the flexibility to demonstrate
compliance with meaningful use capability when reporting clinical
quality measures by reporting a zero denominator.
Response: A zero percent performance rate indicates that the
eligible professional is reporting on a measure that is not clinically
relevant to their practice. We do not preclude practices from doing
this. However, since the Physician Quality Reporting System does not
mandate a certain core set of measures and eligible professionals can
select which measures apply to them, eligible professionals should be
able to find 3 measures which pertain to their practice. We do
recognize that eligible professionals may be somewhat limited for 2011
as there are only 20 measures available for Physician Quality Reporting
System EHR reporting and those eligible professionals who wish to
report measures without electronic specifications for the Physician
Quality Reporting System will need to do so using a qualified registry
or through claims (if claims-based reporting is permitted for the
selected measure). We intend to discuss our plan to integrate reporting
on quality measures under the Physician Quality Reporting System with
reporting requirements under the EHR Incentive Program in future notice
and comment rulemaking prior to implementation of the plan.

[[Page 73548]]

(4) Section 3002(e)--Feedback
Section 3002(e) of the ACA amends section 1848(m)(5) of the Act by
adding subparagraph (H), which requires the Secretary to provide timely
feedback to eligible professionals on the performance of the eligible
professional with respect to satisfactorily submitting data on quality
measures. Since the inception of the program in 2007, the Physician
Quality Reporting System has provided eligible professionals who have
reported Physician Quality Reporting System data on quality measures
feedback reports at the TIN/NPI level detailing participation in the
Physician Quality Reporting System, including reporting rate and
performance rate information. For 2008, we improved the format and
content of feedback reports based on stakeholder input. We also
developed an alternate report distribution method whereby each eligible
professional can directly request and receive a feedback report. We
will continue to provide feedback reports to individuals and group
practices that satisfactorily submit Physician Quality Reporting System
quality measure and thus qualify to earn a Physician Quality Reporting
System incentive.
We believe that the requirements under section 1848(m)(5)(H) of the
Act, as added by section 3002(e) of the ACA, for ``timely'' feedback
reports is met by providing the feedback reports on or about the time
of issuance of the incentive payments. Thus, we proposed to provide
2011 feedback reports on or about the time of issuance of the 2011
incentive payments in 2012, consistent with our current practice. In
addition, we proposed to provide interim feedback reports for eligible
professionals reporting 2011 measures groups through the claims-based
reporting mechanism. These reports would be similar in content and
format to the reports that we currently provide for such eligible
professionals using claims for dates of service between January 1, 2011
and February 28, 2011. We indicated that we expected that we would be
able to make these interim feedback reports available to eligible
professionals in June 2011. We stated that we believe interim feedback
reports would be particularly valuable to eligible professionals
reporting measures groups, because it would let an eligible
professional know how many more cases he or she needs to report to
satisfy the criteria for satisfactory reporting for claims-based
reporting of measures groups. We also indicated that we intend to
continue to explore methods to facilitate Physician Quality Reporting
System feedback report distribution, as discussed in the proposed rule
(75 FR 40201).
The following is a summary of comments received regarding our
proposal to provide timely feedback reports for the Physician Quality
Reporting System.
Comment: We received some positive comments regarding our proposal
to provide timely feedback. One commenter stated that eligible
professionals will benefit from timely feedback reports on whether they
are satisfactorily submitting data on quality measures. While some
commenters supported our proposal to provide interim feedback reports
for those who are reporting measures groups via claims, other
commenters urged us to focus our efforts on providing other options for
interim feedback. One commenter stated that the timeframe for feedback
should be revised to a point during the reporting period so that
eligible providers can act on the information they receive and that
this was the legislation's intention. Commenters indicated that
providing feedback after the close of the reporting period or just
ahead of incentive payments is of minimal value since eligible
professionals are not able to assess their reporting status and revise
their reporting practices as needed. Commenters specifically
recommended receiving quarterly or monthly feedback reports or upon
request.
Response: We appreciate the commenters' suggestions to provide more
interim feedback reports in a timely manner. Although section
1848(m)(5) of the Act requires us to provide ``timely feedback'' to
eligible professionals on satisfactorily submitting data on quality
measures, it is not a requirement to distribute ``interim'' feedback
reports. While we agree that eligible professionals would benefit from
timely, interim feedback, we have determined that we will not be able
to complete the programming and development work necessary to provide
the proposed interim feedback reports for eligible professionals who
report 2011 measures groups using the claims-based reporting mechanism
in the time frame that we proposed for the 2011 Physician Quality
Reporting System. If we were to provide these interim feedback reports
for 2011, they would more than likely not be available until late 2011.
Since receiving interim feedback this late in the reporting period
would be of little utility to eligible professionals, we are not
finalizing our proposal to provide eligible professionals who report
measures groups using the claims-based reporting mechanism with interim
feedback reports for 2011. We intend, instead, to provide these interim
feedback reports for 2012. In addition, as discussed further in section
VII.F.2 of this final rule, we plan to provide an interim eRx report in
the fall of 2011, which will include 2012 eRx payment adjustment
information. We also will continue to provide timely annual feedback
reports and anticipate providing additional interim reports for 2012.
Furthermore, we are working internally to improve eligible
professionals' electronic access to Physician Quality Reporting System
and eRx reports by report type, program, and year for 2011.
Comment: Several commenters were disappointed by our proposal and
suggested that it does not meet the statutory requirements and
requested that we revise our proposal to increase the timeliness and
frequency of the reports. One commenter suggested we revise the
feedback report proposal to expedite the reports and ensure that the
process improves successful participation in the Physician Quality
Reporting System. Several comments specifically recommended that
interim feedback reports be provided to all Physician Quality Reporting
System participants, regardless of reporting mechanism used, rather
than only to those reporting measures groups via claims-based
reporting, as proposed. Other commenters specifically requested that
interim feedback reports be provided to those reporting individual
quality measures. Other commenters recommended we provide more
frequent, or real-time, feedback reports to ensure that this process
improves successful participation in the Physician Quality Reporting
System. One commenter specifically encouraged CMS to provide feedback
reports throughout the process, so that participants are aware of their
progress in the program. Another commenter recommended that the system
be redesigned to automatically generate a report as soon as the
requirements for an individual eligible professional have been
satisfied, much like what most of the registry systems do and why they
have such a high level of successful completion. Another commenter
suggested including the most recent Physician Quality Reporting System
data available in the confidential feedback reports. Issuing the
reports at the time of the incentive payment, as proposed, may
discourage many from participating in the program the following year
given that they are not certain whether or not they were

[[Page 73549]]

successful the previous year and renders the reports not useful for
quality improvement. The commenters believe the lack of timeliness of
feedback reports is one of the major reasons for dissatisfaction with
the Physician Quality Reporting System.
Response: Section 1848(m)(5)(HH) of the Act requires that we
provide timely feedback to eligible professionals on the performance of
the eligible professional with respect to satisfactorily submitting
data on Physician Quality Reporting System measures but does not define
the term ``timely'' or specify a deadline for providing feedback. As we
stated in the proposed rule (75 FR 40201), we believe that this
requirement is met by providing a timely, annual feedback report at or
about the time of issuance of the incentive payments. In addition to
providing an annual feedback report, we also proposed to provide an
interim feedback report for eligible professionals who submit measures
groups via claims. Although, for the reasons discussed previously, we
are not finalizing our proposal to provide this interim feedback report
for 2011, we intend to do so for 2012. The processing of claims data
from the NCH file, along with the necessary programming required to
produce reports and subsequently distribute to eligible professionals
is time intensive. We are actively working to facilitate this process
so that the interim feedback reports for claims-based reporting of
measures groups and other interim feedback reports can be available for
the 2012 Physician Quality Reporting System. We are continuing to work
on ways to provide eligible professionals with timely and accurate
feedback reports while working with the limitations of the claims-based
reporting method. We also intend to work with registries and EHR
vendors to explore ways in which we can leverage these alternative
reporting mechanisms to provide interim feedback reports.
Comment: One commenter suggested that the interim feedback reports
be provided for the first quarter of data instead of 2 months of data
as proposed.
Response: While we agree that interim feedback reports for the
first quarter of data would be valuable, we do not, for the reasons
stated previously, have the technical ability to make interim feedback
reports based on just the first 2 months of data available before July
1, 2011. We agree with commenters that interim feedback reports need to
be issued at a point during the reporting period that eligible
professionals can act upon the information to increase their chances of
reporting satisfactorily, especially when they are required to report
on percentage of applicable cases or patients. As stated previously,
since the utility of receiving feedback reports in late 2011, (at the
earliest) is minimal, we are not finalizing our proposal to provide
eligible professionals who report measures groups using the claims-
based reporting mechanism with interim feedback reports for 2011.
Comment: While we received favorable comments regarding our efforts
to streamline and simplify distribution of Physician Quality Reporting
System feedback reports, some commenters suggested that we continue to
improve access to the feedback reports. Commenters noted that many
individual eligible professionals and small practices still have
difficulty obtaining their feedback reports. Commenters noted the
numerous problems and issues using the Physician Quality Reporting
System portal to download these reports. One commenter suggested that
the feedback reports should be published for all eligible professionals
without requiring them to submit a request.
Response: We are preparing, in the near future, to launch tools to
provide eligible professionals access to all reporting years and report
types via the CMS portal. We anticipate this level of access to be
ready in mid- to late 2011. CMS security system access requirements are
mandated by the information systems and security component of CMS and
unfortunately cannot be changed by the Physician Quality Reporting
System or eRx program requirements. A quick reference guide on IACS
accounts, which is the current identity management system required for
accessing feedback reports, is currently under development to assist
eligible professionals with accessing their feedback reports.
Comment: One commenter recommended providing aggregate data to
specialty societies so that they can assist in educating members on the
program and potential issues. Another commenter suggested that we
improve upon the aggregate quality data error reports by individual
measures, currently distributed 4 times per year, by increasing their
frequency to monthly.
Response: We appreciate the commenter's valuable input. As we
explore ways to provide more timely feedback, we will also evaluate
commenter's suggestion and explore its feasibility.
Comment: One commenter requested clarification as to whether
eligible professionals could utilize the informal appeals process to
dispute data contained in the interim feedback reports.
Response: We would expect that initial questions arising from the
interim reports would be addressed by the QualityNet Help Desk, as is
done today with the annual feedback reports. As discussed below, the
main difference between the current inquiry process via the QualityNet
Help Desk and the informal appeals process is that we have established
timeframes around when requests for an informal review must be
submitted and when a response must be provided.
Upon consideration of the comments and for the reasons we discussed
previously, we are finalizing our proposal to provide feedback reports
to all Physician Quality Reporting System participants on or about the
time of issuance of the incentive payments. We also finalize our
proposal to provide interim feedback reports for eligible professionals
reporting measures groups through the claims-based reporting mechanism.
For the 2011 Physician Quality Reporting System, however, we do not
believe that we will have the technical capability needed to issue
these interim feedback reports until the second half of the year. Since
we do not believe that these interim feedback reports would be of much
value at that point, we do not anticipate generating interim feedback
reports for eligible professionals reporting measures groups until the
2012 Physician Quality Reporting System. For 2012, we also anticipate
being able to provide additional interim feedback reports.
(5) Section 3002(f)--Appeals
Section 1848(m)(5)(I) of the Act, as amended and added by section
3002(f)(2) of the ACA, requires that the Secretary establish and have
in place, no later than January 1, 2011, an informal process for
eligible professionals to seek a review of the determination that an
eligible professional did not satisfactorily submit data on quality
measures under the Physician Quality Reporting System. We note that
except as provided under the informal process under section
1848(m)(5)(I) of the Act, section 1848(m)(5)(E) of the Act, as amended
by section 3002(f) of the ACA, specifies that, with respect to the
Physician Quality Reporting System, there shall be no administrative or
judicial review under section 1869, section 1878, or otherwise, of--
(1) The determination of measures applicable to services furnished
by eligible professionals under the Physician Quality Reporting System;

[[Page 73550]]

(2) The determination of satisfactory reporting under the Physician
Quality Reporting System; and
(3) The determination of any Physician Quality Reporting System
incentive payment and Physician Quality Reporting System payment
adjustment.
We proposed to base the informal process on our current inquiry
process whereby an eligible professional can contact the Quality Net
Help Desk (via phone or e-mail) for general Physician Quality Reporting
System and eRx Incentive Program information, information on Physician
Quality Reporting System feedback report availability and access, and/
or information on Physician Quality Reporting System Portal password
issues (75 FR 40201). For purposes of the informal process required
under section 1848(m)(5)(E) of the Act, we proposed the following
inquiry process:
An eligible professional electing to utilize the informal
process must request an informal review within 90 days of the release
of his or her feedback report.
An eligible professional can request the informal review
by notifying the Quality Net Help Desk via e-mail at
[email protected]. The e-mail requesting the initiation of the
informal review process should summarize the concern(s) of the eligible
professional and the reason(s) for requesting an informal review.
We proposed to provide the eligible professional with a
response to his or her request for an informal review within 60 days of
receiving the original request.
As this process is informal and the statute does not
require a formal appeals process, we will not include a hearing or
evidence submission process, although the eligible professional may
submit information to assist in the review.
Based on our informal review, we will provide a written
response. Where we find that the eligible professional did
satisfactorily report, we proposed to provide the applicable incentive
payment.
Given that this is an informal review process and given
the limitations on review under section 1848(m)(5)(E) of the Act,
decisions based on the informal review will be final, and there will be
no further review or appeal.
The following is a summary of comments received on the proposed
informal appeals process and our responses.
Comment: Several comments expressed support for the establishment
of an informal appeals process, believing that eligible professionals'
ability to challenge the results of the program is a necessary step to
encouraging participation in the program and in promoting transparency.
One commenter specifically indicated that having 90 days to
electronically file an ``informal appeal'' is a sufficient amount of
time and that having the ability to electronically submit these
requests will help to ensure a timely, streamlined process. Another
commented that the current lack of recourse for eligible professionals
has contributed to a lack of interest in, and even skepticism, about
the Physician Quality Reporting System.
Response: We appreciate the commenters' support of the informal
appeals process and are hopeful that providing eligible professionals
with an avenue to request an informal review of the determination that
they did not satisfactorily report will encourage greater participation
in the Physician Quality Reporting System.
Comment: Some commenters felt the period for requesting an informal
review should be extended. One commenter suggested extending the
timeframe to file an appeal through the end of the following year.
Another commenter recommended extending the timeframe to the end of the
reporting year, as those in large practices may not see their Physician
Quality Reporting System report for a month or two after CMS sends it.
Some commenters suggested that any results that are successfully
appealed should be incorporated in public reporting of physician
performance.
Response: While we understand the commenters' desire to extend the
timeframe for submitting a request for an informal review, doing so
could potentially impact the timeliness of future years' Physician
Quality Reporting System incentive payments, because we would not be
able to start analyzing the next year's data until we have completed
our analysis of the current year's data. Therefore, we are requiring
eligible professionals to submit their requests for an informal review
within 90 days of the feedback reports becoming available, as proposed.
Comment: One commenter indicated that eligible professionals who
successfully obtain an incentive payment are unlikely to a request a
review. The commenter believes the review for those who are
unsuccessful is unlikely to overturn the initial adjudication, since it
can only be based on data present in the CMS system as there is no
opportunity for evidence submission. The commenter feels that eligible
professionals submitting data could easily be given feedback
immediately about whether the data set was complete or not, both in
terms of the individual data points and the number of eligible
patients.
Response: We agree with the commenter's assertion that eligible
professionals who are successful in obtaining a Physician Quality
Reporting System incentive are unlikely to request an informal review.
With respect to the claim that the ``review for those who are
unsuccessful is unlikely to overturn the initial adjudication, since it
can only be based on data present in the CMS system as there is no
opportunity for evidence submission,'' we disagree. CMS strives to
ensure the accuracy of our initial determinations. However, recognizing
errors may arise, CMS implemented the informal review process whereby
Physician Quality Reporting System participants may request via the
Quality Net Help Desk a review of the determination that the eligible
professional did not satisfactorily submit data. In prior program
years, the informal review method has resulted in supplemental payments
for some eligible professionals despite the restriction on submitting
additional evidence. This informal process has proven to be successful
in finding errors in prior years, and we believe it will continue to do
so. While we agree that it would be ideal to be able to provide
immediate feedback as to whether the data set was complete or not both
in terms of the individual data points and the number of eligible
patients, this would not be technically feasible under the current
claims processing system. However, we do intend to provide interim
feedback reports as previously described.
Comment: In support of implementing a successful informal review
process, some commenters recommended that the Quality Net Help Desk be
expanded with additional telephone lines and more trained, experienced,
and qualified staff. Commenters reported that some eligible
professionals have faced challenges getting through to a CMS staff
person and/or accessing the information they need through the existing
Quality Net Help Desk. Another commenter stated that they believe the
Quality Net Help Desk should be able to help eligible professionals and
their staff immediately.
Response: We agree that in implementing an informal review process
that utilizes the existing inquiry support framework additional
resources will be needed and anticipate putting additional resources
towards the Quality Net Help Desk.

[[Page 73551]]

Comment: Some commenters felt the proposed process was too informal
to provide a fair and appropriate appeal. One commenter suggested the
agency consider basing the informal process on the current inquiry
process as merely a starting point and plan to expand the process in
the future. Similarly, other commenters indicated that the appeals
process needs to be a structured, transparent, and user-friendly
appeals process so that eligible professionals have an avenue to
quickly remedy erroneous determinations.
Response: We note that section 1848(m)(5)(I) of the Act does not
require a formal appeals process; rather, it only requires an informal
process for eligible professionals to seek a review of the
determination that an eligible professional did not satisfactorily
submit data on quality measures under the Physician Quality Reporting
System. We believe that the process that we proposed and are finalizing
adequately allows an eligible professional to seek an informal review
of the determination that the professional did not satisfactorily
report. However, we agree that a timely response to eligible
professionals who are questioning the outcome of their Physician
Quality Reporting System reporting rate calculation will benefit the
eligible professional. We plan to communicate the informal review
process to eligible professionals through education and outreach. We
also agree that the process needs to be user friendly and are using the
lessons learned from inquiries received related to previous program
years in determining the most timely and user-friendly method for the
informal appeals process.
Comment: Another commenter suggested as payment adjustments begin
to apply in 2015, we work with Congress to implement a more formal
appeals process that includes standardized and transparent rules for
submitting and reviewing evidence.
Response: For the 2011 Physician Quality Reporting System, we plan
to implement the informal review process as described previously and
required under section 1848(m)(5)(I) of the act. We plan to use any
lessons learned from this process to make further enhancements to the
process in future years.
Upon consideration of the comments, we are finalizing the informal
review process as proposed and previously described. As stated in the
proposed rule, we anticipate posting, by December 31, 2011 (75 FR
40202) on the CMS Physician Quality Reporting System Web site, further
information regarding the operational aspects of the informal review
process for the 2011 Physician Quality Reporting System. As we are
implementing this informal review process beginning with the 2011
Physician Quality Reporting System and our expectation that we will be
unable to generate 2011 Physician Quality Reporting System interim
feedback reports prior to the start of the July 1, 2011 reporting
period, we anticipate that eligible professionals will first have an
opportunity to avail themselves of this informal process when the 2011
Physician Quality Reporting System feedback reports are made available
in 2012.
2. Section 132: Incentives for Electronic Prescribing (eRx)--The
Electronic Prescribing Incentive Program
a. Program Background and Statutory Authority
As described in the CY 2011 PFS proposed rule (75 FR 40202 through
40203), Electronic Prescribing (eRx) is the transmission using
electronic media, of prescription or prescription-related information
between prescriber, dispenser, pharmacy benefit manager (PBM), or
health plan, either directly or through an intermediary, including an
eRx network. The intention of the 2011 eRx Incentive Program, which is
separate from, and in addition to, incentive payments that eligible
professionals may earn through the Physician Quality Reporting System,
is to continue to encourage significant expansion of the use of
electronic prescribing by authorizing a combination of financial
incentives and payment adjustments. Individual eligible professionals
do not have to participate in the Physician Quality Reporting System in
order to participate in the eRx Incentive Program (and vice versa). We
proposed to add Sec. 414.92 to title 42 of the Code of Federal
Regulations to implement and codify the provisions of the eRx Incentive
Program.
For 2011, which is the third year of the eRx Incentive Program, the
Secretary is authorized to provide eligible professionals who are
successful electronic prescribers an incentive payment equal to 1.0
percent of the total estimated Medicare Part B PFS allowed charges
(based on claims submitted not later than 2 months after the end of the
reporting period) for all covered professional services furnished by
the eligible professional during the 2011 reporting period. The
applicable electronic prescribing percent (1.0 percent) authorized for
the 2011 eRx Incentive Program is different from that (2.0 percent)
authorized for the 2009 and 2010 eRx Incentive Program. Under section
1848(m)(2)(C) of the Act, the incentive payments for successful
electronic prescribers for future years are authorized as follows:
1.0 percent for 2012.
0.5 percent for 2013.
In addition, section 1848(m)(2)(D) of the Act, as added by section
4101(f)(2)(B) of Title IV of Division B of the American Recovery and
Reinvestment Act of 2009 (Pub. L. 111-5) (ARRA-HITECH) which authorized
the Medicare EHR Incentive Program, specifies that the eRx incentive
does not apply to an eligible professional (or group practice), if, for
the EHR reporting period, the eligible professional (or group practice)
earns an incentive payment under the Medicare EHR Incentive Program
beginning in 2011.
For the eRx Incentive Program, when reporting the G-codes for
purposes of qualifying for the incentive payment for electronic
prescribing in 2011, we proposed that the eligible professional must
have and regularly use a ``qualified'' electronic prescribing system,
as defined in the electronic prescribing measure specifications.
In addition, under section 1848(a)(5)(A) of the Act, a PFS payment
adjustment applies beginning in 2012 to those professionals who are not
successful electronic prescribers. Specifically, for 2012, 2013, and
2014, if the eligible professional is not a successful electronic
prescriber for the reporting period for the year, the PFS amount for
covered professional services furnished by such professionals during
the year as previously referenced shall be less than the PFS amount
that would otherwise apply over the next several years by--
1.0 percent for 2012.
1.5 percent for 2013.
2.0 percent for 2014.
We believe that the criteria for determination of successful
electronic prescriber for the eRx incentive payment are not required to
be identical to the criteria that will be used to determine the
applicability of the payment adjustment that begins in 2012. In
general, we believe that an incentive should be broadly available to
encourage the widest possible adoption of eRx, even for low volume
prescribers. On the other hand, we believe that a payment adjustment
should be applied primarily to assure that those who have a large
volume of prescribing do so electronically, without penalizing those
for whom the adoption and use of an electronic prescribing system may
be impractical given the low volume of prescribing. Under section
1848(m)(6)(A) of the Act, the definition

[[Page 73552]]

of ``eligible professional'' for purposes of eligibility for the eRx
Incentive Program is identical to that for the Physician Quality
Reporting System under section 1848(k)(3)(B) of the Act. Eligible
professionals include physicians, other practitioners, physical and
occupational therapists, qualified speech-language pathologists, and
qualified audiologists. However, as we have noted in prior years, for
purposes of the eRx Incentive Program, eligibility is further
restricted by scope of practice to those professionals who have
prescribing authority. Detailed information about the types of
professionals that are eligible to participate in the eRx Incentive
Program is available on the eRx Incentive Program section of the CMS
Web site at http://www.cms.gov/ERXIncentive.
As in the 2010 eRx Incentive Program, we proposed for 2011 that the
eRx Incentive Program continue to be an incentive program in which
determination of whether an eligible professional is a successful
electronic prescriber will be made at the individual professional
level, based on the NPI. Inasmuch as some individuals (identified by
NPIs) may be associated with more than one practice or TIN, the
determination of whether an eligible professional is a successful
electronic prescriber will be made to the holder of each unique TIN/NPI
combination (75 FR 40202). Then, as in previous years, payment will be
made to the applicable holder of the TIN. For 2011, the determination
of whether an eligible professional is a successful electronic
prescriber will continue to be made for each unique TIN/NPI
combination. However, section 1848(m)(3)(C) of the Act required the
Secretary by January 1, 2010 to establish and have in place a process
under which eligible professionals in a group practice (as defined by
the Secretary) would be treated as meeting the requirements for
submitting data on electronic prescribing quality measures for covered
professional services for a reporting period (or, for purposes of the
payment adjustment under section 1848(a)(5) of the Act, for a reporting
period for a year) if, in lieu of reporting the electronic prescribing
measure, the group practice reports measures determined appropriate by
the Secretary, such as measures that target high-cost chronic
conditions and preventive care, in a form and manner, and at a time
specified by the Secretary. Therefore, in addition to making incentive
payments for 2011 to individual eligible professionals based on
separately analyzing whether the individual eligible professionals are
successful electronic prescribers, we proposed to also make incentive
payments to group practices based on the determination that the group
practice, as a whole, is a successful electronic prescriber in
accordance with section 1848(m)(3)(C) of the Act (75 FR 40203).
The following is a summary of the general comments received on the
CY 2011 PFS proposed rule related to the eRx Incentive Program and our
responses.
Comment: Some commenters provided overall support for the eRx
Incentive Program. Specific aspects of the program for which the
commenters voiced support include the numerator and denominator codes,
the reporting mechanisms, what constitutes a ``qualified'' electronic
prescribing system, the criteria for being a successful electronic
prescriber for purposes of the 2011 incentive payment, and the 10
percent limitation under section 1848(m)(2)(B) of the Act.
Response: We appreciate the commenters' positive feedback.
Comment: A couple of commenters highlighted the importance of
providing eligible professionals feedback on whether they have
successfully completed all requirements for this program and
establishing an appeals process to allow eligible professionals to
appeal decisions that affect their eligibility to take part in the eRx
Incentive Program or that affect their ability to get eRx incentives.
Response: We agree with the commenters on the importance of
feedback to eligible professionals. In addition to providing an annual
feedback report, we anticipate making interim feedback reports for the
program available to any eligible professional who bills for a
denominator-eligible case during the first half of 2011. We anticipate
that interim feedback reports will be available in the fall of 2011 and
will include information related to the 2012 eRx payment adjustment.
Although there is a required informal review process for the Physician
Quality Reporting System, we are not establishing such a process for
the eRx Incentive Program (nor are we required to do so). We expect
that any questions arising from the interim feedback reports or the
eligibility for an eRx incentive will be addressed by the Quality Net
Help Desk as is currently done.
Comment: One commenter urged us to make available to individual
eligible professionals the percentage of their prior year's Medicare
charges that resulted from the outpatient CPT codes included in the
electronic prescribing measure's specifications.
Response: Unfortunately, we do not have resources to calculate and
provide feedback to eligible professionals regarding the composition of
their charges. Most electronic billing systems, however, will have this
functionality and should be able to provide eligible professional who
use such billing systems with this information. In addition, eligible
professionals who participate in the eRx Incentive Program will receive
feedback reports with information on the percentage of an eligible
professional's charges that resulted from the denominator codes
included in the electronic prescribing's specifications.
Comment: One commenter sought guidance for physicians whose
patients participate in the Medicaid PACE program and use a contracted
pharmacy that may not be able to receive electronic prescriptions. The
commenter asked whether these visits would be excluded from the
requirements of the eRx Incentive Program.
Response: The eRx Incentive Program requires that an eligible
professional use a qualified eRx system to electronically prescribe
during the office visit. Hence, if the qualified system used by the
eligible professional meets the requirements for a qualified eRx
system, as described below and listed on the CMS eRx Incentive Web site
at http://www.cms.gov/erxincentive, and the prescription is sent
electronically, then the eligible professional will be able to report
the electronic prescribing event even if the pharmacy was not able to
receive the prescription electronically. The use of a pharmacy that
cannot receive an electronic prescription does not invalidate the
electronic prescribing event and the eligible professional would still
get credit for electronically prescribing as long as he or she reports
this event for a denominator-eligible visit.
Upon consideration of the comments, we are finalizing our proposal
to add Sec. 414.92 to title 42 of the Code of Federal Regulations to
implement and codify the provisions of the eRx Incentive Program.
Details regarding the specific aspects of the eRx Incentive Program
that are being finalized, including our rationale, are described below.
We have made some technical changes to the regulations at Sec. 414.92,
such as eliminating the unnecessary use of acronyms and inserting or
revising cross-references as needed.

[[Page 73553]]

b. The 2011 eRx Incentive
(1) The 2011 Reporting Period for the eRx Incentive Program
Section 1848(m)(6)(C)(i)(II) of the Act defines ``reporting
period'' for the 2011 eRx Incentive Program to be the entire year.
Section 1848(m)(6)(C)(ii) of the Act, however, authorizes the Secretary
to revise the reporting period if the Secretary determines such
revision is appropriate, produces valid results on measures reported,
and is consistent with the goals of maximizing scientific validity and
reducing administrative burden. We proposed the 2011 eRx Incentive
Program reporting period for purposes of the 2011 incentive payment to
be the entire calendar year (January 1, 2011 through December 31, 2011)
based on the definition of ``reporting period'' specified under section
1848(m)(6)(C)(i)(II) of the Act. We proposed that successful electronic
prescribers would be eligible to receive an incentive payment equal to
1.0 percent of the total estimated allowed Medicare Part B charges
(based on claims submitted by no later than February 28, 2012) for all
covered professional services furnished January 1, 2011 through
December 31, 2011.
We did not receive any comments related to the proposed reporting
period for the 2011 eRx incentive. Therefore, the reporting period for
the 2011 eRx incentive will be the entire 2011 calendar year, or
January 1, 2011 through December 31, 2011.
(2) Criteria for Determination of Successful Electronic Prescriber for
Eligible Professionals
Under section 1848(m)(3)(B) of the Act, in order to qualify for the
incentive payment, an eligible professional must be a ``successful
electronic prescriber,'' which the Secretary is authorized to identify
using 1 of 2 possible criteria. One criterion, under section
1848(m)(3)(B)(ii) of the Act, is based on the eligible professional's
reporting, in at least 50 percent of the reportable cases, on any
electronic prescribing quality measures that have been established
under the physician reporting system, under subsection 1848(k) of the
Act and are applicable to services furnished by the eligible
professional during a reporting period. We applied this criterion in
2009. However, for years after 2009, section 1848(m)(3)(D) of the Act
permits the Secretary in consultation with stakeholders and experts to
revise the criteria for submitting data on electronic prescribing
measures under section 1848(m)(3)(B)(ii) of the Act.
The second criterion, under section 1848(m)(3)(B)(iii) of the Act,
is based on the electronic submission by the eligible professional of a
sufficient number (as determined by the Secretary) of prescriptions
under Part D during the reporting period. If the Secretary decides to
use the latter standard, then, in accordance with section
1848(m)(3)(B)(iv) of the Act, the Secretary is authorized to use Part D
drug claims data to assess whether a ``sufficient'' number of
prescriptions have been submitted by eligible professionals. However,
under section 1848(m)(3)(B)(i) of the Act, if the standard based on a
sufficient number (as determined by the Secretary) of electronic Part D
prescriptions is applied for a particular reporting period, then the
standard based on the reporting on electronic prescribing measures
would no longer apply.
For 2011, we proposed to continue to require eligible professionals
to report on the electronic prescribing measure used in the 2009 and
2010 eRx Incentive Program to determine whether an eligible
professional is a successful electronic prescriber, but we also
proposed to again use modified measure specifications and to use
modified reporting criteria based on the authority provided under
section 1848(m)(3)(D) of Act, as discussed below (75 FR 40203).
(A) Reporting the Electronic Prescribing Measure
We proposed, for purposes of the 2011 incentive payment and 2012
and 2013 payment adjustments, to retain the 3 reporting mechanisms
available to individual eligible professionals to report the electronic
prescribing measure in 2010 to maintain program stability. First, we
proposed to again retain the claims-based reporting mechanism that is
used in the 2009 and 2010 eRx Incentive Program. In addition, similar
to the Physician Quality Reporting System, for the eRx Incentive
Program, we proposed to continue the registry-based reporting mechanism
and, we also proposed that the EHR-based reporting mechanism be
available for the electronic prescribing measure for 2011 (75 FR
40203).
We proposed that only registries qualified to submit quality
measure results and numerator and denominator data on quality measures
on behalf of eligible professionals for the 2011 Physician Quality
Reporting System would be qualified to submit measure results and
numerator and denominator data on the electronic prescribing measure on
behalf of eligible professionals for the 2011 eRx Incentive Program (75
FR 40204).
We proposed that qualified registries would need to submit the
electronic prescribing measure for the 2011 eRx Incentive Program to
CMS in two separate transmissions. Such qualified registries would
first need to submit 2011 data on the electronic prescribing measure
between July 1, 2011 and August 19, 2011, following the end of the 2012
payment adjustment reporting period (which is the first 6 months of
2011), for purposes of the eRx payment adjustment described in section
VII.F.2.c. of this final rule with comment period. The second
submission for purposes of the 2011 incentive would occur following the
end of the 2011 incentive payment reporting period (which is the whole
calendar year of 2011).
Similarly, we proposed that only EHR products ``qualified'' to
potentially be able to submit clinical quality data extracted from the
EHR to CMS for the 2011 Physician Quality Reporting System would be
considered ``qualified'' for the purpose of an eligible professional
potentially being able to submit data on the electronic prescribing
measure for the 2011 eRx Incentive Program (75 FR 40204). The self-
nomination process and requirements for EHR vendors for the Physician
Quality Reporting System would continue to apply to the EHR vendors for
the 2011 eRx Incentive Program.
We proposed that eligible professionals who want to use a qualified
EHR to submit the electronic prescribing measure for the 2011 eRx
Incentive Program would be required to transmit 2011 electronic
prescribing measure data to CMS in two separate transmissions. Such
eligible professionals would first need to submit 2011 data on the
electronic prescribing measure between July 1, 2011 and August 19,
2011, following the end of the 2012 payment adjustment reporting
period, for purposes of the eRx payment adjustment described in section
VII.F.2.c. of this final rule with comment period. The second
submission for purposes of the 2011 incentive would occur following the
end of the 2011 incentive payment reporting period.
The following is a summary of the comments received regarding the
proposed mechanisms for reporting the electronic prescribing measure in
2011 for purposes of the 2011 incentive payment, and for purposes of
the 2012 and 2013 payment adjustments described in sections VII.F.2.c.
and d. of this final rule with comment period.
Comment: Some commenters agreed with retaining the same reporting

[[Page 73554]]

mechanisms for 2011 that were in place for 2010, particularly our
decision to continue offering claims-based reporting and the inclusion
of an EHR-based reporting mechanism.
Response: We appreciate the commenters' positive feedback and are
finalizing our proposal to include a claims, registry, and EHR
reporting for the 2011 eRx incentive.
Comment: One commenter thinks the requirement to submit electronic
prescribing measure data in two submissions is burdensome for eligible
professionals and suggests exploring alternatives where only one
submission is required.
Response: We proposed two data submissions during 2011 for EHR-
based reporting and registry-based reporting for different purposes.
One was a submission between July 1, 2011 and August 19, 2011, that was
intended to be solely for purposes of the 2012 payment adjustment. The
second submission, which was to occur following the end of the 2011
incentive payment reporting period, was solely for purposes of the 2011
incentive payment. For purposes of the 2012 payment adjustment, we will
not be able to finalize the registry and EHR-based reporting mechanisms
because it will not be operationally feasible for us to accept the data
submissions from the EHRs and registries in the timeframe needed for us
to be able to have sufficient time to be analyze the data and make the
determination whether an eligible professional is subject to the 2012
payment adjustment prior to January 1, 2012. Therefore, there will not
be two submissions of electronic prescribing measure data from
registries and EHRs during 2011.
Eligible professionals who intend to use the EHR-based reporting
mechanism to submit data on the electronic prescribing measure for
purposes of the 2011 incentive payment will need to submit the
electronic prescribing measure data via their EHR following the end of
the 2011 incentive payment reporting period. Similarly, registries that
are submitting electronic prescribing data on behalf of eligible
professionals or group practices for purposes of the 2011 incentive
payment will need to do so following the end of the 2011 incentive
reporting period. If an eligible professional chooses to use a
qualified registry or qualified EHR for purposes of submitting
electronic prescribing measure data for the 2011 incentive, we will not
combine data from multiple reporting mechanisms. Therefore, an eligible
professional must make sure that the required number of eRx events for
purposes of the 2011 incentive payment is reported to us via a single
reporting mechanism.
After considering the comments and for the reasons previously
explained, we are finalizing our proposal to provide a claims,
registry, and EHR reporting mechanism for the 2011 eRx incentive. As in
2010, not all registries qualified to submit quality measures on behalf
of eligible professionals for the 2011 Physician Quality Reporting
System will be qualified to submit quality measures results and
numerator and denominator data on the electronic prescribing measure
under the eRx Incentive Program. The electronic prescribing measure is
reportable by an eligible professional any time he or she bills for one
of the procedure codes for Part B services included in the measure's
denominator. Some registries that self-nominate to become a qualified
registry for the Physician Quality Reporting System may not choose to
self-nominate to become a qualified registry for submitting electronic
prescribing measures that require reporting at each eligible visit,
such as the electronic prescribing measure. Registries need to indicate
their desire to qualify to submit measure results and numerator and
denominator data on the electronic prescribing measure for the 2011 eRx
Incentive program at the time that they submit their self-nomination
letter for the 2011 Physician Quality Reporting System. The self-
nomination process and requirements for registries for the Physician
Quality Reporting System, which also will apply to the registries for
the 2011 eRx Incentive Program, are discussed in section VII.F.1. of
this final rule with comment period. We will post a final list of
qualified registries for the 2011 eRx Incentive Program on the eRx
Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive when we post the final list of qualified registries for
the 2011 Physician Quality Reporting System on the Physician Quality
Reporting System section of the CMS Web site.
Similarly, EHR vendors are required to indicate their desire to
have one or more of their EHR products qualified for the purpose of an
eligible professional potentially being able to submit data on the
electronic prescribing measure for the 2011 eRx Incentive Program at
the time when they submit their self-nomination letter for the 2011
Physician Quality Reporting System. A list of qualified EHR vendors and
their products (including the version that is qualified) for the 2011
eRx Incentive Program will be posted on the eRx Incentive Program
section of the CMS Web site at http://www.cms.gov/ERXIncentive when we
post the list of qualified EHR products for the 2011 Physician Quality
Reporting System on the Physician Quality Reporting System section of
the CMS Web site.
Although we are finalizing three reporting mechanisms for use by
eligible professionals for the 2011 eRx incentive, for purposes of the
2012 eRx payment adjustment, we are finalizing only the claims-based
reporting mechanism given that, for operational reasons, we will not
have the ability to accept registry and EHR data in the timeframe that
we need to be able to complete our analysis of the data and make the
determination of whether an eligible professional is subject to the
2012 payment adjustment prior to January 1, 2012. As discussed in the
proposed rule (75 FR 40208), all claims for services furnished between
January 1, 2011 and June 30, 2011, must be processed by no later than
one month after the reporting period to be included in our analysis for
purposes of the 2012 payment adjustment. Accordingly, to the extent an
eligible professional intends to use a registry or EHR to submit
electronic prescribing measure data for purposes of qualifying for the
2011 incentive, the eligible professional would still need to submit
electronic prescribing measure data on claims for services furnished
between January 1, 2011 and June 30, 2011, in order to avoid the 2012
payment adjustment.
(B) The Reporting Denominator for the Electronic Prescribing Measure
The electronic prescribing measure, similar to the Physician
Quality Reporting System measures, has two basic elements, which
include: (1) a reporting denominator that defines the circumstances
when the measure is reportable; and (2) a reporting numerator.
The denominator for the electronic prescribing measure consists of
specific billing codes for covered professional services. The measure
becomes reportable when any one of these procedure codes is billed by
an eligible professional for Part B covered professional services. As
initially required under section 1848(k)(2)(A)(ii) of the Act, and
further established through rulemaking and under section 1848(m)(2)(B)
of the Act, we may modify the codes making up the denominator of the
electronic prescribing measure. As such, we expanded the scope of the
denominator codes for 2010 to covered professional services outside the
professional office and outpatient setting, such as professional
services furnished in

[[Page 73555]]

skilled nursing facilities or the home care setting.
For 2011, we proposed to retain the 2010 electronic prescribing
measure's denominator codes. The following is a summary of the comments
received regarding the proposed denominator codes for the 2011
electronic prescribing measure.
Comment: A couple of commenters supported our proposal to retain
the denominator codes from denominator of the 2010 electronic
prescribing measure denominator. Conversely, other commenters opposed
retaining the 2010 electronic prescribing denominator codes because
they do not allow for surgeons to effectively participate in the eRx
Incentive Program. The commenters did not suggest additional codes for
inclusion in the electronic prescribing measure's denominator though.
Response: With respect to the commenters' suggestions to add other
denominator codes that were not proposed, we are not able to do so
since the public would not have had an opportunity to comment on these
additional codes. We welcome, however, specific suggestions for
additional codes for consideration for the 2012 electronic prescribing
measure. We believe that the existing denominator codes are
representative of the types of services in which prescriptions are most
often generated.
Comment: Another commenter was concerned that we have unnecessarily
restricted the electronic prescribing's denominator by associating a
prescription with a patient visit. The commenter noted that a vast
majority of prescriptions in an internal medicine or family practice
office are generated outside of a patient visit through the
prescription renewal workflow while new prescriptions--the minority--
are often coincident with the patient visit. The commenter believes
that this sets up a cascade of filters that may prevent many otherwise
successful providers from meeting the denominator criteria. The
commenter stated that pharmacies either have, or can easily acquire,
the capability to report the manner in which the prescription was
received and CMS should consider a determined number of pharmacy claims
of electronic prescriptions for Medicare beneficiaries, where the
prescriber and manner of prescription delivery are clearly defined, as
acceptable minimum criteria to determine a successful electronic
prescriber. The commenter believes that the infrastructure to support
this is laid in the requirements that Medicare D claims be submitted
electronically to CMS and would allow CMS to identify successful
electronic prescribers independent of the office-generated claims.
Response: As we stated in the proposed rule (75 FR 40203), we
believe that the completeness and accuracy of the Part D data with
respect to whether a prescription was submitted electronically is
unknown, which is why we are continuing to require reporting on an
electronic prescribing measure. As stated previously, we welcome
suggestions for additional denominator codes for use in future years
but believe that the existing denominator codes are generally
representative of the types of services in which prescriptions are
often generated.
Comment: One commenter supported the proposal to ``expand the scope
of the denominator codes for 2010 to professional services outside the
professional office and outpatient setting, such as professional
services furnished in skilled nursing facilities or the home-care
setting.''
Response: We are unclear why the commenter is providing feedback on
the 2010 denominator codes as the scope of the rule is limited to the
2011 electronic prescribing measure. The 2010 denominator codes were
finalized in the 2010 PFS final rule with comment period (74 FR 61852).
Since the 2010 denominator codes already reflected our desire to
include some professional services outside the professional office and
outpatient setting, for 2011, we did not propose any changes to the
denominator codes. Therefore, for 2011, we are retaining the 2010
denominator codes for the reasons listed by the commenter. Accordingly,
after considering the comments, we are finalizing the following CPT
codes in the denominator of the electronic prescribing measure for
2011: 90801, 90802, 90804, 90805, 90806, 90807, 90808, 90809, 90862,
92002, 92004, 92012, 92014, 96150, 96151, 96152, 99201, 99202, 99203,
99204, 99205, 99211, 99212, 99213, 99214, 99215, 99304, 99305, 99306,
99307, 99308, 99309, 99310, 99315, 99316, 99324, 99325, 99326, 99327,
99328, 99334, 99335, 99336, 99337, 99341, 99342, 99343, 99344, 99345,
99347, 99348, 99349, 99350, G0101, G0108, G0109. We believe these codes
represent the types of services for which prescriptions are likely to
be generated.
There are no diagnosis codes in the measure's denominator and there
are no age/gender requirements in order for a patient to be included in
the measure's denominator (that is, reporting of the electronic
prescribing measure is not further limited to certain ages or a
specific gender). For purposes of both the incentive payment and
payment adjustments discussed in sections VII.F.2.c. and d. of this
final rule with comment period, eligible professionals who do not bill
for one of the procedure codes for Part B covered professional services
included in the measure's denominator will have no occasion to report
the electronic prescribing measure. In other words, the measure is not
applicable unless the professional bills for one of the codes included
in the measure's denominator. In addition, in order to qualify for an
incentive or avoid the payment adjustment, eligible professionals are
not required to report this measure in all cases in which the measure
is applicable. There are specific reporting thresholds, or reported
electronic prescribing events, that an eligible professional must meet
in order to be considered a ``successful electronic prescriber'' for
purposes of the 2011 incentive payments, which are described in section
VII.F.2.b.(2).(E). of this final rule with comment period. In addition,
there are specific reporting thresholds that an eligible professional
must meet in order to be considered a ``successful electronic
prescriber'' for purposes of the 2012 and 2013 payment adjustments,
which are described in sections VII.F.2.c. and d. of this final rule
with comment period, respectively.
By no later than December 31, 2010, we will post the final
specifications of the measure on the ``eRx Measure'' page of the eRx
Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive.
(C) Qualified Electronic Prescribing System--Required Functionalities
and Part D eRx Standards
To report the electronic prescribing measure in 2011, we again
proposed that the eligible professional must report one of the
measure's numerator G-codes, as discussed below. However, when
reporting any of the G-codes in 2011, we proposed that the professional
must have and regularly use a ``qualified'' electronic prescribing
system, as defined in the electronic prescribing measure
specifications. If the professional does not have general access to an
eRx system in the practice setting, then the eligible professional does
not have any data to report for purposes of the incentive payment. For
2011, we proposed to retain what constitutes a ``qualified'' electronic
prescribing system as a system based upon certain required
functionalities that the system can perform. We proposed to retain the
same functionalities that were required in 2010.
In addition, section 1848(m)(3)(B)(v) of the Act specifies that to
the extent

[[Page 73556]]

practicable, in determining whether an eligible professional is a
successful electronic prescriber, ``the Secretary shall ensure that
eligible professionals utilize electronic prescribing systems in
compliance with standards established for such systems pursuant to the
Part D Electronic Prescribing Program under section 1860D-4(e).'' The
Part D standards for electronic prescribing systems establish which
electronic standards Part D sponsors, providers, and dispensers must
use when they electronically transmit prescriptions and certain
prescription related information for Part D covered drugs that are
prescribed for Part D eligible individuals. For 2011, we proposed that
to be a qualified electronic prescribing system, electronic systems
must convey the information for the required functionalities using the
standards currently in effect for the Part D electronic prescribing
program.
We did not receive any comments on the proposed required
functionalities or Part D eRx standards. For this reason, we are
finalizing the required functionalities and Part D eRx standards as
described below.
Required Functionalities for a ``Qualified'' Electronic Prescriber
System
For 2011, a ``qualified'' electronic prescribing system is one that
can do the following:
(a) Generate a complete active medication list incorporating
electronic data received from applicable pharmacies and PBMs, if
available.
(b) Allow eligible professionals to select medications, print
prescriptions, electronically transmit prescriptions, and conduct
alerts (written or acoustic signals to warn the prescriber of possible
undesirable or unsafe situations including potentially inappropriate
dose or route of administration of a drug, drug-drug interactions,
allergy concerns, or warnings and cautions). This functionality must be
enabled.
(c) Provide information related to lower cost, therapeutically
appropriate alternatives (if any). The ability of an electronic
prescribing system to receive tiered formulary information, if
available, would again suffice for this requirement for 2011 and until
this function is more widely available in the marketplace.
(d) Provide information on formulary or tiered formulary
medications, patient eligibility, and authorization requirements
received electronically from the patient's drug plan (if available).
Part D Electronic Prescribing Standards.
To be a qualified electronic prescribing system under the 2011 eRx
Incentive Program, electronic systems must convey the information
listed previously under (a) through (d) using the standards currently
in effect for the Part D electronic prescribing program. Additional
Part D electronic prescribing standards were implemented April 1, 2009.
These latest Part D electronic prescribing standards, and those that
had previously been adopted, can be found on the CMS Web site at http://www.cms.gov/eprescribing.
To ensure that eligible professionals utilize electronic
prescribing systems that meet these requirements, the electronic
prescribing measure requires that those functionalities required for a
``qualified'' electronic prescribing system utilize the adopted Part D
electronic prescribing standards. The Part D electronic prescribing
standards relevant to the four functionalities for a ``qualified''
system in the electronic prescribing measure described previously and
listed as (a), (b), (c), and (d), currently are as follows:
(a) Generate medication list--Use the National Council for
Prescription Drug Programs (NCPDP) Prescriber/Pharmacist Interface
SCRIPT Standard, Implementation Guide, Version 8, Release 1, October
2005 (hereinafter ``NCPDP SCRIPT 8.1'') Medication History Standard;
(b) Transmit prescriptions electronically--Use the NCPDP SCRIPT 8.1
for the transactions listed at Sec. 423.160(b)(2);
(c) Provide information on lower cost alternatives--Use the NCPDP
Formulary and Benefits Standard, Implementation Guide, Version 1,
Release 0 (Version 1.0), October 2005 (hereinafter ``NCPDP Formulary
and Benefits 1.0'');
(d) Provide information on formulary or tiered formulary
medications, patient eligibility, and authorization requirements
received electronically from the patient's drug plan--use--
(1) NCPDP Formulary and Benefits 1.0 for communicating formulary
and benefits information between prescribers and plans;
(2) Accredited Standards Committee (ASC) X12N 270/271-Health Care
Eligibility Benefit Inquiry and Response, Version 4010, May 2000,
Washington Publishing Company, 004010X092 and Addenda to Health Care
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002,
Washington Publishing Company, 004010X092A1 for communicating
eligibility information between the plan and prescribers; and
(3) NCPDP Telecommunication Standard Specification, Version 5,
Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch
Standard Batch Implementation Guide, Version 1, Release 1 (Version
1.1), January 2000 for communicating eligibility information between
the plan and dispensers.
However, there are Part D electronic prescribing standards that are
in effect for functionalities that are not commonly utilized at this
time. One example is Rx Fill Notification, which is discussed in the
Part D electronic prescribing final rule (73 FR 18926). For purposes of
the 2011 Electronic Prescribing Program, we again are not requiring
that an electronic prescribing system contain all functionalities for
which there are available Part D electronic prescribing standards since
many of these functionalities are not commonly available. For those
required functionalities previously described, a ``qualified'' system
must use the adopted Part D electronic prescribing standards for
electronic messaging.
There are other aspects of the functionalities for a ``qualified''
system that are not dependent on electronic messaging and are part of
the software of the electronic prescribing system, for which Part D
standards for electronic prescribing do not pertain and are not
required for purposes of the eRx Incentive Program. For example, the
requirements in qualification (b) that require the system to allow
professionals to select medications, print prescriptions, and conduct
alerts are functions included in the particular software, for which
Part D standards for electronic messaging do not apply.
We are aware that there are significant numbers of eligible
professionals who are interested in participating in the eRx Incentive
Program but currently do not have an electronic prescribing system. The
electronic prescribing measure does not require the use of any
particular system or transmission network; only that the system be a
``qualified'' system having the functionalities previously described
based on Part D electronic prescribing standards. If the professional
does not have general access to an electronic prescribing system in the
practice setting, the eligible professional would not be able to report
the 2011 electronic prescribing measure. In addition to not being
eligible for a 2011 incentive payment, an eligible professional who
does not report the electronic prescribing measure for 2011 may be
subject to the 2012 eRx payment adjustment discussed in section
VII.F.2.c. of this final rule with comment period.

