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Rule

Medicare Program; Payment Policies Under the Physician Fee Schedule, Five-Year Review of Work Relative Value Units, Clinical Laboratory Fee Schedule: Signature on Requisition, and Other Revisions to Part B for CY 2012

Action

Final Rule With Comment Period.

Summary

This final rule with comment period addresses changes to the physician fee schedule and other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. It also addresses, implements or discusses certain statutory provisions including provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively known as the Affordable Care Act) and the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. In addition, this final rule with comment period discusses payments for Part B drugs; Clinical Laboratory Fee Schedule: Signature on Requisition; Physician Quality Reporting System; the Electronic Prescribing (eRx) Incentive Program; the Physician Resource-Use Feedback Program and the value modifier; productivity adjustment for ambulatory surgical center payment system and the ambulance, clinical laboratory, and durable medical equipment prosthetics orthotics and supplies (DMEPOS) fee schedules; and other Part B related issues.

 

Table of Contents Back to Top

DATES: Back to Top

Effective date: These regulations are effective on January 1, 2012.

Implementation date: The 3-day payment window policy provisions specified in section V.B.3.a. of this final rule with comment period will be implemented by July 1, 2012.

Comment date: To be assured consideration, comments on the items listed in the “Comment Subject Areas” section of this final rule with comment period must be received at one of the addresses provided below, no later than 5 p.m. Eastern Standard Time on January 3, 2012.

ADDRESSES: Back to Top

In commenting, please refer to file code CMS-1524-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions for “submitting a comment.”

2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1524-FC, P.O. Box 8013, Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services,Attention: CMS-1524-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses:

a. For delivery in Washington, DC—Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-1066 in advance to schedule your arrival with one of our staff members.

Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

FOR FURTHER INFORMATION CONTACT: Back to Top

Ryan Howe, (410) 786-3355 or Chava Sheffield, (410) 786-2298, for issues related to the physician fee schedule practice expense methodology and direct practice expense inputs.

Elizabeth Truong, (410) 786-6005, or Sara Vitolo, (410) 786-5714, for issues related to potentially misvalued services and interim final work RVUs.

Ken Marsalek, (410) 786-4502, for issues related the multiple procedure payment reduction and pathology services.

Sara Vitolo, (410) 786-5714, for issues related to malpractice RVUs.

Michael Moore, (410) 786-6830, for issues related to geographic practice cost indices.

Ryan Howe, (410) 786-3355, for issues related to telehealth services.

Elizabeth Truong, (410) 786-6005, for issues related to the sustainable growth rate, or the anesthesia or physician fee schedule conversion factors.

Bonny Dahm, (410) 786-4006, for issues related to payment for covered outpatient drugs and biologicals.

Glenn McGuirk, (410) 786-5723, for issues related to the Clinical Laboratory Fee Schedule (CLFS) signature on requisition policy.

Claudia Lamm, (410) 786-3421, for issues related to the chiropractic services demonstration budget neutrality issue.

Jamie Hermansen, (410) 786-2064, or Stephanie Frilling, (410) 786-4507 for issues related to the annual wellness visit.

Christine Estella, (410) 786-0485, for issues related to the Physician Quality Reporting System, incentives for Electronic Prescribing (eRx) and Physician Compare.

Gift Tee, (410) 786-9316, for issues related to the Physician Resource Use Feedback Program and physician value modifier.

Stephanie Frilling, (410) 786-4507 for issues related to the 3-day payment window.

Pam West, (410) 786-2302, for issues related to the technical corrections or the therapy cap.

Rebecca Cole or Erin Smith, (410) 786-4497, for issues related to physician payment not previously identified.

SUPPLEMENTARY INFORMATION: Back to Top

Comment Subject Areas: We will consider comments on the following subject areas discussed in this final rule with comment period that are received by the date and time indicated in the DATES section of this final rule with comment period:

(1) The interim final work, practice expense, and malpractice RVUs (including the physician time, direct practice expense (PE) inputs, and the equipment utilization rate assumption) for new, revised, potentially misvalued, and certain other CY 2012 HCPCS codes. These codes and their CY 2012 interim final RVUs are listed in Addendum C to this final rule with comment period.

(2) The physician self-referral designated health services codes listed in Tables 83 and 84.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the regulations.gov Web site (http://www.regulations.gov) as soon as possible after they have been received. Follow the search instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-(800) 743-3951.

Table of Contents Back to Top

To assist readers in referencing sections contained in this preamble, we are providing a table of contents. Some of the issues discussed in this preamble affect the payment policies, but do not require changes to the regulations in the Code of Federal Regulations (CFR). Information on the regulations' impact appears throughout the preamble and, therefore, is not discussed exclusively in section IX. of this final rule with comment period.

I. Background

A. Development of the Relative Value System

1. Work RVUs

2. Practice Expense Relative Value Units (PE RVUs)

3. Resource-Based Malpractice RVUs

4. Refinements to the RVUs

5. Application of Budget Neutrality to Adjustments of RVUs

B. Components of the Fee Schedule Payment Amounts

C. Most Recent Changes to Fee Schedule

II. Provisions of the Rule for the Physician Fee Schedule

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

1. Overview

2. Practice Expense Methodology

a. Direct Practice Expense

b. Indirect Practice Expense per Hour Data

c. Allocation of PE to Services

(1) Direct Costs

(2) Indirect Costs

d. Facility and Nonfacility Costs

e. Services With Technical Components (TCs) and Professional Components (PCs)

f. PE RVU Methodology

(1) Setup File

(2) Calculate the Direct Cost PE RVUs

(3) Create the Indirect Cost PE RVUs

(4) Calculate the Final PE RVUs

(5) Setup File Information

(6) Equipment Cost per Minute

3. Changes to Direct PE Inputs

a. Inverted Equipment Minutes

b. Labor and Supply Input Duplication

c. AMA RUC Recommendations for Moderate Sedation Direct PE Inputs

d. Updates to Price and Useful Life for Existing Direct Inputs

4. Development of Code-Specific PE RVUs

5. Physician Time for Select Services

B. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the PFS

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services Under the PFS

a. Background

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

c. Validating RVUs of Potentially Misvalued Codes

3. Consolidating Reviews of Potentially Misvalued Codes

4. Public Nomination Process

5. CY 2012 Identification and Review of Potentially Misvalued Services

a. Code Lists

b. Specific Codes

(1) Codes Potentially Requiring Updates to Direct PE Inputs

(2) Codes Without Direct Practice Expense Inputs in the Non-Facility Setting

(3) Codes Potentially Requiring Updates to Physician Work

6. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy

a. Background

b. CY 2012 Expansion of the MPPR Policy to the Professional Component of Advance Imaging Services

c. Further Expansion of MPPR Policies Under Consideration for Future Years

d. Procedures Subject to the OPPS Cap

C. Overview of the Methodology for Calculation of Malpractice RVUs

D. Geographic Practice Cost Indices (GPCIs)

1. Background

2. GPCI Revisions for CY 2012

a. Physician Work GPCIs

b. Practice Expense GPCIs

(1) Affordable Care Act Analysis and Revisions for PE GPCIs

(A) General Analysis for the CY 2012 PE GPCIs

(B) Analysis of ACS Rental Data

(C) Employee Wage Analysis

(D) Purchased Services Analysis

(E) Determining the PE GPCI Cost Share Weights

(i) Practice Expense

(ii) Employee Compensation

(iii) Office Rent

(iv) Purchased Services

(v) Equipment, Supplies, and Other Miscellaneous Expenses

(vi) Physician Work and Malpractice GPCIs

(F) PE GPCI Floor for Frontier States

(2) Summary of CY 2012 PE Proposal

c. Malpractice GPCIs

d. Public Comments and CMS Responses Regarding the CY 2012 Proposed Revisions to the 6th GPCI Update

e. Summary of CY 2012 Final GPCIs

3. Payment Localities

4. Report From the Institute of Medicine

E. Medicare Telehealth Services for the Physician Fee Schedule

1. Billing and Payment for Telehealth Services

a. History

b. Current Telehealth Billing and Payment Policies

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

3. Submitted Requests for Addition to the List of Telehealth Services for CY 2012

a. Smoking Cessation Services

b. Critical Care Services

c. Domiciliary or Rest Home Evaluation and Management Services

d. Genetic Counseling Services

e. Online Evaluation and Management Services

f. Data Collection Services

g. Audiology Services

4. The Process for Adding HCPCS Codes as Medicare Telehealth Services

5. Telehealth Consultations in Emergency Departments

6. Telehealth Originating Site Facility Fee Payment Amount Update

III. Addressing Interim Final Relative Value Units From CY 2011 and Establishing Interim Relative Value Units for CY 2012

A. Methodology

B. Finalizing CY 2011 Interim and Proposed Values for CY 2012

1. Finalizing CY 2011 Interim and Proposed Work Values for CY 2012

a. Refinement Panel

(1) Refinement Panel Process

(2) Proposed and Interim Final Work RVUs Referred to the Refinement Panels in CY 2011

b. Code-Specific Issues

(1) Integumentary System: Skin, Subcutaneous, and Accessory Structures (CPT Codes 10140-11047) and Active Wound Care Management (CPT Codes 97597 and 97598)

(2) Integumentary System: Nails (CPT Codes 11732-11765)

(3) Integumentary System: Repair (Closure) (CPT Codes 11900-11901, 12001-12018, 12031-13057, 13100-13101, 15120-15121, 15260, 15732, 15832))

(4) Integumentary System: Destruction (CPT Codes 17250-17286)

(5) Integumentary System: Breast (CPT Codes 19302-19357)

(6) Musculoskeletal: Spine (Vertebral Column) (CPT Codes 22315-22851)

(7) Musculoskeletal: Forearm and Wrist (CPT Codes 25116-25605)

(8) Musculoskeletal: Femur (Thigh Region) and Knee Joint (CPT Codes 27385-27530)

(9) Musculoskeletal: Leg (Tibia and Fibula) and Ankle Joint (CPT Codes 27792)

(10) Musculoskeletal: Foot and Toes (CPT Codes 28002-28825)

(11) Musculoskeletal: Application of Casts and Strapping (CPT Codes 29125-29916)

(12) Respiratory: Lungs and Pleura (CPT Codes 32405-32854)

(13) Cardiovascular: Heart and Pericardium (CPT Codes 33030-37766)

(14) Digestive: Salivary Glands and Ducts (CPT Codes 42415-42440)

(15) Digestive: Esophagus (CPT Codes 43262-43415)

(16) Digestive: Rectum (CPT Codes 45331)

(17) Digestive: Biliary Tract (CPT Codes 47480-47564)

(18) Digestive: Abdomen, Peritoneum, and Omentum (CPT Codes 49082-49655)

(19) Urinary System: Bladder (CPT Codes 51705-53860)

(20) Female Genital System: Vagina (CPT Codes 57155-57288)

(21) Maternity Care and Delivery (CPT Codes 59400-59622)

(22) Endocrine System: Thyroid Glad (CPT Codes 60220-60240)

(23) Endocrine System: Parathyroid, Thymus, Adrenal Glands, Pancreas, and Cartoid Body (CPT Codes 60500)

(24) Nervous System: Skull, Meninges, Brain and Extracranial Peripheral Nerves and Autonomic Nervous System (CPT Codes 61781-61885, 64405-64831)

(25) Nervous system: Spine and Spinal Cord (CPT Codes 62263-63685)

(26) Eye and Ocular Adnexa: Eyeball (CPT Codes 65285)

(27) Eye and Ocular Adnexa: Posterior Segment (CPT Codes 67028)

(28) Diagnostic Radiology: Chest, Spine, and Pelvis (CPT Codes 71250, 72114-72131)

(29) Diagnostic Radiology: Upper Extremities (CPT Codes 73080-73700)

(30) Diagnostic Ultrasound: Extremities (CPT Codes 76881-76882)

(31) Radiation Oncology: Radiation Treatment Management (CPT Codes 77427-77469)

(32) Nuclear Medicine: Diagnostic (CPT Codes 78226-78598)

(33) Pathology and Laboratory: Urinalysis (CPT Codes 88120-88177)

(34) Immunization Administration for Vaccines/Toxoids (CPT Codes 90460-90461)

(35) Gastroenterology (CPT Codes 91010-91117)

(36) Opthalmology: Special Opthalmological Services (CPT Codes 92081-92285)

(37) Special Otorhinolaryngologic Services (CPT Codes 92504-92511)

(38) Special Otorhinolaryngologic Services: Evaluative and Therapeutic Services (CPT Codes 92605-92618)

(39) Cardiovascular: Therapeutic Services and Procedures (CPT Codes 92950)

(40) Neurology and Neuromuscular Procedures: Sleep Testing (CPT Codes 95800-95811)

(41) Osteopathic Manipulative Treatment (CPT Codes 98925-98929)

(42) Evaluation and Management: Initial Observation Care (CPT Codes 99218-99220)

(43) Evaluation and Management: Subsequent Observation Care (CPT Codes 99224-99226)

(44) Evaluation and Management: Subsequent Hospital Care (CPT Codes 99234-99236)

2. Finalizing CY 2011 Interim Direct PE RVUs for CY 2012

a. Background and Methodology

b. Common Refinements

(1) General Equipment Time

(2) Supply and Equipment Items Missing Invoices

c. Code-Specific Direct PE Inputs

(1) CT Abdomen and Pelvis

(2) Endovascular Revascularization

(3) Nasal/Sinus Endoscopy

(4) Insertion of Intraperitoneal Catheter

(5) In Situ Hybridization Testing

(6) External Mobile Cardivascular Telemetry

3. Finalizing CY 2011 Interim Final and CY 2012 Proposed Malpractice RVUs

a. Finalizing CY 2011 Interim Final Malpractice RVUs

b. Finalizing CY 2012 Proposed Malpractice RVUs, Including Malpractice RVUs for Certain Cardiothoracic Surgery Services

4. Payment for Bone Density Tests

5. Other New, Revised, or Potentially Misvalued Codes With CY 2011 Interim Final RVUs or CY 2012 Proposed RVUs Not Specifically Discussed in the CY 2012 Final Rule With Comment Period

C. Establishing Interim Final RVUs for CY 2012

1. Establishing Interim Final Work RVUs for CY 2012

a. Code-Specific Issues

(1) Integumentary System: Skin, Subcutaneous, and Accessory Structures (CPT Codes 10060-10061, 11056)

(2) Integumentary System: Nails (CPT Codes 11719-11721, and G0127)

(3) Integumentary System: Repair (Closure) (CPT Codes 15271-15278, 16020, 16025)

(4) Musculoskeletal: Hand and Fingers (CPT Codes 26341)

(5) Musculoskeletal: Application of Casts and Strapping (CPT Codes 29125-29881)

(6) Musculoskeletal: Endoscopy/Arthroscopy (CPT codes 29826, 29880, 29881)

(7) Respiratory: Lungs and Pleura (CPT Codes 32096-32674)

(8) Cardiovascular: Heart and Pericardium (CPT Codes 33212-37619)

(A) Pediatric Cardiovascular Code (CPT Code 36000)

(B) Renal Angiography codes (CPT Codes 36251-36254)

(C) IVC Transcatheter Procedures (CPT Codes 37191-37193)

(9) Hemic and Lymphatic: General (CPT Codes 38230-38232)

(10) Digestive: Liver (CPT Codes 47000)

(11) Digestive: Abdomen, Peritoneum, and Omentum (CPT Codes 49082-49084)

(12) Nervous system: Spine and Spinal Cord (CPT Codes 62263-63685)

(13) Nervous System: Extracranial Nerves, Peripheral Nerves, and Autonomic Nervous System (CPT Codes 64633-64636)

(14) Diagnostic Radiology: Abdomen (CPT Codes 74174-74178)

(15) Pathology and Laboratory: Cytopathology (CPT Codes 88101-88108)

(16) Psychiatry: Psychiatric Therapeutic Procedures (CPT Codes 90854, 90867-98069)

(17) Opthalmology: Special Opthalmological Services (CPT Codes 92071-92072)

(18) Special Otorhinolaryngologic Services: Audologic Function Tests (CPT Codes 92558-92588)

(19) Special Otorhinolaryngologic Services: Evaluative and Therapeutic Services (CPT Codes 92605 and 92618)

(20) Cardiovascular: Cardiac Catheterization (CPT Codes 93451-93568)

(21) Pulmonary: Other Procedures (CPT Codes 94060-94781)

(22) Neurology and Neuromuscular Procedures: Nerve Conduction Tests (CPT Codes 95885-95887)

(23) Neurology and Neuromuscular Procedures: Autonomic Function Tests (CPT Codes 95938-95939)

(24) Other CY 2012 New, Revised, and Potentially Misvalued CPT Codes Not Specifically Discussed Previously

2. Establishing Interim Final Direct PE RVUs for CY 2012

3. Establishing Interim Final Malpractice RVUs for CY 2012

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

A. Medicare Sustainable Growth Rate (SGR)

1. Physicians' Services

2. Preliminary Estimate of the SGR for 2012

3. Revised Sustainable Growth Rate for CY 2011

4. Final Sustainable Growth Rate for CY 2010

5. Calculation of CYs 2012, 2011, and 2010 Sustainable Growth Rates

a. Detail on the CY 2012 SGR

(1) Factor 1—Changes in Fees for Physicians' Services (Before Applying Legislative Adjustments) for CY 2012

(2) Factor 2—The Percentage Change in the Average Number of Part B Enrollees From CY 2011 to CY 2012

(3) Factor 3—Estimated Real Gross Domestic Product Per Capita Growth in 2012

(4) Factor 4—Percentage Change in Expenditures for Physicians' Services Resulting From Changes in Statute or Regulations in CY 2012 Compared With CY 2011

b. Detail on the CY 2011 SGR

(1) Factor 1—Changes in Fees for Physicians' Services (Before Applying Legislative Adjustments) for CY 2011

(2) Factor 2—The Percentage Change in the Average Number of Part B Enrollees From CY 2010 to CY 2011

(3) Factor 3—Estimated Real Gross Domestic Product Per Capita Growth in CY 2011

(4) Factor 4—Percentage Change in Expenditures for Physicians' Services Resulting From Changes in Statute or Regulations in CY 2011 Compared With CY 2010

c. Detail on the CY 2010 SGR

(1) Factor 1—Changes in Fees for Physicians' Services (Before Applying Legislative Adjustments) for CY 2010

(2) Factor 2—The Percentage Change in the Average Number of Part B Enrollees From CY 2009 to CY 2010

(3) Factor 3—Estimated Real Gross Domestic Product Per Capita Growth in CY 2010

(4) Factor 4—Percentage Change in Expenditures for Physicians' Services Resulting From Changes in Statute or Regulations in CY 2010 Compared With CY 2009

B. The Update Adjustment Factor (UAF)

1. Calculation Under Current Law

C. The Percentage Change in the Medicare Economic Index (MEI)

D. Physician and Anesthesia Fee Schedule Conversion Factors for CY 2012

1. Physician Fee Schedule Update and Conversion Factor

a. CY 2012 PFS Update

b. CY 2011 PFS Conversion Factor

2. Anesthesia Conversion Factor

V. Other PFS Issues

A. Section 105: Extension of Payment for Technical Component of Certain Physician Pathology Services

B. Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatients: 3-Day Payment Window Policy and the Impact on Wholly Owned or Wholly Operated Physician Practices

1. Introduction

2. Background

3. Applicability of the 3-Day Payment Window Policy for Services Furnished in Physician Practices

a. Payment Methodology

b. Identification of Wholly Owned or Wholly Operated Physician Practices

C. Medicare Therapy Caps

VI. Other Provisions of the Final Rule

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

1. Widely Available Market Price (WAMP)/Average Manufacturer Price

2. AMP Threshold and Price Substitutions

a. AMP Threshold

b. AMP Price Substitution

(1) Inspector General Studies

(2) Proposal

(3) Timeframe for and Duration of Price Substitutions

(4) Implementation of AMP-Based Price Substitution and the Relationship of ASP to AMP

3. ASP Reporting Update

a. ASP Reporting Template Update

b. Reporting of ASP Units and Sales Volume for Certain Products

4. Out of Scope Comments

B. Discussion of Budget Neutrality for the Chiropractic Services Demonstration

C. Productivity Adjustment for the Ambulatory Surgical Center Payment System, and the Ambulance, Clinical Laboratory and DMEPOS Fee Schedules

D. Clinical Laboratory Fee schedule: Signature on Requisition

1. History and Overview

2. Proposed Changes

E. Section 4103 of the Affordable Care Act: Medicare Coverage and Payment of the Annual Wellness Visit Providing a Personalized Prevention Plan Under Medicare Part B

1. Incorporation of a Health Risk Assessment as Part of the Annual Wellness Visit

a. Background and Statutory Authority—Medicare Part B Coverage of an Annual Wellness Visit Providing Personalized Prevention Plan Services

b. Implementation

(1) Definition of a “Health Risk Assessment”

(2) Changes to the Definitions of First Annual Wellness Visit and Subsequent Annual Visit

(3) Additional Comments

(4) Summary

2. The Addition of a Health Risk Assessment as a Required Element for the Annual Wellness Visit Beginning in 2012

a. Payment for AWV Services With the Inclusion of an HRA Element

F. Quality Reporting Initiatives

1. Physician Payment, Efficiency, and Quality Improvements—Physician Quality Reporting System

a. Program Background and Statutory Authority

b. Methods of Participation

(1) Individual Eligible Professionals

(2) Group Practices

(A) Background and Authority

(B) Definition of Group Practice

(C) Process for Physician Group Practices To Participate as Group Practices

c. Reporting Period

d. Reporting Mechanisms—Individual Eligible Professionals

(1) Claims-Based Reporting

(2) Registry-Based Reporting

(A) Requirements for the Registry-Based Reporting Mechanism—Individual Eligible Professionals

(B) 2012 Qualification Requirements for Registries

(3) EHR-Based Reporting

(A) Direct EHR-Based Reporting

(i) Requirements for the Direct EHR-Based Reporting Mechanism—Individual Eligible Professionals

(ii) 2012 Qualification Requirements for Direct EHR-Based Reporting Products

(B) EHR Data Submission Vendors

(i) Requirements for EHR Data Submission Vendors Based on Reporting Mechanism—Individual Eligible Professionals

(ii) 2012 Qualification Requirements for EHR Data Submission Vendors

(C) Qualification Requirements for Direct EHR-Based Reporting Data Submission Vendors and Their Products for the 2013 Physician Quality Reporting System

e. Incentive Payments for the 2012 Physician Quality Reporting System

(1) Criteria for Satisfactory Reporting of Individual Quality Measures for Individual Eligible Professionals via Claims

(2) 2012 Criteria for Satisfactory Reporting of Individual Quality Measures for Individual Eligible Professionals via Registry

(3) Criteria for Satisfactory Reporting of Individual Quality Measures for Individual Eligible Professionals via EHR

(4) Criteria for Satisfactory Reporting of Measures Groups via Claims—Individual Eligible Professionals

(5) 2012 Criteria for Satisfactory Reporting of Measures Groups via Registry—Individual Eligible Professionals

(6) 2012 Criteria for Satisfactory Reporting on Physician Quality Reporting System Measures by Group Practices Under the GPRO

f. 2012 Physician Quality Reporting System Measures

(1) Statutory Requirements for the Selection of 2012 Physician Quality Reporting System Measures

(2) Other Considerations for the Selection of 2012 Physician Quality Reporting System Measures

(3) 2012 Physician Quality Reporting System Individual Measures

(A) 2012 Physician Quality Reporting System Core Measures Available for Claims, Registry, and/or EHR-Based Reporting

(B) 2012 Physician Quality Reporting System Individual Measures for Claims and Registry Reporting

(C) 2012 Measures Available for EHR-Based Reporting

(4) 2012 Physician Quality Reporting System Measures Groups

(5) 2012 Physician Quality Reporting System Quality Measures for Group Practices Selected To Participate in the GPRO (GPRO)

g. Maintenance of Certification Program Incentive

h. Feedback Reports

i. Informal Review

j. Future Payment Adjustments for the Physician Quality Reporting System

2. Incentives and Payment Adjustments for Electronic Prescribing (eRx)—The Electronic Prescribing Incentive Program

a. Program Background and Statutory Authority

b. Eligibility

(1) Individual Eligible Professionals

(A) Definition of Eligible Professional

(2) Group Practices

(A) Definition of “Group Practice”

(B) Process To Participate in the eRx Incentive Program—eRx GPRO

c. Reporting Periods

(1) Reporting Periods for the 2012 and 2013 eRx Incentives

(2) Reporting Periods for the 2013 and 2014 eRx Payment Adjustments

d. Standard for Determining Successful Electronic Prescribers

(1) Reporting the Electronic Prescribing Quality Measure

(2) The Denominator for the Electronic Prescribing Measure

(3) The Reporting Numerator for the Electronic Prescribing Measure

e. Required Functionalities and Part D Electronic Prescribing Standards

(1) “Qualified” Electronic Prescribing System

(2) Part D Electronic Prescribing Standards

f. Reporting Mechanisms for the 2012 and 2013 Reporting Periods

(1) Claims-Based Reporting

(2) Registry-Based Reporting

(3) EHR-Based Reporting

g. The 2012 and 2013 eRx Incentives

(1) Applicability of 2012 and 2013 eRx Incentives for Eligible Professionals and Group Practices

(2) Reporting Criteria for Being a Successful Electronic for the 2012 and 2013 eRx Incentives—Individual Eligible Professionals

(3) Criteria for Being a Successful Electronic Prescriber 2012 and 2013 eRx Incentives—Group Practices

(4) No Double Payments

h. The 2013 and 2014 Electronic Prescribing Payment Adjustments

(1) Limitations to the 2013 and 2014 eRx Payment Adjustments—Individual Eligible Professionals

(2) Requirements for the 2013 and 2014 eRx Payment Adjustments—Individual Eligible Professionals

(3) Requirements for the 2013 and 2014 eRx Payment Adjustments—Group Practices

(4) Significant Hardship Exemptions

(A) Significant Hardship Exemptions

(i) Inability To Electronically Prescribe Due to Local, State, or Federal Law or Regulation

(ii) Eligible Professionals Who Prescribe Fewer Than 100 Prescriptions During a 6-Month, Payment Adjustment Reporting Period

(B) Process for Submitting Significant Hardship Exemptions—Individual Eligible Professionals and Group Practices

G. Physician Compare Web site

1. Background and Statutory Authority

2. Final Plans

H. Medicare EHR Incentive Program for Eligible Professionals for the 2012 Payment Year

1. Background

2. Attestation

3 The Physician Quality Reporting System—Medicare EHR Incentive Pilot

a. EHR Data Submission Vendor-Based Reporting Option

b. Direct EHR-Based Reporting Option

4. Method for EPs To Indicate Election To Participate in the Physician Quality Reporting System—Medicare EHR Incentive Pilot for Payment Year 2012

I. Establishment of the Value-Based Payment Modifier and Improvements to the Physician Feedback Program

1. Overview

2. The Value Based Modifier

a. Measures of Quality of Care and Costs

(1) Quality of Care Measures

(A) Quality of Care Measures for the Value-Modifier

(B) Potential Quality of Care Measures for Additional Dimensions of Care in the Value Modifier

(i) Outcome Measures

(ii) Care Coordination/Transition Measures

(iii) Patient Safety, Patient Experience and Functional Status

(2) Cost Measures

(A) Cost Measures for the Value Modifier

(B) Potential Cost Measures for Future Use in the Value Modifier

b. Implementation of the Value Modifier

c. Initial Performance Period

d. Other Issues

3. Physician Feedback Program

a. Alignment of Physician Quality Reporting System Quality Care Measures With the Physician Feedback Reports

b. 2010 Physician Group and Individual Reports Disseminated in 2011

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

1. General

2. Annual Update to the Code List

a. Background

b. Response to Comments

c. Revisions Effective for 2012

K. Technical Corrections

1. Outpatient Speech-Language Pathology Services: Conditions and Exclusions

2. Outpatient Diabetes Self-Management Training and Diabetes Outcome Measurements

a. Changes to the Definition of Deemed Entity

b. Changes to the Condition of Coverage Regarding Training Orders

3. Practice Expense Relative Value Units (RVUs)

VII. Waiver of Proposed Rulemaking and Collection of Information Requirements

A. Waiver of Proposed Rulemaking and Delay of Effective Date

B. Collection of Information Requirements

1. Part B Drug Payment

2. The Physician Quality Reporting System (Formerly the Physician Quality Reporting Initiative (PQRI))

a. Estimated Participation in the 2010 Physician Quality Reporting System

b. Burden Estimate on Participation in the 2010 Physician Quality Reporting System—Individual Eligible Professionals

(1) Burden Estimate on Participation in the 2012 Physician Quality Report System via the Claims-Based Reporting Mechanism—Individual Eligible Professionals

(2) Burden Estimate on Participation in the 2012 Physician Quality Reporting System—Group Practices

(3) Burden Estimate on Participation in the Maintenance of Certification Program Incentive

(4) Burden Estimate on Participation in the Maintenance of Certification Program Incentive

3. Electronic Prescribing (eRx) Incentive Program

a. Estimate on Participation in the 2012, 2013, and 2014 eRx Incentive Program

b. Burden Estimate on Participation in the eRx Incentive Program—Individual Eligible Professionals

(1) Burden Estimate on Participation in the eRx Incentive Program via the Claims-Based Reporting Mechanism- Individual Eligible Professionals

(2) Burden Estimate on Participation in the eRx Incentive Program via the Registry-Based Reporting Mechanism- Individual Eligible Professionals and Group Practices

(3) Burden Estimate on Participation in the eRx Incentive Program via the EHR-Based Reporting Mechanism—Individual Eligible Professionals and Group Practices

(4) Burden Estimate on Participation in the eRx Incentive Program—Group Practices

4. Medicare Electronic Health Record (EHR) Incentive Program for Eligible Professionals for the 2012 Payment Year

VIII. Response to Comments

IX. Regulatory Impact Analysis

A. Statement of Need

B. Overall Impact

C. RVU Impacts

1. Resource-Based Work, PE, and Malpractice RVUs

2. CY 2012 PFS Impact Discussion

a. Changes in RVUs

b. Combined Impact

D. Effects of Proposal To Review Potentially Misvalued Codes on an Annual Basis Under the PFS

E. Effect of Revisions to Malpractice RUVs

F. Effect of Changes to Geographic Practice Cost Indices (GPCIs)

G. Effects of Final Changes to Medicare Telehealth Services Under the Physician Fee Schedule H Effects of the Impacts of Other Provisions of the Final Rule With Comment Period

1. Part B Drug Payment: ASP Issues

2. Chiropractic Services Demonstration

3. Extension of Payment for Technical Component of Certain Physician Pathology Services

4. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan: Incorporation of a Health Risk Assessment as Part of the Annual Wellness Visit

5. Physician Payment, Efficiency, and Quality Improvements—Physician Quality Reporting System

6. Incentives for Electronic Prescribing (eRx)—The Electronic Prescribing Incentive Program

7. Physician Compare Web site

8. Medicare EHR Incentive Program

9. Physician Feedback Program/Value Modifier Payment

10. Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatients: 3-Day Window Policy and Impact on Wholly Owned or Wholly Operated Physician Offices

11. Clinical Lab Fee Schedule: Signature on Requisition

I. Alternatives Considered

J. Impact on Beneficiaries

K. Accounting Statement

L. Conclusion

X. Addenda Referenced in This Rule and Available Only Through the Internet on the CMS Web Site

Regulations Text

Acronyms Back to Top

In addition, because of the many organizations and terms to which we refer by acronym in this final rule with comment period, we are listing these acronyms and their corresponding terms in alphabetical order as follows:

AAAnesthesiologist assistant

AACEAmerican Association of Clinical Endocrinologists

AACVPRAmerican Association of Cardiovascular and Pulmonary Rehabilitation

AADEAmerican Association of Diabetes Educators

AANAAmerican Association of Nurse Anesthetists

ABMSAmerican Board of Medical Specialties

ABNAdvanced Beneficiary Notice

ACCAmerican College of Cardiology

ACGMEAccreditation Council on Graduate Medical Education

ACLSAdvanced cardiac life support

ACPAmerican College of Physicians

ACRAmerican College of Radiology

ACSAmerican Community Survey

ADLActivities of daily living

AEDAutomated external defibrillator

AFROCAssociation of Freestanding Radiation Oncology Centers

AFSAmbulance Fee Schedule

AHAAmerican Heart Association

AHFS-DIAmerican Hospital Formulary Service-Drug Information

AHRQ[HHS] Agency for Healthcare Research and Quality

AMAAmerican Medical Association

AMA RUC[AMA's Specialty Society] Relative (Value) Update Committee

AMA-DEAmerican Medical Association Drug Evaluations

AMIAcute Myocardial Infarction

AMPAverage Manufacturer Price

AOAccreditation organization

AOAAmerican Osteopathic Association

APAAmerican Psychological Association

APCAdministrative Procedures Act

APTAAmerican Physical Therapy Association

ARRAAmerican Recovery and Reinvestment Act (Pub. L. 111-5)

ASCAmbulatory surgical center

ASPAverage Sales Price

ASPEAssistant Secretary of Planning and Evaluation (ASPE)

ASRTAmerican Society of Radiologic Technologists

ASTROAmerican Society for Therapeutic Radiology and Oncology

ATAAmerican Telemedicine Association

AWPAverage Wholesale Price

AWVAnnual Wellness Visit

BBABalanced Budget Act of 1997 (Pub. L. 105-33)

BBRA[Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)

BIPAMedicare, Medicaid, and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)

BLSBureau of Labor and Statistics

BMDBone Mineral Density

BMIBody Mass Index

BNBudget Neutrality

BPMBenefit Policy Manual

CABGCoronary Artery Bypass Graft

CADCoronary Artery Disease

CAHCritical Access Hospital

CAHEACommittee on Allied Health Education and Accreditation

CAPCompetitive Acquisition Program

CAREContinuity Assessment Record and Evaluation

CBICCompetitive Bidding Implementation Contractor

CBPCompetitive Bidding Program

CBSACore-Based Statistical Area

CDCCenters for Disease Control and Prevention

CEMCardiac Event Monitoring

CFConversion Factor

CFCConditions for Coverage

CFRCode of Federal Regulations

CKDChronic Kidney Disease

CLFSClinical Laboratory Fee Schedule

CMACalifornia Medical Association

CMDContractor Medical Director

CMEContinuing Medical Education

CMHCCommunity Mental Health Center

CMPsCivil Money Penalties

CMSCenters for Medicare & Medicaid Services

CNSClinical Nurse Specialist

CoPCondition of Participation

COPDChronic Obstructive Pulmonary Disease

CORFComprehensive Outpatient Rehabilitation Facility

COSCost of Service

CPEPClinical Practice Expert Panel

CPIConsumer Price Index

CPI-UConsumer Price Index for Urban Consumers

CPRCardiopulmonary Resuscitation

CPT[Physicians] Current Procedural Terminology (4th Edition, 2002, copyrighted by the American Medical Association)

CQMClinical Quality Measures

CRCardiac Rehabilitation

CRFChronic Renal Failure

CRNACertified Registered Nurse Anesthetist

CROsClinical Research Organizations

CRPCanalith Repositioning

CRTCertified Respiratory Therapist

CSCComputer Sciences Corporation

CSWClinical Social Worker

CTComputed Tomography

CTAComputed Tomography Angiography

CWFCommon Working File

CYCalendar Year

D.O.Doctor of Osteopathy

DEADrug Enforcement Agency

DHHSDepartment of Health and Human Services

DHSDesignated health services

DMEDurable Medical Equipment

DMEPOSDurable medical equipment, prosthetics, orthotics, and supplies

DOJDepartment of Justice

DOQDoctors Office Quality

DOSDate of service

DOTPADevelopment of Outpatient Therapy Alternatives

DRADeficit Reduction Act of 2005 (Pub. L. 109-171)

DSMTDiabetes Self-Management Training Services

DXA CPTDual energy X-ray absorptiometry

E/MEvaluation and Management Medicare Services

ECGElectrocardiogram

EDIElectronic data interchange

EEGElectroencephalogram

EGCElectrocardiogram

EHRElectronic health record

EKGElectrocardiogram

EMGElectromyogram

EMTALAEmergency Medical Treatment and Active Labor Act

EOGElectro-oculogram

EPOErythopoeitin

EPsEligible Professional

eRxElectronic Prescribing

ESOEndoscopy Supplies

ESRDEnd-Stage Renal Disease

FAAFederal Aviation Administration

FAXFacsimile

FDAFood and Drug Administration (HHS)

FFSFee-for-service

FISHIn Situ Hybridization Testing

FOTOFocus On Therapeutic Outcomes

FQHCFederally Qualified Health Center

FR Federal Register

FTEFull Time Equivalent

GAFGeographic Adjustment Factor

GAOGovernment Accountability Office

GEMGenerating Medicare [Physician Quality Performance Measurement Results]

GFRGlomerular Filtration Rate

GMEGraduate Medical Education

GPCIsGeographic Practice Cost Indices

GPOGroup Purchasing Organization

GPROGroup Practice Reporting Option

GPSGeographic Positioning System

GSAGeneral Services Administration

GTGrowth Target

HACHospital-Acquired Conditions

HBAIHealth and Behavior Assessment and Intervention

HCCHierarchal Condition Category

HCPACHealth Care Professionals Advisory Committee

HCPCSHealthcare Common Procedure Coding System

HCRISHealthcare Cost Report Information System

HDL/LDLHigh-Density Lipoprotein/Low-Density Lipoprotein

HDRTHigh Dose Radiation Therapy

HEMSHelicopter Emergency Medical Services

HH PPSHome Health Prospective Payment System

HHAHome Health Agency

HHRGHome Health Resource Group

HHS[Department of] Health and Human Services

HIPAAHealth Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191)

HITHealth Information Technology

HITECHHealth Information Technology for Economic and Clinical Health Act (Title IV of Division B of the Recovery Act, together with Title XIII of Division A of the Recovery Act)

HITSPHealthcare Information Technology Standards Panel

HIVHuman Immunodeficiency Virus

HMOHealth Maintenance Organization

HOPDHospital Outpatient Department

HPSAHealth Professional Shortage Area

HRAHealth Risk Assessment

HRSAHealth Resources Services Administration (HHS)

HSIPHPSA Surgical Incentive Program

HUDDepartment of Housing and Urban Development

HUDHousing and Urban Development

IACSIndividuals Access to CMS Systems

IADLInstrumental Activities of Daily Living

ICDInternational Classification of Diseases

ICFIntermediate Care Facilities

ICFInternational Classification of Functioning, Disability and Health

ICRIntensive Cardiac Rehabilitation

ICRInformation Collection Requirement

IDEInvestigational Device Exemption

IDTFIndependent Diagnostic Testing Facility

IFCInterim Rinal Rule with Comment Period

IGIIHS Global Insight, Inc.

