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Rule

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

Action

Final Rule With Comment Period.

Unified Agenda

Amendment to Payment Policies Under the Physician Fee Schedule and Part B for CY 2011 (CMS-1503-F2)

4 actions from July 13th, 2010 to January 10th, 2011

  • July 13th, 2010
  • September 24th, 2010
    • NPRM Comment Period End
  • November 29th, 2010
  • January 10th, 2011
 

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Tables Back to Top

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. Thecommenters 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 § 414.90(b), we are indicating that such practices are deemed to be participating in the Physician Quality Reporting System at § 414.90(g)(1). In addition, we are clarifying at § 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 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 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 Back to Top
Reporting mechanism Reporting criteria Reporting period
A pre-populated data collection tool provided by CMS • Report on all measures included in the data collection tool (26 measures); and January 1, 2011-December 31, 2011.
• 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 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 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 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 Back to Top
Group size (number of eligible professionals) Number of measures groups required to be reported Minimum number of medicare part b patients in denominator for satisfactory reporting of measures groups Number of individual measures required to be reported Percent of medicare part b patients in denominator for satisfactory reporting of individual measures via claims (%) Percent of medicare part b patients in denominator for satisfactory reporting of individual measures via registries (%) Required number of unique visits where an e-prescription was generated to be a successful electronic prescriber
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 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 (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 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® 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 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.

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 Back to Top
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.
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.

BILLING CODE 4120-01-P

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.

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

(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;
  • 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 Back to Top
Physician Quality Reporting System Measure title Measure developer NQF Measure No.
*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.
1 *** Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus NCQA 0059
2 *** Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus NCQA 0064
3 *** Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus NCQA 0061
5 *** Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) AMA-PCPI 0081
7 *** Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI) AMA-PCPI 0070
110 ** Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old AMA-PCPI 0041
111 *** Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older NCQA 0043
112 *** Preventive Care and Screening: Screening Mammography NCQA 0031
113 *** Preventive Care and Screening: Colorectal Cancer Screening NCQA 0034
124 Health Information Technology (HIT): Adoption/Use of Electronic Health Records (EHR) CMS/QIP 0488
Table 82—Additional Measures Available for EHR-Based Reporting in 2011 Back to Top
Physician Quality Reporting System Measure title Measure developer NQF Measure No.
* 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.
39 Screening or Therapy for Osteoporosis for Women Aged 65 Years and Older AMA-PCPI/NCQA 0046
47 Advance Care Plan AMA-PCPI/NCQA 0326
48 Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and Older AMA-PCPI/NCQA 0098
128 * Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-up CMS/Quality Insights of Pennsylvania 0421
173 Preventive Care and Screening: Unhealthy Alcohol Use—Screening AMA-PCPI AQA Adopted
TBD * Hypertension (HTN): Blood Pressure Measurement AMA-PCPI 0013
TBD Drugs to be Avoided in the Elderly NCQA 0022
TBD ** Weight Assessment and Counseling for Children and Adolescents NCQA 0024
TBD * Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention AMA-PCPI 0028
TBD ** Childhood Immunization Status NCQA 0038

(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 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 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.

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

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 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 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 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 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 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 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® 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 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® 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, 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® 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® 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 § 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 § 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®. 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.

(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.

(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 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;

(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 qnetsupport@sdps.org. 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.

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 § 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 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 § 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 § 414.92, such as eliminating the unnecessary use of acronyms and inserting or revising cross-references as needed.

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 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 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 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 § 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.

(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).

(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 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 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 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 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 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 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
  • 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 § 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 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) (100). 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 § 414.200 through § 414.232 (with the exception of § 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 § 414.220 of the regulations);
  • Items requiring frequent and substantial servicing (sections 1834(a)(3) of the Act and § 414.222 of the regulations);
  • Customized items (section 1834(a)(4) of the Act and § 414.224 of the regulations);
  • Oxygen and oxygen equipment (section 1834(a)(5) of the Act and § 414.226 of the regulations);
  • Other items of DME (section 1834(a)(7) of the Act and § 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 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 § 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 § 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 § 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 § 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.

(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 § 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 § 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 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 § 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 § 414.402 to mean a contract supplier that furnishes items through the mail. We further defined mail order in program 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 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 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.

(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 § 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 § 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 § 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 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 § 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 § 410.60(c)) or an occupational therapist in private practice (as defined in § 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 § 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 § 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 § 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 § 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 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 § 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 § 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, § 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 § 414.423 to establish an appeals process for contracts terminated under section 1847(a) and (b) of the Act. Proposed § 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 § 414.402 that are used in the proposed § 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 § 423.641 through § 423.668, Subpart N—Medicare 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: (§ 414.402)

We are proposed to amend § 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 § 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 § 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 § 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 § 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 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 § 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 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 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 § 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 § 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 § 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 § 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 § 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 § 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 described in § 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 § 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, § 414.420(f)(2) authorizes payment for the new oxygen equipment in accordance with § 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 § 414.226(a).