[[Page 73557]]

(D) The Reporting Numerator for the Electronic Prescribing Measure
The proposed criteria for reporting for purposes of being a 2011
successful electronic prescriber are designed to reward those eligible
professionals who demonstrate that they have adopted a qualified
electronic prescribing system and used the system in a substantial way
to electronically prescribe. Accordingly, for the 2011 electronic
prescribing measure, we proposed to retain the following numerator G-
code from the 2010 electronic prescribing measure's numerator: G8553
(At least 1 prescription created during the encounter was generated and
transmitted electronically using a qualified electronic prescribing
system) (75 FR 40206).
We did not receive any comments related to the proposed electronic
prescribing measure numerator G-code for 2011. Therefore, we are
finalizing G-code G8553 for the 2011 electronic prescribing measure's
numerator.
We intend to post the final 2011 electronic prescribing measure
specifications on the ``eRx Measure'' page of the eRx Incentive Program
section of the CMS Web site at http://www.cms.gov/ERXIncentive by no
later than December 31, 2010.
Because the electronic prescribing quality measure will apply only
when an eligible professional furnishes services indicated by one of
the codes included in the measure's denominator, for claims-based
reporting, for example, it will not be necessary for an eligible
professional to report G-codes for the electronic prescribing measure
on claims not containing one of the denominator codes. However, if
reporting a G-code, the G-code data submission will only be considered
valid if it appears on the same Medicare Part B claim containing one of
the electronic prescribing quality measure's denominator codes.
In addition, if the eligible professional submits a Medicare Part B
claim containing one of the electronic prescribing measure's
denominator codes, he or she can report the numerator G-code only when
the eligible professional furnishes services indicated by the G-code
included in the measure's numerator. That is, only when at least 1
prescription created during the encounter is generated and transmitted
electronically using a qualified electronic prescribing system.
(E) Criteria for Successful Reporting of the Electronic Prescribing
Measure
As discussed previously, section 1848(m)(3)(D) of the Act
authorizes the Secretary to revise the criteria for submitting data on
the electronic prescribing measure from the criteria specified under
section 1848(m)(3)(B)(ii) of the Act, which requires the measure to be
reported in at least 50 percent of the cases in which the measure is
reportable. For the 2010 eRx incentive, we revised the criteria for
successful electronic prescriber such that an eligible professional
shall be treated as a successful electronic prescriber for a reporting
period based on the eligible professional's reporting of the electronic
prescribing measure which counts the generation and reporting of one or
more prescriptions associated with a patient visit electronically for a
minimum of 25 unique visits per year of applicable cases in the
denominator of the electronic prescribing for 2010. For 2011, we again
proposed to make the determination of whether an eligible professional
is a successful electronic prescriber for purposes of the eRx incentive
based on a count of the number of times (minimum threshold of 25) an
eligible professional reports that at least one prescription created
during the encounter is generated using a qualified electronic
prescribing system (that is, reports the G8553 code).
The following is a summary of comments received regarding the
criteria for the determination of a successful electronic prescriber
for eligible professionals for the 2011 eRx incentive payment.
Comment: One commenter requested that we define and share for
public comment the actual number of Part D prescriptions that would
suffice to document successful electronic prescribing.
Response: We did not propose to use Part D prescriptions as the
standard to determine whether an eligible professional is a successful
e-prescriber for purposes of the 2011 eRx incentive payment. As stated
in the proposed rule (75 FR 40203), we may consider doing so in the
future. At such time, we would define the actual number of Part D
prescriptions that would be required to be prescribed electronically
via notice and comment rulemaking.
Comment: Several commenters supported the electronic prescribing
measure reporting threshold of 25, while others stated that they
support our plan to reduce the electronic prescribing measure reporting
burden from 50 percent of all applicable services to reporting just 25
times.
Response: We appreciate the commenters' feedback regarding the
proposed electronic prescribing measure reporting threshold for
purposes of the 2011 eRx incentive payment. For 2011, we are finalizing
our proposal to require that professionals report on 25 unique
electronic prescribing events in order to be considered a successful e-
prescriber for the purpose of qualifying for a 2011 eRx incentive
payment. We believe that this reporting threshold simplifies the
reporting burden and encourages participation.
Comment: Some commenters expressed concern that the reporting
threshold of 25 unique visits is too low a standard for incentive
payments as it is unclear how this threshold will drive improvements
for all Medicare beneficiaries. A more robust standard was recommended.
One commenter specifically recommended a reporting threshold of between
250-500 prescriptions per year per eligible professional and 25,000-
50,000 per year per GPRO I group practice. Another commenter
recommended that we require eligible professionals to transmit more
than 40 percent of written prescriptions electronically, which is in
line with the EHR Incentive Program.
Response: We appreciate the commenters' valuable input. We have
reviewed several eRx Incentive Program management reports in order to
determine the feasibility of using the ``25'' visit threshold and we
believe that this threshold simplifies the eRx reporting burden. In
establishing this threshold we also took into account the many valid
circumstances that would prevent eligible professionals who have
adopted a qualified electronic prescribing system from having 25 unique
electronic prescribing events during the calendar year and variations
in practice characteristics. Our goal is to increase participation in
the eRx Incentive Program and, more importantly, to encourage the
continued adoption and use of electronic prescribing systems.
After considering the comments received and for the reasons
previously explained, we are finalizing our proposal to make the
determination of whether an eligible professional is a successful
electronic prescriber for purposes of the CY 2011 incentive payment
based on a count of the number of times (minimum threshold of 25) an
eligible professional reports that at least one prescription created
during the encounter is generated using a qualified electronic
prescribing system (that is, reports the G8553 code) during the 2011
reporting period (that is, January 1, 2011 through December 31, 2011).

[[Page 73558]]

(3) Determination of the 2011 Incentive Payment Amount for Individual
Eligible Professionals Who Are Successful Electronic Prescribers
Section 1848(m)(2)(B) of the Act imposes a limitation on the
electronic prescribing incentive payment. The Secretary is authorized
to choose 1 of 2 possible criteria for determining whether or not the
limitation applies to a successful electronic prescriber. The first
criterion is based upon whether the Medicare Part B allowed charges for
covered professional services to which the electronic prescribing
quality measure applies are less than 10 percent of the total Medicare
Part B PFS allowed charges for all covered professional services
furnished by the eligible professional during the reporting period. The
second criterion is based on whether the eligible professional submits
(both electronically and non-electronically) a sufficient number (as
determined by the Secretary) of prescriptions under Part D (which can,
again, be assessed using Part D drug claims data). If the Secretary
decides to use the latter criterion, then, in accordance with section
1848(m)(2)(B) of the Act, the criterion based on the reporting on
electronic prescribing measures would no longer apply. The statutory
limitation also applies with regard to the application of the payment
adjustment. Based on our proposal to make the determination of whether
an eligible professional is a ``successful electronic prescriber''
based on submission of the electronic prescribing measure, we proposed
to apply the criterion under section 1848(m)(2)(B)(i) of the Act for
the limitation for both the 2011 incentive payment and the 2012 payment
adjustment (the application of the limitation with regard to the 2012
eRx payment adjustment is discussed in section VII.F.2.c.(3). of this
final rule with comment period).
Since, as discussed previously, we proposed for 2011 to make the
determination of whether an eligible professional is a ``successful
electronic prescriber'' based on submission of the electronic
prescribing measure, we also proposed to retain the requirement to
analyze the claims submitted by the eligible professional at the TIN/
NPI level to determine whether the 10 percent threshold is met in
determining the receipt of an electronic prescribing incentive payment
for 2011 by an eligible professional (75 FR 40206). For purposes of the
2011 eRx incentive payment, this calculation is expected to take place
in the first quarter of 2012 and will be performed by dividing the
eligible professional's total 2011 Medicare Part B PFS allowed charges
for all such covered professional services submitted for the measure's
denominator codes by the eligible professional's total Medicare Part B
PFS allowed charges for all covered professional services (as assessed
at the TIN/NPI level). If the result is 10 percent or more, then the
statutory limitation will not apply and a successful electronic
prescriber will qualify to earn the electronic prescribing incentive
payment. If the result is less than 10 percent, then the statutory
limitation will apply and the eligible professional will not earn an
electronic prescribing incentive payment even if he or she
electronically prescribes and reports a G-code indicating that he or
she generated and transmitted a prescription electronically at least 25
times for those eligible cases that occur during the 2011 reporting
period. Although an individual eligible professional may decide to
conduct his or her own assessment of how likely this statutory
limitation is expected to apply to him or her before deciding whether
or not to report the electronic prescribing measure, an individual
eligible professional may report the electronic prescribing measure
without regard to the statutory limitation for the incentive payment.
The following is a summary of the comments received on the
determination of the 2011 incentive payment amount for individual
eligible professionals who are successful electronic prescribers.
Comment: Several commenters felt we should allow eligible
professionals to earn an incentive both for the eRx Incentive Program
as well as for the Medicare EHR Incentive Program. The commenters did
not think these incentives should be mutually exclusive, claiming that
the eRx payment adjustment applies even if the eligible professional is
participating in both programs.
Response: We do not have the authority to allow eligible
professionals to earn an incentive under the eRx Incentive Program and
the Medicare EHR Incentive Program. Section 1848(m)(2)(D) of the Act
specifies that the incentive under the eRx Incentive Program shall not
apply to an eligible professional (or, in the case of a group practice)
if, for the EHR reporting period the eligible professional (or group
practice) receives an incentive payment under the EHR Incentive Program
with respect to a certified EHR technology that has the capability of
electronic prescribing.
We will, however, be developing a plan, as described under section
1848(m)(7) of the Act (``Integration of Physician Quality Reporting and
EHR Reporting''), to integrate measure reporting requirements under the
Physician Quality Reporting System, eRx Incentive Program, and the EHR
Incentive Program, with respect to selection of measures to demonstrate
meaningful use under the EHR Incentive Program, quality of care
furnished to an individual, and such other activities as specified by
the Secretary.
With regards to the commenters' statement that the eRx payment
adjustment still applies even if an eligible professional participates
in both programs, this is not accurate. The eRx payment adjustment
applies only to the extent that the eligible professional is not a
successful electronic prescriber. We would also like to clarify that
the limitation under section 1848(m)(2)(D) of the Act with respect to
EHR incentive payments does not preclude the 10 percent limitation
under section 1848(m)(2)(B)(i) of the Act from applying with regard to
the eRx payment adjustment to an eligible professional who earns an EHR
incentive.
Comment: One commenter requested that we clarify the way in which
we intend to calculate the group eRx incentives if individual members
of the group have received Medicare EHR incentives.
Response: We will assess the group practice's data first to
determine eRx incentive eligibility. If the group practice is eligible
for an eRx incentive, then we will filter out the allowed charges for
all NPIs who earn an EHR incentive before calculating the group's
incentive amount.
Comment: We also received feedback pertaining to the eRx Incentive
Program and EHR Incentive Program having different threshold criteria.
Specifically, the commenter was concerned that the in order to qualify
for the EHR incentive, eligible professionals must use a qualified EHR
to generate and transmit 40 percent of all permissible prescriptions
electronically but for the eRx Incentive Program, the threshold is 25
successful electronic prescriptions during the reporting period for
purposes of the incentive payment. Since eligible professionals must
still participate in the eRx Incentive Program to avoid the 2012
payment adjustment, a commenter stated that having different threshold
criteria for the two programs causes confusion and recommended the
establishment of a consistent threshold for electronic prescriptions.
Another commenter felt that different thresholds are appropriate given
that the EHR Incentive Program is voluntary and the

[[Page 73559]]

eRx Incentive Program is mandatory to maintain full payment.
Response: We note that the EHR Incentive Program and the eRx
Incentive Program are two separate, distinct programs with different
purposes and underlying statutory provisions. Professionals eligible
for the eRx Incentive Program are encouraged to be successful
electronic prescribers using qualified electronic prescribing systems.
The Medicare EHR Incentive Program will provide incentive payments to
eligible professionals (EPs), eligible hospitals, and critical access
hospitals (CAHs) that are meaningful users of certified EHR technology.
Electronic prescribing is merely one component of the EHR Incentive
Program.
As such, we believe, at this time that it is appropriate to have
different reporting thresholds. However, as noted previously, we will
be developing a plan, as described under section 1848(m)(7) of the Act
(``Integration of Physician Quality Reporting and EHR Reporting''), to
integrate measure reporting requirements under the Physician Quality
Reporting System, eRx Incentive Program, and the EHR Incentive Program.
In the plan, we will study potential ways to address the commenters'
concerns.
(4) Reporting Option for Satisfactory Reporting of the Electronic
Prescribing Measure by Group Practices
Section 1848(m)(3)(C) of the Act required that we establish and
have in place a process under which eligible professionals in a group
practice shall be treated as a successful electronic prescriber. In
addition, we are prohibited from making double payments under section
1848(m)(3)(C)(iii) of the Act, which requires that payments to a group
practice shall be in lieu of the payments that would otherwise be made
under the eRx Incentive Program to eligible professionals in the group
practice for being a successful electronic prescriber. For 2011, we
proposed to make incentive payments to group practices based on the
determination that the group practice, as a whole, is a successful
electronic prescriber for 2011 (75 FR 40207). An individual eligible
professional who is affiliated with a group practice participating in
the group practice reporting option that successfully meets the
requirements for group practices would not be eligible to earn a
separate eRx incentive payment for 2011 on the basis of his or her
successfully reporting the electronic prescribing measure at the
individual level.
The following is a summary of the comments received regarding the
two group practice options for reporting the electronic prescribing
measure in 2011.
Comment: One commenter supports the proposed eRx GPRO II, including
the proposed reporting criteria for GPRO II groups.
Response: We appreciate the commenter's positive feedback and are
finalizing the eRx GPRO II as proposed. We believe that the eRx GPRO II
will expand opportunities for group practices to participate in the eRx
Incentive Program.
Comment: One commenter appreciated that we have recognized the
burden of claims-based reporting for the Physician Quality Reporting
System and the eRx Incentive Program but the commenter was
``disappointed that a GPRO-specific alternative for the eRx Incentive
Program was not proposed. Most groups using [electronic prescribing
technology] can readily obtain detailed information on physician
utilization of the system.'' The commenter felt that this data could be
easily reported, in detail, on the GPRO I data collection tool and
urges CMS to consider this alternative for 2011 reporting.
Response: We assume that the ``GPRO-specific alternative'' that the
commenter is referring to is the addition of the electronic prescribing
measure to the GPRO I data collection tool so that the groups
participating in GPRO I can use this data collection tool to submit
quality measures data for both the Physician Quality Reporting System
and the eRx Incentive Program. Similar suggestions have been considered
in the past but were not implemented due to fiscal concerns and
concerns about the timing of when an updated GPRO I data collection
tool could be available. We will continue to explore the feasibility of
adding the electronic prescribing measure to the GPRO I data collection
tool so that practices can use the data collection tool to submit the
electronic prescribing measure instead of claims, a qualified registry,
or a qualified EHR.
Based on these comments, we are finalizing two group practice
reporting options for the eRx Incentive Program for 2011--GPRO I and
GPRO II. GPRO I is the reporting option for large group practices with
200 or more eligible professionals and GPRO II is the reporting option
for group practices with fewer than 200 eligible professionals. The
reporting criteria under these 2 options differ depending on the size
of the group practice. Eligibility and reporting requirements for the
2011 eRx GPRO I and GPRO II are described below. We believe that these
2 options will encourage greater participation in the eRx Incentive
Program by reducing overall reporting burden for eligible professionals
who are part of a group practice.
(A) Definition of ``Group Practice''
Section 1848(m)(3)(C)(i) of the Act authorizes the Secretary to
define ``group practice.'' For purposes of determining whether a group
practice is a successful electronic prescriber for 2011, we proposed
that consistent with the definition of group practice proposed for the
Physician Quality Reporting System group practice reporting option
(GPRO), a ``group practice'' would be defined as a single Taxpayer
Identification Number (TIN) with 2 or more eligible professionals, as
identified by their individual National Provider Identifier (NPI), who
have reassigned their Medicare billing rights to the TIN. ``Group
practice'' would also include group practices participating in Medicare
demonstration projects approved by the Secretary (75 FR 40207).
In addition, we proposed to restrict participation in the 2011 eRx
GPRO to group practices participating in the 2011 Physician Quality
Reporting System GPRO (either through GPRO I or GPRO II) or group
practices that are deemed to be participating in the 2011 Physician
Quality Reporting System GPRO (that is, group practices participating
in a CMS-approved Medicare demonstration) that have indicated their
desire to participate in the 2011 eRx GPRO (75 FR 40207).
We also proposed that a group practice that wishes to participate
in the 2011 eRx Incentive Program under the group practice reporting
option will have to indicate how the group practice intends to report
the electronic prescribing measure. That is, the group practice will
need to indicate in its self-nomination letter which reporting
mechanism (that is, claims, registries or EHRs) the group practice
intends to use for purposes of participating in the 2011 eRx Incentive
Program group practice reporting option.
We did not receive any comments related to the proposed definition
of ``group practice'' for purposes of the eRx Incentive Program. For
this reason, we are finalizing our proposal as previously described.
Unlike individual eligible professionals who may choose not to
participate in the Physician Quality Reporting System, to be eligible
to earn an electronic prescribing incentive in 2011, group practices
that wish to participate in the electronic prescribing group practice
reporting option will be required to participate in the Physician

[[Page 73560]]

Quality Reporting System group practice reporting option or be deemed
to be participating in the Physician Quality Reporting System group
practice reporting option based on the practice's participation in an
approved Medicare demonstration project. Participation in the eRx
Incentive Program, including participation in the electronic
prescribing group practice reporting option is, however, optional for
group practices that are participating in the Physician Quality
Reporting System under the group practice reporting option. If a group
practice wishes to participate in the 2011 eRx Incentive Program under
the group practice reporting option, the group practice must indicate
its desire to do so at the time that the group practice self-nominates
to participate in the 2011 Physician Quality Reporting System group
practice reporting option. However, group practices are not required to
indicate their intent to participate in the 2011 eRx Incentive Program
as individual eligible professionals, when the group practice self-
nominates to participate in the 2011 Physician Quality Reporting System
group practice reporting option.
As discussed in section VII.F.1.g. of this final rule with comment
period, group practices interested in participating in the 2011
Physician Quality Reporting System through the group practice reporting
option will be required to submit a self-nomination letter to CMS,
requesting to participate in the 2011 Physician Quality Reporting
System group practice reporting option. Instructions for submitting the
self-nomination letter will be posted on the Physician Quality
Reporting System section of the CMS Web site by November 15, 2010. A
group practice that had indicated their desire to participate in the
eRx Incentive Program group practice reporting option when they self-
nominated to participate in the 2011 Physician Quality Reporting System
group practice reporting option will be notified of the selection
decision with respect to participation in the eRx Incentive Program at
the same time that it is notified of the selection decision for the
Physician Quality Reporting System group practice reporting option.
(B) Process for Group Practices To Participate as Group Practices and
Criteria for Successful Reporting of the Electronic Prescribing Measure
by Group Practices
For group practices selected to participate in the electronic
prescribing group practice reporting option for purposes of the 2011
eRx incentive payment, we proposed that the reporting period would be
January 1, 2011 to December 31, 2011 (75 FR 40207). We proposed that
group practices selected to participate in the 2011 eRx Incentive
Program and qualify for the eRx incentive payment through the group
practice reporting option would be able to choose to report the
electronic prescribing measure through the claims-based, the registry-
based, or, the EHR-based reporting mechanism.
In order for a group practice participating in the Physician
Quality Reporting System GPRO I to be considered a successful
electronic prescriber for purposes of the 2011 eRx incentive, we
proposed that the group practice would have to report that at least 1
prescription during an encounter was generated and transmitted
electronically using a qualified electronic prescribing system in at
least 2,500 instances during the reporting period. In order for a group
practice participating in the Physician Quality Reporting System GPRO
II to be considered a successful electronic prescriber, we proposed
that the group practice would have to report that at least 1
prescription during an encounter was generated and transmitted
electronically using a qualified electronic prescribing system for 75-
1,875 instances, based on the group's size (75 FR 40208).
Section 1848(m)(2)(B) of the Act specifies that the 10 percent
threshold limitation on the applicability of the electronic prescribing
incentive applies to group practices as well as individual eligible
professionals. Therefore, in determining whether a group practice will
receive an electronic prescribing incentive payment for 2011 by meeting
the proposed reporting criteria previously described, we would
determine based on the claims, whether 10 percent of a group practice's
charges comprised of codes in the denominator of the electronic
prescribing measure.
We did not receive any comments related to the proposed process for
group practices to participate as group practices and the proposed
criteria for successful reporting of the electronic prescribing measure
by group practices for purposes of the 2011 eRx Incentive. Therefore,
for purposes of the 2011 eRx incentive, we are finalizing our proposal
to require GPRO I practices to report the electronic prescribing
measure for 2,500 instances during the January 1, 2011 through December
31, 2011. We are also finalizing our proposal to require GPRO II
practices to report the electronic prescribing measure for the number
of instances specified in Table 76 (see section VII.F.1.g.(3).(B). of
this final rule with comment period) during the January 1, 2011 through
December 31, 2011 reporting period. We believe these are reasonable
thresholds to demonstrate use of electronic prescribing technology.
In addition, we are finalizing our proposal to allow group
practices participating in the 2011 eRx Incentive Program under GPRO I
and GPRO II to submit data on the electronic prescribing measure using
claims, a qualified registry, or a qualified EHR for purposes of
qualifying for the 2011 eRx incentive payment. In addition, for
purposes of the 2011 eRx incentive, we will not combine data on the
electronic prescribing submitted via multiple reporting mechanisms.
That is, a group practice must meet the relevant 2011 GPRO reporting
criteria for the 2011 incentive using a single reporting mechanism.
Combining data received via multiple reporting mechanisms would add
significant complexity to our analytics and potentially delay incentive
payments.
c. The 2012 eRx Payment Adjustment
Section 1848(a)(5) of the Act requires that with respect to covered
professional services furnished by an eligible professional in 2012, if
the eligible professional is not a successful electronic prescriber for
the reporting period for the year, the fee schedule amount for such
services furnished by such professional during 2012 shall be equal to
99 percent of the fee schedule amount that would otherwise apply to
such PFS services.
The following is a summary of general comments received regarding
the eRx payment adjustment and our responses.
Comment: Some commenters were opposed to implementation of the eRx
payment adjustment because of the eRx Incentive Program is relatively
new. Commenters noted that we have not released any summary results
regarding how many eligible professionals are reporting and how many
are earning incentives, eligible professionals have not received
feedback reports on their progress for 2009 or 2010, and there is no
evidence that the program is working. As a result, commenters suggested
that CMS should ensure that eligible professionals who attempt to
report but are unsuccessful due to the data submission process are not
penalized.
Response: Section 1848(a)(5) of the Act requires us to implement a
payment adjustment beginning with covered professional services
furnished by an eligible professional during 2012, if the eligible
professional is not a successful electronic prescriber. We do not have

[[Page 73561]]

the authority to delay implementation of this payment adjustment.
Comment: One commenter suggested that we exercise additional
flexibility in assigning payment adjustments carefully by reviewing
each eligible professional's circumstances prior to assigning any
payment adjustments.
Response: Although we value the commenter's input, this suggestion
is not technically feasible. Given the short period of time between the
end of the data submission period for the 2012 eRx payment adjustment
and when we would have to begin adjusting eligible professional's 2012
payments, it would not be feasible for us to review every eligible
professional's circumstances individually. In addition, section
1848(a)(5) (A)(i) of the Act requires us to apply the payment
adjustment ``if the eligible professional is not a successful
electronic prescriber.'' We believe that the criteria for becoming a
successful electronic prescriber for purposes of the payment adjustment
that we have proposed and are finalizing below are reasonable in that
we have limited the number of electronic prescribing events required to
avoid the payment adjustment. Furthermore, as discussed further in
section VII.F.2.c.(4). of this final rule with comment period we have
provided a process whereby eligible professionals can request a
significant hardship exception on a case-by-case basis under section
1848(a)(5)(B) of the Act.
Comment: Several commenters urged us to synchronize the eRx
Incentive Program and EHR Incentive Program so that eligible
professionals who receive Medicare EHR incentives will be exempt from
the eRx payment adjustments. Commenters stated that the EHR Incentive
Program provides an opportunity and payment adjustment that did not
exist when the original eRx Incentive Program regulations were put in
place, and adjustments should be made due to the amount of overlap
between programs. As it is, the eRx Incentive Program and the EHR
Incentive Program represent a form of ``double jeopardy'' for
physicians. For instance, a physician who gets the first year
``meaningful use'' subsidy via Medicaid could also be penalized for not
using electronic prescribing. Also, commenters claimed that in some
cases, in order to avoid the eRx payment adjustment, a physician would
have to purchase a stand-alone electronic prescribing program and then
transition to a full EHR once the certification standards are
determined. Furthermore, the list of ``certified'' EHRs for the EHR
Incentive Program will not be available until January 2011. Another
commenter stated that it is unfair to penalize eligible professionals
who are working in good faith to adopt a comprehensive EHR under the
EHR Incentive Program. Another commenter suggested that every effort be
made to align the EHR Incentive Program and the eRx payment adjustment
to remove the burden from eligible professionals of having to submit
electronic prescribing measure data more than once.
Response: We agree with the desire to align the EHR Incentive
Program and the eRx payment adjustment and understand the commenters'
concerns. The EHR Incentive Program and the eRx Incentive Program are
governed by different laws, and have different reporting requirements.
While section 1848(m)(2)(D) explicitly limits eligible professionals or
group practices that receive an EHR incentive from qualifying for an
eRx incentive payment in the same year, there is not a similar
statutory provision that explicitly limits an eligible professional or
group practice that receives an EHR incentive from being subject to the
eRx payment adjustment. At this time an eligible professional who
wishes to participate in the EHR Incentive Program would also have to
participate in the eRx Incentive Program during 2011 to avoid an eRx
payment adjustment in 2012 since the two programs have different
requirements with respect to electronic prescribing. Eligible
professionals, however, are not penalized for participating in both
programs. Rather, an eligible professional who qualifies for an eRx
incentive and a Medicare EHR incentive cannot earn an eRx incentive for
the same year. However, we are making the effort to study possible
methods of aligning the two programs by developing a plan, as described
under section 1848(m)(7) of the Act (``Integration of Physician Quality
Reporting and EHR Reporting''), to integrate measure reporting
requirements under Physician Quality Reporting System, eRx Incentive
Program and the EHR Incentive Program.
We note that although section 1848(m)(2) precludes an eligible
professional who has earned an incentive payment under the EHR
Incentive Program from also earning an eRx incentive payment, the
statute does not preclude the eligible professional from being subject
to the eRx payment adjustment. In order to avoid the eRx payment
adjustment, an eligible professional participating in the Medicare EHR
Incentive Program still must meet the relevant eRx payment adjustment
criteria for being a successful electronic prescriber.
(1) The eRx Payment Adjustment Reporting Period
For purposes of the 2012 eRx payment adjustment, we proposed to
make a determination of whether an eligible professional or a group
practice is a successful electronic prescriber based on the January 1,
2011 through June 30, 2011 reporting period (75 FR 40208). For eligible
professionals and group practices using the claims-based reporting
mechanism, we proposed that all claims for services furnished between
January 1, 2011 and June 30, 2011 must be processed by no later than
one month after the reporting period, for the claim to be included in
our data analysis.
The following is a summary of comments received on the proposed
reporting period for the 2012 eRx payment adjustment and our proposal
to require claims to be submitted by no later than 1 month after the
reporting period.
Comment: Several commenters expressed a desire for us to revise or
delay the 2012 eRx payment adjustment reporting period, asserting that
basing the 2012 eRx payment adjustment on electronic prescribing
activity in 2011 conflicts with the law. Although some commenters
acknowledged the need for time to complete a data analysis to determine
if an eligible professional was a successful electronic prescriber
prior to 2012, these commenters expressed opposition to the shorter
reporting period. Other commenters believed that payment adjustments
for 2012 should be based on a reporting period in 2012 rather than a
reporting period in 2011. Commenters preferred that the reporting
period for the 2012 and 2013 payment adjustments be the full 2012 and
2013 calendar years, respectively. One commenter requested an April 1
through September 30, 2011 for the 2012 payment adjustment. One
commenter noted that some organizations might have planned an
implementation of a qualified electronic prescribing system prior to
January 1, 2012, to avoid the 2012 eRx payment adjustment. Such
organizations would now have to complete that implementation more than
six months in advance, potentially causing a significant financial
burden for the organization. Another commenter stated that the 2012 eRx
payment adjustment may cause some practices to reduce their Medicare
patient roster (or refuse to accept new Medicare patients) in order to
reduce the size of the payment adjustment, because they claim they
would not have adequate time to meet

[[Page 73562]]

the proposed 2011 requirements to avoid the payment adjustment in 2012.
Response: With respect to commenters' claims that the proposed
reporting period for purposes of applying the 2012 eRx payment
adjustment conflicts with the law, section 1848(a)(5) of the Act
requires that the PFS amount for covered professional services
furnished by an eligible professional during 2012, be reduced by 1
percent during 2012, if the eligible professional is not a successful
electronic prescriber for the reporting period for the year. Under
section 1848(a)(5)(D) of the Act, we have the discretion to define the
``reporting period'' for purposes of the payment adjustment with
respect to a year.
While we appreciate the commenters' suggestions to use data from
the entire 2011 calendar year, a later part of 2011, or from 2012 for
such an assessment for purposes of applying the 2012 eRx payment
adjustment for services furnished in 2012, we believe it is necessary
to reduce the PFS amount concurrently with claims submissions in 2012.
The alternatives to reducing the PFS amount concurrently with claims
submissions in 2012 would be having to recoup payments after the
determination is made about whether the payment adjustment applies,
providing added payments if the claims are paid at the reduced amount
before the determination is made about whether the payment adjustment
applies, or holding claims until the determination is made about
whether the payment adjustment applies. As a result, we need to
determine whether eligible professionals are successful electronic
prescribers prior to 2012, based on a reporting period that also takes
place prior to 2012. We believe that the proposed reporting period of
the first six months of 2011 will allow sufficient time for eligible
professionals to report the electronic prescribing measure, allow us to
collect and analyze the data submitted by eligible professionals, and
avoid retroactive adjustments of payments in 2012. Avoiding retroactive
adjustments would not be possible if the determination of a successful
electronic prescriber for purposes of the 2012 payment adjustment was
based on reporting for the entire 2011 calendar year or a later portion
of the 2011 calendar year. After the end of the reporting period, we
must allow some time for claims for services furnished during the
reporting period to be submitted and processed before it is available
for analysis. Once we have completed our analysis we also need time to
make the necessary system changes to begin applying the payment
adjustments to the appropriate individuals. All of this must occur
prior to January 1, 2012.
Comment: One commenter suggested we be consistent with EHR
Incentive Program submission guidelines by allowing electronic
prescribing measure data to be submitted for up to two months after the
close of the reporting period, rather than the proposed one month.
Response: As we explained previously, we need sufficient time
following the close of the 6-month reporting period to determine
whether an eligible professional is a successful electronic prescriber
and must do so prior to 2012, when the eRx payment adjustment would be
assessed (if applicable). Accordingly, we cannot allow claims to be
submitted for up to two months after the close of the reporting period.
After considering the comments and for the reasons we explained
previously, we are finalizing a 6-month reporting period, from January
1, 2011 through June 30, 2011, for the 2012 eRx payment adjustment.
(2) Criteria for Determining Applicability of the 2012 eRx Payment
Adjustment to Individual Eligible Professionals
As we explained previously, section 1848(a)(5) of the Act requires
a payment adjustment be applied with respect to covered professional
services furnished by an eligible professional in 2012, if the eligible
professional is not a successful electronic prescriber for the
reporting period for the year. Section 1848(m)(3)(B) of the Act sets
forth the requirements for being a successful electronic prescriber. As
we discussed in section VII.F.2.b.(2). of this final rule with comment
period, for the 2011 eRx Incentive Program, we decided to continue to
require eligible professionals to report on the electronic prescribing
measure to determine whether an eligible professional is a successful
electronic prescriber. Details about the electronic prescribing quality
measure are discussed in section VII.F.2.b.(2).(C) and (D) of this
final rule with comment period.
In addition, based on the authority under section 1848(m)(3)(D) of
the Act to revise the criteria for submitting data on the electronic
prescribing quality measure, we proposed that the 2012 eRx payment
adjustment would not apply to the following:
(1) An eligible professional who is not a physician (includes MDs,
DOs, and podiatrists), nurse practitioner, or physician assistant as of
June 30, 2011.
(2) An eligible professional who does not have at least 100 cases
(that is, claims for patient services) containing an encounter code
that falls within the denominator of the electronic prescribing measure
for dates of service between January 1, 2011 through June 30, 2011.
(3) An eligible professional who is a successful electronic
prescriber for the January 1, 2011 through June 30, 2011 reporting
period. Specifically, we proposed that to be a successful electronic
prescriber for purposes of avoiding the 2012 eRx payment adjustment,
the eligible professional must report that at least 1 prescription for
Medicare Part B FFS patients created during an encounter that is
represented by 1 of the codes in the denominator of the 2011 electronic
prescribing measure was generated and transmitted electronically using
a qualified eRx system at least 10 times during the 2012 eRx payment
adjustment reporting period (that is, January 1, 2011 through June 30,
2011). (75 FR 40208).
The limitation with respect to the electronic prescribing measures
required under section 1848(m)(2)(B)(i) of the Act also applies to the
eRx payment adjustment. Therefore, we proposed that if less than 10
percent of the eligible professional's estimated total allowed charges
for the January 1, 2011 through June 30, 2011 reporting period are
comprised of services which appear in the denominator of the 2011
electronic prescribing measure, then the eligible professional would
not be subject to the 2012 eRx payment adjustment (75 FR 40209). As
with the 2011 eRx incentive payment, we proposed that the determination
of whether an eligible professional is subject to the payment
adjustment will be made at the individual professional level, based on
the NPI and for each unique TIN/NPI combination.
The following is a summary of the comments received on the proposed
criteria for determining the applicability of the 2012 eRx payment
adjustment to individual eligible professionals and our responses.
Comment: A couple of commenters suggested that regardless of the
payment adjustment exemption criteria, any eligible professional who
qualifies for the incentive payment should be exempt from the payment
adjustment. The commenters specifically requested an exemption for
eligible professionals who are successful electronic prescribers for
the 2011 eRx incentive.
Response: As discussed previously, section 1848(a)(5) of the Act
requires that the PFS amount for covered professional services
furnished by an

[[Page 73563]]

eligible professional, who is not a successful electronic prescriber,
must be reduced by 1 percent for services furnished during 2012. With
regard to applying the required 2012 eRx payment adjustment, we believe
it is necessary to reduce the PFS amount concurrently with claims
submissions in 2012, and so we need to determine if the 2012 eRx
payment adjustment is applicable to eligible professionals prior to
2012. This assessment would not be possible if the successful
electronic prescriber determination was based on eRx incentive payment
eligibility criteria for 2011, given that we cannot determine
successful electronic prescribers for purposes of the 2011 eRx
incentive until 2012.
After considering the comments received, we are finalizing the
criteria for determining applicability of the 2012 eRx payment
adjustment to individual eligible professionals as proposed and
previously described. As stated in the proposed rule (75 FR 40208 and
40209), we believe that that limiting the application of the payment
adjustment to those professionals who generally have prescribing
privileges and who have a sufficient number of denominator-eligible
cases is appropriate. We also believe that the reporting threshold of
10 unique electronic prescribing events between January 1, 2011 and
June 30, 2011 is achievable. As stated previously, although we proposed
to allow reporting of the electronic prescribing measure via claims, a
qualified registry, or a qualified EHR, we are finalizing only the
claims-based reporting mechanism for purposes of the 2012 payment
adjustment. It is not operationally feasible for us to accept the data
submissions from the EHRs and registries in the timeframe needed for us
to be able to have sufficient time to be analyze the data and make the
determination whether an eligible professional is subject to the 2012
payment adjustment prior to January 1, 2012.
For purposes of determining whether an eligible professional is a
physician (includes MDs, DOs, and podiatrists), nurse practitioner, or
physician assistant we will use National Plan & Provider Enumeration
System (NPPES) data. It is an eligible professional's responsibility to
ensure that his or her primary taxonomy code in NPPES is accurate.
Since there are concerns about the reliability of the specialty
information contained in NPPES, we are also establishing a G-code that
eligible professionals can use to report to us that they do not have
prescribing privileges. Eligible professionals who do not have
prescribing privileges must report this G-code on at least one claim
with dates of service between January 1, 2011 and June 30, 2011, and
processed by no later than one month after the reporting period.
(3) Criteria for Determining Applicability of the 2012 eRx Payment
Adjustment to Group Practices
As required by section 1848(m)(3)(C) of the Act, we are also
required to establish and have in place a process under which eligible
professionals in a group practice shall be treated as a successful
electronic prescriber for purposes of the eRx payment adjustment. Thus,
we proposed that for purposes of the 2012 eRx payment adjustment, a
payment adjustment would not be applied to a group practice
participating in the 2011 eRx GPRO if the group practice is
participating in either the 2011 Physician Quality Reporting System
GPRO I or the 2011 Physician Quality Reporting System GPRO II and meets
the proposed 2011 criteria for successful electronic prescribing for
the 2011 eRx incentive (75 FR 40209). For purposes of the 2012 eRx
payment adjustment, however, we proposed that the 2011 eRx incentive
criteria for successful electronic prescribing would need to be
satisfied during the 2012 eRx payment adjustment reporting period of
January 1, 2011 through June 30, 2011, for the same operational reasons
that we proposed a 6-month reporting period for the payment adjustment
for individual eligible professionals.
For purposes of determining whether the eRx payment adjustment
applies to a group practice, we proposed to analyze each unique TIN/NPI
combination so as not to disadvantage eligible professionals who may
have joined the group practice after January 1, 2011 (75 FR 40209).
In addition, in accordance with the limitation under section
1848(m)(2)(B)(i) of the Act, we proposed that the 2012 eRx payment
adjustment would not apply to an eRx GPRO in which less than 10 percent
of the group practice's estimated total allowed charges for the January
1, 2011 through June 30, 2011 reporting period are comprised of
services which appear in the denominator of the 2011 electronic
prescribing measure. To be consistent with how this limitation is
applied to group practices for purposes of the incentive, we proposed
to determine whether this limitation applies to a group practice for
the payment adjustment at the TIN level.
For the same reasons that we proposed a 6-month reporting period
for the 2012 eRx payment adjustment for group practices, we also
proposed to use only claims processed by no later than 1 month after
the reporting period in our analysis, consistent with our proposed
approach for analyzing individual eligible professional claims.
Similarly, we proposed that registries would need to submit eRx data
for services furnished January 1, 2011 through June 30, 2011 to CMS
between July 1, 2011 and August 19, 2011, so that we may include
registry data in our analysis. We also proposed that group practices
participating in the eRx group practice reporting option via EHR-based
reporting would be required to submit eRx data for services furnished
January 1, 2011 through June 30, 2011 to CMS between July 1, 2011 and
August 19, 2011 (75 FR 40209).
The following is a summary of the comments received on the proposed
criteria for determining applicability of the 2012 eRx payment
adjustment to group practices, including the proposed criteria for
successful reporting of the electronic prescribing measure for group
practices, and our proposed analytical approach.
Comment: One commenter suggested that we lower the reporting
criteria for group practices if we finalize our proposal to use the 6-
month reporting period beginning January 1, 2011 to determine whether a
group practice is subject to the 2012 payment adjustment. The commenter
noted that in determining the volume for the group incentive payment,
we assume that not all eligible professionals in the practice would be
electronically prescribing. The commenter believes that the same
assumption should be applied for purposes of the payment adjustment
determination.
Response: As we stated in the proposed rule (75 FR 40209), we do
not believe that group practices would be disadvantaged by having to
satisfy the criteria for being a successful e-prescriber for the 2011
eRx incentive in 6 months to avoid the 2012 eRx payment adjustment.
When compared to the criteria for individual eligible professionals
reporting the electronic prescribing measure for purposes of the
payment adjustment, the criteria for being a successful electronic
prescriber for the 2011 eRx payment adjustment for group practices
enable group practices, on average, to avoid the incentive by
electronically prescribing a fewer number of prescriptions per eligible
professionals than what individual eligible professionals are required
to do. Therefore, we are not lowering the reporting criteria for
successful electronic prescribers for

[[Page 73564]]

purposes of determining applicability of the 2012 eRx payment
adjustment to group practices. By having the same reporting criteria
for purposes of both the payment adjustment and incentive payment,
group practices have the added advantage of knowing that they have
successfully electronically prescribed for purposes of the 2011
incentive payment once they have successfully electronically prescribed
for purposes of the 2012 payment adjustment, since the reporting
periods for the 2011 incentive and 2012 payment adjustment overlap.
After consideration of the comments received and for the reasons we
discussed previously, we are finalizing the criteria for determining
applicability of the 2012 eRx payment adjustment to group practices.
However, for the reasons discussed previously with regard to the
reporting mechanisms for submitting data on the electronic prescribing
measure during 2011 for purposes of the 2012 payment adjustment, we are
finalizing only the claims-based reporting mechanism. Thus, for the
2012 eRx payment adjustment, we are not finalizing eRx data submission
by group practices via a qualified registry or qualified EHR.
In addition, while we had proposed to analyze each unique TIN/NPI
combination to see whether the payment adjustment applies on an
individual basis if the group practice fails to satisfy the criteria
that would exempt the group practice from being subject to the 2012 eRx
payment adjustment, we are unable to finalize this proposal as this
would add significant time to our data analyses and could delay our
ability to determine applicability of the 2012 payment adjustment in a
timely fashion.
(4) Significant Hardship Exemption
Section 1848(a)(5)(B) of the Act provides that the Secretary may,
on a case-by-case basis, exempt an eligible professional from the
application of the payment adjustment, if the Secretary determines,
subject to annual renewal, that compliance with the requirement for
being a successful electronic prescriber would result in a significant
hardship, such in the case of an eligible professional who practices in
a rural area without sufficient Internet access. Therefore, we proposed
that in addition to meeting the criteria for a successful electronic
prescriber, an eligible professional or group practice may also be
exempt from application of the 2012 eRx payment adjustment, if, during
the 2012 eRx payment adjustment reporting period (that is, January 1,
2011 through June 30, 2011), one of the following circumstances applies
to the eligible professional or group practice:
The eligible professional or group practice practices in a
rural area with limited high speed internet access; or
The eligible professional or group practice practices in
an area with limited available pharmacies for electronic prescribing.
We proposed to add two additional ``G'' codes to the 2011
electronic prescribing measure's specifications describing these 2
circumstances. Eligible professionals or group practices to whom one or
more of these circumstances apply would be required to report the
appropriate G-code at least once between January 1, 2011 and June 30,
2011 using their selected 2011 eRx reporting mechanism. Reporting of
one of these two G-codes prior to June 30, 2011 will indicate to us
that the eligible professional or group practice would like to be
considered for an exemption from the 2012 payment adjustment under the
significant hardship exception (75 FR 40209).
The following is a summary on the comments we received regarding
our proposal for the significant hardship exemption and our responses.
Comment: One commenter supported the proposed process for the
significant hardship exemption and did not offer any other
circumstances that should also be considered a significant hardship.
Response: We appreciate the commenter's supportive comments.
Comment: While our acknowledgement of hardship circumstances was
appreciated, several commenters suggested we add more hardship
exemption categories, or offered additional hardship circumstances for
our consideration. Specifically, commenters requested that the
following hardship circumstances be added to the payment adjustment
exemption list: (1) Physicians who are nearing the end of their
careers, (2) physicians who are currently eligible for Social Security
benefits or will be eligible for Social Security benefits by 2014, (3)
physicians who plan on participating in the EHR incentive program
beginning in 2012, 2013, or 2014, (4) DEA e-prescribers, (5) small
practices (that is, 1 to 2 physicians), (6) practices located in Health
Professional Shortage Areas (HPSAs), (7) physicians who cannot meet the
requirements due to patient preference, and (8) hospital-based eligible
professionals. Commenters stated that physicians nearing retirement age
or in small practices may find it difficult to justify the cost of
implementing these systems. Several commenters noted that many
physicians have postponed purchasing electronic prescribing software in
order to take advantage of the EHR incentives. Finally, commenters
argued that physicians who electronically prescribe controlled
substances should have additional time to comply with the eRx Incentive
Program requirements as the DEA compliant electronic prescribing
applications are not yet available.
Response: We appreciate the commenters' feedback and are actively
working on G-codes for eligible professionals to report the significant
hardship categories we proposed for the 2012 eRx payment adjustment. We
do not believe, however, that any of the suggested additional hardship
categories constitute a circumstance that limits an eligible
professional's access to electronic prescribing in the way that the two
hardship exemptions we proposed do. We also believe that eligible
professionals who are nearing retirement or are eligible for Social
Security benefits still have the opportunity to purchase and use
electronic prescribing technology even though they may not have a
business case for doing so. With respect to the other hardship
exemptions specifically requested by commenters (such as, hospital-
based eligible professionals, DEA e-prescribers and physicians who
cannot meet the requirements due to patient preferences), we believe
that we have already taken these circumstances into account when we
established the reporting threshold for the electronic prescribing and
the other criteria that would subject an eligible professional to the
eRx payment adjustment. Therefore, we are finalizing the two hardship
exemption G-codes that we proposed.
Comment: A couple of commenters requested that we further define
terms such as ``rural areas,'' areas with ``limited high speed internet
access,'' and ``limited availability of pharmacies.''
Response: We are actively working to develop G-codes for eligible
professionals to report the eRx hardship. Once we finalize the G-codes,
we will provide additional guidance with regards to the hardship
exemptions categories associated with the eRx payment adjustment along
with education and outreach with regard to the 2012 payment adjustment
under the eRx Incentive Program.
After considering the comments received, we are finalizing the
following hardship exemptions for purposes of the 2012 eRx payment
adjustment:
Eligible professionals who practice in a rural area
without sufficient high speed internet access; and

[[Page 73565]]

Eligible professionals who practice in an area without
sufficient available pharmacies for electronic prescribing.
We are creating G-codes to address these 2 situations. Since the
hardship exception must be renewed on an annual basis, we have deleted
the proposed language at Sec. 414.92(c)(2)(ii) that listed specific
circumstances that constitute a ``significant hardship.'' For future
years and in future rulemaking, we will address the circumstances that
will constitute a significant hardship for each year.
Eligible professionals for whom one or more of these circumstances
apply must report the appropriate G-code at least once between January
1, 2011 and June 30, 2011 using claims. Group practices who wish to
participate in the 2011 eRx GPRO and for whom one or more of these
circumstances apply must request a hardship exemption at the time they
self-nominate by indicating the appropriate G-code in their self-
nomination letter to CMS. Reporting of one of these G-codes prior to
June 30, 2011 will indicate to us that the eligible professional or
group practice would like to be considered for an exemption from the
eRx 2012 payment adjustment under the significant hardship exception.
d. The 2013 eRx Payment Adjustment
Section 1848(a)(5) of the Act also requires that with respect to
covered professional services furnished by an eligible professional in
2013, if the eligible professional is not a successful electronic
prescriber for the reporting period for the year, the fee schedule
amount for such services furnished by such professional during 2013
shall be equal to 98.5 percent of the fee schedule amount that would
otherwise apply to such PFS services. Under section 1848(m)(3)(C) of
the Act, we are also required to establish and have in place a process
under which eligible professionals in a group practice shall be treated
as a successful electronic prescriber for purposes of the eRx payment
adjustment.
For purposes of the 2013 eRx payment adjustment, we proposed to use
the proposed criteria for successful electronic prescriber for the
proposed 2011 eRx incentive payment to determine whether an eligible
professional or a group practice is a successful electronic prescriber
for purposes of the 2013 eRx payment adjustment. In addition, we
proposed that the reporting period for the 2013 eRx payment adjustment
would be January 1, 2011 through December 31, 2011 (75 FR 40210). We
believe that matching the criteria that will be applied for the 2013
eRx payment adjustment with the criteria that will be applied for the
2011 eRx incentive payment in an earlier year would be the most
effective means of encouraging eligible professionals and group
practices to adopt and use electronic prescribing systems since anyone
who does not qualify for an incentive in 2011 would be subject to a
payment adjustment in 2013.
The following is a summary of the comments received on our proposal
for the 2013 eRx payment adjustment.
Comment: We received comments similar to the ones opposing the
proposed 2012 eRx payment adjustment reporting period, with regard to
the proposed 2013 eRx payment adjustment reporting period. One
commenter suggested that the proposed reporting period for purposes of
the 2013 eRx payment adjustment be changed so the 2012 and 2013 eRx
payment adjustments do not overlap. Another commenter suggested that
the 2013 payment adjustment be based on claims reported during the
first half of 2012 to better reflect expected increases in eRx
adoption, including increases due to the EHR Incentive Program.
Response: We understand the commenters' concerns that the reporting
periods for purposes of the 2012 and 2013 eRx payment adjustments
overlap. We note that section 1848(a)(5)(C)(D) gives us the authority
to specify the reporting period with respect to a year. As such, we may
consider revisiting in the 2012 PFS rulemaking process additional
reporting periods in 2012 for purposes of the 2013 eRx payment
adjustment since having multiple reporting periods for purposes of the
payment adjustment will maximize opportunities for eligible
professionals to avoid the 2013 payment adjustment.
After considering the comments received and for the reasons we
previously explained, we are finalizing our proposal to use the 2011
eRx incentive payment criteria for successful electronic prescriber as
described in section VII.F.2.b. of this final rule with comment period
to determine whether an eligible professional or a group practice is a
successful electronic prescriber for purposes of the 2013 eRx payment
adjustment based on the January 1, 2011 through December 31, 2011
reporting period. However, we may consider revisiting the criteria for
the 2013 payment adjustment in the context of 2012 reporting periods in
the 2012 PFS proposed and final rules.
e. Public Reporting of Names of Successful Electronic Prescribers
Section 1848(m)(5)(G) of the Act requires the Secretary to post on
the CMS Web site, in an easily understandable format, a list of the
names of eligible professionals (or group practices) who satisfactorily
submit data on quality measures for the Physician Quality Reporting
System and the names of the eligible professionals (or group practices)
who are successful electronic prescribers. As required by section
1848(m)(5)(G) of the Act, we proposed to make public the names of
eligible professionals and group practices who are successful
electronic prescribers for the 2011 eRx Incentive Program on the
Physician Compare Web site that we are required to establish by January
1, 2011 under section 10331 of the ACA.
The following is a summary of the comments received regarding
public reporting of successful electronic prescribers.
Comment: A few commenters expressed concerns about posting the
names of successful e-prescribers. One commenter was concerned that the
public would not be able to correctly identify a successful e-
prescriber as a professional who has met the reporting requirements for
the eRx Incentive Program. One commenter was concerned that individuals
using this information to make health care decisions may do so without
fully understanding the methodology and the program requirements. The
commenters suggested that CMS take appropriate measures to ensure the
accuracy of the list of successful e-prescribers and to provide the
appropriate disclaimers for the Web site listing.
Response: We will make every effort to ensure that the list of
successful e-prescribers that we will post on the Physician Compare Web
site is accurate. We also intend to include explanatory language with
information on the intended uses and/or limitations of this data.
Based on the comments received, we are finalizing our proposal to
post the names of eligible professionals and group practices who are
successful electronic prescribers for purposes of the 2011 eRx
incentive on the Physician Compare Web site. We anticipate that the
names of individual eligible professionals and group practices who are
successful electronic prescribers for the 2011 eRx Incentive Program
will be available in 2012 after the 2011 incentive payments are paid.
To comply with section 1848(m)(5)(G) of the Act, we specifically
intend to post

[[Page 73566]]

the names of individual eligible professionals who report the
electronic prescribing measure at least 25 times during the 2011
reporting period for patient encounters included in the measure's
denominator, without regard to whether the limitation under section
1848(m)(2)(B) of the Act applies to the eligible professional and
without regard to whether the eligible professional actually qualifies
to earn an incentive payment. In addition, since the Physician Quality
Reporting System and the eRx Incentive Program are two separate
programs and individual eligible professionals are not required to
participate in both programs to earn an incentive under either program,
we point out that it is possible for an eligible professional who
participates in both incentive programs to be listed both as an
individual eligible professional who satisfactorily submits data on
quality measures for the Physician Quality Reporting System and is a
successful electronic prescriber under the eRx Incentive Program.
Likewise, if an eligible professional participated in both incentive
programs but did not meet the respective requirements for both
programs, he or she may be listed as an individual eligible
professional who satisfactorily submits data on quality measures for
the Physician Quality Reporting System only or as a successful
electronic prescriber under the eRx Incentive Program only.
Similarly, for purposes of publicly reporting the names of group
practices, on the Physician Compare Web site, we intend to post the
names of group practices that report the electronic prescribing measure
the required number of times during the 2011 reporting period for
patient encounters included in the measure's denominator without regard
to whether the limitation under section 1848(m)(2)(B) of the Act
applies to the group practice or whether the group practice actually
qualifies to earn an incentive payment. Although any group practice
participating in the eRx Incentive Program under the group practice
reporting option would also have to participate in a Physician Quality
Reporting System group practice reporting option, the criteria for
satisfactory reporting of Physician Quality Reporting System measures
for group practices are different from the criteria for successful
reporting of the electronic prescribing measure by group practices.
Therefore, it is possible for a group practice to be listed as a group
practice that satisfactorily submits data on quality measures for the
Physician Quality Reporting System but not as a successful electronic
prescriber under the eRx Incentive Program, or vice versa.