IMEIndirect Medical Education

IMRTIntensity-Modulated Radiation Therapy

INRInternational Normalized Ratio

IOMInstitute of Medicine

IOMInternet Only Manual

IPCIIndirect Practice Cost Index

IPPEInitial Preventive Physical Examination

IPPSInpatient Prospective Payment System

IRSInternal Revenue Service

ISOInsurance Services Office

IVDIschemic Vascular Disease

IVIGIntravenous Immune Globulin

IWPUTIntra-service Work Per Unit of Time

JRCERTJoint Review Committee on Education in Radiologic Technology

KDEKidney Disease Education

LCDLocal Coverage Determination

LOPSLoss of Protective Sensation

LUGPALarge Urology Group Practice Association

M.D.Doctor of Medicine

MAMedicare Advantage Program

MACMedicare Administrative Contractor

MA-PDMedicare Advantage-Prescription Drug Plans

MAVMeasure Applicability Validation

MCMPMedicare Care Management Performance

MCPMonthly Capitation Payment

MDRDModification of Diet in Renal Disease

MedCACMedicare Evidence Development and Coverage Advisory Committee (formerly the Medicare Coverage Advisory Committee (MCAC))

MedPACMedicare Payment Advisory Commission

MEIMedicare Economic Index

MGMAMedical Group Management Association

MIEA-TRHCAMedicare Improvements and Extension Act of 2006 (that is, Division B of the Tax Relief and Health Care Act of 2006 (TRHCA) (Pub. L. 109-432)

MIPPAMedicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275)

MMAMedicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)

MMEAMedicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309)

MMSEAMedicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173)

MNTMedical Nutrition Therapy

MOCMaintenance of Certification

MPMalpractice

MPCMultispecialty Points of Comparison

MPPRMultiple Procedure Payment Reduction Policy

MQSAMammography Quality Standards Act of 1992 (102)

MRAMagnetic Resonance Angiography

MRIMagnetic Resonance Imaging

MSAMetropolitan Statistical Area

MSPMedicare Secondary Payer

MUEMedically Unlikely Edit

NAICSNorth American Industry Classification System

NBRCNational Board for Respiratory Care

NCCINational Correct Coding Initiative

NCDNational Coverage Determination

NCQANational Committee for Quality Assurance

NCQDISNational Coalition of Quality Diagnostic Imaging Services

NDCNational Drug Codes

NFNursing facility

NISTANational Institute of Standards and Technology Act

NPNurse Practitioner

NPINational Provider Identifier

NPPNonphysician Practitioner

NPPESNational Plan & Provider Enumeration System

NQFNational Quality Forum

NRCNuclear Regulatory Commission

NSQIPNational Surgical Quality Improvement Program

NTSBNational Transportation Safety Board

NUBCNational Uniform Billing Committee

OACT[CMS] Office of the Actuary

OBRAOmnibus Budget Reconciliation Act

OCROptical Character Recognition

ODFOpen Door Forum

OESOccupational Employment Statistics

OGPEOxygen Generating Portable Equipment

OIGOffice of the Inspector General

OMBOffice of Management and Budget

ONC[HHS] Office of the National Coordinator for Health IT

OPPSOutpatient Prospective Payment System

OSCAROnline Survey and Certification and Reporting

PAPhysician Assistant

PACEProgram of All-inclusive Care for the Elderly

PACMBPRAPreservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (Pub. L. 111-192)

PATPerformance Assessment Tool

PCProfessional Components

PCIPercutaneous Coronary Intervention

PCIPPrimary Care Incentive Payment Program

PDPPrescription Drug Plan

PEPractice Expense

PE/HRPractice Expense per Hour

PEACPractice Expense Advisory Committee

PECOSProvider Enrollment Chain and Ownership System

PERCPractice Expense Review Committee

PFSPhysician Fee Schedule

PGP[Medicare] Physician Group Practice

PHIProtected Health Information

PHPPartial Hospitalization Program

PIM[Medicare] Program Integrity Manual

PLIProfessional Liability Insurance

POAPresent On Admission

POCPlan Of Care

PODsPhysician Owned Distributors

PPATRAPhysician Payment And Therapy Relief Act

PPIProducer Price Index

PPISPhysician Practice Expense Information Survey

PPPSPersonalized Prevention Plan Services

PPSProspective Payment System

PPTAPlasma Protein Therapeutics Association

PQRIPhysician Quality Reporting Initiative

PRPulmonary rehabilitation

PRAPaperwork Reduction Act

PSAPhysician Scarcity Areas

PTPhysical Therapy

PTAPhysical Therapy Assistant

PTCAPercutaneous Transluminal Coronary Angioplasty

PVBPPhysician and Other Health Professional Value-Based Purchasing Workgroup

QDCs(Physician Quality Reporting System) Quality Data Codes

RARadiology Assistant

RACMedicare Recovery Audit Contractor

RBMARadiology Business Management Association

RFARegulatory Flexibility Act

RHCRural Health Clinic

RHQDAPUReporting Hospital Quality Data Annual Payment Update Program

RIARegulatory Impact Analysis

RNRegistered Nurse

RNACReasonable Net Acquisition Cost

RPARadiology Practitioner Assistant

RRTRegistered Respiratory Therapist

RUC[AMA's Specialty Society] Relative (Value) Update Committee

RVRBSResource-Based Relative Value Scale

RVURelative Value Unit

SBASmall Business Administration

SCHIPState Children's Health Insurance Programs

SDWSpecial Disability Workload

SGRSustainable Growth Rate

SLP Speech-Language Pathology

SMS[AMAs] Socioeconomic Monitoring System

SNFSkilled Nursing Facility

SORSystem of Record

SRSStereotactic Radiosurgery

SSASocial Security Administration

SSISocial Security Income

STARSServices Tracking and Reporting System

STATSShort Term Alternatives for Therapy Services

STSSociety for Thoracic Surgeons

TCTechnical Components

TINTax Identification Number

TJCJoint Commission

TRHCATax Relief and Health Care Act of 2006 (Pub. L. 109-432)

TTOTranstracheal Oxygen

UAFUpdate Adjustment Factor

UPMCUniversity of Pittsburgh Medical Center

URACUtilization Review Accreditation Committee

USDEUnited States Department of Education

USP-DIUnited States Pharmacopoeia-Drug Information

VADepartment of Veterans Affairs

VBPValue-Based Purchasing

WACWholesale Acquisition Cost

WAMPWidely Available Market Price

WHOWorld Health Organization

Addenda Available Only Through the Internet on the CMS Web Site Back to Top

In the past, the Addenda referred to throughout the preamble of our annual PFS proposed and final rules with comment period were included in the printed Federal Register. However, beginning with the CY 2012 PFS proposed rule, the PFS Addenda no longer appear in the Federal Register. Instead these Addenda to the annual proposed and final rules with comment period will be available only through the Internet. The PFS Addenda along with other supporting documents and tables referenced in this final rule with comment period are available through the Internet on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/. Click on the link on the left side of the screen titled, “PFS Federal Regulations Notices” for a chronological list of PFS Federal Register and other related documents. For the CY 2012 PFS final rule with comment period, refer to item CMS-1524-FC. For complete details on the availability of the Addenda referenced in this final rule with comment period, we refer readers to section X. of this final rule with comment period. Readers who experience any problems accessing any of the Addenda or other documents referenced in this final rule with comment period and posted on the CMS Web site identified above should contact Rebecca Cole at (410) 786-1589 or Erin Smith at (410) 786-4497.

CPT (Current Procedural Terminology) Copyright Notice Back to Top

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

I. Background Back to Top

Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), “Payment for Physicians' Services.” The Act requires that payments under the physician fee schedule (PFS) are based on national uniform relative value units (RVUs) based on the relative resources used in furnishing a service. Section 1848(c) of the Act requires that national RVUs be established for physician work, practice expense (PE), and malpractice expense. Before the establishment of the resource-based relative value system, Medicare payment for physicians' services was based on reasonable charges. We note that throughout this final rule with comment period, unless otherwise noted, the term “practitioner” is used to describe both physicians and nonphysician practitioners (such as physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, psychologists, or clinical social workers) that are permitted to furnish and bill Medicare under the PFS for their services.

A. Development of the Relative Value System

1. Work RVUs

The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (101), and OBRA 1990, (101). The final rule, published on November 25, 1991 (56 FR 59502), set forth the fee schedule for payment for physicians' services beginning January 1, 1992. Initially, only the physician work RVUs were resource-based, and the PE and malpractice RVUs were based on average allowable charges.

The physician work RVUs established for the implementation of the fee schedule in January 1992 was developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original physician work RVUs for most codes in a cooperative agreement with the Department of Health and Human Services (DHHS). In constructing the code-specific vignettes for the original physician work RVUs, Harvard worked with panels of experts, both inside and outside the Federal government, and obtained input from numerous physician specialty groups.

Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia services are based on RVUs from a uniform relative value guide, with appropriate adjustment of the conversion factor (CF), in a manner to assure that fee schedule amounts for anesthesia services are consistent with those for other services of comparable value. We established a separate CF for anesthesia services, and we continue to utilize time units as a factor in determining payment for these services. As a result, there is a separate payment methodology for anesthesia services.

We establish physician work RVUs for new and revised codes based, in part, on our review of recommendations received from the American Medical Association's (AMA's) Specialty Society Relative Value Update Committee (RUC).

2. Practice Expense Relative Value Units (PE RVUs)

Section 121 of the Social Security Act Amendments of 1994 (103), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act and required us to develop resource-based PE RVUs for each physicians service beginning in 1998. We were to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs.

Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay implementation of the resource-based PE RVU system until January 1, 1999. In addition, section 4505(b) of the BBA provided for a 4-year transition period from charge-based PE RVUs to resource-based RVUs.

We established the resource-based PE RVUs for each physician's service in a final rule with comment period, published November 2, 1998 (63 FR 58814), effective for services furnished in 1999. Based on the requirement to transition to a resource-based system for PE over a 4-year period, resource-based PE RVUs did not become fully effective until 2002.

This resource-based system was based on two significant sources of actual PE data: the Clinical Practice Expert Panel (CPEP) data and the AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were collected from panels of physicians, practice administrators, and nonphysician health professionals (for example, registered nurses (RNs)) nominated by physician specialty societies and other groups. The CPEP panels identified the direct inputs required for each physician's service in both the office setting and out-of-office setting. We have since refined and revised these inputs based on recommendations from the AMA RUC. The AMA's SMS data provided aggregate specialty-specific information on hours worked and PEs.

Separate PE RVUs are established for procedures that can be performed in both a nonfacility setting, such as a physician's office, and a facility setting, such as a hospital outpatient department (HOPD). The difference between the facility and nonfacility RVUs reflects the fact that a facility typically receives separate payment from Medicare for its costs of providing the service, apart from payment under the PFS. The nonfacility RVUs reflect all of the direct and indirect PEs of providing a particular service.

Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) directed the Secretary of Health and Human Services (the Secretary) to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations to supplement the data we normally collect in determining the PE component. On May 3, 2000, we published the interim final rule (65 FR 25664) that set forth the criteria for the submission of these supplemental PE survey data. The criteria were modified in response to comments received, and published in the Federal Register (65 FR 65376) as part of a November 1, 2000 final rule. The PFS final rules with comment period published in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended the period during which we would accept these supplemental data through March 1, 2005.

In the calendar year (CY) 2007 PFS final rule with comment period (71 FR 69624), we revised the methodology for calculating direct PE RVUs from the top-down to the bottom-up methodology beginning in CY 2007 and provided for a 4-year transition for the new PE RVUs under this new methodology. This transition ended in CY 2010 and direct PE RVUs are calculated in CY 2012 using this methodology, unless otherwise noted.

In the CY 2010 PFS final rule with comment period (74 FR 61749), we updated the PE/hour (PE/HR) data that are used in the calculation of PE RVUs for most specialties. For this update, we used the Physician Practice Information Survey (PPIS) conducted by the AMA. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) using a survey instrument and methods highly consistent with those of the SMS and the supplemental surveys used prior to CY 2010. We note that in CY 2010, for oncology, clinical laboratories, and independent diagnostic testing facilities (IDTFs), we continued to use the supplemental survey data to determine practice expense per hour (PE/HR) values (74 FR 61752). Beginning in CY 2010, we provided for a 4-year transition for the new PE RVUs using the updated PE/HR data. In CY 2012, the third year of the transition, PE RVUs are calculated based on a 75/25 blend of the new PE RVUs developed using the PPIS data and the previous PE RVUs based on the SMS and supplemental survey data.

3. Resource-Based Malpractice RVUs

Section 4505(f) of the BBA amended section 1848(c) of the Act to require that we implement resource-based malpractice RVUs for services furnished on or after CY 2000. The resource-based malpractice RVUs were implemented in the PFS final rule with comment period published November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice insurance premium data collected from commercial and physician-owned insurers from all the States, the District of Columbia, and Puerto Rico. In the CY 2010 PFS final rule with comment period (74 FR 61758), we implemented the Second Five-Year Review and update of the malpractice RVUs. In the CY 2011 PFS final rule with comment period, we described our approach for determining malpractice RVUs for new or revised codes that become effective before the next Five-Year Review and update (75 FR 73208). Accordingly, to develop the CY 2012 malpractice RVUs for new or revised codes we crosswalked the new or revised code to the malpractice RVUs of a similar source code and adjusted for differences in work (or, if greater, the clinical labor portion of the fully implemented PE RVUs) between the source code and the new or revised code.

4. Refinements to the RVUs\

Section 1848(c)(2)(B)(i) of the Act requires that we review all RVUs no less often than every 5-years. The First Five-Year Review of Work RVUs was published on November 22, 1996 (61 FR 59489) and was effective in 1997. The Second Five-Year Review of Work RVUs was published in the CY 2002 PFS final rule with comment period (66 FR 55246) and was effective in 2002. The Third Five-Year Review of Work RVUs was published in the CY 2007 PFS final rule with comment period (71 FR 69624) and was effective on January 1, 2007. The Fourth Five-Year Review of Work RVUs was initiated in the CY 2010 PFS final rule with comment period where we solicited candidate codes from the public for this review (74 FR 61941). Proposed revisions to work RVUs and corresponding changes to PE and malpractice RVUs affecting payment for physicians' services for the Fourth Five-Year Review of Work RVUs were published in a separate Federal Register notice on June 6, 2011 (76 FR 32410). We have reviewed public comments, made adjustments to our proposals in response to comments, as appropriate, and included final values in this final rule with comment period, effective for services furnished beginning January 1, 2012.

In 1999, the AMA RUC established the Practice Expense Advisory Committee (PEAC) for the purpose of refining the direct PE inputs. Through March 2004, the PEAC provided recommendations to CMS for over 7,600 codes (all but a few hundred of the codes currently listed in the AMA's Current Procedural Terminology (CPT) codes). As part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented a new bottom-up methodology for determining resource-based PE RVUs and transitioned the new methodology over a 4-year period. A comprehensive review of PE was undertaken prior to the 4-year transition period for the new PE methodology from the top-down to the bottom-up methodology, and this transition was completed in CY 2010. In CY 2010, we also incorporated the new PPIS data to update the specialty-specific PE/HR data used to develop PE RVUs, adopting a 4-year transition to PE RVUs developed using the PPIS data.

In the CY 2005 PFS final rule with comment period (69 FR 66236), we implemented the First Five-Year Review of the malpractice RVUs (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). The Second Five-Year Review and update of resource-based malpractice RVUs was published in the CY 2010 PFS final rule with comment period (74 FR 61758) and was effective in CY 2010.

In addition to the Five-Year Reviews, beginning for CY 2009, CMS and the AMA RUC have identified and reviewed a number of potentially misvalued codes on an annual basis based on various identification screens. This annual review of work and PE RVUs for potentially misvalued codes was supplemented by section 3134 of the Affordable Care Act, which requires the agency to periodically identify, review and adjust values for potentially misvalued codes with an emphasis on the following categories: (1) Codes and families of codes for which there has been the fastest growth; (2) codes or families of codes that have experienced substantial changes in practice expenses; (3) codes that are recently established for new technologies or services; (4) multiple codes that are frequently billed in conjunction with furnishing a single service; (5) codes with low relative values, particularly those that are often billed multiple times for a single treatment; (6) codes which have not been subject to review since the implementation of the RBRVS (the so-called ‘Harvard valued codes’); and (7) other codes determined to be appropriate by the Secretary.

5. Application of Budget Neutrality to Adjustments of RVUs

Budget neutrality typically requires that expenditures not increase or decrease as a result of changes or revisions to policy. However, section 1848(c)(2)(B)(ii)(II) of the Act requires adjustment only if the change in expenditures resulting from the annual revisions to the PFS exceeds a threshold amount. Specifically, adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million.

B. Components of the Fee Schedule Payment Amounts

To calculate the payment for every physician's service, the components of the fee schedule (physician work, PE, and malpractice RVUs) are adjusted by geographic practice cost indices (GPCIs). The GPCIs reflect the relative costs of physician work, PE, and malpractice in an area compared to the national average costs for each component.

RVUs are converted to dollar amounts through the application of a CF, which is calculated by CMS' Office of the Actuary (OACT).

The formula for calculating the Medicare fee schedule payment amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work × GPCI work) + (RVU PE × GPCI PE) + (RVU Malpractice × GPCI Malpractice)] × CF.

C. Most Recent Changes to the Fee Schedule

The CY 2011 PFS final rule with comment period (75 FR 73170) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized many of the CY 2010 interim RVUs and implemented interim RVUs for new and revised codes for CY 2011 to ensure that our payment systems are updated to reflect changes in medical practice and the relative values of services. The CY 2011 PFS final rule with comment period also addressed other policies, as well as certain provisions of the Affordable Care Act and the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).

In the CY 2011 PFS final rule with comment period, we announced the following for CY 2011: the total PFS update of −10.1 percent; the initial estimate for the sustainable growth rate of −13.4 percent; and the conversion factor (CF) of $25.5217. These figures were calculated based on the statutory provisions in effect on November 2, 2010, when the CY 2011 PFS final rule with comment period was issued.

On December 30, 2010, we published a correction notice (76 FR 1670) to correct several technical and typographical errors that occurred in the CY 2011 PFS final rule with comment period. This correction notice announced a revised CF for CY 2011 of $25.4999, which was in accordance with the statutory provisions in effect as of November 2, 2010, the date the CY 2011 PFS final rule with comment period was issued.

On November 30, 2010, the Physician Payment and Therapy Relief Act of 2010 (PPATRA) (Pub. L. 111-286) was signed into law. Section 3 of Pub. L. 111-286 modified the policy finalized in the CY 2011 PFS final rule with comment period (75 FR 73241), effective January 1, 2011, regarding the payment reduction applied to multiple therapy services provided to the same patient on the same day in the office setting by one provider and paid for under the PFS (hereinafter, the therapy multiple procedure payment reduction (MPPR)). The PPATRA provision changed the therapy MPPR percentage from 25 to 20 percent of the PE component of payment for the second and subsequent “always” therapy services furnished in the office setting on the same day to the same patient by one provider, and excepted the payment reductions associated with the therapy MPPR from budget neutrality under the PFS.

On December 15, 2010, the Medicare and Medicaid Extenders Act of 2010 (MMEA) (Pub. L. 111-309) was signed into law. Section 101 of the MMEA provided for a 1-year zero percent update for the CY 2011 PFS. As a result of the MMEA, the CY 2011 PFS conversion factor was revised to $33.9764.

II. Provisions of the Final Rule for the Physician Fee Schedule Back to Top

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

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments of 1994 (103), enacted on October 31, 1994, required us to develop a methodology for a resource-based system for determining PE RVUs for each physician's service. We develop PE RVUs by looking at the direct and indirect physician practice resources involved in furnishing each service. Direct expense categories include clinical labor, medical supplies, and medical equipment. Indirect expenses include administrative labor, office expense, and all other expenses. The sections that follow provide more detailed information about the methodology for translating the resources involved in furnishing each service into service-specific PE RVUs. In addition, we note that section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. Therefore, if revisions to the RVUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million. We refer readers to the CY 2010 PFS final rule with comment period (74 FR 61743 through 61748) for a more detailed history of the PE methodology.

2. Practice Expense Methodology

a. Direct Practice Expense

We use a bottom-up approach to determine the direct PE by adding the costs of the resources (that is, the clinical staff, equipment, and supplies) typically required to provide each service. The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review of recommendations received from the AMA RUC. For a detailed explanation of the bottom-up direct PE methodology, including examples, we refer readers to the Five-Year Review of Work Relative Value Units Under the PFS and Proposed Changes to the Practice Expense Methodology proposed notice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).

b. Indirect Practice Expense per Hour Data

We use survey data on indirect practice expenses incurred per hour worked in developing the indirect portion of the PE RVUs. Prior to CY 2010, we primarily used the practice expense per hour (PE/HR) by specialty that was obtained from the AMA's Socioeconomic Monitoring Surveys (SMS). The AMA administered a new survey in CY 2007 and CY 2008, the Physician Practice Expense Information Survey (PPIS), which was expanded (relative to the SMS) to include nonphysician practitioners (NPPs) paid under the PFS.

The PPIS is a multispecialty, nationally representative, PE survey of both physicians and NPPs using a consistent survey instrument and methods highly consistent with those used for the SMS and the supplemental surveys. The PPIS gathered information from 3,656 respondents across 51 physician specialty and healthcare professional groups. We believe the PPIS is the most comprehensive source of PE survey information available to date. Therefore, we used the PPIS data to update the PE/HR data for almost all of the Medicare-recognized specialties that participated in the survey for the CY 2010 PFS.

When we changed over to the PPIS data beginning in CY 2010, we did not change the PE RVU methodology itself or the manner in which the PE/HR data are used in that methodology. We only updated the PE/HR data based on the new survey. Furthermore, as we explained in the CY 2010 PFS final rule with comment period (74 FR 61751), because of the magnitude of payment reductions for some specialties resulting from the use of the PPIS data, we finalized a 4-year transition (75 percent old/25 percent new for CY 2010, 50 percent old/50 percent new for CY 2011, 25 percent old/75 percent new for CY 2012, and 100 percent new for CY 2013) from the previous PE RVUs to the PE RVUs developed using the new PPIS data.

Section 303 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) added section 1848(c)(2)(H)(i) of the Act, which requires us to use the medical oncology supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.

We do not use the PPIS data for reproductive endocrinology, sleep medicine, and spine surgery since these specialties are not separately recognized by Medicare, nor do we have a method to blend these data with Medicare-recognized specialty data.

Supplemental survey data on independent labs, from the College of American Pathologists, were implemented for payments in CY 2005. Supplemental survey data from the National Coalition of Quality Diagnostic Imaging Services (NCQDIS), representing independent diagnostic testing facilities (IDTFs), were blended with supplementary survey data from the American College of Radiology (ACR) and implemented for payments in CY 2007. Neither IDTFs nor independent labs participated in the PPIS. Therefore, we continue to use the PE/HR that was developed from their supplemental survey data.

Consistent with our past practice, the previous indirect PE/HR values from the supplemental surveys for medical oncology, independent laboratories, and IDTFs were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data.

Previously, we have established PE/HR values for various specialties without SMS or supplemental survey data by crosswalking them to other similar specialties to estimate a proxy PE/HR. For specialties that were part of the PPIS for which we previously used a crosswalked PE/HR, we instead use the PPIS-based PE/HR. We continue previous crosswalks for specialties that did not participate in the PPIS. However, beginning in CY 2010 we changed the PE/HR crosswalk for portable x-ray suppliers from radiology to IDTF, a more appropriate crosswalk because these specialties are more similar to each other with respect to physician time.

For registered dietician services, the resource-based PE RVUs have been calculated in accordance with the final policy that crosswalks the specialty to the “All Physicians” PE/HR data, as adopted in the CY 2010 PFS final rule with comment period (74 FR 61752) and discussed in more detail in the CY 2011 PFS final rule with comment period (75 FR 73183).

There are four specialties whose utilization data will be newly incorporated into ratesetting for CY 2012. We proposed to use proxy PE/HR values for these specialties by crosswalking values from other, similar specialties as follows: Speech Language Pathology from Physical Therapy; Hospice and Palliative Care from All Physicians; Geriatric Psychiatry from Psychiatry; and Intensive Cardiac Rehabilitation from Cardiology. Additionally, since section 1833(a)(1)(K) of the Act (as amended by section 3114 of the Affordable Care Act) requires that payment for services provided by a certified nurse midwife be paid at 100 percent of the PFS amount, this specialty will no longer be excluded from the ratesetting calculation. We proposed to crosswalk the PE\HR data from Obstetrics/gynecology to Certified Nurse Midwife. These proposed changes were reflected in the “PE HR” file available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

Comment: Several commenters supported the proposals to incorporate the data into ratesetting for CY 2012. Most of these commenters also supported the proposed proxy PE/HR value crosswalks. One commenter, however, objected to using the Psychiatry PE/HR crosswalk for Geriatric Psychiatry. The commenter noted that many of the specific geriatric issues such as mobility, hearing impairments, and cognitive impairments that increase the expenses for geriatrician's treating frail adults also apply to the practice expenses for geriatric psychiatrists. Therefore, the commenter argued that CMS should use a blend of information from Geriatric Medicine and Psychiatry as the PE/HR crosswalk.

Response: We appreciate the broad support for the proposal to incorporate utilization data from these specialties into ratesetting for CY 2012. We understand the commenters' concerns in terms of geriatric psychiatry and agree that in many ways the patient population for geriatric psychiatry may resemble the patient population for geriatric medicine. However, the primary drivers of the indirect practice expense per hour for these specialties are the administrative staff category and the office rent category. We disagree with the commenter that the administrative staff and office space requirements for geriatric psychiatrists more closely resemble the administrative staff and office space requirements for geriatrics than for psychiatry. In general, these categories are more likely to be driven by the types of services provided than the patient population served.

After consideration of the public comments we received, we are finalizing our CY 2012 proposals to update the PE/HR data as reflected in the “PE HR” file available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), CY 2012 is the third year of the 4-year transition to the PE RVUs calculated using the PPIS data. Therefore, in general, the CY 2012 PE RVUs are a 25 percent/75 percent blend of the previous PE RVUs based on the SMS and supplemental survey data and the new PE RVUS developed using the PPIS data as described previously.

c. Allocation of PE to Services

To establish PE RVUs for specific services, it is necessary to establish the direct and indirect PE associated with each service.

(1) Direct Costs

The relative relationship between the direct cost portions of the PE RVUs for any two services is determined by the relative relationship between the sum of the direct cost resources (that is, the clinical staff, equipment, and supplies) typically required to provide the services. The costs of these resources are calculated from the refined direct PE inputs in our PE database. For example, if one service has a direct cost sum of $400 from our PE database and another service has a direct cost sum of $200, the direct portion of the PE RVUs of the first service would be twice as much as the direct portion of the PE RVUs for the second service.

(2) Indirect Costs

Section II.A.2.b. of this final rule with comment period describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocate the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the greater of either the clinical labor costs or the physician work RVUs. We also incorporate the survey data described earlier in the PE/HR discussion. The general approach to developing the indirect portion of the PE RVUs is described as follows:

  • For a given service, we use the direct portion of the PE RVUs calculated as previously described and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that perform the service to determine an initial indirect allocator. For example, if the direct portion of the PE RVUs for a given service were 2.00 and direct costs, on average, represented 25 percent of total costs for the specialties that performed the service, the initial indirect allocator would be 6.00 since 2.00 is 25 percent of 8.00 and 6.00 is 75 percent of 8.00.
  • We then add the greater of the work RVUs or clinical labor portion of the direct portion of the PE RVUs to this initial indirect allocator. In our example, if this service had work RVUs of 4.00 and the clinical labor portion of the direct PE RVUs was 1.50, we would add 6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to get an indirect allocator of 10.00. In the absence of any further use of the survey data, the relative relationship between the indirect cost portions of the PE RVUs for any two services would be determined by the relative relationship between these indirect cost allocators. For example, if one service had an indirect cost allocator of 10.00 and another service had an indirect cost allocator of 5.00, the indirect portion of the PE RVUs of the first service would be twice as great as the indirect portion of the PE RVUs for the second service.
  • We next incorporate the specialty-specific indirect PE/HR data into the calculation. As a relatively extreme example for the sake of simplicity, assume in our previous example that, based on the survey data, the average indirect cost of the specialties performing the first service with an allocator of 10.00 was half of the average indirect cost of the specialties performing the second service with an indirect allocator of 5.00. In this case, the indirect portion of the PE RVUs of the first service would be equal to that of the second service.

d. Facility and Nonfacility Costs

For procedures that can be furnished in a physician's office, as well as in a hospital or facility setting, we establish two PE RVUs: facility and nonfacility. The methodology for calculating PE RVUs is the same for both the facility and nonfacility RVUs, but is applied independently to yield two separate PE RVUs. Because Medicare makes a separate payment to the facility for its costs of furnishing a service, the facility PE RVUs are generally lower than the nonfacility PE RVUs.

e. Services With Technical Components (TCs) and Professional Components (PCs)

Diagnostic services are generally comprised of two components: a professional component (PC) and a technical component (TC), each of which may be performed independently or by different providers, or they may be performed together as a “global” service. When services have PC and TC components that can be billed separately, the payment for the global component equals the sum of the payment for the TC and PC. This is a result of using a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global components, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global components, PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the global under the bottom-up methodology.)

f. PE RVU Methodology

For a more detailed description of the PE RVU methodology, we refer readers to the CY 2010 PFS final rule with comment period (74 FR 61745 through 61746).

(1) Setup File

First, we create a setup file for the PE methodology. The setup file contains the direct cost inputs, the utilization for each procedure code at the specialty and facility/nonfacility place of service level, and the specialty-specific PE/HR data from the surveys.

(2) Calculate the Direct Cost PE RVUs

Sum the costs of each direct input.

Step 1: Sum the direct costs of the inputs for each service.

Apply a scaling adjustment to the direct inputs.

Step 2: Calculate the current aggregate pool of direct PE costs. This is the product of the current aggregate PE (aggregate direct and indirect) RVUs, the CF, and the average direct PE percentage from the survey data.

Step 3: Calculate the aggregate pool of direct costs. This is the sum of the product of the direct costs for each service from Step 1 and the utilization data for that service.

Step 4: Using the results of Step 2 and Step 3 calculate a direct PE scaling adjustment so that the aggregate direct cost pool does not exceed the current aggregate direct cost pool and apply it to the direct costs from Step 1 for each service.

Step 5: Convert the results of Step 4 to an RVU scale for each service. To do this, divide the results of Step 4 by the CF. Note that the actual value of the CF used in this calculation does not influence the final direct cost PE RVUs, as long as the same CF is used in Step 2 and Step 5. Different CFs will result in different direct PE scaling factors, but this has no effect on the final direct cost PE RVUs since changes in the CFs and changes in the associated direct scaling factors offset one another.

(3) Create the Indirect Cost PE RVUs

Create indirect allocators.

Step 6: Based on the survey data, calculate direct and indirect PE percentages for each physician specialty.

Step 7: Calculate direct and indirect PE percentages at the service level by taking a weighted average of the results of Step 6 for the specialties that furnish the service. Note that for services with TCs and PCs, the direct and indirect percentages for a given service do not vary by the PC, TC, and global components.

Step 8: Calculate the service level allocators for the indirect PEs based on the percentages calculated in Step 7. The indirect PEs are allocated based on the three components: the direct PE RVUs, the clinical PE RVUs, and the work RVUs. For most services the indirect allocator is: Indirect percentage * (direct PE RVUs/direct percentage) + work RVUs.

There are two situations where this formula is modified:

  • If the service is a global service (that is, a service with global, professional, and technical components), then the indirect allocator is: indirect percentage (direct PE RVUs/direct percentage) + clinical PE RVUs + work RVUs.
  • If the clinical labor PE RVUs exceed the work RVUs (and the service is not a global service), then the indirect allocator is: Indirect percentage (direct PE RVUs/direct percentage) + clinical PE RVUs.

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

For presentation purposes in the examples in Table 2, the formulas were divided into two parts for each service.

  • The first part does not vary by service and is the indirect percentage (direct PE RVUs/direct percentage).
  • The second part is either the work RVUs, clinical PE RVUs, or both depending on whether the service is a global service and whether the clinical PE RVUs exceed the work RVUs (as described earlier in this step).