We proposed to revise the payment rule for oxygen and oxygen equipment at § 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 § 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 § 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 § 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 § 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 § 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 § 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 rental DME payment category in section 4062 of the Omnibus Budget Reconciliation Act of 1987 (OBRA '87) (100), 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 § 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 § 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 § 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 § 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 § 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 § 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 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 § 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 § 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 (95) 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 § 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 § 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 § 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 § 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 § 424.535(c). Thus, by complying with the reporting responsibilities found in § 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 § 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 § 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 § 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 § 409.23 (along with a conforming revision to the corresponding regulations text at § 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 § 409.17(d) (which is incorporated by reference in § 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, § 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 § 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 § 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 § 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 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 (§ 411.355(g)).
  • Preventive screening tests, immunizations, or vaccines (§ 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 § 411.355(g) (regarding dialysis-related outpatient prescription drugs furnished in or by an ESRD facility) and in § 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 § 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 § 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 § 411.351.

Table 98 Additions to the Physician Self-Referral List of CPT1/HCPCS Codes Back to Top
1CPT codes and descriptions only are copyright 2010 AMA. All rights are reserved and applicable FARS/DFARS clauses apply.
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.
Table 99—Deletions to the Physician Self-Referral List of CPT1HCPCS Codes Back to Top
1CPT codes and descriptions only are copyright 2010 AMA. All rights are reserved and applicable FARS/DFARS clauses apply.
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.

VIII. Waiver of Proposed Rulemaking and Delay in Effective Date Back to Top

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 providing a 60-day public comment period.

Furthermore, in this final rule with comment period, we are making a technical revision to § 410.64 (Additional Preventive Services) to conform with section 1861(ddd)(1), as amended by section 4104 of the ACA. We are revising § 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 § 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 Back to Top

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 (§ 410.32)

Section 410.32(d)(2)(i) requires the physician or qualified nonphysician practitioner (as defined in § 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 § 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 (§ 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 § 411.355(b)(1). The written notice must include a list of other suppliers (as defined in § 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 § 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 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 (§ 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 § 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 (§ 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 § 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 § 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 Back to Top
Regulation section(s) OMB control No. Respondents Responses Burden per response (hours) Total annual burden (hours) Hourly labor cost of reporting (in $) Total labor cost of reporting (in $) Total capital/maintenance costs (in $) Total cost (in $)
* 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.
§ 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
§ 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
Total 71,017 7,525,777 196,509 11,584,380

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 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 × 3 measures × 6 cases per measure) to 180 minutes (12 minutes per measure × 3 measures × 6 cases per measure), with the burden to the median practice being 31.5 minutes (1.75 minutes per measure × 3 measures × 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 × 3 measures × 6 cases per measure) to $208.80 ($11.60 per measure × 3 measures × 6 cases per measure), with the cost to the median practice being $30.42 per eligible professional ($1.69 per measure × 3 measures × 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 × 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 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 × 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 × 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 × 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 × 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 × 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 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 × $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 × 1 measure × 25 cases per measure). This equates to a cost of approximately $42.29 (1.75 minutes per case × 1 measure × 25 cases per measure × $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 × 1 measure × 10 cases per measure). This equates to a cost of approximately $16.92 (1.75 minutes per case × 1 measure × 10 cases per measure × $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 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 × 1 measure × 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 × 1 measure × 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 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 Back to Top

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 Back to Top

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, 96), 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 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 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 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 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 § 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 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 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.

Table 103—Impact of CY 2011 Changes in Payments to Hospital-Based and Independent ESRD Facilities Back to Top
1 2 3 4 5 6
Number of facilities Number of dialysis treatments (in millions) Effect of changes in wage index1 (percent) Effect of changes in wage index and of affordable Care Act provision2 (percent) Overall effect of wage index affordable Care Act & Drug Add-on3 (percent)
[Percent change in composite rate payments to ESRD facilities]
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.
1This 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.
2This 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.
3This 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.
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

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 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 × 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 × 6 reporting instances per measure × 3 measures × $58 per hour) to $208.80 (12 minutes per reporting instance × 6 reporting instances per measure × 3 measures × $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 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 × 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 × 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 × $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 × 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 × 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 × 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 × 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 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 × 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 × 1 measure × 25 cases per measure × $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, 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 × 1 measure × 75 cases per measure × $58 per hour) for the smallest groups participating under GPRO II to $4,229.17 (1.75 minutes per case × 2,500 cases per measure × $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 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 Back to Top
FY Cost (in $ 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.

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 Back to Top
Category Transfers
CY 2011 Annualized Monetized Transfers Estimated decrease in expenditures of $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 Transfers Estimated increase in expenditures of $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 Back to Top

begin regulatory text

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

PART 405—FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED Back to Top

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 Back to Top

2.A new § 405.2449 is added to read as follows

§ 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 § 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 § 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 § 410.15 of this chapter).

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

§ 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 § 405.2463).

PART 409—HOSPITAL INSURANCE BENEFITS Back to Top

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 Back to Top

§ 409.17 [Amended]

5.Amend § 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 Back to Top

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

§ 409.20 Coverage of services.

(a) * * *

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

* * * * *

7.Section 409.23 is revised to read as follows:

§ 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 § 409.17(b) through (d) of this part.