G. DMEPOS Provisions

1. Medicare Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS) Competitive Bidding Program (CBP)
a. Legislative and Regulatory History of DMEPOS CBP
Medicare pays for most DMEPOS furnished after January 1, 1989
pursuant to fee schedule methodologies set forth in section 1834 of the
Act, as added by section 4062 of the Omnibus Budget Reconciliation Act
of 1987 (OBRA '87) (Pub. L. 100-203). Specifically, sections
1834(a)(1)(A) and (B), and 1834 (h)(1)(A) of the Act provide that
Medicare payment for these items is equal to 80 percent of the lesser
of the actual charge for the item or the fee schedule amount for the
item. We implemented this payment methodology at 42 CFR Part 414,
Subpart D of our regulations. Sections 1834(a)(2) through (a)(5) and
1834(a)(7) of the Act, and implementing regulations at Sec. 414.200
through Sec. 414.232 (with the exception of Sec. 414.228), set forth
separate payment categories of durable medical equipment (DME) and
describe how the fee schedule for each of the following categories is
established:
Inexpensive or other routinely purchased items (section
1834(a)(2) of the Act and Sec. 414.220 of the regulations);
Items requiring frequent and substantial servicing
(sections 1834(a)(3) of the Act and Sec. 414.222 of the regulations);
Customized items (section 1834(a)(4) of the Act and Sec.
414.224 of the regulations);
Oxygen and oxygen equipment (section 1834(a)(5) of the Act
and Sec. 414.226 of the regulations);
Other items of DME (section 1834(a)(7) of the Act and
Sec. 414.229 of the regulations).
For a detailed discussion of payment for DMEPOS under fee
schedules, see the final rule published in the April 10, 2007 Federal
Register (72 FR 17992).
Blood glucose testing strips or diabetic testing strips are covered
under the Medicare DME benefit in accordance with section 1861(n) of
the Act. Other supplies that are necessary for the effective use of DME
are also covered under the Medicare DME benefit in accordance with
longstanding program instructions at section 110.3 of chapter 15 of the
Medicare Benefit Policy Manual.
Section 1847 of the Act, as amended by section 302(b)(1) of the
MMA, requires the Secretary to establish and implement a DMEPOS CBP.
Under the DMEPOS CBP, Medicare sets payment amounts for selected DMEPOS
items and services furnished to beneficiaries in competitive bidding
areas (CBAs) based on bids submitted by qualified suppliers and
accepted by Medicare. For competitively bid items, these new payment
amounts, referred to as ``single payment amounts (SPA),'' replace the
fee schedule payment methodology. Section 1847(b)(5) of the Act
provides that Medicare payment for these competitively bid items and
services is made on an assignment-related basis equal to 80 percent of
the applicable SPA, less any unmet Part B deductible described in
section 1833(b) of the Act. Section 1847(b)(2)(A)(iii) of the Act
prohibits the awarding of contracts to any entity unless the total
amounts to be paid to contractors in a CBA are expected to be less than
the total amounts that would otherwise be paid under the fee schedule
methodologies set forth in section 1834(a) of the Act. This requirement
guarantees savings to both the Medicare program and beneficiaries under
the program. The fee schedule methodologies will continue to set
payment amounts for noncompetitively bid DMEPOS items and services. The
program also includes provisions to ensure beneficiary access to
quality DMEPOS items and services. Section 1847(b)(2)(A) and
1847(b)(4)(B) of the Act, respectively, limits participation in the
program to suppliers who have met applicable quality and financial
standards and requires the Secretary to maintain beneficiary access to
multiple suppliers.
When first enacted by the Congress, section 1847(a)(1)(B) of the
Act required the Secretary to phase in the DMEPOS CBP in a manner so
that the competition under the program occurred in 10 of the largest
metropolitan statistical areas (MSAs) in 2007. The program was to be
expanded into 70 additional MSAs in 2009, and then into additional
areas after 2009.
In the May 1, 2006 Federal Register (72 FR 25654), we issued a
proposed rule that would implement the DMEPOS CBP for certain DMEPOS
items and services and solicited public comment on our proposals. In
the April 10, 2007 Federal Register (72 FR 17992), we issued a final
rule addressing the comments on the proposed rule and establishing the
regulatory framework for the DMEPOS CBP in accordance with section 1847
of the Act.
Consistent with the requirements of section 1847 of the Act and the

[[Page 73567]]

competitive bidding regulations, we began implementation of the program
by conducting the first round of competition in 10 of the largest MSAs
in 2007. We limited competition during this first round of the program
to DMEPOS items and services included in 10 selected product
categories, including mail order diabetic supplies. The bidding window
opened on May 15, 2007 and was extended to allow bidders adequate time
to prepare and submit their bids. We then evaluated each submission and
awarded contracts consistent with the requirements of section
1847(b)(2) of the Act and Sec. 414.414. Following the bid evaluation
process, we awarded over 329 contracts to qualified suppliers.
The DMEPOS CBP was effective on July 1, 2008. Beginning on that
date, Medicare coverage for competitively bid DMEPOS items and services
furnished in the first 10 CBAs was limited to items and services
furnished by contract suppliers and/or grandfathered suppliers of
oxygen and oxygen equipment and rented DME, unless an exemption applies
as stated in the regulation. For further discussion of the DMEPOS CBP
and the bid evaluation process, see the final rule published in the
April 10, 2007 Federal Register (72 FR 17992).
On July 15, 2008, the MIPPA was enacted. Section 154 of the MIPPA
amended section 1847 of the Act to make certain limited changes to the
DMEPOS CBP. Section 154(a) of the MIPPA delayed competition under the
program and amended section 1847(a)(1)(D)(i) of the Act to terminate
the competitive bidding contracts effective June 30, 2008 and prohibit
payment based on the contracts.
Section 154(a) of the MIPPA required the Secretary to conduct a
second competition to select suppliers for Round 1 in 2009 (``Round 1
Rebid''). The Round 1 Rebid includes the ``same items and services''
and is to be conducted in the ``same areas'' as the 2007 Round 1
competition, with certain limited exceptions. Specifically, we were
required to exclude the product category of negative pressure wound
therapy (NPWT) items and services and the San Juan, Puerto Rico CBA
from the Round 1 Rebid. In addition, section 154(a) of the MIPPA
permanently excluded group 3 complex, rehabilitative wheelchairs from
the DMEPOS CBP by amending the definition of ``items and services'' in
section 1847(a)(2) of the Act. Section 154(a) of the MIPPA delayed
competition for Round 2 of the DMEPOS CBP from 2009 to 2011, and
subsequent competitions under the program to after 2011. Finally,
section 154(a) of the MIPPA specifically addresses the phase in of a
competition for national mail order items and services by specifying
that such competitions may be phased in after 2010.
b. Implementation of a National Mail Order DMEPOS Competitive Bidding
Program (CBP) for Diabetic Testing Supplies
Section 1847(a)(2)(A) of the Act mandates competitive bidding
programs for supplies used in conjunction with durable medical
equipment, such as blood glucose monitors used by beneficiaries with
diabetes to test their blood glucose levels. Replacement of supplies
used with these monitors are referred to under the DMEPOS CBP as
diabetic supplies or diabetic testing supplies such as blood glucose
test strips and lancets. In the April 10, 2007 final rule (72 FR 17992)
implementing the DMEPOS CBP, we established regulations to implement
competitions on a regional or national level for certain items such as
diabetic testing supplies that are furnished on a mail order basis. We
explained our rationale for establishing a national DMEPOS CBP for
items furnished on a mail order basis in the May 1, 2006 proposed rule
(71 FR 25669) and April 10, 2007 final rule (72 FR 18018). In the case
of diabetic supplies and other items furnished by local neighborhood
pharmacies, establishing a competition for items furnished on a mail
order basis would exempt local pharmacies from competing with national
mail order suppliers while preserving the choice of the beneficiary to
go to any local pharmacy to pick up their diabetic supplies.
Manufacturers and suppliers have stated to CMS at different meetings on
numerous occasions that the choice for beneficiaries to obtain diabetic
supplies from local pharmacies with licensed pharmacists in house who
can provide instructions and guidance to beneficiaries related to their
testing needs is important and needs to be preserved.
In the January 16, 2009 Federal Register (74 FR 2873), we published
an interim final rule implementing certain changes to the DMEPOS CBP.
Specifically, the rule implemented certain MIPPA provisions that
delayed implementation of Round 1 of the program, required CMS to
conduct a second Round 1 competition in 2009, and mandated certain
changes for both the Round 1 Rebid and subsequent rounds of the
program. In the January 16, 2009 interim final rule, we indicated that
we would be considering alternatives for competition of diabetic
testing supplies in future notice and comment rulemaking. We explained
that we believed it was consistent with section 1847(a) to employ
competitive bidding for diabetic suppliers in both the mail order and
traditional retail markets, in part due to concerns raised about the
bifurcation of the method of delivery of diabetic supplies and the
difficulty in defining what constitutes ``mail order'' for purposes of
competition.
In the July 13, 2010, proposed rule (75 FR 40211), we discussed
alternatives for competition of diabetic testing supplies and proposed
the implementation of a revised national mail order DMEPOS CBP for
diabetic testing supplies. Under the proposed mail order DMEPOS CBP, we
would award contracts to suppliers to furnish these items across the
nation to beneficiaries who elect to have replacement diabetic testing
supplies delivered to their residence. Suppliers wishing to furnish
these items through mail order to Medicare beneficiaries would be
required to submit bids to participate in the national mail order
DMEPOS CBP for diabetic testing supplies. In addition, we proposed to
revise the national mail order program for diabetic testing supplies
DMEPOS CBP by implementing the following changes:
Revision of Sec. 414.402 to include definitions of:
``National mail order DMEPOS CBP,'' ``Mail order item,'' and ``Non-mail
order item.'' We proposed these new definitions to establish a clear
distinction between mail order items and non-mail order items. These
revised definitions would apply to all future competitions for mail
order items and services.
Addition of Sec. 414.411 to implement the special rule
mandated by section 1847(b)(10)(A) of the Act for competitions for
diabetic testing strips following the Round 1 Rebid. Section
1847(b)(10)(A) requires suppliers bidding in competitions to furnish
diabetic testing strips after the Round 1 Rebid to demonstrate that
their bid covers at least 50 percent of all types of diabetic testing
strips furnished by suppliers. If the supplier is not able to satisfy
this requirement, the Secretary must reject that bid.
Revision of Sec. 414.422 to include an additional term in
contracts of mail order suppliers of diabetic testing supplies
following the Round 1 Rebid. The proposed term would prohibit suppliers
from influencing or incentivizing beneficiaries to change their brand
of glucose monitor and test strips.

[[Page 73568]]

(1) Future Competitions for Diabetic Testing Supplies
Section 1847(a)(1)(A) of the Act mandates the establishment of
DMEPOS CBP for items described in section 1847(a)(2)(A) of the Act,
including diabetic testing supplies. Section 1847(a)(1)(B)(ii) of the
Act authorizes the phase in of items and services under these programs
beginning with the highest cost and highest volume items and services
or those items and services that are determined to have the largest
savings potential. Current Medicare claims data from fiscal year 2009
shows that over 62 percent of beneficiaries currently receive their
replacement diabetic testing supplies from mail order suppliers. Mail
order diabetic testing supplies account for approximately one billion
dollars in allowed charges per year and are therefore high volume
items. We believe that a national mail order DMEPOS CBP for diabetic
testing supplies would result in large savings as a result of
competition between entities that would factor into their bids savings
from volume discount purchasing of quantities of supplies needed on a
national rather than local basis. Therefore, we believe that
implementing a national mail order DMEPOS CBP for diabetic testing
supplies is the best option for meeting the requirements of the statute
referenced above as long as certain refinements discussed below are
made to the program to address concerns about the mail order/non-mail
order bifurcation.
We have heard from industry groups and suppliers that furnish
diabetic testing supplies on a national mail order basis of their
concerns that national chain pharmacies that furnish diabetic testing
supplies through both a national mail order business and local retail
pharmacies will encourage beneficiaries to obtain these items from
local retail locations by offering certain incentives to Medicare
beneficiaries for switching from mail order to local retail. Based on
our experience from Round 1, we believe DMEPOS CBP for mail order
diabetic testing supplies would be subject to manipulation without a
clearer definition of what we mean by mail order. We agree with the
industry groups and suppliers that have indicated that this practice
will harm businesses that only furnish diabetic testing supplies on a
mail order basis. In order to address these concerns, we are proposing
to add to Sec. 414.402 a definition of ``National mail order DMEPOS
CBP.'' We proposed to define that term as a program whereby contracts
are awarded to suppliers for the furnishing of mail order items across
the nation. We believe that implementing a national competitive bidding
program for diabetic supplies would preserve beneficiary choice to
purchase testing supplies in person from any local pharmacy that is an
enrolled Medicare supplier that furnishes diabetic supplies, while
clarifying the definition of mail order will provide significant
savings potential for beneficiaries and the program. Savings would be
generated in the near future from national SPAs for supplies furnished
on a mail order or home delivery basis and on a long term basis for all
diabetic supplies as a result of the requirement of section
1834(a)(1)(F) of the Act (as amended by section 6410(b) of the ACA) to
either competitively bid in all areas or adjust prices in all areas by
January 1, 2016. We believe that more beneficiaries will elect to
choose the mail order/home delivery option, thereby further increasing
short term savings under the program. Even if this is not the case, and
the percentage of beneficiaries choosing the mail order/home delivery
option remains at the current rate of 62 percent, savings for the
remaining 38 percent must be achieved by no later than January 1, 2016,
as a result of the requirements of section 1834(a)(1)(F) of the Act.
We considered other alternatives for establishing DMEPOS CBP for
diabetic testing supplies that would eliminate the mail order/non-mail
order bifurcation and associated concerns. These alternatives include
the following:
A national competition among all types of suppliers for
all replacement diabetic supplies. Under this alternative, all
beneficiaries would receive their replacement diabetic supplies from
contract suppliers responsible for furnishing diabetic supplies
throughout the nation using any method of delivery as long as the
supplies are delivered on a timely basis.
Competitions in regional CBAs among all types of suppliers
for all replacement diabetic supplies. Under this alternative, all
beneficiaries would receive their replacement diabetic supplies from
contract suppliers responsible for furnishing diabetic supplies
throughout a designated region of the country using any method of
delivery to a beneficiary's home as long as the supplies are delivered
on a timely basis.
Competitions in local CBAs among all types of suppliers
for all replacement diabetic supplies. Under this alternative, all
beneficiaries would receive their replacement diabetic supplies from
contract suppliers responsible for furnishing diabetic supplies
throughout the local area using any method of delivery to a
beneficiary's home as long as the supplies are delivered on a timely
basis.
We believe that the first option to bid on a national basis for all
diabetic supplies, would result in most beneficiaries using mail order
and might generate more savings than a national competition for
diabetic supplies furnished on a mail order basis only. However, this
first option would likely eliminate the beneficiary choice to obtain
replacement diabetic supplies on a non-mail order basis from any
enrolled supplier that is a pharmacy or other local supplier storefront
where a licensed pharmacist is on hand to offer guidance and
consultation to the beneficiary. We believe the other two options would
also diminish this choice. In addition, the alternatives of regional or
local competitions are not likely to result in savings at or above the
level that can be generated from a national competition for mail order
supplies. Suppliers participating in a national program may be able to
obtain volume purchasing discounts for the quantities of supplies
needed nationwide. Therefore, we did not propose any of these
alternatives but we solicited public comment on alternatives for
establishing DMEPOS CBP for diabetic testing supplies.
In Sec. 414.411, we proposed to establish a national mail order
DMEPOS CBP with competitions taking place after 2010 for the purpose of
awarding contracts to suppliers to furnish replacement diabetic testing
supplies across the nation, with additional program refinements
described below. We note that the decision to proceed with a national
mail order competition after 2010 does not prevent us from phasing in
competitions for non-mail order diabetic supplies or from conducting
competitions for diabetic supplies in general in the future consistent
with section 1847(a)(1) of the Act.
Comment: We received 31 comments in response to our proposed
regulation to implement a national mail order DMEPOS CBP for diabetic
testing supplies. There were several commenters that supported the
proposal made by CMS and a few commenters that were opposed to our
proposal. The commenters in favor of our proposal stated they wanted
CMS to preserve the local storefront option for the beneficiary. A few
commenters specifically stated that CMS should maintain retail
pharmacies as a necessary safety valve, ensuring that beneficiaries
will have immediate local

[[Page 73569]]

access to their specific diabetic testing supplies. In addition,
several commenters who supported our conducting separate auctions
stated that our proposal to conduct one competition between mail order
companies and those with a local storefront would not be fair because
these companies have different business models, different overhead
costs and different operational structures. Numerous commenters stated
that beneficiaries get better service from a local storefront than they
would get from a mail order company because local storefronts preserve
a face-to-face pharmacy/patient relationship.
We also received several comments opposed to our proposal to
conduct separate competitions because they believed that gives the
local storefronts an unfair advantage because they are paid more than
mail order companies for the same product. They suggest that CMS should
conduct a competition for both mail order and non mail order under one
program.
Response: We agree with those commenters who stated that we need to
preserve beneficiary choice and access to local storefronts to get
their diabetic testing supplies. We believe that our proposal preserves
the beneficiaries' choice to go to their local pharmacy to pick up
their diabetic supplies or request that they be sent through the mail
by a national mail order DMEPOS contract supplier. Also, we believe
that both mail order suppliers and storefront suppliers are able to
provide the necessary services and education to their beneficiaries.
Therefore, we believe our proposal to bid diabetic testing supplies
when provided through the mail will preserve beneficiaries' choice
while ensuring they receive quality services. We also agree that to bid
storefronts and mail order companies in the same auction may make it
difficult for small storefronts to compete against large mail order
suppliers. We also believe the difference in payment between mail order
companies and retail stores will not harm mail order companies because
we expect that more beneficiaries will choose to obtain their test
strips from mail order companies to lower their co-insurance payment,
generating more business for mail order suppliers. In addition, non-
mail order diabetic supplies were not included the first round of the
competitive bidding program and the issue with regard to payment for
these items under the program will be addressed in the future as
additional items subject to the program are phased in.
Comment: One commenter stated that CMS should phase in a regional
program, rather than moving immediately into a national program, since
CMS and mail order suppliers are without sufficient knowledge base or
experience with the operation of a large-scale competitive bidding
program and its impact on beneficiaries' access to quality care.
Response: We disagree with this comment. We believe that the option
to bid on a national basis for all mail order diabetic supplies would
result in large savings because of the volume purchase power of bidders
providing these items on a national basis. Currently our data shows
that over 62 percent of Medicare beneficiaries receive their testing
supplies through the mail, we see no real benefit of bidding on a
regional basis because most mail order suppliers operate nationally. We
also believe that we have experience conducting the DMEPOS CBP since we
have successfully completed the bidding and contract offers for Round 1
Rebid and the program will begin January 1, 2011. We have established a
process and will evaluate and monitor contract suppliers to ensure
beneficiaries' have access to quality products.
Comment: One commenter stated that diabetic testing supplies should
be excluded from DMEPOS CBP because CMS does not have any experience
with this product category with respect to competitive bidding, as
diabetic supplies were not included in any prior demonstration project.
Several commenters suggested that CMS should not initiate the bidding
process for the national mail order DMEPOS CBP until it has had
sufficient time to evaluate the rebid of Round 1.
Response: Section 1847(a)(1)(A) of the Act mandates the
establishment of DMEPOS CBP for items described in section
1847(a)(2)(A) of the Act, including diabetic testing supplies. Section
1847(a)(1)(B)(ii) of the Act authorizes the phase in of items and
services under these programs beginning with the highest cost and
highest volume items and services or those items and services that are
determined to have the largest savings potential. Current Medicare
claims data identifies diabetic testing supplies as a high cost/high
volume item. Mail order diabetic testing supplies account for
approximately one billion dollars in allowed charges per year and the
majority of these payments are for mail order diabetic testing
supplies. In addition, CMS does have experience bidding these items as
they were included in both Round 1 and the Round 1 rebid.
Comment: One commenter stated that section 1834(a)(1)(F) of the Act
does not compel CMS to adjust prices for all items by January 1, 2016,
or any other specific date. The commenter stated that CMS could elect
to continue to exclude diabetic testing supplies provided through local
retail storefronts.
Response: We are required by section 1834(a)(1)(F) of the Act to
either competitively bid in all areas of the country or adjust prices
for all phased in items in areas where competitive bidding programs are
not implemented by January 1, 2016. We intend to address specific
issues related to implementation of clauses (ii) and (iii) of section
1834(a)(1)(F) of the Act as part of separate rulemaking mandated by
section 1834(a)(1)(G) of the Act.
After consideration of the public comments we received, we are not
making any changes to this section of the proposed rule on the future
competitions of diabetic testing supplies.
(2) Definition of Mail Order Item
We proposed to define ``mail order item'' in Sec. 414.402 to mean
any item (for example, diabetic testing supplies) shipped or delivered
to the beneficiary's home, regardless of the method of delivery. We
also proposed to define ``non-mail order item'' as any item (for
example, diabetic testing supplies) that a beneficiary or caregiver
purchases at a local pharmacy or supplier storefront rather than having
the item delivered to the beneficiary's home. For round 1 of the
program, this means that beneficiaries that do not obtain their testing
supplies through mail order may purchase these items at a local
pharmacy or local storefront. Therefore, the only items excluded from
the mail order definition and mail order competition would be those
that a beneficiary or caregiver purchases at a local pharmacy or local
supplier storefront and are not delivered to the beneficiary's home.
These revised definitions of mail order item and non-mail order item
are intended to clearly identify which items is truly mail order. In
addition, we believe this definition will preserve the choice of the
beneficiary to obtain replacement diabetic supplies in person from a
local pharmacy and eliminate the circumvention of the mail order
program.
As previously discussed, for Round 1 and the Round 1 Rebid of the
DMEPOS CBP, we defined mail order contract supplier in our regulations
at Sec. 414.402 to mean a contract supplier that furnishes items
through the mail. We further defined mail order in program

[[Page 73570]]

instructions to mean ``items ordered remotely (that is, by telephone,
e-mail, internet or mail) and delivered to beneficiary's residence by
common carriers (for example, U.S. Postal Service, Federal Express,
United Parcel Service) and does not include items obtained by
beneficiaries from local storefronts.'' The intent of the Round 1
definition was to distinguish between mail order supplies (items
shipped or delivered directly to the beneficiary's home, regardless of
the method of delivery) and non-mail order supplies (items that a
beneficiary or caregiver picks up in person at a local pharmacy or
storefront). Manufacturers and suppliers of blood glucose monitors and
test strips have expressed on numerous occasions the importance of
maintaining the patient option of obtaining diabetic testing supplies
from a local pharmacy that provides full time access to a licensed
pharmacist who can provide instructions and guidance to the beneficiary
or caregiver related to the use of the diabetic supplies (the pharmacy
pickup option). This is the ``non-mail order'' option we attempted to
separate from the mail order option with the Round 1 definition of mail
order.
During implementation of Round 1 of the program, we discovered that
suppliers that did not successfully compete and win a contract under
the program tried to adopt certain approaches to circumvent the mail
order definition. In the first round of competitive bidding, suppliers
that lost their bid to be a contract supplier for mail order diabetic
testing supplies considered ways to change their delivery methods to
circumvent the mail order DMEPOS CBP. For example, some mail order
suppliers considered purchasing a fleet of cars to deliver these items
to the beneficiary's home so as not to be considered a mail order
supplier. Other suppliers attempted to enter into special ``private''
arrangements with well known delivery services and claimed that because
of such arrangements they should not be considered mail order
suppliers. These alternative home delivery methods do not provide any
benefits to the patient beyond what the traditional mail order home
delivery method offers. They are simply ways to continue furnishing
diabetic supplies on a home delivery basis after submitting a bid for
mail order that does not result in the award of a contract under the
DMEPOS CBP. Without a clear distinction between mail order (home
delivery option) and non-mail order (pharmacy pickup option), suppliers
could continue to attempt to make arrangements as they did in the
initial Round 1 competition to circumvent the DMEPOS CBP. We consider
these practices to be inconsistent with the DMEPOS CBP statute and
regulations currently in effect, and our proposal is intended to
further clarify the existing definition of mail order. Such
arrangements prevent beneficiaries and the Medicare program from
realizing savings afforded by the mail order DMEPOS CBP and is unfair
to winning suppliers who bid in good faith for a contract for
furnishing supplies to the home delivery market.
This proposed definition of mail order item would not apply to the
Round 1 Rebid competition because of the specific requirement of MIPPA
to rebid Round 1 in 2009 for the same items and services included in
the initial Round 1 competition. However, for a national competition,
it is imperative that the new definition of mail order item be in place
because of the implications such a program would have on the entire
mail order delivery market in the United States. In these future
competitions, we will continue to emphasize in our educational efforts
the basic distinction between mail order (items shipped or delivered to
the beneficiary's home, regardless of the method of delivery) and non-
mail order (items that a beneficiary or caregiver picks up in person at
a local pharmacy or storefront). In addition, we will continue to take
appropriate and necessary action against suppliers that furnish mail
order items and bill for them as if they were non-mail order items.
As previously mentioned, an alternative DMEPOS CBP for replacement
diabetic supplies would be to hold a national competition among all
types of suppliers for all replacement diabetic supplies. One benefit
to this approach is that it would eliminate the need to differentiate
between mail order and non-mail order supplies; however, it would
likely eliminate the pharmacy pickup choice since most local pharmacies
would not be able to service the entire CBA if they did not also
operate a national mail order service.
We solicited comment on our proposed definition of ``mail order''
and its impact on future rounds of bidding. We received several
comments regarding the proposed definition of mail order both in favor
of and against the definition.
Comment: Several commenters agreed with the proposed definition
because they believe it will result in a clear distinction between mail
order and non-mail order and reduce the ability of suppliers to game
the program. A few commenters opposed the proposed change in definition
stating that the definition is too broad and therefore, could be
applied to any DMEPOS item delivered to a patient's home.
Response: We agree that it is important to revise the definition of
mail order to make a clear distinction between mail order and non mail
order. We believe we cannot make the necessary distinction between mail
order and non-mail order under our current definition. With the revised
definition, beneficiaries will have a clear choice to make; they or
their caregiver can either go to a retail store or get their items
shipped or delivered to their home by any means. If they choose to get
their items delivered to their home they would have their supplies
delivered by a DMEPOS contract supplier who meets our qualifications to
be a mail order supplier of diabetic testing supplies. We agree that
the definition is broad with respect to DMEPOS items in general.
However, for the reasons previously stated, we believe it is necessary
to have this specific definition of mail order item for diabetic
testing supplies that includes any item shipped or delivered to the
beneficiary's home, regardless of the method of delivery. However,
competitions for mail order items may not be necessary or appropriate
for rented equipment or for items that require the presence of the
supplier in the home for inspection, equipment set up, and other
purposes. We believe that mail order competitions may be more
appropriate for purchased items that do not require these in home
services.
Comment: Several commenters advocated for exemption from bidding as
a local storefront and from the program when providing diabetic testing
supplies delivered to the patient's home. These commenters believe that
this service is necessary for some beneficiaries who have difficulty
getting to a pharmacy. The commenters stated that the proposed
definition of mail order prevents them from continuing to service snow
bird beneficiaries. The commenter supported the policy that independent
pharmacies do not have to bid to continue to provide diabetic testing
supplies to beneficiaries that come into their store, but they would
also like to continue to provide supplies to these beneficiaries via
mail when they temporarily relocate as a snowbird. Several commenters
also stated that they would like CMS to exempt from competitive bidding
companies that deliver diabetic testing supplies directly to a
beneficiary's home using their specially trained employees.
Response: We disagree. We do not believe that such an exception is

[[Page 73571]]

warranted because contract suppliers will be able to deliver these
items to the beneficiary's home in these situations. If the beneficiary
or their caregiver would normally pick up the beneficiary's supplies in
person at a local pharmacy they may switch for any reason or any period
of time and obtain these items from a contract mail order supplier.
Delivery of the supplies from a local store is no different than
delivery thru the mail or some other means from a remote location. It
would be unfair to exempt these companies from competitive bidding
while still allowing them to provide these items when they deliver them
to the patient's home. We believe that home delivery companies should
have to bid in the DMEPOS CBP and be awarded a contract to continue to
deliver these items to the home. We are not aware of what services are
being provided by the specially trained employees that commenters refer
to that are different than services that a mail order contract supplier
would perform. The contract suppliers must meet all of the supplier and
quality standards necessary for furnishing the items. The supplier of
the glucose monitor is responsible for ensuring that the beneficiary is
educated and trained on the use of their monitor. Since there are no
in-home services necessary for furnishing replacement diabetic testing
supplies, we do not understand the point these commenters are trying to
make. We believe that mail order suppliers are qualified and capable of
providing any education and services related to the furnishing of the
replacement diabetic testing supplies. Finally, it is important to note
that our current rules provide great flexibility in arranging for the
furnishing of replacement diabetic testing supplies. The program allows
beneficiaries to receive a 3-month supply of diabetic test strips and
beneficiaries can order and obtain their supplies 5 days in advance of
the start of the next 3-month period.
Comment: Several commenters stated that mail order companies
provide the same type of instruction and guidance that local pharmacies
provide by offering hotlines, working with patients to educate and
coach them on the use of glucose monitors, and continued patient
counseling and monitoring.
Response: As previously discussed, we believe that mail order
suppliers are qualified and capable of providing any necessary services
related to the furnishing of replacement diabetic testing supplies. The
same supplier standards and quality standards that apply to local
storefronts that furnish these items also apply to mail order
suppliers. Local home delivery companies state that because they have
local presence they can offer better service from specially trained
employees to meet the needs of the beneficiaries. We believe that
employees of mail order companies are also well trained and both
companies train their employees to address beneficiaries' needs.
After consideration of the public comments received, we are
finalizing our proposal without modification.
(3) Special Rule in Case of Competition for Diabetic Testing Strips
Following Round 1 Rebid of the program, any competition for
diabetic testing strips, such as a national mail order program for
diabetic testing supplies proposed in this rule, must include the
special rule set forth in section 1847(b)(10)(A) of the Act. Under that
section, a supplier must demonstrate that their bid to furnish diabetic
testing strips covers the furnishing of a sufficient number of
different types of diabetic testing strip products that, in the
aggregate and taking into account volume for the different products,
account for at least 50 percent of all such types of products on the
market. Section 1847(a)(10)(A) of the Act also specifies that the
volume for the different products may be determined in accordance with
data (which may include market based data) recognized by the Secretary.
When a beneficiary needs to obtain replacement test strips, they must
obtain the specific brand of test strips products that work with their
brand and model of blood glucose monitor. The test strips are not
manufactured in a way that allows use of different brands of test
strips in different brands of monitors. Therefore, when replacement
test strips are furnished, the supplier must ensure that the specific
brand and model of test strips that the patient requires for use with
their purchased monitor is furnished.
Section 1847(b)(10)(B) of the Act mandates the DHHS OIG conduct a
study before 2011 to generate volume data for the various products that
could be used for this purpose.
Under the DMEPOS CBP, bidding suppliers are required to provide
information on the products they plan to furnish if awarded a contract.
We proposed to use this information and information on the market share
(volume) of the various diabetic testing strip products to educate
suppliers on meeting the requirements of this special rule. In
addition, it may be necessary to obtain additional information from
suppliers such as invoices or purchase orders to verify that the
requirements in the statute have been met.
We proposed that suppliers be required to demonstrate that their
bids cover the minimum 50-percent threshold provided in the statute,
but we invited comments on whether a higher threshold should be used.
We have proposed the 50-percent threshold in part because we believe
that all suppliers have an inherent incentive to furnish a wide variety
of types of diabetic testing products to generate a wider customer
referral base. The 50-percent threshold would ensure that beneficiaries
have access to mail order delivery of the top-selling diabetic test
strip products. In addition, as explained below, we proposed an ``anti-
switching provision'' that we believe should obviate the need to
establish a threshold of greater than 50 percent for the purpose of
implementing this special rule because the contract suppliers would not
be able to carry a limited variety of products and switch beneficiaries
to those products.
For purposes of implementing the special rule in section
1847(b)(10)(A) of the Act, we proposed to define ``diabetic testing
strip product'' as a specific brand and model of test strip, as that is
the best way to distinguish among different products. Therefore, we
plan to use market based data for specific brands and models of
diabetic test strips to determine the relative market share or volume
of the various products on the market that are available to Medicare
beneficiaries. We plan to review a variety of data, including but not
limited to data furnished in the OIG report, to determine the market
share of the various products. The special rule mandated by section
1847(b)(10)(A) of the Act applies to all competitions for diabetic
testing strips after the Round 1 Rebid of the DMEPOS CBP. Therefore, we
would apply this rule to non-mail order competitions and local
competitions conducted for diabetic testing strips after the Round 1
Rebid of the DMEPOS CBP.
Comment: Several commenters supported the requirement for suppliers
to demonstrate that their bids cover 50 percent of the diabetic testing
strips on the market. Other commenters noted problems associated with
implementing the 50-percent rule. A few commenters stated that this
rule provides an advantage to large manufacturers by encouraging
suppliers to carry more of their products and disadvantages small
manufacturers with limited product lines.
Response: This special rule is mandated by the statute which
stipulates a supplier must demonstrate

[[Page 73572]]

that its bid to furnish diabetic testing strips covers the furnishing
of a sufficient number of different types of diabetic testing strip
products that, in the aggregate and taking into account volume for the
different products, to account for at least 50 percent of all such
types of products on the market. Suppliers are able to decide from
which manufacturers to obtain their diabetic testing supplies from, but
we are required to ensure that suppliers are in compliance with the
special rule before awarding a contract to them under the DMEPOS CBP.
Comment: Several commenters are concerned that products developed
between bidding cycles will be frozen out of the program for up to 3
years and suppliers could be discouraged from offering new products
until the next bidding cycle or up to 3 years after the product's
release.
Response: We disagree that the 50-percent rule creates a
disincentive for manufacturers and innovators to develop new and
progressive technology. This rule does not prevent suppliers from
offering new products to their customers. In fact, suppliers may choose
to offer new products in order to gain market share under the DMEPOS
CBP. In addition, we believe that the anti-switching rule would create
a strong incentive for contract suppliers to carry a wide range of
products well beyond the 50-percent threshold in order to increase
their volume of business. Contract supplier would have to carry the
brand test strips that work with new products that are successfully
marketed to Medicare beneficiaries.
Comment: Several commenters stated that the minimum 50-percent
threshold required by the statute may be insufficient to ensure that
suppliers carry a wide array of available products. Other commenters
recommended that CMS require suppliers to carry a more clinically
diverse array of products. Without this change they believe suppliers
could limit the range of diabetic testing supplies by only offering the
lowest cost versions of those supplies.
Response: We disagree. We believe that the 50-percent threshold is
sufficient to ensure that contract suppliers offer the products that
physicians and beneficiaries prefer because it will be extremely
difficult for suppliers to limit the number of products they offer to
the lowest cost versions unless those are also the top selling
products. We believe that the top selling products are widely used
because physicians and beneficiaries prefer them rather than because
they are the cheapest products available. We do not believe that
physicians and pharmacists would continue to recommend products to
beneficiaries if they did not meet the needs of the specific
beneficiaries. Likewise, we do not believe that beneficiaries who
choose certain products would continue to use those products and make
them top-selling products if they did not adequately meet their needs.
Due to widespread manufacturer rebates, trade-ins, and other discounts,
beneficiaries and other consumers are able to purchase new glucose
monitor products at little or no cost. Therefore, beneficiaries who are
unhappy with their choice of glucose monitor product, can easily switch
to another brand of monitor. It would be extremely difficult for
suppliers who only elect to furnish products that are not top-selling
products to reach the 50-percent threshold.
Comment: One commenter stated that the 50-percent rule is a strong
beneficiary protection and that the 50-percent rule will not work
without enforcement of the anti-switching rule.
Response: We agree that the 50-percent threshold would ensure that
beneficiaries have access to mail order delivery of the top-selling
diabetic test strip brands and models. We also agree that the 50-
percent rule would be more effective with implementation of the anti-
switching rule.
Comment: One commenter recommended that when CMS determines the
product list they should identify the brands and products that have
been furnished through the mail. This is important because market share
data for mail order and retail medical supply establishments are not
the same.
Response: We agree. The DHHS OIG is conducting a study to generate
volume data for various diabetic testing strip products furnished on a
mail order basis. We will use this data in providing guidance to
implement this special rule for mail order contract suppliers to ensure
that their bids cover at least 50 percent of the volume of testing
strip products currently furnished to beneficiaries via mail order. The
OIG is required to complete their study before 2011 and will make their
data available to the public.
Comment: A few commenters believe that the proposed rule does not
indicate how CMS will determine compliance with the percentage
standard. The commenters urge CMS to do more than analyze a supplier's
bid to determine compliance. They suggest CMS develop mechanisms to
``look back'' at a supplier's actual performance over a period of time,
preferably on a monthly basis for the first year of the program's
operation. Also, CMS could review supplier's records, such as invoices
and purchase orders, to verify compliance with the requirement.
Response: We agree with this comment and the need for CMS to ensure
compliance with the special rule. Suppliers will be required to submit
information to document that their bid covers at least 50 percent of
the products available to beneficiaries. In addition, contract
suppliers will be required to submit quarterly reports that include
information on the items that the contract supplier has furnished for
the quarter. These quarterly reports will indicate the approximate
number of items furnished, manufacturer, model and model number of the
items furnished. The quarterly reports will enable us to monitor access
to different products under the program.
Comment: One commenter stated that the 50-percent rule fails to
meets the non-discrimination requirement.
Response: We disagree. The non-discrimination requirement does not
conflict with the 50-percent rule. Contract suppliers must furnish the
same products to Medicare patients that they furnish to their other
customers and these products must make up at least 50 percent of the
volume of items available. Neither requirement prevents the supplier
from meeting the other requirement. The non-discrimination requirement
will be fully enforced along with the special 50-percent rule.
Comment: A commenter recommended that CMS consult with patient
advocates, providers, and industry experts to determine whether the
methodology used by CMS for determining the different types and amounts
of products on the market is consistent with what is actually available
to Medicare beneficiaries today.
Response: We agree and will consider whether or not it is necessary
to consult with patient advocates, providers, and industry experts to
determine the types and volume products available to Medicare
beneficiaries. The statute also mandates that the OIG conduct a study
to generate volume data for various diabetic testing strip products
that could be used to make this determination.
Comment: A commenter suggested that CMS should consider adopting a
generic substitution requirement for diabetic testing supplies.
Response: This comment is outside the scope of this rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal without modification.

[[Page 73573]]

(4) Anti-Switching Rule in Case of Competition for Diabetic Test Strips
As previously noted, we believe that an anti-switching requirement
will help ensure compliance with the 50-percent rule and creates an
incentive for contract suppliers to offer a wide variety of testing
strip products. Therefore, we proposed to prohibit suppliers awarded
contracts for diabetic testing supplies from influencing or
incentivizing the beneficiary by persuading, pressuring, or advising
them to switch from their current brand or for new beneficiaries from
their preferred brand of glucose monitor and testing supplies. The
contract supplier may not furnish information about alternative brands
to the beneficiary to influence the beneficiary's decision unless the
beneficiary requests such information. We proposed that contract
suppliers for diabetic testing supplies must furnish the brand of
diabetic testing supplies that work with the home blood glucose monitor
selected by the beneficiary. In the case where the beneficiary is
receiving a monitor for the first time or a replacement monitor, the
contract supplier would be subject to the requirements of Sec. 414.420
in order to protect beneficiaries from feeling forced or incentivized
to use a particular type or brand of monitor. We continue to believe
the proper role of the contract supplier is to furnish diabetic testing
strips and other supplies to beneficiaries, not to interfere with the
beneficiary's selection of the type of monitor and supplies. This
requires the supplier to furnish the brand of testing supplies that
work with the blood glucose monitor product that the beneficiary, and
not the supplier of the testing supplies, selects. If the beneficiary
needs a blood glucose monitor for the first time, or needs to replace
their existing blood glucose monitor, and neither the beneficiary nor
their physician has determined which brand or type of monitor to
obtain, the beneficiary may continue to ask for assistance from the
supplier to select a monitor and the supplier should show them the full
range of products. However, if the beneficiary has already selected a
monitor and simply needs replacement diabetic testing supplies, the
supplier must furnish the brands of testing supplies that work with the
brand monitor that the beneficiary has selected. We believed that our
proposal would preserve the integrity of the clinical decision
regarding choice of glucose monitoring system and would result in
contract suppliers offering a wide variety of diabetic testing supply
products.
We proposed to amend Sec. 414.422 to add the anti-switching
requirement to the terms of the contract for a supplier of diabetic
testing supplies. A supplier would be in breach of their contract and
subject to the sanctions set forth under Sec. 414.423(g), including
termination, if they violate this term.
Comment: Numerous commenters stated that CMS should adopt a strong
anti-switching rule and stated that this rule is an important
improvement to the DMEPOS CBP and will protect beneficiaries' access to
supplies.
Response: We agree that the anti-switching rule will help protect
beneficiaries from being influenced or incentivized to use a particular
type of brand of glucose monitor.
Comment: One commenter also recommended that the anti-switching
rule should be actively monitored to ensure that beneficiaries are
adequately protected.
Response: We agree. The anti-switching rule will be actively
monitored by requiring contract suppliers to submit quarterly reports
that include information of the items that the contract supplier has
furnished for the quarter. We will be analyzing the quarterly reports
to determine changes in the rates that various brands are provided. We
will also be monitoring beneficiary complaints to determine if this is
an issue.
Comment: One commenter stated suppliers should be required to
submit evidence to CMS such as copies of agreements with manufactures
to demonstrate how they will obtain adequate quantities of testing
supplies in order to furnish the supplies sought by beneficiaries in a
timely manner. This is to prevent suppliers from influencing a
beneficiary's choice of products by not being able to fill certain
orders.
Response: We disagree. The anti-switching rule does not require the
supplier to increase their capacity for furnishing sufficient
quantities of all of the various products available. It is intended to
prevent the supplier from actively influencing or incentivizing the
beneficiary to switch to a different glucose monitor product. If the
contract supplier does not stock a specific product or is out of
inventory of a specific product they carry and which the beneficiary
needs, the beneficiary can go to any other contract supplier to see if
they carry the product they need in stock.
Comment: A few commenters were concerned about the anti-switching
rule because they believe that this rule will prevent suppliers from
consulting with beneficiaries regarding the various features of the
different products and the selection of diabetic supplies that best
meet the patient's needs.
Response: The anti-switching policy impacts those beneficiaries who
are already using a specific monitor or whose physician ordered a
specific brand. The anti-switching policy prevents suppliers from
influencing or incentivizing beneficiaries to switch monitors. This
policy has no impact on situations where the beneficiary has not yet
selected a monitor or initiates discussions with the supplier about
changing to a new type of monitor.
Comment: One commenter stated that the anti-switching rule prevents
beneficiaries from having access to lower cost glucose monitors and
test strips, unless they specifically request information about less
costly alternatives from their supplier. In addition, the commenter
stated that the DMEPOS CBP should provide incentives to use lower cost
alternatives and not prohibit their use.
Response: We disagree. The purpose of this policy is to prevent
beneficiaries from being influenced to switch from their current brand
to a lower cost brand to increase a supplier's profit. The
beneficiary's choice should not be influenced by the supplier's ability
to obtain the product at a lower cost, rather than the product that the
beneficiary prefers. This policy does not prevent a beneficiary from
initiating a discussion with suppliers or their physician to determine
the most appropriate brand. The contract supplier can discuss the
features or how to operate the glucose monitor selected by the
beneficiary, even if information is not requested by the beneficiary.
Comment: One commenter stated that CMS should enforce the anti-
switching rule by prohibiting mail order suppliers from counseling
patients on blood glucose monitors and supplies, pre-approving
suppliers' marketing materials and establishing a hotline for
beneficiaries.
Response: We disagree. As previously stated, the contract supplier
can discuss the features or how to operate the glucose monitor selected
by the beneficiary even if this information is not requested by the
beneficiary. We established a 1-800 Medicare number which is a
beneficiary dedicated hotline that beneficiaries are to call when they
have questions or concerns related to their Medicare needs. In
addition, the presence of local ombudsman will be available for
beneficiaries and suppliers for their Medicare related needs when the
DMEPOS CBP is implemented.
Comment: One commenter recommended that CMS take steps to

[[Page 73574]]

appropriately inform and educate beneficiaries in advance about their
rights under the anti-switching provisions. The commenter also
recommended that a special education effort be implemented during the
new Round 1 Rebid and any future rounds of bidding aimed at eliminating
any confusion that beneficiaries have regarding their ability to
continue receiving their replacement supplies at their retail
pharmacies.
Response: We agree. We have designed and will conduct an extensive
beneficiary educational campaign on the Round 1 Rebid. In addition, for
future rounds of competition we will continue to conduct future
educational campaigns to educate beneficiaries on all aspects of the
program, including the anti-switching provisions and the 50-percent
rule.
After consideration of the public comments we received, we are
finalizing our proposal without modification
c. Off-the-Shelf (OTS) Orthotics Exemption
In the April 10, 2007 final rule (72 FR 17992), we established
Sec. 414.404(b)(1), which sets forth several exemptions to the DMEPOS
CBP. These exceptions are applicable to providers, physicians, and
treating practitioners that furnish certain DMEPOS items under Medicare
Part B. The exempted items are limited to crutches, canes, walkers,
folding manual wheelchairs, blood glucose monitors, and infusion pumps
that are DME. For an explanation as to why these items were exempt see
the DMEPOS Competitive Bidding final rule (CMS-1270-F) published April
10, 2007, (72 FR 17992). For the exemptions to apply, the items must be
furnished by a physician or treating practitioner to his or her own
patients as part of his or her professional service. The items are to
be billed under a billing number assigned to the physician, the
treating practitioner (if possible), or a group practice to which the
physician or treating practitioner has reassigned the right to receive
Medicare payment.
The April 10, 2007 final rule also established an exemption for a
physical therapist in private practice (as defined in Sec. 410.60(c))
or an occupational therapist in private practice (as defined in Sec.
410.59(c)) to furnish competitively bid OTS orthotics without
submitting a bid and being awarded a contract under the DMEPOS CBP,
provided that the items are furnished only to the therapist's own
patients as part of a physical or occupational therapy service.
Section 154(d) of MIPPA amended section 1847(a) of the Act by
adding paragraph (7), which expands the exemptions from the DMEPOS CBP
for certain OTS orthotics to physicians or other practitioners (as
defined by the Secretary) if furnished to their own patients as part of
their professional service. Section 1847(a)(7) of the Act, as added by
MIPPA, also expanded the exemption from the program to hospitals for
certain OTS orthotics, crutches, canes, walkers, folding manual
wheelchairs, blood glucose monitors, and infusion pumps if these items
are furnished to the hospital's own patients during an admission or on
the date of discharge.
The DMEPOS CBP Round 1 Rebid interim final rule with comment period
(IFC) included the expanded exemption for certain DMEPOS items as
provided by MIPPA for hospitals. We noted in the IFC that we would
address the expanded exemption of OTS orthotics for hospitals,
physicians and other practitioners in future rulemaking.
We proposed to revise current provisions at Sec. 414.404(b)(1)(i)
to incorporate the provision of section 1847(a)(7)(A)(i) and (ii) of
the Act that exempts from the program OTS orthotics furnished by
physicians and other practitioners to their own patients as part of
their professional service or by hospitals to the hospital's own
patients during an admission or on the date of discharge.
Comment: One commenter submitted a question requesting
clarification on whether a supplier owned by a hospital or provider
affiliated with a hospital would qualify for the hospital exemption.
Response: The OTS orthotics exemption for hospitals is limited to
hospitals that furnish OTS orthotics to their own patients during an
admission or on the date of discharge. The exemption for a hospital
does not apply to suppliers or providers owned by or affiliated with a
hospital. This exemption applies only to entities that meet the
definition at section 1861(e) of the Act.
Comment: One commenter suggested that CMS include small independent
pharmacies in the definition of ``other practitioners'' and exempt OTS
orthotics furnished by small independent pharmacies from bidding and
contract requirements under the DMEPOS CBP.
Response: We disagree. There are several factors we consider in
determining which suppliers qualify for an exemption. As discussed in
the April 10, 2007, Federal Register (72 FR 18029) we exempted physical
and occupational therapists, from bidding in the DMEPOS CBP and being
awarded a contract so that they could continue to provide competitively
bid OTS orthotics to their own patients when these items are furnished
as part of their professional service. MIPPA has extended this
exemption to include OTS orthotics furnished by physicians, certain
other practitioners, and hospitals to their own patients. The MIPPA
expanded exemption does not include OTS orthotics furnished to the
general public by suppliers such as pharmacies. Therefore, we do not
agree that this exemption should be applied to small independent
pharmacies who sell these products to the general public and they are
not furnished as an integral part of a treatment service furnished by
the pharmacy. Also, the term treating practitioner is defined at Sec.
414.402 of the regulations and includes physician assistants, nurse
practitioners, and clinical nurse specialists in accordance with the
definition of these terms as defined at section 1861(aa)(5) of the Act.
We do not believe that the statutory language that extended the OTS
orthotic exemption to physicians, certain other practitioners, and
hospitals was intended to extend the exemption to small independent
pharmacies that provide products to the general public.
Comment: One commenter supported the OTS orthotics exemption for
physicians, practitioners, and hospitals.
Response: We agree.
After consideration of the public comments we received, we are
finalizing our proposal without modification.
d. Grandfathering Rules Resulting in Additional Payments to Contract
Suppliers Under the DMEPOS Competitive Bidding Program (CBP)
Section 1847(a)(4) of the Act requires that in the case of rented
DME and oxygen and oxygen equipment, the Secretary shall establish a
``grandfathering'' process. This requirement was implemented through
regulations at Sec. 414.408(j) that were published in the April 10,
2007 Federal Register (72 FR 17992). The grandfathering process allows
beneficiaries who were renting DME items or receiving oxygen and oxygen
equipment prior to the start of a DMEPOS CBP from a supplier who did
not win a contract to continue to rent the equipment from that
noncontract supplier if that supplier chooses to become a grandfathered
supplier. Under Sec. 414.408(i)(2), when the beneficiary decides to
use a contract supplier instead of a grandfathered supplier to receive
their oxygen equipment and supplies, the contract supplier receives

[[Page 73575]]

a minimum of 10 monthly payments for taking over the furnishing of
oxygen and oxygen equipment. When a beneficiary decides to use a
contract supplier to furnish capped rental DME, section Sec.
414.408(h)(2) restarts the 13-month capped rental period. These rules
were established, in part, based on advice from the Program Advisory
and Oversight Committee (PAOC) and are intended to give bidding
suppliers an assurance that they would be compensated in these
situations and would not have to factor into their bids the cost of
receiving as few as one monthly payment for beneficiaries near the end
of the 13-month cap for capped rental items and 36-month cap for oxygen
equipment.
At the time these rules were developed, the supplier was mandated
by the statute to transfer title to the equipment to the beneficiary
after the both the 13-month cap for capped rental items and the 36-
month cap for oxygen equipment. Section 144(b) of the MIPPA repealed
the transfer of title requirement for oxygen equipment, as established
by DRA, replacing that requirement with the 36-month rental cap. Under
the revised oxygen payment provisions, suppliers now get the equipment
back when the beneficiary no longer needs it. Also, at the time these
rules were developed, the beneficiary had the option to acquire
standard power wheelchairs on a lump sum purchase basis, an option
which greater than 95 percent of the beneficiaries selected, based upon
historic claims data. Therefore, those items generally would not be
affected by the grandfathering rules. However, as discussed in section
VI.V. of this final rule with comment period, section 3136 of the
Affordable Care Act eliminates the lump sum purchase option for
standard power wheelchairs. This new policy applies to items furnished
under the DMEPOS CBP beginning with Round 2 of the program. Over
200,000 beneficiaries received standard power wheelchairs nationwide in
2009, and the Medicare allowed charges for these wheelchairs was over
$650 million, including both rental and purchase options. Therefore,
this large volume of capped rental items will be subject to the
grandfathering rules effective with Round 2 of the DMEPOS CBP, thus
increasing the overall magnitude of the effect these rules have on the
program and beneficiaries.
In some cases, the grandfathering rules described above place a
financial burden on beneficiaries who are near the end of the 13 or 36-
month rental cap periods. If a beneficiary's existing supplier chooses
not to be a grandfathered supplier, the beneficiary will be required to
switch to a contract supplier in order for Medicare to continue to pay
for the furnishing of the rental equipment. In such cases, the
beneficiary will be responsible for additional co-insurance amounts.
Based on experience from the initial Round 1 competition in 2008, we
believe that most suppliers will choose to grandfather and therefore
these rules will have no impact on these situations. However, in those
limited situations in which the beneficiary does not use a
grandfathered supplier and the beneficiary is near the end of the 13 or
36-month rental cap period, the impact on the beneficiary could be
significant. As mentioned above, our current grandfathering rules will
result in a limited number of beneficiaries facing additional co-
insurance payments. To illustrate the impact some beneficiaries may
face as a result of these rules, a beneficiary who has already made 12
coinsurance payments for a capped rental item could make as many as 12
additional copayments as a result of restarting the capped rental
period when they transition from a noncontract supplier to a contract
supplier at the beginning of a DMEPOS CBP. In another example, a
beneficiary who has already made 35 coinsurance payments for oxygen and
oxygen equipment could make as many as 9 additional copayments as a
result of the rule that provides a minimum of 10 monthly payments when
they transition from a noncontract supplier to a contract supplier at
the beginning of a DMEPOS CBP. As stated above, we expect that most
noncontract suppliers will choose to become grandfathered suppliers,
therefore limiting the number of instances where these rules would
apply. However, in light of the beneficiary impact in the those extreme
cases illustrated above, and in light of the recent legislative changes
by the MIPPA and the Affordable Care Act as explained above, we are
reevaluating whether or not changes to these grandfathering rules are
necessary. As discussed above, as a result of the MIPPA, suppliers of
oxygen equipment no longer lose title to the equipment after receiving
the 36th payment and this may warrant reconsideration of the minimum
number of payments they should receive as contract suppliers when a
beneficiary transitions to them from a noncontract supplier at the
beginning of a DMEPOS CBP. In addition, we believe it is important to
reevaluate the policy that restarts the 13-month capped rental period
in situations where a beneficiary transitions from a noncontract
supplier to a contract supplier at the beginning of a DMEPOS CBP.
We received nine public comments on the grandfathering rules
resulting in additional payments to contract suppliers under the DMEPOS
CBP. In the proposed rule we solicited public comments on whether or
not the current rules should be changed to reduce the number of
payments the contract supplier would receive in these situations above
the 13 and 36-month limits set forth under the standard payment rules
in section 1834(a) of the Act. We requested comments only and did not
propose any regulation changes. Therefore, the comments received will
be taken into consideration in future proposed rulemaking.
e. Appeals Process
The April 10, 2007 DMEPOS CBP final rule finalized Sec.
414.422(g)(1), which states that ``any deviation from contract
requirements, including a failure to comply with governmental agency or
licensing organization requirements, constitutes a breach of
contract.'' In the event we determine that a contract supplier's
actions constitute a breach of contract, Sec. 414.422(g)(2) authorizes
us to take one or more of the following actions:
Require the contract supplier to submit a corrective
action plan.
Suspend the contract supplier's contract.
Terminate the contract.
Preclude the contract supplier from participating in the
DMEPOS CBP.
Revoke the supplier number of the contract supplier, or
Avail itself of other remedies allowed by the statute.
We proposed to add a new Sec. 414.423 to establish an appeals
process for contracts terminated under section 1847(a) and (b) of the
Act. Proposed Sec. 414.423 would set forth policies and procedures
relating to our determinations of a breach of contract and the appeals
process for contract suppliers that are considered to be in breach of
contract. In addition, we proposed to add new definitions to Sec.
414.402 that are used in the proposed Sec. 414.423.
Given the impact that termination has on a contract supplier, we
believe it is appropriate for contract suppliers whose contract(s) may
be terminated due to a breach of contract to have access to an appeals
process that will reconsider that termination. In establishing this
process we reviewed other appeals processes, such as the appeals
process under Part D located at Sec. 423.641 through Sec. 423.668,
Subpart N--Medicare

[[Page 73576]]