Apply a scaling adjustment to the indirect allocators.

Step 9: Calculate the current aggregate pool of indirect PE RVUs by multiplying the current aggregate pool of PE RVUs by the average indirect PE percentage from the survey data.

Step 10: Calculate an aggregate pool of indirect PE RVUs for all PFS services by adding the product of the indirect PE allocators for a service from Step 8 and the utilization data for that service.

Step 11: Using the results of Step 9 and Step 10, calculate an indirect PE adjustment so that the aggregate indirect allocation does not exceed the available aggregate indirect PE RVUs and apply it to indirect allocators calculated in Step 8.

Calculate the indirect practice cost index.

Step 12: Using the results of Step 11, calculate aggregate pools of specialty-specific adjusted indirect PE allocators for all PFS services for a specialty by adding the product of the adjusted indirect PE allocator for each service and the utilization data for that service.

Step 13: Using the specialty-specific indirect PE/HR data, calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty.

Step 14: Using the results of Step 12 and Step 13, calculate the specialty-specific indirect PE scaling factors.

Step 15: Using the results of Step 14, calculate an indirect practice cost index at the specialty level by dividing each specialty-specific indirect scaling factor by the average indirect scaling factor for the entire PFS.

Step 16: Calculate the indirect practice cost index at the service level to ensure the capture of all indirect costs. Calculate a weighted average of the practice cost index values for the specialties that furnish the service.

(Note: For services with TCs and PCs, we calculate the indirect practice cost index across the global components, PCs, and TCs. Under this method, the indirect practice cost index for a given service (for example, echocardiogram) does not vary by the PC, TC, and global component.)

Step 17: Apply the service level indirect practice cost index calculated in Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get the indirect PE RVUs.

(4) Calculate the Final PE RVUs

Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17 and apply the final PE budget neutrality (BN) adjustment.

The final PE BN adjustment is calculated by comparing the results of Step 18 to the current pool of PE RVUs. This final BN adjustment is required primarily because certain specialties are excluded from the PE RVU calculation for ratesetting purposes, but all specialties are included for purposes of calculating the final BN adjustment. (See “Specialties excluded from ratesetting calculation” later in this section.)

(5) Setup File Information

  • Specialties excluded from ratesetting calculation: For the purposes of calculating the PE RVUs, we exclude certain specialties, such as certain nonphysician practitioners paid at a percentage of the PFS and low-volume specialties, from the calculation. These specialties are included for the purposes of calculating the BN adjustment. They are displayed in Table 1. We note that since specialty code 97 (physician assistant) is paid at a percentage of the PFS and therefore excluded from the ratesetting calculation, this specialty has been added to the table for CY 2012.

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  • Crosswalk certain low volume physician specialties: Crosswalk the utilization of certain specialties with relatively low PFS utilization to the associated specialties.
  • Physical therapy utilization: Crosswalk the utilization associated with all physical therapy services to the specialty of physical therapy.
  • Identify professional and technical services not identified under the usual TC and 26 modifiers: Flag the services that are PC and TC services, but do not use TC and 26 modifiers (for example, electrocardiograms). This flag associates the PC and TC with the associated global code for use in creating the indirect PE RVUs. For example, the professional service, CPT code 93010 (Electrocardiogram, routine ECG with at least 12 leads; interpretation and report only), is associated with the global service, CPT code 93000 (Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report).
  • Payment modifiers: Payment modifiers are accounted for in the creation of the file. For example, services billed with the assistant at surgery modifier are paid 16 percent of the PFS amount for that service; therefore, the utilization file is modified to only account for 16 percent of any service that contains the assistant at surgery modifier.
  • Work RVUs: The setup file contains the work RVUs from this final rule with comment period.

(6) Equipment Cost Per Minute

The equipment cost per minute is calculated as:

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

Where:

minutes per year = maximum minutes per year if usage were continuous (that is, usage = 1); generally 150,000 minutes.

usage = equipment utilization assumption; 0.75 for certain expensive diagnostic imaging equipment (see 74 FR 61753 through 61755 and section II.A.3. of the CY 2011 PFS final rule with comment period) and 0.5 for others.

price = price of the particular piece of equipment.

interest rate = 0.11.

life of equipment = useful life of the particular piece of equipment.

maintenance = factor for maintenance; 0.05.

This interest rate was proposed and finalized during rulemaking for CY 1998 PFS (62 FR 33164). We solicit comment regarding reliable data on current prevailing loan rates for small businesses.

Comment: Several commenters, including the AMA RUC stated that CMS should establish a periodic review of the interest rate assumption for equipment costs using current interest rate data from the Small Business Association and the Federal Reserve and allow for public comment on periodic updates. The RUC also noted that current market volatility exacerbates the need to establish such a process. One commenter noted that exaggerated assumptions about equipment interest rates inflates services with high equipment cost inputs relative to services without high equipment cost inputs, such as most primary care services. Therefore, CMS should update the equipment interest rate assumption.

In addition to examining the interest rate assumption, the RUC requested that CMS review the assumptions regarding useful life of equipment and yearly maintenance costs associated with maintaining high cost equipment and allow for comment on the methodologies used in developing these assumptions.

Response: We appreciate the public comments we received in response to our request regarding reliable data on current prevailing loan rates for small businesses. We will examine the suggestions of the AMA RUC and the other commenters in order to inform any future rulemaking on this issue.

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3. Changes to Direct PE Inputs

In this section, we discuss other specific CY 2012 proposals and changes related to direct PE inputs. The changes we proposed and are finalizing are included in the proposed CY 2012 direct PE database, which is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

a. Inverted Equipment Minutes

It came to our attention that the minutes allocated for two particular equipment items have been inverted. This inversion affected three codes: 37232 (Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, each additional vessel; with transluminal angioplasty (List separately in addition to code for primary procedure)), 37233 (Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, each additional vessel; with atherectomy, includes angioplasty within the same vessel, when performed (List separately in addition to code for primary procedure)), and 37234 (Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, each additional vessel; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed (List separately in addition to code for primary procedure)). In each case, the number of minutes allocated to the “printer, dye sublimation (photo, color)” (ED031) should have been appropriately allocated to the “stretcher” (EF018). The number of minutes allocated to the stretcher should have been appropriately allocated to the printer. Therefore, we proposed input corrections to the times associated with the two equipment items in the three codes.

Comment: Several commenters agreed with these corrections as proposed.

Response: We appreciate the support for these proposed revisions, as well as the information provided that allowed us to make them.

After consideration of the public comments we received, we are finalizing our CY 2012 proposal to modify the direct PE database by correcting the input errors associated with the two equipment items in the three codes. The CY 2012 direct PE database reflects these changes and is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

b. Labor and Supply Input Duplication

We recently identified a number of CPT codes with inadvertently duplicated labor and supply inputs in the PE database. We proposed to remove the duplicate labor and supply inputs in the CY 2012 database as detailed in Table 3.

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Comment: Many commenters agreed with the proposal to remove the duplicate labor and supply inputs from the direct PE database. One commenter agreed with the proposal but also stated that the inputs for CPT code 76813 may not reflect the use of current technology.

Response: We appreciate the broad support for the proposal. We refer stakeholders who do not believe that the direct PE database reflects current use technology for particular codes to the public process for nominating potentially misvalued codes in section II.B. of this final rule with comment period.

After consideration of the public comments we received, we are finalizing our CY 2012 proposal to remove the duplicate labor and supply inputs in the CY 2012 database as detailed in Table 3. The CY 2012 direct PE database reflects these changes and is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

c. AMA RUC Recommendations for Moderate Sedation Direct PE Inputs

For services described by certain codes, the direct PE database includes nonfacility inputs that reflect the assumption that moderate sedation is inherent in the procedure. These codes are listed in Table 4. The AMA RUC has recently provided CMS with a recommendation that standardizes the nonfacility direct PE inputs that account for moderate sedation as typically furnished as part of these services. Specifically, the RUC recommended that the direct PE inputs allocated for moderate sedation include the following:

  • Clinical Labor Inputs: Registered Nurse (L051A) time that includes two minutes of time to initiate sedation, the number of minutes associated with the physician intra-service work time, and 15 minutes for every hour of patient recovery time for post-service patient monitoring. Supply Inputs: “Pack, conscious sedation” (SA044) that includes: an angiocatheter 14g-24g, bandage, strip 0.75in × 3in, catheter, suction, dressing, 4in × 4.75in (Tegaderm), electrode, ECG (single), electrode, ground, gas, oxygen, gauze, sterile 4in × 4in, gloves, sterile, gown, surgical, sterile, iv infusion set, kit, iv starter, oxygen mask (1) and tubing (7ft), pulse oximeter sensor probe wrap, stop cock, 3-way, swab-pad, alcohol, syringe 1ml, syringe-needle 3ml 22-26g, tape, surgical paper 1in (Micropore), tourniquet, and non-latex 1in × 18in.
  • Equipment Inputs: “Table, instrument, mobile” (EF027), “ECG, 3-channel (with SpO2, NIBP, temp, resp)” (EQ011), “IV infusion pump” (EQ032), “pulse oxymetry recording software (prolonged monitoring)” (EQ212), and “blood pressure monitor, ambulatory, w-battery charger” (EQ269).

We have reviewed this recommendation and generally agree with these inputs. However, we note that the equipment item “ECG, 3-channel (with SpO2, NIBP, temp, resp)” (EQ011) incorporates the functionality of the equipment items “pulse oxymetry recording software (prolonged monitoring)” (EQ212), and “blood pressure monitor, ambulatory, w-battery charger” (EQ269). Therefore, we did not include these two items as standard nonfacility inputs for moderate sedation in our proposal to accept the AMA RUC recommendation with the refinement as stated.

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Comment: Several commenters, including the AMA RUC, agreed with CMS' proposal to accept the recommendations for moderate sedation direct PE inputs with the stated refinements. One commenter suggested that a particular code on the list should be removed since moderate sedation is not typically performed when that service is furnished.

Response: We appreciate the support for our proposal to accept the recommendation as well as those in favor of our refinements. We acknowledge and appreciate the perspectives of the commenter who suggested that a particular code should not include moderate sedation. However, we note that we generally include nonfacility direct PE inputs for moderate sedation for all services valued in the nonfacility setting and reported using CPT codes that are identified by the CPT Editorial Panel as having moderate sedation as inherent to the procedure.

After consideration of the public comments we received, we are finalizing our CY 2012 proposal to accept the AMA RUC recommendation with the refinement as stated. The CY 2012 direct PE database reflects these changes and is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

d. Updates to Price and Useful Life for Existing Direct Inputs

In the CY 2011 PFS final rule with comment period (75 FR 73205), we finalized a process to act on public requests to update equipment and supply price and equipment useful life inputs through annual rulemaking beginning with the CY 2012 PFS final rule with comment period.

During 2010, we received a request to update the price of “tray, bone marrow biopsy-aspiration” (SA062) from $24.27 to $34.47. The request included multiple invoices that documented updated prices for the supply item. We also received a request to update the useful life of “holter monitor” (EQ127) from 7 years to 5 years, based on its entry in the AHA's publication, ”Estimated Useful Lives of Depreciable Hospital Assets,” which we use as a standard reference. In each of these cases, we proposed to accept the updated inputs, as requested. The CY 2012 direct PE database reflects these proposed changes and is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

Comment: Several commenters expressed support for the proposal to update the supply items as proposed. MedPAC expressed continued misgivings that this process for updating prices is flawed because it relies on voluntary requests from stakeholders who have a financial stake in the process. Therefore, MedPAC believes that stakeholders are unlikely to provide CMS with evidence that prices for supplies and equipment have declined because it would lead to lower RVUs for particular services. MedPAC also called for CMS to establish an objective process to regularly update the prices of medical supplies and equipment to reflect market prices, especially for expense items.

Response: We appreciate the general support for the proposal. We also appreciate MedPAC's comments and understand the commission's concerns. As we have previously stated, we continue to believe it is important to establish a periodic and transparent process to update the cost of high-cost items to reflect typical market prices in our ratesetting methodology, and we continue to study the best way to establish such a process. We remind stakeholders that we have previously stated our difficulty in obtaining accurate pricing information, and this transparent process offers the opportunity for the community to object to increases in price inputs for particular items by providing accurate information about lower prices available to the practitioner community. We remind stakeholders that PFS payment rates are developed within a budget neutral system, and any increases in price inputs for particular supply items result in corresponding decreases to the relative value of all other direct practice expense inputs. Had any interested stakeholder presented information that indicated that increasing the price input for the bone marrow biopsy-aspiration was inappropriate, we would have considered evidence of lower available prices prior to amending the price input in the CY 2012 direct PE database.

After consideration of the public comments we received, we are finalizing our CY 2012 proposal to accept the updated inputs, as requested. The CY 2012 direct PE database reflects these changes and is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

4. Development of Code-Specific PE RVUs

When creating G codes, we often develop work, PE, and malpractice RVUs by crosswalking the RVUs from similar (reference) codes. In most of these cases, the PE RVUs are directly crosswalked pending the availability of utilization data. Once that data is available, we crosswalk the direct PE inputs and develop PE RVUs using the regular practice expense methodology, including allocators that are derived from utilization data. For CY 2012, we are using this process to develop PE RVUs for the following services: G0245 (Initial physician evaluation and management of a diabetic patient with diabetic sensory neuropathy resulting in a loss of protective sensation (LOPS) which must include: (1) The diagnosis of LOPS, (2) a patient history, (3) a physical examination that consists of at least the following elements: (a) Visual inspection of the forefoot, hindfoot and toe web spaces, (b) evaluation of a protective sensation, (c) evaluation of foot structure and biomechanics, (d) evaluation of vascular status and skin integrity, and (e) evaluation and recommendation of footwear and (4) patient education); G0246 (Follow-up physician evaluation and management of a diabetic patient with diabetic sensory neuropathy resulting in a loss of protective sensation (LOPS) to include at least the following: (1) A patient history, (2) a physical examination that includes: (a) Visual inspection of the forefoot, hindfoot and toe web spaces, (b) evaluation of protective sensation, (c) evaluation of foot structure and biomechanics, (d) evaluation of vascular status and skin integrity, and (e) evaluation and recommendation of footwear, and (3) patient education); G0247 (Routine foot care by a physician of a diabetic patient with diabetic sensory neuropathy resulting in a loss of protective sensation (LOPS) to include, the local care of superficial wounds (for example, superficial to muscle and fascia) and at least the following if present: (1) Local care of superficial wounds, (2) debridement of corns and calluses, and (3) trimming and debridement of nails); G0341 (Percutaneous islet cell transplant, includes portal vein catheterization and infusion); G0342 (Laparoscopy for islet cell transplant, includes portal vein catheterization and infusion); G0343 (Laparotomy for islet cell transplant, includes portal vein catheterization and infusion); and G0365 (Vessel mapping of vessels for hemodialysis access (services for preoperative vessel mapping prior to creation of hemodialysis access using an autogenous hemodialysis conduit, including arterial inflow and venous outflow)). The values in Addendum B reflect the updated PE RVUs.

In addition, there is a series of G-codes describing surgical pathology services with PE RVUs historically valued outside of the regular PE methodology. These codes are: G0416 (Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 1-20 specimens); G0417 (Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 21-40 specimens); G0418 (Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 41-60 specimens); and G0419 (Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, greater than 60 specimens.) The PE RVUs for these codes were established as described in the CY 2009 PFS final rule with comment period (73 FR 69751). In reviewing these values for CY 2012, we noted that because the PE RVUs established through rulemaking in CY 2009 were neither developed using the regular PE methodology nor directly crosswalked from other codes, the PE RVUs for these codes were not adjusted to account for the CY 2011 MEI rebasing and revising, which is discussed in the CY 2011 PFS final rule with comment period (75 FR 73262). While it was technically appropriate to insulate the PE RVUs from that adjustment in CY 2011, upon further review, we believe adjusting these PE RVUs would result in more accurate payment rates relative to the RVUs for other PFS services. Therefore, we proposed to adjust the PE RVUs for these codes by 1.182, the adjustment rate that accounted for the MEI rebasing and revising for CY 2011. The PE RVUs in Addendum B to the CY 2011 PFS proposed rule reflected the proposed updates.

Comment: In general, commenters were supportive of the proposal to develop PE RVUs for these services through the PE methodology. Several commenters, however, urged CMS to reconsider using the standard PE methodology to develop PE RVUs for this service since the resulting payment rate for G0365 would be significantly lower than the current rate.

Response: We appreciate the general support for proposal. We are also grateful to those commenters who alerted us to the significant change in PE RVUs for G0365. In developing the proposal, we did not expect the newly developed PE RVUs for G0365 to change significantly from those previously established outside the methodology. In re-examining the disparities between the CY 2011 PE RVUs and those that appeared in the proposed rule, we discovered that an inadvertent data entry error in the proposed direct PE database had led to the development and display of erroneous PE RVUs. Because the commenters' objections to the proposal in methodology resulted directly from concerns about the resulting PE RVUs, we believe that those concerns are addressed by the correction of direct PE database error and the development of PE RVUs for G0365 that are more similar to the current PE RVUs.

After consideration of the public comments we received, we are finalizing our CY 2012 proposal to develop PE RVUs through the methodologies explained in the proposal. The final CY 2012 RVUs for these codes are displayed in Addendum B to this final rule with comment period.

5. Physician Time for Select Services

As we describe in section II.A.2.f. of this final rule with comment period, in creating the indirect practice cost index, we calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty.

During a review of the physician time data for the CY 2012 PFS rulemaking, we noted an anomaly regarding the physician time allotted to a series of group service codes that are listed in Table 5. We believe that the time associated with these codes reflects the typical amount of time spent by the practitioner in furnishing the group service. However, because the services are billed per patient receiving the service, the time for these codes should be divided by the typical number of patients per session. In reviewing the data used in the valuation of work RVUs for these services, we noted that in one vignette for these services, the typical group session consisted of 6 patients. Therefore we proposed adjusted times for these services based on 6 patients. However, we sought comment on the typical number of patients seen per session for each of these services.

Comment: Several commenters alerted CMS to inaccurate post-service times and rounding discrepancies in the physician time file that did not correspond with the intent of the proposal. Specifically, commenters urged CMS to recalculate the times for group education/therapy to ensure they reflect the intent of the proposal.

Response: We appreciate being informed of these inaccuracies and discrepancies. As the commenters noted, the physician time file as displayed in the supporting web files for the CY 2012 PFS proposed rule included inappropriate post-service times and rounding discrepancies for some of the codes addressed in the proposal. We have addressed these issues in the physician time file used in developing the PE RVUs for CY 2012.

Comment: Several commenters, including the AMA RUC, submitted useful information regarding the typical group size for particular services. In many cases, however, commenters expressed concerns about this proposal that stretched beyond the scope of the proposed rule, including concerns about detrimental effect on work RVUs for the services, inappropriate clinical comparisons of unrelated services by CMS, or Medicare or other payment policy changes regarding appropriate group sizes for billing or coverage purposes.

Response: We did not propose any changes to the work RVUs or other policies related to these services. Our proposal related to the physician time data as used in the practice expense methodology as we describe in section II.A.2.f. of this final rule with comment period. In creating the indirect practice cost index, we calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty. The proposal addresses the times associated for these codes only insofar as they contribute to the aggregate pools of indirect PE at the specialty level. In formulating the proposal, we addressed these services together because we believe that these group services share particular coding, not clinical, characteristics that complicate the use of time data in the practice expense methodology. If appropriate, we would address any changes to the work RVUs or other polices in future rulemaking.

We appreciate all of the comments regarding this proposal. In the following paragraphs, we address how we will use this submitted information in order to set final time values for these codes—

  • 90849 (Multiple-family group psychotherapy);
  • 90853 (Group psychotherapy (other than of a multiple-family group); and
  • 90857 (Interactive group psychotherapy).

Comment: The AMA RUC recommended that CMS postpone any changes to the physician times for these codes since these services are currently under revision by the CPT Editorial Panel and the AMA RUC intends to provide CMS with new recommendations in the near future.

Response: We appreciate that CPT and the AMA RUC are both examining these services, and we will consider any codes or recommendations regarding these services. Until then, we continue to believe that because these services are billed per patient, the physician time for the corresponding codes should be divided by the typical number of patients per session in order to arrive at more appropriate PE RVUs across the PFS. We note that the vignette for 90853 includes a typical group session of 6 patients. Therefore, pending new recommendations from the AMA RUC, we believe it would be appropriate to establish physician time for this code as 2 pre-service minutes, 14 intra-service minutes, and 8 post-service minutes with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

We believe that the typical group session may be similar for 90857 based on similar code descriptors, work RVUs, and clinical vignettes. Therefore, pending new recommendations from the AMA RUC, we believe it would be appropriate to establish physician time for this code as 3 pre-service minutes, 9 intra-service minutes, and 10 post-service minutes with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

For 90849, we believe that it would be most appropriate to wait for the new recommendations prior to adjusting the physician time because the typical group size and typical patient size is different, and we received no information regarding the typical group size.

  • 92508 (Treatment of speech, language, voice, communication, and/or auditory processing disorder; group, 2 or more individuals)

Comment: Several commenters pointed out that the CPT 92508 was recently reviewed by the HCPAC and that the recommended physician times already are considered the appropriate proration by the number of patients in the group.

Response: We agree with the commenter's assessment and therefore, believe it would be appropriate to discard our proposed physician time changes for CPT 92508 and maintain the current time of 2 minutes pre-time, 17 minutes intra-time and 3 minutes post-time for CY 2012.

  • 96153 (Health and behavior intervention, each 15 minutes, face-to-face; group (2 or more patients))

Comment: The AMA RUC reported that because the February 2001 HCPAC recommendation indicated that the typical number of people receiving this service per group was 6 individuals, CMS' proposal to divide the physician time by six is appropriate.

Response: We appreciate the information submitted by the AMA RUC and thank them for pointing out initially the inaccuracy in the post service minutes. Considering this information, we believe it is appropriate to amend the physician time for CPT code 96153 to 1 pre-service minute, 3 intra-service minutes, and 1 post-service minute with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

  • 97150 (Therapeutic procedure(s), group (2 or more individuals))

Comment: In its comment, the AMA RUC noted that this code is scheduled to be reviewed by the RUC early in 2012. Therefore, the AMA RUC recommends that CMS postpone any changes until receiving the new recommendation. Another commenter informed CMS that the typical group size is two for this procedure.

Response: We appreciate the AMA RUC's comments and we will consider any codes or recommendations regarding these services. Until then, we continue to believe that, because these services are billed per patient, the physician time for the corresponding codes should be divided by the typical number of patients per session in order to arrive at more appropriate PE RVUs across the PFS. We also appreciate the other commenter's information that two patients are the typical group size for this service. Therefore, pending the new recommendation from the AMA RUC, we believe it would be appropriate to establish physician time for this code as 1 pre-service minute, 12 intra-service minutes, and 2 post-service minutes with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

  • 97804 (Medical nutrition therapy; group (2 or more individual(s)), each 30 minutes)

Comment: The AMA RUC suggested that CMS should rely on information provided by the American Dietetic Association for a specific typical number of individuals in a group for CPT code 97804. The American Dietetic Association commented that groups of four to six patients were typical when this service is furnished.

Response: We appreciate the information provided by the commenters. Considering this information, we believe it is appropriate to amend the physician time for CPT code 97804 to 2 pre-service minutes, 6 intra-service minutes, and 2 post-service minutes with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

  • G0109 (Diabetes outpatient self-management training services, group session (2 or more), per 30 minutes)

Comment: A commenter submitted information supporting a typical group size of 6 patients for this service and urged CMS to use that number in determining the appropriate physician time associated with the code.

Response: We appreciate the commenter's response. Considering this information, we believe it is appropriate to amend the physician time for CPT code 97804 to 2 pre-service minutes, 5 intra-service minutes, and 2 post-service minutes with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

  • G0271 (Medical nutrition therapy, reassessment and subsequent intervention(s) following second referral in same year for change in diagnosis, medical condition, or treatment regimen (including additional hours needed for renal disease), group (2 or more individuals), each 30 minutes), and G0421 (Face-to-face educational services related to the care of chronic kidney disease; group, per session, per one hour)

We received no comments regarding the typical group time for these services. However, given the similarities of these services to CPT code 97804 (Medical nutrition therapy; group (2 or more individual(s)), each 30 minutes), we believe it would be appropriate to use the times for that code as a reasonable crosswalk and establish physician time for these codes as 2 pre-service minutes, 6 intra-service minutes, and 2 post-service minutes with the understanding that the total resulting minutes is the product of these and the number of patients in the group.

After consideration of the public comments and related information, we are finalizing our proposed updates to the physician time file, as amended for certain codes as explicitly addressed in this section. The final time values for these codes can be found in the final CY 2012 Physician Time file, which is available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

As a result of our review, we also proposed to update our physician time file to reflect the physician time associated with certain G-codes that had previously been missing from the file.

We received no comments regarding our proposal to update the physician time file to reflect the physician time associated with the G-codes that were previously missing from the file. Therefore, we are finalizing our updates to the physician time file. The final time values can be found in the final CY 2012 Physician Time file, which is available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

B. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the PFS

As discussed in section I. of this final rule with comment period, in order to value services under the PFS, section 1848(c) of the Act requires the Secretary to determine relative values for physicians' services based on three components: work, practice expense (PE), and malpractice. Section 1848(c)(1)(A) of the Act defines the work component to include “the portion of the resources used in furnishing the service that reflects physician time and intensity in furnishing the service.” Additionally, the statute provides that the work component shall include activities that occur before and after direct patient contact. Furthermore, the statute specifies that with respect to surgical procedures, the valuation of the work component for the code must reflect a “global” concept in which pre-operative and post-operative physicians' services related to the procedure are also included.

In addition, section 1848(c)(2)(C)(i) of the Act specifies that “the Secretary shall determine a number of work relative value units (RVUs) for the service based on the relative resources incorporating physician time and intensity required in furnishing the service.” As discussed in detail in sections I.A.2. and I.A.3. of this final rule with comment period, the statute also defines the PE and malpractice components and provides specific guidance in the calculation of the RVUs for each of these components. Section 1848(c)(1)(B) of the Act defines the PE component as “the portion of the resources used in furnishing the service that reflects the general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising practice expenses.”

Section 1848(c)(2)(C)(ii) of the Act specifies that the “Secretary shall determine a number of practice expense relative value units for the services for years beginning with 1999 based on the relative practice expense resources involved in furnishing the service.” Furthermore, section 1848(c)(2)(B) of the Act directs the Secretary to conduct a periodic review, not less often than every 5 years, of the RVUs established under the PFS. On March 23, 2010, the Affordable Care Act was enacted, further requiring the Secretary to periodically identify and review potentially misvalued codes, and make appropriate adjustments to the relative values of those services identified as being potentially misvalued. Section 3134(a) of the Affordable Care Act added a new section 1848(c)(2)(K) to the Act which requires the Secretary to periodically identify potentially misvalued services using certain criteria, and to review and make appropriate adjustments to the relative values for those services. Section 3134(a) of the Affordable Care Act also added a new section 1848(c)(2)(L) to the Act which requires the Secretary to develop a process to validate the RVUs of certain potentially misvalued codes under the PFS, identified using the same criteria used to identify potentially misvalued codes, and to make appropriate adjustments.

As discussed in section I.A.1. of this final rule with comment period, we generally establish physician work RVUs for new and revised codes based on our review of recommendations received from the American Medical Association Specialty Society Relative Value Scale Update Committee (AMA RUC). We also receive recommendations from the AMA RUC regarding direct PE inputs for services, which we evaluate in order to develop the PE RVUs under the PFS. The AMA RUC also provides recommendations to us on the values for codes that have been identified as potentially misvalued. To respond to concerns expressed by MedPAC, the Congress, and other stakeholders regarding accurate valuation of services under the PFS, the AMA RUC created the Five-Year Review Identification Workgroup in 2006. In addition to providing recommendations to us for work RVUs and physician times, the AMA RUC's Practice Expense Subcommittee reviews direct PE inputs (clinical labor, medical supplies, and medical equipment) for individual services.

In accordance with section 1848(c) of the Act, we determine appropriate adjustments to the RVUs, taking into account the recommendations provided by the AMA RUC and MedPAC, explain the basis of these adjustments, and respond to public comments in the PFS proposed and final rules. We note that section 1848(c)(2)(A)(ii) of the Act authorizes the use of extrapolation and other techniques to determine the RVUs for physicians' services for which specific data are not available, in addition to taking into account the results of consultations with organizations representing physicians.

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services Under the PFS

a. Background

In its March 2006 Report to the Congress, MedPAC noted that “misvalued services can distort the price signals for physicians' services as well as for other health care services that physicians order, such as hospital services.” In that same report MedPAC postulated that physicians' services under the PFS can become misvalued over time for a number of reasons: For example, MedPAC stated, “when a new service is added to the physician fee schedule, it may be assigned a relatively high value because of the time, technical skill, and psychological stress that are often required to furnish that service. Over time, the work required for certain services would be expected to decline as physicians become more familiar with the service and more efficient in furnishing it.” That is, the amount of physician work needed to furnish an existing service may decrease when new technologies are incorporated. Services can also become overvalued when practice expenses decline. This can happen when the costs of equipment and supplies fall, or when equipment is used more frequently, reducing its cost per use. Likewise, services can become undervalued when physician work increases or practice expenses rise. In the ensuing years since MedPAC's 2006 report, additional groups of potentially misvalued services have been identified by the Congress, CMS, MedPAC, the AMA RUC, and other stakeholders.

In recent years CMS and the AMA RUC have taken increasingly significant steps to address potentially misvalued codes. As MedPAC noted in its March 2009 Report to the Congress, in the intervening years since MedPAC made the initial recommendations, “CMS and the AMA RUC have taken several steps to improve the review process.” Most recently, section 1848(c)(2)(K)(ii) of the Act (as added by section 3134(a) of the Affordable Care Act) directed the Secretary to specifically examine, as determined appropriate, potentially misvalued services in seven categories as follows:

  • Codes and families of codes for which there has been the fastest growth.
  • Codes and families of codes that have experienced substantial changes in practice expenses.
  • Codes that are recently established for new technologies or services.
  • Multiple codes that are frequently billed in conjunction with furnishing a single service.
  • Codes with low relative values, particularly those that are often billed multiple times for a single treatment.
  • Codes which have not been subject to review since the implementation of the RBRVS (the so-called `Harvard-valued codes').
  • Other codes determined to be appropriate by the Secretary.

Section 1848(c)(2)(K)(iii) of the Act also specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In addition, the Secretary may conduct surveys, other data collection activities, studies, or other analyses, as the Secretary determines to be appropriate, to facilitate the review and appropriate adjustment of potentially misvalued services. This section also authorizes the use of analytic contractors to identify and analyze potentially misvalued codes, conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of potentially misvalued services. Additionally, this section provides that the Secretary may coordinate the review and adjustment of the RVUs with the periodic review described in section 1848(c)(2)(B) of the Act. Finally, section 1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the physician fee schedule.

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

Over the last several years, CMS, in conjunction with the AMA RUC, has identified and reviewed numerous potentially misvalued codes in all seven of the categories specified in section 1848(c)(2)(K)(ii) of the Act, and we plan to continue our work examining potentially misvalued codes in these areas over the upcoming years, consistent with the new legislative requirements on this issue. In the current process, we request the AMA RUC to review potentially misvalued codes that we identify and to make recommendations on revised work RVUs and/or direct PE inputs for those codes to us. The AMA RUC, through its own processes, also might identify and review potentially misvalued procedures. We then assess the recommended revised work RVUs and/or direct PE inputs and, in accordance with section 1848(c) of the Act, we determine if the recommendations constitute appropriate adjustments to the RVUs under the PFS.

Since CY 2009, as a part of the annual potentially misvalued code review, we have reviewed over 700 potentially misvalued codes to refine work RVUs and direct PE inputs in addition to continuing the comprehensive Five-Year Review process. We have adopted appropriate work RVUs and direct PE inputs for these services as a result of these reviews.

Our prior reviews of codes under the potentially misvalued codes initiative have included codes in all seven categories specified in section 1848(c)(2)(K)(ii) of the Act. That is, we have reviewed and assigned more appropriate values to certain—

  • Codes and families of codes for which there has been the fastest growth;
  • Codes and families of codes that have experienced substantial changes in practice expenses;
  • Codes that were recently established for new technologies or services;
  • Multiple codes that are frequently billed in conjunction with furnishing a single service;
  • Codes with low relative values, particularly those that are often billed multiple times for a single treatment;
  • Codes which had not been subject to review since the implementation of the RBRVS (`Harvard valued'); and
  • Codes potentially misvalued as determined by the Secretary.

In this last category, we have previously proposed policies in CYs 2009, 2010, and 2011, and requested that the AMA RUC review codes for which there have been shifts in the site-of-service (that is, codes that were originally valued as being furnished in the inpatient setting, but that are now predominantly furnished on an outpatient basis), as well as codes that qualify as “23-hour stay” outpatient services (these services typically have lengthy hospital outpatient recovery periods). We note that a more detailed discussion of the extensive prior reviews of potentially misvalued codes is included in the CY 2011 PFS final rule with comment period (75 FR 73215 through 73216).

In CY 2011, we identified additional codes under section 1848(c)(2)(K)(ii) of the Act that we believe are ripe for review and referred them to the AMA RUC (75 FR 73215 through 73216). Specifically, we identified potentially misvalued codes in the category of “Other codes determined to be appropriate by the Secretary,” referring lists of codes that have low work RVUs but that are high volume based on claims data, as well as targeted key codes that the AMA RUC uses as reference services for valuing other services (termed “multispecialty points of comparison” services).

Since the publication of the CY 2011 PFS final rule with comment period, we released the Fourth Five-Year Review of Work (76 FR 32410), which discussed the identification and review of an additional 173 potentially misvalued codes. We initiated the Fourth Five-Year Review of work RVUs by soliciting public comments on potentially misvalued codes for all services included in the CY 2010 PFS final rule with comment period that was published in the Federal Register on November 25, 2009. In addition to the codes submitted by the commenters, we identified a number of potentially misvalued codes and requested the AMA RUC review and provide recommendations. Our identification of potentially misvalued codes for the Fourth Five-Year Review focused on two Affordable Care Act categories: site-of-service anomaly codes and Harvard valued codes. As discussed in the Fourth Five-Year Review of Work (76 FR 32410), we sent the AMA RUC an initial list of 219 codes for review. Consistent with our past practice, we requested the AMA RUC to review codes on a “family” basis rather than in isolation in order to ensure that appropriate relativity in the system was retained. Consequently, the AMA RUC included additional codes for review, resulting in a total of 290 codes for the Fourth Five-Year Review of Work. Of those 290 codes, 53 were subsequently sent by the AMA RUC to the CPT Editorial Panel to consider coding changes, 14 were not reviewed by the AMA RUC (and subsequently not reviewed by us) because the specialty society that had originally requested the review in its public comments on the CY 2010 PFS final rule with comment period elected to withdraw the codes, 36 were not reviewed by the AMA RUC because their values were set as interim final in the CY 2011 PFS final rule with comment period, and 14 were not reviewed by us because they were noncovered services under Medicare. Therefore, the AMA RUC reviewed 173 of the 290 codes initially identified for the Fourth Five-Year Review of Work, and provided the recommendations that were addressed in detail in the Fourth Five-Year Review of Work (76 FR 32410). In addition, under the Fourth Five-Year Review of Work, we reviewed recommendations for five additional potentially misvalued codes from the Health Care Professionals Advisory Committee (HCPAC), a deliberative body of nonphysician practitioners that also convenes during the AMA RUC meeting. The HCPAC represents physician assistants, chiropractors, nurses, occupational therapists, optometrists, physical therapists, podiatrists, psychologists, audiologists, speech pathologists, social workers, and registered dieticians.