PART 410—SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS Back to Top

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 Back to Top

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

§ 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).

§ 410.3 [Amended]

10.Amend § 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 Back to Top

11.Section 410.15 is added to read as follows:

§ 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:

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

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

§ 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.

* * * * *

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

§ 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 § 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:

* * * * *

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

§ 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 § 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 Back to Top

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

§ 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.

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

§ 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).

16.Section 410.160 is amended by—

A. Revising paragraph (b)(2).

B. Adding paragraphs (b)(10) through (13).

The revisions and additions read as follows:

§ 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 Back to Top

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 Back to Top

18.Section 411.15 is amended by—

A. Revising paragraph (a)(1).

B. Adding new paragraph (k)(16).

The revision and addition read as follows:

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

* * * * *

Subpart J—Financial Relationships Between Physicians and Entities Furnishing Designated Health Services Back to Top

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

§ 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 § 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 Back to Top

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 Back to Top

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

§ 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 § 414.80(a)) and major surgical procedures furnished by general surgeons in health professional shortage areas (as defined in § 414.2) furnished on or after January 1, 2011 and before January 1, 2016, incentive payments specified under § 414.80 and § 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 Back to Top

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 Back to Top

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:

§ 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.

* * * * *

24.Section 414.26 is amended by—

A. Redesignating paragraph (c) as paragraph (d).

B. Adding a new paragraph (c).

The addition reads as follows:

§ 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 Back to Top

25.Section 414.54 is revised to read as follows:

§ 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 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.

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

§ 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 § 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.

* * * * *

27.Section 414.67 is revised to read as follows:

§ 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 § 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.

28.Section 414.80 is added to read as follows:

§ 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.

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

§ 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 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 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.

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

§ 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 § 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 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 § 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 § 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—

(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 Back to Top

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

§ 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.

* * * * *

32.Section 414.229 is amended by—

A. Revising paragraphs (a)(3), (d)(1), and (h).

B. Adding paragraphs (a)(4), (a)(5), and (b)(3).

The revisions and additions read as follows:

§ 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) Back to Top

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:

§ 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.

* * * * *

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

§ 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.

* * * * *

35.Section 414.408 is amended by—

A. Revising paragraph (f)(1).

B. Redesignating paragraph (h)(2) through (h)(7) as paragraphs (h)(3) through (h)(8), respectively.

C. Adding new paragraph (h)(2).

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:

§ 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.

* * * * *

36.Section 414.410 is amended as follows:

A. Revising paragraphs (a)(2) and (a)(3).

B. Adding a new paragraph (a)(4).

The revisions and addition read as follows:

§ 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.

* * * * *

37.Section 414.411 is added to read as follows:

§ 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.

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

§ 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.

* * * * *

39.Section 414.423 is added to read as follows:

§ 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 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 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 Back to Top

39.Section 414.610 is amended as follows:

A. Revising paragraph (c)(1)(i).

B. Redesignating (c)(1)(ii) as (c)(1)(iii).

C. Adding a new paragraph (c)(1)(ii).

D. Revising paragraphs (c)(5)(ii), (f), and (h).

The revisions and addition read as follows:

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

40.Section 414.620 is revised to read as follows:

§ 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 § 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 § 414.610(f).

Subpart J—Submission of Manufacturer's Average Sales Price Data Back to Top

41.Section 414.804 is amended by—

A. Redesignating paragraph (a)(6) as (a)(7).

B. Adding new paragraph (a)(6).

C. Reserving paragraph (b).

The addition reads as follows:

§ 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 Back to Top

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:

§ 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.

* * * * *

43.Section 414.904 is amended by—

A. Adding paragraphs (a)(3), (i), and (j).

B. Revising paragraph (d)(3).

The revisions and additions read as follows:

§ 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 § 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 § 414.902 of this subpart).

PART 415—SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS, SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN CERTAIN SETTINGS Back to Top

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 Back to Top

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

§ 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 § 414.510 of this chapter applies to the TC of specimens for physician pathology services.

PART 424—CONDITIONS FOR MEDICARE PAYMENT Back to Top

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 Back to Top

47.Section 424.20 is amended by revising paragraph (e)(2) to read as follows:

§ 424.20 Requirements for posthospital SNF care.

* * * * *

(e) * * *

(2) A physician extender (that is, a nurse practitioner, a clinical nurse 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 § 404.1005, § 404.1007, and § 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 § 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 § 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 § 483.40(e) of this chapter.

* * * * *

Subpart C—Claims for Payment Back to Top

48.Section 424.44 is amended by revising paragraphs (a), (b), and (e) to read as follows:

§ 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 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 § 424.520 and § 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 Back to Top

49.Section 424.502 is amended by adding a definition of “Voluntary termination” to read as follows:

§ 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.

50.Section 424.510 is amended by revising paragraph (d)(2)(iii) to read as follows:

§ 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.

51.Section 424.516 is amended by adding a new paragraph (e)(3) to read as follows:

§ 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.

* * * * *

end regulatory text

Authority: Back to Top

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 Back to Top

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 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.)