Contract Determinations and Appeals, to consider essential steps to
ensure suppliers have access to an appropriate review of certain CMS
decisions. We proposed a simplified process that would not result in
disruption to the program by having suppliers going in and out of the
program. For this reason, we proposed a process for review and
reconsideration before the contract is actually terminated. This
proposal would avoid the necessity to reinstate retroactively suppliers
because the contracts would generally not be terminated before the full
review process has occurred. This would protect the supplier because we
generally would not terminate a supplier until a final decision is
made. Another feature of this process that may be beneficial to some
suppliers is allowing them to submit a corrective action plan (CAP)
depending upon the nature of the breach. We believe our proposal would
allow most suppliers to correct identified deficiencies.
(1) Purpose and Definitions: (Sec. 414.402)
We are proposed to amend Sec. 414.402 to define the following
terms:
Affected party means a contract supplier that has been
notified that their DMEPOS CBP contract will be terminated for a breach
of contract.
Breach of contract means any deviation from contract
requirements, including a failure to comply with a governmental agency
or licensing organization requirements.
Corrective Action Plan (CAP) means a contract supplier's
written document with supporting information that describes the actions
the contract supplier would take within a specified timeframe to remedy
the breach of contract.
Hearing Officer (HO) means an individual, who was not
involved with the CBIC recommendation to terminate a DMEPOS Competitive
Bidding Program contract, who is designated by CMS to review and make
an unbiased and independent recommendation when there is an appeal of
CMS's initial determination to terminate a DMEPOS Competitive Bidding
Program contract.
Parties to the hearing means the DMEPOS contract supplier
and CMS.
(2) Applicability
The appeals process proposed in this regulation would allow
contract suppliers the opportunity for a review of the following:
A CMS determination under Sec. 414.422(g)(1) that the
contract supplier breached its contract entered into as part of the
DMEPOS CBP; and
Certain agency actions taken under Sec. 414.422(g)(2).
The proposed appeals process would not apply to any other actions
made by CMS, nor would the existence of other appeals processes
preclude us from terminating a DMEPOS CBP contract. In other words, the
proposed appeals process would be in addition to--and would not
replace--existing CMS regulations regarding other appeals mechanisms.
For example, a contract may be terminated because a supplier's National
Supplier Clearinghouse (NSC) number has been revoked or inactivated. In
this case, the supplier would not appeal the decision to inactivate or
revoke its number through this appeals process. Instead, the supplier
would continue to appeal the inactivation or revocation of its supplier
number through the NSC's appeals process. We would postpone the
contract termination decision until the supplier completes the NSC
appeals process unless there are multiple findings of breach of
contract.
Under our proposal, when we issue a termination decision, it would
be final and binding unless a postponement of the termination decision
is allowed by proposed Sec. 414.423.
(3) Contract Termination
We proposed that this appeals process applies in situations where
the supplier has received a notice that we have determined that they
are in breach of contract and that their contract is therefore subject
to termination. A contract may be terminated for any violation of the
terms of the contract. Examples of violations include, but are not
limited to, situations where the contract supplier--
Has committed or participated in false, fraudulent, or
abusive activities affecting the Medicare program, including the
submission of false or fraudulent data or claims;
Experiences financial difficulties so that they are unable
to effectively provide the necessary services to a Medicare
beneficiary; or
Fails to meet the non-discrimination policy and provides
different items to beneficiaries located in a competitive bidding area
(CBA) than it provides to its non-Medicare beneficiaries at Sec.
414.422(c).
(4) Notice of Termination
We proposed that the CBIC would work with suppliers to informally
resolve performance deficiencies under its DMEPOS CBP contract prior to
sending a recommendation to CMS that the supplier's contract be
terminated. If the CBIC cannot informally resolve the supplier's
deficiencies and recommends that we terminate the supplier's contract,
we will review the CBIC's recommendation to terminate the supplier's
contract. If we find that a breach occurred, we would begin the
contract termination process by sending out a notice of termination to
the supplier.
We also proposed requirements for the notice of termination so that
suppliers are informed of the basis for CMS's action as well as their
options to respond to this action. The notice would explain all actions
we plan to take in response to the supplier's breach, such as the
ability to submit a CAP or our determination to preclude a supplier
from participating in future rounds of competitive bidding if found in
breach of contract. If the supplier decides to appeal any of these
decisions the supplier would submit an appeal in response to the notice
to terminate. If we consider a supplier to be in breach of its
contract, either in part or in whole, we would notify the contract
supplier of the termination by certified mail. The notice would
indicate that the contract supplier has been found to be in breach of
contract and that the supplier's contract will be terminated within 45
days of the date of the notification of termination. The notice would
be sent by the CBIC using certified mail on the same date that the
notification is signed. The notification will be mailed on the date
that it is signed. This is the same date as indicated on the
notification.
Our proposal required the notice to include, at a minimum, the
following information:
The reasons for the termination in sufficient detail to
allow the contract supplier to understand the nature of its breach of
contract;
Depending on the nature of the breach, whether the
supplier may be allowed to submit a CAP in lieu of requesting a hearing
by the HO;
The right to request a hearing by the HO;
The address to which the written request for a hearing
must be mailed;
The address to which the CAP must be mailed; and
The effective date of the termination of the contract, if
a CAP is not submitted or if a request for a hearing has not been filed
timely.
We believe that this information will be sufficient to provide the
supplier with the basis for CMS's action, as well as their options in
responding to our decision.
In addition, our proposal required the notice to indicate any
additional penalties that may result from the termination, such as, not
being eligible

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to bid in future rounds of competitive bidding. An appeal of the
termination would include the appeal of any other results from the
termination that are permissible under Sec. 414.423, such as
preclusion from participation in future rounds of the DMEPOS CBP. We
believe this information may help the supplier to decide whether to
appeal the notice of termination.
(5) Corrective Action Plan
We proposed a process by which a contract supplier may be able to
submit a CAP to address the breach of contract. Depending on the nature
of the breach of contract, we proposed that the notice to the supplier
would indicate whether a contract supplier would be allowed to provide
the CBIC with a written CAP instead of submitting a request for a
hearing by a HO. For example, under this proposal we would not allow a
CAP if the supplier has been excluded from any federal program,
debarred by any federal agency, or convicted of a healthcare-related
crime. We may also not allow a CAP that would result in negative
consequences to the beneficiaries or the program caused by delaying the
termination of the contract.
We proposed the following timelines for situations where the
contract supplier is allowed to provide a written CAP:
If the supplier decides to submit a CAP, the CAP must be
received by the CBIC within 30 days from the date on the notice of
termination.
If the supplier decides not to submit a CAP, the supplier
retains the right to request a review by a HO within 30 days from the
date of the notice of termination. While the CAP is being evaluated,
the termination action would be postponed. We believe that 30 days is a
sufficient amount of time for suppliers to prepare and submit a CAP and
this would also ensure that there are no unnecessary delays in the
appeals process.
We proposed to require the CAP to demonstrate that the contract
supplier has a plan to remedy all of the deficiencies that were
identified in its notice of termination and must specify the timeframes
for correcting these deficiencies. The CBIC would review the CAP to
ensure that the contract supplier would be taking the appropriate
measures in a timely manner to remedy the breach of contract. What
constitutes a timely manner is dependent on the type of deficiency that
is being corrected. Once the nature of the deficiency is identified the
CBIC and CMS would make a case-by-case determination concerning what
constitutes a timely manner for correcting the deficiency. However, we
expect most deficiencies to be corrected within 90 days or less.
Further guidance of what constitutes a timely manner would be
communicated to the contract supplier by the CBIC as part of the review
process.
As part of the review process, the CBIC would provide guidance, in
accordance with CMS instructions, regarding the type of documentation
that the CAP and the follow up report must provide to substantiate that
the deficiencies have been corrected. To make a determination if a CAP
would be considered acceptable, we would discuss any deficiencies
related to the CAP with the supplier, and as a result of these
discussions, the CBIC may allow a supplier to make revisions to its CAP
during the review process. Suppliers will only revise their CAP one-
time during the review process. The timeframe for the review process
would vary upon the circumstances for each case. If the supplier does
not submit an acceptable CAP during the review process, the supplier
would receive a new notice that their CAP is not acceptable or has not
been implemented consistent with the supplier's original submission and
its contract would be terminated within 45 days. Every supplier that
submits a CAP will have a one-time opportunity to revise their CAP
based upon deficiencies identified by the CBIC. Failure to develop and
implement an approved CAP would result in a new notice to the supplier
of the termination of the DMEPOS CBP contract and provide notice that
the supplier may request a hearing on this termination. We proposed
that once an acceptable CAP has been completed the contract supplier
must provide a follow-up report within 5 days of the agreed upon date
for the completion of the CAP to verify that all of the deficiencies
identified in the CAP have been corrected consistent with the
timeframes specified in the CAP, as approved by the CMS. We believe
that 5 days is a sufficient time for a supplier to submit a report to
the CBIC outlining all steps that have been completed to correct the
identified deficiencies.
(6) Right To Request a Hearing by the CBIC Hearing Officer (HO)
We proposed that a contract supplier that has received a notice
that we consider the supplier in breach of contract has the right to
request a hearing before a HO who was not involved with the original
breach of contract determination. We consider this process to be a
reconsideration of the original decision, and, consistent with other
Medicare appeals provisions, we believe it is important that an
individual not involved in making the initial recommendation conduct
the reconsideration of the initial decision. As mentioned previously,
the HO would be an individual who is designated by CMS to review and to
make an unbiased and independent recommendation of whether to terminate
the supplier's DMEPOS CBP contract. The notice to the contract supplier
would also identify the location to which a request for hearing must be
sent.
We proposed that a contract supplier may appeal the notice of
termination by submitting a written request to the CBIC for a hearing
by a HO. The written request should include any evidence to support its
appeal. The HO is not required to allow evidence submitted in addition
to evidence beyond the evidence submitted along with the written
request. The hearing request must be received by the CBIC within 30
days from the date of the termination letter. A request for a hearing
must be sent to the address identified on the notice. Failure to
request a hearing within the allotted 30 days would result in a
termination of the supplier's contract, as of the effective date of
termination identified in the notice to the supplier. There would be no
extension to this 30-day timeframe. We believe suppliers have
sufficient time to decide whether or not to request a hearing and the
deficiencies identified in the notice may pose a risk to the DMEPOS
CBP. The date the request is received by the CBIC determines if the
hearing request was timely filed.
We would require that the request for hearing be filed by a
supplier's authorized official, because an authorized official of the
company signed the contract and this ensures the validity of the
request. The authorized official must be an official of the company who
is identified on the supplier's CMS 855-S form as an authorized
official of the supplier. A supplier may appoint someone other than the
authorized official to be a representative for them at the hearing.
However, the representative may not be an individual who has been
disqualified or suspended from acting as a representative by the
Secretary or otherwise prohibited by law. The request for a hearing
must be filed with the CBIC at the address identified on the notice of
termination.
(7) Scheduling of the Hearing
We proposed that within 30 days from the receipt of a supplier's
timely hearing request the HO would contact the parties to schedule a
hearing. The request for a hearing would result in the

[[Page 73578]]

postponement of the date of the contract termination. The only
exception to this rule is when a supplier has been excluded from any
federal program, debarred by any federal agency, or convicted of a
healthcare related crime; in that situation the supplier's contract
would be terminated immediately. In the hearing request the contract
supplier may ask for the hearing to be held in person or by telephone.
The HO would send a notice to the parties to the hearing indicating the
time and place for the hearing at least 30 days before the date of the
hearing. The HO may, on his or her own motion, or at the request of a
party, change the time and place for the hearing, but must give the
parties to the hearing a 30 day notice of the change.
We proposed to require that the HO's notice scheduling the hearing
must provide, at a minimum, the following information:
Date, time, and location of the scheduled hearing;
Description of the hearing procedure;
Issues to be resolved;
Requirement that the contract supplier bears the burden of
proof to demonstrate that it is not in breach of contract; and
Provide an opportunity for the supplier to submit
additional evidence if requested by the HO.
We believe this information provides the supplier with sufficient
information regarding the hearing date, time, and matters that would be
addressed at that time. We solicited comment on the content of this
notice and the procedures for scheduling a hearing.
(8) Burden of Proof
We proposed that the contract supplier would present to the HO the
basis for its disagreement with the termination notice and would have
the burden of proof to demonstrate to the HO with supporting evidence
that it is not in breach of its contract and that the termination
action is not appropriate. The supplier's supporting evidence must be
submitted with its request for a hearing. The supporting evidence and
the request for a hearing must be submitted together and received by
the HO within 30 days from the date identified on the notice of
termination. In the absence of good cause, the HO may not allow
evidence to be submitted in addition to the evidence submitted along
with the written request. We also have the opportunity to submit
evidence to the HO within 30 days of receiving the notice announcing
the hearing. The HO will share all evidence submitted, both from the
supplier and CMS, in preparation for the hearing with all affected
parties within 15 days prior to the scheduled date of the hearing.
(9) Role of the Hearing Officer (HO)
Our proposal requires that the HO conduct a thorough and
independent review. Such a review requires the consideration of all
information and documentation relevant to the hearing and submitted
consistent with this proposal. Consistent with this goal, we propose
that the HO is responsible for all of the following:
Sharing all evidence submitted, from both the supplier and
CMS, in preparation for the hearing with all affected parties within 15
days prior to the scheduled date of the hearing.
Conducting the hearing and deciding the order in which the
evidence and the arguments of the parties would be presented.
Determining the rules on admissibility of the evidence.
Examining the witnesses, in addition to the examinations
conducted by CMS and the contract supplier.
Determining the rules for requesting documents and other
evidence from other parties.
Ensuring a complete recording of the hearing is available
and provided to all parties to the hearing and the CBIC.
Preparing a file of the record of the hearing which
includes all evidence submitted as well as any relevant documents
identified by the HO and considered as part of the hearing.
Complying with all applicable provisions of 42 USC Title
18 and related provisions of the Act, the applicable regulations issued
by the Secretary, and manual instructions issued by CMS.
The HO would make a recommendation based on the information
presented and submitted. The HO would issue a written recommendation to
CMS within 30 days of the close of the hearing, unless the HO requests
an extension from CMS and demonstrates to CMS that he or she needs an
extension due to complexity of the matter or heavy work load. The HO's
recommendation would include the rationale for his or her
recommendation regarding the termination of the supplier's contract and
the HO would submit this recommendation to CMS for its determination.
(10) CMS's Final Determination
We proposed that the HO's recommendation is submitted to CMS, and
the agency would make the final determination regarding whether the
supplier's contract would be terminated. Our determination would be
based upon on the record of the hearing, evidence, and documents
considered by the HO as part of the HO recommendation. Information
submitted after the hearing would not be considered. Our decision would
be made within 30 days of the receipt of the HO's recommendation. If
our decision is to terminate the contract, the supplier would be
notified of the effective date of termination by certified mail. Our
decision regarding the termination of the contract is final and
binding.
(11) Effective Date of the Contract Termination
We proposed that suppliers who submit a CAP or request a hearing
would have the termination date identified on the notice delayed. The
only exception to this rule is when a supplier has been excluded from
any federal program, debarred by any federal agency, or convicted of a
healthcare related crime; in that situation the contract would be
terminated immediately. For terminations that do not meet these
exceptions, the effective date of a final termination would be
determined as follows:
The termination of a supplier's DMEPOS CBP contract is
effective on the date specified in the initial notice of termination,
which will be 45 days from the date of the notice, unless the supplier
requests a hearing with the HO or the supplier submits a CAP.
After reviewing the HO recommendation, if we terminate a
supplier's contract the effective date of the termination would be the
date specified in the post-hearing notice sent to the supplier
indicating CMS's final determination to terminate the contract.
(12) Effect of Contract Termination
Under our proposal, once a supplier's contract is terminated for
breach of contract under the DMEPOS CBP, the contract supplier is no
longer a DMEPOS CBP contract supplier for any DMEPOS CBP product
category for which it was awarded a contract. This termination applies
to all areas and product categories because there is only one contract
that encompasses all CBAs and product categories for which the supplier
was awarded a contract. We would not make payment and would reject
claims for DMEPOS competitive bid items and services furnished by a
supplier whose contract has been terminated after the effective date of
the termination for the remainder of the contract period.
We recognize that a supplier's termination would impact
beneficiaries within the CBA. Therefore, we proposed that terminated
suppliers must notify all

[[Page 73579]]

beneficiaries within the CBA who are receiving rented competitively bid
items of the termination of their contract status so that the
beneficiaries can make arrangements to receive equipment and suppliers
through other contract suppliers. After we have made our final
determination and sent notification to the supplier, the supplier must
notify beneficiaries within 5 days of receipt of the contract
supplier's final notice of termination. This notice must inform
beneficiaries that they will have to select a new contract supplier to
furnish their DMEPOS items in order for Medicare to pay for these
items. For beneficiary protection, we also proposed that contract
suppliers who fail to give proper notification to beneficiaries may be
prevented from participating in future rounds of DMEPOS CBP. We also
proposed that rental items may not be picked up from the beneficiary's
home until after the last day of the rental month for which the
supplier has already received payment. We proposed both of these
policies to protect the beneficiary and to ensure that suppliers do not
pick up equipment from a beneficiary for a time period for which they
have already been paid to provide the service.
Comment: A commenter supported CMS's appeals process for contract
suppliers whose competitive bidding contract was terminated due to
breach of contract. The commenter stated that ``including an appeals
process under DMEPOS CBP protects contract providers from arbitrary or
mistaken decisions by CMS or its contractors and preserves the
continuity of care for the beneficiaries they are serving.''
Response: We agree that the appeals process does provide protection
for contract suppliers and preserves continuity of care for the
beneficiaries they serve.
Comment: A commenter who was concerned with the timeline required
for communication between terminated suppliers and beneficiaries. The
commenter suggested that CMS lengthen the period of time to afford
providers ample opportunity to develop, mail and disseminate this
critical information.
Response: We agree and have increased the period of time from 5 to
15 days of receipt of contract suppliers' final notice of termination.
We believe that 15 days would be a good balance to ensure the
beneficiaries receive information timely and suppliers will have enough
time to notify the beneficiaries. Therefore, a contract supplier, whose
contract was terminated, has 15 days from the receipt of the final
notice of termination to notify each beneficiary currently renting a
competitive bid item. This change will not impact any other of the
timeframes or provisions described in this regulation. We also proposed
that rental items may not be picked up from the beneficiary's home
until after the last day of the rental month for which the supplier has
already received payment. We proposed both of these policies to protect
the beneficiary and to ensure that suppliers do not pick up equipment
from a beneficiary for a time period for which they have already been
paid to provide the service.
Comment: A commenter opposed the proposed appeals process because
they believed, ``the proposed process is biased and burdened with
inherent CMS conflict of interests that disadvantage suppliers.'' This
commenter recommended CMS adopt the appeals process used for DMEPOS
claims which includes a hearing by an administrative law judge (ALJ)
and the Departmental Appeals Board (DAB) or the process used under
government contracting and FAR requirements.'' In addition, the
commenter questioned whether the termination occurs at the supplier
number level or the product category level. The commenter has
questioned if a supplier has contracts for more than one of the product
categories, and is determined to be in breach of contract in one
category, does the termination apply to just that one product or to
all? The commenter also stated that the process should include an
appeal to a federal court.
Response: We disagree with this comment and feel that our process
does provide for an independent and unbiased review by the CBIC hearing
officer who was not involved in the original recommendation. It is not
in the best interest of the program to terminate contracts if the
supplier has not breached their contract; therefore, this action will
not be taken lightly. This process allows CMS contractor's hearing
officers to conduct an independent review of the issues. Only after
considering the HO's recommendation will CMS make a final determination
regarding these issues. We believe this process provides suppliers with
ample opportunities to have their positions reviewed and considered.
Therefore, we are not including review by the ALJ or the DAB. Our
process provides for different levels of review of breach of contract,
one at the recommendation level, one at the CBIC hearing officer level,
and one at the CMS Administrator level. We believe this process does
provide for an extensive review by allowing for reconsideration before
a contract is actually terminated, which may include the use of a
corrective action plan. As stated in the final regulation, these
contracts are not procurement contracts are not subject to the FAR
requirements; therefore, the FAR is not applicable. The rule does not
address federal court review that might otherwise exist. As we stated
in the proposed rule Sec. 414.423(k)(4) CMS's decisions regarding
contract terminations are final and binding. In response to the
question regarding the scope of the termination, if a supplier is
terminated due to a breach of contract all locations associated with
that contract will be terminated, regardless of the competitive bid
product category they provide. In addition, we have added clarifying
language to Sec. 414.423(l)(1).
After consideration of the public comments we received, we are
revising the time for the supplier to notify the beneficiary once the
supplier has been notified of their contract termination. Therefore, we
have revised Sec. 414.423(l)(2)(i) of the regulation to state that the
supplier whose contract was terminated must notify the beneficiary
within 15 days of receipt of the final notice of termination. In
addition, we are clarifying the regulation language by adding language
to Sec. 414.423(l)(1) to state that ``all locations of the contract
supplier'' may no longer furnish competitive bid items to beneficiaries
within a CBA and be reimbursed by Medicare for these items after the
effective date of the termination.
2. Changes to Payment Rules for Oxygen and Oxygen Equipment
a. Background
The general Medicare payment rules for DME are set forth in section
1834(a) of the Act and 42 CFR part 414, subpart D of our regulations.
Section 1834(a)(1) of the Act and Sec. 414.210(a) of our regulations
establish the Medicare payment for a DME item as equal to 80 percent of
either the lower of the actual charge or the fee schedule amount for
the item. The beneficiary coinsurance is equal to 20 percent of either
the lower of the actual charge or the fee schedule amount for the item
once the deductible is met.
The specific payment rules for oxygen and oxygen equipment under
the existing fee schedules are set forth in section 1834(a)(5) of the
Act and Sec. 414.226 of our regulations. Suppliers are paid a monthly
payment amount for furnishing medically necessary oxygen contents (for
both stationary and portable) and stationary oxygen equipment described
under the class

[[Page 73580]]

described in Sec. 414.226(c)(1)(i). Equipment in the stationary class
includes stationary oxygen concentrators, which concentrate oxygen from
room air; stationary liquid oxygen systems, which use oxygen stored as
a very cold liquid in cylinders and tanks; and gaseous oxygen systems,
which administer compressed oxygen directly from cylinders.
A monthly add-on payment is also made to suppliers furnishing
medically necessary portable oxygen equipment falling under one of two
classes described in Sec. 414.226(c)(1)(ii) and (iii). Equipment in
these classes includes traditional portable equipment, that is,
portable liquid oxygen systems and portable gaseous oxygen systems, and
oxygen generating portable equipment (OGPE), that is, portable oxygen
concentrators and oxygen transfilling equipment used to fill portable
tanks or cylinders in the home. Both the liquid and gaseous oxygen
systems (for stationary and traditional portable systems) require on-
going delivery of oxygen contents.
Section 1834(a)(5)(F) of the Act, as amended by section 144(b) of
MIPPA, limits the monthly rental payments to suppliers for oxygen
equipment to 36 months of continuous use, although monthly payments for
furnishing gaseous or liquid oxygen contents continue after the 36-
month equipment rental cap is reached for gaseous or liquid systems. In
the CY 2009 PFS final rule with comment period (73 FR 69875 through
69876), we discussed section 144(b) of MIPPA and included a detailed
discussion of how section 5101(b) of the DRA previously required
suppliers to transfer title to oxygen equipment to the beneficiary at
the end of the 36-month rental period. Section 144(b) of the MIPPA
repealed this requirement to transfer title to the oxygen equipment to
the beneficiary and allows suppliers to retain title to the oxygen
equipment after 36 monthly rental payments are made for the equipment.
Section 414.210 establishes the requirements for the replacement of
DME, including oxygen equipment. Section 414.210(f)(1) states that if
an item of DME, which includes oxygen equipment, has been in continuous
use by the patient for the equipment's reasonable useful lifetime or if
the original equipment is lost, stolen, or irreparably damaged, the
patient may elect to obtain a new piece of equipment. In such
circumstances, Sec. 414.420(f)(2) authorizes payment for the new
oxygen equipment in accordance with Sec. 414.226(a). Section
414.210(f)(1) states that the reasonable useful lifetime for DME, which
includes oxygen equipment, is determined through program instructions.
In the absence of CMS program instructions, the carrier may determine
the reasonable useful lifetime for equipment, but in no case can it be
less than 5 years. Computation is based on when the equipment is
delivered to the beneficiary, not the age of the equipment. If the
beneficiary elects to obtain new oxygen equipment after the reasonable
useful lifetime, the payment is made for a new 36-month rental period
in accordance with Sec. 414.226(a).
We proposed to revise the payment rule for oxygen and oxygen
equipment at Sec. 414.226(g)(1) to address situations where
beneficiaries relocate outside the service area of a supplier during
the 36-month rental payment cap period for the oxygen equipment.
Beneficiaries are experiencing great difficulties in finding
suppliers willing to furnish oxygen equipment in situations where only
a few months are left in the 36-month rental payment period at the time
they relocate. For example, if a beneficiary is in the 30th rental
month, the new supplier would be entitled to only 6 months of rental
payments and then would have to continue to furnish the oxygen and
oxygen equipment during any period of medical need for the remainder of
the reasonable useful lifetime of the equipment. This creates a
financial disincentive for oxygen suppliers to furnish oxygen and
oxygen equipment to beneficiaries in these situations.
The proposed changes to the payment rules for oxygen and oxygen
equipment would apply to oxygen and oxygen equipment furnished under
Part B and would also apply to oxygen and oxygen equipment furnished
under programs implemented in accordance with section 1847(a) of the
Act.
b. Furnishing Oxygen Equipment After the 36-Month Rental Period (Cap)
In the CY 2010 PFS final rule with comment period (74 FR 61887
through 61890), we finalized Sec. 414.226(g)(1) which, in accordance
with section 1834(a)(5)(F)(ii)(I) of the Act, requires the supplier
that furnishes oxygen equipment during the 36-month rental period to
continue furnishing the oxygen equipment after the 36-month rental
period. The supplier is required to continue to furnish the equipment
during any period of medical need for the remainder of the reasonable
useful lifetime of the equipment. As we noted when finalizing this
rule, section 1834(a)(5)(F)(ii)(I) does not provide any exceptions to
this requirement. If the beneficiary relocates outside the supplier's
normal service area at some time after the 36-month rental period but
before the end of the reasonable useful lifetime of the equipment, the
supplier must make arrangements for the beneficiary to continue
receiving the equipment at his or her new place of residence. This
responsibility for furnishing the equipment does not transfer to
another supplier.
We revised Sec. 414.226(f) to conform our regulations to this new
MIPPA requirement. We deleted the transfer of ownership requirement and
added the new requirement that the supplier must continue furnishing
the oxygen equipment after the 36-month rental period during any period
of medical need for the remainder of the reasonable useful lifetime of
the equipment. It is important to note that Sec. 414.226(g)(1)(ii)
does not apply this same requirement in situations where the
beneficiary relocates outside of the supplier's normal service area
during the 36-month rental period.
c. Furnishing Oxygen Equipment During the 36-Month Rental Period (CAP)
Section Sec. 414.226(g)(1) contains the requirement that the
supplier that furnishes oxygen and oxygen equipment for the first month
of the 36th month of the rental cap period must continue to furnish the
equipment for the entire 36-month period of continuous use, with
limited exceptions. One exception at Sec. 414.226(g)(1)(ii) applies
when a beneficiary permanently relocates his or her residence during
the 36-month rental period outside of the current supplier's normal
service area. This exception was proposed in the ``Home Health
Prospective Payment System Rate Update for Calendar Year 2007 and
Deficit Reduction Act of 2005 Changes to Medicare Payment for Oxygen
Equipment and Capped Rental Durable Medical Equipment; Proposed Rule''
published in the August 3, 2006 Federal Register (71 FR 44094) and was
intended to reduce the burden on the supplier in these situations. This
approach is also consistent with the regulations addressing capped
rental items described in Sec. 414.229. We addressed this issue in the
context of other capped rental DME, not including oxygen and oxygen
equipment, in the July 10, 1995 Federal Register (60 FR 35494) in
response to comments. The discussion states that since the
implementation of the capped rental payment methodology on January 1,
1989, we received no reports of beneficiaries having difficulty
obtaining access to capped rental DME after relocating outside the
supplier's service area. Since enactment of the capped

[[Page 73581]]

rental DME payment category in section 4062 of the Omnibus Budget
Reconciliation Act of 1987 (OBRA '87) (Pub. L. 100-203),
representatives of the DME industry indicated that suppliers would be
able to accommodate beneficiaries in these situations, and this has
proven to be true for capped rental items. In fact, we have found this
to be the case to this day.
For this reason, we believed that beneficiaries would not encounter
problems obtaining access to oxygen and oxygen equipment in similar
situations, that is, following the 36-month cap imposed by section
144(b) of MIPPA. However, since the changes to the payment rules for
oxygen and oxygen equipment mandated by the DRA became effective in
2006 and the 36-month rental cap imposed by MIPPA was reached for the
first time in January 2009, we have received many reports of
beneficiaries relocating prior to the end of the 36-month rental
payment cap period and having difficulty finding an oxygen supplier in
the new location. We have learned that many suppliers are unwilling to
provide services in situations where there are a few number of months
left in the 36-month rental payment period.
We do not believe that beneficiaries have encountered similar
issues following the 36-month rental cap, which most likely is the
result of different statutory requirements for these two periods (that
is, during and after the 36-month rental period). Section
1834(a)(5)(F)(ii) of the Act requires the supplier that furnishes the
oxygen equipment during the 36-month rental payment period to continue
furnishing the equipment after the 36-month rental payment period.
Consistent with this requirement, we established regulations at Sec.
414.226(f)(1) that require the supplier to furnish the equipment or
make arrangements for furnishing the equipment in situations where the
beneficiary relocates outside the supplier's normal service area. Since
no such requirement currently applies in situations where the
beneficiary relocates prior to the end of the 36-month rental payment
period, and in fact current regulations at Sec. 414.226(g)(1)(ii)
absolve the supplier of the obligation to continue furnishing oxygen
equipment in these situations, beneficiaries are experiencing
difficulties finding suppliers of oxygen equipment in their new
locations that are willing to accommodate them. As noted above, we have
not seen this problem in the capped rental DME context. The requirement
at Sec. 414.226(g)(1) to furnish oxygen equipment for the entire 36-
month rental cap period was established in the course of implementing
section 5101(b) of the DRA in order to safeguard the beneficiary from
situations where suppliers might discontinue service and pick up oxygen
equipment prior to the end of the 36-month rental cap in order to avoid
losing title to the equipment. As mentioned earlier, the transfer of
title of oxygen and oxygen equipment after the 36th paid rental month
was repealed. The exception to this rule at Sec. 414.226(g)(1)(ii) was
established based on our experience that suppliers of capped rental DME
have accommodated beneficiaries in these situations, which,
unfortunately, has not been our experience in the context of oxygen
equipment.
In order to address this vulnerability facing beneficiaries as a
result of regulations currently in effect, we proposed to revise the
exception at Sec. 414.226(g)(1)(ii) to apply only to situations where
the beneficiary relocates before the 18th paid rental month to an area
that is outside the normal service area of the supplier that initially
furnished the equipment. We proposed to revise the regulation to
require the supplier that furnishes the oxygen equipment and receives
payment for month 18 or later to either furnish the equipment for the
remainder of the 36-month rental payment period or, in the case where
the beneficiary has relocated outside the service area of the supplier,
make arrangements for furnishing the oxygen equipment with another
supplier for the remainder of the 36-month rental payment period. The
supplier that is required to furnish the equipment on the basis of this
requirement must also furnish the equipment after the 36-month rental
payment period in accordance with the requirements of section
1834(a)(5)(F)(ii) and Sec. 414.226(f).
The proposed revision would mean that a supplier does not have to
continue to furnish the oxygen equipment if the beneficiary relocates
outside the normal service area before the 18th paid rental month
during a period of continuous use. Under the current rule, a supplier
does not have to furnish the oxygen equipment if the beneficiary
relocated before the 36th paid rental month during a period of
continuous use. The current rule was established based on the long
term, demonstrated ability of suppliers of capped rental DME to
accommodate beneficiaries in situations where they relocate near the
end of a capped rental payment period.
Comment: We received a total of 8 comments on our proposal to
require oxygen suppliers to continue to furnish medically necessary
oxygen equipment for the remainder of the reasonable useful lifetime of
the equipment to beneficiaries who relocate on or after the 18th rental
month. All the comments were opposed to the proposed requirement. Some
of the commenters questioned whether the statute gives us the authority
to establish this requirement before the 36th month rental payment.
Others objected to the financial and coordination-of-benefits burden
they believe that this requirement would cause for suppliers. Other
objections were that the proposed requirement did not consider the
effect on beneficiaries who relocate on a temporary basis during winter
months (``snow birds''), or the access problems that it might cause in
rural areas. Recommended alternatives included starting the rental
period over at the time of relocation or keeping the current policy
that only requires suppliers to continue furnishing oxygen equipment to
beneficiaries who relocate outside of their service area if 36 rental
amounts have already been paid.
Response: In addition to considering the comments on the proposed
rule, we analyzed complaint data from beneficiaries from January 2009
to September 2010 which is data collected by the regional offices. In
the limited situations where beneficiaries receiving oxygen equipment
for less than 36 months relocated during this time and initially had
trouble locating an oxygen supplier in their new location, CMS
caseworkers in the CMS Regional Offices and the Office of the Medicare
Beneficiary Ombudsman were able to locate suppliers to serve each and
every beneficiary, usually within a matter of days. This means that,
although supply arrangements and/or access to oxygen and oxygen
equipment in these situations may have been briefly delayed, suppliers
stepped forward to provide access to oxygen and oxygen equipment in
these situations. Based on this information and certain comments
received, we have decided not to finalize this proposed revision at
this time. If in the future, beneficiaries' access to oxygen equipment
becomes a problem following the relocation of beneficiaries, we may
consider this proposal or similar proposals.

H. Provider and Supplier Enrollment Issue: Air Ambulance Provision

The National Transportation Safety Board (NTSB) is an independent
Federal agency charged by the Congress with investigating
transportation accidents, determining their probable cause, and making
recommendations to prevent

[[Page 73582]]

similar accidents from occurring. Based on information derived from
testimony provided at the NTSB public hearing and investigations into
recent helicopter air ambulance accidents, the NTSB made several
specific recommendations to the Secretary on September 24, 2009.
Specifically, the NTSB recommended that the Secretary develop
minimum safety accreditation standards for helicopter air ambulance
operators that augment the operating standards of 14 CFR 135 by
including for all flights with medical personnel on board: (a)
Scenario-based pilot training; (b) implementation of preflight risk
evaluation programs; and (c) the installation of FAA-approved terrain
awareness warning systems, night vision imaging systems, flight data
recording systems for monitoring and autopilots if a second pilot is
not used.
In response to the NTSB concerns, the Secretary noted that the
recommendations to CMS were similar to those being made to the Federal
Aviation Administration (FAA). While we have expertise to regulate
health and safety requirements that suppliers and providers of
healthcare should meet, we do not have the expertise to determine
aircraft safety requirements. The Secretary stated that, ``we believe
the FAA should determine the minimum level of safety that HEMS
operators should meet and CMS should adopt regulations that require any
HEMS operator that enrolls in Medicare to meet those requirements.''
The Secretary also added that, ``while we do not believe CMS should
augment FAA regulations, we do believe that CMS' regulations should
ensure that only those HEMS operators that maintain the minimum level
of requirements established by the FAA through its regulations are
enrolled or maintain enrollment in the Medicare program.'' The FAA
proposed Federal regulations to address the NTSB's concerns in their
October 12, 2010 proposed rule (75 FR 62640) entitled ``Air Ambulance
and Commercial Helicopter Operations, Part 91 Helicopter Operations,
and Part 135 Aircraft Operations; Safety Initiatives and Miscellaneous
Amendments.''
In the April 21, 2006 Federal Register, we published the
``Requirements for Providers and Suppliers to Establish and Maintain
Medicare Enrollment'' final rule. This final rule implemented section
1866(j)(1)(A) of the Act. In this final rule, we required that all
providers and suppliers (other than physicians or practitioners who
have elected to ``opt-out'' of the Medicare program) must complete an
enrollment form and submit specific information to CMS in order to
obtain Medicare billing privileges. Section 424.515 required that
ambulance service providers continue to resubmit enrollment information
in accordance with Sec. 410.41(c)(2), which states, ``Upon a carrier's
request, complete and return the ambulance supplier form designated by
CMS and provide the Medicare carrier with documentation of compliance
with emergency vehicle and staff licensure and certification
requirements in accordance with State and local laws.'' This final rule
also established Sec. 424.510(d)(2)(iii) which states, ``Submission of
all documentation, including all applicable Federal and State licensure
and regulatory requirements that apply to the specific provider or
supplier type related to providing health care services, required by
CMS under this or other statutory or regulatory authority, or under the
Paperwork Reduction Act of 1995, to establish the provider or
supplier's eligibility to furnish Medicare covered items or services to
beneficiaries in the Medicare program.''
While the Airline Deregulation Act (Pub. L. 95-504) preempts a
State, political subdivision of a State, or political authority of at
least two States from enacting or enforcing a law, regulation, or other
provision having the force and effect of law related to a price, route,
or service of an air carrier that may provide air transportation, air
ambulances remain subject to Federal laws and regulations. In
accordance with Sec. 424.516(a)(2), providers and suppliers must
adhere to all Federal regulations and State laws and regulations, as
required, based on the type of services or supplies the provider or
supplier type will furnish and bill Medicare.
In Sec. 424.510(d)(iii), we proposed to clarify that ambulance
suppliers and other providers and suppliers include documentation
regarding all applicable Federal and State certifications. Accordingly
we proposed to revise Sec. 424.510(d)(iii) from ``Submission of all
documentation, including all applicable Federal and State licenses and
regulatory requirements that apply to the specific provider or supplier
type that relate to providing health care service, required by CMS
under this or other statutory or regulatory authority, or under the
Paperwork Reduction Act of 1995, to establish the provider or
supplier's eligibility to furnish Medicare covered items or services to
beneficiaries in the Medicare program,'' to ``Submission of all
documentation, including all applicable Federal and State licenses,
certifications (including, but not limited to FAA certifications), and
regulatory requirements that apply to the specific provider or supplier
type that relate to providing health care service, required by CMS
under this or other statutory or regulatory authority, or under the
Paperwork Reduction Act of 1995, to establish the provider or
supplier's eligibility to furnish Medicare covered items or services to
beneficiaries in the Medicare program.'' When revoked or suspended, we
are requiring that the specific pilot certifications (for example,
instrumentation and medical), and the airworthiness certifications be
reported. We proposed to add new paragraph (e)(3) to clarify that
Medicare enrolled providers and suppliers must report a revocation or
suspension of a Federal or State license or certification, including
but not limited to FAA certifications. The certifications, when
revoked, that need to be reported are the specific pilot
certifications, such as instrument and medical certified; as well as
airworthiness certificates. This revision will clarify that fixed-wing
ambulance operators and helicopter air ambulance operators are
responsible for notifying the designated Medicare contractor for their
State when FAA revokes or suspends any license or certification.
Moreover, fixed-wing ambulance operators and helicopter air ambulance
operators must maintain all requirements as specified in 14 CFR parts
91, 119, and 135.
We stated our belief that requiring fixed wing ambulance and
helicopter air ambulance operators to notify their Medicare contractor
of a suspension or revocation of a license or certification will ensure
that any action taken by the FAA or other regulating authority will
have a direct link to the operator's ability to maintain their Medicare
enrollment. We also stated that such a policy will help improve
aircraft safety for operators that are enrolled in Medicare and
providing services to Medicare beneficiaries. We believe that allowing
providers and suppliers to self-report licensure or certification
revocations and suspensions within a 30 day period via the Medicare
enrollment application (such as, the Internet-based Provider Enrollment
Chain and Ownership System (PECOS) or the paper CMS-855) promotes
compliance with the Medicare reporting requirements found in Sec.
424.516. In addition, by reporting a licensure or certification
revocation or suspension within 30 days, the provider or supplier
avoids the Medicare contractor bringing an action to revoke its
Medicare billing privileges and establishing a Medicare enrollment bar,
see Sec. 424.535(c). Thus,

[[Page 73583]]

by complying with the reporting responsibilities found in Sec. 424.516
and voluntarily terminating from the Medicare program, the air
ambulance supplier can submit an initial application to enroll in the
Medicare program as soon as the licensure or certification revocation
or suspension action is resolved with the applicable licensing or
certification organization. If the supplier does not self-report a
licensure, certification revocation or a suspension action, then the
supplier's enrollment in the Medicare program will be automatically
revoked for a period of one to three years.
In Sec. 424.502, we proposed to define the term, ``voluntary
termination'' as it is currently used in the Medicare program and
throughout this regulation in the context of the provider enrollment
requirements: We proposed that the term, ``voluntary termination''
means an air ambulance supplier that submits written confirmation to
CMS of its decision to discontinue enrollment in the Medicare program.
Furthermore, we stated our belief that an air ambulance supplier
can make the decision to voluntarily terminate their business
relationship with the Medicare program at any time, including when the
provider or supplier makes the decision that they will no longer
furnish services to Medicare beneficiaries. In those situations, where
an air ambulance supplier does not meet their reporting
responsibilities and notify the Medicare program of a Federal or State
licensure or certification revocation or suspension within 30 days of
the reportable event, we believe that it is appropriate that CMS or the
Medicare contractor revoke the supplier's Medicare billing privileges
using Sec. 424.535(a)(1). We believe that this change will clarify
that CMS or our Medicare contractor may revoke Medicare billing
privileges when these types of suppliers do not report a revocation or
suspension of a Federal or State license or certification.
Comment: Several comments received agreed with CMS' enrollment
requirements and believe the FAA has the appropriate resources to
develop, monitor, and enforce aviation or aviation safety related
standards. The commenters believe that the sole authority of the FAA to
regulate matters of aviation safety assures continuity in regulations
and further believe any change to the authority would have serious
consequences for safe operations since CMS lacks the expertise and
resources to develop and enforce such standards.
Response: We agree with the commenters; and therefore, are
finalizing the proposal without modification.
Comment: Several commenters believe CMS missed an opportunity
through this proposed rule to improve system safety for Medicare
beneficiaries through an accreditation process.
Response: Currently, we do not have the statutory authority to
establish an accreditation program for fixed-wing air ambulance
operators and air ambulance operators.
Comment: Several commenters noted that the preamble language might
cause confusion as stated, ``fixed-wing air ambulance operators and
HEMS operators must maintain all requirements as specified in 14 CFR
part 135.''
Response: We are clarifying that all fixed-wing air ambulance
operators and helicopter air ambulance operators must adhere to all
applicable FAA regulations as specified in 14 CFR parts 91, 119 and 135
or risk having their Medicare enrollment revoked or suspended.

I. Technical Corrections

1. Physical Therapy, Occupational Therapy and Speech-Language Pathology
We proposed to revise Sec. 409.23(c) by making a minor technical
correction to remove an extraneous cross-reference which was initially
proposed in the CY 2008 PFS proposed rule (72 FR 38122, 72 FR 38193,
and 72 FR 38221). This cross-reference refers the reader to ``paragraph
(c)(1)(ii) of this section,'' a paragraph also proposed in the CY 2008
PFS proposed rule, but never finalized. In the CY 2008 PFS final rule
with comment period, we inadvertently neglected to remove the
associated cross-reference from the regulations text. Therefore, we
proposed to rectify that oversight by making an appropriate correction
in the regulations text, along with other minor formatting revisions by
making the following changes:
To make a minor clarification to the section heading and
introductory text of Sec. 409.23 (along with a conforming revision to
the corresponding regulations text at Sec. 409.20(a)(3)) by revising
the existing phrase ``speech therapy'' to read ``speech-language
pathology services,'' so that it more accurately reflects the currently
used terminology for this type of therapeutic treatment.
To make a minor wording change in the provision at Sec.
409.17(d) (which is incorporated by reference in Sec. 409.23(c)(2)),
in order to clarify that the former provision's reference to
``hospital'' policies and procedures can alternatively refer, depending
on the particular context, to SNF policies and procedures.
We did not receive public comment on this proposal; and therefore,
are finalizing this proposal without modification.
2. Scope of Benefits
Currently, Sec. 410.3(b)(2) states that the specific rules on
payment are set forth in subpart E of part 410. However, the specific
payment rules are actually listed in subpart I of part 410. Therefore,
we proposed correct this referencing error by making a technical
correction to Sec. 410.3(b)(2).
We did not receive public comment on this proposal; and therefore,
are finalizing this proposal without modification.

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

1. General
Section 1877 of the Act prohibits a physician from referring a
Medicare beneficiary for certain designated health services (DHS) to an
entity with which the physician (or a member of the physician's
immediate family) has a financial relationship, unless an exception
applies. Section 1877 of the Act also prohibits the DHS entity from
submitting claims to Medicare or billing the beneficiary or any other
entity for Medicare DHS that are furnished as a result of a prohibited
referral.
Section 1877(h)(6) of the Act and Sec. 411.351 of our regulations
specify that the following services are DHS:
Clinical laboratory services.
Physical therapy services.
Occupational therapy services.
Outpatient speech-language pathology services.
Radiology services.
Radiation therapy services and supplies.
Durable medical equipment and supplies.
Parenteral and enteral nutrients, equipment, and supplies.
Prosthetics, orthotics, and prosthetic devices and
supplies.
Home health services.
Outpatient prescription drugs.
Inpatient and outpatient hospital services.
2. Annual Update to the Code List
a. Background
In Sec. 411.351, we specify that the entire scope of four DHS
categories is defined in a list of CPT/HCPCS codes (the Code List),
which is updated annually to account for changes in the most recent CPT
and HCPCS

[[Page 73584]]

publications. The DHS categories defined and updated in this manner
are:
Clinical laboratory services.
Physical therapy, occupational therapy, and outpatient
speech-language pathology services.
Radiology and certain other imaging services.
Radiation therapy services and supplies.
The Code List also identifies those items and services that may
qualify for either of the following two exceptions to the physician
self-referral prohibition:
Dialysis-related drugs furnished in or by an ESRD facility
(Sec. 411.355(g)).
Preventive screening tests, immunizations, or vaccines
(Sec. 411.355(h)).
The Code List was last updated in Addendum I of the CY 2010 PFS
final rule with comment period (74 FR 62177 through 62188) and revised
in a subsequent correction notice (75 FR 26350).
b. Response to Comments
We received no public comments relating to the Code List that
became effective January 1, 2010.
c. Revisions Effective for 2011
The updated, comprehensive Code List effective January 1, 2011
appears as Addendum J in this final rule with comment period and is
available on our Web site at http://www.cms.gov/PhysicianSelfReferral/40_List_of_Codes.asp#TopOfPage. Additions and deletions to the Code
List conform the Code List to the most recent publications of CPT and
HCPCS and to changes in Medicare coverage policy and payment status.
Tables 98 and 99 identify the additions and deletions,
respectively, to the comprehensive Code List that became effective
January 1, 2010. Tables 98 and 99 also identify the additions and
deletions to the list of codes used to identify the items and services
that may qualify for the exception in Sec. 411.355(g) (regarding
dialysis-related outpatient prescription drugs furnished in or by an
ESRD facility) and in Sec. 411.355(h) (regarding preventive screening
tests, immunizations, and vaccines).
In Table 98, we specify additions that reflect new CPT and HCPCS
codes that become effective January 1, 2011, or that became effective
since our last update. We also include additions that reflect changes
in Medicare coverage policy or payment status that become effective
January l, 2011, or that became effective since our last update.
Table 99 reflects the deletions necessary to conform the Code List
to the most recent publications of the CPT and HCPCS and to changes in
Medicare coverage policy and payment status. In addition, we are
deleting CPT codes 94667 and 94668 (Chest wall manipulation) from the
category of ``physical therapy, occupational therapy, and outpatient
speech-language pathology services'' because these services are not
generally considered to be physical therapy services. Also, we are
deleting CPT code 77014 (CT scan for therapy guide) from the category
``radiology and certain other imaging services.'' This service is
always integral to the performance of, and performed during, a non-
radiological medical procedure. Therefore, under Sec. 411.351, this
service is excluded from the definition of ``radiology and certain
other imaging services.''
Lastly, we are deleting the drugs currently listed as qualifying
for the exception for ``EPO and other dialysis-related drugs''
furnished in or by an ESRD facility. Beginning January 1, 2011, EPO and
other dialysis-related drugs furnished by an ESRD facility (except
drugs for which there are no injectable equivalents or other forms of
administration) will be paid under the ESRD PPS promulgated in the
final rule published on August 12, 2010 in the Federal Register (75 FR
49030). Drugs for which there are no injectable equivalents or other
forms of administration will be payable under the ESRD PPS beginning
January 1, 2014. The definition of DHS at Sec. 411.351 excludes
services that are reimbursed by Medicare as part of a composite rate
(unless the services are specifically identified as DHS and are
themselves payable through a composite rate, such as home health and
inpatient and outpatient hospital services). Accordingly, EPO and other
dialysis-related outpatient prescription drugs furnished by an ESRD
facility (except drugs for which there are no injectable equivalents or
other forms of administration) will not be DHS beginning January 1,
2011. When dialysis-related drugs for which there are no injectable
equivalents or other forms of administration are bundled into the ESRD
PPS beginning January 1, 2014, and furnished by an ESRD facility, they
will no longer meet the definition of DHS and, therefore, will not be
subject to the physician self-referral prohibition. In the meantime,
those drugs remain DHS. If we determine that any of those drugs may
qualify for the exception for dialysis-related drugs at 411.355(g), we
will announce them through the annual update to the Code List that
appears in the PFS final rule.
We will consider comments regarding the codes listed in Tables 98
and 99. Comments will be considered if we receive them by the date
specified in the DATES section of this final rule with comment period.
We will not consider any comment that advocates a substantive change to
any of the DHS defined in Sec. 411.351.

Table 98 Additions to the Physician Self-Referral List of CPT \1\/HCPCS
Codes
------------------------------------------------------------------------

------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
------------------------------------------------------------------------
0058T..................................... Cryopreservation ovary tiss.
0059T..................................... Cryopreservation oocyte.
G0432..................................... EIA HIV-1/HIV-2 screen.
G0433..................................... ELISA HIV-1/HIV-2 screen.
G0434..................................... Drug screen multi drug
class.
G0435..................................... Oral HIV-1/HIV-2 screen.
------------------------------------------------------------------------
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT SPEECH-LANGUAGE
PATHOLOGY SERVICES
------------------------------------------------------------------------
95992..................................... Canalith repositioning proc.
------------------------------------------------------------------------
RADIOLOGY AND CERTAIN OTHER IMAGING SERVICES
------------------------------------------------------------------------
72159..................................... Mr angio spine w/o&w/dye.
73225..................................... Mr angio upr extr w/o&w/dye.
74176..................................... Ct angio abd & pelvis.
74177..................................... Ct angio abd&pelv w/
contrast.
74178..................................... Ct angio abd & pelv 1+
regns.
76881..................................... Us xtr non-vasc complete.
76882..................................... Us xtr non-vasc lmtd.
92132..................................... Cmptr ophth dx img ant
segmt.
92133..................................... Cmptr ophth img optic nerve.
92134..................................... Cptr ophth dx img post
segmt.
92227..................................... Remote dx retinal imaging.
92228..................................... Remote retinal imaging mgmt.
------------------------------------------------------------------------
RADIATION THERAPY SERVICES AND SUPPLIES
------------------------------------------------------------------------
49327..................................... Lap ins device for rt.
49412..................................... Ins device for rt guide
open.
57156..................................... Ins vag brachytx device.
A4650..................................... Implant radiation dosimeter.
------------------------------------------------------------------------
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
[No additions]..........................................................
------------------------------------------------------------------------
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
------------------------------------------------------------------------
90662..................................... Flu vacc prsv free inc
antig.
90670..................................... Pneumococcal vacc 13 val im.
G0432..................................... EIA HIV-1/HIV-2 screen.
G0433..................................... ELISA HIV-1/HIV-2 screen.
G0435..................................... Oral HIV-1/HIV-2 screen.
Q2035..................................... Afluria vacc, 3 yrs & >, im.
Q2036..................................... Flulaval vacc, 3 yrs & >,
im.
Q2037..................................... Fluvirin vacc, 3 yrs & >,
im.
Q2038..................................... Fluzone vacc, 3 yrs & >, im.
Q2039..................................... NOS flu vacc, 3 yrs & >, im.
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2010 AMA. All rights
are reserved and applicable FARS/DFARS clauses apply.

[[Page 73585]]

Table 99--Deletions to the Physician Self-Referral List of CPT \1\ HCPCS
Codes
------------------------------------------------------------------------

------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
------------------------------------------------------------------------
0104T............................. At rest cardio gas rebreathe.
0140T............................. Exhaled breath condensate ph.
G0430............................. Drug screen multi class.
------------------------------------------------------------------------
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT SPEECH-LANGUAGE
PATHOLOGY SERVICES
------------------------------------------------------------------------
94667............................. Chest wall manipulation.
94668............................. Chest wall manipulation.
------------------------------------------------------------------------
RADIOLOGY AND CERTAIN OTHER IMAGING SERVICES
------------------------------------------------------------------------
76150............................. X-ray exam, dry process.
76880............................. Us exam, extremity.
77014............................. Ct scan for therapy guide.
------------------------------------------------------------------------
RADIATION THERAPY SERVICES AND SUPPLIES
------------------------------------------------------------------------
[No deletions]..........................................................
------------------------------------------------------------------------
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
------------------------------------------------------------------------
J0630............................. Calcitonin salmon injection.
J0636............................. Inj calcitriol per 0.1 mcg.
J0882............................. Darbepoetin alfa, esrd use.
J0895............................. Deferoxamine mesylate inj.
J1270............................. Injection, doxercalciferol.
J1750............................. Inj iron dextran.
J1756............................. Iron sucrose injection.
J1955............................. Inj levocarnitine per 1 gm.
J2501............................. Paricalcitol.
J2916............................. Na ferric gluconate complex.
J2993............................. Reteplase injection.
J2995............................. Inj streptokinase/250000 IU.
J2997............................. Alteplase recombinant.
J3364............................. Urokinase 5000 IU injection.
P9041............................. Albumin (human), 5%, 50 ml.
P9045............................. Albumin (human), 5%, 250 ml.
P9046............................. Albumin (human), 25%, 20 ml.
P9047............................. Albumin (human), 25%, 50 ml.
Q0139............................. Ferumoxytol, esrd use.
Q4081............................. Epoetin alfa, 100 units ESRD.
------------------------------------------------------------------------
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
------------------------------------------------------------------------
90658............................. Flu vaccine, 3 yrs & >, im.
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2010 AMA. All rights
are reserved and applicable FARS/DFARS clauses apply.