In summary, since CY 2009, CMS and the AMA RUC have addressed a number of potentially misvalued codes. For CY 2009, the AMA RUC recommended revised work values and/or PE inputs for 204 misvalued services (73 FR 69883). For CY 2010, an additional 113 codes were identified as misvalued and the AMA RUC provided us new recommendations for revised work RVUs and/or PE inputs for these codes to us as discussed in the CY 2010 PFS final rule with comment period (74 FR 61778). For CY 2011, CMS reviewed and adopted more appropriate values for 209 codes under the annual review of potentially misvalued codes. For CY 2012, we recently released the Fourth Five-Year Review of Work, which discussed the review of 173 potentially misvalued codes and proposed appropriate adjustments to RVUs. In section II.B.5.of this final rule with comment period, we also provide a list of codes identified for future consideration as part of the potentially misvalued codes initiative, that is, in addition to the codes that are part of the Fourth Five-Year Review of Work, as discussed in that section, we are requesting the AMA RUC review these codes and submit recommendations to us.

c. Validating RVUs of Potentially Misvalued Codes

In addition to identifying and reviewing potentially misvalued codes, section 3134(a) of the Affordable Care Act added a new section 1848(c)(2)(L) of the Act, which specifies that the Secretary shall establish a formal process to validate RVUs under the PFS. The validation process may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre-, post-, and intra-service components of work. The Secretary is directed to validate a sampling of the work RVUs of codes identified through any of the seven categories of potentially misvalued codes specified by section 1848(c)(2)(K)(ii) of the Act. Furthermore, the Secretary may conduct the validation using methods similar to those used to review potentially misvalued codes, including conducting surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the validation of RVUs of services.

In the CY 2011 PFS proposed rule (75 FR 40068), we solicited public comments on possible approaches and methodologies that we should consider for a validation process. We received a number of comments regarding possible approaches and methodologies for a validation process. As discussed in the CY 2011 PFS final rule with comment period (75 FR 73217), some commenters were skeptical that there could be viable alternative methods to the existing AMA RUC code review process for validating physician time and intensity that would preserve the appropriate relativity of specific physician's services under the current payment system. These commenters generally urged us to rely solely on the AMA RUC to provide valuations for services under the PFS.

While a number of commenters strongly opposed our plans to develop a formal validation process, many other commenters expressed support for the development and establishment of a system-wide validation process of the work RVUs under the PFS. As noted in the CY 2011 PFS final rule with comment period (75 FR 73217 through 73218), these commenters commended us for seeking new approaches to validation, as well as being open to suggestions from the public on this process. A number of commenters submitted technical advice and offered their time and expertise as resources for us to draw upon in any examination of possible approaches to developing a formal validation process.

However, in response to our solicitation of comments regarding time and motion studies, a number of commenters opposed the approach of using time and motion studies to validate estimates of physician time and intensity, stating that properly conducted time and motion studies are extraordinarily expensive and, given the thousands of codes paid under the PFS, it would be unlikely that all codes could be studied. As we stated in the CY 2011 PFS final rule with comment period (75 FR 73218), we understand that these studies would require significant resources and we remain open to suggestions for other approaches to developing a formal validation process. We noted that MedPAC suggested in its comment letter that we should consider “collecting data on a recurring basis from a cohort of practices and other facilities where physicians and nonphysician clinical practitioners work” (75 FR 73218). As we stated previously, we intend to establish a more extensive validation process of RVUs in the future in accordance with the requirements of section 1848(c)(2)(L) of the Act.

While we received a modest number of comments specifically addressing technical and methodological aspects of developing a validation system, we believe it would be beneficial to provide an additional opportunity for stakeholders to submit comments on data sources and possible methodologies for developing a system-wide validation system. In the proposed rule, we solicited comments on data sources and studies which may be used to validate estimates of physician time and intensity that could be factored into the work RVUs, especially for services with rapid growth in Medicare expenditures, which is one of the Affordable Care Act categories that the statute specifically directs us to examine. We also solicited comments regarding MedPAC's suggestion of “collecting data on a recurring basis from a cohort of practices and other facilities where physicians and nonphysician clinical practitioners work.” We note that after our proposed rule was released, MedPAC further discussed its continuing concerns regarding accurate data. “In our June 2011 Report to the Congress, we expressed deep concern in particular about the accuracy of the fee schedule's time estimates--estimates of the time that physicians and other health professionals spend furnishing services. These estimates are an important factor in determining the RVUs for practitioner work. However, research for CMS and for the Assistant Secretary for Planning and Evaluation has shown that the time estimates are likely too high for some services. In addition, anecdotal evidence and the experience of clinicians on the Commission raises questions about the time estimates” (MedPAC Report to the Congress “Medicare and the Health Care Delivery System, June 2011”).

We plan to discuss the validation process in more detail in a future PFS rule once we have considered the matter further in conjunction with the public comments received on the CY 2011 rulemaking, as well as comments received on this final rule with comment period. We note that any proposals we would make on the formal validation process would be subject to public comment, and we would consider those comments before finalizing the policies.

Comment: We received a number of comments and suggestions on developing a system-wide validation process, including stakeholders' reactions to MedPAC's suggestion of data collection from a cohort of physician practices.

Response: We thank the commenters for their suggestions on developing a system-wide validation system and, as we noted previously, we plan to discuss the development of the validation process in more detail in a future PFS rule.

3. Consolidating Reviews of Potentially Misvalued Codes

As previously discussed, we are statutorily required under section 1848(c)(2)(B) of the Act to review the RVUs of services paid under the PFS no less often than every 5 years. In the past, we have satisfied this requirement by conducting separate periodic reviews of work, PE, and malpractice RVUs for established services every 5-years in what is commonly known as CMS' Five-Year Reviews of Work, PE, and Malpractice RVUs. On May 24, 2011, we released the proposed notice regarding the Fourth Five-Year Review of Work RVUs. The most recent comprehensive Five-Year Review of PE RVUs occurred for CY 2010; the same year we began using the Physician Practice Information Survey (PPIS) data to update the PE RVUs. The last Five-Year Review of Malpractice RVUs also occurred for CY 2010. These Five-Year Reviews have historically included codes identified and nominated by the public for review, as well as those identified by CMS and the AMA RUC.

In addition to the Five-Year Reviews, beginning for CY 2009, CMS and the AMA RUC have identified and reviewed a number of potentially misvalued codes on an annual basis using various identification screens, such as codes with high growth rates, codes that are frequently billed together in one encounter, and codes that are valued as inpatient services but that are now predominately furnished as outpatient services. These annual reviews have not included codes identified by the public as potentially misvalued since, historically, the public has the opportunity to submit potentially misvalued codes during the Five-Year Review process.

With the enactment of the Affordable Care Act in 2010, which endorsed our initiative to identify and review potentially misvalued codes and emphasized the importance of our ongoing work in this area to improve accuracy and appropriateness of payments under the PFS, we believe that continuing the annual identification and review of potentially misvalued codes is necessary. Given that we are engaging in extensive reviews of work RVUs and direct PE inputs of potentially misvalued codes on an annual basis, we believe that separate and “freestanding” Five-Year Reviews of Work and PE may have become redundant with our annual efforts. Therefore, for CY 2012 and forward, we proposed to consolidate the formal Five-Year Review of Work and PE with the annual review of potentially misvalued codes. That is, we would begin meeting the statutory requirement to review work and PE RVUs for potentially misvalued codes at least once every 5-years through an annual process, rather than once every 5-years. Furthermore, to allow for public input and to preserve the public's ability to identify and nominate potentially misvalued codes for review, we proposed a process by which the public could submit codes for our potential review, along with supporting documentation, on an annual basis. Our review of these codes would be incorporated into our potentially misvalued codes initiative. This proposed public process is further discussed in section II.B.4. of this final rule with comment period. In the CY 2012 proposed rule, we solicited comments on our proposal to consolidate the formal Five-Year Reviews of Work and PE with the annual review of potentially misvalued codes.

Comment: Commenters overwhelmingly supported the proposal to consolidate review of potentially misvalued codes into one annual process. Commenters also agreed that the review should include both work and practice expense, and encouraged CMS to continue its efforts to ensure that professional liability valuations are as current as possible. However, some commenters were concerned that the number of codes that CMS and the public, through the proposed code nomination process, could potentially bring forward for review would create significant burden on specialty societies in terms of time, manpower, and financial resources on specialty societies. The commenters urged CMS to recognize that a reasonable timeline is required for specialty societies to conduct a credible evaluation of potentially misvalued services, especially as specialty societies already have a sizable number of pending requests for reviews of services previously identified under the potentially misvalued code initiative.

To alleviate concerns that the consolidation could result in requiring specialty societies to survey a large volume of codes every year, commenters offered several suggestions for limiting the number of codes reviewed each year. Commenters requested that CMS consider establishing a timeframe under which codes could be resurveyed. That is, a number of commenters suggested that the physician work of a code should not be re-reviewed within a certain timeframe, such as a 3- or 5-year period after it was last reviewed. Commenters also asked that CMS consider a “cap” on the number of codes and/or code families that we would require any given specialty to review in a calendar year. Furthermore, some commenters were worried that in substituting an annual review process for one that previously occurred once every five years, the burden of reviewing codes identified as potentially misvalued would be distributed inequitably among the various specialties, leading to a perception of unfairness in the process which the commenters believed would undermine CMS' potentially misvalued codes initiative. These commenters urged CMS to establish a 3-year timetable for the review of potentially misvalued services where a comparable proportion of codes for each specialty each year would be specified in advance so that the specialty societies may be able to allocate resources more predictably and efficiently.

Commenters also expressed concern that CMS is proposing to review potentially misvalued codes on the same time frame as the review of new and revised codes where CMS has historically issued interim final values for these codes in the final rule with comment period. The commenters asserted they need to have the opportunity to review CMS' response to AMA RUC recommendations, comment on CMS' proposed values, and receive a response from CMS to these comments prior to January 1 of the year the revised RVUs will be used to pay physician claims. A commenter noted “physicians should not be penalized by having to receive potentially incorrect reimbursement for a procedure for as much as 12 months because of the government's timing of its notice and comment processes.” Other commenters, while supportive of CMS' proposal to consolidate reviews, stressed that the process should not be condensed so much that there is not time for thoughtful comment and consideration. Consequently, commenters urged CMS to work with the AMA RUC so that all recommendations for a given year are received by an earlier deadline, allowing for publication in that year's proposed rule and for comments to be addressed by CMS in that year's final rule before changes that affect payment are implemented.

Response: We appreciate the support commenters expressed for our proposed consolidated annual review of codes and thank the commenters for their comments and suggestions. We understand the commenters' concerns regarding the potential burden that some specialty societies may be expecting from this process. We agree with commenters that a reasonable timeline should be allowed for evaluation of services. Therefore, to address commenters' concern regarding the potential burden, we will be sensitive to the number of codes identified as potentially misvalued for any given specialty society, and we will prioritize codes for immediate review if the specialty society makes such a request to us. Since we cannot predict with certainty the number of codes that will be identified as potentially misvalued, nor the distribution of those codes among specialty societies for review, we do not believe we should predetermine “caps” or place time limitations on the review process that may unintentionally hinder the rapid progress of our potentially misvalued codes initiative. However, we may revisit the commenters' suggestions at a later date if the volume of codes to be reviewed becomes an issue.

To respond to the commenters who were worried that codes identified through the potentially misvalued codes process may not be equitably or “fairly” distributed among specialty societies and have suggested that CMS review a comparable proportion of codes for each specialty each year, we note that, based on our previous experience, the objective screens we have used to identify potentially misvalued codes do not produce lists of codes that are evenly distributed among the specialties that furnish them. Rather, the screens have tended to identify certain types of services more frequently than others (for example, due to rapidly changing technology) and therefore yield disproportionate numbers of potentially misvalued codes to be reviewed by the various specialty societies. However, we have received similar comments in previous rules regarding distribution among specialty societies. Consequently, in the CY 2012 proposed rule, we explicitly identified a list of potentially misvalued high expenditure codes that spans most specialties discussed in II.B.5.a. of this final rule with comment period.

Finally, to respond to the comments regarding the code review cycle, we note that the timing of CMS' current review process is constrained by the CPT Editorial Panel's scheduled release of new and revised codes by October 1 and the receipt of the complete AMA RUC's recommendations later in the year, which are at odds with the PFS rulemaking cycle. As we have indicated for many years in our PFS final rules with comment period, most recently in the CY 2011 rule (75 FR 73170), before adopting interim RVUs for new and revised codes, we have the opportunity to review and consider AMA RUC recommendations which are based on input from the medical community. If we did not adopt RVUs for new and revised codes in the initial year on an interim final basis, we would either have to delay using the codes for a year or permit each Medicare contractor to establish their own payment rate for the codes. We believe it would be contrary to the public interest to delay adopting values for new and revised codes for the initial year, especially since we have an opportunity to receive significant input from the medical community before adopting the values, and the alternatives could produce undesirable levels of uncertainty and inconsistency in payment for a year. We understand the preference of some commenters for the review of potentially misvalued codes to be conducted within a single rulemaking year in order to avoid payment under interim values for the coming year. However, we continue to believe that it is important to consolidate the work and PE reviews for all codes (new, revised, and potentially misvalued) into one cycle. As we have explained in several previous PFS final rules with comment period, most recently in the CY 2011 PFS final rule with comment period (75 FR 73170), we believe it is in the public interest to adopt interim final revised RVUs for codes that have been identified as misvalued. Similar to the new and revised codes, before making any changes to RVUs for potentially misvalued codes, we have an opportunity to review input from the medical community in the form of the AMA RUC recommendations for the codes. We believe a delay in implementing revised values for codes that have been identified as misvalued would perpetuate payment for the services at a rate that does not appropriately reflect the relative resources involved in furnishing the service and would continue unwarranted distortion in the payment for other services across the PFS.

We note that it is often difficult to draw definitive lines between the codes that are being reviewed as new, revised, or potentially misvalued. For example, CMS may identify a code as potentially misvalued in a given year and refer the family of codes to the AMA RUC for review. Subsequently, the AMA RUC may send the family of codes to the CPT Editorial Panel for revision because upon an initial review, the AMA RUC may have concluded that the family of services has evolved to the point that the code descriptors are no longer appropriate. The CPT Editorial Panel may revise the code(s) descriptors or may create entirely new codes to better define the service. In this final rule with comment period, we reviewed several new codes initially referred to the AMA RUC for review through our potentially misvalued codes initiative, and we believe that this trend likely will increase in the near future. Additionally, since CMS reviews and assigns interim values to new and revised codes in the PFS final rule with comment period for the coming year, consolidating the review of potentially misvalued codes with the new and revised codes is a more efficient and transparent process, and reduces the burden on both specialty societies and other stakeholders who would otherwise be called upon to consider, review and comment on the same family of codes in multiple rules. Moreover, consolidation of our review of new, revised, and potentially misvalued codes in one cycle allows for codes in a family to be reviewed together, resulting in more consistent valuation within code families and a better opportunity to maintain appropriate relativity within code families which, as we discuss in this section of this final rule with comment period, is a high priority.

Therefore, given the considerable overall support commenters expressed, we are finalizing our proposal without modification to consolidate periodic reviews of work and PE RVUs under section 1848(c)(2)(B) of the Act and of potentially misvalued codes under section 1848(c)(2)(K) of the Act into one annual process.

We note that while we proposed to review the physician work RVUs and direct PE inputs of potentially misvalued codes on an annual basis, we did not propose at this time to review malpractice RVUs on an annual basis. As discussed in section II.C. of this final rule with comment period, in general, malpractice RVUs are based on malpractice insurance premium data on a specialty level. The last comprehensive review and update of the malpractice RVUs occurred for CY 2010 using data obtained from the PPIS data. Since it is not feasible to conduct such extensive physician surveys to obtain updated specialty level malpractice insurance premium data on an annual basis, we believe the comprehensive review of malpractice RVUs should continue to occur at 5-year intervals.

Furthermore, in identifying and reviewing potentially misvalued codes on an annual basis, we note that this new proposed process presents us with the opportunity to review simultaneously both the work RVUs and the direct PE inputs for each code. Heretofore, the work RVUs and direct PE inputs of potentially misvalued codes were commonly reviewed separately and at different times. For example, a code may have been identified as potentially misvalued based solely on its work RVUs so the AMA RUC would have reviewed the code and provided us with recommendations on the physician times and work RVUs. However, the direct PE inputs of the code would not necessarily have been reviewed concurrently and therefore, the AMA RUC would not necessarily have provided us with recommendations for any changes in the direct PE inputs of the code that would have been warranted to ensure that the PE RVUs of the code are determined more appropriately. Therefore, while this code may have been recently reviewed and revised under the potentially misvalued codes initiative for physician work, the PE component of the code could still be potentially misvalued. Going forward, we believe combining the reviews of both physician work and PE for each code under our potentially misvalued codes initiative will align the review of these codes and lead to more accurate and appropriate payments under the PFS.

Finally, it is important to note that the code-specific resource based relative value framework under the PFS system is one in which services are ranked relative to each other. That is, the work RVUs assigned to a code are based on the physician time and intensity expended on that particular service as compared to the physician time and intensity of the other services paid under the PFS. This concept of relativity to other services also applies to the PE RVUs, particularly when it comes to reviewing and assigning correct direct PE inputs that are relative to other similar services. Consequently, we are emphasizing the need to review both the work and PE components of codes that are identified as part of the potentially misvalued initiative to ensure that appropriate relativity is constructed and maintained in several key relationships:

  • The work and PE RVUs of codes are ranked appropriately within the code family. That is, the RVUs of services within a family should be ranked progressively so that less intensive services and/or services that require less physician time and/or require fewer or less expensive direct PE inputs should be assigned lower work or PE RVUs relative to other codes within the family. For example, if a code for treatment of elbow fracture is under review under the potentially misvalued codes initiative, we would expect the work and PE RVUs for all the codes in the family also be reviewed in order to ensure that relativity is appropriately constructed and maintained within this family. Furthermore, as we noted in the CY 2010 PFS final rule with comment period (74 FR 61941), when we submit codes to the AMA RUC and request its review, in order to maintain relativity, we emphasized the importance of reviewing the base code of a family. The base code is the most important code to review because it is the basis for the valuation of other codes within the family and allows for all related codes to be reviewed at the same time (74 FR 61941).
  • The work and PE RVUs of codes are appropriately relative based on a comparison of physician time and/or intensity and/or direct inputs to other services furnished by physicians in the same specialty. To continue the example discussed previously, if a code for treatment of elbow fracture is under review, we would expect this code to be compared to other codes, such as codes for treatment of humerus fracture, or other codes furnished by physicians in the same specialty, in order to ensure that the work and PE RVUs are appropriately relative within the specialty.
  • The work and PE RVUs of codes are appropriately relative when compared to services across specialties. While it may be challenging to compare codes that describe completely unrelated services, since the entire PFS is a budget neutral system where payment differentials are dependent on the relative differences between services, it is essential that services across specialties are appropriately valued relative to each other. To illustrate the point, if a service furnished primarily by dermatology is analogous in physician time and intensity to another service furnished primarily by allergy/immunology, then we would expect the work RVUs for the two services to be similar, even though the two services may be otherwise unrelated.

4. Public Nomination Process

Under the previous Five-Year Reviews, the public was provided with the opportunity to nominate potentially misvalued codes for review. To allow for public input and to preserve the public's ability to identify and nominate potentially misvalued codes for review under our annual potentially misvalued codes initiative, we proposed a process by which on an annual basis the public could submit codes, along with documentation supporting the need for review. We proposed that stakeholders may nominate potentially misvalued codes by submitting the code with supporting documentation during the 60-day public comment period following the release of the annual PFS final rule with comment period. We would evaluate the supporting documentation and decide whether the nominated code should be reviewed as potentially misvalued during the following year. If we were to receive an overwhelming number of nominated codes that qualified as potentially misvalued in any given year, we would prioritize the codes for review and could decide to hold our review of some of the potentially misvalued codes for a future year. We noted that we may identify additional potentially misvalued codes for review by the AMA RUC based on the seven statutory categories under section 1848(c)(2)(K)(ii) of the Act.

We encouraged stakeholders who believe they have identified a potentially misvalued code, supported by documentation, to nominate codes through the public process. We emphasized that in order to ensure that a nominated code will be fully considered to qualify as a potentially misvalued code to be reviewed under our annual process, accompanying documentation must be provided to show evidence of the code's inappropriate valuation, either in terms of inappropriate physician times, work RVUs, and/or direct PE inputs. The AMA RUC developed certain “Guidelines for Compelling Evidence” for the Third Five-Year Review which we believe could be applicable for members of the public as they gather supporting documentation for codes they wish to nominate for the annual review of potentially misvalued codes. The specific documentation that we would seek under this proposal includes the following:

  • Documentation in the peer reviewed medical literature or other reliable data that there have been changes in physician work due to one or more of the following:

++ Technique.

++ Knowledge and technology.

++ Patient population.

++ Site-of-service.

++ Length of hospital stay.

++ Physician time.

  • An anomalous relationship between the code being proposed for review and other codes. For example, if code “A” describes a service that requires more work than codes “B,” “C,” and “D,” but is nevertheless valued lower. The commenter would need to assemble evidence on service time, technical skill, patient severity, complexity, length of stay and other factors for the code being considered and the codes to which it is compared. These reference services may be both inter- and intra-specialty.
  • Evidence that technology has changed physician work, that is, diffusion of technology.
  • Analysis of other data on time and effort measures, such as operating room logs or national and other representative databases.
  • Evidence that incorrect assumptions were made in the previous valuation of the service, such as a misleading vignette, survey, or flawed crosswalk assumptions in a previous evaluation;
  • Prices for certain high cost supplies or other direct PE inputs that are used to determine PE RVUs are inaccurate and do not reflect current information.
  • Analyses of physician time, work RVU, or direct PE inputs using other data sources (for example, Department of Veteran Affairs (VA) National Surgical Quality Improvement Program (NSQIP), the Society for Thoracic Surgeons (STS), and the Physician Quality Reporting System (PQRS) databases).
  • National surveys of physician time and intensity from professional and management societies and organizations, such as hospital associations.

We noted that when a code is nominated, and supporting documentation is provided, we would expect to receive a description of the reasons for the code's misvaluation with the submitted materials. That is, we would require a description and summary of the evidence is required that shows how the service may have changed since the original valuation or may have been inappropriately valued due to an incorrect assumption. We would also appreciate specific Federal Register citations, if they exist, where commenters believe the nominated codes were previously valued erroneously. We also proposed to consider only nominations of active codes that are covered by Medicare at the time of the nomination.

As proposed in the CY 2012 proposed rule, after we receive the nominated codes during the 60-day comment period following the release of the annual PFS final rule with comment period, we would review the supporting documentation and assess whether they appear to be potentially misvalued codes appropriate for review under the annual process. We proposed that, in the following PFS proposed rule, we would publish a list of the codes received under the public nomination process during the previous year and indicate whether the codes would be included in the current review of potentially misvalued codes. We would also indicate the publicly nominated codes that we would not be including in the current review (whether due to insufficient documentation or for other reasons). Under this proposed process, the first opportunity for the public to nominate codes would be during the public comment period for this CY 2012 PFS final rule with comment period. We would publish in the CY 2013 PFS proposed rule, the list of nominated codes, and indicate whether they will be reviewed as potentially misvalued codes. We would request that the AMA RUC review these potentially misvalued codes along with any other codes identified by CMS as potentially misvalued, and provide to us recommendations for appropriate physician times, work RVUs, and direct PE inputs. We requested public comments on this proposed code nomination process and indicated that we would consider any suggestions to modify and improve the proposed process.

Comment: The vast majority of commenters supported CMS' proposal to develop a public nomination process for potentially misvalued codes. The commenters noted that the proposed process would provide a way for the public to participate in the identification of potentially misvalued procedures. Commenters were enthusiastic that the proposal allows for stakeholders to propose a code for review on an immediate basis which is a significant improvement to the current process, noting that previously, only “CMS and the RUC could bring a code forward for review whenever they have reason to believe it may be misvalued; however, physicians, other healthcare providers, specialty societies and other stakeholders are restricted to a five-year cycle.” On the other hand, another commenter “does not agree with the once-a-year opportunity to nominate codes [and] * * * recommends that there should be greater opportunity for public comment.”

A number of commenters stated that they believe the supporting documentation criteria would ensure that all requests are considered fairly and urged CMS to conduct a rigorous review of public comments and supporting documentation when determining whether a publicly nominated code should be reviewed as a potentially misvalued code, especially when a code is nominated by only a few commenters or even a single commenter. Other commenters thought CMS should provide “guidelines” to justify bringing a code(s) forward for review in order to prevent a member of the public from asking that every single code paid under the Medicare PFS be reviewed. Some commenters noted that “professional associations participating on the RUC frequently struggle with the concept and documentation of ‘Compelling Evidence.' ” Consequently, the commenters believed that the public will likewise struggle with the concept of submitting evidence to substantiate potentially misvalued codes. Other commenters noted that the public nomination process proposed by CMS requires that commenters nominating codes include supportive evidence to show that the resource use related to the delivery of a service has changed in a way to suggest a code's RVUs may be misvalued, whereas CMS is not obligated to follow this same standard. The commenters suggested that CMS should be required to adhere to the supporting documentation that the public would need to provide when nominating a potentially misvalued code for review through the proposed public nomination process.

Several commenters believed that CMS should not restrict which codes could be nominated or referred. A number of commenters objected to CMS' proposal to consider only nominations of active codes that are covered by Medicare at the time of the nomination. The commenters believed this proposal was unfair to those specialties that do not serve a predominantly Medicare-aged population but who must also rely on the the resource based relative value scale. The commenters asserted that CMS has historically published the relative value recommendations from the AMA RUC for preventive services and other non-covered services. Commenters recommended that all valid CPT codes should remain open to comment and review. Commenters also believed as long as a stakeholder could provide adequate supporting documentation to support the nomination of the code, CMS should allow for the review of any code, including any codes that went through refinement in the past.

Commenters also expressed appreciation that CMS proposed to disclose in the PFS proposed rule the list of codes identified as potentially misvalued (including those that originated from the public nomination process) for future review because publishing the misvalued codes list provides some notice to affected parties who may wish to provide input during the review process. Some commenters suggested that following the nomination process, specialty societies should have another opportunity to review and comment on any relevant nominations before CMS decides to include the codes on the list of potentially misvalued codes in the proposed rule.

Response: We appreciate the enthusiasm expressed by commenters who welcome the opportunity to participate with us in the identification of potentially misvalued codes. We also acknowledge the commenters' concern that our requirements for accompanying documentation to show how the code is potentially misvalued may be viewed as burdensome and could pose a barrier to the public in nominating some codes. We provided guidelines in the proposed rule for such documentation in order to help the public to develop a strong case and assemble sufficient documentation when nominating a code. Although some commenters viewed the requirement to provide evidence of potential misvaluation as overly burdensome, it is important to demonstrate that a nominated code is not only potentially misvalued, but that improved accuracy in payment for the code would improve the overall accuracy of the physician fee schedule. As commenters have pointed out, reviewing potentially misvalued codes is resource intensive for the AMA RUC, specialty societies, CMS, and the public, and we must ensure that codes we refer as potentially misvalued warrant the requested review.

However, to respond to the commenters who suggested we should be required to follow the same process as the public for nominating potentially misvalued codes, we note that we have longstanding statutory authority to identify and review the RVUs of services no less often than every 5-years and that we frequently have exercised our discretion to prioritize codes for review.

We understand commenters' concerns about the burden that reviewing codes entails. We believe that by ranking codes in order of interest to CMS for review over a reasonable timeframe, we can help to reduce some of that burden. For this year, we have prioritized the review of codes to those that have some degree of significant financial impact on the PFS. Specifically, we have proposed a list of high expenditure codes for review in CY 2012. We also are limiting the review of RVUs to codes that are active, covered by Medicare, and for which the RVUs are used for payment purposes under the PFS so that resources are not expended on the review of codes with RVUs that have no financial impact on the PFS. We note that while we have published the AMA RUC relative value recommendations for non-covered services as a courtesy, these codes historically have not been reviewed by CMS and the RVUs are not valid for Medicare payment purposes. Therefore, while we will continue our historical practice of publishing the AMA RUC relative value recommendations for non-covered services, we will not be accepting for review either inactive or non-covered codes (for which the RVUs will have no financial impact on the PFS) through the public nomination process. We will consider any other active and Medicare covered services that are nominated by the public and supported by documentation of the nature described previously in this section.

Finally, we note that all timely comments received on the final rule with comment period can be accessed and reviewed by the public through http://www.regulations.gov/ after the final rule's comment period closes. Therefore, anyone who wishes to look though the public comments can identify the codes that have been nominated by the public as potentially misvalued, as well as the accompanying supporting documentation. CMS will assess the list of publicly nominated codes, taking into consideration the documentation provided as well as the list of codes the agency has identified for review, and will identify and publish in the following year's proposed rule the list of nominated codes and codes selected for review. Accordingly, we are finalizing the proposed public nomination process without modification.

5. CY 2012 Identification and Review of Potentially Misvalued Services

a. Code Lists

While we anticipate receiving nominations from the public for potentially misvalued codes in conjunction with rulemaking, we believe it is imperative that we continue the work of the review initiatives over the last several years and drive the agenda forward to identify, review, and adjust values for potentially misvalued codes for CY 2012.

In the CY 2011 PFS proposed rule (75 FR 40068 through 40069), we identified and referred to the AMA RUC a list of potentially misvalued codes in three areas:

  • Codes on the AMA RUC's multi-specialty points of comparison (MPC) list (used as reference codes in the valuation of other codes),
  • Services with low work RVUs that are billed in multiples (a statutory category); and
  • Codes that have low work RVUs for which CMS claims data show high volume (that is, high utilization of these codes represents a significant dollar impact in the payment system).

Our understanding is that the AMA RUC is currently working towards reviewing these codes at our request. We intend to provide an update and discuss any RVU adjustments to codes that have been identified as potentially misvalued in the CY 2012 PFS final rule, as they move through the review process.

Meanwhile, for CY 2012, we are continuing with our work to identify and review additional services under the potentially misvalued codes initiative. Stakeholders have noted that many of the services previously identified under the potentially misvalued codes initiative were concentrated in certain specialties. To develop a robust and representative list of codes for review under the potentially misvalued codes initiative, we examined the highest PFS expenditure services by specialty (based on our most recently available claims data and using the specialty categories listed in the PFS specialty impact table, see Table 84 in section IX.B. of this final rule with comment period) and identified those that have not been reviewed since CY 2006 (which was the year we completed the Third Five-Year Review of Work and before we began our potentially misvalued codes initiative).

In our examination of the highest PFS expenditure codes for each specialty (we used the specialty categories listed in the PFS specialty impact table, see Table 84 in section IX.B. of this final rule with comment period), we noted that Evaluation and Management (E/M) services consistently appeared in the top 20 high PFS expenditure services. We noted as well that most of the E/M services have not been reviewed since the comprehensive review of services for the Third Five-Year Review of Work in CY 2006. Therefore, after an examination of the highest PFS expenditure codes for each specialty, we have developed two code lists of potentially misvalued codes which we proposed to refer to the AMA RUC for review.

First, we proposed to request that the AMA RUC conduct a comprehensive review of all E/M codes, including the codes listed in Table 6. As shown previously, E/M services are commonly among the highest PFS expenditure services. Additionally in recent years, there has been significant interest in delivery system reforms, such as patient-centered medical homes and making the primary care physician the focus of managing the patient's chronic conditions. The chronic conditions challenging the Medicare population include heart disease, diabetes, respiratory disease, breast cancer, allergy, Alzheimer's disease, and factors associated with obesity. Thus, as the focus of primary care has evolved from an episodic treatment-based orientation to a focus on comprehensive patient-centered care management in order to meet the challenges of preventing and managing chronic disease, we believed a more current review of E/M codes was warranted. We note that although physicians in primary care specialties bill a high percentage of their services using the E/M codes, physicians in non-primary care specialties also bill these codes for many of their services.

Since we believe the focus of primary care is evolving to meet the challenges of preventing and managing chronic disease, we noted in the proposed rule that we would like the AMA RUC to prioritize review of the E/M codes and provide us with recommendations on the physician times, work RVUs, and direct PE inputs of at least half of the E/M codes listed in Table 6 by July 2012 in order for us to include any revised valuations for these codes in the CY 2013 PFS final rule with comment period. We also noted that we would expect the AMA RUC to review the remaining E/M codes listed in Table 6 by July 2013 in order for us to complete the comprehensive re-evaluation of E/M services and include the revised valuations for these codes in the CY 2014 PFS final rule with comment period.

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

Comment: Many commenters did not believe that reviewing the work RVUs and direct PE inputs of all E/M services is warranted at this time. A significant number of commenters generally agreed that health care delivery has changed, that chronic disease management has led to increases in physician time and effort, and that primary care physicians provide valuable services to Medicare beneficiaries that are not captured appropriately in the E/M services. Some commenters did not believe that the resource-based relative value scale is the appropriate system to account for changes in health care delivery models. A smaller number of commenters did not believe that physician work for E/M services had changed since the codes were last reviewed.

The majority of commenters requested that CMS withdraw its proposal to review all E/M codes because the current E/M codes, as written, do not fully encompass the work associated with patient-centered care management. The commenters noted that there are many codes that have been reviewed and valued by the AMA RUC for such services, including medical team conference, comprehensive preventive evaluation, physician supervision of a hospice patient, international normalized ratio management, smoking and alcohol counseling, case management, monthly medical home management, anticoagulation management, and phone or electronic evaluation. Some commenters noted that the AMA RUC has previously provided recommendations to value telephone and electronic evaluation services that complement coordinated care. While Medicare either does not pay separately for or does not cover many of these services, the commenters believed these services are part of a patient centered care management model and are necessary services for managing patients with chronic conditions. The commenters urged CMS to provide explicit payment for these coordination services rather than attempt to address the primary care issue through the comprehensive review of current E/M code values. For example, commenters suggested CMS “work with the medical community to develop and implement the patient-centered medical home, reward prevention and wellness, eliminate fragmentation and duplication, and produce a cohesive system of care that prevents unnecessary complications from acute or chronic illness, hospitalizations, and other avoidable expenses.”

Some commenters asserted that the current E/M codes have code descriptors and documentation requirements that do not capture the work necessary for chronic disease management. Commenters noted that the current E/M codes were developed 20 years ago and describe care of patients with acute problems. In addition, the commenters believed the current E/M codes do not describe care to treat chronic medical problems of patients in skilled nursing facilities which were treated in the hospital a few years ago. Commenters asserted that physicians are now caring for an increasingly complex elderly population with multiple chronic problems who require services such as extensive care coordination that was not part of standard medical practice when many of the E/M codes were created. Thus, while the commenters agreed that care coordination would help better manage chronic diseases in the elderly, they believed this care would be better described by new codes, and not the current E/M codes. Accordingly, the commenters recommended that CMS undertake a comprehensive review of the existing E/M service codes in collaboration with the AMA RUC and the CPT Editorial Panel. That is, the commenters envisioned and supported an extensive review that considers revisions to these codes that will better recognize the work of primary care physicians and cognitive specialists who provide care for patients with acute and chronic conditions before focusing on the valuation of the codes.