VIII. Waiver of Proposed Rulemaking and Delay in Effective Date

We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and substance
of the proposed rule or a description of the subjects and issues
involved. This procedure can be waived, however, if an agency finds
good cause that a notice-and-comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
We utilize HCPCS codes for Medicare payment purposes. The HCPCS is
a national drug coding system comprised of Level I (CPT) codes and
Level II (HCPCS National Codes) that are intended to provide uniformity
to coding procedures, services, and supplies across all types of
medical providers and suppliers. Level I (CPT) codes are copyrighted by
the AMA and consist of several categories, including Category I codes
which are 5-digit numeric codes, and Category III codes which are
temporary codes to track emerging technology, services, and procedures.
The AMA issues an annual update of the CPT code set each Fall, with
January 1 as the effective date for implementing the updated CPT codes.
The HCPCS, including both Level I and Level II codes, is similarly
updated annually on a CY basis. Annual coding changes are not available
to the public until the Fall immediately preceding the annual January
update of the PFS. Because of the timing of the release of these new
codes, it is impracticable for us to provide prior notice and solicit
comment on these codes and the RVUs assigned to them in advance of
publication of the final rule that implements the PFS. Yet, it is
imperative that these coding changes be accounted for and recognized
timely under the PFS for payment because services represented by these
codes will be provided to Medicare beneficiaries by physicians during
the CY in which they become effective. Moreover, regulations
implementing HIPAA (42 CFR parts 160 and 162) require that the HCPCS be
used to report health care services, including services paid under the
PFS. We also assign interim RVUs to any new codes based on a review of
the AMA RUC recommendations for valuing these services. By reviewing
these AMA RUC recommendations for the new codes, we are able to assign
RVUs to services based on input from the medical community and to
establish payment for them, on an interim basis, that corresponds to
the relative resources associated with furnishing the services. We are
also able to determine, on an interim final basis, whether the codes
will be subject other payment policies. If we did not assign RVUs to
new codes on an interim basis, the alternative would be to either not
pay for these services during the initial CY or have each Medicare
contractor establish a payment rate for these new codes. We believe
both of these alternatives are contrary to the public interest,
particularly since the AMA RUC process allows for an assessment of the
valuation of these services by the medical community prior to our
establishing payment for these codes on an interim basis. Therefore, we
believe it would be contrary to the public interest to delay
establishment of fee schedule payment amounts for these codes.
For the reasons outlined above in this section, we find good cause
to waive the notice of proposed rulemaking for the interim RVUs for
selected procedure codes identified in Addendum C and to establish RVUs
for these codes on an interim final basis. We are providing a 60-day
public comment period.
Section II.C. of this final rule with comment period discusses the
identification and review of potentially misvalued codes by the AMA
RUC, as well as our review and decisions regarding the AMA RUC
recommendations. Similar to the AMA RUC recommendations for new and
revised codes discussed above, due to the timing of the AMA RUC
recommendations for the potentially misvalued codes, it was
impracticable for CMS to solicit public comment regarding specific
proposals for revision prior to this final rule with comment period. We
believe it is in the public interest to implement the revised RVUs for
the codes that were identified as misvalued, and that have been
reviewed and re-evaluated by the AMA RUC, on an interim final basis for
CY 2011. The revisions of RVUs for these codes will establish a more
appropriate payment that better corresponds to the relative resources
associated with furnishing these services. A delay in implementing
revised values for these misvalued codes would not only perpetuate the
known misvaluation for these services, it would also perpetuate a
distortion in the payment for other services under the PFS.
Implementing the changes now allows for a more equitable distribution
of payments across all PFS services. We believe a delay in
implementation of these revisions would be contrary to the public
interest, particularly since the AMA RUC process allows for an
assessment of the valuation of these services by the medical community
prior to the AMA RUC's recommendation to CMS. For the reasons described
above, we find good cause to waive notice and comment procedures with
respect to the misvalued codes identified in Tables 53, 54, and 55, and
to revise RVUs for these codes on an interim final basis. We are

[[Page 73586]]

providing a 60-day public comment period.
Furthermore, in this final rule with comment period, we are making
a technical revision to Sec. 410.64 (Additional Preventive Services)
to conform with section 1861(ddd)(1), as amended by section 4104 of the
ACA. We are revising Sec. 410.64(a) by removing the words ``not
otherwise described in this subpart'' and adding the words ``not
described in subparagraphs (1) or (3) of Sec. 410.2 of this subpart''
in their place. This change reflects section 1861(ddd)(1) of the Act
(as amended by section 4104(a)(2) of the ACA). While this change was
not discussed in the CY 2011 PFS proposed rule (74 FR 40129), we are
making this change pursuant to the ``good cause'' exception to APA
notice and comment rulemaking. Under the good cause exception, public
participation procedures are not required ``when the agency for good
cause finds (and incorporates the finding and a brief statement of
reasons therefore in the rules issued) that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the public
interest'' (5 U.S.C. 553(b)). Section 410.64(a) previously reflected
section 1861(ddd)(1) of the Act, which was subsequently amended. The
revision to the regulations merely incorporates the new statutory
language for consistency, and is not an interpretation or
clarification. Therefore, we believe it is appropriate to waive
advanced notice and public comment on this change for good cause, due
to the technical nature of the revision to the regulations.
We ordinarily provide a 60-day delay in the effective date of the
provisions of a rule in accordance with the Administrative Procedure
Act (APA) (5 U.S.C. 553(d)), which requires a 30-day delayed effective
date, and the Congressional Review Act (5 U.S.C. 801(a)(3)), which
requires a 60-day delayed effective date for major rules. However, we
can waive the delay in the effective date if the Secretary finds, for
good cause, that the delay is impracticable, unnecessary, or contrary
to the public interest, and incorporates a statement of the finding and
the reasons in the rule issued (5 U.S.C. 553(d)(3); 5 U.S.C. 808(2)).

IX. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):

A. ICRs Regarding Diagnostic X-ray Tests, Diagnostic Laboratory Tests,
and Other Diagnostic Tests: Conditions (Sec. 410.32)

Section 410.32(d)(2)(i) requires the physician or qualified
nonphysician practitioner (as defined in Sec. 410.32(a)(2)) who orders
the service must maintain documentation of medical necessity in the
beneficiary's medical record. In addition, both the medical record and
the laboratory requisition (or order) would be required to be signed by
the physician or qualified nonphysician practitioner (as defined in
Sec. 410.32(a)(2)) who orders the service. The burden associated with
these requirements would be the time and effort necessary for a
physician or qualified nonphysician practitioner to sign the medical
record or laboratory requisition (or order). There is also a
recordkeeping requirement associated with maintaining the documentation
of medical necessity in the beneficiary medical record. While these
recordkeeping and reporting requirements are subject to the PRA, we
believe the associated burden is exempt from the PRA in accordance with
5 CFR 1320.3(b)(2). We believe that the time, effort, and financial
resources necessary to comply with the aforementioned information
collection requirements is incurred by persons in the normal course of
their activities and therefore considered to be usual and customary
business practices.

B. ICRs Regarding General Exceptions to the Referral Prohibition
Related to Both Ownership/Investment and Compensation (Sec. 411.355)

Section 411.355(b)(7)(i) states that with respect to magnetic
resonance imaging, computed tomography, and positron emission
tomography, the referring physician must provide written notice to the
patient at the time of the referral that the patient may receive the
same services from a person other than one described in Sec.
411.355(b)(1). The written notice must include a list of other
suppliers (as defined in Sec. 400.202 of this title) that provide the
services for which the individual is being referred. In response to
public comments received, we are finalizing this provision to require
that the list must include a minimum of 5 suppliers within a 25-mile
radius of the referring physician's office location at the time of the
referral, rather than the proposed 10 suppliers. The notice should be
written in a manner sufficient to be reasonably understood by all
patients and should include for each supplier on the list, at a
minimum, the supplier's name, address, and telephone number.
This rule finalizes section 411.355(b)(7)(ii) to state that if the
referring physician makes a referral within an area with fewer than 5
other suppliers within the 25-mile radius of the physician's office
location at the time of the referral, the physician shall list all of
the other suppliers of the imaging service that are present within a
25-mile radius of the referring physician's office location. Provision
of the written list of alternate suppliers will not be required if no
other suppliers provide the services for which the individual is being
referred within the 25-mile radius. These physicians must still
disclose to the patient that the patient may receive these services
from a person other than one described in Sec. 411.355(b)(1) in a
manner sufficient to reasonably be understood by all patients.
The burden associated with the requirements contained in this
section would be the time and effort necessary for a physician to
develop a standard disclosure. There would also be burden associated
with the time and effort necessary for a physician to provide the
disclosure to the patient. Based upon public comments received, we have
removed the requirement that a physician must obtain the patient's
signature on the disclosure and maintain a copy of this document in the
medical record. Physicians must retain adequate assurance that the
information was shared with the patient so that this information can be
verified.
Our estimate that it would take 1 hour for a physician's office to
develop a standard disclosure remains the same in this final rule with
comment to account for physicians drafting the disclosure notice and
listing the 5 alternate

[[Page 73587]]

suppliers. Our estimate that 71,000 physicians will be required to
comply with these requirements remains unchanged from the proposed
rule. The total burden associated with the development of the standard
disclosure remains 71,000 hours at a cost of $1,042,280. Although the
physician no longer must have the patient sign the disclosure and enter
it into the medical record, we have not changed the estimate that it
will take each physician 1 minute to provide the disclosure to the
patient. Each provider will make approximately 106 disclosures. The
total estimated annual burden for this requirement remains 125,433
hours at a cost of $10,536,400.

C. ICRs Regarding Appeals Process for Termination of Competitive
Bidding Contract (Sec. 414.423)

Section 414.423(c)(1)(i) states that CMS has the option to allow a
DMEPOS supplier to provide a written CAP to remedy the deficiencies
identified in the notice, when CMS determines that the delay in the
termination date caused by allowing a CAP will not cause harm to
beneficiaries. As stated in Sec. 414.423(c)(2)(i) a CAP must be
submitted within 30 calendar days from the date on the notification
letter. If the supplier decides not to submit a CAP the supplier may
within 30 days of the date on the termination letter request a hearing
by a CBIC hearing officer.
The burden associated with this requirement is the time and effort
necessary for a supplier that has received a termination notice to
develop and submit a CAP. We estimate that 10 suppliers will need to
comply with this requirement annually. Similarly, we estimate that it
will take a supplier an average of 3 hours to develop a CAP. The total
estimated annual burden associated with this requirement is 30 hours at
a cost of $2,250.
Section 414.423(e)(2) requires that if CMS accepts the CAP,
including supplier's designated timeframe for its completion, the
supplier must provide a follow-up report within 5 days after the
supplier has fully implemented the CAP that verifies that all of the
deficiencies identified in the CAP have been corrected in accordance
with the timeframes accepted by CMS. The burden associated with this
requirement is the time and effort necessary for a supplier to develop
and submit a follow-up report. While this requirement is subject to the
PRA, we believe the associated burden is exempt under 5 CFR
1320.3(h)(6). In accordance with 5 CFR 1320.3(h)(6), a request for
facts or opinions addressed to a single person is not defined as
information collection requirements and is therefore exempt from the
PRA.
Section 414.423(f)(1) states that a supplier who has received a
notice that CMS considers them in breach of contract or that their CAP
is not acceptable has the right to request a hearing before a CBIC HO
who was not involved with the original determination. Section
414.423(f)(2) further specifies that a supplier who wishes to appeal
the termination notice must submit a written request to the CBIC. The
request for a hearing must be received by the CBIC within 30 calendar
days from the date of the notice to terminate.
The burden associated with this section is the time and effort
necessary for a supplier to develop and submit a written request for a
hearing by a CBIC Hearing Officer. We estimate that it will take a
supplier 8 hours to develop and submit a request for a hearing. We
believe 5 suppliers will be subject to this requirement on an annual
basis. The total estimated annual burden associated with developing and
submitting a written request for a hearing by a CBIC Hearing Officer is
40 hours at a cost of $3,000.
Section 414.423 requires a contract supplier whose contract has
been terminated to notify all beneficiaries who are receiving rented
competitive bid items or competitive bid items received on a recurring
basis, of the termination of their contract. The notice to the
beneficiary from the supplier whose contract was terminated must be
provided within 5 days of receipt of the notice of termination. The
notification to the beneficiaries must inform the beneficiaries that
they are going to have to select a new contract supplier for these
items.
The burden associated with this section is the time and effort
necessary for a supplier to develop and distribute notification of its
termination to all beneficiaries receiving rented competitive bid items
or competitive bid items received on a recurring basis. We estimate
that it will take a supplier 3 hours to develop and distribute a notice
announcing its termination to all of its beneficiaries receiving rented
competitive bid items or competitive bid items received on a recurring
basis. We believe 2 suppliers will be subject to this requirement on an
annual basis. The total estimated annual burden associated with this
requirement is 6 hours at a cost of $450.

D. ICRs Regarding Additional Provider and Supplier Requirements for
Enrolling and Maintaining Active Enrollment Status in the Medicare
Program (Sec. 424.516)

Section 424.516(e)(2) would require a provider or supplier to
report a revocation or suspension to the applicable Medicare contractor
within 30 days of any revocation or suspension of a Federal or State
license or certification. Similarly, proposed Sec. 424.516(e)(2)
states that within 30 days of a voluntary withdrawal or involuntary
termination from the Medicare program, the provider or supplier must
report a voluntary withdrawal or involuntary termination to the
applicable Medicare contractor. The burden associated with the
requirements in Sec. 424.516(e)(2) and (3) is the time and effort
necessary for a provider or supplier to report the required information
to the applicable Medicare contractor. While these requirements are
subject to the PRA, each submission will be evaluated on a case-by-case
basis.

Table 100--Estimated Annual Recordkeeping and Reporting Burden
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly labor Total labor Total
Burden per Total annual cost of cost of capital/ Total cost
Regulation section(s) OMB control No. Respondents Responses response burden reporting reporting maintenance (in $)
(hours) (hours) (in $) (in $) costs (in $)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 411.355................................ 0938-New........................ 71,000 71,000 1 71,000 14.68 1,042,280 0 1,042,280
71,000 7,454,760 0.0167 125,433 83.79 *10,536,400 0 10,536,400
Sec. 414.423................................ 0938-New........................ 10 10 3 30 75.00 2,250 0 2,250
5 5 8 40 75.00 3000 0 3000
2 2 3 6 75.00 450 0 450
---------------------------------------------------------------------------------------------------------------

[[Page 73588]]

Total..................................... ................................ 71,017 7,525,777 ............ 196,509 ............ ............ ............ 11,584,380
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The annual cost burden for this provision was calculated by taking 106 disclosures per year per physician x $1.40 per disclosure = $148.40 a year per physician x 71,000 physicians =
$10,536,400.

E. Additional Information Collection Requirements

This final rule with comment period imposes collection of
information requirements as outlined in the regulation text and
specified above. However, this final rule with comment period also
makes reference to several associated information collections that are
not discussed in the regulation text contained in this document. The
following is a discussion of these information collections, some of
which have already received OMB approval.
1. Part B Drug Payment
The discussion of average sales price (ASP) issues in section
VII.A.1 of this final rule with comment period does not contain any new
information collection requirements with respect to payment for
Medicare Part B drugs and biologicals under the ASP methodology. Drug
manufacturers are required to submit ASP data to us on a quarterly
basis. The ASP reporting requirements are set forth in section 1927(b)
of the Act. The burden associated with this requirement is the time and
effort required by manufacturers of Medicare Part B drugs and
biologicals to calculate, record, and submit the required data to CMS.
While the burden associated with this requirement is subject to the
PRA, it is currently approved under OMB control number 0938-0921 with a
June 31, 2012, expiration date.
2. The Physician Quality Reporting System (Formerly the Physician
Quality Reporting Initiative (PQRI))
Section VII.F.1. of this final rule with comment period discusses
the background of the Physician Quality Reporting System, provides
information about the measures and reporting mechanisms that will be
available to eligible professionals and group practices who choose to
participate in the 2011 Physician Quality Reporting System, and the
criteria for satisfactory reporting in 2011.
With respect to satisfactory submission of data on quality measures
by eligible professionals, eligible professionals include physicians,
other practitioners as described in section 1842(b)(18)(c) of the Act,
physical and occupational therapists, qualified speech-language
pathologists, and qualified audiologists. Eligible professionals may
choose whether to participate and, to the extent they satisfactorily
submit data on quality measures for covered professional services, they
can qualify to receive an incentive payment. To qualify to receive an
incentive payment for 2011, the eligible professional (or group
practice) must meet one of the criteria for satisfactory reporting
described in section VII.F.1.e. or VII.F.1.f. of this final rule with
comment period (or section VII.F.1.g. for group practices).
Because this is a voluntary program, it is difficult to accurately
estimate how many eligible professionals will opt to participate in the
Physician Quality Reporting System in CY 2011. Information from the
``Physician Quality Reporting System 2007 Reporting Experience
Report,'' which is available on the Physician Quality Reporting System
section of the CMS Web site at http://www.cms.hhs.gov/pqri, indicates
that nearly 110,000 unique TIN/NPI combinations attempted to submit
Physician Quality Reporting System quality measures data via claims for
the 2007 Physician Quality Reporting System. Therefore, for purposes of
conducting a burden analysis for the 2011 Physician Quality Reporting
System, we will assume that all eligible professionals who attempted to
participate in the 2007 Physician Quality Reporting System will also
attempt to participate in the 2011 Physician Quality Reporting System.
Furthermore, we believe that the burden for eligible professionals who
are participating in the Physician Quality Reporting System for the
first time in 2011 will be considerably higher than the burden for
eligible professionals who have participated in the Physician Quality
Reporting System in prior years.
For individual eligible professionals, the burden associated with
the requirements of this reporting initiative is the time and effort
associated with eligible professionals identifying applicable Physician
Quality Reporting System quality measures for which they can report the
necessary information, collecting the necessary information, and
reporting the information needed to report the eligible professional's
or group practice's measures. We believe it is difficult to accurately
quantify the burden because eligible professionals may have different
processes for integrating the Physician Quality Reporting System into
their practice's work flows. Moreover, the time needed for an eligible
professional to review the quality measures and other information,
select measures applicable to his or her patients and the services he
or she furnishes to them, and incorporate the use of quality data codes
into the office work flows is expected to vary along with the number of
measures that are potentially applicable to a given professional's
practice. Since eligible professionals are generally required to report
on at least 3 measures to earn a Physician Quality Reporting System
incentive, we will assume that each eligible professional who attempts
to submit Physician Quality Reporting System quality measures data is
attempting to earn a Physician Quality Reporting System incentive
payment and reports on an average of 3 measures for this burden
analysis.
Because we anticipate even greater participation in the 2011
Physician Quality Reporting System than in previous years, including
participation by eligible professionals who are participating in the
Physician Quality Reporting System for the first time in 2011, we will
assign 5 hours as the amount of time needed for eligible professionals
to review the 2011 Physician Quality Reporting System Measures List,
review the various reporting options, select the most appropriate
reporting option, identify the applicable measures or measures groups
for which they can report the necessary information, review the measure
specifications for the selected measures or measures groups, and
incorporate reporting of the selected measures or measures groups into
the office work flows. This estimate is based on our assumption that an
eligible professional will need up to 2 hours to review the 2011
Physician Quality Reporting System Measures List, review the reporting
options, and select a reporting option and measures on which

[[Page 73589]]

to report and 3 hours to review the measure specifications for up to 3
selected measures or up to 1 selected measures group and to develop a
mechanism for incorporating reporting of the selected measures or
measures group into the office work flows.
Information from the PVRP, which was a predecessor to the Physician
Quality Reporting System, indicated an average labor cost of $50 per
hour. To account for salary increases over time, we will use an average
practice labor cost of $58 per hour in our estimates based on an
assumption of an average annual increase of approximately 3 percent.
Thus, we estimate the cost for an eligible professional associated with
preparing to report Physician Quality Reporting System quality measures
would be approximately $290 per eligible professional ($58 per hour x 5
hours).
We continue to expect the ongoing costs associated with Physician
Quality Reporting System participation to decline based on an eligible
professional's familiarity with and understanding of the Physician
Quality Reporting System, experience with participating in the
Physician Quality Reporting System, and increased efforts by CMS and
stakeholders to disseminate useful educational resources and best
practices.
We believe the burden associated with actually reporting the
Physician Quality Reporting System quality measures will vary depending
on the reporting mechanism selected by the eligible professional. For
claims-based reporting, eligible professionals must gather the required
information, select the appropriate QDCs, and include the appropriate
QDCs on the claims they submit for payment. The Physician Quality
Reporting System will collect QDCs as additional (optional) line items
on the existing HIPAA transaction 837-P and/or CMS Form 1500 (OCN:
0938-0999). We do not anticipate any new forms and no modifications to
the existing transaction or form. We also do not anticipate changes to
the 837-P or CMS Form 1500 for CY 2011.
Based on our experience with the PVRP, we continue to estimate that
the time needed to perform all the steps necessary to report each
measure (that is, reporting the relevant quality data code(s) for a
measure) on claims ranges from 15 seconds (0.25 minutes) to over 12
minutes for complicated cases and/or measures, with the median time
being 1.75 minutes. At an average labor cost of $58 per hour per
practice, the cost associated with this burden ranges from $0.24 in
labor to about $11.60 in labor time for more complicated cases and/or
measures, with the cost for the median practice being $1.69.
The total estimated annual burden for this requirement will also
vary along with the volume of claims on which quality data is reported.
In previous years, when we required reporting on 80 percent of eligible
cases for claims-based reporting, we found that on average, the median
number of reporting instances for each of the Physician Quality
Reporting System measures was 9. Since we proposed to reduce the
required reporting rate by over one-third to 50 percent, then for
purposes of this burden analysis we will assume that an eligible
professional will need to report each selected measure for 6 reporting
instances. The actual number of cases on which an eligible professional
would be required to report quality measures data will vary, however,
with the eligible professional's patient population and the types of
measures on which the eligible professional chooses to report (each
measure's specifications includes a required reporting frequency).
Based on the assumptions discussed above, we estimate the total
annual reporting burden per eligible professional associated with
claims-based reporting to range from 4.5 minutes (0.25 minutes per
measure x 3 measures x 6 cases per measure) to 180 minutes (12 minutes
per measure x 3 measures x 6 cases per measure), with the burden to the
median practice being 31.5 minutes (1.75 minutes per measure x 3
measures x 6 cases). We estimate the total annual reporting cost per
eligible professional associated with claims-based reporting to range
from $4.32 ($0.24 per measure x 3 measures x 6 cases per measure) to
$208.80 ($11.60 per measure x 3 measures x 6 cases per measure), with
the cost to the median practice being $30.42 per eligible professional
($1.69 per measure x 3 measures x 6 cases per measure).
For registry-based reporting, there would be no additional time
burden for eligible professionals to report data to a registry as
eligible professionals opting for registry-based reporting would more
than likely already be reporting data to the registry for other
purposes and the registry would merely be re-packaging the data for use
in the Physician Quality Reporting System. Little, if any, additional
data would need to be reported to the registry for purposes of
participation in the 2011 Physician Quality Reporting System. However,
eligible professionals would need to authorize or instruct the registry
to submit quality measures results and numerator and denominator data
on quality measures to CMS on their behalf. We estimate that the time
and effort associated with this would be approximately 5 minutes per
eligible professional.
Registries interested in submitting quality measures results and
numerator and denominator data on quality measures to CMS on their
participants' behalf in 2011 will need to complete a self-nomination
process in order to be considered ``qualified'' to submit on behalf of
eligible professionals unless the registry was qualified to submit on
behalf of eligible professionals for prior years and did so
successfully. We estimate that the self-nomination process for
qualifying additional registries to submit on behalf of eligible
professionals for the 2011 Physician Quality Reporting System involves
approximately 1 hour per registry to draft the letter of intent for
self-nomination. It is estimated that each self-nominated entity will
also spend 2 hours for the interview with CMS officials and 2 hours
calculating numerators, denominators, and measure results for each
measure the registry wishes to report using a CMS-provided measure
flow. However, the time it takes to complete the measure flow could
vary depending on the registry's experience and the number and type of
measures for which the registry wishes to submit on behalf of eligible
professionals. Additionally, part of the self-nomination process
involves the completion of an XML submission by the registry, which is
estimated to take approximately 5 hours, but may vary depending on the
registry's experience. We estimate that the registry staff involved in
the registry self-nomination process have an average labor cost of $50
per hour. Therefore, assuming the total burden hours per registry
associated with the registry self-nomination process is 10 hours, we
estimate the total cost to a registry associated with the registry
self-nomination process to be approximately $500 ($50 per hour x 10
hours per registry).
The burden associated with the registry-based reporting
requirements of this voluntary reporting initiative is the time and
effort associated with the registry calculating quality measures
results from the data submitted to the registry by its participants and
submitting the quality measures results and numerator and denominator
data on quality measures to CMS on behalf of their participants. The
time needed for a registry to review the quality measures and other
information, calculate the measures results, and submit the measures
results and numerator and denominator data on the quality

[[Page 73590]]

measures on their participants' behalf is expected to vary along with
the number of eligible professionals reporting data to the registry and
the number of applicable measures. However, we believe that registries
already perform many of these activities for their participants. The
number of measures that the registry intends to report to CMS and how
similar the registry's measures are to CMS' Physician Quality Reporting
System measures will determine the time burden to the registry.
For EHR-based reporting, the eligible professional must have access
to a CMS-specified identity management system, such as IACS, which we
believe takes less than 1 hour to obtain. Once an eligible professional
has an account for this CMS-specified identity management system, he or
she must extract the necessary clinical data from his or her EHR, and
submit the necessary data to the CMS-designated clinical data
warehouse. With respect to our requirement for an eligible professional
to submit a test file, we believe that doing so would take less than 1
hour. With respect to submitting the actual 2011 data file in 2012, we
believe that this would take an eligible professional no more than 2
hours, depending on the number of patients on which the eligible
professional is submitting. We believe that once the EHR is programmed
by the vendor to allow data submission to CMS, the burden to the
eligible professional associated with submission of data on Physician
Quality Reporting System quality measures should be minimal. Because
this manner of reporting quality data to CMS was new to the Physician
Quality Reporting System for 2010 and no EHR data submissions have
taken place yet, it is difficult to estimate how many eligible
professionals will opt to participate in the Physician Quality
Reporting System through the EHR mechanism in CY 2011.
An EHR vendor interested in having their product(s) be used by
eligible professionals to submit Physician Quality Reporting System
quality measures data to CMS was required to complete a self-nomination
process in order for the vendor's product(s) to be considered
``qualified'' for 2011. It is difficult to accurately quantify the
burden associated with the EHR self-nomination process as there is
variation regarding the technical capabilities and experience among
vendors. For purposes of this burden analysis, however, we estimate
that the time required for an EHR vendor to complete the self-
nomination process will be similar to the time required for registries
to self-nominate, that is approximately 10 hours at $50 per hour for a
total of $500 per EHR vendor ($50 per hour x 10 hours per EHR vendor).
The burden associated with the EHR vendor programming its EHR
product(s) to extract the clinical data that the eligible professional
needs to submit to CMS for purposes of reporting 2010 Physician Quality
Reporting System quality measures will be dependent on the EHR vendor's
familiarity with the Physician Quality Reporting System, the vendor's
system capabilities, as well as the vendor's programming capabilities.
Some vendors already have these necessary capabilities and for such
vendors, we estimate the total burden hours to be 40 hours at a rate of
$50 per hour for a total burden estimate of $2,000 ($50 per hour x 40
hours per vendor). However, given the variability in the capabilities
of the vendors, those vendors with minimal experience would have a
burden of approximately 200 hours at $50 per hour, for a total estimate
of $10,000 per vendor ($50 per hour x 200 hours per EHR vendor).
With respect to the process for group practices to be treated as
satisfactorily submitting quality measures data under the 2011
Physician Quality Reporting System discussed in section VII.F.1. of
this final rule with comment, group practices interested in
participating in the 2011 Physician Quality Reporting System through
one of the group practice reporting options (GPRO I or GPRO II) will
need to complete a self-nomination process similar to the self-
nomination process required of registries and EHR vendors. Therefore,
assuming 2 hours for a group practice to decide whether to participate
as a group or individually, approximately 2 hours per group practice to
draft the letter of intent for self-nomination, gather the requested
information, and provide this requested information, and an additional
2 hours undergoing the vetting process with CMS officials, we estimate
a total of 6 hours associated with the self-nomination process.
Assuming that the group practice staff involved in the group practice
self-nomination process have the same average practice labor cost as
the average practice labor cost estimates we used for individual
eligible professionals of $58 per hour, we estimate the total cost to a
group practice associated with the group practice self-nomination
process to be approximately $348 ($58 per hour x 6 hours per group
practice).
The burden associated with the group practice reporting
requirements of this voluntary reporting initiative is the time and
effort associated with the group practice submitting the quality
measures data. For practices participating under the GPRO I process,
this would be the time associated with the physician group completing
the data collection tool. The information collection components of this
data collection tool have been reviewed by OMB and are currently
approved under OMB control number 0938-0941, with an expiration date of
December 31, 2011, for use in the Physician Group Practice, Medicare
Care Management Performance (MCMP), and EHR demonstrations. Based on
burden estimates for the PGP demonstration, which uses the same data
submission methods, we estimate the burden associated with a physician
group completing the data collection tool would be approximately 79
hours per physician group. Based on an average labor cost of $58 per
physician group, we estimate the cost of data submission per physician
group associated with participating in the Physician Quality Reporting
System GPRO I would be $4,582 ($58 per hour x 79 hours per group
practice).
For group practices participating under the GPRO II process, the
burden associated with submitting the Physician Quality Reporting
System quality measures data would be the time associated with the
group practice submitting the required data to CMS via claims or a
registry. We would expect that data submission under GPRO II would take
no more time than the time it would take an individual eligible
professional to submit via claims or registry. We believe it would be
appropriate to multiply the appropriate burden estimates for each
reporting mechanism for individual eligible professionals by the number
of eligible professionals in a group to obtain the burden estimates for
data submission under GPRO II. For example, based on our estimate of
15.75 minutes per eligible professional under claims-based reporting,
we would expect that a 2-person group would have a burden of 31.50
minutes for claims-based submission under GPRO II.
Eligible professionals who wish to qualify for the additional 0.5
percent incentive payment authorized under section 1848(m)(7) of the
Act (``Additional Incentive Payments'') for 2011 will need to more
frequently than is required to qualify for or maintain board
certification status participate in a qualified Maintenance of
Certification Program for 2011 and successfully complete a qualified
Maintenance of Certification Program practice assessment for 2011. We
believe that a majority of the eligible professionals who would attempt
to qualify for this

[[Page 73591]]

additional 0.5 percent incentive payment would be those who are already
enrolled and participating in a Maintenance of Certification Board. The
amount of time that it would take for the eligible professional to
participate in the Maintenance of Certification Program more frequently
than is required to qualify for or maintain board certification status
would vary based on what each individual board determines constitutes
``more frequently.'' The amount of time needed to complete a qualified
Maintenance of Certification Program practice assessment is expected to
be spread out over time since a quality improvement component is often
required. Information from an informal poll of a few ABMS member boards
indicates that the time an individual eligible professional spends to
complete the practice assessment component of the Maintenance of
Certification ranges from 8 to 12 hours.
We invited comments on this burden analysis, including the
underlying assumptions used in developing our burden estimates and
received no comments.
3. Electronic Prescribing (eRx) Incentive Program
We believe it is difficult to accurately estimate how many eligible
professionals will opt to participate in the eRx Incentive Program in
CY 2011. Information from the 2009 eRx Incentive Program indicates that
nearly 90,000 eligible professionals participated in the first year of
the program. We believe, however, that the number of participants will
increase in light of the payment adjustment that will start in 2012.
Therefore, for purposes of conducting a burden analysis for the 2011
eRx Incentive Program, we will assume that as many eligible
professionals who attempted to participate in the 2007 Physician
Quality Reporting System will attempt to participate in the 2011 eRx
Incentive Program. As such, we can estimate that nearly 110,000 unique
TIN/NPI combinations will participate in the 2011 eRx Incentive Program
(see the ``PQRI 2007 Reporting Experience Report,'' which is available
on the Physician Quality Reporting System section of the CMS Web site
at http://www.cms.hhs.gov/pqri).
Section VII.F.2 of this final rule with comment discusses the
background of the eRx Incentive Program. Section VII.F.2.b.(2) of this
final rule with comment provides information on how eligible
professionals and group practices can qualify to be considered a
successful electronic prescriber in 2011 in order to earn an incentive
payment. For 2011, eligible professionals and group practices may
choose whether to participate and, to the extent they meet-- (1)
certain thresholds with respect to the volume of covered professional
services furnished; and (2) the criteria to be considered a successful
electronic prescriber described in section VII.F.2.b.(2) of this final
rule with comment, they can qualify to receive an incentive payment for
2011 and/or avoid being subject to the payment adjustment that goes
into effect in 2012.
For the 2011 eRx Incentive Program, as discussed in section
VII.F.2. of this final rule with comment, each eligible professional
will need to report the G-code indicating that at least one
prescription generated during an encounter was electronically submitted
at least 25 instances during the reporting period. We expect the
ongoing costs associated with participation in the eRx Incentive
Program to decline based on an eligible professional's familiarity with
and understanding of the eRx Incentive Program, experience with
participating in the eRx Incentive Program, and increased efforts by
CMS and stakeholders to disseminate useful educational resources and
best practices.
Similar to the Physician Quality Reporting System, one factor in
the burden to individual eligible professionals is the time and effort
associated with individual eligible professionals reviewing the
electronic prescribing measure to determine whether it is applicable to
them, reviewing the available reporting options (for purposes of the
2011 incentive, this measure will be reportable through claims-based
reporting, registry-based reporting, or through EHRs) and selecting
one, gathering the required information, and incorporating reporting of
the measure into their office work flows. Since the eRx Incentive
Program consists of only 1 measure to report, we estimate 2 hours as
the amount of time needed for individual eligible professionals to
prepare for participation in the eRx Incentive Program. At an average
cost of approximately $58 per hour per practice, we estimate the total
preparation costs to individual eligible professionals to be
approximately $116 (2 hours x $58 per hour).
Another factor that influences the burden to eligible professionals
is how they choose to report the electronic prescribing measure. For
eligible professionals who choose to do so via claims, we estimate that
the burden associated with the requirements of this incentive program
is the time and effort associated with gathering the required
information, selecting the appropriate quality data codes (QDCs), and
including the appropriate QDCs on the claims they submit for payment.
For claims-based reporting, the QDCs will be collected as additional
(optional) line items on the existing HIPAA transaction 837-P and/or
CMS Form 1500. We do not anticipate any new forms and no modifications
to the existing transaction or form. We also do not anticipate changes
to the 837-P or CMS Form 1500 for CY 201.
Based on the information from the PVRP described above for the
amount of time it takes a median practice to report one measure one
time on claims (1.75 minutes) and our requirement that eligible
professionals to report the measure 25 times for purposes of the
incentive payment, we estimate the burden associated with claims-based
data submission to be 43.75 minutes (1.75 minutes per case x 1 measure
x 25 cases per measure). This equates to a cost of approximately $42.29
(1.75 minutes per case x 1 measure x 25 cases per measure x $58 per
hour) per individual eligible professional. For purposes of the 2012
eRx payment adjustment, where an eligible professional is required to
report the measure only 10 times, we estimate the burden associated
with claims-based submission to be 17.5 minutes (1.75 minutes per case
x 1 measure x 10 cases per measure). This equates to a cost of
approximately $16.92 (1.75 minutes per case x 1 measure x 10 cases per
measure x $58 per hour) per individual eligible professional.
Because registry-based reporting of the electronic prescribing
measure to CMS was added to the eRx Incentive Program for 2010 and
eligible professionals are not required to indicate to us how they plan
to report the electronic prescribing measure each year, it is difficult
to accurately estimate how many eligible professionals will opt to
participate in the eRx Incentive Program through the registry-based
reporting mechanism in CY 2011. We do not anticipate, however, any
additional burden for eligible professionals to report data to a
registry as eligible professionals opting for registry-based reporting
would more than likely already be reporting data to the registry for
other purposes. Little, if any, additional data would need to be
reported to the registry for purposes of participation in the 2011 eRx
Incentive Program. However, eligible professionals would need to
authorize or instruct the registry to submit quality measures results
and numerator and denominator data on the electronic

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prescribing measure to CMS on their behalf. We estimate that the time
and effort associated with this would be approximately 5 minutes for
each eligible professional that wishes to authorize or instruct the
registry to submit quality measures results and numerator and
denominator data on the electronic prescribing measure to CMS on their
behalf.
Based on our decision to consider only registries qualified to
submit Physician Quality Reporting System quality measures results and
numerator and denominator data on quality measures to CMS on their
participants' behalf for the 2011 Physician Quality Reporting System to
be qualified to submit results and numerator and denominator data on
the electronic prescribing measure for the 2011 eRx Incentive Program,
there would be no need for a registry to undergo a separate self-
nomination process for the eRx Incentive Program and therefore, no
additional burden associated with the registry self-nomination process.
There would also be a burden to the registry associated with the
registry calculating results for the electronic prescribing measure
from the data submitted to the registry by its participants and
submitting the quality measures results and numerator and denominator
data on the electronic prescribing quality measure to CMS on behalf of
their participants. The time needed for a registry to review the
electronic prescribing measure and other information, calculate the
measure's results, and submit the measure's results and numerator and
denominator data on the measure on their participants behalf is
expected to vary along with the number of eligible professionals
reporting data to whom the measure applies. However, we believe that
registries already perform many of these activities for their
participants. Since the eRx Incentive Program consists of only one
measure, we believe that the burden associated with the registry
reporting the measure's results and numerator and denominator to CMS on
behalf of their participants would be minimal.
For EHR-based reporting, the eligible professional must extract the
necessary clinical data from his or her EHR and submit the necessary
data to the CMS-designated clinical data warehouse. Because this manner
of reporting quality data to CMS was first added to the eRx Incentive
Program in 2010 and eligible professionals are not required to indicate
to us how they intend to report the electronic prescribing measure, it
is difficult to estimate how many eligible professionals will opt to
participate in the eRx Incentive Program through the EHR-based
reporting mechanism in CY 2011. We believe that once an eligible
professional's EHR is programmed by the vendor to allow data submission
to CMS, the burden to the eligible professional associated with
submission of data on the electronic prescribing measure should be
minimal.
Since we are considering only EHR products qualified for the 2010
Physician Quality Reporting System to be qualified for the 2011 eRx
Incentive Program, there will be no need for EHR vendors to undergo a
separate self-nomination process for the 2011 eRx Incentive Program and
therefore, no additional burden associated with the self-nomination
process.
There will also be a burden to the EHR vendor associated with the
EHR vendor programming its EHR product(s) to extract the clinical data
that the eligible professional needs to submit to CMS for purposes of
reporting the proposed 2011 electronic prescribing measure. The time
needed for an EHR vendor to review the measure and other information
and program each qualified EHR product to enable eligible professionals
to submit data on the measure to the CMS-designated clinical data
warehouse will be dependent on the EHR vendor's familiarity with the
electronic prescribing measure, the vendor's system capabilities, as
well as the vendor's programming capabilities. Since only EHR products
qualified for the 2011 Physician Quality Reporting System will be
qualified for the 2011 eRx Incentive Program and the eRx Incentive
Program consists of only one measure, we believe that any burden
associated with the EHR vendor to program its product(s) to enable
eligible professionals to submit data on the electronic prescribing
measure to the CMS-designated clinical data warehouse would be minimal.
Finally, with respect to the process for group practices to be
treated as successful electronic prescribers under the 2011 eRx
Incentive Program discussed in section VII.F.2. of this final rule with
comment, group practices will have the same options as individual
eligible professionals in terms of the form and manner for reporting
the electronic prescribing measure (that is, group practices would have
the option of reporting the measure through claims, a qualified
registry, or a qualified EHR product). There are only 2 differences
between the requirements for an individual eligible professional and a
group practice: (1) The fact that a group practice will have to self-
nominate; and (2) the number of times that a group practice will be
required to report the electronic prescribing measure.
We do not anticipate any additional burden associated with the
group practice self-nomination practice since we are limiting the group
practices to those selected to participate in the 2011 Physician
Quality Reporting System GPRO I or Physician Quality Reporting System
GPRO II. The practice only will need to indicate their desire to
participate in the eRx GPRO at the same time they self-nominate for
either Physician Quality Reporting System GPRO I or Physician Quality
Reporting System GPRO II and indicate how they intend to report the
electronic prescribing measure.
In terms of the burden to group practices associated with
submission of the electronic prescribing measure, we believe that this
would be similar to the burden to individual eligible professionals for
submitting the electronic prescribing measure. In fact, overall, there
could be less burden associated with a practice participating as a
group rather than as individual eligible professionals because the
total number of reporting instances required by the group could be less
than the total number of reporting instances that would be required if
each member of the group separately reported the electronic prescribing
measure. Thus, we believe that the burden to a group practice
associated with reporting the electronic prescribing measure could
range from almost no burden (for groups who choose to do so through a
qualified EHR or registry) to 72.92 hours (1.75 minutes per measure x 1
measure x 2500 cases per measure) for a GPRO I group who chooses to
report the electronic prescribing measures through claims submission.
Consequently, the total estimated cost per group practice to report the
electronic prescribing measure could be as high as $4,225 ($1.69 per
measure x 1 measure x 2500 cases per measure).
As with individual eligible professionals, we believe that group
practices that choose to participate in the 2011 eRx GPRO through
registry-based reporting of the electronic prescribing measure would
more than likely already be reporting data to the registry. Little, if
any, additional data would need to be reported to the registry for
purposes of participation in the 2011 eRx Incentive Program beyond
authorizing or instructing the registry to submit quality measures
results and numerator and denominator data on the electronic
prescribing measure to CMS on their behalf. We estimate that the time
and effort associated with this would be approximately 5 minutes for

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each group practice that wishes to authorize or instruct the registry
to submit quality measures results and numerator and denominator data
on the electronic prescribing measure to CMS on their behalf.
For group practices that choose to participate in the 2011 eRx
Incentive Program through EHR-based reporting of the electronic
prescribing measure, once the EHR is programmed by the vendor to allow
data submission to CMS, the burden to the group practice associated
with submission of data on the electronic prescribing measure should be
minimal.
We invited comments on this burden analysis, including the
underlying assumptions used in developing our burden estimates and
received none.

X. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.

XI. Regulatory Impact Analysis

We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). We estimate,
as discussed below in this section, that the PFS provisions included in
this final rule with comment period will redistribute more than $100
million in 1 year. Therefore, we estimate that this rulemaking is
``economically significant'' as measured by the $100 million threshold,
and hence also a major rule under the Congressional Review Act.
Accordingly, we have prepared a Regulatory Impact Analysis that to the
best of our ability presents the costs and benefits of the rulemaking.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, we
estimate that most hospitals and most other providers are small
entities as that term is used in the RFA (including small businesses,
nonprofit organizations, and small governmental jurisdictions). The
great majority of hospitals and most other health care providers and
suppliers are small entities, either by being nonprofit organizations
or by meeting the SBA definition of a small business (having revenues
of less than $34.5 million in any 1 year) (for details see the SBA's
Web site at http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (refer to the 620000 series). Individuals and
States are not included in the definition of a small entity. The RFA
requires that we analyze regulatory options for small businesses and
other entities. We prepare a regulatory flexibility analysis unless we
certify that a rule would not have a significant economic impact on a
substantial number of small entities. The analysis must include a
justification concerning the reason action is being taken, the kinds
and number of small entities the rule affects, and an explanation of
any meaningful options that achieve the objectives with less
significant adverse economic impact on the small entities.
For purposes of the RFA, physicians, NPPs, and suppliers including
IDTFs are considered small businesses if they generate revenues of $10
million or less based on SBA size standards. Approximately 95 percent
of physicians are considered to be small entities. There are over 1
million physicians, other practitioners, and medical suppliers that
receive Medicare payment under the PFS.
For purposes of the RFA approximately 85 percent of suppliers of
DMEPOS are considered small businesses according to the SBA size
standards. Our most recent claims information includes 47,000 entities
billing Medicare for DMEPOS each year. Total annual estimated Medicare
expenditures for DMEPOS suppliers are approximately $10.1 billion in CY
2009, for which $8.1 billion was fee-for-service (FFS) and $2 billion
was for managed care.
For purposes of the RFA, approximately 80 percent of clinical
diagnostic laboratories are considered small businesses according to
the SBA size standards.
Ambulance providers and suppliers for purposes of the RFA are also
considered to be small entities.
In addition, most ESRD facilities are considered small entities for
purposes of the RFA, either based on nonprofit status or by having
revenues of $34.5 million or less in any year. We note that a
considerable number of ESRD facilities are owned and operated by large
dialysis organizations (LDOs) or regional chains, which would have
total revenues more than $34.5 million in any year if revenues from all
locations are combined. However, the claims data we use to estimate
payments for this RFA and RIA does not identify which dialysis
facilities are parts of an LDO, regional chain, or other type of
ownership. Each individual dialysis facility has its own provider
number and bills Medicare using this number. Therefore, we consider
each ESRD facility to be a small entity for purposes of the RFA. We
consider a substantial number of entities to be significantly affected
if the final rule with comment period has an annual average impact on
small entities of 3 to 5 percent or more. The majority of ESRD
facilities will experience impacts of approximately 2 percent of total
revenues. There are 976 nonprofit ESRD facilities with a combined
increase of 2.1 percent in overall payments relative to current overall
payments. We note that although the overall effect of the wage index
changes is budget neutral, there are increases and decreases based on
the location of individual facilities. The analysis and discussion
provided in this section and elsewhere in this final rule with comment
period complies with the RFA requirements.
Because we acknowledge that many of the affected entities are small
entities, the analysis discussed throughout the preamble of this final
rule with comment period constitutes our regulatory flexibility
analysis for the remaining provisions and addresses comments received
on these issues.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis, if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. Any
such regulatory impact analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside of
a metropolitan statistical area and has fewer than 100 beds. We do not
believe this final rule with comment period has impact on

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significant operations of a substantial number of small rural hospitals
because most dialysis facilities are freestanding. While there are 180
rural hospital-based dialysis facilities, we do not know how many of
them are based at hospitals with fewer than 100 beds. However, overall,
the 180 rural hospital-based dialysis facilities will experience an
estimated 2.1 percent increase in payments. As a result, this rule will
not have a significant impact on small rural hospitals. Therefore, the
Secretary has determined that this final rule with comment period will
not have a significant impact on the operations of a substantial number
of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2010, that
threshold is approximately $135 million. This final rule with comment
period will not mandate any requirements for State, local, or tribal
governments in the aggregate, or by the private sector, of $135
million. Medicare beneficiaries are considered to be part of the
private sector and as a result a more detailed discussion is presented
on the Impact of Beneficiaries in section XI.G. of this regulatory
impact analysis.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have examined this final rule with comment period in
accordance with Executive Order 13132 and have determined that this
regulation would not have any substantial direct effect on State or
local governments, preempt States, or otherwise have a Federalism
implication.
We have prepared the following analysis, which together with the
information provided in the rest of this preamble, meets all assessment
requirements. The analysis explains the rationale for and purposes of
this final rule with comment period; details the costs and benefits of
the rule; analyzes alternatives; and presents the measures we will use
to minimize the burden on small entities. As indicated elsewhere in
this rule, we are implementing a variety of changes to our regulations,
payments, or payment policies to ensure that our payment systems
reflect changes in medical practice and the relative value of services.
We provide information for each of the policy changes in the relevant
sections of this final rule with comment period. We are unaware of any
relevant Federal rules that duplicate, overlap, or conflict with this
final rule with comment period. The relevant sections of this rule
contain a description of significant alternatives if applicable.

A. RVU Impacts

1. Resource-Based Work, PE, and Malpractice RVUs
Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or
decreases in RVUs may not cause the amount of expenditures for the year
to differ by more than $20 million from what expenditures would have
been in the absence of these changes. If this threshold is exceeded, we
make adjustments to preserve budget neutrality.
Our estimates of changes in Medicare revenues for PFS services
compare payment rates for CY 2010 with final payment rates for CY 2011
using CY 2009 Medicare utilization for all years. To the extent that
there are year-to-year changes in the volume and mix of services
provided by physicians, the actual impact on total Medicare revenues
will be different than those shown in Table 101. The payment impacts
reflect averages for each specialty based on Medicare utilization. The
payment impact for an individual physician would be different from the
average, based on the mix of services the physician furnishes. The
average change in total revenues would be less than the impact
displayed here because physicians furnish services to both Medicare and
non-Medicare patients and specialties may receive substantial Medicare
revenues for services that are not paid under the PFS. For instance,
independent laboratories receive approximately 85 percent of their
Medicare revenues from clinical laboratory services that are not paid
under the PFS.
Table 101 shows only the payment impact on PFS services. We note
that these impacts do not include the effect of the December 2010 and
January 2011 conversion factor changes under current law. The following
is an explanation of the information represented in Table 101:
Column A (Specialty): The Medicare specialty code as
reflected in our physician/supplier enrollment files.
Column B (Allowed Charges): The aggregate estimated PFS
allowed charges for the specialty based on CY 2009 utilization and CY
2010 rates. That is, allowed charges are the PFS amounts for covered
services and include coinsurance and deductibles (which are the
financial responsibility of the beneficiary). These amounts have been
summed across all services furnished by physicians, practitioners, and
suppliers within a specialty to arrive at the total allowed charges for
the specialty.
Column C (Impact of Work and Malpractice (MP) RVU
Changes): This column shows the estimated CY 2011 impact on total
allowed charges of the changes in the work and malpractice RVUs,
including the impact of changes due to new, revised, and potentially
misvalued codes.
Column D (Impact of PE RVU and Multiple Procedure Payment
Reduction Changes--Full): This column shows the estimated CY 2011
impact on total allowed charges of the changes in the PE RVUs if there
were no remaining transition to the full use of the new PPIS data. This
column also includes the impact of the various MPPR and imaging
equipment utilization polices, and the impact of changes due to new,
revised, and potentially misvalued codes.
Column E (Impact of PE RVU and Multiple Procedure Payment
Reduction Changes--Tran): This column shows the estimated CY 2011
impact on total allowed charges of the changes in the PE RVUs under the
second year of the 4-year transition to the full use of the new PPIS
data. This column also includes the impact of the various MPPR and
imaging equipment utilization policies, and the impact of changes due
to new, revised, and potentially misvalued codes.
Column F (Impact of MEI Rebasing): This column shows the
estimated CY 2011 impact on total allowed charges of the CY 2011
rescaling of the RVUs so that the proportions of total payments based
on the work, PE, and malpractice RVUs match the proportions in the
final revised and rebased MEI for CY 2011.
Column G (Combined Impact--Full): This column shows the
estimated CY 2011 combined impact on total allowed charges of all the
changes in the previous columns if there were no remaining transition
to the new PE RVUs using the PPIS data.
Column H (Combined Impact--Tran): This column shows the
estimated CY 2011 combined impact on total allowed charges of all the
changes in the previous columns under the second year of the 4-year
transition to the new PE RVUs using the PPIS data.
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2. CY 2011 PFS Impact Discussion
a. Changes in RVUs
The most widespread specialty impacts of the RVU changes are
generally related to several factors. First, as discussed in section
II.A.2. of this final rule with comment period, we are currently
implementing the second year of the 4-year transition to new PE RVUs
using the new PPIS data that were adopted in the CY 2010 PFS final rule
with comment period (74 FR 61751). The impacts of using the new PPIS
data are generally consistent with the impacts discussed in the CY 2010
PFS final rule with comment period (74 FR 61983 through 61984).
The second general factor contributing to the CY 2011 impacts shown
in Table 101 is the CY 2011 rescaling of the RVUs so that in the
aggregate they match the work, PE, and malpractice proportions in the
revised and rebased MEI for CY 2011. That is, as discussed in section
II.E.5. of this final rule with comment period, the revised and rebased
MEI has a greater proportion attributable to malpractice and PE and,
correspondingly, a lesser proportion attributable to work. Specialties
that have a high proportion of total RVUs attributable to work, such as
anesthesiology, are estimated to experience a decrease in aggregate
payments as a result of this rescaling, while specialties that have a
high proportion attributable to PE, such as radiation oncology, are
estimated to experience an increase in aggregate payments. Malpractice
generally represents a small proportion of total payments and the
rescaling of the malpractice RVUs is not the primary driver of the
specialty impacts. As discussed in section II.E.7. of this final rule
with comment period, the rescaling of the RVUs to match the rebased MEI
is budget neutral overall.
Finally, another significant factor contributing to the impacts
shown in Table 101 (but on a specialty-specific rather than widespread
level) is the final policies regarding new, revised, and potentially
revised codes resulting from our CY 2011 acceptance of 70 percent of
the AMA RUC work RVU recommendations and the majority of the direct PE
input recommendations. We have incorporated alternative RVUs and direct
PE inputs for some codes in accordance with our recommended policies.
We note that some specialties, such as radiation oncology,
ophthalmology, and IDTFs that commonly furnish potentially misvalued
codes that have been examined by the AMA RUC and newly

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valued for CY 2011, experience decreases in aggregate payment as a
result of these changes.
Table 101 also includes the impacts resulting from our regulatory
change to expand the current 50 percent MPPR policy to therapy
services, but at an MPPR rate of 25 percent on the PE component payment
for therapy services. Under the PFS, we estimate that this change would
primarily reduce payments to the specialties of physical therapy and
occupational therapy. In order to maintain budget neutrality, we
redistributed the PFS savings back into other services paid under the
PFS by increasing all PE RVUs by approximately 0.5 percent.
Because providers in settings outside of the PFS, such as
outpatient hospital departments, are also paid using the PFS payment
rates and policies for physical therapy services, we estimated that
this will reduce (not redistribute) payments in those settings for
therapy services by approximately 7 percent in CY 2011.
In addition, Table 101 includes the impacts resulting from the
regulatory change to the scope of the current contiguous body area MPPR
policy for imaging services from contiguous body areas to include
noncontiguous body areas. We estimate that this change would primarily
reduce payments to the specialties of IDTF and radiology. In order to
maintain budget neutrality, we redistributed these savings back into
other services paid under the PFS by increasing all PE RVUs by
approximately 0.1 percent.
Table 101 also reflects the impacts resulting from certain ACA
provisions, including reductions in payment under section 3135 of the
ACA which amends section 1848(b)(4) of the Act to increase the
equipment utilization rate assumption for expensive diagnostic imaging
equipment, and, effective July 1, 2010, to increase the level of the
MPPR for contiguous body areas from 25 percent to 50 percent. The
expansion of the MPPR policy is further discussed in section II.C.4. of
this final rule with comment period, while the discussions of the
provisions of section 3135 of the ACA are found in sections VI.M. and
II.A.3.a. of this final rule with comment period. As required by
sections 1848(c)(2)(B)(v)(V) and (VI) of the Act (as added by sections
3135(a) and (b) of the ACA), these changes are not budget neutral and
result in program savings.
We note that in section XI.D of this final rule with comment
period, we provide discussions of the budget impacts of individual ACA
provisions not elsewhere discussed in this section. Additionally, while
column H in Table 101 illustrates the estimated combined CY 2011 impact
on total allowed charges by specialty of all the final RVU and MPPR
changes and the MEI rebasing, including several ACA provisions that
directly affect the determination of PFS payments as discussed
previously, we note that other ACA provisions discussed in section
XI.D. of this final rule with comment period could also result in
additional impacts on individual practitioners or specialties,
depending on their practice patterns. Since the effects of a number of
the ACA provisions are dependent on the practice patterns of
practitioners, we would expect these impacts to be non-uniform among
specialties. For example, as discussed further in section XI.D.19 of
this final rule with comment period, section 1833(x) of the Act (as
added by section 5501(a) of the ACA) provides for a 10 percent
incentive payment for primary care services furnished by primary care
practitioners. Accordingly, potentially eligible primary care
specialties designated under the statute (including family practice and
geriatric medicine), are expected to experience an estimated aggregate
increase in payment of between 4 and 9 percent, which includes the
estimated impacts under the PFS displayed in column H of Table 101 and
the new primary care incentive payments. We note that in general the
payment impact for an individual physician may be different from the
average, based on the mix of services the physician furnishes and his
or her eligibility for the primary care incentive payment program.
b. Combined Impact
Column H of Table 101 displays the estimated CY 2011 combined
impact on total allowed charges by specialty of all the final RVU and
MPPR changes. These impacts range from an increase of 6 percent for
portable x-ray suppliers to a decrease of 15 percent for diagnostic
testing facilities. There is generally a slightly positive net effect
of our final policies on primary care specialties, such as family
practice, internal medicine, and geriatrics. Again, these impacts are
estimated prior to the application of the negative CY 2011 CF update
applicable under the current statute.
Comment: One commenter requested that the specialty impact table
incorporate the impact of payment changes for other Medicare Part B
services that are not paid under the PFS.
Response: The purpose of Table 101 is to isolate the impacts by
specialty for services paid under the PFS. To the extent that changes
in payment for other Part B services are adopted in this final rule
with comment period and have significant impacts upon providers, those
impacts are discussed elsewhere in this section.
Table 102 shows the estimated impact on total payments for selected
high-volume procedures of all of the changes discussed previously,
including the effect of the CY 2011 negative PFS CF update. We selected
these procedures because they are the most commonly furnished by a
broad spectrum of physician specialties. There are separate columns
that show the change in the facility rates and the nonfacility rates.
For an explanation of facility and nonfacility PE, we refer readers to
Addendum A of this final rule with comment period.
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B. Geographic Practice Cost Indices (GPCIs)

As discussed in section II.D. of this final rule with comment
period, we are required to update the GPCI values at least every 3
years and phase in the adjustment over 2 years (if there has not been
an adjustment in the past year). For CY 2011, we are finalizing new
GPCIs for each Medicare locality. The updated GPCIs reflect the first
year of the 2-year phase-in. The new GPCIs rely upon the 2010 HUD data
for determining the relative cost differences in the office rent
component of the PE GPCIs, as well as the 2006 through 2007
professional malpractice premium data for determining the malpractice
GPCIs. The 2006 through 2008 Bureau of Labor and Statistics (BLS)
Occupational Employment Statistics (OES) data were used as a
replacement for 2000 Census data for determining the physician work
GPCIs and the employee compensation component of the PE GPCIs. However,
as discussed in section II.D. of this final rule with comment period,
we are continuing to use the current cost share weights for determining
the PE GPCI values and locality GAFs.
Additionally, the updated GPCIs reflect several provisions required
by changes included in the ACA. Section 1848(e)(1)(H) of the Act (as
added by section 3102(b) of the ACA) specifies that for CYs 2010 and
2011, the employee wage and rent portions of the PE GPCIs reflect only
one-half of the relative cost differences for each locality compared to
the national average and includes a ``hold harmless'' provision for any
PFS locality that would receive a reduction to its PE GPCI resulting
from the limited recognition of cost differences. Section 1848(e)(1)(E)
of the Act (as amended by section 3102(a) of the ACA) extends the 1.000
work GPCI floor only through December 31, 2010. Therefore, the CY 2011
GPCIs reflect the sunset of the 1.000 work GPCI floor. Section
1848(e)(1)(G) of the Act (as amended by section 134(b) of the MIPPA)
established a permanent 1.500 work GPCI floor in Alaska, beginning
January 1, 2009 and, therefore, the 1.500 work GPCI floor in Alaska
will remain in place for CY 2011. Moreover, section 1848(e)(1)(I) of
the Act (as added by section 10324(c) of the ACA) establishes a 1.000
PE GPCI floor for services furnished in frontier states effective
January 1, 2011. We estimate the combined impact of these provisions on
a fiscal year cash basis to be $580 million for FY 2011.
As required by the statute, the updated GPCIs would be phased in
over a 2-year period. Addendum D to this final rule with comment period
shows the estimated effects of the revised GPCIs on locality GAFs for
the transitional year (CY 2011) by State and Medicare locality. The
GAFs reflect the use of updated underlying GPCI data and the ACA
provisions. The GAFs are a weighted composite of each area's work, PE,
and malpractice GPCIs using the national GPCI cost share weights. While
we do not actually use the GAFs in computing the PFS payment for a
specific service, they are useful in comparing the estimated overall
costs and payments for different localities. The actual effect on
payment for any specific service would deviate from the estimated
payment based on the GAF to the extent that the proportions of work,
PE, and malpractice expense RVUs for the specific service differ from
those of the GAF. The most significant changes would occur in 12
payment localities, where the GAF increases or decreases by more than 2
percent. The cumulative effects of all of the GPCI revisions, including
the updated underlying GPCI data and provisions of the ACA, are
reflected in the CY 2012 GPCI values that are displayed in Addendum E
to this final rule with comment period.

C. Rebasing and Revising of the MEI

As discussed in section II.E.5. of this final rule with comment
period, we finalized the rebasing and revision of the MEI for the CY
2011 PFS. Using the new 2006 MEI weights in place of the 2000 weights
and implementing the revisions to the MEI results in a slightly higher
projected MEI increase for CY 2011 than would have been the case
without the rebasing and revision of the MEI. The MEI update for CY
2011 is 0.4 percent under the 2006-based MEI, while the MEI update for
CY 2011 would have been 0.3 percent under the 2000-based MEI. After CY
2011, the 2006-based MEI updates are forecasted to be either the same
or slightly lower (0.1 to 0.2 percentage point) than the forecasted
2000-based MEI updates.

D. The Affordable Care Act Provisions

1. Section 3002: Improvements to the Physician Quality Reporting System
For the impact of this provision see section XI.E.6. of this final
rule with comment period.
2. Sections 3003 and 3007: Improvements to the Physician Feedback
Program and Value-Based Payment Under the Physician Fee Schedule
As discussed in section VI.B. of this final rule with comment
period, these provisions: (1) continue the confidential feedback
program and requires the Secretary, beginning in 2012, to provide
reports that compare patterns of resource use of individual physicians
to other physicians; and (2) require the Secretary to apply a separate,
budget-neutral, value-based payment modifier to the payment calculation
for PFS services furnished by certain practitioners beginning in CY
2015. There is no budgetary impact associated with these provisions for
CY 2011.
3. Section 3102: Extension of the Work Geographic Index Floor and
Revisions to the Practice Expense Geographic Adjustment under the
Medicare Physician Fee Schedule, and Protections for Frontier States as
Amended by Section 10324
For the impact of this provision see section XI.B. of this final
rule with comment period.
4. Section 3103: Extension of Exceptions Process for Medicare Therapy
Caps
This provision extends the exceptions process for therapy caps
through December 31, 2010. Therapy caps are discussed in detail in
section III.A.1. of this final rule with comment period. We estimate
the impact on a fiscal year cash basis to be $1.16 billion for FY 2011.
5. Section 3104: Extension of Payment for Technical Component of
Certain Physician Pathology Services
As discussed in section VI.E. of this final rule with comment
period, this provision continues payment to independent laboratories
for the TC of physician pathology services for fee-for-service Medicare
beneficiaries who are inpatients or outpatients of a covered hospital
through CY 2010. We estimate the impact on a fiscal year cash basis to
be $80 million for FY 2011.
6. Sections 3105 and 10311: Extension of Ambulance Add-Ons
As discussed in section VI.F. of this final rule with comment
period, these provisions require the extension of certain add-on
payments for ground ambulance services, and the extension of certain
rural area designations for purposes of air ambulance payment. As
further discussed in section VI.F. of this final rule with comment
period, we are amending the Medicare program regulations to conform the
regulations to these provisions of the ACA. These statutory provisions
are essentially prescriptive and do not allow for discretionary
alternatives on the part of the Secretary.
As discussed in the July 1, 2004 interim final rule (69 FR 40288),
in

[[Page 73602]]

determining the super-rural bonus amount under section 1834(l)(12) of
Act, we followed the statutory guidance of using the data from the
Comptroller General (GAO) of the U.S. We obtained the same data as the
data that were used in the GAO's September 2003 Report titled
``Ambulance Services: Medicare Payments Can Be Better Targeted to Trips
in Less Densely Populated Rural Areas'' (GAO report number GAO-03-986)
and used the same general methodology in a regression analysis as was
used in that report. The result was that the average cost per trip in
the lowest quartile of rural county populations was 22.6 percent higher
than the average cost per trip in the highest quartile. As required by
section 1834(l)(12) of the Act, this percent increase is applied to the
base rate for ground ambulance transports that originate in qualified
rural areas, which were identified using the methodology set forth in
the statute. Payments for ambulance services under Medicare are
determined by the point of pick-up (by zip code area) where the
beneficiary is loaded on board the ambulance. We determined that ground
ambulance transports originating in 7,842 zip code areas (which were
determined to be in ``qualified rural areas'') out of 42,879 zip code
areas, according to the July 2010 zip code file, will realize increased
base rate payments under this provision. However, the number and level
of services that might occur in these areas for CY 2011 is unknown at
this time. While many elements may factor into the final impact of
sections 3105(a) through (c) and 10311(a) through (c) of the ACA, we
estimate the impact of all these provisions to be $10 million for FY
2011.
7. Section 3107: Extension of Physician Fee Schedule Mental Health Add-
On
As discussed in section VI.G. of this final rule with comment
period, this provision extends application of the five percent increase
in Medicare payment for specified mental health services only through
CY 2010. We estimate the impact on a fiscal year cash basis to be $20
million for FY 2011.
8. Section 3108: Permitting Physician Assistants to Order Post-Hospital
Extended Care Services
As discussed in section VI.H. of this final rule with comment
period, this provision adds PAs to the list of practitioners (that is,
physicians, nurse practitioners (NPs), and clinical nurse specialists)
that can perform the required initial certification and periodic
recertifications under section 1814(a)(2)(B) of the Act with respect to
the SNF level of care. There is no budgetary impact associated with
this provision.
9. Section 3111: Payment for Bone Density Tests
As discussed in section VI.I. of this final rule with comment
period, this provision requires payment for dual-energy x-ray
absorptiometry (DXA) services furnished during CYs 2010 and 2011 at 70
percent of the Medicare rate paid in CY 2006, with the applicable
geographic adjustment for CY 2011. We estimate the impact on a fiscal
year cash basis to be $60 million for FY 2011.
10. Section 3114: Improved Access for Certified Nurse-Midwife Services
As discussed in section VI.J. of this final rule with comment
period, this provision increased the amount of Medicare payment made
under the PFS for certified nurse-midwife (CNM) services. There is no
significant budgetary impact associated with this provision.
11. Section 3122: Extension of Medicare Reasonable Costs Payments for
Certain Clinical Diagnostic Laboratory Tests Furnished to Hospital
Patients in Certain Rural Areas
As discussed in section VI.K. of this final rule with comment
period, this provision reinstitutes reasonable cost payment for
clinical diagnostic laboratory tests performed by hospitals with fewer
than 50 beds that are located in qualified rural areas as part of their
outpatient services for cost reporting periods beginning on or after
July 1, 2010 through June 30, 2011. For some hospitals with cost
reports that begin as late as June 30, 2011, this reinstitution of
reasonable cost payment could affect services performed as late as June
29, 2012, because this is the date those cost reports will close.
12. Section 3134: Misvalued Codes Under the PFS
As discussed in section II.C. of this final rule with comment
period, section 1848 (c)(2)(K) of the Act (as added by section 3134 of
the ACA) requires the Secretary to periodically review and identify
potentially misvalued codes and make appropriate adjustments to the
relative values of those services identified as being potentially
misvalued. The impacts of our CY 2011 policy changes under this
provision are included in the discussion of RVU impacts in section
XI.A. of this final rule and summarized by specialty in Table Q1 of
this final rule with comment period.
13. Section 3135: Modification of Equipment Utilization Factor for
Advanced Imaging Services
As discussed in section VI.M. of this final rule with comment
period, for services furnished on or after July 1, 2010, section
1848(b)(4)(D) of the Act (as added by section 3135(b) of the ACA)
adjusts the technical component MPPR for multiple imaging studies
provided in a single imaging session on contiguous body parts within
families of codes from 25 percent to 50 percent as of July 1, 2010. For
services furnished on or after January 1, 2011, section 1848(b)(4)(C)
of the Act (as added by section 3135(a) of the ACA) increases the
equipment utilization rate to 75 percent for expensive diagnostic
imaging equipment, changing the CY 2011 utilization rate adopted in the
CY 2010 PFS final rule with comment period to the 75 percent rate. We
estimate the impact on a fiscal year cash basis to be savings to the
Medicare program of $160 million for FY 2011.
14. Section 3136: Revisions in Payments for Power Wheelchairs
As discussed in section VI.N. of this final rule with comment
period, this provision requires the Secretary to revise the capped
rental fee schedule amounts for all power wheelchairs effective for
power wheelchairs furnished on or after January 1, 2011. Under the
monthly capped rental payment structure, the fee schedule will pay 15
percent (instead of 10 percent) of the purchase price for the first 3
months and 6 percent (instead of 7.5 percent) for the remaining rental
months not to exceed 13 months. In addition, the lump sum (up front)
purchase payment will be eliminated for standard power-driven
wheelchairs. For complex rehabilitative power-driven wheelchairs, the
provision permits payment to be made on a lump sum purchase method or a
monthly rental method. These changes are prescriptive in the statute
and do not allow for alternatives.
We expect the changes mandated by section 3136 of the ACA as a
whole to achieve program savings as a result of total payments per
standard power wheelchair being less than 100 percent of the purchase
fee schedule amount. This decrease in expenditures is expected for two
reasons. Primarily, the provision will eliminate the lump sum payment
method for standard power-driven wheelchairs and instead payment will
be made under the monthly rental method resulting in lower aggregate
payments because many beneficiaries who use standard power wheelchairs
do not use them for as long

[[Page 73603]]

as 13 months. In addition, we note that currently a significantly lower
volume of power-driven wheelchairs are paid under the monthly payment
method. The payment impact of increasing monthly rental payments in the
initial 3 months will be offset both by the savings achieved from
eliminating the lump sum payment method for standard power-driven
wheelchairs and by decreasing payments for the remaining months of
rental from 7.5 percent to 6 percent of the purchase price for all
power-driven wheelchairs. We compared the estimates of current payments
for power-driven wheelchairs to estimates of payments resulting from
the changes required by section 3136 of the ACA which showed an
estimated payment impact of a decrease in expenditures of approximately
$780 million over a 5-year period. The FY 2011 cash savings was $120
million.
15. Section 3139: Payment for Biosimilar Biological Products
In Section VI.O. of this rule we discussed the provisions of the
ACA that establish the definition of biosimilar, and reference
biological product as well as the payment methodology for these
products under Section 1847A of the Act. We noted that while these
provisions are effective July 1, 2010, per statute, we do not expect to
make payment for biosimilar products until after such products are
approved by the FDA. We do not expect this provision to have any impact
on spending.
16. Section 3401: Revisions of Certain Market Basket Updates and
Incorporation of Productivity Adjustments
As discussed in section VI.P. of this final rule with comment
period, section 3401 of the ACA amends section 1881(b)(14)(F) of the
Act so that in CY 2011, there is a full ESRD market basket update to
the composite rate component of the blended payment amount under the
new ESRD PPS. This provision is estimated to be a cost to the Medicare
program of $40 million (does not include coinsurance).
Section 3401 of the ACA also incorporates a productivity adjustment
into the update factors for certain payment systems. Specifically,
section 3401 requires that in CY 2011 (and in subsequent years), update
factors under the ASC payment system, the AFS, the CLFS, and the DMEPOS
fee schedules be adjusted by the productivity adjustment. We estimate
the impact to be savings to the Medicare program of $20 million, $30
million, $50 million, and $60 million for the ASC payment system, the
AFS, the CLFS, and the DMEPOS fee schedules respectively, for FY 2011.
17. Section 4103: Medicare Coverage of Annual Wellness Visit Providing
a Personalized Prevention Plan
As discussed in section VI.Q. of this final rule with comment
period, for services furnished on or after January 1, 2011, section
1861(s)(2)(FF) of the Act (as added by section 4103 of the ACA)
provides Medicare coverage, with no coinsurance or deductible, for an
annual wellness visit. The annual wellness visit entails the creation
of a personalized prevention plan for an individual that ultimately
will include a health risk assessment and also includes other elements,
such as updating the family history, identifying providers that
regularly provide medical care to the individual, body mass index
measurement, development of a screening service schedule, and
identification of risk factors. We estimate the impact on a fiscal year
cash basis to be $110 million for FY 2011.
18. Section 4104: Removal of Barriers to Preventive Services in
Medicare
As discussed in section VI.R. of this final rule with comment
period, for services furnished on or after January 1, 2011, sections
1833(a)(1) and 1833(b) of the Act (as amended by section 4104 of the
ACA) waive the deductible and coinsurance requirements for most
preventive services, and waive the deductible for colorectal cancer
screening tests that are reported with other codes. Services to which
no coinsurance or deductible would be applied are the annual wellness
visit, the initial preventive physical examination, and any covered
preventive service if it is recommended with a grade of A or B by the
United States Preventive Services Task Force. We estimate that this new
benefit will result in an increase in Medicare payments. We estimate
the impact on a fiscal year cash basis to be $110 million for FY 2011.
19. Section 5501: Expanding Access to Primary Care Services and General
Surgery Services
As discussed in section VI.S. of this final rule with comment
period, for services furnished on or after January 1, 2011 and before
January 1, 2016, sections 1833(x) and (y) of the Act (as added by
section 5501 of the ACA) provides for a 10 percent incentive payment
applied to primary care services furnished by primary care
practitioners, as well as a 10 percent incentive payment for major
surgical procedures furnished by general surgeons practicing in
geographic health professional shortage areas. Under the final CY 2011
policies, we estimate the impact on a fiscal year cash basis to be $240
million for section 1833(x) of the Act and $10 million for section
1833(y) of the Act for FY 2011.
20. Section 6003: Disclosure Requirements for In-office Ancillary
Services Exception to the Prohibition of Physician Self-referral for
Certain Imaging Services
In section VI.T of this final rule with comment period, we discuss
our revisions to Sec. 411.355(b)(2) to include a new disclosure
requirement created by section 6003 of the ACA and related to the in-
office ancillary services exception to the physician self-referral
prohibition. We are finalizing this provision with some modification,
including reducing the number of required suppliers on the disclosure
from 10 to 5 and removing the requirement that a record of the signed
disclosure notification be maintained as a part of the patient's
medical record. Physicians are now able to document the disclosure
without the patient's signature.
Comment: Two commenters disagreed with the estimated impact in the
proposed rule related to section 6003 of the ACA. The commenter noted
that requiring physicians to list 10 suppliers is excessive and places
an unnecessary administrative burden on the referring physicians. The
commenters also expressed concern that it will take longer to create
and maintain the disclosure notice than we proposed. The commenters did
not provide alternative values for calculating the impact of this
provision.
Response: We have addressed the commenters' concerns regarding the
administrative burden related to this new disclosure requirement in the
final rule by reducing the number of suppliers that must be listed from
10 to 5. In addition, we have removed the requirement that the
disclosure notice be signed by the patient and a copy of this
maintained in the medical record. We believe that our previous economic
estimates are appropriate taking into account the public comments
received in response to the estimated values included in the proposed
rule and the changes that have been finalized in this rule.
We believe that the provisions in section VI.T. of this final rule
with comment period will have a minor economic impact on the affected
physicians who self-refer for advanced imaging services under the in-
office

[[Page 73604]]

ancillary services exception. We did not receive any public comments
addressing the estimated number of physicians impacted by this
provision. The burden associated for these physicians remains de
minimis as we have reduced the number of suppliers to be listed and
have reduced the requirements for effective disclosure by eliminating
the patient signature maintained as part of the medical record. We
still believe physicians will incur a one-time cost associated with
developing the disclosure notice.
21. Section 6404: Maximum Period for Submission of Medicare Claims
Reduced to Not More Than 12 Months
As discussed in section VI.U. of this final rule with comment
period, section 6404 of the ACA reduces the maximum time period for
filing Medicare claims to no more than 12 months after the date of
service. Under the new law, claims for services furnished on or after
January 1, 2010, must be filed within 1 calendar year after the date of
service. In addition, section 6404 of the ACA provides that claims for
services furnished before January 1, 2010, must be filed no later than
December 31, 2010. Section 6404 of the ACA also permits the Secretary
to make certain exceptions to the 1-year filing deadline. This final
rule with comment period would create three new exceptions to the 1-
year filing deadline.
The budgetary impact related to this provision is significant as
future payment of claims for services incurred will now be made at an
earlier date, relative to the 12-month submission expiration. This is
reflected by the Part A and Part B payment amounts of $60 and $50
million for FY 2011. However, for purposes of the RIA, the economic
impact of this provision is non-economically significant, as to the
interest lost on money now required to pay claims prior to the 12-month
submission expiration is minimal.
Providers and suppliers have established billing practices for the
submission of claims for payment to the Medicare program. Although this
final rule with comment period would require providers and suppliers to
submit Medicare FFS claims within 12 months from the date of service,
we believe providers and suppliers would easily revise their billing
practices on a one-time basis, and suffer no economic impact. In fact,
analysis of Medicare claims data shows that more than 99 percent of
Part A and Part B claims are filed in 12 months or less. Lastly,
providers, suppliers, or the small number of beneficiaries that
occasionally submit claims may benefit from the availability of the
three new exceptions to the timely filing rule. However, we believe the
impact on program costs would be negligible.
We did not receive any comments on the RIA for this provision.
22. Section 6410 of Patient Accountability and Affordable Care Act and
Section 154 of MIPPA: Adjustments to the Metropolitan Statistical Areas
(MSA) for Medicare Durable Medical Equipment, Prosthetics, Orthotics,
and Supplies Competitive Acquisition Program
For the impact of this provision see section XI.E.7.c. of this
final rule with comment period.
23. Section 10501(i)(3): Collection of HCPCS Data for the Development
and Implementation of a Prospective Payment System for the Medicare
FQHC Program
As discussed in section VI.W. of this final rule with comment
period, section 10501(i)(3) of the ACA establishes a process by which
we will collect claims level data, using HCPCS codes, from FQHCs. This
data will be used to determine the time, scope, and intensity of
services provided by FQHCs in anticipation of the establishment of a
prospective payment system to be implemented beginning in 2014. We
further noted that the proposed new data collection effort would be for
informational and data gathering purposes only, and would not be
utilized to determine Medicare payment to the FQHC. Because this
provision does not affect payment to FQHCs, there is no impact.

E. Other Provisions of the Final Rule

1. Part B Drug Payment: ASP Issues
Application of our policies for ``Carry Over ASP'' and ``Partial
Quarter ASP Data,'' as discussed in section VII.A. of this final rule
with comment period, are dependent on the status and quality of
quarterly manufacturer data submissions, so we cannot quantify
associated savings.
Furthermore, we do not expect that our policy for determining the
payment amount for drugs and biologicals that include intentional
overfill, as discussed in section VII.A of this final rule with comment
period, will impact payments made by the Medicare program.
Finally, as discussed in section VII.A of this final rule with
comment period, we are not finalizing our price substitution policy at
this time and as a result there is no impact to the program as no
changes to policy are being made.
2. Ambulance Fee Schedule: Policy for Reporting Units When Billing for
Ambulance Fractional Mileage
As discussed in section VII.B. of this final rule with comment
period, we are implementing fractional mileage billing for all
providers and suppliers of ambulance services. Effective for dates of
service on and after January 1, 2011, ambulance providers and suppliers
(except for providers eligible to bill on the Form UB-04) will be
required to report mileage rounded up to the nearest tenth of a mile,
rather than the nearest whole mile, on all claims for mileage totaling
up to 100 covered miles, and we will pay based on that amount.
Implementation of the fractional mileage billing policy will be delayed
until August 1, 2011 for ambulance providers submitting claims on the
Form UB-04, unless updates to allow billing fractional units on the
Form UB-04 are not completed by July 2011. In that case, implementation
of the fractional mileage billing policy is delayed for ambulance
providers eligible to bill on the Form UB-04 until January 1, 2012.
By requiring that providers and suppliers round up to the nearest
tenth of a mile rather than the nearest whole mile, providers and
suppliers will be submitting claims for anywhere between 0.1 and 0.9 of
a mile less per claim and Medicare will pay based on that amount. In
our analysis (using 2008 claim data) for the proposed rule, we
indicated that Medicare could potentially save at least $45 million per
year in payments for base mileage billed by suppliers, and perhaps as
much as $80 million per year when considering other types of ambulance
mileage payments such as those for rural mileage and those made to
institutional providers. Further analysis has revealed that, once
adjusted for other factors such as premium offsets and MA savings, the
potential annual savings totals approximately $30 million for supplier-
billed base mileage alone. We continue to anticipate that the total
savings will likely increase when considering other ambulance mileage
payments such as for rural mileage, institutional provider payments,
etc. However, we were not able to further analyze the potential
additional savings using available data. Although implementation of the
fractional mileage billing policy for institutional providers billing
on paper claims is delayed in the final rule with comment period, the
volume of institutional paper billers is insignificant--less than 1
percent of all institutional billers submits claims on the Form UB-04--
and therefore, will

[[Page 73605]]

not significantly impact any potential savings.
3. Chiropractic Services Demonstration
As discussed in section VII.D. of this final rule with comment
period, we are continuing the recoupment of the $50 million in
expenditures from this demonstration in order to satisfy the budget
neutrality requirement in section 651(f)(1)(b) of the MMA. We initiated
this recoupment in CY 2010 and this will be the second year. As
discussed in the CY 2010 PFS final rule with comment period, we
finalized a policy to recoup $10 million each year through adjustments
to the PFS for all chiropractors in CYs 2010 through 2014. To implement
this required budget neutrality adjustment, we are recouping $10
million in CY 2011 by reducing the payment amount under the PFS for the
chiropractic CPT codes (that is, CPT codes 98940, 98941, and 98942) by
approximately 2 percent.
4. Renal Dialysis Services Furnished by ESRD Facilities
The ESRD related provisions are discussed in sections VI.P.1. and
VII.E. of this final rule with comment period. To understand the impact
of the changes affecting payments to different categories of ESRD
facilities, it is necessary to compare estimated payments under the
current year (CY 2010 payments) to estimated payments under the
revisions to the composite rate payment system (CY 2011 payments) as
discussed in section VII.E. of this final rule with comment period. To
estimate the impact among various classes of ESRD facilities, it is
imperative that the estimates of current payments and estimates of
proposed payments contain similar inputs. Therefore, we simulated
payments only for those ESRD facilities for which we are able to
calculate both current CY 2010 payments and proposed CY 2011 payments.
Also, as explained in the ESRD PPS final rule (74 FR 49162 through
49164), section 1881(b)(14)(E)(i) of the Act requires a 4-year
transition (phase-in) from the current composite payment system to the
ESRD PPS, and section 1881(b)(14)(E)(ii) allows ESRD facilities to make
a one-time election to be excluded from the transition. As of January
1, 2011, ESRD facilities that elect to go through the transition would
be paid a blended amount that will consist of 75 percent of the basic
case-mix adjusted composite payment system and the remaining 25 percent
would be based on the ESRD PPS payment. Therefore, these final rates
listed in the impact table (Table Q3) reflect only the composite rate
portion of the blended payment amounts for facilities going through the
first year of the 4-year transition under the new ESRD PPS.
ESRD providers were grouped into the categories based on
characteristics provided in the Online Survey and Certification and
Reporting (OSCAR) file and the most recent cost report data from the
Healthcare Cost Report Information System (HCRIS). We also used the
June 2010 update of CY 2009 National Claims History file as a basis for
Medicare dialysis treatments and separately billable drugs and
biologicals. Since the December 2009 update of the CY 2009 National
Claims History File is incomplete, we updated the data. The description
of the updates for the separately billable drugs is described in
section VII.E. of this final rule with comment period. To update the
treatment counts we used the ratio of the June 2009 to the December
2008 updates of the CY 2008 National Claims History File figure for
treatments. This was an increase of 12.4 percent. Due to data
limitations, we are unable to estimate current and proposed payments
for 32 of the 5431 ESRD facilities that bill for ESRD dialysis
treatments.
Table 103 shows the impact of this year's changes to CY 2011
payments to hospital-based and independent ESRD facilities. The first
column of Table 103 identifies the type of ESRD provider, the second
column indicates the number of ESRD facilities for each type, and the
third column indicates the number of dialysis treatments. The fourth
column shows the effect of all changes to the ESRD wage index for CY
2011 as it affects the composite rate payments to ESRD facilities. The
fourth column compares aggregate ESRD wage-adjusted composite rate
payments in CY 2011 to aggregate ESRD wage-adjusted composite rate
payments in CY 2010. In CY 2010, ESRD facilities receive 100 percent of
the CBSA wage-adjusted composite rate. The overall effect to all ESRD
providers in aggregate is zero because the CY 2011 ESRD wage index has
been multiplied by a budget neutrality adjustment factor to comply with
the statutory requirement that any wage index revisions be done in a
manner that results in the same aggregate amount of expenditures as
would have been made without any changes in the wage index. The fifth
column shows the effect of changes to the ESRD wage index in CY 2011
and the effect of section 3401(h) of the ACA, which amends section
1881(b)(14)(F) of the Act to revise the ESRD market basket increase
factor. Effective January 1, 2011, there is a full ESRD bundled market
basket update to the composite rate component of the blended payment
amount under the payment system. We apply an ESRD market basket
increase factor of 2.5 percent for those facilities electing to go
through the ESRD PPS transition. The sixth column shows the overall
effect of the changes in composite rate payments to ESRD providers,
including the drug add-on. The overall effect is measured as the
difference between the CY 2011 payment with all changes in this rule
and current CY 2010 payment. This payment amount is computed by
multiplying the wage-adjusted composite rate with the drug add-on for
each provider times the number of dialysis treatments from the CY 2009
claims. The CY 2011 payment is the composite rate for each provider
(with the 14.7 percent drug add-on) times dialysis treatments from CY
2009 claims. The CY 2010 current payment is the composite rate for each
provider (with the current 15.0 percent drug add-on) times dialysis
treatments from CY 2009 claims.
The overall impact to ESRD providers in aggregate is 2.2 percent as
shown in Table 103. Most ESRD facilities will see an increase in
payments as a result of the ACA provision. While section 3401(h) of the
ACA modifies the ESRD bundled market basket, which we will be a 2.5
percent increase to the ESRD composite rate portion of the blended
payment amount, this 2.5 percent increase does not apply to the drug
add-on to the composite rate. For this reason, the impact of all
changes in this final rule with comment period is a 2.2 percent
increase for all ESRD providers. Overall, payments to ineligible
professional independent ESRD facilities will increase by 2.2 percent
and payments to hospital-based ESRD facilities will increase by 2.1
percent.

[[Page 73606]]

Table 103--Impact of CY 2011 Changes in Payments to Hospital-Based and Independent ESRD Facilities
[Percent change in composite rate payments to ESRD facilities]
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------------------
Effect of
changes in Overall effect
Number of Effect of wage index and of wage index
Number of dialysis changes in of affordable affordable
facilities treatments wage index \1\ Care Act Care Act &
(in millions) (percent) provision \2\ Drug Add-on
(percent) \3\ (percent)
----------------------------------------------------------------------------------------------------------------
All Providers: 5,399 38.6 0.0 2.5 2.2
Independent................. 4,821 34.9 0.0 2.5 2.2
Hospital Based.............. 578 3.7 -0.1 2.4 2.1
By Facility Size:
Less than 5000 treatments... 2105 5.9 0.1 2.5 2.3
5000 to 9999 treatments..... 2,049 14.8 0.1 2.6 2.3
Greater than 9999 treatments 1,245 17.9 -0.1 2.4 2.2
Type of Ownership:
Profit...................... 4,423 31.8 0.0 2.5 2.3
Nonprofit................... 976 6.7 -0.1 2.4 2.1
By Geographic Location:
Rural....................... 1,178 6.2 0.1 2.6 2.4
Urban....................... 4,221 32.4 0.0 2.5 2.2
By Region:
New England................. 165 1.3 -0.6 1.8 1.6
Middle Atlantic............. 603 4.8 -0.4 2.1 1.8
East North Central.......... 885 6.0 0.2 2.7 2.4
West North Central.......... 403 2.1 -0.1 2.4 2.2
South Atlantic.............. 1,211 8.8 0.0 2.5 2.2
East South Central.......... 422 2.9 0.2 2.7 2.4
West South Central.......... 729 5.6 0.4 2.9 2.6
Mountain.................... 323 1.8 0.2 2.7 2.4
Pacific..................... 619 5.0 0.1 2.6 2.4
Puerto Rico & Virgin Islands 39 0.4 -2.4 0.0 -0.2
----------------------------------------------------------------------------------------------------------------
Notes: Payments have been adjusted to reflect budget neutrality.
2010 includes the MIPPA 1% increase and site neutral rates.
2010 & 2011 are 100 percent new CBSA wage adjusted composite rate.
\1\ This column shows the overall effect of wage index changes on ESRD providers. Composite rate payments are
computed using the final CY 2011 wage indexes which are compared to composite rate payments using the current
CY 2010 wage indexes.
\2\ This column shows the effect of the changes in the Wage Indexes and the ACA provision which includes an ESRD
Bundled Market Basket (2.5 percent) increase to the composite rate. This provision is effective January 1,
2011.
\3\ This column shows the percent change between CY 2011 and CY 2010 composite rate payments to ESRD facilities.
The CY 2011 payments include the CY 2011 wage adjusted composite rate, a 2.5% increase due to the ACA,
effective January 1, 2011, and the drug add-on of 14.7%. The CY 2010 payments include the CY 2010 wage
adjusted composite rate, a 1% increase and site neutral rates effective January 1, 2009 and the drug add-on of
15.0%. This column shows the effect of wage index, ACA, and drug add-on changes. While the ACA provision
includes a 2.5% increase to the composite rate, this increase does not apply to the drug add-on to the
composite rate. For this reason, the impact of all changes in this final rule with comment period is a 2.2%
increase for all ESRD providers.

5. Section 131(b) of the MIPPA: Physician Payment, Efficiency, and
Quality Improvements--Physician Quality Reporting System
As discussed in section VII.F.1 of this final rule with comment
period, we are finalizing several different reporting options for
eligible professionals who wish to participate in the 2011 Physician
Quality Reporting System. Although there may be some cost incurred in
the Physician Quality Reporting System and their associated code sets,
and for expanding an existing clinical data warehouse to accommodate
registry-based reporting and EHR-based reporting for the Physician
Quality Reporting System, we do not anticipate a significant cost
impact on the Medicare program.
Participation in the CY 2011 Physician Quality Reporting System by
individual eligible professionals is voluntary and individual eligible
professionals and group practices may have different processes for
integrating the Physician Quality Reporting System into their
practice's work flows. Given this variability and the multiple
reporting options that we provide, it is difficult to accurately
estimate the impact of the Physician Quality Reporting System on
providers. Furthermore, we believe that costs for eligible
professionals who are participating in the Physician Quality Reporting
System for the first time in 2011 will be considerably higher than the
cost for eligible professionals who participated in Physician Quality
Reporting System in prior years. In addition, for many eligible
professionals, the cost of participating in the Physician Quality
Reporting System is offset by the incentive payment received.
With respect to the potential incentive payment that will be made
for the 2011 Physician Quality Reporting System, we estimate this
amount to be approximately $100 million. This estimate is derived from
looking at our 2008 incentive payment of more than $95 million and then
accounting for the fact that the 2008 incentive payment was 1.5 percent
of an eligible professional's total estimated Medicare Part B PFS
allowed charges for all covered professional services furnished during
the 2008 reporting period. For 2011, the incentive payment is 1.0
percent of an eligible professional's total estimated Medicare Part B
PFS allowed charges for all covered professional services furnished
during the 2011 reporting period. Although we expect

[[Page 73607]]

that the lower incentive payment amount for 2011 would reduce the total
outlay by approximately one-third, we also expect more eligible
professionals to participate in the 2011 Physician Quality Reporting
System as there are more methods of data submission and additional
alternative reporting periods and that some eligible professionals
would qualify for the additional 0.5 percent incentive authorized under
section 1848(m)(7) of the Act (``Additional Incentive Payment'').
One factor that influences the cost to individual eligible
professionals is the time and effort associated with individual
eligible professionals identifying applicable Physician Quality
Reporting System quality measures and reviewing and selecting a
reporting option. This burden will vary with each individual eligible
professional by the number of applicable measures, the eligible
professional's familiarity, and understanding of the Physician Quality
Reporting System I, experience with Physician Quality Reporting System
participation, and the method(s) selected by the eligible professional
for reporting of the measures, and incorporating the reporting of the
measures into the office work flows. Information obtained from the
Physician Voluntary Reporting Program (PVRP), which was a predecessor
to the Physician Quality Reporting System and was the first step for
the reporting of physician quality of care through certain quality
metrics, indicated an average labor cost per practice of approximately
$50 per hour. To account for salary increases over time, we will use an
average practice labor cost of $58 per hour for our estimates, based on
an assumption of an average annual increase of approximately 3 percent.
Therefore, assuming that it takes an individual eligible professional
approximately 5 hours to review the PQRI quality measures, review the
various reporting options, select the most appropriate reporting
option, identify the applicable measures for which they can report the
necessary information, and incorporate reporting of the selected
measures into their office work flows, we estimate that the cost to
eligible professionals associated with preparing to report Physician
Quality Reporting System quality measures would be approximately $290
per individual eligible professional ($58 per hour x 5 hours).
Another factor that influences the cost to individual eligible
professionals is how they choose to report the Physician Quality
Reporting System measures (that is, whether they select the claims-
based, registry-based or EHR-based reporting mechanism). For claims-
based reporting, estimates from the PVRP indicate the time needed to
perform all the steps necessary to report quality data codes (QDCs) for
1 measure on a claim ranges from 15 seconds (0.25 minutes) to 12
minutes for complicated cases or measures. In previous years, when we
required reporting on 80 percent of eligible cases for claims-based
reporting, we found that on average, the median number of reporting
instances for each of the PQRI measures was 9. Since we reduced the
required reporting rate by over one-third to 50 percent, then for
purposes of this impact analysis we will assume that an eligible
professional will need to report each selected measure for 6 reporting
instances, or 6 cases. Assuming that an eligible professional, on
average, will report 3 measures and that an eligible professional
reports on an average of 6 reporting instances per measure, we estimate
that the cost to an individual eligible professional associated with
claims-based reporting of Physician Quality Reporting System measures
would range from approximately $4.35 (0.25 minutes per reporting
instance x 6 reporting instances per measure x 3 measures x $58 per
hour) to $208.80 (12 minutes per reporting instance x 6 reporting
instances per measure x 3 measures x $58 per hour). If an eligible
professional satisfactorily reports, these costs will more than likely
be negated by the incentive earned. For the 2007 PQRI, which had a 1.5
percent incentive for a 6-month reporting period, the mean incentive
amount was close to $700 for an individual eligible professional and
the median incentive payment amount was over $300.
For registry-based reporting, individual eligible professionals
must generally incur a cost to submit data to registries. Estimated
fees for using a qualified registry range from no charge, or a nominal
charge, for an individual eligible professional to use a registry to
several thousand dollars, with a majority of registries charging fees
ranging from $500 to $1,000. However, our impact analysis is limited to
the incremental costs associated with Physician Quality Reporting
System reporting, which we believe are minimal. Many eligible
professionals who select registry-based reporting were already
utilizing the registry for other purposes and would not need to report
additional data to the registry specifically for Physician Quality
Reporting System. The registries also often provide the eligible
professional services above and beyond what is required for Physician
Quality Reporting System.
For EHR-based reporting, an individual eligible professional
generally will incur a cost associated with purchasing an EHR product.
Although we do not believe that the majority of eligible professionals
would purchase an EHR solely for the purpose of participating in
Physician Quality Reporting System, cost estimates for EHR adoption by
eligible professionals from the EHR Incentive Program final rule (75 FR
44549) show that an individual eligible professional who chooses to do
so would have to spend anywhere from $25,000 to $54,000 to purchase and
implement an EHR and up to $18,000 annually for ongoing maintenance.
Although we believe that the majority of eligible professionals
attempting to qualify for the additional 0.5 percent incentive payment
authorized by section 1848(m)(7) of the Act would be those who are
already required by their Boards to participate in a Maintenance of
Certification Program, individual eligible professionals who wish to
qualify for the additional 0.5 percent incentive payment and are not
currently participating in a Maintenance of Certification Program would
also have to incur a cost for participating in a Maintenance of
Certification Program. The manner in which fees are charged for
participating in a Maintenance of Certification Program vary by
specialty. Some Boards charge a single fee for participation in the
full cycle of Maintenance of Certification Program. Such fees appear to
range anywhere from over $1,100 to nearly $1,800 per cycle. Some Boards
have annual fees that are paid by their diplomates. On average, ABMS
diplomates pay approximately $200.00 per year for participating in
Maintenance of Certification Program. Some Boards have an additional
fee for the Maintenance of Certification Program Part III secure
examination, but most Boards do not have additional charges for
participation in the Part IV practice/quality improvement activities.
With respect to the process for group practices to be treated as
satisfactorily submitting quality measures data for the CY 2011
Physician Quality Reporting System discussed in section VII.F.1 of this
final rule with comment period, group practices interested in
participating in the CY 2011 Physician Quality Reporting System through
the group practice reporting option (GPRO) I or GPRO II may also incur
a cost. However, for groups that satisfactorily report for 2011
Physician Quality Reporting System, we believe these

[[Page 73608]]

costs would be completely offset by the incentive payment earned since
the group practice would be eligible for an incentive payment equal to
1 percent of the entire group's total estimated Medicare Part B PFS
allowed charges for covered professional services furnished during the
reporting period.
One factor in the cost to group practices would be the costs
associated with the self-nomination process. Similar to our estimates
for staff involved with the claims-based reporting option for
individual eligible professionals, we also estimate that the group
practice staff involved in the group practice self-nomination process
has an average labor cost of $58 per hour. Therefore, assuming 2 hours
for a group practice to decide whether to participate individually or
as a group and 4 hours for the self-nomination process, we estimate the
total cost to a group practice associated with the group practice self-
nomination process to be approximately $348 ($58 per hour x 6 hours per
group practice).
For groups participating under the GPRO I process, another factor
in the cost to the group would be the time and effort associated with
the group practice completing and submitting the proposed data
collection tool. The information collection components of this data
collection tool have been reviewed by OMB and are currently approved
under OMB control number 0938-0941, with an expiration date of December
31, 2011. Based on the Physician Group Practice (PGP) demonstration's
estimate that it takes approximately 79 hours for a group practice to
complete the data collection tool, which uses the same data submission
methods as those we have finalized, we estimate the cost associated
with a physician group completing the data collection tool would be
approximately $4,582 ($58 per hour x 79 hours per group practice).
For group practices participating under the GPRO II process, the
costs associated with submitting the Physician Quality Reporting System
quality measures data will be the time associated with the group
practice submitting the required data to CMS via claims or, if
applicable, a registry. The costs for a group practice reporting to a
registry is similar to the costs associated with registry reporting for
an individual eligible professional, as the process is the same with
the exception that more patients and more measures must be reported in
GPRO II compared to an individual eligible professional. For similar
reasons, the costs for a group practice reporting via claims should
also be similar to the costs associated with claims-based reporting for
an individual eligible professional. Overall, there is significantly
less burden associated with a group practice participating in Physician
Quality Reporting System via GPRO II than doing so as individual
eligible professionals. Participation in GPRO II requires the group
practice as a whole to report a fewer number of measures on a fewer
number of people since eligible professionals within a group who share
patients will not be required to separately report measures for those
shared patients. Therefore, assuming that an average group practice
will spend 20 hours for data submission, we estimate the cost of data
submission under GPRO II would be approximately $1,160 (20 hours for
data submission x $58 per hour). Smaller groups may need less time for
data submission as they would be required to report fewer measures and
presumably have a smaller patient population while larger groups may
need more time for data submission since they would be required to
report more measures and presumably have a larger patient population.
In addition to costs incurred by eligible professionals and group
practices, registries and EHR vendors may also incur some costs related
to the Physician Quality Reporting System. Registries interested in
becoming ``qualified'' to submit on behalf of individual eligible
professionals would also have to incur a cost associated with the
vetting process and with calculating quality measures results from the
data submitted to the registry by its participants and submitting the
quality measures results and numerator and denominator data on quality
measures to CMS on behalf of their participants. We estimate the
registry self-nomination process will cost approximately $500 per
registry ($50 per hour x 10 hours per registry). This cost estimate
includes the cost of submitting the self-nomination letter to CMS and
completing the CMS vetting process. Our estimate of $50 per hour
average labor cost for registries is based on the assumption that
registry staff include IT professionals whose average hourly rates
range from $36 to $84 per hour depending on experience, with an average
rate of nearly $50 per hour for a mid-level programmer. Because we are
finalizing new requirements for 2011, the 2010 qualified registries
will incur similar costs associated with the self-nomination process.
We do not believe that there are any additional costs for registries
associated with a registry calculating quality measures results from
the data submitted to the registry by its participants and submitting
the quality measures results and numerator and denominator data on
quality measures to CMS on behalf of their participants. We believe
that the majority of registries already perform these functions for
their participants.
An EHR vendor interested in having its product(s) be used by
individual eligible professionals to submit Physician Quality Reporting
System measures to CMS for 2012 will have to complete a vetting process
during 2011 and program its EHR product(s) to extract the clinical data
that the eligible professional needs to submit to CMS for purposes of
reporting 2012 quality measures in 2013 as well. We specified that
previously qualified vendors will need to only update their electronic
measure specifications and data transmission schema during 2011 to
incorporate any new EHR measures to maintain their qualification for
the 2012 Physician Quality Reporting System. Therefore, for EHR vendors
that were not previously qualified, the cost associated with completing
the self-nomination process, including the vetting process with CMS
officials, is estimated to be $500 ($50 per hour x 10 hours per EHR
vendor). Our estimate of a $50 per hour average labor cost for EHR
vendors is based on the assumption that vendor staff include IT
professionals whose average hourly rates range from $36 to $84 per hour
depending on experience, with an average rate of nearly $50 per hour
for a mid-level programmer. We believe that the cost associated with
the time and effort needed for an EHR vendor to review the quality
measures and other information and program the EHR product to enable
individual eligible professionals to submit Physician Quality Reporting
System quality measures data to the CMS-designated clinical warehouse
will be dependent on the EHR vendor's familiarity with the Physician
Quality Reporting System, the vendor's system's capabilities, as well
as the vendor's programming capabilities. Some vendors already have the
necessary capabilities and for such vendors, we estimate the total cost
to be approximately $2,000 ($50 per hour x 40 hours per vendor).
However, given the variability in the capabilities of the vendors, we
believe an estimate for those vendors with minimal experience would be
approximately $10,000 per vendor ($50 per hour x 200 hours per EHR
vendor).
6. Section 132 of the MIPPA: Incentives for Electronic Prescribing
(eRx)--The eRx Incentive Program
Section VII.F.2. of this final rule with comment period describes
the 2011

[[Page 73609]]

Electronic Prescribing (eRx) Incentive Program. To be considered a
successful electronic prescriber in CY 2011, an individual eligible
professional will need to meet the requirements described in section
VII.F.2. of this final rule with comment period.
We estimate that the cost impact of the eRx Incentive Program on
the Medicare program would be the cost incurred for maintaining the
electronic prescribing measure and its associated code set, and for
maintaining the existing clinical data warehouse to accommodate
registry-based reporting and EHR-based reporting for the electronic
prescribing measure. However, we do not believe that this provision has
a significant cost impact on the Medicare program since much of this
infrastructure has already been established for the Physician Quality
Reporting System program.
Individual eligible professionals and group practices may have
different processes for integrating the eRx Incentive Program into
their practices' work flows. Given this variability and the multiple
reporting options that we provide, it is difficult to accurately
estimate the impact of the eRx Incentive Program on providers.
Furthermore, we believe that costs for eligible professionals who are
participating in the eRx Incentive Program for the first time in 2011
will be considerably higher than the cost for eligible professionals
who participated in the eRx Incentive Program in prior years. In
addition, for many eligible professionals (especially those who
participated in the eRx Incentive Program in prior years), the cost of
participating in the eRx Incentive Program for 2011 will be offset by
the incentive payment received. As a result of the payment adjustment
that begins in 2012, the cost of not participating in the eRx Incentive
Program for 2011 could be higher than the cost of participating in the
form of reduced Medicare payments.
For the 2009 eRx Incentive Program, approximately $148 million in
total incentives were paid to eligible professionals with a median
incentive amount of about $1,600. We estimate that the total incentive
payments for the 2011 eRx Incentive Program (which will be paid in
2012) will be similar. We anticipate that despite a decrease in the
incentive payment amount from 2 percent in 2010 to 1 percent of total
estimated Medicare Part B allowed charges for covered professional
services in 2011, more eligible professionals (and groups) will choose
to participate in the 2011 eRx Incentive Program to avoid a prospective
1 percent payment penalty in 2012 for not demonstrating that they are
successful electronic prescribers. Any eligible professional who wishes
to participate in the eRx Incentive Program must have a qualified
electronic prescribing system in order to participate. Therefore, a
one-time potential cost to some individual eligible professionals would
be the cost of purchasing and using an eRx system, which varies by the
commercial software package selected, the level at which the
professional currently employs information technology in his or her
practice and the training needed. One study indicated that a midrange
complete electronic medical record with electronic prescribing
functionality costs $2,500 per license with an annual fee of $90 per
license for quarterly updates of the drug database after setup costs
while standalone prescribing, messaging, and problem list system may
cost $1,200 per physician per year after setup costs. Hardware costs
and setup fees substantially add to the final cost of any software
package. (Corley, S.T. (2003). ``Electronic prescribing: A review of
costs and benefits.'' Topics in Health Information Management 24(1):29-
38.). These are the estimates that we intend to use for our impact
analysis.
Similar to the Physician Quality Reporting System, one factor in
the cost to individual eligible professionals is the time and effort
associated with individual eligible professionals reviewing the
electronic prescribing measure to determine whether it is applicable to
them, reviewing the available reporting options and selecting one,
gathering the required information, and incorporating reporting of the
measure into their office work flows. Since the eRx Incentive Program
consists of only 1 quality measure, we estimate 2 hours as the amount
of time needed for individual eligible professionals to prepare for
participation in the eRx Incentive Program. Information obtained from
the PVRP, which was a predecessor to the Physician Quality Reporting
System and was the first step for the reporting of physician quality of
care through certain quality metrics, indicated an average labor cost
per practice of approximately $50 per hour. To account for salary
increases over time, we will use an average practice labor cost of $58
per hour for our estimates, based on an assumption of an average annual
increase of approximately 3 percent. At an average cost of
approximately $58 per hour, we estimate the total preparation costs to
individual eligible professionals to be approximately $116 ($58 per
hour x 2 hours).
Another factor that influences the cost to individual eligible
professionals is how they choose to report the electronic prescribing
measure (that is, whether they select the claims-based, registry-based
or EHR-based reporting mechanism). For claims-based reporting, there
would be a cost associated with reporting the appropriate QDC on the
claims an individual eligible professional submits for payment. Based
on the information from the PVRP described above for the amount of time
it takes a median practice to report one measure one time (1.75
minutes) and the requirement to report 25 electronic prescribing events
during 2011, we estimate the annual estimated cost per individual
eligible professional to report the electronic prescribing measure via
claims-submission to be $42.29 (1.75 minutes per case x 1 measure x 25
cases per measure x $58 per hour). We believe that for most successful
electronic prescribers who earn an incentive, these costs would be
negated by the incentive payment received given that the median
incentive for eligible professionals who qualified for a 2009 eRx
incentive was around $1,600.
For eligible professionals who select the registry-based reporting
mechanism, we do not anticipate any additional cost for individual
eligible professionals to report data to a registry, as individual
eligible professionals opting for registry-based reporting are more
than likely already reporting data to the registry. Little, if any,
additional data would need to be reported to the registry for purposes
of participation in the CY 2011 eRx Incentive Program. Individual
eligible professionals using registries for Physician Quality Reporting
System will likely experience minimal, if any, increased costs charged
by the registry to report this 1 additional measure.
For EHR-based reporting, the eligible professional must extract the
necessary clinical data from his or her EHR, and submit the necessary
data to the CMS-designated clinical data warehouse. Once the EHR is
programmed by the vendor to allow data submission to CMS, the cost to
the individual eligible professional associated with the time and
effort to submit data on the electronic prescribing measure should be
minimal.
With respect to the process for group practices to be treated as
successful electronic prescribers under the CY 2011 eRx Incentive
Program discussed in section VII.F.2 of this final rule with comment
period, group practices have the same option as individual eligible
professionals in terms of the form and manner for reporting the eRx
measure (that is, group practices have the option of reporting the
measure through claims,