Many commenters, representing different medical specialties, noted that CMS' focus on primary care as the locus for care coordination and chronic disease management is misplaced. Commenters asserted that patient care coordination, prevention, performance measurement and the adoption of health information technology affects the entire medical community. These commenters argued that that these trends and initiatives will pose challenges for specialty medicine as well. Specifically, a commenter stated, “We believe that high quality provision of such services is not defined by the specialty of the provider and thus we cannot support policy options that focus on provider specialty rather than on the content and the quality of the service being provided.”

Other commenters noted that the E/M codes are used by many surgeons and other specialists because nearly every procedural CPT code involves one or more E/M service within the code's global period. Commenters suggested that CMS unbundle E/M services from surgical codes in order to ensure that surgical patients received the appropriate follow-up care and management of post-procedure activity to achieve desired outcomes. That is, CMS should apply zero-day global periods to surgical codes, such that post-operative hospital and office visits must meet the medical necessity and documentation requirements for evaluation and management coding in order to be paid separately.

Finally, some commenters noted that the previous comprehensive review of the evaluation and management codes in 2006 did not improve the emphasis on chronic care management, stating that “the third 5-Year Review failed to achieve the goals of properly compensating primary physicians for chronic care management, so there is no expectation that another review within the existing system will result in a different outcome.” A few commenters supported the proposal to review the E/M codes and they “consider the review and re-evaluation of E&M codes as a critical immediate step to ensure patient access to care and to maintaining the viability of the [their] workforce.”

Response: We thank the commenters for their comments on our proposal to review E/M services and address the evolving challenges of chronic care management. We also appreciate commenters' support for recognizing the importance of primary care and care coordination, and appropriately valuing such care within Medicare's statutory structure for physician payment and quality reporting. We understand some commenters' concerns about the ability of the current E/M coding and documentation system to appropriately value primary care services and improved care coordination. We understand that many commenters would prefer that we consider paying separately for non-face-to-face care coordination activities, such as telephone calls and medical team conferences, rather than finalize the proposal to request that the AMA RUC review all 91 E/M codes at this time. We will continue to explore valuations of E/M services and other potential refinements to the PFS that would appropriately value these services. We are also examining many other programs that may contribute to more appropriate valuation of services and better health care outcomes.

We would like to assure the commenters that we, as well as the HHS' Assistant Secretary for Planning and Evaluation (ASPE), are actively researching our current coding and payment systems to appropriately value these services. As detailed in the proposed rule (75 FR 42917), we are considering several approaches to improve coordinated care and health care transitions to reduce readmissions or subsequent illnesses, improve beneficiary outcomes, and avoid additional financial burden on the health care system. We are committed to achieving better care for individuals, better health for populations, and reduced expenditure growth. Reforms such as Accountable Care Organizations and Medical Homes and reforms of our current fee-for-service payment system are designed to achieve these goals.

As an example, we recently launched the Partnership for Patients (in April 2011), a national public-private patient safety initiative for which more than 6,000 organizations—including physician and nurses' organizations, consumer groups, employers and over 3,000 hospitals—have pledged to help achieve the Partnership's goals of reducing hospital complications and improving care transitions. The Partnership for Patients includes the Community-Based Care Transitions Program, which provides funding to community-based organizations partnering with eligible hospitals to coordinate a continuum of post-acute care in order to test models for improving care transitions for high risk Medicare beneficiaries. Achieving the goals of the Partnership for Patients will take the combined effort of many key stakeholders across the health care system—physicians, nurses, hospitals, health plans, employers and unions, patients and their advocates, as well as the Federal and State governments. Many important stakeholders have already pledged to join this Partnership in a shared effort to save thousands of lives, stop millions of injuries and take important steps toward a more dependable and affordable health care system. We are currently working with these stakeholders to improve care processes and systems, enhance communication and coordination to reduce complication for patients, raise public awareness and develop information, tools and resources to help patients and families effectively engage with their providers to avoid preventable complications, and provide the incentives and support that will enable clinicians and hospitals to deliver high-quality health care to their patients, with minimal burdens. (For more information regarding the Partnership for Patients Initiative, we refer readers to http://www.healthcare.gov/compare/partnership-for-patients/index.html.)

Additionally, the Center for Medicare and Medicaid Innovation (Innovation Center) of CMS has undertaken several demonstrations to support care coordination and primary care. Most recently, on September 28, 2011, we released a request for applications for the Comprehensive Primary Care Initiative, a CMS-led multipayer initiative to provide enhanced support for comprehensive primary care. A primary care practice is a key point of contact for patients' health care needs. In recent years, new ways have emerged to strengthen primary care by improving care coordination, making it easier to work together, and helping clinicians spend more time with their patients. Under the Comprehensive Primary Care Initiative, we intend to pay primary care providers a monthly care management fee on behalf of Medicare fee-for-service beneficiaries and, in participating states, Medicaid fee-for-service beneficiaries for improved and comprehensive care management. Specifically, participating primary care practices will be given support to better coordinate primary care for their Medicare patients, including creating personalized care plans for patients with serious or chronic diseases follow personalized care plans, give patients 24-hour access to care and health information, more preventive care, and more patient centered care management. The work of the Comprehensive Primary Care Initiative could inform and help further develop innovative revisions to the PFS. (For more information regarding the Comprehensive Primary Care Initiative, we refer readers to http://innovations.cms.gov/areas-of-focus/seamless-and-coordinated-care-models/cpci/.)

Further, HHS' ASPE has convened a Technical Expert Panel (TEP) to conduct studies that could inform efforts to accurately align physician payments in Medicare, which may help expand the supply of primary care physicians and improve the value of care for beneficiaries. One of the major tasks being undertaken by this TEP is to develop new approaches to defining visits and paying for primary care services under the physician fee schedule. There are a number of services that are increasingly viewed as key to high-quality primary care but that do not require a face-to-face encounter with the patient. While the valuations of current E/M services include care coordination, communication and other management, this project will consider how visits are defined and will examine whether we need to adjust payments to appropriately pay for primary care activities. It makes sense to reassess how visits are defined because it is becoming increasingly more common for primary care physicians to be engaged in the management of multiple established chronic conditions rather than evaluation and treatment of acute, new problems. The complexity and time for the physician is more often associated with decision-making than with the history-taking and physicals. Further, the chronic care model involves much greater attention to teaching patient self-management skills, doing more proactive care coordination, and anticipation of health care needs. We believe the TEP findings could provide us with improved information for the valuation of primary care services, including care coordination, which may be more effective than simply reviewing the work RVUs and direct PE inputs of current E/M services. In addition to ASPE's efforts that are focused directly on physician payment, they also have a second project underway to research effective methods for increasing the supply of primary care providers and services. This project will analyze what is known about the relative effectiveness of various strategies to increase the supply of primary care providers and services in order to meet these future health system needs.

Accordingly, given the significant concern expressed by the majority of commenters over the possible inadequacies of the current E/M coding and documentation structure to address evolving chronic care management and support primary care and our ongoing research on how to best provide payment for primary care and patient-centered care management, we are not finalizing the proposal to review the list of 91 E/M codes at this time. Instead, we believe allowing time for consideration of the findings of the Comprehensive Primary Care Initiative, the ASPE research on balancing physician incentives and evaluating payment for primary care services, demonstrations that we have undertaken on care coordination, as well as other initiatives assessing how to value and encourage primary care will provide improved information for the valuation of chronic care management, primary care, and care transitions. We also will continue to consider the numerous policy alternatives that commenters offered, such as separate E/M codes for established visits for patients with chronic disease versus a post-surgical follow-up office visits. We intend to continue to work with stakeholders on how to value and pay for primary care and patient-centered care management, and we continue to welcome ideas from the medical community for how to improve care management through the provision of primary care services. Second, we also proposed providing a select list of high PFS expenditure procedural codes representing services furnished by an array of specialties, as listed in Table 7. These procedural codes have not been reviewed since CY 2006 (before we began our potentially misvalued codes initiatives in CY 2008) and, based on the most recently available data, have CY 2010 allowed charges of greater than $10 million at the specialty level (based on the specialty categories listed in the PFS specialty impact table and CY 2010 Medicare claims data). A number of the codes in Table 7 would not otherwise be identified as potentially misvalued services using the screens we have used in recent years with the AMA RUC or based on one of the six specific statutory categories under section 1848(c)(2)(k)(ii) of the Act. However, we identified the potentially misvalued codes listed in Table 7 under the seventh statutory category, “other codes determined to be appropriate by the Secretary.” We selected these codes based on the fact that they have not been reviewed for at least 6 years, and in many cases the last review occurred more than 10 years ago. They represent high Medicare expenditures under the PFS; thus, we believe that a review to assess changes in physician work and update direct PE inputs is warranted. Furthermore, since these codes have significant impact on PFS payment on a specialty level, a review of the relativity of the codes to ensure that the work and PE RVUs are appropriately relative within the specialty and across specialties, as discussed previously, is essential. For these reasons, we have identified these codes as potentially misvalued and proposed to request the AMA RUC review the codes listed in Table 7 and provide us with recommendations on the physician times, work RVUs and direct PE inputs in a timely manner. That is, similar to our proposal for the AMA RUC to review E/M codes in a timely manner, we proposed to request that the AMA RUC review at least half of the procedural codes listed in Table 7 by July 2012 in order for us to include any revised valuations for these codes in the CY 2013 PFS final rule with comment period.

BILLING CODE 4210-01-P

BILLING CODE 4120-01-C

Comment: Some commenters did not believe that high expenditure/high volume was an appropriate criterion for us to use to identify the codes for the potentially misvalued codes initiative, stating “simply because a service is frequently performed, does not indicate that the service may be overvalued.” Additionally, the commenters believed that selecting codes that have not been reviewed since CY 2006 was arbitrary and assumes that the delivery of these services and procedures has changed radically over the past 5-years. Other commenters believed CMS should provide justification for the revaluation by providing evidence of how the delivery of a service or procedure has changed within 5 years.

Some commenters agreed that high expenditure codes should be reviewed on a periodic basis; however, the commenters suggested that the periodic basis should be a reasonably long length of time and 5 (or 6) years is not a sufficiently long period of time absent other evidence of potential changes in the service under review. The commenters suggested that CMS could automatically review high expenditure procedures every 10 or 15 years. MedPAC, commenting on the CY 2012 PFS proposed rule, agreed that accurate payments for high expenditure services “can improve the balance of payments between primary care and services such as imaging tests, and other procedures.”

Finally, we received a number of comments on specific codes where commenters provided arguments as to why CMS should remove these codes from the high expenditure code list. The commenters noted that specific codes had been considered by the AMA RUC in the past five years or that certain codes are currently scheduled to be considered by either the CPT Editorial Panel for new coding or the AMA RUC for revised valuations (for work RVUs and/or PE inputs) at an upcoming meeting.

Response: As we noted previously, it is a long-standing statutory requirement that we review RVUs no less often than every 5-years and, in conducting these reviews, we have historically exercised our discretion to prioritize which codes to review. In proposing to prioritize this list of high expenditure codes, we stated that the reason we identified these codes is because they have significant impact on PFS payment on a specialty level and have not been recently reviewed. We believe that the practice of a service can evolve over time, as can the technology used to conduct the service, and such efficiencies could easily have developed since our last comprehensive review of services in 2006 for the third 5-year review. As such, a review of the relativity of these codes, which are high expenditure and high volume, to ensure that the work and PE RVUs are appropriately valued to reflect changes in practice and technology and relative to other services within the specialty and across specialties is essential to the overall accuracy of the PFS.

Because of the concerns expressed by commenters about the burden associated with code reviews, we believe that it is appropriate to prioritize review of codes to a manageable subset that also have a high impact on the PFS and work with the specialty society to spread review of the remaining codes identified as potentially misvalued over a reasonable timeframe. In this spirit, we do not believe it would be appropriate to remove codes from the high expenditure list unless we find, as some commenters indicated, that we have reviewed both the work RVUs and direct PE inputs for the code during the specified time period. Also, regarding the suggestion to schedule review of high expenditure codes every 10 to 15-years, not only do we believe more regular monitoring of codes with high impact on the PFS will produce a more accurate and equitable payment system, but we have a statutory obligation to review codes at least every 5-years (although we do not always conduct a review that involves the AMA RUC). As noted, changes in technology and practice evolve for many services more rapidly than every 10 to 15-years. We also believe that, with our decision not to review the 91 E/M codes at this time, we have relieved some of the burden on specialty societies, which should enable them to complete their reviews of these high expenditure/high volume codes.

Finally, in reviewing the code specific comments, we noticed that in many cases, the commenters believed that the code should be removed from this code list because the work RVU had been reviewed within 6-years, or the code was recently considered at an AMA RUC meeting. We note that while a number of codes have been considered at an AMA RUC meeting, until we receive recommendations and review the codes for both work and direct PE inputs, we will continue to include these codes on the high expenditure list. We think some of the commenters may have believed that since a code was discussed at an AMA RUC meeting and sent to the CPT editorial panel or the code is being surveyed and prepared for a presentation at the AMA RUC, the code should be removed from the potentially misvalued high expenditure code list. We are clarifying that even if a code is about to be reviewed by the specialty society or AMA RUC, or referred to the CPT Editorial Panel, we would continue to include the code on our list of codes for review under the potentially misvalued codes initiative. Similarly, if a code is being reviewed by the CPT editorial panel, we would consider any replacement codes to address the potential misvaluation associated with the previous codes.

Accordingly, we are finalizing the proposed high expenditure/high volume list without modification.

Specific Codes

On an ongoing basis, public stakeholders (including physician specialty societies, beneficiaries, and other members of the public) bring concerns to us regarding direct PE inputs and physician work. In the past, we would consider these concerns and address them through proposals in annual rulemaking, technical corrections, or by requesting that the AMA RUC consider the issue.

Since last year's rulemaking, the public has brought a series of issues to our attention that relate directly to direct PE inputs and physician work. We believe that some of these issues will serve as examples of codes that might be brought forward by the public as potentially misvalued in the proposed nomination process as discussed previously in section II.B.4. of this final rule with comment period.

(1) Codes Potentially Requiring Updates to Direct PE Inputs

Abdomen and Pelvis CT. For CY 2011, AMA CPT created a series of new codes that describe combined CTs of the abdomen and pelvis. Prior to 2011, these services would have been billed using multiple stand-alone codes for each body region. The new codes are: 74176 (Computed tomography, abdomen and pelvis; without contrast material); 74177 (Computed tomography, abdomen and pelvis; with contrast material); and 74178 (Computed tomography, abdomen and pelvis; without contrast material in one or both body regions, followed by with contrast material(s) and further sections in one or both body regions.)

As stated in the CY 2011 PFS final rule with comment period (75 FR 73350), we accepted the AMA RUC- recommended direct PE inputs for these codes, with refinements to the equipment minutes to assure that the time associated with the equipment items reflected the time during the intra-service period when a clinician is using the piece of equipment, plus any additional time the piece of equipment is not available for use for another patient due to its use during the designated procedure. We believe that the direct PE inputs of the new codes reflect the typical resources required to furnish the services in question.

However, stakeholders have alerted us that the resulting PE RVUs for the new codes reflect an anomalous rank order in comparison to the previously existing stand-alone codes. Specifically, the PE RVUs for the codes that describe CT scans without contrast for either body region are greater than the PE RVUs for 74176, which describes a CT scan of both body regions. We believe that the anomalous rank order of the PE RVUs for this series of codes may be the result of outdated direct PE inputs for the previously existing stand-alone codes. The physician work for those codes was last reviewed by the AMA RUC during the Third Five-Year Review of Work for CY 2007. However, the direct PE inputs for the codes have not been reviewed since 2003. Therefore, we are requesting that the AMA RUC review both the direct PE inputs and work values of the following codes in accordance with the consolidated approach to reviewing potentially misvalued codes as outlined in section II.B.2.c. of this final rule with comment period:

  • 72192Computed tomography, pelvis; without contrast material.
  • 72193Computed tomography, pelvis; with contrast material(s).
  • 72194Computed tomography, pelvis; without contrast material, followed by contrast material(s) and further sections.
  • 74150Computed tomography, abdomen; without contrast material.
  • 74160Computed tomography, abdomen; with contrast material(s).
  • 74170Computed tomography, abdomen; without contrast material, followed by contrast material(s) and further sections.

Comment: Several commenters suggested that the rank order anomalies resulted from a series of issues unrelated to the direct PE inputs for the existing component codes. These commenters argued that the anomaly resulted from CMS' refinement of equipment minutes in the new codes, errors in CMS' direct PE database, and the longstanding CMS policy that new codes are not subject to practice expense transitions. Furthermore, the commenters asserted that the AMA RUC reviewed the component code direct PE inputs when developing the direct PE inputs for the combined codes. Therefore, the commenters asked that CMS withdraw its request that the AMA RUC review the direct PE inputs of the existing codes.

Response: We refer readers to section III.B.2 of this final rule with comment period. There, we address interim final direct PE inputs from CY 2011, including accurate allocation of equipment minutes and, specifically, the direct PE inputs for CPT codes 74176, 74177, and 74178. In that section we finalize the interim direct PE inputs as published in the CY 2011 PFS final rule, with a minor refinement to the clinical labor inputs. We note that the refined PE RVUs for the combined codes do not significantly alter payment.

While we acknowledge the occasional irregularities that result from the application of broad-based payment transitions, our longstanding policy in a PFS transition payment year is that if the CPT Editorial Panel creates a new code for that year, the new code would be paid at its fully implemented PFS amount and not at a transition rate for that year.

While the commenters suggested that the RUC reviewed the direct PE inputs of the component codes recently, we have received no recent recommendation from the RUC regarding the direct PE inputs for these codes. Had the RUC reviewed the direct PE inputs for the component codes and made recommendations either to maintain or amend the current direct PE inputs, we would have responded to those recommendations. After considering these comments and noting the technical refinements to the direct PE inputs of the combined codes, we continue to believe that the direct PE inputs of the component codes should be reviewed. Therefore, we are maintaining our request that the RUC review the component codes.

Tissue Pathology. A stakeholder informed us that the direct PE inputs associated with a particular tissue examination code are atypical. Specifically, the stakeholder suggested that the AMA RUC relied upon an atypical clinical vignette in identifying the direct PE inputs for the service associated with CPT code 88305 (Level IV—Surgical pathology, gross and microscopic examination). The stakeholder claims that in furnishing the typical service, the required material includes a single block of tissue and 1-3 slides. The stakeholder argues that the typical cost of the resources needed to provide the service is approximately $18, but the PE RVUs for 2011 result in a national payment rate of $69.65 for the technical component of the service. Because the direct PE inputs associated with this code have not been reviewed since 1999, we are asking that the AMA RUC review both the direct PE inputs and work values of this code as soon as possible in accordance with the consolidated approach to reviewing potentially misvalued codes as outlined in section II.B.2.c. of this final rule with comment period though the work for this code was reviewed in April 2010.

Comment: Several commenters disagreed with CMS' request to review the work RVU of this code because the most recent extensive review of the physician work was conducted by the RUC in April of 2010. The AMA RUC expressed concern that CMS would ask the RUC to review the code solely on the basis of the stakeholder's assertions about overpayment. The AMA RUC asked CMS to consider that the stakeholder's estimates of typical costs do not reflect the range of practice costs considered in the PE methodology, and that the stakeholder should be directed to consider direct practice expense costs instead of full practice expense payment rates.

Response: We understand the commenters' requests to review only the direct PE inputs for the code since the physician work for this code and for the code family were recently reviewed by the RUC and CMS. We maintain that conducting a combined review of both physician work and direct PE for each code reviewed under our potentially misvalued codes initiative will lead to a more comprehensive evaluation and to more accurate and appropriate payments under the PFS. However, we understand that the advantages of a simultaneous review of work and direct practice may be limited in the case of this code where the work was so recently reviewed. Therefore, we believe that a review of the direct PE inputs alone is appropriate.

We acknowledge the RUC's concern that the commenter may have been comparing his perception of direct practice expense costs with broader practice expense payments for this code. We acknowledge the practice expense portion of PFS payment is developed in consideration of both direct and indirect practice expense costs. We also concur with the RUC that interested stakeholders can review the publicly available direct PE inputs associated with each code. Those inputs are available in the direct PE database on the CMS Web site under the downloads section for the “CY 2012 PFS final rule with comment period” at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.

However, we note that the stakeholder's assessment of the direct costs associated with the typical service reported using CPT code 88305 is significantly lower than the summed direct practice expense inputs currently associated with the code. Additionally, as we stated in the CY 2012 PFS proposed rule, we are asking the RUC to review the direct PE inputs of the code because they have not been reviewed since 1999. We also point out that if the stakeholder had not brought the concern to us, this code would have appeared on our list of PFS high expenditure procedural codes that had not been reviewed since CY 2006. After consideration of these comments, we are maintaining our request that the RUC review CPT code 88305, but in the case of this code, we are only asking for a review of direct PE inputs.

In Situ Hybridization Testing. We received comments from the Large Urology Group Practice Association (LUGPA) regarding two new cytopathology codes that describe in situ hybridization testing of urine specimens. Prior to CY 2011, in situ hybridization testing was coded and billed using CPT Codes 88365 (In situ hybridization (e.g., FISH), each probe), 88367 (Morphometric analysis, in situ hybridization (quantitative or semi-quantitative) each probe; using computer-assisted technology) and 88368 (Morphometric analysis, in situ hybridization (quantitative or semi-quantitative) each probe; manual). The appropriate CPT code listed would be billed one time for each probe used in the performance of the test, regardless of the medium of the specimen (that is, blood, tissue, tumor, bone marrow or urine).

For CY 2011, the AMA's CPT Editorial Panel created two new cytopathology codes that describe in situ hybridization testing using urine samples: CPT code 88120 (Cytopathology, in situ hybridization (e.g., FISH), urinary tract specimen with morphometric analysis, 3-5 molecular probes, each specimen; manual) and CPT code 88121 (Cytopathology, in situ hybridization (e.g., FISH), urinary tract specimen with morphometric analysis, 3-5 molecular probes, each specimen; using computer-assisted technology).

Because the descriptors indicate that the new codes account for approximately four probes, whereas 88367 and 88368 describe each probe, there are more PE RVUs associated with the new codes than with the previously existing codes that are currently still used for any specimen except for urine. However, because the previously existing codes are billed per probe, the payment for a test using a different specimen type could vary depending upon the number of probes. For example, a practitioner furnishing a test involving a blood specimen and using three probes would bill CPT code 88368 (total RVUs: 6.28) three times with the result of 18.84 RVUs. A practitioner furnishing the same test but using a urine sample instead of a blood sample would receive payment based on the 13.47 RVUs associated with CPT code 88120.

We accepted the RUC-recommended work values and direct PE inputs, without refinement, for the two new cytopathology codes that describe in situ hybridization testing using urine samples. We reviewed the direct PE recommendations made by the AMA RUC and considered the inputs to be appropriate. However, we shared LUGPA's concerns regarding the potential payment discrepancies between the codes that describe the same test using different specimen media. Therefore, in the CY 2012 PFS proposed rule, we asked the AMA RUC to review the both the direct PE inputs and work values of the following codes in accordance with the consolidated approach to reviewing potentially misvlaued codes as outlined in section II.B.2.c. of this final rule with comment period: CPT codes 88365 (In situ hybridization (e.g., FISH), each probe); 88367 (Morphometric analysis, in situ hybridization (quantitative or semi-quantitative) each probe; using computer-assisted technology); and 88368 (Morphometric analysis, in situ hybridization (quantitative or semi-quantitative) each probe; manual).

Comment: Several commenters urged CMS to remove the in situ hybridization codes from its request for review since the RUC reviewed the work values for those codes when valuing the new codes.

Response: We believe that these codes exemplify the need to conduct simultaneous review of direct PE inputs and physician work and time. As we explained in the proposal, maintaining appropriate relativity among payment rates, and PE RVUs in particular, requires the assignment of correct direct PE inputs relative to similar services. We understand that the RUC recommended maintaining the work RVUs for the existing codes in the context of the recommendation regarding the new codes, but the recommendations did not address the direct PE inputs of the existing codes that now describe similar tests using specimen media other than urine.

Comment: LUGPA urged CMS to resolve the payment discrepancies by amending the direct PE inputs for 88120 and 88121 in order to equalize payment with the payment rates with 88367 and 88368. Additionally, the association suggested that CMS should equalize the work and malpractice RVUs for these codes with 88367 and 88368. The association also reasserted the claim that the information which CMS accepted in its totality from the RUC and the CPT Editorial Panel, with respect to both the existence of and values for the new codes, is erroneous and unsupportable.

Response: We do not agree with the commenter's assertion that the technical resources required in conducting the urinary tract specimen test with and without the use of computer-assisted technology are exactly the same. We believe that using computer-assisted technology inherently alters the kind and amount of direct practice expense resources typically used in furnishing services. Therefore, we believe it would be inappropriate to use the direct inputs for the manual code in the calculation of PE RVUs for the code that describes the service when furnished using computer-assisted technology.

However, we continue to share the commenter's concerns regarding the potential payment discrepancies between the codes that describe the same test using different specimen media. If the direct resources required for conducting the test using urine specimens are different from the direct resources required for conducting the test using other specimen media, we do not believe it would be appropriate to assume the typical direct practice expense inputs for the non-specific specimen media codes that were previously valued based upon all the specimen media including urine are still accurate now that services using urine will be reported using different codes.

Therefore, we maintain our request as stated in the in the CY 2012 PFS proposed rule (76 FR 42795 and 42796) that the AMA RUC review both the direct PE inputs and work values of the existing codes that describe the test using specimen media other than urine.

After consideration of these comments, and in anticipation of forthcoming review of codes 88365, 88367, and 88368, we are maintaining for CY 2012 the current direct PE inputs for CPT codes 88120 and 88121 on an interim basis subject to public comment.

Ultrasound Equipment. A stakeholder has raised concerns about potential inconsistencies with the inputs and the prices related to ultrasound equipment in the direct PE database. Upon reviewing inputs and prices for ultrasound equipment, we have noted that there are 17 different pieces of ultrasound and ultrasound-related equipment in the database that are associated with 110 CPT Codes. The price inputs for ultrasound equipment range from $1,304.33 to $466,492.00. Therefore, we are asking the AMA RUC to review the ultrasound equipment included in those codes as well as the way the equipment is described and priced in the direct PE database.

In the past, the AMA RUC has provided us with valuable recommendations regarding particular categories of equipment and supply items that are used as direct PE inputs for a range of codes. For example, in the 2011 PFS final rule (75 FR 73204), we made changes to a series of codes following the RUC's review of services that include the radiographic fluoroscopic room (CMS Equipment Code EL014) as a direct PE input. The RUC review revealed the use of the item to no longer be typical for certain services in which it had been specified within the direct cost inputs. These recommendations have often prompted our proposals that have served to maintain appropriate relativity within the PFS, and we hope that the RUC will continue to address issues relating to equipment and supply inputs that affect many codes. Furthermore, we believe that in these kinds of cases, it may be appropriate to make changes to the related direct PE inputs for a series of codes without reevaluating the physician work or other direct PE inputs for the individual codes. In other words, while we generally believe that both the work and the direct practice expense inputs should be reviewed whenever the RUC makes recommendations regarding either component of a code's value, we recognize the value of discrete RUC reviews of direct PE items that serve as inputs for a series of service codes.

Comment: Many commenters expressed agreement with CMS' interest in establishing consistency regarding direct PE inputs for ultrasound equipment. The RUC agreed to review the types of equipment and the assignment to individual codes but reiterated that the RUC does not make recommendations related to specific prices used in the practice expense RVU calculations. A few commenters urged CMS and the RUC to provide manufacturers and other stakeholders the opportunity to provide input and feedback to the AMA RUC regarding descriptive and other information related to this equipment during any review.

Response: We appreciate the support for this request and the efforts of the RUC in taking on this review. We remind commenters that because the AMA RUC is an independent committee, concerned stakeholders should communicate directly with the AMA RUC regarding its professional composition. We note that we alone are responsible for all decisions about the direct PE inputs for purposes of PFS payment so, while the AMA RUC provides us with recommendations based on its broad expertise, we ultimately remain responsible for determining the direct PE inputs for all PFS services. Additionally, we note that any changes to the equipment inputs related to ultrasound services will be made through rulemaking and be subject to public comment. Finally, we remind interested stakeholders that throughout the year we meet with parties who want to share their views on topics of interest to them. These discussions may provide us with information regarding changes in medical practice and afford opportunities for the public to bring to our attention issues they believe we should consider for future rulemaking. (2) Codes Without Direct Practice Expense Inputs in the Non-Facility Setting Certain stakeholders have requested that we create nonfacility PE values for a series of kyphoplasty services CPT codes:

  • 22523 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (e.g., kyphoplasty); thoracic),
  • 22524 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (e.g., kyphoplasty); lumbar).
  • 22525 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (e.g., kyphoplasty); each additional thoracic or lumbar vertebral body (List separately in addition to code for primary procedure)).

In the case of these codes, we are asking the RUC to make recommendations regarding the appropriateness of creating nonfacility direct PE inputs. If the RUC were to make direct PE recommendations, we would review those recommendations as part of the annual process.

Comment: Several commenters asserted that determining the appropriateness of creating nonfacility direct PE inputs for particular services is not the role of the RUC. In response to this request, the RUC provided CMS with recommended direct PE inputs for CY 2012, but asserted that the RUC does not believe that it is within the Committee's expertise to determine whether a service can be performed safely or effectively in the office setting.

Response: We appreciate the commenter's' perspectives and understand the RUC's position. Since the RUC submitted nonfacility direct PE input recommendations with its annual recommendations on new, revised, and potentially misvalued codes for CY 2012, we priced the services on an interim basis in the nonfacility setting for CY 2012. However, we note that the valuation of a service under the PFS in particular settings does not address whether those services are medically reasonable and necessary in the case of individual patients, including being furnished in a setting appropriate to the patient's medical needs and condition. We address the nonfacility direct PE input recommendations for these codes in section III.B.2. of this final rule with comment period.

(3) Codes Potentially Requiring Updates to Physician Work

Cholecystectomy. We received a comment regarding a potential relativity problem between two cholecystectomy (gall bladder removal) CPT codes. CPT code 47600 (Cholecystectomy;) has a work RVU of 17.48, and CPT code 47605 (Cholecystectomy; with cholangiography) has a work RVU of 15.98. Upon examination of the physician time and visits associated with these codes, we found that CPT code 47600 includes 115 minutes of intra-service time and a total time of 420 minutes, including 3 office visits, 3 subsequent hospital care days, and 1 hospital discharge management day. CPT code 47605 includes 90 minutes of intra-service time and a total time of 387 minutes, including 2 office visits, 3 subsequent hospital care days, and 1 hospital discharge management day. We believe that the difference in physician time and visits is the cause for the difference in work RVU for these codes. However, upon clinical review, it does not appear that these visits appropriately reflect the relativity of these two services, as CPT code 47600 should not have more time and visits associated with the service than CPT code 47605. Therefore, we are asking the AMA RUC to review these two cholecystectomy CPT codes, 47600 and 47605.

Comment: Commenters did not disagree with us that there is a work RVU rank order anomaly between codes 47600 and 47605 but they believed 47605 is undervalued. The commenters agreed that these services should be reviewed together.

Response: We look forward to receiving recommendations from the AMA RUC and reviewing these codes. We note again that it is essential to value codes in the context of the code family and to consider the relativity with other services of similar time and intensity outside of the code family.

We thank the public for bringing these issues to our attention and kindly request that the public continue to do so.

6. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy

a. Background

Medicare has a longstanding policy to reduce payment by 50 percent for the second and subsequent surgical procedures furnished to the same patient by the same physician on the same day, largely based on the presence of efficiencies in the practice expense (PE) and pre- and post-surgical physician work. Effective January 1, 1995, the MPPR policy, with the same percentage reduction, was extended to nuclear medicine diagnostic procedures (CPT codes 78306, 78320, 78802, 78803, 78806, and 78807). In the CY 1995 PFS final rule with comment period (59 FR 63410), we indicated that we would consider applying the policy to other diagnostic tests in the future.

Consistent with recommendations of MedPAC in its March 2005 Report to the Congress on Medicare Payment Policy, under the CY 2006 PFS, the MPPR policy was extended to the technical component (TC) of certain diagnostic imaging procedures performed on contiguous areas of the body in a single session (70 FR 70261). The reduction recognizes that, for the second and subsequent imaging procedures, there are some efficiencies in clinical labor, supplies, and equipment time. In particular, certain clinical labor activities and supplies are not duplicated for subsequent procedures and, because equipment time and indirect costs are allocated based on clinical labor time, those would also be reduced accordingly.

The imaging MPPR policy originally applied to computed tomography (CT) and computed tomographic angiography (CTA), magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA), and ultrasound services within 11 families of codes based on imaging modality and body region. When we adopted the policy in CY 2007, we stated that we believed efficiencies were most likely to occur when imaging procedures are performed on contiguous body areas because the patient and equipment have already been prepared for the second and subsequent procedures, potentially yielding resource savings in areas such as clerical time, technical preparation, and supplies (70 FR 45850). The MPPR policy originally applied only to procedures furnished in a single session involving contiguous body areas within a family of codes, not across families. Additionally, while the MPPR policy applies to TC-only services and to the TC of global services, it does not apply to professional component (PC) services.

Under the current imaging MPPR policy, full payment is made for the TC of the highest paid procedure, and payment is reduced by 50 percent of the TC for each additional procedure when an MPPR scenario applies. We originally planned to phase in the imaging MPPR policy over a 2-year period, with a 25 percent reduction in CY 2006 and a 50 percent reduction in CY 2007 (70 FR 70263). However, the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171) amended the statute to place a cap on the PFS payment amount for most imaging procedures at the amount paid under the hospital outpatient prospective payment system (OPPS). In view of the new OPPS payment cap added by the DRA, we decided in the PFS final rule with comment period for 2006 that it would be prudent to retain the imaging MPPR at 25 percent while we continued to examine the appropriate payment levels (71 FR 69659). The DRA also exempted reduced expenditures attributable to the imaging MPPR policy from the PFS budget neutrality provision. Effective July 1, 2010, section 3135(b) of the Affordable Care Act amended the statute to increase the MPPR on the TC of imaging services under the policy established in the CY 2006 PFS final rule with comment period from 25 to 50 percent, and exempted the reduced expenditures attributable to this further change from the PFS budget neutrality provision.

In the July 2009 GAO report entitled, “Medicare Physician Payments: Fees Could Better Reflect Efficiencies Achieved when Services are Provided Together,” the GAO recommended that we take further steps to ensure that fees for services paid under the PFS reflect efficiencies that occur when services are furnished by the same physician to the same beneficiary on the same day. The GAO recommended the following: (1) expanding the existing imaging MPPR policy for certain services to the PC to reflect efficiencies in physician work for certain imaging services; and (2) expanding the MPPR to reflect PE efficiencies that occur when certain nonsurgical, nonimaging services are furnished together. The GAO report also encouraged us to focus on service pairs that have the most impact on Medicare spending.

In its March 2010 report, MedPAC noted its concerns about mispricing of services under the PFS. MedPAC indicated that it would explore whether expanding the unit of payment through packaging or bundling would improve payment accuracy and encourage more efficient use of services.

In the CYs 2009 and 2010 PFS proposed rules (73 FR 38586 and 74 FR 33554, respectively), we stated that we planned to analyze nonsurgical services commonly furnished together (for example, 60 to 75 percent of the time) to assess whether an expansion of the MPPR policy could be warranted. MedPAC encouraged us to consider duplicative physician work, as well as PE, in any expansion of the MPPR policy.