[[Page 73610]]

a qualified registry, or a qualified EHR product). There are only 2
differences between the requirements for an individual eligible
professional and a group practice: (1) The fact that a group practice
would have to self-nominate; and (2) the number of times a group
practice would be required to report the eRx measure. Overall, there
could be less cost associated with a practice participating in the eRx
Incentive Program as a group rather than the individual members of the
group separately participating. We do not believe that there are any
additional costs associated with the group practice self-nomination
process since we are limiting the group practices to those selected to
participate in the 2011 Physician Quality Reporting System GPRO I or
Physician Quality Reporting System GPRO II. The practices only will
need to indicate their desire to participate in the eRx GPRO at the
time they self-nominate for either Physician Quality Reporting System
GPRO I or Physician Quality Reporting System GPRO II.
The costs for a group practice reporting to an EHR or registry
should be similar to the costs associated with registry and EHR
reporting for an individual eligible professional, as the process is
the same with the exception that more electronic prescribing events
must be reported by the group. For similar reasons, the costs for a
group practice reporting via claims should also be similar to the costs
associated with claims-based reporting for an individual eligible
professional. Therefore, we estimate that the costs for group practices
who are selected to participate in the CY 2011 eRx Incentive Program as
a group would range from $126.88 (1.75 minutes per case x 1 measure x
75 cases per measure x $58 per hour) for the smallest groups
participating under GPRO II to $4,229.17 (1.75 minutes per case x 2,500
cases per measure x $58 per hour) for the groups participating under
GPRO I.
We believe that the costs to individual eligible professionals and
group practices associated with avoiding the eRx payment adjustment
that goes into effect in 2012 would be similar to the costs of an
eligible professional or group practice reporting the electronic
prescribing measure for purposes of the 2011 eRx incentive.
Specifically, we believe that the cost of reporting the eRx measure in
one instance for purposes of the payment adjustment is identical to the
cost of reporting the eRx measure for one instance on claims for
purposes of the incentive payment. The only difference would be in the
total costs for an individual eligible professional. Group practices
are required to report the eRx measure for the same number of eRx
events for both the 2011 incentive and the 2012 payment adjustment.
Individual eligible professionals, however, are required to report the
eRx measure only for 10 eRx events for purposes of the 2012 payment
adjustment as opposed to 25 eRx events for purposes of the 2011
incentive.
Based on our decision to consider only registries qualified to
submit quality measures results and numerator and denominator data on
quality measures to CMS on their participants' behalf for the 2011
Physician Quality Reporting System to be qualified to submit results
and numerator and denominator data on the eRx measure for the CY 2011
eRx Incentive Program, we do not estimate any cost to the registry
associated with becoming a registry qualified to submit the eRx measure
for CY 2011.
The cost for the registry would be the time and effort associated
with the registry calculating results for the eRx measure from the data
submitted to the registry by its participants and submitting the
quality measures results and numerator and denominator data on the eRx
quality measure to CMS on behalf of their participants. We believe such
costs will be minimal as registries would already be required to
perform these activities for the Physician Quality Reporting System.
Likewise, based on our decision to consider only EHR products
qualified for the CY 2011 Physician Quality Reporting System to be
qualified to submit results and numerator and denominator data on the
electronic prescribing measure for the CY 2011 eRx Incentive Program,
there would be no need for EHR vendors to undergo a separate self-
nomination process for the eRx Incentive Program. Therefore, there will
be no additional cost associated with the self-nomination process.
The cost to the EHR vendor associated with the EHR-based reporting
requirements of this reporting initiative is the time and effort
associated with the EHR vendor programming its EHR product(s) to
extract the clinical data that the individual eligible professional
needs to submit to CMS for reporting the CY 2011 eRx measure. Since we
determined that only EHR products qualified for the 2011 Physician
Quality Reporting System will be qualified for the CY 2011 eRx
Incentive Program, and the eRx Incentive Program consists of only one
measure, we believe that any burden associated with the EHR vendor to
program its product(s) to enable individual eligible professionals to
submit data on the eRx measure to the CMS-designated clinical data
warehouse will be minimal.
7. Durable Medical Equipment-Related Issues
a. Off-the-Shelf (OTS) Orthotics Exemption
In section VII.G. of this final rule with comment period, we are
expanding the exemptions from the CBP for certain OTS orthotics to
physicians, other practitioners (as defined by the Secretary), or by
hospitals if furnished to their own patients as part of their
professional service.
The exemption is a self-implementing mandate required by section
154(d) of MIPPA, which added section 1847(a)(7) of the Act. Section
1847(a)(7)(A) of the Act expanded the exemptions from the CBP for
certain OTS orthotics to physicians, other practitioners (as defined by
the Secretary), or hospitals if furnished to their own patients as part
of their professional service. Section 1847(a)(7)(B) of the Act, as
added by section 154(d) of MIPPA, also expanded the exemption from CBP
for certain DME items (crutches, canes, walkers, folding manual
wheelchairs, blood glucose monitors, and infusion pumps) when furnished
by hospitals to the hospital's own patients during an admission or on
the date of discharge.
We believe this exemption will have a negligible impact on
physicians, other practitioners, and hospitals. The exemption allows
physicians, other practitioners, and hospitals to continue to provide
these items to their own patients without submitting a bid and becoming
a contract supplier. This exemption also allows continued access to
these items for beneficiaries when these items are furnished by
physicians, other practitioners, and hospitals to their own patients.
b. Changes to Payment for Oxygen Equipment
We are not finalizing our proposal pertaining to oxygen and oxygen
equipment; and therefore, the impact analysis associated with this
proposal is not being finalized.
c. Diabetic Testing Supplies
We are establishing requirements for conducting a national
competition for furnishing diabetic testing supplies on a mail order
basis. Specifically this final rule with comment period will establish
3 requirements: A new definition for what constitutes mail order; a
rule that requires contract suppliers to provide at a minimum 50
percent of all of the different types of diabetic testing products on
the market by brand and model name; and a prohibition against

[[Page 73611]]

influencing and incentivizing beneficiaries to switch their brand of
monitor and testing supplies.
Currently, based on claims data from FY 2009, over 62 percent of
beneficiaries receive their replacement diabetic testing supplies from
mail order suppliers. The new mail order definition will not impact
these beneficiaries because they can continue to obtain their items
through mail order. The remaining 38 percent of beneficiaries may
continue to obtain these items from a local pharmacy. We do not expect
this rule to have any adverse effects on beneficiaries because the new
definition of mail order item is reflective of the way that
beneficiaries currently get their diabetic testing supplies. However,
we believe that by clarifying this definition, we will protect
beneficiaries from paying higher co-payment amounts and we anticipate
program savings that would have been eroded by suppliers circumventing
our definition to continue to provide items, even if not awarded a
contract under competitive bidding and to obtain the higher fee
schedule payment amount. This definition is also consistent with the
way that suppliers currently do business by either providing items
through mail order or at a local storefront. For these reasons we
believe this new definition will have minimal impact.
Also, we considered the option to not bifurcate bidding based on
delivery method and to bid for diabetic testing supplies regardless of
how the items were obtained. We rejected this approach because it would
force companies with different business models to compete against each
other, by requiring local pharmacies to compete with national mail
order suppliers in order to win a contract to be able to furnish
diabetic testing supplies.
In order to implement a national mail order competition for
diabetic supplies, we are also implementing the special ``50 percent
rule'' mandated by MIPPA. This final rule with comment period requires
a bidder to demonstrate that its bid covers types of diabetic testing
strip products that, in the aggregate and taking into account volume
for the different products, cover 50 percent (or such higher percentage
as the Secretary may specify) of all such types of products. The 50
percent threshold would ensure that beneficiaries have access to mail
order delivery of the top-selling diabetic test strip products from
every contract supplier. We plan to use the information that bidding
suppliers provide on their bidding Form B where suppliers list the
products they plan to furnish. We believe this requirement will have a
minimal impact on suppliers because most suppliers currently provide a
wide range of the brands and models in order to gain market share. The
statute states that suppliers are required to carry at least 50 percent
of all brands on the market. However, the Secretary can establish
suppliers to carry a higher percentage of brands. We have adopted the
50 percent criteria because we believe this is reflective of what
suppliers are currently doing and ensures appropriate access for
beneficiaries.
In addition to the 50 percent rule we are establishing an anti-
switching requirement. This provision would prevent contract suppliers
from influencing or incentivizing beneficiaries by persuading,
pressuring, or advising them to switch from their current brand to a
brand provided by the supplier. We believe this requirement will
protect the beneficiary and physician choice of glucose monitoring
systems. The decision concerning the type of monitor and testing
supplies that a beneficiary chooses should not be made by the supplier
but rather by the beneficiary and their physician. We believe that this
provision will have a minimal impact on suppliers because suppliers
currently offer a variety of products and generally do not require
beneficiaries to switch from the brands they are familiar with and
customarily use.
d. Metropolitan Statistical Areas
In section VII.V. of this final rule with comment period, we
implement section 6410 of the ACA regarding adjustments to the DMEPOS
CBP. We believe that the provisions pertaining to subdividing
metropolitan statistical areas (MSAs) with populations of at least
8,000,000 for the purpose of establishing competitive bidding areas
(CBAs) under Round 2 of the DMEPOS CBP will have a positive impact on
most suppliers, particularly small suppliers. The authority provided by
section 1847(a)(1)(D)(ii)(II) of the Act will be used to create CBAs
that are smaller than the highly and densely populated MSAs of:
Chicago-Naperville-Joliet, IL-IN-WI; Los Angeles-Long Beach-Santa Ana,
CA; and New York-Northern New Jersey-Long Island, NY-NJ-PA. This
results in more manageable service areas for suppliers to navigate when
furnishing items. More importantly, it ensures more timely delivery of
items and services to beneficiaries located throughout each of the
MSAs. It also benefits small suppliers because they will have smaller
geographic areas to cover as contract suppliers than the large MSAs,
which in some cases, might prevent them from being considered for
participation under the program. The larger suppliers will still have
the opportunity to bid in all of the CBAs within each MSA. We expect
that subdividing the large MSAs of Chicago, Los Angeles, and New York
would not have a negative impact on program savings, as long as each
CBA is large enough to be attractive to suppliers for bidding purposes.
Table 104 considers FY cash impact on the entire Medicare program,
including Medicare Advantage for FYs 2011 thru 2015, of the provisions
of this final rule with comment period related to the establishment of
CBAs during Round 2 and prior to calendar year 2015. The FY-CY
distinction is an important one when comparing savings. For example,
the savings for the DMEPOS CBP will be for 9 months of FY 2013, but for
12 months of CY 2013. Table 104 considers the impact on program
expenditures, and does not include beneficiary coinsurance. Finally,
the estimates in Table 104 incorporate spillover effects from the
competitive acquisition program onto the Medicare Advantage program.
The expectation is that the 21 additional MSAs added to the DMEPOS CBP
would lower prices for DME products in FFS and would lead to lower
prices in the Medicare Advantage market. The table below considers FY
cash impact of the above provisions on the entire Medicare program,
including Medicare Advantage for the FY.

Table 104--Impact of Adding 21 MSAs to Round 2 of the Medicare DMEPOS
Competitive Bidding Program
------------------------------------------------------------------------
Cost (in $
FY millions)
------------------------------------------------------------------------
2011................................................. 0
2012................................................. 0
2013................................................. -40
2014................................................. -70
2015................................................. -110
------------------------------------------------------------------------

Subdividing the large MSAs of Chicago, Los Angeles, and New York is
considered to have little to no fiscal impact. The exceptions to the
DMEPOS CBP involving rural areas, MSAs with populations less than
250,000, and low population density areas in selected MSAs before 2015
are considered to have little to no impact because the baseline never
considered these areas as subject to competitive bidding prices.

[[Page 73612]]

8. Air Ambulance
In section VII.H. of this final rule with comment period, we
present our provision regarding air ambulance and provider and supplier
enrollment. We note that this provision is an administrative initiative
that may result in Medicare program savings but at this time those
savings are inestimable. We believe the probable costs providers or
suppliers will incur as a result of this rule to be negligible.

F. Alternatives Considered

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

G. Impact on Beneficiaries

There are a number of changes in this final rule with comment
period that would have an effect on beneficiaries. In general, we
believe that many of the proposed changes, including the refinements of
the PQRI with its focus on measuring, submitting, and analyzing quality
data, the expansion of the list of Medicare-approved telehealth
services, the incentive payments for primary care services furnished by
primary care practitioners in any location and major surgical
procedures furnished by general surgeons in HPSAs, the waiver of
beneficiary cost-sharing for most preventive services, and the annual
wellness visit provisions, will have a positive impact and improve the
quality and value of care provided to Medicare beneficiaries.
The regulatory provisions may affect beneficiary liability in some
cases. For example, the waiver of the deductible and coinsurance for
the annual wellness visit, the IPPE, and preventive services with a
grade of A or B from the USPSTF would reduce beneficiary liability for
these services. Most changes in aggregate beneficiary liability due to
a particular provision would be a function of the coinsurance (20
percent if applicable for the particular provision after the
beneficiary has met the deductible). To illustrate this point, as shown
in Table 102, the CY 2010 national payment amount in the nonfacility
setting for CPT code 99203 (Office/outpatient visit, new) is $76.93
which means that in CY 2010 a beneficiary would be responsible for 20
percent of this amount, or $15.39. Based on this final rule with
comment period, the CY 2011 national payment amount in the nonfacility
setting for CPT code 99203, as shown in Table 102, is $77.59, which
means that, in CY 2011, the beneficiary coinsurance for this service
would be $15.52
Additionally, beneficiary liability would also be impacted by the
effect of the aggregate cost (savings) of the provisions on the
standard calculation of the Medicare Part B premium rate (generally 25
percent of the provision's cost or savings).
Most policies discussed in this final rule with comment period that
impact payment rates, such as the expansion of the MPPR to therapy
services and the increased discount on the TC of multiple imaging
procedures from 25 percent to 50 percent, would similarly impact
beneficiaries' coinsurance.

H. Accounting Statement

As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 105, we have
prepared an accounting statement showing the estimated expenditures
associated with this final rule with comment period. This estimate
includes the estimated FY 2011 cash benefit impact associated with
certain ACA and MIPPA provisions, and the CY 2011 incurred benefit
impact associated with the estimated CY 2011 PFS conversion factor
update based on the Mid-Session Review of the FY 2011 President's
Budget baseline.

Table 105--Accounting Statement: Classification of Estimated
Expenditures
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
CY 2011 Annualized Monetized Estimated decrease in expenditures of
Transfers. $17.6 billion for PFS conversion factor
update.
From Whom To Whom?........... Federal Government to physicians, other
practitioners and providers and
suppliers who receive payment under
Medicare.
FY 2011 Annualized Monetized Estimated increase in expenditures of
Transfers. $1.97 billion for Affordable Care Act
provisions.
From Whom To Whom?........... Federal Government to providers.
------------------------------------------------------------------------

In accordance with the provisions of Executive Order 12866, this
final rule with comment period was reviewed by the Office of Management
and Budget.

List of Subjects

42 CFR Part 405

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

42 CFR Part 409

Health facilities, Medicare.

42 CFR Part 410

Health facilities, Health professions, Kidney diseases,
Laboratories, Medicare, Reporting and recordkeeping requirements, Rural
areas, X-rays.

42 CFR Part 411

Kidney diseases, Medicare, Physician Referral, Reporting and
recordkeeping requirements.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 414

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

42 CFR Part 415

Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 424

Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.

0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:

[[Page 73613]]

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

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

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

Subpart X--Rural Health Clinic and Federally Qualified Health
Center Services

0
2. A new Sec. 405.2449 is added to read as follows

Sec. 405.2449 Preventive services.

For services furnished on or after January 1, 2011, preventive
services covered under the Medicare Federally qualified health center
benefit are those preventive services defined in section 1861(ddd)(3)
of the Act, and Sec. 410.2 of this chapter. Specifically, these
include the following:
(a) The specific services currently listed in section 1861(ww)(2)
of the Act, with the explicit exclusion of electrocardiograms.
(b) The Initial Preventive Physical Examination (IPPE) (as
specified by section 1861(ww)(1) of the Act as added by section 611 of
the Medicare Prescription Drug, Improvement and Modernization Act of
2003 (Pub. L. 108-173) and Sec. 410.16 of this chapter); and
(c) The Personalized Prevention Plan Services (PPPS), also known as
the ``Annual Wellness Visit'' (as specified by section 1861(hhh) of the
Act as added by section 4103 of the Affordable Care Act (Pub. L. 111-
148) and Sec. 410.15 of this chapter).

0
3. Section 405.2470 is amended by adding a new paragraph (d) to read as
follows:

Sec. 405.2470 Reports and maintenance of records.

* * * * *
(d) Collection of additional claims data. Beginning January 1,
2011, a Medicare FQHC must report on its Medicare claims such
information as the Secretary determines is needed to develop and
implement a prospective payment system for FQHCs including, but not
limited to all pertinent HCPCS (Healthcare Common Procedure Coding
System) code(s) corresponding to the service(s) provided for each
Medicare FQHC visit (as defined in Sec. 405.2463).

PART 409--HOSPITAL INSURANCE BENEFITS

0
4. The authority citation for part 409 continues to read as follows:

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

Subpart B--Inpatient Hospital Services and Inpatient Critical
Access Hospital Services

Sec. 409.17 [Amended]

0
5. Amend Sec. 409.17(d) by removing the phrase ``hospital policies and
procedures.'' and adding in its place the phrase ``the provider's
policies and procedures.''.

Subpart C--Posthospital SNF Care

0
6. Section 409.20 is amended by revising paragraph (a)(3) to read as
follows:

Sec. 409.20 Coverage of services.

(a) * * *
(3) Physical therapy, occupational therapy, and speech-language
pathology services.
* * * * *

0
7. Section 409.23 is revised to read as follows:

Sec. 409.23 Physical therapy, occupational therapy, and speech-
language pathology services.

Medicare pays for physical therapy, occupational therapy, or
speech-language pathology services as posthospital SNF care if they are
furnished--
(a) By (or under arrangements made by) the facility and billed by
(or through) the facility;
(b) By qualified physical therapists, physical therapist
assistants, occupational therapists, occupational therapy assistants,
or speech-language pathologists as defined in part 484 of this chapter;
and
(c) In accordance with a plan that meets the requirements of Sec.
409.17(b) through (d) of this part.

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

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

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

Subpart A--General Provisions

0
9. Section 410.2 is amended by adding the definition of ``Preventive
services'' in alphabetical order to read as follows:

Sec. 410.2 Definitions.

* * * * *
Preventive services means all of the following:
(1) The specific services listed in section 1861(ww)(2) of the Act,
with the explicit exclusion of electrocardiograms;
(2) The Initial Preventive Physical Examination (IPPE) (as
specified by section 1861(ww)(1) of the Act); and
(3) Annual Wellness Visit (AWV), providing Personalized Prevention
Plan Services (PPPS) (as specified by section 1861(hhh)(1) of the Act).

Sec. 410.3 [Amended]

0
10. Amend Sec. 410.3(b)(2) by removing the reference ``subpart E'' and
adding in its place the reference ``subpart I.''

Subpart B--Medical and Other Health Services

0
11. Section 410.15 is added to read as follows:

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

(a) Definitions. For purposes of this section--
Detection of any cognitive impairment means assessment of an
individual's cognitive function by direct observation, with due
consideration of information obtained by way of patient report,
concerns raised by family members, friends, caretakers or others.
Eligible beneficiary means an individual who is no longer within 12
months after the effective date of his or her first Medicare Part B
coverage period and who has not received either an initial preventive
physical examination or an annual wellness visit providing a
personalized prevention plan within the past 12 months.
Establishment of, or an update to the individual's medical and
family history means, at minimum, the collection and documentation of
the following:
(i) Past medical and surgical history, including experiences with
illnesses, hospital stays, operations, allergies, injuries and
treatments.
(ii) Use or exposure to medications and supplements, including
calcium and vitamins.
(iii) Medical events in the beneficiary's parents and any siblings
and children, including diseases that may be hereditary or place the
individual at increased risk.
First annual wellness visit providing personalized prevention plan
services means the following services furnished to an eligible
beneficiary by a health professional as those terms are defined in this
section:

[[Page 73614]]

(i) Establishment of an individual's medical and family history.
(ii) Establishment of a list of current providers and suppliers
that are regularly involved in providing medical care to the
individual.
(iii) Measurement of an individual's height, weight, body-mass
index (or waist circumference, if appropriate), blood pressure, and
other routine measurements as deemed appropriate, based on the
beneficiary's medical and family history.
(iv) Detection of any cognitive impairment that the individual may
have, as that term is defined in this section.
(v) Review of the individual's potential (risk factors) for
depression, including current or past experiences with depression or
other mood disorders, based on the use of an appropriate screening
instrument for persons without a current diagnosis of depression, which
the health professional may select from various available standardized
screening tests designed for this purpose and recognized by national
medical professional organizations.
(vi) Review of the individual's functional ability and level of
safety, based on direct observation or the use of appropriate screening
questions or a screening questionnaire, which the health professional
as defined in this section may select from various available screening
questions or standardized questionnaires designed for this purpose and
recognized by national professional medical organizations.
(vii) Establishment of the following:
(A) A written screening schedule for the individual such as a
checklist for the next 5 to 10 years, as appropriate, based on
recommendations of the United States Preventive Services Task Force and
the Advisory Committee on Immunization Practices, and the individual's
health status, screening history, and age-appropriate preventive
services covered by Medicare.
(B) A list of risk factors and conditions for which primary,
secondary or tertiary interventions are recommended or are underway for
the individual, including any mental health conditions or any such risk
factors or conditions that have been identified through an initial
preventive physical examination (as described under Sec. 410.16 of
this subpart), and a list of treatment options and their associated
risks and benefits.
(viii) Furnishing of personalized health advice to the individual
and a referral, as appropriate, to health education or preventive
counseling services or programs aimed at reducing identified risk
factors and improving self management, or community-based lifestyle
interventions to reduce health risks and promote self-management and
wellness, including weight loss, physical activity, smoking cessation,
fall prevention, and nutrition.
(ix) Voluntary advance care planning (as defined in this section)
upon agreement with the individual.
(x) Any other element determined appropriate through the national
coverage determination process.
Health professional means--
(i) A physician who is a doctor of medicine or osteopathy (as
defined in section 1861(r)(1) of the Act); or
(ii) A physician assistant, nurse practitioner, or clinical nurse
specialist (as defined in section 1861(aa)(5) of the Act); or
(iii) A medical professional (including a health educator, a
registered dietitian, or nutrition professional, or other licensed
practitioner) or a team of such medical professionals, working under
the direct supervision (as defined in Sec. 410.32(b)(3)(ii)) of a
physician as defined in paragraph (i) of this definition.
Review of the individual's functional ability and level of safety
means, at minimum, assessment of the following topics:
(i) Hearing impairment.
(ii) Ability to successfully perform activities of daily living.
(iii) Fall risk.
(iv) Home safety.
Subsequent annual wellness visit providing personalized prevention
plan services means the following services furnished to an eligible
beneficiary by a health professional as those terms are defined in this
section:
(i) An update of the individual's medical and family history.
(ii) An update of the list of current providers and suppliers that
are regularly involved in providing medical care to the individual as
that list was developed for the first annual wellness visit providing
personalized prevention plan services.
(iii) Measurement of an individual's weight (or waist
circumference), blood pressure and other routine measurements as deemed
appropriate, based on the individual's medical and family history.
(iv) Detection of any cognitive impairment that the individual may
have, as that term is defined in this section.
(v) An update to the following:
(A) The written screening schedule for the individual as that
schedule is defined in paragraph (a) of this section for the first
annual wellness visit providing personalized prevention plan services.
(B) The list of risk factors and conditions for which primary,
secondary or tertiary interventions are recommended or are underway for
the individual as that list was developed at the first annual wellness
visit providing personalized prevention plan services.
(vi) Furnishing of personalized health advice to the individual and
a referral, as appropriate, to health education or preventive
counseling services or programs as that advice and related services are
defined in paragraph (a) of this section.
(vii) Voluntary advance care planning (as defined in paragraph (a)
of this section) upon agreement with the individual.
(viii) Any other element determined appropriate through the
national coverage determination process.
Voluntary advance care planning means, for purposes of this
section, verbal or written information regarding the following areas:
(i) An individual's ability to prepare an advance directive in the
case where an injury or illness causes the individual to be unable to
make health care decisions.
(ii) Whether or not the physician is willing to follow the
individual's wishes as expressed in an advance directive.
(b) Conditions for coverage of annual wellness visits providing
personalized prevention plan services. Medicare Part B pays for first
and subsequent annual wellness visits providing personalized prevention
plan services that are furnished to an eligible beneficiary, as
described in this section, if they are furnished by a health
professional, as defined in this section.
(c) Limitations on coverage of an annual wellness visit providing
personalized prevention plan services. Payment may not be made for
either a first or a subsequent annual wellness visit providing
personalized prevention plan services that is performed for an
individual who is--
(1) Not an eligible beneficiary as described in this section.
(2) An eligible beneficiary as described in this section and who
has had either an initial preventive physical examination as specified
in Sec. 410.16 of this subpart or either a first or a subsequent
annual wellness visit providing personalized prevention plan services
performed within the past 12 months.
(d) Effective date. Coverage for an annual wellness visit providing
personalized prevention plan services is

[[Page 73615]]

effective for services furnished on or after January 1, 2011.

0
12. Section 410.32 is amended by adding paragraph (b)(2)(vii) to read
as follows:

Sec. 410.32 Diagnostic x-ray tests, diagnostic laboratory tests, and
other diagnostic tests: Conditions.

* * * * *
(b) * * *
(2) * * *
(vii) Diagnostic tests performed by a certified nurse-midwife
authorized to perform the tests under applicable State laws.
* * * * *

0
13. Section 410.64 is amended by revising paragraph (a) introductory
text to read as follows:

Sec. 410.64 Additional Preventive Services

(a) Medicare Part B pays for additional preventive services not
described in paragraph (1) or (3) of the definition of ``preventive
services'' under Sec. 410.2, that identify medical conditions or risk
factors for individuals if the Secretary determines through the
national coverage determination process (as defined in section
1869(f)(1)(B) of the Act) that these services are all of the following:
* * * * *

0
14. Section 410.78 is amended by revising paragraph (b) introductory
text to read as follows:

Sec. 410.78 Telehealth services.

* * * * *
(b) General rule. Medicare Part B pays for office or other
outpatient visits, subsequent hospital care services (with the
limitation of one telehealth visit every 3 days), subsequent nursing
facility care services (not including the Federally-mandated periodic
visits under Sec. 483.40(c) and with the limitation of one telehealth
visit every 30 days), professional consultations, psychiatric
diagnostic interview examination, neurobehavioral status exam,
individual psychotherapy, pharmacologic management, end-stage renal
disease-related services included in the monthly capitation payment
(except for one ``hands on'' visit per month to examine the access
site), individual and group medical nutrition therapy services,
individual and group kidney disease education services, individual and
group diabetes self-management (DSMT) training services (except for one
hour of in-person services to be furnished in the year following the
initial DSMT service to ensure effective injection training), and
individual and group health and behavior assessment and intervention
services furnished by an interactive telecommunications system if the
following conditions are met:
* * * * *

Subpart I--Payment for SMI Benefits

0
15. Section 410.150 is amended by adding paragraph (b)(20) to read as
follows:

Sec. 410.150 To whom payment is made.

* * * * *
(b) * * *
(20) To a certified nurse-midwife for professional services
furnished by the certified nurse-midwife in all settings and for
services and supplies furnished incident to those services. Payment is
made only if no facility or other provider charges or is paid any
amount for the furnishing of the professional services of the certified
nurse-midwife.

0
16. Section 410.152 is amended by revising paragraph (l) to read as
follows:

Sec. 410.152 Amount of payment.

* * * * *
(l) Amount of payment: Preventive services. Medicare Part B pays
100 percent of the Medicare payment amount established under the
applicable payment methodology for the service setting for providers
and suppliers for the following preventive services:
(1) Pneumococcal (as specified in paragraph (h) of this section),
influenza, and hepatitis B vaccine and administration.
(2) Screening mammography.
(3) Screening pap tests and screening pelvic exam.
(4) Prostate cancer screening tests (excluding digital rectal
examinations).
(5) Colorectal cancer screening tests (excluding barium enemas).
(6) Bone mass measurement.
(7) Medical nutrition therapy (MNT) services.
(8) Cardiovascular screening blood tests.
(9) Diabetes screening tests.
(10) Ultrasound screening for abdominal aortic aneurysm (AAA).
(11) Additional preventive services identified for coverage through
the national coverage determination (NCD) process.
(12) Initial Preventive Physical Examination (IPPE).
(13) Annual Wellness Visit (AWV), providing Personalized Prevention
Plan Services (PPPS).

0
16. Section 410.160 is amended by--
0
A. Revising paragraph (b)(2).
0
B. Adding paragraphs (b)(10) through (13).
The revisions and additions read as follows:

Sec. 410.160 Part B annual deductible.

* * * * *
(b) * * *
(2) Pneumococcal, influenza, and hepatitis b vaccines and their
administration.
* * * * *
(10) Bone mass measurement.
(11) Medical nutrition therapy (MNT) services.
(12) Annual Wellness Visit (AWV), providing Personalized Prevention
Plan Services (PPPS).
(13) Additional preventive services identified for coverage through
the national coverage determination (NCD) process.
* * * * *

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

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

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

Subpart A--General Exclusions and Exclusion of Particular Services

0
18. Section 411.15 is amended by--
0
A. Revising paragraph (a)(1).
0
B. Adding new paragraph (k)(16).
The revision and addition read as follows:

Sec. 411.15 Particular services excluded from coverage.

* * * * *
(a) * * *
(1) Examinations performed for a purpose other than treatment or
diagnosis of a specific illness, symptoms, complaint, or injury, except
for screening mammography, colorectal cancer screening tests, screening
pelvic exams, prostate cancer screening tests, glaucoma screening
exams, ultrasound screening for abdominal aortic aneurysms (AAA),
cardiovascular disease screening tests, diabetes screening tests, a
screening electrocardiogram, initial preventive physical examinations
that meet the criteria specified in paragraphs (k)(6) through (k)(15)
of this section, additional preventive services that meet the criteria
in Sec. 410.64 of this chapter, or annual wellness visits providing
personalized prevention plan services.
* * * * *
(k) * * *
(16) In the case of an annual wellness visit providing a
personalized

[[Page 73616]]

prevention plan, subject to the conditions and limitations specified in
Sec. 410.15 of this subpart.
* * * * *

Subpart J--Financial Relationships Between Physicians and Entities
Furnishing Designated Health Services

0
19. Section 411.355 is amended by adding paragraph (b)(7) to read as
follows:

Sec. 411.355 General exceptions to the referral prohibition related
to both ownership/investment and compensation.

* * * * *
(b) * * *
(7) Disclosure requirement for certain imaging services.
(i) With respect to magnetic resonance imaging, computed
tomography, and positron emission tomography services identified as
``radiology and certain other imaging services'' on the List of CPT/
HCPCS Codes, the referring physician must provide written notice to the
patient at the time of the referral that the patient may receive the
same services from a person other than one described in paragraph
(b)(1) of this section. Except as set forth in paragraph (b)(7)(ii) of
this section, the written notice must include a list of at least 5
other suppliers (as defined in Sec. 400.202 of this chapter) that
provide the services for which the individual is being referred and
which are located within a 25-mile radius of the referring physician's
office location at the time of the referral. The notice should be
written in a manner sufficient to be reasonably understood by all
patients and should include for each supplier on the list, at a
minimum, the supplier's name, address, and telephone number.
(ii) If there are fewer than 5 other suppliers located within a 25-
mile radius of the physician's office location at the time of the
referral, the physician must list all of the other suppliers of the
imaging service that are present within a 25-mile radius of the
referring physician's office location. Provision of the written list of
alternate suppliers will not be required if no other suppliers provide
the services for which the individual is being referred within the 25-
mile radius.
* * * * *

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES

0
20. The authority citation for part 413 continues to read as follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Public Law 106-133 (113 Stat. 1501A-332).

Subpart E--Payments to Providers

0
21. Section 413.70 is amended by adding a sentence at the end of
paragraph (b)(3)(ii)(B) to read as follows:

Sec. 413.70 Payment for services of a CAH.

* * * * *
(b) * * *
(3) * * *
(ii) * * *
(B) * * * Effective for primary care services furnished by primary
care practitioners (as defined in Sec. 414.80(a)) and major surgical
procedures furnished by general surgeons in health professional
shortage areas (as defined in Sec. 414.2) furnished on or after
January 1, 2011 and before January 1, 2016, incentive payments
specified under Sec. 414.80 and Sec. 414.67(b), respectively, of this
title must not be included in determining payment made under this
paragraph.
* * * * *

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

0
22. The authority citation for part 414 continues to read as follows:

Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).

Subpart A--General Provisions

0
23. Section 414.2 is amended by adding the definitions of ``Health
Professional Shortage Area'' and ``Major surgical procedure'' in
alphabetical order to read as follows:

Sec. 414.2 Definitions.

* * * * *
Health Professional Shortage Area (HPSA) means an area designated
under section 332(a)(1)(A) of the Public Health Service Act as
identified by the Secretary prior to the beginning of such year.
Major surgical procedure means a surgical procedure for which a 10-
day or 90-day global period is used for payment under the physician fee
schedule and section 1848(b) of the Act.
* * * * *

0
24. Section 414.26 is amended by--
0
A. Redesignating paragraph (c) as paragraph (d).
0
B. Adding a new paragraph (c).
The addition reads as follows:

Sec. 414.26 Determining the GAF.

* * * * *
(c) Adjusting the practice expense index to account for the
Frontier State floor.
(1) General criteria. Effective on or after January 1, 2011, CMS
will adjust the practice expense index for physicians' services
furnished in qualifying States to recognize the practice expense index
floor established for Frontier States. A qualifying State must meet the
following criteria:
(i) At least 50 percent of counties located within the State have a
population density less than 6 persons per square mile.
(ii) The State does not receive a non-labor related share
adjustment determined by the Secretary to take into account the unique
circumstances of hospitals located in Alaska and Hawaii.
(2) Amount of adjustment. The practice expense value applied for
physicians' services furnished in a qualifying State will be not less
than 1.00.
(3) Process for determining adjustment. (i) CMS will use the most
recent population estimate data published by the U.S. Census Bureau to
determine county definitions and population density. This analysis will
be periodically revised, such as for updates to the decennial census
data.
(ii) CMS will publish annually a listing of qualifying Frontier
States receiving a practice expense index floor attributable to this
provision.
* * * * *

Subpart B--Physicians and Other Practitioners

0
25. Section 414.54 is revised to read as follows:

Sec. 414.54 Payment for certified nurse-midwives' services.

(a) For services furnished after December 31, 1991, allowed amounts
under the fee schedule established under section 1833(a)(1)(K) of the
Act for the payment of certified nurse-midwife services may not exceed
65

[[Page 73617]]

percent of the physician fee schedule amount for the service.
(b) For certified nurse-midwife services furnished on or after
January 1, 2011, allowed amounts may not exceed 100 percent of the
physician fee schedule amount that would be paid to a physician for the
services.

0
26. Section 414.65 is amended by revising paragraph (a)(1) introductory
text to read as follows:

Sec. 414.65 Payment for telehealth services.

(a) * * *
(1) The Medicare payment amount for office or other outpatient
visits, subsequent hospital care services (with the limitation of one
telehealth subsequent hospital care service every 3 days), subsequent
nursing facility care services (not including the Federally-mandated
periodic visits under Sec. 483.40(c) and with the limitation of one
telehealth nursing facility care service every 30 days), professional
consultations, psychiatric diagnostic interview examination,
neurobehavioral status exam, individual psychotherapy, pharmacologic
management, end-stage renal disease-related services included in the
monthly capitation payment (except for one ``hands on'' visit per month
to examine the access site), individual and group medical nutrition
therapy services, individual and group kidney disease education
services, individual and group diabetes self-management training (DSMT)
services (except for 1 hour of in-person DSMT services to be furnished
in the year following the initial DSMT service to ensure effective
injection training), and individual and group health and behavior
assessment and intervention furnished via an interactive
telecommunications system is equal to the current fee schedule amount
applicable for the service of the physician or practitioner.
* * * * *

0
27. Section 414.67 is revised to read as follows:

Sec. 414.67 Incentive payments for services furnished in Health
Professional Shortage Areas.

(a) Health Professional Shortage Area (HPSA) physician bonus
program. A HPSA physician incentive payment will be made subject to the
following:
(1) HPSA bonuses are payable for services furnished by physicians
as defined in section 1861(r) of the Act in areas designated as of
December 31 of the prior year as geographic primary medical care HPSAs
as defined in section 332(a)(1)(A) of the Public Health Service Act.
(2) HPSA bonuses are payable for services furnished by
psychiatrists in areas designated as of December 31 of the prior year
as geographic mental health HPSAs if the services are not already
eligible for the bonus based on being in a geographic primary care
HPSA.
(3) Physicians eligible for the HPSA physician bonus are entitled
to a 10 percent incentive payment above the amount paid for their
professional services under the physician fee schedule.
(4) Physicians furnishing services in areas that are designated as
geographic HPSAs prior to the beginning of the year but not included on
the published list of zip codes for which automated HPSA bonus payments
are made must use the AQ modifier to receive the HPSA physician bonus
payment.
(b) HPSA surgical incentive payment program. A HPSA surgical
incentive payment will be made subject to the following:
(1) A major surgical procedure as defined in Sec. 414.2 of this
part is furnished by a general surgeon on or after January 1, 2011 and
before January 1, 2016 in an area recognized for the HPSA physician
bonus program under paragraph (a)(1) of this section.
(2) Payment will be made on a quarterly basis in an amount equal to
10 percent of the Part B payment amount for major surgical procedures
furnished as described in paragraph (b)(1) of this section, in addition
to the amount the physician would otherwise be paid.
(3) Physicians furnishing services in areas that are designated as
geographic HPSAs eligible for the HPSA physician bonus program under
paragraph (a)(1) of this section prior to the beginning of the year but
not included on the published list of zip codes for which automated
HPSA surgical incentive payments are made should report HCPCS modifier
-AQ to receive the HPSA surgical incentive payment.
(4) The payment described in paragraph (b)(2) of this section is
made to the surgeon or, where the surgeon has reassigned his or her
benefits to a critical access hospital (CAH) paid under the optional
method, to the CAH based on an institutional claim.

0
28. Section 414.80 is added to read as follows:

Sec. 414.80 Incentive payment for primary care services.

(a) Definitions. As defined in this section--
Eligible primary care practitioner means one of the following:
(i) A physician (as defined in section 1861(r)(1) of the Act) who
meets all of the following criteria:
(A) Enrolled in Medicare with a primary specialty designation of
08-family practice, 11-internal medicine, 37-pediatrics, or 38-
geriatrics.
(B) At least 60 percent of the physician's allowed charges under
the physician fee schedule (excluding hospital inpatient care and
emergency department visits) during a reference period specified by the
Secretary are for primary care services.
(ii) A nurse practitioner, clinical nurse specialist, or physician
assistant (as defined in section 1861(aa)(5) of the Act) who meets all
of the following criteria:
(A) Enrolled in Medicare with a primary specialty designation of
50-nurse practitioner, 89-certified clinical nurse, or 97-physician
assistant.
(B) At least 60 percent of the practitioner's allowed charges under
the physician fee schedule (excluding hospital inpatient care and
emergency department visits) during a reference period specified by the
Secretary are for primary care services.
Primary care services means--
(i) New and established patient office or other outpatient
evaluation and management (E/M) visits;
(ii) Initial, subsequent, discharge, and other nursing facility E/M
services;
(iii) New and established patient domiciliary, rest home (for
example, boarding home), or custodial care E/M services;
(iv) Domiciliary, rest home (for example, assisted living
facility), or home care plan oversight services; and
(v) New and established patient home E/M visits.
(b) Payment.
(1) For primary care services furnished by an eligible primary care
practitioner on or after January 1, 2011 and before January 1, 2016,
payment is made on a quarterly basis in an amount equal to 10 percent
of the payment amount for the primary care services under Part B, in
addition to the amount the primary care practitioner would otherwise be
paid for the primary care services under Part B.
(2) The payment described in paragraph (b)(1) of this section is
made to the eligible primary care practitioner or, where the physician
has reassigned his or her benefits to a critical access hospital (CAH)
paid under the optional method, to the CAH based on an institutional
claim.

0
29. A new Sec. 414.90 is added to read as follows:

[[Page 73618]]

Sec. 414.90 Physician Quality Reporting System.

(a) Basis and scope. This section implements the following
provisions of the Act:
(1) 1848(a)--Payment Based on Fee Schedule.
(2) 1848(k)--Quality Reporting System.
(3) 1848(m)--Incentive Payments for Quality Reporting.
(b) Definitions. As used in this section, unless otherwise
indicated--
Covered professional services means services for which payment is
made under, or is based on, the Medicare physician fee schedule as
provided under section 1848(k)(3) of the Act and which are furnished by
an eligible professional.
Eligible professional means any of the following:
(i) A physician.
(ii) A practitioner described in section 1842(b)(18)(C) of the Act.
(iii) A physical or occupational therapist or a qualified speech-
language pathologist.
(iv) A qualified audiologist (as defined in section 1861(ll)(3)(B)
of the Act).
Group practice means a single Taxpayer Identification Number (TIN)
with two or more eligible professionals, as identified by their
individual National Provider Identifier (NPI), who have reassigned
their Medicare billing rights to the TIN.
Maintenance of Certification Program means a continuous assessment
program, such as qualified American Board of Medical Specialties
Maintenance of Certification Program or an equivalent program (as
determined by the Secretary), that advances quality and the lifelong
learning and self-assessment of board certified specialty physicians by
focusing on the competencies of patient care, medical knowledge,
practice-based learning, interpersonal and communication skills, and
professionalism. Such a program must include the following:
(i) The program requires the physician to maintain a valid
unrestricted license in the United States.
(ii) The program requires a physician to participate in educational
and self-assessment programs that require an assessment of what was
learned.
(iii) The program requires a physician to demonstrate, through a
formalized secure examination, that the physician has the fundamental
diagnostic skills, medical knowledge, and clinical judgment to provide
quality care in their respective specialty.
(iv) The program requires successful completion of a qualified
maintenance of certification program practice assessment.
Maintenance of Certification Program Practice Assessment means an
assessment of a physician's practice that--
(i) Includes an initial assessment of an eligible professional's
practice that is designed to demonstrate the physician's use of
evidence-based medicine;
(ii) Includes a survey of patient experience with care; and
(iii) Requires a physician to implement a quality improvement
intervention to address a practice weakness identified in the initial
assessment under paragraph (h) of this section and then to remeasure to
assess performance improvement after such intervention.
Measures group means a subset of four or more Physician Quality
Reporting System measures that have a particular clinical condition or
focus in common. The denominator definition and coding of the measures
group identifies the condition or focus that is shared across the
measures within a particular measures group.
Physician Quality Reporting System means the physician reporting
system under section 1848(k) of the Act for the reporting by eligible
professionals of data on quality measures and the incentive payment
associated with this physician reporting system.
Performance rate means the percentage of a defined population who
receives a particular process of care or achieve a particular outcome
for a particular quality measure.
Reporting rate means the percentage of patients that the eligible
professional indicated a quality action was or was not performed
divided by the total number of patients in the denominator of the
measure.
Qualified registry means a medical registry or a maintenance of
certification program operated by a specialty body of the American
Board of Medical Specialties that, with respect to a particular program
year, has self-nominated and successfully completed a vetting process
(as specified by CMS) to demonstrate its compliance with the Physician
Quality Reporting System qualification requirements specified by CMS
for that program year. The registry may act as a data submission
vendor, which has the requisite legal authority to provide Physician
Quality Reporting System data (as specified by CMS) on behalf of an
eligible professional to CMS.
Qualified electronic health record product means an electronic
health record vendor's product and version that, with respect to a
particular program year, has self-nominated and successfully completed
a vetting process (as specified by CMS) to demonstrate the product's
compliance with the Physician Quality Reporting System qualification
requirements specified by CMS for a program year. The requirements and
process for an electronic health record product to be qualified for the
purpose of the Physician Quality Reporting System is separate from the
standards, implementation specifications, and certification criteria
established for the EHR Incentive Program specified in part 495.
(c) Incentive payments. With respect to covered professional
services furnished during a reporting period by an eligible
professional, if --
(1) There are any quality measures that have been established under
the Physician Quality Reporting System that are applicable to any such
services furnished by such professional (or in the case of a group
practice under paragraph (g) of this section, such group practice) for
such reporting period; and
(2) The eligible professional (or in the case of a group practice
under paragraph (g) of this section, the group practice) satisfactorily
submits (as determined under paragraph (f) of this section for eligible
professionals and paragraph (g) of this section for group practices) to
the Secretary data on such quality measures in accordance with the
Physician Quality Reporting System for such reporting period, in
addition to the amount otherwise paid under section 1848 of the Act,
there also must be paid to the eligible professional (or to an employer
or facility in the cases described in section 1842(b)(6)(A) of the Act
or, in the case of a group practice) under paragraph (g) of this
section, to the group practice, from the Federal Supplementary Medical
Insurance Trust Fund established under section 1841 of the Act an
amount equal to the applicable quality percent (as specified in
paragraph (c)(3) of this section) of the eligible professional's (or,
in the case of a group practice under paragraph (g) of this section,
the group practice's) total estimated allowed charges for all covered
professional services furnished by the eligible professional (or, in
the case of a group practice under paragraph (g) of this section, by
the group practice) during the applicable reporting period. For
purposes of this paragraph,
(i) The eligible professional's (or, in the case of a group
practice under paragraph (g) of this section, the group practice's)
total estimated allowed charges for covered professional services
furnished during a reporting period are determined based on claims

[[Page 73619]]

processed in the National Claims History (NCH) no later than 2 months
after the end of the applicable reporting period;
(ii) In the case of an eligible professional who furnishes covered
professional services in more than one practice, incentive payments are
separately determined for each practice based on claims submitted for
the eligible professional for each practice;
(iii) Incentive payments earned by an eligible professional (or in
the case of a group practice under paragraph (g) of this section, by a
group practice) for a particular program year will be paid as a single
consolidated payment to the TIN holder of record.
(3) Applicable quality percent. The applicable quality percent is
as follows:
(i) For 2011, 1.0 percent; and
(ii) For 2012, 2013, and 2014, 0.5 percent;
(d) Additional incentive payment. (1) Through 2014, if an eligible
professional meets the requirements described in paragraph (d)(2) of
this section, the applicable percent for such year, as described in
paragraphs (c)(3)(i) and (ii) of this section, must be increased by 0.5
percentage points.
(2) In order to qualify for the additional incentive payment
described in paragraph (d)(1) of this section, an eligible professional
must meet the following requirements:
(i) The eligible professional must--
(A) Satisfactorily submit data on quality measures for purposes of
this section for a year; and
(B) Have such data submitted on their behalf through a Maintenance
of Certification program (as defined in paragraph (b) of this section)
that meets:
(1) The criteria for a registry (as specified by CMS); or
(2) An alternative form and manner determined appropriate by the
Secretary.
(ii) The eligible professional, more frequently than is required to
qualify for or maintain board certification status--
(A) Participates in a maintenance of certification program (as
defined in paragraph (b) of this section) for a year; and
(B) Successfully completes a qualified maintenance of certification
program practice assessment (as defined in paragraph (b) of this
section) for such year.
(iii) A Maintenance of Certification Program submits to the
Secretary, on behalf of the eligible professional, information--
(A) In a form and manner specified by the Secretary, that the
eligible professional has successfully met the requirements of
paragraph (d)(2)(ii) of this section, which may be in the form of a
structural measure);
(B) If requested by the Secretary, on the survey of patient
experience with care (as described in paragraph (b) of this section);
and
(C) As the Secretary may require, on the methods, measures, and
data used under the Maintenance of Certification Program and the
qualified Maintenance of Certification Program practice assessment.
(e) Use of consensus-based quality measures. For each program year,
CMS will publish the final list of measures and the final detailed
measure specifications for all quality measures selected for inclusion
in the Physician Quality Reporting System quality measure set for a
given program year on a CMS Web site by no later than December 31 of
the prior year.
(1) General rule. Subject to paragraph (e)(2) of this section, for
purposes of reporting data on quality measures for covered professional
services furnished during a year, subject to paragraph (f) of this
section, the quality measures specified under this paragraph must be
such measures selected by the Secretary from measures that have been
endorsed by the entity with a contract with the Secretary under section
1890(a) of the Act.
(2) Exception. In the case of a specified area or medical topic
determined appropriate by the Secretary for which a feasible and
practical measure has not been endorsed by the entity with a contract
under section 1890(a) of the Act, the Secretary may specify a measure
that is not so endorsed as long as due consideration is given to
measures that have been endorsed or adopted by a consensus organization
identified by the Secretary, such as the AQA alliance.
(3) Opportunity to provide input on measures. For each quality
measure adopted by the Secretary under this paragraph, the Secretary
ensures that eligible professionals have the opportunity to provide
input during the development, endorsement, or selection of quality
measures applicable to services they furnish.
(f) Requirements for individual eligible professionals to qualify
to receive an incentive payment. In order to qualify to earn a
Physician Quality Reporting System incentive payment for a particular
program year, an individual eligible professional, as identified by a
unique TIN/NPI combination, must meet the criteria for satisfactory
reporting specified by CMS for such year by reporting on either
individual Physician Quality Reporting System quality measures or
Physician Quality Reporting System measures groups identified by CMS
during a reporting period specified in paragraph (f)(1) of this section
and using one of the reporting mechanisms specified in paragraph (f)(2)
of this section. Although an eligible professional may attempt to
qualify for the Physician Quality Reporting System incentive payment by
reporting on both individual Physician Quality Reporting System quality
measures and measures groups, using more than one reporting mechanism
(as specified in paragraph (f)(2) of this section), or reporting for
more than one reporting period, he or she will receive only one
Physician Quality Reporting System incentive payment per TIN/NPI
combination for a program year.
(1) Reporting periods. For purposes of this paragraph, the
reporting period with respect to program year 2011 is--
(i) The 12-month period from January 1 through December 31 of such
program year; or
(ii) The 6-month period from July 1 through December 31 of such
program year.
(2) Exceptions. In program year 2011, the 6-month reporting period
is not available for EHR-based reporting of individual Physician
Quality Reporting System quality measures or for reporting by group
practices under the process described in paragraph (g) of this section.
(3) Reporting mechanisms. For program year 2011, an eligible
professional who wishes to participate in the Physician Quality
Reporting System must report information on the individual Physician
Quality Reporting System quality measures or Physician Quality
Reporting System measures groups identified by CMS in the following
manner:
(i) Reporting the individual Physician Quality Reporting System
quality measures or Physician Quality Reporting System measures groups
to CMS, by no later than 2 months after the end of the applicable
reporting period, on the eligible professional's Medicare Part B claims
for covered professional services furnished during the applicable
reporting period.
(ii) Reporting the individual Physician Quality Reporting System
quality measures or Physician Quality Reporting System measures groups
to a qualified registry (as specified in paragraph (b) of this section)
in the form and manner and by the deadline specified by the qualified
registry selected by the eligible professional. The selected registry
will submit information, as required by CMS, for covered professional
services furnished

[[Page 73620]]

by the eligible professional during the applicable reporting period to
CMS on the eligible professional's behalf; or
(iii) Reporting the individual Physician Quality Reporting System
quality measures to CMS by extracting clinical data using a secure data
submission method, as required by CMS, from a qualified EHR product (as
defined in paragraph (b) of this section) by the deadline specified by
CMS for covered professional services furnished by the eligible
professional during the applicable reporting period. Prior to actual
data submission for a given program year and by a date specified by
CMS, the eligible professional must submit a test file containing real
or dummy clinical quality data extracted from the qualified EHR product
selected by the eligible professional using a secure data submission
method, as required by CMS.
(g) Requirements for group practices to qualify to receive an
incentive payment. A group practice (as defined in paragraph (b) of
this section) will be treated as satisfactorily submitting data on
quality measures under Physician Quality Reporting System for covered
professional services for a reporting period, if, in lieu of reporting
Physician Quality Reporting System measures, the group practice--
(1) Meets the participation requirements specified by CMS for the
Physician Quality Reporting System group practice reporting option or
is a group practice of any size (including solo practitioners) or
comprised of multiple TINs participating in a Medicare approved
demonstration project that is deemed to be participating in the
Physician Quality Reporting System group practice reporting option;
(2) Is selected by CMS to participate in the Physician Quality
Reporting System group practice reporting option;
(3) Reports measures specified by CMS in the form and manner, and
at a time specified by CMS; and
(4) Meets other requirements for satisfactory reporting specified
by CMS.
(5) No double payments. Payments to a group practice under this
paragraph must be in lieu of the payments that would otherwise be made
under the Physician Quality Reporting System to eligible professionals
in the group practice for meeting the criteria for satisfactory
reporting for individual eligible professionals.
(i) If an eligible professional, as identified by an individual
NPI, has reassigned his or her Medicare billing rights to a TIN
selected to participate in the Physician Quality Reporting System group
practice reporting option for a program year, then for that program
year the eligible professional must participate in the Physician
Quality Reporting System via the group practice reporting option. For
any program year in which the TIN is selected to participate in the
Physician Quality Reporting System group practice reporting option, the
eligible professional cannot individually qualify for a Physician
Quality Reporting System incentive payment by meeting the requirements
specified in paragraph (f) of this section.
(ii) If, for the program year, the eligible professional
participates in the Physician Quality Reporting System under another
TIN that is not selected to participate in the Physician Quality
Reporting System group practice reporting option for that program year,
then the eligible professional may individually qualify for a Physician
Quality Reporting System incentive by meeting the requirements
specified in paragraph (f) of this section under that TIN.
(h) Limitations on review. Except as specified in paragraph (i) of
this section, there is no administrative or judicial review under
section 1869 or 1879 of the Act, or otherwise of--
(1) The determination of measures applicable to services furnished
by eligible professionals under the Physician Quality Reporting System;
(2) The determination of the payment limitation; and
(3) The determination of any Physician Quality Reporting System
incentive payment and the Physician Quality Reporting System payment
adjustment.
(i) Informal review. Eligible professionals (or in the case of
reporting under paragraph (g) of this section, group practices) may
seek an informal review of the determination that an eligible
professional (or in the case of reporting under paragraph (g) of this
section, group practices) did not satisfactorily submit data on quality
measures under the Physician Quality Reporting System.
(1) To request an informal review, an eligible professional (or in
the case of reporting under paragraph (g) of this section, group
practices) must submit a request to CMS within 90 days of the release
of the feedback reports. The request must be submitted in writing or
via e-mail and summarize the concern(s) and reasons for requesting an
informal review and may also include information to assist in the
review.
(2) CMS will provide a written response within 60 days of the
receipt of the original request.
(i) All decisions based on the informal review will be final.
(ii) There will be no further review or appeal.
(j) Public reporting of an eligible professional's or group
practice's Physician Quality Reporting System data. For each program
year, CMS will post on a public Web site, in an easily understandable
format, a list of the names of eligible professionals (or in the case
of reporting under paragraph (g) of this section, group practices) who
satisfactorily submitted Physician Quality Reporting System quality
measures.

0
30. A new Sec. 414.92 is added to read as follows:

Sec. 414.92 Electronic Prescribing Incentive Program.

(a) Basis and scope. This section implements the following
provisions of the Act:
(1) Section 1848(a)--Payment Based on Fee Schedule.
(2) Section 1848(m)--Incentive Payments for Quality Reporting.
(b) Definitions. As used in this section, unless otherwise
indicated--
Covered professional services means services for which payment is
made under, or is based on, the Medicare physician fee schedule which
are furnished by an eligible professional.
Electronic Prescribing Incentive Program means the incentive
payment program established under section 1848(m) of the Act for the
adoption and use of electronic prescribing technology by eligible
professionals.
Eligible professional means any of the following healthcare
professionals who have prescribing authority:
(i) A physician.
(ii) A practitioner described in section 1842(b)(18)(C) of the Act.
(iii) A physical or occupational therapist or a qualified speech-
language pathologist.
(iv) A qualified audiologist (as defined in section 1861(ll)(3)(B)
of the Act).
Group practice means a group practice that is--
(i) Defined at Sec. 414.90(b), that is participating in the
Physician Quality Reporting System; or
(ii) (A) In a Medicare approved demonstration project that is
deemed to be participating in the Physician Quality Reporting System
group practice reporting option; and
(B) Has indicated its desire to participate in the electronic
prescribing group practice option.
Qualified electronic health record product means an electronic
health record product and version that, with

[[Page 73621]]

respect to a particular program year, is designated by CMS as a
qualified electronic health record product for the purpose of the
Physician Quality Reporting System (as described in Sec. 414.90) and
the product's vendor has indicated a desire to have the product
qualified for purposes of the product's users to submit information
related to the electronic prescribing measure.
Qualified registry means a medical registry or a Maintenance of
Certification Program operated by a specialty body of the American
Board of Medical Specialties that, with respect to a particular program
year, is designated by CMS as a qualified registry for the purpose of
the Physician Quality Reporting System (as described in Sec. 414.90)
and that has indicated its desire to be qualified to submit the
electronic prescribing measure on behalf of eligible professionals for
the purposes of the Electronic Prescribing Incentive Program.
(c) Incentive payments and payment adjustments. (1) Incentive
payments. Subject to paragraph (c)(3) of this section, with respect to
covered professional services furnished during a reporting period by an
eligible professional, if the eligible professional is a successful
electronic prescriber for such reporting period, in addition to the
amount otherwise paid under section 1848 of the Act, there also must be
paid to the eligible professional (or to an employer or facility in the
cases described in section 1842(b)(6)(A) of the Act) or, in the case of
a group practice under paragraph (e) of this section, to the group
practice, from the Federal Supplementary Medical Insurance Trust Fund
established under section 1841 of the Act an amount equal to the
applicable electronic prescribing percent (as specified in paragraph
(c)(1)(ii) of this section) of the eligible professional's (or, in the
case of a group practice under paragraph (e) of this section, the group
practice's) total estimated allowed charges for all covered
professional services furnished by the eligible professional (or, in
the case of a group practice under paragraph (e) of this section, by
the group practice) during the applicable reporting period.
(i) For purposes of paragraph (c)(1) of this section,
(A) The eligible professional's (or, in the case of a group
practice under paragraph (e) of this section, the group practice's)
total estimated allowed charges for covered professional services
furnished during a reporting period are determined based on claims
processed in the National Claims History (NCH) no later than 2 months
after the end of the applicable reporting period;
(B) In the case of an eligible professional who furnishes covered
professional services in more than one practice, incentive payments are
separately determined for each practice based on claims submitted for
the eligible professional for each practice;
(C) Incentive payments earned by an eligible professional (or in
the case of a group practice under paragraph (e) of this section, by a
group practice) for a particular program year will be paid as a single
consolidated payment to the TIN holder of record.
(ii) Applicable electronic prescribing percent. The applicable
electronic prescribing percent is as follows:
(A) For the 2011 and 2012 program years, 1.0 percent.
(B) For the 2013 program year, 0.5 percent.
(iii) Limitation with respect to electronic health record (EHR)
incentive payments. The provisions of this paragraph do not apply to an
eligible professional (or, in the case of a group practice under
paragraph (e) of this section, a group practice) if, for the electronic
health record reporting period the eligible professional (or group
practice) receives an incentive payment under section 1848(o)(1)(A) of
the Act with respect to a certified electronic health record technology
(as defined in section 1848(o)(4) of the Act) that has the capability
of electronic prescribing.
(2) Incentive payment adjustment. Subject to paragraphs (c)(1)(ii)
and (c)(3) of this section, with respect to covered professional
services furnished by an eligible professional during 2012, 2013, or
2014, if the eligible professional (or in the case of a group practice
under paragraph (e) of this section, the group practice) is not a
successful electronic prescriber (as specified by CMS for purposes of
the payment adjustment) for an applicable reporting period (as
specified by CMS) the fee schedule amount for such services furnished
by such professional (or group practice) during the program year
(including the fee schedule amount for purposes of determining a
payment based on such amount) is equal to the applicable percent (as
specified in paragraph (c)(2)(i) of this section) of the fee schedule
amount that would otherwise apply to such services under section 1848
of the Act.
(i) Applicable percent. The applicable percent is as follows:
(A) For 2012, 99 percent;
(B) For 2013, 98.5 percent; and
(C) For 2014, 98 percent.
(ii) Significant hardship exception. CMS may, on a case-by-case
basis, exempt an eligible professional (or in the case of a group
practice under paragraph (e) of this section, a group practice) from
the application of the payment adjustment under paragraph (c)(2) of
this section if, CMS determines, subject to annual renewal, that
compliance with the requirement for being a successful electronic
prescriber would result in a significant hardship.
(3) Limitation with respect to electronic prescribing quality
measures. The provisions of paragraphs (c)(1) and (c)(2) of this
section do not apply to an eligible professional (or, in the case of a
group practice under paragraph (e) of this section, a group practice)
if for the reporting period the allowed charges under section 1848 of
the Act for all covered professional services furnished by the eligible
professional (or group, as applicable) for the codes to which the
electronic prescribing measure applies are less than 10 percent of the
total of the allowed charges under section 1848 of the Act for all such
covered professional services furnished by the eligible professional
(or the group practice, as applicable).
(d) Requirements for individual eligible professionals to qualify
to receive an incentive payment. In order to be considered a successful
electronic prescriber and qualify to earn an electronic prescribing
incentive payment (subject to paragraph (c)(3) of this section), an
individual eligible professional, as identified by a unique TIN/NPI
combination, must meet the criteria for successful electronic
prescriber under section 1848(m)(3)(B) of the Act and as specified by
CMS during the reporting period specified in paragraph (d)(1) of this
section and using one of the reporting mechanisms specified in
paragraph (d)(2) of this section. Although an eligible professional may
attempt to qualify for the electronic prescribing incentive payment
using more than one reporting mechanism (as specified in paragraph
(d)(2) of this section), the eligible professional will receive only
one electronic prescribing incentive payment per TIN/NPI combination
for a program year.
(1) Reporting period. For purposes of this paragraph in 2011, the
reporting period with respect to a program year is the entire calendar
year.
(2) Reporting mechanisms. For program year 2011, an eligible
professional who wishes to participate in the Electronic Prescribing
Incentive Program must report information on the electronic prescribing
measure identified by CMS to--

[[Page 73622]]

(i) CMS, by no later than 2 months after the end of the applicable
reporting period, on the eligible professional's Medicare Part B claims
for covered professional services furnished by the eligible
professional during the reporting period specified in paragraph (d)(1)
of this section;
(ii) A qualified registry (as defined in paragraph (b) of this
section) in the form and manner and by the deadline specified by the
qualified registry selected by the eligible professional. The selected
qualified registry will submit information, as required by CMS, for
covered professional services furnished by the eligible professional
during the reporting period specified in paragraph (d)(1) of this
section to CMS on the eligible professional's behalf; or
(iii) CMS by extracting clinical data using a secure data
submission method, as required by CMS, from a qualified electronic
health record product (as defined in paragraph (b) of this section) by
the deadline specified by CMS for covered professional services
furnished by the eligible professional during the reporting period
specified in paragraph (d)(1) of this section. Prior to actual data
submission for a given program year and by a date specified by CMS, the
eligible professional must submit a test file containing real or dummy
clinical quality data extracted from the qualified electronic health
record product selected by the eligible professional using a secure
data submission method, as required by CMS.
(e) Requirements for group practices to qualify to receive an
incentive payment. (1) A group practice (as defined in paragraph (b) of
this section) will be treated as a successful electronic prescriber for
covered professional services for a reporting period if the group
practice meets the criteria for successful electronic prescriber
specified by CMS in the form and manner and at the time specified by
CMS.
(2) No double payments. Payments to a group practice under this
paragraph must be in lieu of the payments that would otherwise be made
under the Electronic Prescribing Incentive Program to eligible
professionals in the group practice for being a successful electronic
prescriber.
(i) If an eligible professional, as identified by an individual
NPI, has reassigned his or her Medicare billing rights to a TIN
selected to participate in the electronic prescribing group practice
reporting option for a program year, then for that program year the
eligible professional must participate in the Electronic Prescribing
Incentive Program via the group practice reporting option. For any
program year in which the TIN is selected to participate in the
Electronic Prescribing Incentive Program group practice reporting
option, the eligible professional cannot individually qualify for an
electronic prescribing incentive payment by meeting the requirements
specified in paragraph (d) of this section.
(ii) If, for the program year, the eligible professional
participates in the Electronic Prescribing Incentive Program under
another TIN that is not selected to participate in the Electronic
Prescribing Incentive Program group practice reporting option for that
program year, then the eligible professional may individually qualify
for an electronic prescribing incentive by meeting the requirements
specified in paragraph (d) of this section under that TIN.
(f) Public reporting of an eligible professional's or group
practice's Electronic Prescribing Incentive Program data. For each
program year, CMS will post on a public Web site, in an easily
understandable format, a list of the names of eligible professionals
(or in the case of reporting under paragraph (e) of this section, group
practices) who are successful electronic prescribers.

Subpart D--Payment for Durable Medical Equipment and Prosthetic and
Orthotic Devices

0
31. Section 414.202 is amended by adding the definition of ``Complex
rehabilitative power-driven wheelchair.

Sec. 414.202 Definitions.

* * * * *
Complex rehabilitative power-driven wheelchair means a power-driven
wheelchair that is classified as--
(1) Group 2 power wheelchair with power options that can
accommodate rehabilitative features (for example, tilt in space); or
(2) Group 3 power wheelchair.
* * * * *

0
32. Section 414.229 is amended by--
0
A. Revising paragraphs (a)(3), (d)(1), and (h).
0
B. Adding paragraphs (a)(4), (a)(5), and (b)(3).
The revisions and additions read as follows:

Sec. 414.229 Other durable medical equipment-capped rental items.

(a) * * *
(3) For power-driven wheelchairs furnished on or after January 1,
2006 through December 31, 2010, payment is made in accordance with the
rules set forth in paragraphs (f) or (h) of this section.
(4) For power-driven wheelchairs that are not classified as complex
rehabilitative power-driven wheelchairs, furnished on or after January
1, 2011, payment is made in accordance with the rules set forth in
paragraph (f) of this section.
(5) For power-driven wheelchairs classified as complex
rehabilitative power-driven wheelchairs, furnished on or after January
1, 2011, payment is made in accordance with the rules set forth in
paragraphs (f) or (h) of this section.
(b) * * *
(3) For power-driven wheelchairs furnished on or after January 1,
2011, the monthly fee schedule amount for rental equipment equals 15
percent of the purchase price recognized as determined under paragraph
(c) of this section for each of the first 3 months and 6 percent of the
purchase price for each of the remaining months.
* * * * *
(d) * * *
(1) Suppliers must offer beneficiaries the option of purchasing
power-driven wheelchairs at the time the supplier first furnishes the
item. On or after January 1, 2011, this option is available only for
complex rehabilitative power-driven wheelchairs. Payment must be on a
lump-sum fee schedule purchase basis if the beneficiary chooses the
purchase option. The purchase fee is the amount established in
paragraph (c) of this section.
* * * * *
(h) Purchase of power-driven wheelchairs furnished on or after
January 1, 2006. (1) Suppliers must offer beneficiaries the option to
purchase power-driven wheelchairs at the time the equipment is
initially furnished.
(2) Payment is made on a lump-sum purchase basis if the beneficiary
chooses this option.
(3) On or after January 1, 2011, this option is available only for
complex rehabilitative power-driven wheelchairs.

Subpart F--Competitive Bidding for Certain Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)

0
33. Section 414.402 is amended by adding the definitions of ``Affected
party,'' ``Breach of contract,'' ``Corrective action plan (CAP),''
``Hearing officer,'' ``Mail order item,'' ``National mail order DMEPOS
competitive bidding program,'' ``Non-mail order item'' and ``Parties to
the hearing'' in alphabetical order to read as follows:

[[Page 73623]]

Sec. 414.402 Definitions.

Affected party means a contract supplier that has been notified
that their DMEPOS CBP contract will be terminated for a breach of
contract.
* * * * *
Breach of contract means any deviation from contract requirements,
including a failure to comply with a governmental agency or licensing
organization requirements, constitutes a breach of contract.
* * * * *
Corrective action plan (CAP) means a contract supplier's written
document with supporting information that describes the actions the
contract supplier will take within a specified timeframe to remedy a
breach of contract.
* * * * *
Hearing officer (HO) means an individual, who was not involved with
the CBIC recommendation to terminate a DMEPOS Competitive Bidding
Program contract, who is designated by CMS to review and make an
unbiased and independent recommendation when there is an appeal of
CMS's initial determination to terminate a DMEPOS Competitive Bidding
Program contract.
* * * * *
Mail order item means any item (for example, diabetic testing
supplies) shipped or delivered to the beneficiary's home, regardless of
the method of delivery.
* * * * *
National mail order DMEPOS competitive bidding program means a
program whereby contracts are awarded to suppliers for the furnishing
of mail order items across the nation.
* * * * *
Non-mail order item means any item (for example, diabetic testing
supplies) that a beneficiary or caregiver picks up in person at a local
pharmacy or supplier storefront.
Parties to the hearing means the DMEPOS contract supplier and CMS.
* * * * *

0
34. Section 414.404 is amended by revising paragraph (b)(1)(i) to read
as follows:

Sec. 414.404 Scope and applicability.

* * * * *
(b) * * *
(1) * * *
(i) The items furnished are limited to crutches, canes, walkers,
folding manual wheelchairs, blood glucose monitors, and infusion pumps
that are DME, and off-the-shelf (OTS) orthotics.
* * * * *

0
35. Section 414.408 is amended by--
0
A. Revising paragraph (f)(1).
0
B. Redesignating paragraph (h)(2) through (h)(7) as paragraphs (h)(3)
through (h)(8), respectively.
0
C. Adding new paragraph (h)(2).
0
D. In newly designated paragraphs (h)(3)(i) and (ii), remove the phrase
``(h)(2)'' and insert in its place the phrase ``(h)(3).''
The revision and addition reads as follows:

Sec. 414.408 Payment rules.

* * * * *
(f) * * *
(1) The single payment amounts for new purchased durable medical
equipment, including power wheelchairs that are purchased when the
equipment is initially furnished and enteral nutrition equipment are
calculated based on the bids submitted and accepted for these items.
For contracts entered into beginning on or after January 1, 2011,
payment on a lump sum purchase basis is only available for power
wheelchairs classified as complex rehabilitative power wheelchairs.
* * * * *
(h) * * *
(2) For contracts entered into beginning on or after January 1,
2011, the monthly fee schedule amount for rental of power wheelchairs
equals 15 percent of the single payment amounts calculated for new
durable medical equipment under paragraph (f)(1) of this section for
each of the first 3 months, and 6 percent of the single payment amounts
calculated for these items for each of the remaining months 4 through
13.
* * * * *

0
36. Section 414.410 is amended as follows:
0
A. Revising paragraphs (a)(2) and (a)(3).
0
B. Adding a new paragraph (a)(4).
The revisions and addition read as follows:

Sec. 414.410 Phase-in implementation of competitive bidding programs.

(a) * * *
(2) In CY 2011, in an additional 91 MSAs (the additional 70 MSAs
selected by CMS as of June 1, 2008, and the next 21 largest MSAs by
total population based on 2009 population estimates, and not already
phased in as of June 1, 2008). CMS may subdivide any of the 91 MSAs
with a population of greater than 8,000,000 into separate CBAs, thereby
resulting in more than 91 CBAs.
(3) After CY 2011, additional CBAs (or, in the case of national
mail order for items and services, after CY 2010).
(4) For competitions (other than for national mail order items and
services) after CY 2011 and prior to CY 2015, the following areas are
excluded:
(i) Rural areas.
(ii) MSAs not selected under paragraphs (a)(1) or (a)(2) of this
section with a population of less than 250,000.
(iii) An area with low population density within an MSA not
selected under paragraphs (a)(1) or (a)(2) of this section.
* * * * *

0
37. Section 414.411 is added to read as follows:

Sec. 414.411 Special rule in case of competitions for diabetic
testing strips conducted on or after January 1, 2011.

(a) National mail order competitions. A supplier must demonstrate
that their bid submitted as part of a national mail order competition
for diabetic testing strips covers the furnishing of a sufficient
number of different types of diabetic testing strip products that, in
the aggregate, and taking into account volume for the different
products, includes at least 50 percent of all the different types of
products on the market. A type of diabetic testing strip means a
specific brand and model of testing strips.
(b) Other competitions. CMS may apply this special rule to non-mail
order or local competitions for diabetic testing strips.

0
38. Section 414.422 is amended by adding paragraph (e)(3) to read as
follows:

Sec. 414.422 Term of contracts.

* * * * *
(e) * * *
(3) Contract suppliers for diabetic testing supplies must furnish
the brand of diabetic testing supplies that work with the home blood
glucose monitor selected by the beneficiary. The contract supplier is
prohibited from influencing or incentivizing the beneficiary by
persuading, pressuring, or advising them to switch from their current
brand or for new beneficiaries from their preferred brand of glucose
monitor and testing supplies. The contract supplier may not furnish
information about alternative brands to the beneficiary unless the
beneficiary requests such information.
* * * * *

0
39. Section 414.423 is added to read as follows:

Sec. 414.423 Appeals Process for Termination of Competitive Bidding
Contract.

This section implements an appeals process for suppliers that CMS
has determined are in breach of their

[[Page 73624]]

Medicare DMEPOS Competitive Bidding Program contracts and where CMS has
taken action to terminate the supplier's contract. Except as specified
in this regulation termination decisions made under this section are
final and binding.
(a) Terminations for breach of contract. CMS may terminate a
supplier's DMEPOS Competitive Bidding Program contract when it
determines that the supplier has violated any of the terms of its
contract.
(b) Notice of termination.
(1) CMS notification. If CMS determines a supplier to be in breach
of its contract either in part or in whole, it will notify the Medicare
DMEPOS supplier of the termination by certified mail.
(2) Content of the notice. The CMS notice will include the
following:
(i) The reasons for the termination.
(ii) The right to request a hearing by a CBIC Hearing Officer, and
depending on the nature of the breach, the supplier may also be allowed
to submit a CAP in lieu of requesting a hearing by a CBIC Hearing
Officer, as specified in paragraph (c)(1)(i) of this section.
(iii) The address to which the written request for a hearing must
be mailed.
(iv) The address to which the CAP must be mailed, if applicable.
(v) Penalties that will accompany the termination, such as not
being eligible to bid in future rounds of competitive bidding.
(vi) The effective date of termination is 45 days from the date of
the notification letter unless a timely hearing request has been filed
or a corrective action plan (CAP) has been submitted within 30 days of
the date on the notification letter.
(c) Corrective action plan (CAP). (1) Option for corrective action
plan (CAP).
(i) CMS has the option to allow a DMEPOS supplier to provide a
written corrective action plan (CAP) to remedy the deficiencies
identified in the notice, when CMS determines that the delay in the
termination date caused by allowing a CAP will not cause harm to
beneficiaries, for example, we would not allow a CAP if the supplier
has been excluded from any Federal program, debarred by a Federal
agency, or convicted of a healthcare-related crime.
(ii) If a supplier chooses not to submit a CAP or if CMS determines
that a supplier's CAP is insufficient, the supplier may request a
hearing on the termination.
(2) Submission of a CAP. (i) A corrective action plan must be
submitted within 30 days from the date on the notification letter. If
the supplier decides not to submit a corrective action plan the
supplier may within 30 days of the date on the termination letter
request a hearing by a CBIC hearing officer.
(ii) Suppliers will only have the opportunity to submit a CAP when
they are first notified that they have been determined to be in breach
of contract. If the CAP is not acceptable or properly implemented,
suppliers will receive a subsequent termination notice.
(d) The purpose of the corrective action plan. (1) For the supplier
to eliminate all of the deficiencies that were identified in the notice
to terminate its contract to avoid contract termination.
(2) To identify the timeframes by which the supplier will implement
each of the components of the CAP.
(e) Review of the CAP. (1) The CBIC will review the CAP. Suppliers
may only revise their CAP one-time during the review process based on
the deficiencies identified by the CBIC. The CBIC will submit a
recommendation to CMS concerning whether the CAP includes the steps
necessary to remedy the contract deficiencies as identified in the
notice of termination.
(2) If CMS accepts the CAP, including supplier's designated
timeframe for its completion; the supplier must provide a follow-up
report within 5 days after the supplier has fully implemented the CAP
that verifies that all of the deficiencies identified in the CAP have
been corrected in accordance with the timeframes accepted by CMS.
(3) If the supplier does not implement an acceptable CAP the
supplier will receive a subsequent notice that their contract will be
terminated within 45 days of the date on that notice.
(f) Right to request a hearing by the CBIC hearing officer (HO).
(1) A supplier who has received a notice that CMS considers the
supplier in breach of contract or that the supplier's CAP is not
acceptable has the right to request a hearing before an HO who was not
involved with the original determination.
(2) A supplier who wishes to appeal the termination notice must
submit a written request to the CBIC. The request for a hearing must be
received by the CBIC within 30 days from the date of the notice to
terminate.
(3) A request for hearing must be in writing and submitted by an
authorized official of the supplier.
(4) The appeals process for the Medicare DMEPOS Competitive Bidding
Program is not to be used in place of other existing appeals processes
that apply to other parts of the Medicare.
(5) If the supplier is given the opportunity to submit a CAP and a
CAP is not submitted and the supplier fails to timely request a
hearing, this will result in the termination of the supplier's DMEPOS
Competitive Bidding Program contract effective 45 days from the date on
the notice to terminate received by the supplier.
(g) The CBIC Hearing Officer schedules and conducts the hearing.
(1) Within 30 days from the receipt of the supplier's timely request
for a hearing the hearing officer will contact the parties to schedule
the hearing.
(2) The hearing may be held in person or by telephone at the
supplier's request.
(3) The scheduling notice to the parties must indicate the time and
place for the hearing and must be sent to the supplier 30 days before
the date of the hearing.
(4) The HO may, on his or her own motion, or at the request of a
party, change the time and place for the hearing, but must give the
parties to the hearing 30 days notice of the change.
(5) The HO's scheduling notice must provide the parties to the
hearing and the CBIC the following information:
(i) Description of the hearing procedure.
(ii) The general and specific issues to be resolved.
(iii) The supplier has the burden to prove it is not in violation
of the contract.
(iv) The opportunity for parties to the hearing to submit
additional evidence to support their positions, if requested by the HO.
(v) All evidence submitted, both from the supplier and CMS, in
preparation for the hearing with all affected parties within 15 days
prior to the scheduled date of the hearing.
(h) Burden of proof. (1) The burden of proof is on the Competitive
Bidding Program contract supplier to demonstrate to the HO with
convincing evidence that it has not breached its contract or that
termination is not appropriate.
(2) The supplier's supporting evidence must be submitted with its
request for a hearing.
(3) If the Medicare DMEPOS supplier fails to submit this evidence
at the time of its submission, the Medicare DMEPOS supplier is
precluded from introducing new evidence later during the hearing
process, unless permitted by the hearing officer.
(4) CMS also has the opportunity to submit evidence to the HO
within 10 days of receiving a notice announcing the hearing.
(5) The HO will share all evidence submitted by the supplier and/or
CMS, with all parties to the hearing and the

[[Page 73625]]

CBIC within 15 days prior to the scheduled date of the hearing.
(i) Role of the Hearing Officer. The HO will conduct a thorough and
independent review of the evidence including the information and
documentation submitted for the hearing and other information that the
HO considers pertinent for the hearing. The role of the HO includes, at
a minimum, the following:
(1) Conducts the hearing and decides the order in which the
evidence and the arguments of the parties are presented;
(2) Determines the rules on admissibility of the evidence;
(3) Examines the witnesses, in addition to the examinations
conducted by CMS and the contract supplier;
(4) The CBIC may assist CMS in the appeals process including being
present at the hearing, testifying as a witness, or performing other,
related ministerial duties.
(5) Determines the rules for requesting documents and other
evidence from other parties;
(6) Ensures a complete record of the hearing is made available to
all parties to the hearing;
(7) Prepares a file of the record of the hearing which includes all
evidence submitted as well as any relevant documents identified by the
HO and considered as part of the hearing; and
(8) Complies with all applicable provisions of 42 USC Title 18 and
related provisions of the Act, the applicable regulations issued by the
Secretary, and manual instructions issued by CMS.
(j) Hearing Officer recommendation. (1) The HO will issue a written
recommendation to CMS within 30 days of the close of the hearing unless
an extension has been granted by CMS because the HO has demonstrated
that an extension is needed due to the complexity of the matter or
heavy workload.
(2) The recommendation will explain the basis and the rationale for
the HO's recommendation.
(3) The hearing officer must include the record of the hearing,
along with all evidence and documents produced during the hearing along
with its recommendation.
(k) CMS' final determination. (1) CMS' review of the HO
recommendation will not allow the supplier to submit new information.
(2) After reviewing the HO recommendation, CMS' decision will be
made within 30 days from the date of receipt of the HO's
recommendation.
(3) A CMS decision to terminate will indicate the effective date of
the termination.
(4) This decision is final and binding.
(l) Effect of contract termination. A contract supplier whose
contract has been terminated--
(1) All locations included in the contract can no longer furnish
competitive bid items to beneficiaries within a CBA and the supplier
cannot be reimbursed by Medicare for these items after the effective
date of the termination.
(2) Must notify all beneficiaries who are receiving rented
competitive bid items or competitive bid items received on a recurring
basis, of the termination of their contract.
(i) The notice to the beneficiary from the supplier whose contract
was terminated must be provided within 15 days of receipt of the final
notice of termination.
(ii) The notification to the beneficiaries must inform the
beneficiaries that they are going to have to select a new contract
supplier to furnish these items in order for Medicare to pay these
items.
(m) Effective date of the contract termination. (1) A supplier's
DMEPOS CBP contract is terminated effective on the termination date
specified in the notice to the supplier, unless the supplier timely
requests a hearing with the HO or the supplier has submitted a CAP
under paragraph (c) of this section.
(2) If a supplier requests an HO review of the CMS decision to
terminate its contract, and CMS based upon the HO's recommendation
terminates the supplier's contract, the effective date of the
termination will be the date specified in the post-hearing notice to
the supplier indicating CMS's final determination to terminate the
contract.
(3) For violations of the terms of the supplier's DMEPOS CBP
contract that may harm beneficiaries, such as a supplier providing an
inferior product that causes harm to the beneficiary, no delays of the
effective date of the termination will be allowed.

Subpart H --Fee Schedule for Ambulance Services

0
39. Section 414.610 is amended as follows:
0
A. Revising paragraph (c)(1)(i).
0
B. Redesignating (c)(1)(ii) as (c)(1)(iii).
0
C. Adding a new paragraph (c)(1)(ii).
0
D. Revising paragraphs (c)(5)(ii), (f), and (h).
The revisions and addition read as follows:

Sec. 414.610 Basis of payments.

* * * * *
(c) * * *
(1) * * *
(i) For services furnished during the period July 1, 2004 through
December 31, 2006, ambulance services originating in--
(A) Urban areas (both base rate and mileage) are paid based on a
rate that is 1 percent higher than otherwise is applicable under this
section; and
(B) Rural areas (both base rate and mileage) are paid based on a
rate that is 2 percent higher than otherwise is applicable under this
section.
(ii) For services furnished during the period July 1, 2008 through
December 31, 2010, ambulance services originating in--
(A) Urban areas (both base rate and mileage) are paid based on a
rate that is 2 percent higher than otherwise is applicable under this
section;
(B) Rural areas (both base rate and mileage) are paid based on a
rate that is 3 percent higher than otherwise is applicable under this
section.
* * * * *
(5) * * *
(ii) For services furnished during the period July 1, 2004 through
December 31, 2010, the payment amount for the ground ambulance base
rate is increased by 22.6 percent where the point of pickup is in a
rural area determined to be in the lowest 25 percent of rural
population arrayed by population density. The amount of this increase
is based on CMS's estimate of the ratio of the average cost per trip
for the rural areas in the lowest quartile of population compared to
the average cost per trip for the rural areas in the highest quartile
of population. In making this estimate, CMS may use data provided by
the GAO.
* * * * *
(f) Updates. The CF, the air ambulance base rates, and the mileage
rates are updated annually by an inflation factor established by law.
The inflation factor is based on the consumer price index for all urban
consumers (CPI-U) (U.S. city average) for the 12-month period ending
with June of the previous year and, for 2011 and each subsequent year,
is reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act.
* * * * *
(h) Treatment of certain areas for payment for air ambulance
services. Any area that was designated as a rural area for purposes of
making payments under the ambulance fee schedule for air ambulance
services furnished on December 31, 2006, must be treated as a rural
area for purposes of making payments under the ambulance fee schedule
for air ambulance services

[[Page 73626]]

furnished during the period July 1, 2008 through December 31, 2010.

0
40. Section 414.620 is revised to read as follows:

Sec. 414.620 Publication of the ambulance fee schedule.

(a) Changes in payment rates resulting from incorporation of the
annual inflation factor and the productivity adjustment as described in
Sec. 414.610(f) will be announced by CMS by instruction and on the CMS
Web site.
(b) CMS will follow applicable rulemaking procedures in publishing
revisions to the fee schedule for ambulance services that result from
any factors other than those described in Sec. 414.610(f).

Subpart J--Submission of Manufacturer's Average Sales Price Data

0
41. Section 414.804 is amended by--
0
A. Redesignating paragraph (a)(6) as (a)(7).
0
B. Adding new paragraph (a)(6).
0
C. Reserving paragraph (b).
0
The addition reads as follows:

Sec. 414.804 Basis of payment.

(a) * * *
(6) The manufacturer's average sales price must be calculated based
on the amount of product in a vial or other container as conspicuously
reflected on the FDA approved label as defined by section 201(k) of the
Food, Drug, and Cosmetic Act.
(b) [Reserved]

Subpart K--Payment for Drugs and Biologicals Under Part B

0
42. Section 414.902 is amended by adding the definitions of
``Biosimilar biological product'' and ``Reference biological product''
in alphabetical order to read as follows:

Sec. 414.902 Definitions.

* * * * *
Biosimilar biological product means a biological product approved
under an abbreviated application for a license of a biological product
that relies in part on data or information in an application for
another biological product licensed under section 351 of the Public
Health Service Act (PHSA) as defined at section 1847A(c)(6)(H) of the
Act.
* * * * *
Reference biological product means the biological product licensed
under such section 351 of the PHSA that is referred to in the
application of the biosimilar biological product as defined at section
1847A(c)(6)(I) of the Act.
* * * * *

0
43. Section 414.904 is amended by--
0
A. Adding paragraphs (a)(3), (i), and (j).
0
B. Revising paragraph (d)(3).
The revisions and additions read as follows:

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

(a) * * *
(3) For purposes of this paragraph--
(i) CMS calculates an average sales price payment limit based on
the amount of product included in a vial or other container as
reflected on the FDA-approved label.
(ii) Additional product contained in the vial or other container
does not represent a cost to providers and is not incorporated into the
ASP payment limit.
(iii) No payment is made for amounts of product in excess of that
reflected on the FDA-approved label.
* * * * *
(d) * * *
(3) Widely available market price and average manufacturer price.
If the Inspector General finds that the average sales price exceeds the
widely available market price or the average manufacturer price by 5
percent or more in CYs 2005 through 2011 the payment limit in the
quarter following the transmittal of this information to the Secretary
is the lesser of the widely available market price or 103 percent of
the average manufacturer price.
* * * * *
(i) If manufacturer ASP data is not available prior to the
publication deadline for quarterly payment limits and the
unavailability of manufacturer ASP data significantly changes the
quarterly payment limit for the billing code when compared to the prior
quarter's billing code payment limit, the payment limit is calculated
by carrying over the most recent available manufacturer ASP price from
a previous quarter for an NDC in the billing code, adjusted by the
weighted average of the change in the manufacturer ASPs for the NDCs
that were reported for both the most recently available previous
quarter and the current quarter.
(j) Biosimilar biological products. Effective July 1, 2010, the
payment amount for a biosimilar biological drug product (as defined in
Sec. 414.902 of this subpart) is the sum of the average sales price of
all NDCs assigned to the biosimilar biological product as determined
under section 1847A(b)(6) of the Act and 6 percent of the amount
determined under section 1847A(b)(4) of the Act for the reference drug
product (as defined in Sec. 414.902 of this subpart).

PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS,
SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN
CERTAIN SETTINGS

0
44. The authority citation for part 415 continues to read as follows:

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

Subpart C--Part B Carrier Payments for Physician Services to
Beneficiaries in Providers

0
45. Section 415.130 is amended by revising paragraph (d) to read as
follows:

Sec. 415.130 Conditions for payment: Physician pathology services.

* * * * *
(d) Physician pathology services furnished by an independent
laboratory.
(1) The technical component of physician pathology services
furnished by an independent laboratory to a hospital inpatient or
outpatient on or before December 31, 2010, may be paid to the
laboratory by the contractor under the physician fee schedule if the
Medicare beneficiary is a patient of a covered hospital as defined in
paragraph (a)(1) of this section.
(2) For services furnished after December 31, 2010, an independent
laboratory may not bill the Medicare contractor for the technical
component of physician pathology services furnished to a hospital
inpatient or outpatient.
(3) For services furnished on or after January 1, 2008, the date of
service policy in Sec. 414.510 of this chapter applies to the TC of
specimens for physician pathology services.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

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

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

Subpart B--Certification and Plan of Treatment Requirements

0
47. Section 424.20 is amended by revising paragraph (e)(2) to read as
follows:

Sec. 424.20 Requirements for posthospital SNF care.

* * * * *
(e) * * *
(2) A physician extender (that is, a nurse practitioner, a clinical
nurse

[[Page 73627]]

specialist, or a physician assistant as those terms are defined in
section 1861(aa)(5) of the Act) who does not have a direct or indirect
employment relationship with the facility but who is working in
collaboration with a physician. For purposes of this section--
(i) Collaboration. (A) Collaboration means a process whereby a
physician extender works with a doctor of medicine or osteopathy to
deliver health care services.
(B) The services are delivered within the scope of the physician
extender's professional expertise, with medical direction and
appropriate supervision as provided for in guidelines jointly developed
by the physician extender and the physician or other mechanisms defined
by Federal regulations and the law of the State in which the services
are performed.
(ii) Types of employment relationships. (A) Direct employment
relationship. A direct employment relationship with the facility is one
in which the physician extender meets the common law definition of the
facility's ``employee,'' as specified in Sec. 404.1005, Sec.
404.1007, and Sec. 404.1009 of title 20 of the regulations. When a
physician extender meets this definition with respect to an entity
other than the facility itself, and that entity has an agreement with
the facility for the provision of nursing services under Sec. 409.21
of this subchapter, the facility is considered to have an indirect
employment relationship with the physician extender.
(B) Indirect employment relationship. (1) When a physician extender
meets the definition of a direct employment relationship in paragraph
(e)(2)(ii)(A) of this section with respect to an entity other than the
facility itself, and that entity has an agreement with the facility for
the provision of nursing services under Sec. 409.21 of this
subchapter, the facility is considered to have an indirect employment
relationship with the physician extender.
(2) An indirect employment relationship does not exist if the
agreement between the entity and the facility involves only the
performance of delegated physician tasks under Sec. 483.40(e) of this
chapter.
* * * * *

Subpart C--Claims for Payment

0
48. Section 424.44 is amended by revising paragraphs (a), (b), and (e)
to read as follows:

Sec. 424.44 Time limits for filing claims.

(a) Time limits. (1) Except as provided in paragraphs (b) and (e)
of this section, for services furnished on or after January 1, 2010,
the claim must be filed no later than the close of the period ending 1
calendar year after the date of service.
(2) Except as provided in paragraphs (b) and (e) of this section
and except for services furnished during the last 3 months of 2009, for
services furnished before January 1, 2010, the claim must be filed--
(i) On or before December 31 of the following year for services
that were furnished during the first 9 months of a calendar year; and
(ii) On or before December 31st of the second following year for
services that were furnished during the last 3 months of the calendar
year.
(3) For services furnished during the last 3 months of CY 2009 all
claims must be filed no later than December 31, 2010.
(b) Exceptions to time limits. Exceptions to the time limits for
filing claims include the following:
(1) The time for filing a claim will be extended if CMS or one of
its contractors determines that a failure to meet the deadline in
paragraph (a) of this section was caused by error or misrepresentation
of an employee, Medicare contractor (including Medicare Administrative
Contractor, intermediary, or carrier), or agent of HHS that was
performing Medicare functions and acting within the scope of its
authority.
(2) The time for filing a claim will be extended if CMS or one of
its contractors determines that a failure to meet the deadline in
paragraph (a) of this section is caused by all of the following
conditions:
(i) At the time the service was furnished the beneficiary was not
entitled to Medicare.
(ii) The beneficiary subsequently received notification of Medicare
entitlement effective retroactively to or before the date of the
furnished service.
(3) The time for filing a claim will be extended if CMS or one of
its contractors determines that a failure to meet the deadline in
paragraph (a) of this section is caused by all of the following
conditions:
(i) At the time the service was furnished the beneficiary was not
entitled to Medicare.
(ii) The beneficiary subsequently received notification of Medicare
entitlement effective retroactively to or before the date of the
furnished service.
(iii) A State Medicaid agency recovered the Medicaid payment for
the furnished service from a provider or supplier 6 months or more
after the service was furnished.
(4) The time for filing a claim will be extended if CMS or one of
its contractors determines that a failure to meet the deadline in
paragraph (a) of this section is caused by all of the following
conditions:
(i) At the time the service was furnished the beneficiary was
enrolled in a Medicare Advantage plan or Program of All-inclusive Care
for the Elderly (PACE) provider organization.
(ii) The beneficiary was subsequently disenrolled from the Medicare
Advantage plan or Program of All-inclusive Care for the Elderly (PACE)
provider organization effective retroactively to or before the date of
the furnished service.
(iii) The Medicare Advantage plan or Program of All-inclusive Care
for the Elderly (PACE) provider organization recovered its payment for
the furnished service from a provider or supplier 6 months or more
after the service was furnished.
(5) Extension of time. (i) If CMS or one of its contractors
determines that a failure to meet the deadline specified in paragraph
(a) of this section was caused by error or misrepresentation of an
employee, Medicare contractor (including Medicare Administrative
Contractor, intermediary, or carrier), or agent of HHS that was
performing Medicare functions and acting within the scope of its
authority, the time to file a claim will be extended through the last
day of the sixth calendar month following the month in which either the
beneficiary or the provider or supplier received notification that the
error or misrepresentation referenced in paragraph (b)(1) of this
section was corrected. No extension of time will be granted for
paragraph (b)(1) when the request for that exception is made to CMS or
one of its contractors more than 4 years after the date of service.
(ii) If CMS or one of its contractors determines that both of the
conditions are met in paragraph (b)(2) of this section but that all of
the conditions in paragraph (b)(3) are not satisfied, the time to file
a claim will be extended through the last day of the sixth calendar
month following the month in which either the beneficiary or the
provider or supplier received notification of Medicare entitlement
effective retroactively to or before the date of the furnished service.
(iii) If CMS or one of its contractors determines that all of the
conditions are met in paragraph (b)(3) of this section, the time to
file a claim will be extended through the last day of the sixth

[[Page 73628]]

calendar month following the month in which the State Medicaid agency
recovered the Medicaid payment for the furnished service from the
provider or supplier.
(iv) If CMS or one of its contractors determines that all of the
conditions are met in paragraph (b)(4) of this section, the time to
file a claim will be extended through the last day of the sixth
calendar month following the month in which the Medicare Advantage plan
or Program of All-inclusive Care for the Elderly (PACE) provider
organization recovered its payment for the furnished service from the
provider or supplier.
* * * * *
(e) As specified in Sec. 424.520 and Sec. 424.521 of this
subpart, there are restrictions on the ability of the following newly-
enrolled suppliers to submit claims for items or services furnished
prior to the effective date of their Medicare billing privileges:
(1) Physician or nonphysician practitioner organizations.
(2) Physicians.
(3) Nonphysician practitioners.
(4) Independent diagnostic testing facilities.
* * * * *

Subpart P--Requirements for Establishing and Maintaining Medicare
Billing Privileges

0
49. Section 424.502 is amended by adding a definition of ``Voluntary
termination'' to read as follows:

Sec. 424.502 Definitions.

* * * * *
Voluntary termination means that a provider or supplier, including
an individual physician or nonphysician practitioner, submits written
confirmation to CMS of its decision to discontinue enrollment in the
Medicare program.

0
50. Section 424.510 is amended by revising paragraph (d)(2)(iii) to
read as follows:

Sec. 424.510 Requirements for enrolling in the Medicare program.

(d) * * *
(2) * * *
(iii) Submission of all documentation, including--
(A) All applicable Federal and State licenses, certifications
including, but not limited to Federal Aviation Administration; and
(B) Documentation associated with regulatory and statutory
requirements necessary to establish a provider's or supplier's
eligibility to furnish Medicare covered items or services to
beneficiaries in the Medicare program.

0
51. Section 424.516 is amended by adding a new paragraph (e)(3) to read
as follows:

Sec. 424.516 Additional provider and supplier requirements for
enrolling and maintaining active enrollment status in the Medicare
program.

(e) * * *
(3) Within 30 days of any revocation or suspension of a Federal or
State license or certification including Federal Aviation
Administration certifications, an air ambulance supplier must report a
revocation or suspension of its license or certification to the
applicable Medicare contractor. The following FAA certifications must
be reported:
(i) Specific pilot certifications including but not limited to
instrument and medical certifications.
(ii) Airworthiness certification.
* * * * *

Authority: Catalog of Federal Domestic Assistance Program No.
93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program.

Dated: October 26, 2010.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: October 29, 2010.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.

Addendum A: Explanation and Use of Addenda B and C

The Addenda on the following pages provide various data
pertaining to the Medicare fee schedule for physicians' services
furnished in CY 2011. Addendum B contains the RVUs for work,
nonfacility PE, facility PE, and malpractice expense, and other
information for all services included in the PFS. Addendum C
contains the list of HCPCS codes that have interim work, PE, and/or
malpractice expense RVUs for CY 2011 and are open for comment on
this final rule with comment period.
(1) Addendum B, CY 2011 Relative Value Units and Related
Information Used in Determining Medicare Payments
In previous years, we have listed many services in Addendum B
that are not paid under the PFS. To avoid publishing as many pages
of codes for these services, we are not including clinical
laboratory codes or the alpha-numeric codes (Healthcare Common
Procedure Coding System (HCPCS) codes not included in CPT) not paid
under the PFS in Addendum B.
Addendum B contains the following information for each CPT code
and alpha-numeric HCPCS code, except for: alpha-numeric codes
beginning with B (enteral and parenteral therapy); E (durable
medical equipment); K (temporary codes for nonphysicians' services
or items); or L (orthotics); and codes for anesthesiology. Please
also note the following:
An ``NA'' in the ``Nonfacility PE RVUs'' column of
Addendum B means that CMS has not developed a PE RVU in the
nonfacility setting for the service because it is typically
performed in the hospital (for example, an open heart surgery is
generally performed in the hospital setting and not a physician's
office). If there is an ``NA'' in the nonfacility PE RVU column, and
the contractor determines that this service can be performed in the
nonfacility setting, the service will be paid at the facility PE RVU
rate.
Services that have an ``NA'' in the ``Facility PE
RVUs'' column of Addendum B are typically not paid under the PFS
when provided in a facility setting. These services (which include
``incident to'' services and the technical portion of diagnostic
tests) are generally paid under either the hospital outpatient
prospective payment system or bundled into the hospital inpatient
prospective payment system payment. In some cases, these services
may be paid in a facility setting at the PFS rate (for example,
therapy services), but there would be no payment made to the
practitioner under the PFS in these situations.
1. CPT/HCPCS code. This is the CPT or alpha-numeric HCPCS number
for the service. Alpha-numeric HCPCS codes are included at the end
of this Addendum.
2. Modifier. A modifier is shown if there is a technical
component (modifier TC) and a professional component (PC) (modifier-
26) for the service. If there is a PC and a TC for the service,
Addendum B contains three entries for the code. A code for: the
global values (both professional and technical); modifier-26 (PC);
and modifier TC. The global service is not designated by a modifier,
and physicians must bill using the code without a modifier if the
physician furnishes both the PC and the TC of the service. Modifier-
53 is shown for a discontinued procedure, for example, a colonoscopy
that is not completed. There will be RVUs for a code with this
modifier.
3. Status indicator. This indicator shows whether the CPT/HCPCS
code is included in the PFS and whether it is separately payable if
the service is covered. An explanation of types of status indicators
follows:
A = Active code. These codes are separately payable under the
PFS if covered. There will be RVUs for codes with this status. The
presence of an ``A'' indicator does not mean that Medicare has made
a national coverage determination regarding the service. Contractors
remain responsible for coverage decisions in the absence of a
national Medicare policy.
B = Bundled code. Payments for covered services are always
bundled into payment for other services not specified. If RVUs are
shown, they are not used for Medicare payment. If these services are
covered, payment for them is subsumed by the payment for the
services to which they are incident (for example, a telephone call
from a hospital nurse regarding care of a patient).
C = Contractors price the code. Contractors establish RVUs and
payment amounts for these services, generally on an individual case
basis following review of documentation, such as an operative
report.
E = Excluded from the PFS by regulation. These codes are for
items and services that

[[Page 73629]]

CMS chose to exclude from the PFS by regulation. No RVUs are shown,
and no payment may be made under the PFS for these codes. Payment
for them, when covered, continues under reasonable charge
procedures.
I = Not valid for Medicare purposes. Medicare uses another code
for the reporting of, and the payment for these services. (Codes not
subject to a 90 day grace period.)
M = Measurement codes, used for reporting purposes only. There
are no RVUs and no payment amounts for these codes. CMS uses them to
aid with performance measurement. No separate payment is made. These
codes should be billed with a zero (($0.00) charge and are denied)
on the MPFSDB.
N = Non-covered service. These codes are noncovered services.
Medicare payment may not be made for these codes. If RVUs are shown,
they are not used for Medicare payment.
R = Restricted coverage. Special coverage instructions apply. If
the service is covered and no RVUs are shown, it is contractor-
priced.
T = There are RVUs for these services, but they are only paid if
there are no other services payable under the PFS billed on the same
date by the same provider. If any other services payable under the
PFS are billed on the same date by the same provider, these services
are bundled into the service(s) for which payment is made.
X = Statutory exclusion. These codes represent an item or
service that is not within the statutory definition of ``physicians'
services'' for PFS payment purposes. No RVUs are shown for these
codes, and no payment may be made under the PFS, (for example,
ambulance services and clinical diagnostic laboratory services.)
4. Description of code. This is the code's short descriptor,
which is an abbreviated version of the narrative description of the
code.
5. Physician work RVUs. These are the RVUs for the physician
work in CY 2011.
6. Fully implemented nonfacility PE RVUs. These are the fully
implemented resource-based PE RVUs for nonfacility settings.
7. CY 2011 transitional nonfacility PE RVUs. These are the CY
2011 resource-based PE RVUs for nonfacility settings.
8. Fully implemented facility PE RVUs. These are the fully
implemented resource-based PE RVUs for facility settings.
9. CY 2011 Transitional facility PE RVUs. These are the CY 2011
resource-based PE RVUs for facility settings.
10. Malpractice expense RVUs. These are the RVUs for the
malpractice expense for CY 2011.

Note: The BN reduction resulting from the chiropractic
demonstration is not reflected in the RVUs for CPT codes 98940,
98941, and 98942. The required reduction will only be reflected in
the files used for Medicare payment.

11. Global period. This indicator shows the number of days in
the global period for the code (0, 10, or 90 days). An explanation
of the alpha codes follows:
MMM = Code describes a service furnished in uncomplicated
maternity cases, including ante partum care, delivery, and
postpartum care. The usual global surgical concept does not apply.
See the Physicians' Current Procedural Terminology for specific
definitions.
XXX = The global concept does not apply.
YYY = The global period is to be set by the contractor (for
example, unlisted surgery codes).
ZZZ = Code related to another service that is always included in
the global period of the other service. (Note: Physician work and PE
are associated with intra-service time and, in some instances, with
the post-service time.)
(2) Addendum C, Codes with Interim RVUs
Addendum C, Codes with Interim RVUs, includes the columns and
indicators described above for Addendum B, plus an additional column
to indicate which component, or components, of each code's RVUs are
interim final for CY 2011 and, therefore, open for public comment:
work, PE, and/or malpractice expense. This column, headed ``RVUs
Open for Comment'' and located between the columns for the
``Description'' and ``Physician Work RVUs,'' displays the indicators
below.
W = Physician work RVUs are interim for CY 2011 and open for
comment.
PE = Nonfacility and facility PE RVUs are interim for CY 2011
and open for comment.
MP = Malpractice expense RVUs are interim for CY 2011 and open
for comment.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C[FR Doc. 2010-27969 Filed 11-2-10; 4:15 pm]
BILLING CODE 4120-01-C