Section 1848(c)(2)(K) of the Act (as added by section 3134(a) of the Affordable Care Act) specifies that the Secretary shall identify potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with furnishing a single service, and review and make appropriate adjustments to their relative values. As a first step in applying this provision, in the CY 2010 final rule with comment period, we implemented a limited expansion of the imaging MPPR policy to additional combinations of imaging services.

Effective January 1, 2011 the imaging MPPR applies regardless of code family; that is, the policy applies to multiple imaging services furnished within the same family of codes or across families. This policy is consistent with the standard PFS MPPR policy for surgical procedures that does not group procedures by body region. The current imaging MPPR policy applies to CT and CTA, MRI and MRA, and ultrasound procedure services furnished to the same patient in the same session, regardless of the imaging modality, and is not limited to contiguous body areas.

We note that section 1848(c)(2)(B)(v)(VI) of the Act (as added by section 3135(b) of the Affordable Care Act) specifies that reduced expenditures attributable to the increase in the imaging MPPR from 25 to 50 percent (effective for fee schedules established beginning with 2010 and for services furnished on or after July 1, 2010) are excluded from the PFS budget neutrality adjustment. That is, the reduced payments for code combinations within a family of codes (contiguous body areas) are excluded from budget neutrality. However, this exclusion only applies to reduced expenditures attributable to the increase in the MPPR percentage from 25 to 50 percent, and not to reduced expenditures attributable to our policy change regarding additional code combinations across code families (non-continguous body areas) that are subject to budget neutrality under the PFS

The complete list of codes subject to the CY 2012 MPPR policy for diagnostic imaging services is included in Addendum F.

As a further step in applying the provisions of section 3134(a) of the Affordable Care Act, effective January 1, 2011, we implemented an MPPR for therapy services. The MPPR applies to separately payable “always therapy” services, that is, services that are only paid by Medicare when furnished under a therapy plan of care. Contractor-priced codes, bundled codes, and add-on codes are excluded because an MPPR would not be applicable for “always therapy” services furnished in combination with these codes. The complete list of codes subject to the MPPR policy for therapy services is included in Addendum H.

In the CY 2011 proposed rule (75 FR 44075), we proposed to apply a 50 percent payment reduction to the PE component of the second and subsequent therapy services for multiple “always therapy” services furnished to a single patient in a single day. However, in response to public comments, in the CY 2011 PFS final rule with comment period (75 FR 73232), we adopted a 25 percent payment reduction to the PE component of the second and subsequent therapy services for multiple “always therapy” services furnished to a single patient in a single day.

Subsequent to publication of the CY 2011 PFS final rule with comment period, section 3 of the Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111-286) revised the payment reduction percentage from 25 percent to 20 percent for therapy services furnished in office settings. The payment reduction percentage remains at 25 percent for services furnished in institutional settings. Section 4 of the Physician Payment and Therapy Relief Act of 2010 exempted the reduced expenditures attributable to the therapy MPPR policy from the PFS budget neutrality provision. Under our current policy as amended by the Physician Payment and Therapy Relief Act, for institutional services, full payment is made for the service or unit with the highest PE and payment for the PE component for the second and subsequent procedures or additional units of the same service is reduced by 25 percent. For non-institutional services, full payment is made for the service or unit with the highest PE and payment for the PE component for the second and subsequent procedures or additional units of the same service is reduced by 20 percent.

The MPPR policy applies to multiple units of the same therapy service, as well as to multiple different services, when furnished to the same patient on the same day. It applies to services furnished by an individual or group practice or “incident to” a physician's service. The MPPR applies when multiple therapy services are billed on the same date of service for one patient by the same practitioner or facility under the same National Provider Identifier (NPI), regardless of whether the services are furnished in one therapy discipline or multiple disciplines, including, physical therapy, occupational therapy, or speech-language pathology.

The MPPR policy applies in all settings where outpatient therapy services are paid under Part B. This includes both services paid under the PFS that are furnished in the office setting, as well as to institutional services paid at the PFS rates that are furnished by outpatient hospitals, home health agencies, comprehensive outpatient rehabilitation facilities (CORFs), and other entities that are paid under Medicare Part B for outpatient therapy services.

In its June 2011 Report to the Congress, MedPAC further discussed its concern about the significant growth in ancillary services, specifically services for which physicians can self-refer under the in office ancillary exceptions list for the Ethics in Patient Referrals Act (also known as the Stark Law) including imaging, other diagnostic tests, and therapeutic services such as physical therapy and radiation therapy. MedPAC argues, in its June 2011 Report, that inaccurate pricing has played a role in this growth, and that there are additional efficiencies to be achieved in pricing imaging services notwithstanding a series of payment adjustments for imaging services over the past several years. MedPAC specifically recommended a multiple procedure payment reduction to the professional component of diagnostic imaging services provided by the same practitioner in the same session.

b. CY 2012 Expansion of the MPPR Policy to the Professional Component of Advanced Imaging Services

Over the past few years, as part of the potentially misvalued service initiative, the AMA RUC has examined several services that are billed together 75 percent or more of the time as part of the potentially misvalued service initiative. In several cases, the AMA RUC-recommended work values for new codes that describe the combined services, and those recommended values reflected the expected efficiencies. For example, for CY 2011, the AMA RUC valued the work for a series of new codes that describe CT of the abdomen and pelvis, specifically CPT codes:

  • 74176 (Computed tomography, abdomen and pelvis; without contrast material).
  • 74177 (Computed tomography, abdomen and pelvis; with contrast material).
  • 74178 (Computed tomography, abdomen and pelvis; without contrast material in one or both body regions, followed by with contrast material(s) and further sections in one or both body regions).

We accepted the work values recommended by the AMA RUC for these codes in the CY 2011 PFS final rule with comment period (75 FR 73229). The recommended work values reflected an expected efficiency for the typical combined service that paralleled the reductions that would typically result from a MPPR adjustment. For example, in support of the recommended work value of 1.74 RVUs for 74176, the AMA RUC explained that the full value of 74150 (Computed tomography, abdomen; without contrast material) (Work RVU = 1.19) plus half the value of 72192 (Computed tomography, pelvis; without contrast material) (1/2Work RVU = 0.55) equals 1.74 work RVUs. The AMA RUC stated that its recommended valuation was appropriate even though the combined current work RVUs for of 74150 and 72192 would result in a total work RVU of 2.28. Furthermore, the AMA RUC validated its estimation of work efficiency for the combined service by comparing the code favorably with the work value associated with 74182 (Magnetic resonance, for example, proton imaging, abdomen; with contrast material(s)) (Work RVU = 1.73), which has a similar intra-service time, 20 minutes. Thus, we believe our current and final MPPR formulations are consistent with the AMA RUC's work to review code pairs for unaccounted-for efficiencies and to appropriately value comprehensive codes for a bundle of component services.

We continue to believe that there may be additional imaging and other diagnostic services for which there are efficiencies in work when furnished together, resulting in potentially excessive payment for these services under current policy. MedPAC also made this same observation in their recent June 2011 Report to the Congress.

As noted, Medicare has a longstanding policy to reduce payment by 50 percent for the second and subsequent surgical procedures and nuclear medicine diagnostic procedures furnished to the same patient by the same physician on the same day.

In continuing to apply the provisions of section 3134(a) of the Affordable Care Act, for CY 2012 we proposed to expand the MPPR to the PC of Advanced Imaging Services (CT, MRI, and Ultrasound), that is, the same list of codes to which the MPPR on the TC of advanced imaging already applies (see Addendum F). Thus, the MPPR would apply to the PC and the TC of the codes. Specifically, we proposed to expand the 50 percent payment reduction currently applied to the TC to apply also to the PC of the second and subsequent advanced imaging services furnished in the same session. Full payment would be made for the PC and TC of the highest paid procedure, and payment would be reduced by 50 percent for the PC and TC for each additional procedure furnished to the same patient in the same session. This proposal was based on the expected efficiencies in furnishing multiple services in the same session due to duplication of physician work—primarily in the pre- and post-service periods, with smaller efficiencies in the intra-service period.

The proposal is consistent with the statutory requirement for the Secretary to identify, review, and adjust the relative values of potentially misvalued services under the PFS as specified by section 3134(a) of the Affordable Care Act. The proposal is also consistent both with our longstanding policy on surgical and nuclear medicine diagnostic procedures, which apply a 50 percent reduction to second and subsequent procedures. Furthermore, it is responsive to continued concerns about significant growth in imaging spending, and to MedPAC (March 2010, June 2011) and GAO (July 2009) recommendations regarding the expansion of MPPR policies under the PFS to account for additional efficiencies.

Finally, as noted, the proposal is consistent with the AMA RUC's recent methodology and rationale in valuing the work for a combined CT of the pelvis (CPT codes 72192, 72193 and 72194), and abdomen (CPT codes 74150, 74160 and 74170) where the AMA RUC assumed the work efficiency for the second service was 50 percent. Savings resulting from this proposal would be redistributed to other PFS services as required by the general statutory PFS budget neutrality provision.

Comment: Overall, most commenters opposed the expansion of the imaging MPPR policy to the PC. While many commenters acknowledged that there may be minimal efficiencies in the PC of second and subsequent procedures, they stated a 50 percent reduction was excessive. Commenters who agreed that some efficiencies exist indicated that activities with potential for duplication included: Review of medical history and prior imaging studies; review of the final report; and discussion of findings with the referring physician.

In contrast, a few commenters, including MedPAC, supported the proposal. MedPAC indicated that the proposal is consistent with the recommendation from its June 2011 Report to the Congress; noted that recent recommendations from the AMA RUC offer additional support; and agreed with a proposal to align the MPPR policy for the technical and professional portions of an imaging service.

Commenters opposed to our proposal raised several issues about the basis for CMS' proposed 50 percent reduction to the professional component for second and subsequent imaging services Many commenters cited a recent article entitled, “Professional Component Payment Reductions for Diagnostic Imaging Examinations When More Than One Service Is Rendered by the Same Provider in the Same Session: An Analysis of Relevant Payment Policy,” published June 29, 2011, in the Journal of the American College of Radiology”. The article argues that efficiencies within the professional component of advanced diagnostic imaging services including radiography and fluoroscopy, ultrasound, nuclear medicine, CT, and MRI are minimal and vary greatly across modalities. The article was authored by a group of radiologists that also participate in AMA RUC activities. They reached their conclusion after a review of the work for codes in the AMA RUC Resource Based Relative Value Scale Data Manager database. The authors focused their review on pre-service and post-service activities and did not review intra-service activities. The authors point out that pre- and post-service time is not a significant portion of time for imaging studies, unlike surgical procedures. The maximum percentage of potentially duplicated pre-service and post-service activity that this team identified ranged from 19 percent for nuclear medicine to 24 percent for ultrasound. The authors found a maximum percentage work reduction by modality ranging from 4.32 percent for CT to 8.15 percent for ultrasound. This translates to a maximum reduction in the professional component of only 2.96 percent for CT to 5.45 percent for ultrasound.

Commenters point out that neither GAO nor MedPAC supported a specific percentage reduction, but recommended that CMS conduct a review and analysis to determine the extent of efficiencies associated with the PC of multiple imaging services, and suggested that such efficiencies may vary by modality. Commenters highlighted several perceived deficiencies in the GAO's technical methodology, including a failure to distinguish between pre- post- and intra- physician work intensity, failure to recognize the wide variability in pre- and post- service time allocation among varied imaging services which makes a blanket policy more imprecise, and failure to consider clinical practice. Commenters argued that CMS provided no analysis to support the proposed MPPR level of 50 percent and did not identify potential areas of duplication in the pre-, post- and intra-service periods.

Commenters expressed views regarding our reference to the AMA RUC valuation of the work for bundled codes for CT of the pelvis and abdomen. Many commenters did not believe it was appropriate to propose a 50 percent MPPR to the PC for all advanced imaging services based on the AMA RUC's 50 percent reduction in work RVUs when valuing the combined pelvis and abdomen CT codes. Commenters indicated that the bundled code pair is not representative of most code pairs in that it is a focused contiguous body area using the same modality with significant overlap in the regions evaluated. Commenters noted that the AMA RUC has not consistently found a 50 percent reduction in physician work when imaging services are performed together.

The AMA RUC also objected to CMS using its recommended work values for the CT of Abdomen/Pelvis to substantiate our proposal. The AMA RUC asserted that it developed the recommended physician work values by estimating the magnitude of the physician work of the surveyed codes relative to physician work values of MRI, MRA, and evaluation and management services. When valuing the code for CT of Abdomen/Pelvis, the AMA RUC did not believe that the recommended physician work RVUs should be lower than the total RVUs resulting from applying a 50 percent MPPR to the professional component of the second and subsequent imaging service in the CT Abdomen/Pelvis code pair. The AMA RUC pointed out that the committee arrived at the recommended values using magnitude estimation and did not sum values for the component codes as suggested by CMS in the proposed rule.

Some commenters acknowledged that there are some efficiencies in the combined CT of the abdomen and pelvis, noting that overlapping images on a CT of the abdomen and pelvis may require less scrutiny. Commenters also noted that the physician has to review the patient history and provide dictation only once for multiple scans. Other commenters rejected the idea that there are efficiencies in the CT of the abdomen and pelvis. Commenters indicated that the service included only about 75 images 5 years ago. Today, it includes approximately 375 images, with the addition of thinner slice images and multiplanar reformatting.

Many commenters maintained that the proposed 50 percent MPPR for the PC of advanced imaging services is based on erroneous assumptions and a misunderstanding of the practice of medicine. These commenters argued that, generally, patients who are having multiple imaging studies on the same day tend to be patients who are seriously ill or injured patients, including cancer, trauma and stroke patients who invariably have significantly more complex pathology, requiring more time, rather than less. In some cases, the image using an initial modality may be inconclusive, requiring use of another imaging modality. Commenters argued that there are no efficiencies in physician work for interpretation of multiple advanced imaging scans for trauma and cancer patients, where images are less likely to be of contiguous anatomic areas.

Commenters maintained that, on average, studies with comparisons take longer than those that do not have comparison studies. The radiologists must look at more films and, when abnormalities are present, must compare each finding to the previous exam. The more studies there are, the more time it takes to interpret each one. Commenters asserted that radiologists are morally and professionally obligated to spend an equal amount of time, effort, and skill on interpreting images, irrespective of whether previous examinations have been performed on the same patient on the same day.

Finally, several commenters argued that technological advances in imaging have increased the intra-service work requiring radiologists to review many more images and more complex images than when the services were originally valued. They argue that contrary to the CMS proposal, clinical practice has become more time consuming because of the need to review hundreds of images per study compared to earlier imaging methods which took far fewer images. In addition to axial images, there frequently are coronal, sagittal, and oblique sequences as well as maximal intensity 3D images with each study. Images of non-contiguous body areas, for example, a CT of the brain and abdomen, are unrelated and are often read by different specialists, each separately requiring dedicated time for interpretation. Further, the search patterns used to identify possible issues in the images are different; technical aspects of viewing non-contiguous images are different; and the mental process used to formulate differential diagnoses are often unrelated. In some cases, such as when it is necessary to re-review prior images, commenters stated that more time may be required compared to the time required to review a single image.

Response: We appreciate the many comments submitted on this proposal. However, we continue to believe that some level of duplication exists in the PC service for second and subsequent advanced imaging services. While our initial proposal was developed with reference to existing MPPR policies and supported by the AMA RUC valuation of new bundled CT imaging codes, as commenters recommended, we have performed additional analysis for this final rule with comment period. Specifically, we have reviewed the vignettes in the AMA RUC database for 12 high volume code pairs where vignettes were available. The codes we reviewed appear in Table 8 and constituted about 30 percent of utilization for the advanced imaging codes performed on the same day in CY 2010 claims data. Although our analysis did not include code pairs with different modalities, we note that our claims data indicate that such code pairs represent only 3 percent of expenditures for advanced imaging codes. Therefore, we do not believe the typical multiple advanced imaging scenario involves more than one modality. We also note that our analysis did not include ultrasound code pairs as there are no vignettes or specific physician times for these services in the AMA RUC database. To identify potential duplication in the PC of the code combinations for which vignettes and physician times were available, we performed a clinical assessment to identify the level of duplication in the typical case and assigned a reduction percentage of either 0, 25, 50, 75 or 100 to each vignette component in the pre-, post-, and intra-service periods.

Our claims analysis revealed that the majority of multiple imaging studies were for contiguous anatomic areas including thorax and abdomen/pelvis, and head/brain and neck/spine, and utilized the same modality. This suggests that multiple studies are typically performed to view a single underlying pathology that spans either multiple regions or lies in the region of overlap where a single study might be suboptimal. If the reasons for the studies were relatively unrelated, the observed association between contiguous areas and same modality would not exist. Conversely, the observation of this firm association between multiple studies on the same day implies that there are some efficiencies in interpreting history; predicting pathology; selecting protocols; reviewing scout and technique scans; focusing on particular tissue types and imaging windows; reviewing overlapping fields; reporting preliminary if not final results; and follow-up discussions with patients, staff and physicians. In contrast to the analysis published by the ACR, we found—

  • Significant duplication in the pre-service work, which consists of reviewing patient history and any prior imaging studies, and determining the protocol and communicating that protocol with technologists;
  • Significant duplication in the post-service work, which almost always consists of reviewing and signing a final report and discussing findings with the referring physician; and
  • Moderate efficiencies in intra-service work. Specifically, supervising contrast (where appropriate), interpreting the examination and comparing it to other studies, and dictating the report for the medical record.

In conclusion, our analysis showed that, after applying a reduction percentage to each vignette component for the second and subsequent scans, identified as the code(s) in the code pair with the lower professional component RVU, and adjusting for intensity differences between pre-service and post-service work and intra-service work, the total RVU reduction ranges from 27.3 to 43.1 percent for second and subsequent procedures in the 12 code pairs.

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

Based on our further analysis and in response to comments, we believe that a 25 percent reduction would more appropriately capture the range of physician work efficiencies for second and subsequent imaging services furnished by the same physician (including physicians in the same group practice) to the same patient in the same session on the same day.

Commenters expressed concerns that there is wide variation in the potential efficiencies among different code pairs that such variability precludes broad application of a single percentage reduction, and that establishing new combined codes is the only mechanism for capturing accurate payment, for multiple imaging services. In general, we believe that MPPR policies capture efficiencies when several services are furnished in the same session and that it is appropriate to apply a single percentage reduction to second and subsequent procedures to capture those efficiencies. Because of the myriad potential combinations of advanced imaging scans, establishing new combined codes for each combination of advanced imaging scans is unwieldy and impractical. An MPPR policy is not precise, but reflects efficiencies in the aggregate, such as common patient history, interpretation of multiple images involving the same patient and same anatomical structures, and, typically, same modality. Our analysis of the specific activities included in furnishing advanced imaging scans together supports a reduction between 27.3 and 43.1 percent. The implementation of a 25 percent reduction in the PC for second and subsequent imaging services furnished by the same physician in the same session is less than range of reductions we observed for second and subsequent scans in our analysis. Therefore, while we acknowledge that efficiencies may vary across code pairs, we believe that a 25 percent reduction in the PC is reasonable and supported by our analysis. We note that, as with many of our policies, we will continue to review this MPPR policy and refine it as needed in future years to ensure that we continue to provide accurate payments under the PFS.

We disagree with commenters' assertions that there are no efficiencies in physician work for the interpretation of multiple advanced imaging scans for trauma and cancer patients. As noted previously, our analysis indicates that the typical multiple imaging case involves contiguous body areas, and only a very small percentage involve more than one modality. We note that this analysis included all claims data, including trauma and cancer patient imaging studies. In addition, we used conservative estimates of the reduction percentages for the observed efficiencies for second and subsequent procedures in our analysis. Finally, we believe there are efficiencies in work for all multiple imaging studies, including the review of medical history and prior imaging studies; contrast administration; review of the final report; and discussion of findings with the referring physician, regardless of the type of injury or patient's diagnosis.

Concerning comparison studies, we note that when interpreting previous studies, the radiologist would interpret not just the prior image itself, but also the patient history or, at a minimum, the portfolio of similar available studies. While we understand that time spent reviewing prior studies adds work by requiring the radiologist to review such studies, we believe that the availability of prior studies may also reduce work by creating a baseline against which new images can be quickly compared.

Commenters were also concerned with technological advances that may exponentially multiply the number of images that are produced in a single imaging session. While we agree with commenters that technology has multiplied the number of images produced, we note that that same technology has vastly improved viewability. The use of shuttles to scan through a series of images along imaged axis, 3-D rendering to allow visualization, rotation and zoom, and modeling to enhance suspect findings and increase the utility of pattern recognition all exist to improve the efficiency of data extraction that at one time had to be visualized entirely in the mind of the radiologist from a series of side-by-side flat images. Therefore, we believe that, in the aggregate, technological advances in imaging have not significantly increased the work of interpretation. Efficiencies resulting from technological advances are even more evident in cases of multiple contiguous images, where rendering allows joystick maneuvering through a single continuous image that may be billed independently, but which may be acquired as a single activity. Finally, we note that other commenters, and the study cited by the American College of Radiology, have acknowledged some efficiencies do exist and are not currently recognized in the coding and payment structure of these codes.

Comment: The AMA RUC requested that CMS continue to support the activities of the joint CPT/RUC workgroup to identify services that can be bundled together into one comprehensive code and to make sure that this bundled code is valued appropriately. The AMA RUC noted that it utilizes Medicare claims data to ensure that it understands what services are reported in conjunction with the codes that are under their review, and to ensure that there is no duplication of pre-service and post-service work, or in practice costs. The AMA RUC maintains that any duplication in the PC that may exist when performing two or more imaging services has already been removed from the individual codes as it is assumed that there are a certain number of instances for which one service will be furnished and reported with another service. The AMA RUC maintains that further expansion of the MPPR to the PC would result in unwarranted and unfair reductions to the payment rate. The AMA RUC has found, through review of survey data, that when codes are commonly reported together (that is, more than 75 percent of the time), the duplication in physician work for the second or subsequent services is not consistently 50 percent, and may range from anywhere between 0 percent and 100 percent. The AMA RUC views its current project to address efficiencies on an individual basis with bundled codes to be a fair and consistent process. Commenters noted that thirteen new bundled CPT codes have been developed and valued by the AMA RUC so far, and more bundled codes are being developed for the 2013 and 2014 CPT cycles. Therefore, the AMA RUC believes its efforts should more than address the GAO recommendation to systematically review services commonly furnished together, and that CMS' implementation of the imaging MPPR policy for the professional component of advanced imaging services is not warranted at this time.

Response: The imaging MPPR is not intended to supersede the AMA RUC process of developing recommended values for services described by CPT codes. We appreciate the work by the AMA RUC and encourage them to continue examining code pairs for duplication based upon the typical case, and appropriately valuing new comprehensive codes for bundled services that are established by the CPT Editorial Panel. We view the AMA RUC process and the MPPR policy as complimentary and equally reasonable means to the appropriate valuation and payment for services under the PFS. Codes subject to the MPPR that are subsequently bundled would no longer be subject to the MPPR when billed alone in a single session. At the same time, the adoption of the MPPR for the PC of advanced imaging services will address duplications in work to ensure that multiple imaging services are paid more appropriately. As noted previously, we believe that an MPPR policy addresses work efficiencies present when more than one advanced imaging service is performed in the same session, and that creating new comprehensive codes to capture the myriad of unique combinations of advanced imaging services that could be performed in the same session would be unwieldy and impractical. In addition, we believe that the expansion of the MPPR policy for advanced imaging services to the PC is consistent with both the GAO and MedPAC recommendations. We note that as more code combinations are bundled into a single complete service reported by one CPT code, the MPPR policy would no longer apply for the combined services. For example, the MPPR no longer applies when the single code is billed for a combined CT of the pelvis and abdomen performed in the same session.

Comment: In the proposed rule, we cited section 3134 of the Affordable Care Act, which requires the Secretary identify potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with furnishing a single service, and to review and make appropriate adjustments to their relative values. A commenter believed that we inappropriately relied on this authority to justify the expansion of the MPPR to PC services. The commenter noted that we stated in the PFS final rule for 2011 that “[b]ecause of the different pieces of equipment used for CT/CTA, MRI/MRA, and ultrasound procedures, it would be highly unlikely that a single practitioner would furnish more than one imaging procedure involving two different modalities to one patient in a single session where the proposed MPPR would apply.” Therefore, the commenter concluded that we should not rely on the authority under section 3134 of the Affordable Care Act to adjust payment for “codes that are frequently billed in conjunction with furnishing a single service” as the basis to expand the MPPR policy to procedures that we conceded are rarely billed together.

Response: We believe that the application of the MPPR to the PC of second and subsequent advanced imaging services furnished in the same session to the same patient is fully consistent with section 1848(c(2)(K) of the Act (as added by section 3134 of the Affordable Care Act). Additionally, we believe the proposed MPPR is consistent with our authority under section 1848(c)(2)(B) of the Act which requires us to review the relative and make adjustments to values for physicians' services at least once every 5 years, and with our authority to establish ancillary policies under section 1848(c)(4) of the Act. As noted previously, we have had several MPPR policies in place for many years before the enactment of section 3134 of the Affordable Care Act.

As explained previously, section 1848(c)(2)(K)(i) of the Act requires the Secretary to identify services within several specific categories as being potentially misvalued, and to make appropriate adjustments to their relative values. One of the specific categories listed under section 1834(c)(2)(K)(ii) of the Act is “multiple codes that are frequently billed in conjunction with furnishing a single service.”

Therefore, we do not agree with the commenters that the MPPR policy undermines the goals of the Affordable Care Act. It appears the commenter may have misunderstood the point of the quoted statement from the proposed rule that, “[b]ecause of the different pieces of equipment used for CT/CTA, MRI/MRA, and ultrasound procedures, it would be highly unlikely that a single practitioner would furnish more than one imaging procedure involving two different modalities to one patient in a single session where the proposed MPPR would apply.” The commenter is correct that we conceded, in the circumstance where two different modalities are used, it is unlikely that two advanced imaging codes would be billed by a single physician for a single patient in a single session. However, the point of this statement was to indicate that the proposed MPPR would not apply in the vast majority of these situations. Although there remains the remote possibility that the MPPR would apply in a scenario where the codes for multiple advanced imaging services are not “frequently billed in conjunction with furnishing a single service,” we believe this would be exceedingly rare. Moreover, we would expect there to be some level of efficiencies in work even in these cases. As we indicated in the CY 2011 PFS final rule with comment period (75 FR 73231), application of a general MPPR policy to numerous imaging service combinations may result in an overestimate of efficiencies in some cases and an underestimate in others. But this can be true for any service paid under the PFS, and we believe it is important to establish a general policy to pay appropriately for the typical service or services furnished. Given that, based on our review of CY 2010 claims data, 97 percent of second and subsequent advanced imaging services furnished to the same patient on the same day involved the use of the same imaging modality, and that some of the cases that did involve different modalities might have been furnished by different physicians in different group practices (in which case the MPPR would not apply), we do not believe it is necessary to adjust our MPPR policy to address an uncommon scenario. Therefore, we believe the MPPR policy is fully consistent with section 1848(c)(2)(K) of the statute, as added by section 3134(a) of the Affordable Care Act, and that the policy fulfills several of our key statutory obligations by more appropriately valuing combinations of imaging services furnished to patients and paid under the PFS.

Comment: Commenters indicated that contemporary radiology is not designed to distinguish between imaging procedures performed during the “same” or “different” sessions with any degree of reliability. There is no practical method to reliably and efficiently make this distinction. This challenge is made even more difficult when the issue of “same” versus “different” interpreting physician(s) is taken into account. The process will also be challenging to auditors who will likely suggest that the burden is on the practice to prove claims submitted with a -59 modifier actually occurred in a separate session. Commenters are concerned that it is unclear how this can be efficiently documented, and request that this be considered before any new policy is adopted.

Commenters noted that imaging tests utilizing different modalities are rarely performed in the same session. For example, a patient may undergo an ultrasound, which would be interpreted by the physician to determine whether the patient requires a CT for further diagnostic evaluation. The physician supervises and/or performs and interprets each test separately, at different times, and speaks to the patient about the results of each test on separate occasions during the patient's visit. Also, separate written reports are required for each test.

Commenters further noted that in multiple trauma cases, the same radiologist would not interpret the entire series of exams. In addition, there are cases when a radiologist determines upon review that X-rays were insufficient to determine the problem and, therefore, recommends another type of imaging study be performed. The same radiologist may review the results of this second imaging test for the same patient later in the same day. In this case, the radiologist needs to complete an entire dictation to reflect the subsequent study and provide his professional interpretation. Commenters specifically asked whether the MPPR would apply when—

  • A physician does not read both scans together, for example, in emergency situations even though both scans were performed in the same session;
  • Two physicians with different specialties each read a separate scan of a patient, though both scans were taken during the same session; and
  • Physicians are in the same group practice.

Response: The MPPR for the PC of advanced imaging services applies to procedures furnished to the same patient, in the same session, on the same day. For purposes of the MPPR on the PC, scans interpreted at widely different times (such as in the emergency situation noted) would constitute separate sessions, even though the scans themselves were conducted in the same session and the MPPR on the TC would apply. We further recognize that in some cases, imaging tests utilizing different modalities may be conducted in separate sessions for the TC service, such as when the patient must be moved to another floor of the hospital; however, the PC services in such cases may, or may not, be furnished in separate sessions. As with the MPPR for multiple surgery, the MPPR on the PC for advanced imaging services applies in the case of multiple procedures furnished by a single physician or by multiple physicians in the same group practice. As a general policy, however, when multiple scans are conducted on a patient in the same session, we would generally consider the interpretations of those scans to be furnished in the same session, including cases when furnished by different physicians in the same group practice. In cases where the physician demonstrates the medical necessity of furnishing interpretations in separate sessions, use of the -59 modifier would be appropriate. We recognize that it may not always be a simple matter to determine whether a service was furnished in the “same” session, particularly in the case of the PC. The physician will need to exercise judgment to determine when it is appropriate to use the -59 modifier indicating separate sessions. We do not expect use of the modifier to be a frequent occurrence.

Comment: Some commenters expressed concern that the proposal may create an incentive to bypass ultrasound and simply order an advanced imaging procedure because, as the lower cost modality, ultrasound payment would be reduced. Another commenter indicated that CMS was proposing to include ultrasound under the definition of advanced imaging services for application of the MPPR, noting that this conflicts with the statutory definition of advanced imaging services as MRI, CT, PET and nuclear cardiology.

Response: Clearly, we do not intend the MPPR to encourage radiologists to forego ultrasound imaging in favor of advanced imaging modalities. We trust that radiologists will continue to utilize the modality or modalities that is/are both medically necessary and most appropriate, rather than use payment considerations to dictate the modality.

We believe the term “advanced imaging” has confused commenters because this term has been used to define different sets of imaging services for different Medicare initiatives. We have not revised the definition of advanced imaging services that we have used for the imaging MPPR policy regarding the TC of the second and subsequent imaging services Since 2006, for payment under the PFS, the imaging MPPR for the TC has included CT, MRI and ultrasound. While ultrasound services are included in both the existing imaging MPPR for the TC and in the MPPR policy we are finalizing for the PC beginning in CY 2012, we do not consider ultrasound services to be advanced imaging procedures for purposes of accreditation. Section 135(a) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) required the Secretary to designate organizations to accredit suppliers, including but not limited to physicians, non-physician practitioners and Independent Diagnostic Testing Facilities that furnish the technical component (TC) of advanced diagnostic imaging services, which include MRI, CT, and nuclear medicine imaging such as positron emission tomography (PET). The MIPPA provision expressly excludes ultrasound, X-ray, and fluoroscopy from this requirement.

Comment: Commenters indicated that CMS' proposed MPPR policy for the PC would result in a payment reduction that would adversely affect both the quality of care and access to care; shift imaging to hospitals; jeopardize the integrated, community-based care model; is counter-productive to the concept of pay for quality performance; and will encourage partial studies to be done over several different visits, which is inefficient for everyone involved and detrimental to patient care. Several commenters did not condone such an unprofessional response, but were concerned that practitioners might begin to circumvent this payment policy.

Response: We have no reason to believe that appropriately valuing services for payment under the PFS by revising payment to reflect duplication in the PC of multiple imaging services would negatively impact quality of care; jeopardize the integrated, community-based care model; be counter-productive to the concept of pay for quality performance; or limit patients' access to medically reasonable and necessary imaging services. We have no evidence to suggest any of the adverse impacts identified by the commenters have resulted from the implementation of the MPPR on the TC of imaging in 2006. In fact, to the contrary, MedPAC's analysis in its June 2011 report indicates there has been continued high annual growth in the use of imaging.

With respect to the ordering and scheduling of imaging services for Medicare beneficiaries, we require that Medicare-covered services be appropriate to patient needs. We would not expect the adoption of an MPPR for the PC of imaging services to result in imaging services being furnished on separate days by one provider merely so that the practitioner or provider may garner increased payment. We agree with the commenters who noted that such an unprofessional response on the part of practitioners would be inefficient and inappropriate. We will continue to monitor access to care and patterns of delivery for imaging services, with particular attention focused on identifying any changes in the delivery of same day imaging services that may be clinically inappropriate.

Comment: Commenters maintained that utilization of advanced imaging has not declined since implementation of the MPPRs or the OPPS cap because the ordering physician has not been impacted by MPPR payment policy. Commenters indicated that in order to address issues of over-utilization of imaging services, it would be more appropriate for CMS to address self-referral issues rather than continue to affect the payment for physicians performing and interpreting imaging studies through an MPPR or payment cap methodology.

Response: We understand the commenters' concerns and will continue to explore ways to appropriately address overutilization. We note that in addition to the commmenters' reference to physician self-referral, in its June 2011 report, MedPAC noted that numerous factors contribute to overutilization include mispricing of services under the PFS.

In summary, after consideration of the public comments received, we are adopting our CY 2012 proposal to apply an MPPR to the PC of advanced imaging services, with a modification to apply a 25 percent reduction for CY 2012 rather than the 50 percent reduction we had proposed. We continue to believe that efficiencies exist in the PC of multiple imaging services, and we will continue to monitor code combinations for possible future adjustments to the reduction percentage applied through this MPPR policy.

Specifically, beginning in CY 2012 we are adopting an MPPR that applies a 25 percent reduction to the PC of second and subsequent advanced imaging services furnished by the same physician to the same patient, in the same session, on the same day. We are proposing to add CPT 74174 (Computed tomographic angiography, abdomen and pelvis; with contrast material(s), including noncontrast images, if performed, and image postprocessing), which is a new code for CY 2012, to the imaging MPPR list. This code is being added on an interim final basis and is open to public comment on this final rule with comment period. We note that the MPPR will apply when the combined new procedure is furnished in conjunction with another procedure(s). The complete list of services subject to the MPPR for the PC of imaging services is the same as for the MPPR currently applied to the TC of imaging services, and is shown in Addendum F. The PFS budget neutrality provision is applicable to the new MPPR for the PC of advanced imaging services. Therefore, the estimated reduced expenditures for imaging services have been redistributed to increase payment for other PFS services. We refer readers to section IX.C. of this final rule with comment period for further discussion of the impact of this policy.

c. Further Expansion of MPPR Policies Under Consideration for Future Years

Currently, the MPPR policies focus only on a select number of codes. We will be aggressively looking for efficiencies in other sets of codes during the coming years and will consider implementing more expansive multiple procedure payment reduction policies in CY 2013 and beyond. In the proposed rule, we invited public comment on the following MPPR policies which are under consideration. Any proposals would be presented in future rulemaking and subject to further public comment:

  • Apply the MPPR to the TC of All Imaging Services. This approach would apply a payment reduction to the TC of the second and subsequent imaging services performed in the same session. Such an approach could define imaging consistent with our existing definition of imaging for purposes of the statutory cap on payment at the OPPS rate (including X-ray, ultrasound (including echocardiography), nuclear medicine (including positron emission tomography), magnetic resonance imaging, computed tomography, and fluoroscopy, but excluding diagnostic and screening mammography). Add-on codes that are always furnished with another service and have been valued accordingly could be excluded.

Such an approach would be based on the expected efficiencies due to duplication of clinical labor activities, supplies, and equipment time. This approach would apply to approximately 530 HCPCS codes, including the 119 codes to which the current imaging MPPR applies. Savings would be redistributed to other PFS services as required by the statutory PFS budget neutrality provision.

  • Apply the MPPR to the PC of All Imaging Services. This approach would apply a payment reduction to the PC of the second or subsequent imaging services furnished in the same encounter. Such an approach could define imaging consistent with our existing definition of imaging for the cap on payment at the OPPS rate. Add-on codes that are always furnished with another service and have been valued accordingly could be excluded.

This approach would be based on efficiencies due to duplication of physician work primarily in the pre- and post-service periods, with smaller efficiencies in the intra-service period. This approach would apply to approximately 530 HCPCS codes, including the 119 codes to which the current imaging MPPR applies. Savings would be redistributed to other PFS services as required by the statutory PFS budget neutrality provision.

  • Apply the MPPR to the TC of All Diagnostic Tests. This approach would apply a payment reduction to the TC of the second and subsequent diagnostic tests (such as radiology, cardiology, audiology, etc.) furnished in the same encounter. Add-on codes that are always furnished with another service and have been valued accordingly could be excluded.

The approach would be based on the expected efficiencies due to duplication of clinical labor activities, supplies, and equipment time. The approach would apply to approximately 700 HCPCS codes, including the approximately 560 HCPCS codes subject to the OPPS cap. The savings would be redistributed to other PFS services as required by the statutory PFS budget neutrality provision.

We received several comments concerning the future expansion of the MPPR. We will take the comments under consideration as we develop future proposals. Any proposals would be presented in future rulemaking and subject to further public comment.

d. Procedures Subject to the OPPS Cap

We are proposing to add the new codes in Table 9 to the list of procedures subject to the OPPS cap, effective January 1, 2012. These procedures meet the definition of imaging under section 5102(b) of the DRA. These codes are being added on an interim final basis and are open to public comment in this final rule with comment period.

C. Overview of the Methodology for the Calculation of Malpractice RVUs

Section 1848(c) of the Act requires that each service paid under the PFS be comprised of three components: work, PE, and malpractice. From 1992 to 1999, malpractice RVUs were charge-based, using weighted specialty-specific malpractice expense percentages and 1991 average allowed charges. Malpractice RVUs for new codes after 1991 were extrapolated from similar existing codes or as a percentage of the corresponding work RVU. Section 4505(f) of the BBA amended section 1848(c) of the Act which required us to implement resource-based malpractice RVUs for services furnished beginning in 2000. Therefore, initial implementation of resource-based malpractice RVUs occurred in 2000.

The statute also requires that we review, and if necessary adjust, RVUs no less often than every 5-years. The first review and update of resource-based malpractice RVUs was addressed in the CY 2005 PFS final rule with comment period (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). In the CY 2010 PFS final rule with comment period, we implemented the second review and update of malpractice RVUs. For a discussion of the second review and update of malpractice RVUs, see the CY 2010 PFS proposed rule (74 FR 33537) and final rule with comment period (74 FR 61758).

As explained in the CY 2011 PFS final rule with comment period, malpractice RVUs for new and revised codes effective before the next Five-Year Review of Malpractice (for example, effective CY 2011 through CY 2014, assuming that the next review of malpractice RVUs occurs for CY 2015) are determined either by a direct crosswalk to a similar source code or by a modified crosswalk to account for differences in work RVUs between the new/revised code and the source code (75 FR 73208). For the modified crosswalk approach, we adjust (or “scale”) the malpractice RVU for the new/revised code to reflect the difference in work RVU between the source code and the new/revised work value (or, if greater, the clinical labor portion of the fully implemented PE RVU) for the new code. For example, if the proposed work RVU for a revised code is 10 percent higher than the work RVU for its source code, the malpractice RVU for the revised code would be increased by 10 percent over the source code RVU. This approach presumes the same risk factor for the new/revised code and source code but uses the work RVU for the new/revised code to adjust for risk-of-service.

D. Geographic Practice Cost Indices (GPCIs)

1. Background

Section 1848(e)(1)(A) of the Social Security Act requires us to develop separate Geographic Practice Cost Indices (GPCIs) to measure resource cost differences among localities compared to the national average for each of the three fee schedule components (that is, physician work, practice expense (PE), and malpractice). While requiring that the PE and malpractice GPCIs reflect the full relative cost differences, section 1848(e)(1)(A)(iii) of the Act requires that the physician work GPCIs reflect only one-quarter of the relative cost differences compared to the national average. In addition, section 1848(e)(1)(G) of the Act sets a permanent 1.5 work GPCI floor for services furnished in Alaska beginning January 1, 2009, and section 1848(e)(1)(I) of the Act sets a permanent 1.0 PE GPCI floor for services furnished in frontier States beginning January 1, 2011.

Section 1848(e)(1)(E) of the Act provides for a 1.0 floor for the work GPCIs which was set to expire at the end of 2009 until it was extended through December 31, 2010 by section 3102(a) of the Affordable Care Act. Because the work GPCI floor was set to expire at the end of 2010, the GPCIs published in Addendum E of the CY 2011 PFS final rule with comment period did not reflect the 1.0 physician work floor. However, section 1848(e)(1)(E) of the Act was amended on December 15, 2010, by section 103 of the Medicare and Medicaid Extenders Act (MMEA) of 2010 (P.L. 111-309) to extend the 1.0 work GPCI floor through December 31, 2011. Appropriate changes to the CY 2011 GPCIs were made to reflect the 1.0 physician work floor required by section 103 of the MMEA. Since the work GPCI floor provided in section 1848(e)(1)(E) of the Act is set to expire prior to the implementation of the CY 2012 PFS, the CY 2012 physician work GPCIs, and summarized geographic adjustment factors (GAFs), presented in this final rule with comment period do not reflect the 1.0 work GPCI floor. As required by section 1848(e)(1)(G) and section 1848(e)(1)(I) of the Act, the 1.5 work GPCI floor for Alaska and the 1.0 PE GPCI floor for frontier States will be applicable in CY 2012. Moreover, the limited recognition of cost differences in employee compensation and office rent for the PE GPCIs, and the related hold harmless provision, required under section 1848(e)(1)(H) of the Act was only applicable for CY 2010 and CY 2011 (75 FR 73253) and, therefore, is no longer effective beginning in CY 2012.

Section 1848(e)(1)(C) of the Act requires us to review and, if necessary, adjust the GPCIs not less often than every 3 years. This section also specifies that if more than 1 year has elapsed since the last GPCI revision, we must phase in the adjustment over 2 years, applying only one-half of any adjustment in the first year.

As noted in the CY 2011 PFS final rule with comment period (75 FR 73252 through 73262), for the sixth GPCI update, we updated the data used to compute all three GPCI components. Specifically, we utilized the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) data to calculate the physician work GPCIs (75 FR 73252). In addition, we used the 2006 through 2008 BLS OES data to calculate the employee compensation sub-component of practice expense (75 FR 73255). Consistent with previous updates, we used the 2 bedroom residential apartment rent data from HUD (2010) at the 50th percentile as a proxy for the relative cost differences in physician office rents (75 FR 73256). Lastly, we calculated the malpractice GPCIs using malpractice premium data from 2006 through 2007 (75 FR 73256).

Since more than 1-year had elapsed since the fifth GPCI update, as required by law, the sixth GPCI update changes are being phased in over a 2-year period. The current CY 2011 GPCIs reflect the first year of the transition. The final CY 2012 GPCIs reflect the full implementation with modifications reflecting the revisions contained in this final rule with comment period.

The Affordable Care Act requires that we analyze the current methodology and data sources used to calculate the PE GPCI component. Specifically, section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of the Affordable Care Act) requires the Secretary to “analyze current methods of establishing practice expense adjustments under subparagraph (A)(i) and evaluate data that fairly and reliably establishes distinctions in the cost of operating a medical practice in different fee schedule areas.” Section 1848(e)(1)(H)(iv) of the Act also requires that such analysis shall include an evaluation of the following:

  • The feasibility of using actual data or reliable survey data developed by medical organizations on the costs of operating a medical practice, including office rents and non-physician staff wages, in different fee schedule areas.
  • The office expense portion of the practice expense geographic adjustment; including the extent to which types of office expenses are determined in local markets instead of national markets.
  • The weights assigned to each area of the categories within the practice expense geographic adjustment.

In addition, the weights for different categories of practice expense in the GPCIs have historically matched the weights developed by the CMS Office of the Actuary (OACT) for use in the Medicare Economic Index (MEI), the measure of inflation used as part of the basis for the annual update to the physician fee schedule payment rates. In response to comments received on the CY 2011 Physician Fee Schedule proposed rule, however, we delayed moving to the new MEI weights developed by OACT for CY 2011 pending further analysis.

Lastly, we asked the Institute of Medicine (IOM) to evaluate the accuracy of the geographic adjustment factors used for Medicare physician payment. IOM will prepare two reports for the Congress and the Secretary of the Department of Health and Human Services. The revised first report (Phase I), which includes supplemental recommendations to the initial IOM release of June1, 2011, was released on September 28, 2011, and includes an evaluation of the accuracy of geographic adjustment factors for the hospital wage index and the GPCIs, and the methodology and data used to calculate them. The second report, expected in spring 2012, will evaluate the effects of the adjustment factors on the distribution of the health care workforce, quality of care, population health, and the ability to provide efficient, high value care. Given the timing of the release of IOM's revised report, we are unable to address the full scope of the IOM recommendations in this final rule with comment period. These reports can be accessed on the IOM's Web site at: http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.

The recommendations that relate to or would have an effect on the GPCIs included in IOM's revised Phase I report are summarized as follows:

  • Recommendation 2-1: The same labor market definition should be used for both the hospital wage index and the physician geographic adjustment factor. Metropolitan statistical areas and Statewide non-metropolitan statistical areas should serve as the basis for defining these labor markets.
  • Recommendation 2-2: The data used to construct the hospital wage index and the physician geographic adjustment factor should come from all health care employers.
  • Recommendation 5-1: The GPCI cost share weights for adjusting fee-for-service payments to practitioners should continue to be national, including the three GPCIs (work, practice expense, and liability insurance) and the categories within the practice expense (office rent and personnel).
  • Recommendation 5-2: Proxies should continue to be used to measure geographic variation in the physician work adjustment, but CMS should determine whether the seven proxies currently in use should be modified.
  • Recommendation 5-3: CMS should consider an alternative method for setting the percentage of the work adjustment based on a systematic empirical process.
  • Recommendation 5-4: The practice expense GPCI should be contructed with the full range of occupations employed in physicians' offices, each with a fixed national weight based on the hours of each occupation employed in physicians' offices nationwide.
  • Recommendation 5-5: CMS and the Bureau of Labor Statistics should develop an agreement allowing the Bureau of Labor Statistics to analyze confidential data for the Centers for Medicare and Medicaid Services.
  • Recommendation 5-6: A new source of information should be developed to determine the variation in the price of commercial office rent per square foot.
  • Recommendation 5-7: Nonclinical labor-related expenses currently included under practice expense office expenses should be geographically adjusted as part of the wage component of the practice expense.

2. GPCI Revisions for CY 2012

The revised GPCI values we proposed were developed by a CMS contractor. As mentioned previously, there are three GPCI components (physician work, PE, and malpractice), and all GPCIs are developed through comparison to a national average for each component. Additionally, each of the three GPCIs relies on its own data source(s) and methodology for calculating its value. As discussed in more detail later in this section, we proposed to revise the PE GPCIs for CY 2012, as well as the cost share weights which correspond to all three GPCIs.

a. Physician Work GPCIs

The physician work GPCIs are designed to capture the relative cost of physician labor by Medicare PFS locality. Previously, the physician work GPCIs were developed using the median hourly earnings from the 2000 Census of workers in seven professional specialty occupation categories which we used as a proxy for physicians' wages. Physicians' wages are not included in the occupation categories because Medicare payments are a key determinant of physicians' earnings. That is, including physicians' wages in the physician work GPCIs would, in effect, have made the indices dependent upon Medicare payments. As required by law, the physician work GPCI reflects one quarter of the relative wage differences for each locality compared to the national average.

The physician work GPCI updates in CYs 2001, 2003, 2005, and 2008 were based on professional earnings data from the 2000 Census. For the sixth GPCI update in CY 2011, we used the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) data as a replacement for the 2000 Census data. We did not propose to revise the physician work GPCI data source for CY 2012. However, we note that the work GPCIs will be revised to account for the expiration of the statutory work floor. The 1.5 work floor for Alaska is permanent and will be applicable in CY 2012. In addition, we proposed to revise the physician work cost share weight from 52.466 to 48.266 in line with the 2011 MEI weights, which are based on 2006 data (referred to hereinafter as the 2006-based MEI).

b. Practice Expense GPCIs

(1) Affordable Care Act Analysis and Revisions for PE GPCIs

(A) General Analysis for the CY 2012 PE GPCIs

As previously mentioned, section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of the Affordable Care Act) requires the Secretary to “analyze current methods of practice expense adjustments under subparagraph (A)(i) and evaluate data that fairly and reliably establishes distinctions in the cost of operating a medical practice in the different fee schedule areas.”

Moreover, section 1848 (e)(1)(H)(v) of the Act requires the Secretary to make appropriate adjustments to the PE GPCIs as a result of the required analysis, no later than January 1, 2012. We proposed to make four revisions to the PE data sources and cost share weights discussed herein effective January 1, 2012. Specifically, we proposed to: (1) Revise the occupations used to calculate the employee wage component of PE using BLS wage data specific to the office of physicians' industry; (2) utilize two bedroom rental data from the 2006-2008 American Community Survey as the proxy for physician office rent; (3) create a purchased service index that accounts for regional variation in labor input costs for contracted services from industries comprising the “all other services” category within the MEI office expense and the stand alone “other professional expenses” category of the MEI; and (4) use the 2006-based MEI (most recent MEI weights finalized in the CY 2011 final rule with comment period) to determine the GPCI cost share weights. These proposals were based on analyses we conducted to address commenter concerns in the CY 2011 final rule with comment period and a continuation of our PE evaluation as required by the Affordable Care Act. The main comments were related to: (1) the occupational groups used to calculate the employee wage component of PE, and (2) concerns by commenters stating that regional variation in purchased services such as legal and accounting were not sufficiently included in the GPCI methodology.

We began analyzing the current methods and data sources used in the establishment of the PE GPCIs during the CY 2011 rulemaking process (75 FR 40084). With respect to our CY 2011 analysis, we began with a review of the Government Accountability Office's (GAO) March 2005 Report entitled, “Medicare Physician Fees: Geographic Adjustment Indices Are Valid in Design, but Data and Methods Need Refinement” (GAO-05-119). While we have raised concerns in the past about some of the GAO's GPCI recommendations, we noted that with respect to the PE GPCIs, the GAO did not indicate any significant issues with the methods underlying the PE GPCIs. Rather, the report focused on some of the data sources used in the method. For example, the GAO stated that the wage data used for the PE GPCIs are not current. Similarly, commenters on previous PE GPCI updates predominantly focused on either the data sources used in the method or raised issues such as incentivizing the provision of care in different geographic areas. However, the latter issue (incentivizing the provision of care) is outside the scope of the statutory requirement that the PE GPCIs reflect the relative costs of the mix of goods and services comprising practice expenses in the different fee schedule areas relative to the national average.

To further analyze the PE office expense in accordance with section 1848(e)(1)(H)(iv) of the Act, we examined the following issues: the appropriateness of expanding the number of occupations included in the employee wage index; the appropriateness of replacing rental data from the Department of Housing and Urban Development (HUD) with data from the 2006-2008 American Community Survey (ACS) two bedroom rental data as a proxy for the office rent subcomponent of PE; and the appropriateness of adjusting the “all other services” and “other professional expenses” MEI categories for geographic variation in labor-related costs. We also examined available ACS occupational group data for potential use in determining geographic variation in the employee wage component of PE.

An additional component of the analysis under section 1848(e)(1)(H)(iv) of the Act is to evaluate the weights assigned to each of the categories within the practice expense geographic adjustment. As discussed in the CY 2011 final rule with comment period (75 FR 73256), in response to concerns raised by commenters and to allow us time to conduct additional analysis, we did not revise the GPCI cost share weights to reflect the weights used in the revised and rebased 2006 MEI that we adopted beginning in CY 2011. In response to those commenters who raised many points regarding the appropriateness of assigning labor-related costs in the medical equipment and supplies and miscellaneous component which do not reflect locality cost differentials, we agreed to address the GPCI cost share weights again in the CY 2012 PFS proposal. These issues are discussed in greater detail in section II.D.2.b.(1).(E). of this final rule with comment period that discusses our determination of the cost share weights.

We also stated in the CY 2011 final rule with comment period that we would review the findings of the Secretary's Medicare Geographic Payment Summit and the MEI technical advisory panel during future rulemaking (75 FR 73256). The Secretary convened the National Summit on Health Care Quality and Value on October 4, 2010. This Summit was attended by a number of policy experts that engaged in detailed discussions regarding geographic adjustment factors and geographic variation in payment and the promotion of high quality care. This National Summit was useful by informing us on issues that we are studying further through two Institute of Medicine studies. In accordance with section 3102(b) of the Affordable Care Act, we are also continuing to consider these issues in the course of this notice and comment rulemaking for the CY 2012 PFS, which includes revisions to the GPCI, and through preparation of a report to the Congress that we will be submitting later this year in accordance with section 3137(b) of the Affordable Care Act on a plan for reforming the hospital wage index. In addition, we announced the establishment of the MEI Technical Advisory Panel and request for nominations of members on October 7, 2011 (76 FR 62415 through 62416). We note that the panel will conclude by September 28, 2012 and we look forward to examining the recommendations of this panel once it has issued its report.

(B) Analysis of ACS Rental Data

In the CY 2011 final rule with comment period, we finalized our policy to use the 2010 Fair Market Rent (FMR) data produced by HUD at the 50th percentile as the proxy for relative cost differences in physician office rents. However, as part of our analysis required by section 1848(e)(1)(H)(iv) of the Act, we have now examined the suitability of utilizing 3-year (2006-2008) ACS rental data to serve as a proxy for physician office rents. We believe that the ACS rental data provide a sufficient degree of reliability and are an appropriate source on which to base our PE GPCI office rent proxy. We also believe that the ACS data provide a higher degree of accuracy than the HUD data since the ACS data are updated annually and not based on data collected by the 2000 Census long form. Moreover, it is our understanding that the Census “long form,” which is utilized to collect the necessary base year rents for the HUD Fair Market Rent (FMR) data, will no longer be available in future years. Therefore, we proposed to use the available 2006 through 2008 ACS rental data for two bedroom residential units as the proxy for physician office rent. We also sought comment regarding the potential use of 5-year ACS rental data as a proxy for physician office rent in future rulemaking.

We believe the ACS data will more accurately reflect geographic variation in the office rent component. As in past GPCI updates, we proposed to apply a nationally uniform weight to the office rent component. We proposed to use the 2006-based MEI weight for fixed capital and utilities as the weight for the office rent category in the PE GPCI, and to use the ACS residential rent data to develop the practice expense GPCI value.

(C) Employee Wage Analysis

Accurately evaluating the relative price that physicians pay for labor inputs requires both a mechanism for selecting the occupations to include in the employee wage index and identifying an accurate measure of the wages for each occupation. We received comments during the CY 2011 rulemaking cycle noting that the current employee wage methodology may omit key occupational categories for which cost varies significantly across regions. Commenters suggested including occupations such as accounting, legal, and information technology in the employee wage component of the PE GPCI. To address these concerns, we proposed to revise the employee wage index framework within the practice expense (PE) GPCI. Under this new methodology, we would only select occupational categories relevant to a physician's practice. We would use a comprehensive set of wage data from the Bureau of Labor Statistics Occupational Employment Statistics (BLS OES) specific to the offices of physicians industry. Utilizing wage and national cost share weight data from the BLS OES would not only provide a more systematic approach to determining which occupations should be included in the non-physician employee wage category of the PE GPCI, but would also enable us to determine how much weight each occupation should receive within the index.

Due to its reliability, public availability, level of detail, and national scope, we proposed to use BLS OES data to estimate both occupation cost shares and hourly wages for purposes of determining the non-physician employee wage component of the PE GPCI. The OES panel data are collected from approximately 200,000 establishments, and provide employment and wage estimates for about 800 occupations. At the national level, OES provides estimates for over 450 industry classifications (using the 3, 4, and 5 digit North American Industry Classification System (NAICS)), including the Offices of Physicians industry (NAICS 621100). As described in the census, the Offices of Physicians industry comprises establishments of health practitioners having the degree of M.D. (Doctor of Medicine) or D.O. (Doctor of Osteopathy) primarily engaged in the independent practice of general or specialized medicine (except psychiatry or psychoanalysis) or surgery. These practitioners operate private or group practices in their own offices (such as centers, clinics) or in the facilities of others (such as hospitals or Health Maintenance Organization (HMO) medical centers). The OES data provide significant detail on occupational categories and offer national level cost share estimates for the offices of physicians industry.

In the BLS OES data methodology, we weighted each occupation based on its share of total labor cost within the offices of physician industry. Specifically, each occupation's weight is proportional to the product of its occupation's employment share and average hourly wage. In this calculation, we used each occupation's employment level rather than hours worked, because the BLS OES does not contain industry-specific information describing the number of hours worked in each occupation (see: http://www.bls.gov/oes/current/naics4_621100.htm). Our proposed methodology accounted for 90 percent of the total wage share in the office of physicians industry. Additionally, our proposed strategy produced 33 individual occupations that accounted for many of the occupations commenters had stated were historically excluded from the employee wage calculation (for example, accounting, auditors, and medical transcriptionists).

We also evaluated available ACS occupational data as a potential data source for the non-physician employee wage PE GPCI subcomponent. Based on the occupations currently used to calculate employee wages, the BLS OES captures occupations with greater relevancy to physician office practices and is a more appropriate data source than the currently available ACS data. In addition, since our publication of the CY 2012 proposed rule, we have conducted an analysis of ACS wage data including an expanded mix of occupations. A review of this analysis can be found in our contractors “Revisions to the Sixth Update of the Geographic Practice Cost Index: Final Report” located on the physician fee schedule CY 2012 final rule with comment period Web site at: http://www.cms.gov/PhysicianFeeSched/. After careful analysis, we still believe that the BLS OES data provide for the most accurate and comprehensive measurement of physician non-physician employee wages.

(D) Purchased Services Analysis

For CY 2012, we proposed to geographically adjust the labor-related industries within the “all other services” and “other professional expenses” categories of the MEI. In response to commenters who stated that these purchased services were labor-related and should be adjusted geographically, we agreed to examine this issue further in the CY 2011 final rule with comment period and refrained from making any changes. Based on our subsequent examination of this issue, we believe it would be appropriate to geographically adjust for the labor-related component of purchased services within the “All Other Services” and “Other Professional Expenses” categories using BLS wage data. In total, there are 63 industries, or cost categories, accounted for within the “all other services” and “other professional services” categories of the 2006-based MEI. For purposes of the hospital wage index at 74 FR 43845, we defined a cost category as labor-related if the cost category is defined as being both labor intensive and its costs vary with, or are influenced by the local labor market. The total purchased services component accounts for 8.095 percent of total practice cost. However, only 5.011 percentage points (of the total 8.095 percentage points assigned to purchased services) are defined as labor-related and thus adjusted for locality cost differences. These 5.011 percentage points represent cost categories that we believe are labor intensive and have costs that vary with, or are influenced by, the local labor market. The labor-related cost categories include but are not limited to building services (such as janitorial and landscaping), security services, and advertising services. The remaining weight assigned to the non labor-related industries (3.084 percentage points) represent industries that do not meet the criteria of being labor intensive or having their costs vary with the local labor market.

In order to calculate the labor-related and non labor- related shares, we would use a similar methodology that is employed in estimating the labor-related share of various CMS market baskets. A more detailed explanation of this methodology can be found under the supporting documents section of the CY 2012 PFS final rule with comment period Web page at http://www.cms.gov/PhysicianFeeSched/.

We believe our analysis, during 2010 and this year, of the current methods of establishing PE GPCIs and our evaluation of data that fairly and reliably establish distinctions in the cost of operating a medical practice in the different fee schedule areas meet the statutory requirements of section 1848(e)(1)(H)(iv) of the Act. A more detailed discussion of our analysis of current methods of establishing PE GPCIs and evaluation of data sources is included in our contractor's draft report entitled, “Proposed Revisions to the Sixth Update of the Geographic Practice Cost Index.” Our contractor's final report and associated analysis of the GPCI revisions, including the PE GPCIs, will be made publicly available on the CMS Web site. The final report may be accessed from the PFS Web site at: http://www.cms.gov/PhysicianFeeSched/ under the “Downloads” section of the CY 2012 PFS final rule with comment period Web page.

Additionally, see section IX.F. of this final rule with comment period for Table 86, which reflects the GAF impacts resulting from these proposals. As the table demonstrates, the primary driver of the CY 2012 impact is the expiration of the work GPCI floor which had produced non budget-neutral increases to the CY 2011 GPCIs for lower cost areas as authorized under the Affordable Care Act the Medicare and Medicaid Extenders Act (MMEA).

(E) Determining the PE GPCI Cost Share Weights

To determine the cost share weights for the CY 2012 GPCIs, we proposed to use the weights established in the 2006-based MEI. The MEI was rebased and revised in the CY 2011 final rule with comment period to reflect the weighted-average annual price change for various inputs needed to provide physicians' services. As discussed in detail in that section (75 FR 73262 through 73277), the proposed expense categories in the MEI, along with their respective weights, were primarily derived from data collected in the 2006 AMA PPIS for self-employed physicians and selected self-employed non-medical doctor specialties. Since we have historically updated the GPCI cost share weights consistent with the most recent update to the MEI, and because we have addressed commenter concerns regarding the inclusion of the weight assigned to utilities with office rent and geographically adjusted for the labor intensive industries within the “all other services” and “other professional expenses” MEI categories, we believe it is appropriate to adopt the 2006-based MEI cost share weights.

(i) Practice Expense

For the cost share weight for the CY 2012 PE GPCIs, we used the 2006-based MEI weight for the PE category of 51.734 percent minus the professional liability insurance category weight of 4.295 percent. Therefore, we proposed a cost share weight for the PE GPCIs of 47.439 percent.

(ii) Employee Compensation

For the employee compensation portion of the PE GPCIs, we proposed to use the non-physician employee compensation category weight of 19.153 percent reflected in the 2006-based MEI.

(iii) Office Rent

We proposed that the weight for the office rent component be revised from 12.209 percent to 10.223 percent. The 12.209 percent office rent GPCI weight was set equal to the 2000-based MEI cost weight for office expenses, which was calculated using the American Medical Association's (AMA) Socioeconomic Monitoring Survey (SMS). The 12.209 percent reflected the expenses for rent, depreciation on medical buildings, mortgage interest, telephone, and utilities. We proposed to set the GPCI office rent equal to 10.223 percent reflecting the 2006-based MEI cost weights (75 FR 73263) for fixed capital (reflecting the expenses for rent, depreciation on medical buildings and mortgage interest) and utilities. We are no longer including telephone costs in the GPCI office rent cost weight because we believe these expenses do not vary by geographic area.

Consistent with the revised and rebased 2006-based MEI which was adopted in the CY 2011 final rule with comment period (75 FR 73263), we disaggregated the broader office expenses component for the PE GPCI into 10 new cost categories. In this disaggregation, the fixed capital component is the office expense category applicable to the office rent component of the PE GPCI. As discussed in the section dealing with office rent, we proposed to use 2006-2008 ACS rental data as the proxy for physician office rent. These data represent a gross rent amount and includes data on utilities expenditures. Since it is not possible to separate the utilities component of rent for all ACS survey respondents, it was necessary to combine these two components to calculate office rent and by extension, we proposed combining those two cost categories when assigning a weight to the office rent component.

(iv) Purchased Services

As discussed in the previous paragraphs, a new purchased services index was created to geographically adjust the labor-related components of the “All Other Services” and “Other Professional Expenses” categories of the 2006-based MEI office market basket. In order to calculate the purchased services index, we proposed to merge the corresponding weights of these two categories to form a combined purchased services weight of 8.095 percent. However, we proposed to only adjust for locality cost differences of the labor-related share of the industries comprising the “All Other Services” and “Other Professional Expenses” categories. We have determined that only 5.011 percentage points of the 8.095 percentage points would be adjusted for locality cost differences (5.011 adjusted purchased service + 3.084 non-adjusted purchased services = 8.095 total cost share weight).

(v) Equipment, Supplies, and Other Miscellaneous Expenses

To calculate the proposed medical equipment, supplies, and other miscellaneous expenses component, we removed professional liability (4.295 percentage points), non-physician employee compensation (19.153 percentage points), fixed capital/utilities (10.223 percentage points), and purchased services (8.095 percentage points) from the PE category weight (51.734 percent). Therefore, we proposed a cost share weight for the medical equipment, supplies, and other miscellaneous expenses component of 9.968 percent. Consistent with previous methodology, this component of the PE GPCI is not adjusted for geographical variation.

(vi) Physician Work and Malpractice GPCIs

Furthermore, we proposed to use the physician compensation cost category weight of 48.266 percent as the work GPCI cost share weight; and we proposed to use the professional liability insurance weight of 4.295 percent for the malpractice GPCI cost share weight. We believe our analysis and evaluation of the weights assigned to each of the categories within the PE GPCIs satisfies the statutory requirements of section 1848(e)(1)(H)(iv) of the Act.

The cost share weights for the CY 2012 GPCIs are displayed in Table 10. For a detailed discussion regarding the GPCI cost share weights and how the weights account for local and national adjustments, see our contractor's “Proposed Revisions to the Sixth Update of the Geographic Practice Cost Index” draft report at (http://www.cms.gov/PhysicianFeeSched/). In addition, information regarding the CY 2011 update to the MEI can be reviewed beginning on 75 FR 73262.

(F) PE GPCI Floor for Frontier States

Section 10324(c) of the Affordable Care Act added a new subparagraph (I) under section 1848(e)(1) of the Act to establish a 1.0 PE GPCI floor for physicians' services furnished in frontier States effective January 1, 2011. In accordance with section 1848(e)(1)(I) of the Act, beginning in CY 2011, we applied a 1.0 PE GPCI floor for physicians' services furnished in States determined to be frontier States. There are no changes to those States identified as “Frontier States” for the CY 2012 final rule with comment period. The qualifying States are reflected in Table 11. In accordance with statute, we will apply a 1.0 GPCI floor for these States in CY 2012.

(2) Summary of CY 2012 PE GPCI Proposal

The PE GPCIs include four components: employee compensation, office rent, purchased services, and medical equipment, supplies and miscellaneous expenses. Our proposals relating to each of these components are as follows:

  • Employee Compensation: We proposed to geographically adjust the employee compensation using the 2006 through 2008 BLS OES data specific to the offices of physicians industry along with nationwide wage data to determine the employee compensation component of the PE GPCIs. The employee compensation component accounts for 19.153 percent of total practice costs or 40.4 percent of the total PE GPCIs.
  • Office Rents: We proposed to geographically adjust office rent using the 2006 through 2008 ACS residential rental data for two bedroom units as a proxy for the relative cost differences in physician office rents. In addition, we proposed to consolidate the utilities into the office rent weight to account for the utility data present in ACS gross rent data. The office rent component accounts for 10.223 percent of total practice cost or 21.5 percent of the PE GPCIs.
  • Purchased Services: We proposed to geographically adjust the labor-related component of purchased services within the “All Other Services” and “Other Professional Expenses “categories using BLS wage data. The methodology employed to estimate purchased services expenses is based on the same data used to estimate the employee wage index. Specifically, the purchased services framework relies on BLS OES wage data to estimate the price of labor in industries that physician offices frequently rely upon for contracted services. As previously mentioned, the labor-related share adjustment for each industry was derived using a similar methodology as is employed for estimating the labor-related shares of CMS market baskets. Furthermore, the weight assigned to each industry within the purchased services index was based on the 2006-based MEI. A more detailed discussion regarding CMS market baskets, as well as the corresponding definitions of a “labor-related share” and a “non-labor-related share” can be viewed at (74 FR 43845). The total purchased services component accounts for 8.095 percent of total practice cost or 17.1 percent of the PE GPCI. However, the proportion of purchased services that is geographically adjusted for locality cost difference is 5.011 percentage points of the 8.095 percentage points or 10.6 percent of the PE GPCI.
  • Medical Equipment, Supplies, and other Miscellaneous Expenses: We continue to believe that items such as medical equipment and supplies have a national market and that input prices do not vary appreciably among geographic areas. As discussed in previous GPCI updates in the CY 2008 and CY 2011 PFS proposed rules, specifically the fifth GPCI update (72 FR 38138) and sixth GPCI update (75 FR 73256), respectively, some price differences may exist, but we believe these differences are more likely to be based on volume discounts rather than on geographic market differences. For example, large physicians' practices may utilize more medical equipment and supplies and therefore may or may not receive volume discounts on some of these items. To the extent that such discounting may exist, it is a function of purchasing volume and not geographic location. The medical equipment, supplies, and miscellaneous expenses component was factored into the PE GPCIs with a component index of 1.000. The medical equipment, supplies, and other miscellaneous expense component account for 9.968 percent of total practice cost or 21.0 percent of the PE GPCI.

c. Malpractice GPCIs

The malpractice GPCIs are calculated based on insurer rate filings of premium data for $1 million to $3 million mature “claims-made” policies (policies for claims made rather than services furnished during the policy term). We chose claims-made policies because they are the most commonly used malpractice insurance policies in the United States. We used claims-made policy rates rather than occurrence policies because a claims-made policy covers physicians for the policy amount in effect when the claim is made, regardless of the date of event in question; whereas an occurrence policy covers a physician for the policy amount in effect at the time of the event in question, even if the policy is expired. Based on the data we analyzed, we proposed to revise the cost share weight for the malpractice GPCI from 3.865 percent to 4.295 percent.

d. Public Comments and CMS Responses Regarding the CY 2012 Proposed Revisions to the 6th GPCI Update

We received many public comments regarding the CY 2012 proposed GPCIs. Summaries of the comments and our responses follow.

Employee Compensation

Comment: Most commenters agreed with CMS' proposal to expand the occupations used to calculate the non-physician employee wage portion of the PE GPCI since the updated occupations better reflect the occupations found in physician practices. Many commenters indicated that BLS was the most appropriate data source since it represents the most current data available. Several commenters agreed with IOM's recommendation to include the full range of occupations employed in physicians' offices (100 percent of total non-physician wage share) from the BLS data, rather than the occupations representing 90 percent of the total non-physician wage share that we proposed. A few commenters did not support the use of BLS data since they do not include data describing the number of hours worked. A few commenters who provide radiation oncology services recommended adding the salaries of medical physicists to the non-physician employee compensation calculation based on wage data from the American Association of Physicists in Medicine or the American Academy of Pain Medicine. Some commenters indicated the occupational weights utilized by CMS are not representative of their actual practices or the Medical Group Management Association (MGMA) data.

Response: We agree with the commenters who indicated that the BLS is the most current and appropriate data source and disagree with the commenters who did not support the use of BLS data since it does not include data describing the number of hours worked. We believe that the BLS data provide the necessary detail on occupational categories and offer national level cost share estimates for the offices of physicians industry. In addition, as IOM noted in its report: “The committee finds that independent, health-care specific data from the BLS provide the most conceptually appropriate measure of differences in wages for health professional labor and clinical and administrative office staff.” (Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy, pp. 5-34, available at http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.)

We also agree with commenters who stated that the updated occupations better reflect the occupations found in physician practices and those who indicated we should expand the occupations to include the full range of occupations employed in physician offices as recommended by IOM. As IOM noted in its report, “the expansion of occupations will be a better reflection of the current workforce and a broader range of health professions, which will help to improve the accuracy of the adjustment. In addition, the expansion will anticipate further changes in the workforce brought by changes in labor market, including the increased demand for expertise in the adoption and use of health information technology” (pp. 5-34). As such, we are modifying our proposal and including all (100%) of non-physician occupations in the offices of physicians industry in our employee compensation PE calculation. Our modification to include the full range of non-physician occupations in response to these comments will increase the number of occupations captured in our employee wage calculation from 33 to 155.

We disagree with commenters who provide radiation oncology services and suggested that we should include medical physicists wage data from the American Association of Physicists in Medicine or the American Academy of Pain Medicine. The use of a consistent and contemporaneous source for the employment and wage data included in the calculation is preferable to a mix of supplemental data sources. Also, while BLS does not collect employment and wage data for medical physicists or health physicists specifically, it does collect employment and wage data for physicists as a whole (SOC code 19-2012 specifically includes physicists, see http://www.bls.gov/opub/ooq/2011/summer/art02.pdf, pg. 20). These data will be included in our calculation now that we are incorporating the full range of occupations employed in physician offices.

With respect to the commenters who indicated the occupational weights utilized by CMS are not representative of their actual practices or the MGMA data, we understand that national occupational weights may not match individual practices or subsets of practices. However, we agree with IOM's preference for “a consistent set of national weights applied to wage data from the full range of health sector occupations so that hourly wage comparisons can be made” (pp. 5-34).

Office Rent

Comment: Some commenters agreed with our proposal to use the ACS data instead of the HUD FMR data. Additionally, some commenters stated that the 3-year ACS was preferable to the 5-year ACS rental data, because it is more recent and thus more likely to reflect current value differences in the rapidly changing marketplace. However, most commenters reiterated their longstanding opposition to the use of residential rent as a proxy for physician office space and indicated that a better solution would be for the government to develop actual data on the cost of renting medical office space consistent with the IOM recommendation. Some commenters recommended a survey of physicians to acquire data on medical office rent. Others recommended a continued use of HUD data for CY 2012 until the ACS is more robust. Several commenters recommended that CMS use data from the MGMA survey to develop a medical office rent index. Commenters also raised issues with the relative relationship between selected individual counties in the ACS data or between the ACS data and CMS' assigned weights, questioning the validity of the methodology. These comments noted that the rent index in Santa Clara increased 7 percent yet remained unchanged in surrounding counties; the rent index in Ft. Lauderdale, Florida, and Teton County, Wyoming, are higher than rent index for Manhattan, New York; and Polk County, Iowa, and San Francisco County, California, have inconsistencies between the ACS-reported median and CMS' assigned weights.

Response: We appreciate all the comments received on our proposal to utilize the 3-year (2006-2008) ACS 2 bedroom rental data as our proxy for physician office rent. We agree with the commenters who stated that the ACS data is preferable to the current HUD FMR data. We also agree with commenters that a commercial data source for office rent that provided for adequate data representation of urban and rural areas would be preferable to a residential rent proxy. As we have previously discussed in the CY 2005, CY 2008, and CY 2011 (69 FR 66262, 72 FR 73257, and 75 FR 73257 respectively) final rules, we recognize that apartment rents may not be a perfect proxy for physician office rent. We have conducted an exhaustive search for a reliable commercial rental data source and have not found any reliable data that meets our accuracy standards. We describe in detail our search for a current, reliable, and publicly available commercial rent data source in our “Final Report on the Sixth Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule” viewable at http://www.cms.gov/PhysicianFeeSched/downloads/GPCI_Report.pdf. In addition, the IOM in their report titled “Geographic Adjustment in Medicare Payment Phase 1: Improving Accuracy” (pp 5-35) was unable to identify a source for commercial rent data.

With regards to surveying physicians directly to gather data to compute office rent, we note that development and implementation of a survey could take several years. Moreover, we have historically not sought direct survey data from physicians related to the GPCI to avoid issues of circularity and self-reporting bias. Also, in the CY 2011 final rule with comment period (75 FR 73259) we asked for specific public comments regarding the benefits of utilizing physician cost reports to potentially achieve greater precision in measuring the relative cost difference among Medicare localities. We also asked for comments related to the administrative burden of requiring physicians to routinely complete these cost reports and whether this should be mandatory for physicians practices. We did not receive any feedback specifically related to this comment solicitation during the open public comment period for the CY 2011 final rule with comment period.

With regard to comments requesting that CMS use data from the MGMA survey to develop the office rent index, as we stated in the CY 2011 final rule with comment period (75 FR 73257), we have concerns with both the sample size and representativeness of the MGMA data. For example, the responses represent only about 2,250 (or approximately 1 percent of physician practices nationwide) and have disproportionate sample sizes for each State, suggesting very uneven response rates geographically. In addition, we also have concerns that the MGMA data have the potential for response bias. The MGMA's substantial reliance on its membership base suggests a nonrandom selection into the respondent group. Some evidence for such issues in the MGMA data arises from the very different sample sizes by State. For example, in the MGMA data, 10 States have fewer than 10 observations each, and California, New York, and New Jersey have fewer than 10 observations per locality. Therefore, we continue to believe the MGMA survey data would not be a sufficient rental data source for all PFS localities.

With regards to comments that rents in Santa Clara increased 7 percent yet remained unchanged in the surrounding counties (San Francisco, San Mateo and Santa Cruz), we contacted the Census Bureau and verified that the data were correct. We also checked with the Census Bureau regarding commenter observations that the rent index value for two bedroom rental units is higher in Ft. Lauderdale, Florida, and Teton County, Wyoming, than in Manhattan. Census verified that these data were correct.

With regards to comments on rents in Polk County, Iowa, compared to San Francisco County, California, Polk County has the second highest office rent index of any county in Iowa (at 0.848). In order to accurately compare the specific relationship between these two counties office rent indices, the Polk County specific office rent index of (.848) should be applied. However, the commenters applied the Iowa “Statewide” locality level index of (.696) to Polk County in their calculations. Because Iowa is a Statewide locality, the higher office rent index for Polk County is reduced when combined with lower cost counties in our GPCI methodology.

As we have stated previously, we did not receive a special tabulation from Census in time to analyze 5-year ACS rental data as a potential data source for physician office rent for the CY 2012 rulemaking cycle. We have now received the 5-year ACS special tabulation from Census and will examine its suitability as a potential proxy for physician office rent. We will also continue our evaluation of ACS rental data during the upcoming year, and may propose further modifications to our office rent methodology in the CY 2013 PFS proposed rule.

We also note that HUD has proposed a new FMR methodology for 2012 that abandons the use of Census long-form data, which are no longer being collected, and instead relies exclusively on ACS data. We will be examining this new proposed methodology to potentially inform future rulemaking.

Purchased Services

Comment: Commenters generally agreed with our proposal to create a purchased service index to capture labor-related categories that reside within the “All Other Services” and “Other Professional Expenses” MEI categories. In addition, several commenters noted that the purchased services index accurately reflects variable professional and non-professional labor costs. However, some commenters disagreed with the proposal to create a purchased service index. The reasons cited included that there is no statutory requirement to add the purchased services proxy to the PE GPCI; the proposed methodology does not adequately capture geographic variation in purchased services; (for example there is no basis to support the assertion that the cost of capital is equal across the country) and, the purchased service index must be reflective of actual physician practice cost expenses and should be based on physician survey data. Lastly, some commenters recommend that CMS consult with physicians' organizations and others to test its categorizations, methodologies, and assumptions.

Response: We agree with commenters who stated that the purchased services index adds an additional level of precision to our PE GPCI calculations. Even though physician practices often purchase accounting, legal, advertising, consulting, landscaping, and other services from a variety of outside contractors, we have not previously included regional variation in the cost of purchased services within the current employee wage index. Specifically, the current methodology only measures regional variation in wages for workers that physician practices employ directly. For these reasons, we worked with our contractor to develop our proposed “purchased services index” to account for the regional labor cost variation within contracted services. This index captures labor-related categories residing within the “all other services” and “other professional expenses” MEI categories, and addresses the concerns of commenters, who in the CY 2011 final rule with comment period (75 FR 73258), thought that these services needed to be geographically adjusted.

We disagree with commenters who think there is insufficient statutory basis for a purchased services index. The incorporation of a purchased services index improves the accuracy of the GPCI consistent with the statute. It will allow for the GPCI to account for geographic variation in the price of a wider range of inputs.

We also disagree with commenters who asserted that the proposed methodology does not adequately capture geographic variation in purchased services, including the cost of capital, and asserted that our data sources were inadequate. To adjust for regional variation in the labor inputs of purchased services requires four key elements. These elements include: Wage data by occupation, industry employment levels, labor-related classifications by industry, and the share of physician practice expense. We are using a combination of BLS OES data and MEI weight data for these elements. The BLS OES data is the best currently available data source for this purpose and is used in many aspects of the GPCI calculation. The MEI weights represent our actuaries' best estimate for the weights for these categories. For a fuller discussion of the derivation of the MEI weights, see the CY 2011 final rule with comment period (75 FR 73262). With respect to capital, it is important to note that the proposed purchased services index does not assume that the cost of capital for physician practices is constant across the nation; instead, it assumes that the cost of capital for contracted firms is constant across the nation. Within the purchased services index, we assume a constant cost of capital for the purchased service firm primarily because we do not believe a reliable data source to measure capital costs for each purchased service industry currently exists.

With respect to commenters who recommended that we consult with physician organizations and others to test our categorizations, methodologies, and assumptions, we have been and will continue to be transparent with respect to our calculation of the purchased services index. We solicited comments on our proposed approach and have given consideration to all comments received.

Updated Cost Share Weights

Comment: Commenters expressed both support and concern with our proposal to update the cost share weights to reflect the 2006-based MEI weights finalized in the CY 2011 final rule with comment period. Several commenters noted that it was appropriate for CMS to update the cost share weights based on the more recent AMA physician survey data reflected in the current MEI weights, but not currently reflected in the GPCI cost share weights. Other commenters stated that the cost share weights should not be adjusted until CMS convenes the MEI technical advisory panel. A few commenters indicated that CMS should not update the cost share weights but should instead explore the use of alternative data sources, such as MGMA or physician surveys, for the weights.

Response: We agree with commenters who supported updating the GPCI cost share weights based on the MEI weights, which reflect the most recent AMA survey data. We have historically updated the GPCI cost share weights consistent with previous adjustments to the MEI. Due partly to concerns commenters raised during last year's rulemaking (see 75 FR 73256) on specific aspects of the GPCI methodology, we delayed updating the GPCI cost weights to reflect the updated MEI weights. Our CY 2012 changes to the GPCI methodology have addressed these comments where appropriate.

We disagree with commenters who indicated that the cost share weights should not be adjusted until CMS convenes the MEI technical advisory panel. The current MEI cost share weights are based on the most recent AMA survey data. The current GPCI cost share weights are based on the old MEI weights reflecting older AMA survey data. It would not be appropriate to continue to delay the adoption of the current MEI weights reflective of more recent AMA survey data in favor of continuing to use the old MEI weights reflective of older AMA survey data. For additional discussion of the derivation of the MEI weights, please see (75 FR 73262). We will study the findings and recommendations of the MEI technical advisory panel once the panel has had an opportunity to meet and issue its findings. For similar reasons, we also disagree with commenters who indicated that CMS should not update the cost share weights but should instead explore the use of alternative data sources, such as MGMA or physician surveys, for the weights. In addition, as discussed earlier, we have concerns with both the sample size and representativeness of the MGMA data.

Impacts

Comment: Many commenters requested that CMS should provide an impact table that separately shows the impact of each of our proposals.

Response: We will provide separate impact tables in our “Revisions to the Sixth Update of the Geographic Practice Cost Index: Final Report” that will individually show the GAF impacts of: Revising the GPCI cost share weights to be consistent with the revised and rebased 2006-based MEI; expanding the occupations used in the calculation of non-physician employee wage to reflect the full range of occupations in the offices of physicians' industry; implementing a purchased service index to account for labor-related services in the “all other services” and “other professional services” MEI categories; and utilizing the 2006-2008 ACS for two bedroom units as the proxy for physician office rent. This final report is viewable at the following Web address: http://www.cms.gov/PhysicianFeeSched/.

Delay Implementation of GPCI Revisions Until IOM Studies Are Completed

Comment: Many commenters urged us not to move forward with proposed changes to the PE GPCI until CMS and various stakeholders have had an opportunity to assess the full impacts and recommendations of the IOM reports on Medicare geographic adjustments.

Response: As previously mentioned, section 1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of the Affordable Care Act) requires the Secretary to “analyze current methods of establishing practice expense adjustments under subparagraph (A)(i) and evaluate data that fairly and reliably establishes distinctions in the cost of operating a medical practice in the different fee schedule areas.”

Moreover, section 1848(e)(1)(H)(v) of the Act requires the Secretary to make appropriate adjustments to the PE GPCIs as a result of the required analysis no later than January 1, 2012. As a result of our analysis, we proposed the four changes to the PE GPCI calculation as discussed previously in this section. While we fully intend to continue our review of the recently released revised IOM Phase I report on the Medicare GPCIs, it is important and consistent with the statute to proceed with appropriate improvements to the GPCI methodology in conjunction with our review of IOM's reports and IOM's continuing work in this area. We may propose further improvements and modifications to the GPCIs methodology in future rulemaking once we have had an opportunity to assess IOM's recommendations in their entirety.

Budget Neutrality

Comment: Some commenters stated that the modifications proposed in the revised Sixth GPCI Update were not budget neutral. These commenters provided tables illustrating the impacts on the single view chest x-ray service.

Response: We disagree that the modifications in the revised Sixth GPCI were not budget neutral. Our actuaries have determined that the CY 2012 GPCIs are budget neutral in the aggregate prior to the application of any statutory GPCI provisions (section 1848(e)(1)(G) and section 1848(e)(1)(I) of the Act) that are exempt by law from budget neutrality. The GPCIs are not necessarily budget neutral on an individual service by service basis.

Other Issues

We received other public comments on matters that were not related to our proposed CY 2012 changes to the GPCIs. We thank the commenters for sharing their views and suggestions. Because we did not make proposals regarding these matters, we do not generally summarize or respond to such comments in this final rule with comment period. For example, we received numerous comments related to the physician work GPCI and the aforementioned expiration of the 1.000 work floor. Since we only proposed to update the cost share weights attributed to physician work, and noted that the statutorily required 1.0 physician work floor would be expiring at the end of CY 2011 in the CY 2012 proposed rule, we will not be responding to comments related to our methodologies or calculations of physician work in this final rule with comment period. For an in-depth discussion of our most recent physician work GPCI update, see the CY 2011 final rule with comment period (75 FR 73252 and 75 FR 73256 through 73260). We look forward to reviewing and evaluating the IOM's recommendations related to physician work included in its revised Phase I report. After we have reviewed the IOM's recommendations in their entirety, we may propose modifications to the physician work GPCI in future rulemaking.

We also received several comments regarding the calculations and methodology used to calculate the MEI, although we did not propose any changes in the methodology used to calculate the MEI. Many commenters reiterated concerns regarding the assignment of MEI weights to the 10 office expense subcategories as outlined in the 2011 Medicare physician payment schedule final rule with comment period. According to some commenters, it is not clear that the AMA PPIS survey expense categories match up with the industry-level data from the Bureau of Economic Analysis in a way that makes this assignment of subcategory weights possible. These commenters further state that the MEI technical advisory panel should revisit this issue, and consider whether other sources of data are available to split office rent from other types of office expenses, and to validate the office rent share as a percent of total expense.

While this issue is outside the scope of this final rule with comment, we note that the costs reported in the 2006 AMA PPIS survey questions for office expenses were crosswalked as closely as possible to the 2002 BEA I/O benchmark categories. The weights for Office Expenses found in the MEI were appropriately based on information reported by self-employed physicians and selected self-employed non-medical doctor specialties found in the 2006 American Medical Association Physician Practice Information Survey (PPIS). The PPIS was developed by medical associations and captures the costs of operating a medical practice, including office rents and non-physician wages. The survey results were further disaggregated using data from the Bureau of Economic Analysis' Benchmark Input/Output tables for Offices of Physicians, Dentists, and Other Health Professionals. These resulting cost shares, along with the methods that were utilized in developing them, were proposed (75 FR 40087 through 40092) and finalized (75 FR 73262 through 73276) during the calendar year 2011, Physician Fee Schedule rule, rulemaking process. As stated in the CY 2011 final rule, (75 FR 73270 through 73276), the MEI technical advisory panel, will be asked to fully evaluate the index. In particular, the panel will be evaluating all technical aspects of the MEI including the cost categories, their associated weights and price proxies, and the productivity adjustment.

e. Summary of CY 2012 Final GPCIs

After consideration of the public comments received on the GPCIs, we are finalizing the revisions to the 6th GPCI update using the most current data, with modifications. We are also finalizing the proposal to change the GPCI cost share weights for CY 2012. As a result, the cost share weight for the physician work GPCI (as a percentage of the total) will be 48.266 percent, and the cost share weight for the PE GPCI will be 47.439 percent with a change in the employee compensation component from 18.654 to 19.153 percentage points. The cost share weight for the office rent component of the PE GPCI will be 10.223 percentage points (fixed capital with utilities), and the medical equipment, supplies, and other miscellaneous expenses component will be 9.968 percentage points. Moreover, the cost share weight for the malpractice GPCI will be 4.295 percent. In addition, we are finalizing the weight for purchased services at 8.095 percentage points (5.011 percentage points will be adjusted for geographic cost differences). Additionally, we will review the complete findings and recommendations from the Institute of Medicine's studies on geographic adjustment factors for physician payment and the MEI technical advisory panel once that information becomes fully available to CMS. We will once again consider the GPCIs for CY 2013 rulemaking in the context of our annual PFS rulemaking beginning in CY 2012 based on the information available at that time. We are finalizing the use of 2006 through 2008 ACS two bedroom rental data as a proxy for the relative cost difference in physicians' offices. Moreover, we will examine 5-year ACS rental data to determine its appropriateness as a potential data source for physician office rent. We will also examine HUDs CY 2012 proposed methodology, which utilizes ACS data exclusively, for potential use in future rulemaking. We are also finalizing our proposal to create a purchased services index to account for labor-related services with the “all other services” and “other professional expenses” MEI components. In response to public commenters who recommended we utilize BLS data to capture the “full range” of occupations included in the offices of physician industry to calculate employee wage, we are modifying our original proposal and expanding the number of occupations utilized in our calculation of non-physician employee wages to reflect 100 percent of the total wage share of non-physician occupations in the offices of physicians' industry.

As we indicated previously in this section, section 103 of the Medicare and Medicaid Extenders Act (MMEA) of 2010 (Pub. L. 111-309) extended the 1.0 work GPCI floor only through December 31, 2011. Therefore, the CY 2012 physician work GPCIs and summarized GAFs do not reflect the 1.0 work floor. Moreover, the limited recognition of cost differences in employee compensation and office rent for the PE GPCIs, and the related hold harmless provision, required under section 1848 (e)(1)(H) of the Act was only applicable for CY 2010 and CY 2011 (75 FR 73253) and, therefore under current law, is no longer effective beginning in CY 2012. However, the permanent 1.5 work GPCI floor for Alaska (as established by section 134(b) of the MIPPA) will remain in effect for CY 2012. We are finalizing the CY 2012 GPCIs shown in Addendum E. The GPCIs have been budget neutralized to ensure that nationwide, total RVUs are not impacted by changes in locality GPCIs. The 1.0 PE GPCI floor for frontier States was applied to the budget neutralized GPCIs. The frontier States are the following: Montana; Wyoming; North Dakota; Nevada; and South Dakota. The CY 2012 updated GAFs and GPCIs may be found in Addenda D and E of this final rule with comment period.

3. Payment Localities

The current PFS locality structure was developed and implemented in 1997. There are currently 89 total PFS localities; 34 localities are Statewide areas (that is, only one locality for the entire State). There are 52 localities in the other 16 States, with 10 States having 2 localities, 2 States having 3 localities, 1 State having 4 localities, and 3 States having 5 or more localities. The District of Columbia, Maryland, Virginia suburbs, Puerto Rico, and the Virgin Islands are additional localities that make up the remaining 3 of the total of 89 localities. The development of the current locality structure is described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and the subsequent final rule with comment period (61 FR 59494).

As we have previously noted in the CYs 2008 and 2009 proposed rules (72 FR 38139 and 73 FR 38513), any changes to the locality configuration must be made in a budget neutral manner within a State and can lead to significant redistributions in payments. For many years, we have not considered making changes to localities without the support of a State medical association in order to demonstrate consensus for the change among the professionals whose payments would be affected (since such changes would be redistributive, with some increasing and some decreasing). However, we have recognized that, over time, changes in demographics or local economic conditions may lead us to conduct a more comprehensive examination of existing payment localities.

For the past several years, we have been involved in discussions with physician groups and their representatives about recent shifts in relative demographics and economic conditions. We explained in the CY 2008 PFS final rule with comment period that we intended to conduct a thorough analysis of potential approaches to reconfiguring localities and would address this issue again in future rulemaking. For more information, we refer readers to the CY 2008 PFS proposed rule (72 FR 38139) and subsequent final rule with comment period (72 FR 66245).

As a follow-up to the CY 2008 PFS final rule with comment period, we acquired a contractor to conduct a preliminary study of several options for revising the payment localities on a nationwide basis. The final report entitled, “Review of Alternative GPCI Payment Locality Structures—Final Report,” is accessible from the CMS PFS Web page http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage under the heading “Review of Alternative GPCI Payment Locality Structures—Final Report.” The report may also be accessed directly from the following link: http://www.cms.gov/PhysicianFeeSched/downloads/Alt_GPCI_Payment_Locality_Structures_Review.pdf.

We did not make any proposals regarding the PFS locality configurations for CY 2012. However, we did receive some comments regarding IOM's recommendation to modify Medicare PFS localities to reflect metropolitan statistical areas (MSA)-based definitions. We will address any changes to Medicare PFS localities in future rulemaking.

4. Report From the Institute of Medicine

At our request, the Institute of Medicine is conducting a study of the geographic adjustment factors in Medicare payment. It is a comprehensive empirical study of the geographic adjustment factors established under sections 1848(e) (GPCI) and 1886(d)(3)(E) of the Act (hospital wage index). These adjustments are designed to ensure Medicare payment fees and rates reflect differences in input costs across geographic areas. The factors IOM is evaluating include the—

  • Accuracy of the adjustment factors;
  • Methodology used to determine the adjustment factors, and
  • Sources of data and the degree to which such data are representative.

Within the context of the U.S. health care marketplace, the IOM is also evaluating and considering the—

  • Effect of the adjustment factors on the level and distribution of the health care workforce and resources, including—

++ Recruitment and retention taking into account mobility between urban and rural areas;

++ Ability of hospitals and other facilities to maintain an adequate and skilled workforce; and

++ Patient access to providers and needed medical technologies;

  • Effect of adjustment factors on population health and quality of care; and
  • Effect of the adjustment factors on the ability of providers to furnish efficient, high value care.

The revised first report “Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy” that was released September 28, 2011 and is available on the IOM Web site http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx. It evaluates the accuracy of geographic adjustment factors and the methodology and data used to calculate them, and contains supplemental GPCI recommendations that were not contained in IOM's initial June 1st report. In its final report, scheduled to be released in the spring of 2012, the IOM will consider the role effect of Medicare payments in on matters such as the distribution of the health care workforce, population health, and the ability of providers to produce high-value, high-quality health care.

The recommendations included in IOM's revised Phase I report that relate to or would have an effect on the GPCIs are summarized as follows:

  • Recommendation 2-1: The same labor market definition should be used for both the hospital wage index and the physician geographic adjustment factor. Metropolitan statistical areas and Statewide non-metropolitan statistical areas should serve as the basis for defining these labor markets.
  • Recommendation 2-2: The data used to construct the hospital wage index and the physician geographic adjustment factor should come from all health care employers.
  • Recommendation 5-1: The GPCI cost share weights for adjusting fee-for-service payments to practitioners should continue to be national, including the three GPCIs (work, practice expense, and liability insurance) and the categories within the practice expense (office rent and personnel).
  • Recommendation 5-2: Proxies should continue to be used to measure geographic variation in the physician work adjustment, but CMS should determine whether the seven proxies currently in use should be modified.
  • Recommendation 5-3: CMS should consider an alternative method for setting the percentage of the work adjustment based on a systematic empirical process.
  • Recommendation 5-4: The practice expense GPCI should be constructed with the full range of occupations employed in physicians' offices, each with a fixed national weight based on the hours of each occupation employed in physicians' offices nationwide.
  • Recommendation 5-5: CMS and the Bureau of Labor Statistics should develop an agreement allowing the Bureau of Labor Statistics to analyze confidential data for the Centers for Medicare and Medicaid Services.
  • Recommendation 5-6: A new source of information should be developed to determine the variation in the price of commercial office rent per square foot.
  • Recommendation 5-7: Nonclinical labor-related expenses currently included under practice expense office expenses should be geographically adjusted as part of the wage component of the practice expense.

We note that the GPCI revisions we are finalizing in this final rule with comment period address three of the IOM recommendations referenced above. Specifically, our final GPCIs utilize the full range of non-physician occupations in the non-physician employee wage calculation consistent with IOM recommendation 5-4. Additionally, we created a new purchased service index to account for non-clinical labor-related expenses similar to IOM recommendation 5-7. Lastly, we have consistently used national cost share weights (MEI) to determine the appropriate weight attributed to each GPCI component, which is supported by recommendation 5-1. We may propose further improvements to the GPCI methodology in future rulemaking to address the remaining IOM recommendations once we have had an opportunity to assess IOM's recommendations in their entirety.

E. Medicare Telehealth Services for the Physician Fee Schedule

1. Billing and Payment for Telehealth Services

a. History

Prior to January 1, 1999, Medicare coverage for services delivered via a telecommunications system was limited to services that did not require a face-to-face encounter under the traditional model of medical care. Examples of these services included interpretation of an x-ray, or electrocardiogram, or electroencephalogram tracing, and cardiac pacemaker analysis.

Section 4206 of the BBA provided for coverage of, and payment for, consultation services delivered via a telecommunications system to Medicare beneficiaries residing in rural health professional shortage areas (HPSAs) as defined by the Public Health Service Act. Additionally, the BBA required that a Medicare practitioner (telepresenter) be with the patient at the time of a teleconsultation. Further, the BBA specified that payment for a teleconsultation had to be shared between the consulting practitioner and the referring practitioner and could not exceed the fee schedule payment which would have been made to the consultant for the service provided. The BBA prohibited payment for any telephone line charges or facility fees associated with the teleconsultation. We implemented this provision in the CY 1999 PFS final rule with comment period (63 FR 58814).

Effective October 1, 2001, section 223 of the Medicare, Medicaid and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554) (BIPA) added a new section, 1834(m), to the Act which significantly expanded Medicare telehealth services. Section 1834(m)(4)(F)(i) of the Act defines Medicare telehealth services to include consultations, office visits, office psychiatry services, and any additional service specified by the Secretary, when delivered via a telecommunications system. We first implemented this provision in the CY 2002 PFS final rule with comment period (66 FR 55246). Section 1834(m)(4)(F)(ii) of the Act required the Secretary to establish a process that provides for annual updates to the list of Medicare telehealth services. We established this process in the CY 2003 PFS final rule with comment period (67 FR 79988).

As specified in regulations at § 410.78(b), we generally require that a telehealth service be furnished via an interactive telecommunications system. Under § 410.78(a)(3), an interactive telecommunications system is defined as multimedia communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real time interactive communication between the patient and the practitioner at the distant site. Telephones, facsimile machines, and electronic mail systems do not meet the definition of an interactive telecommunications system. An interactive telecommunications system is generally required as a condition of payment; however, section 1834(m)(1) of the Act does allow the use of asynchronous “store-and-forward” technology in delivering these services when the originating site is a Federal telemedicine demonstration program in Alaska or Hawaii. As specified in regulations at § 410.78(a)(1), store and forward means the asynchronous transmission of medical information from an originating site to be reviewed at a later time by the practitioner at the distant site.

Medicare telehealth services may be provided to an eligible telehealth individual notwithstanding the fact that the individual practitioner providing the telehealth service is not at the same location as the beneficiary. An eligible telehealth individual means an individual enrolled under Part B who receives a telehealth service furnished at an originating site. As specified in BIPA, originating sites are limited under section 1834(m)(3)(C) of the Act to specified medical facilities located in specific geographic areas. The initial list of telehealth originating sites included the office of a practitioner, a critical access hospital (CAH), a rural health clinic (RHC), a Federally qualified health center (FQHC) and a hospital (as defined in Section 1861(e) of the Act). More recently, section 149 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA) expanded the list of telehealth originating sites to include hospital-based renal dialysis centers, skilled nursing facilities (SNFs), and community mental health centers (CMHCs). In order to serve as a telehealth originating site, these sites must be located in an area designated as a rural health professional shortage area (HPSA), in a county that is not in a metropolitan statistical area (MSA), or must be an entity that participates in a Federal telemedicine demonstration project that has been approved by (or receives funding from) the Secretary of Health and Human Services as of December 31, 2000. Finally, section 1834(m) of the Act does not require the eligible telehealth individual to be presented by a practitioner at the originating site.

b. Current Telehealth Billing and Payment Policies

As noted previously, Medicare telehealth services can only be furnished to an eligible telehealth beneficiary in an originating site. An originating site is defined as one of the specified sites where an eligible telehealth individual is located at the time the service is being furnished via a telecommunications system. In general, originating sites must be located in a rural HPSA or in a county outside of an MSA. The originating sites authorized by the statute are as follows:

  • Offices of a physician or practitioner.
  • Hospitals.
  • CAHs.
  • RHCs.
  • FQHCs.
  • Hospital-Based Or Critical Access Hospital-Based Renal Dialysis Centers (including Satellites).
  • SNFs.
  • CMHCs.

Currently approved Medicare telehealth services include the following:

  • Initial inpatient consultations.
  • Follow-up inpatient consultations.
  • Office or other outpatient visits.
  • Individual psychotherapy.
  • Pharmacologic management.
  • Psychiatric diagnostic interview examination.
  • End-stage renal disease (ESRD) related services.
  • Individual and group medical nutrition therapy (MNT).
  • Neurobehavioral status exam.
  • Individual and group health and behavior assessment and intervention (HBAI).
  • Subsequent hospital care.
  • Subsequent nursing facility care.
  • Individual and group kidney disease education (KDE).
  • Individual and group diabetes self-management training services (DSMT).

In general, the practitioner at the distant site may be any of the following, provided that the practitioner is licensed under State law to furnish the service being furnished via a telecommunications system:

  • Physician.
  • Physician assistant (PA).
  • Nurse practitioner (NP).
  • Clinical nurse specialist (CNS);
  • Nurse-midwife.
  • Clinical psychologist.
  • Clinical social worker.
  • Registered dietitian or nutrition professional.

Practitioners furnishing Medicare telehealth services are located at a distant site, and they submit claims for telehealth services to the Medicare contractors that process claims for the service area where their distant site is located. Section 1834(m)(2)(A) of the Act requires that a practitioner who furnishes a telehealth service to an eligible telehealth individual be paid an amount equal to the amount that the practitioner would have been paid if the service had been furnished without the use of a telecommunications system. Distant site practitioners must submit the appropriate HCPCS procedure code for a covered professional telehealth service, appended with the -GT (Via interactive audio and video telecommunications system) or -GQ (Via asynchronous telecommunications system) modifier. By reporting the -GT or -GQ modifier with a covered telehealth procedure code, the distant site practitioner certifies that the beneficiary was present at a telehealth originating site when the telehealth service was furnished. The usual Medicare deductible and coinsurance policies apply to the telehealth services reported by distant site practitioners.

Section 1834(m)(2)(B) of the Act provides for payment of a facility fee to the originating site. To be paid the originating site facility fee, the provider or supplier where the eligible telehealth individual is located must submit a claim with HCPCS code Q3014 (Telehealth originating site facility fee), and the provider or supplier is paid according to the applicable payment methodology for that facility or location. The usual Medicare deductible and coinsurance policies apply to HCPCS code Q3014. By submitting HCPCS code Q3014, the originating site certifies that it is located in either a rural HPSA or non-MSA county or is an entity that participates in a Federal telemedicine demonstration project that has been approved by (or receives funding from) the Secretary of Health and Human Services as of December 31, 2000 as specified in section 1834(m)(4)(C)(i)(III) of the Act.

As previously described, certain professional services that are commonly furnished remotely using telecommunications technology, but that do not require the patient to be present in-person with the practitioner when they are furnished, are covered and paid in the same way as services delivered without the use of telecommunications technology when the practitioner is in-person at the medical facility furnishing care to the patient. Such services typically involve circumstances where a practitioner is able to visualize some aspect of the patient's condition without the patient being present and without the interposition of a third person's judgment. Visualization by the practitioner can be possible by means of x-rays, electrocardiogram or electroencephalogram tracings, tissue samples, etc. For example, the interpretation by a physician of an actual electrocardiogram or electroencephalogram tracing that has been transmitted via telephone (that is, electronically, rather than by means of a verbal description) is a covered physician's service. These remote services are not Medicare telehealth services as defined under section 1834(m) of the Act. Rather, these remote services that utilize telecommunications technology are considered physicians' services in the same way as services that are furnished in-person without the use of telecommunications technology; they are paid under the same conditions as in-person physicians' services (with no requirements regarding permissible originating sites), and should be reported in the same way (that is, without the -GT or -GQ modifier appended).

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

As noted previously, in the December 31, 2002 Federal Register (67 FR 79988), we established a process for adding services to or deleting services from the list of Medicare telehealth services. This process provides the public with an ongoing opportunity to submit requests for adding services. We assign any request to make additions to the list of Medicare telehealth services to one of the following categories:

  • Category 1: Services that are similar to professional consultations, office visits, and office psychiatry services that are currently on the list of telehealth services. In reviewing these requests, we look for similarities between the requested and existing telehealth services for the roles of, and interactions among, the beneficiary, the physician (or other practitioner) at the distant site and, if necessary, the telepresenter. We also look for similarities in the telecommunications system used to deliver the proposed service, for example, the use of interactive audio and video equipment.
  • Category 2: Services that are not similar to the current list of telehealth services. Our review of these requests includes an assessment of whether the use of a telecommunications system to deliver the service produces similar diagnostic findings or therapeutic interventions as compared with the in-person delivery of the same service. Requestors should submit evidence showing that the use of a telecommunications system does not affect the diagnosis or treatment plan as compared to in-person delivery of the requested service.

Since establishing the process to add or remove services from the list of approved telehealth services, we have added the following to the list of Medicare telehealth services: individual and group HBAI services; psychiatric diagnostic interview examination; ESRD services with 2 to 3 visits per month and 4 or more visits per month (although we require at least 1 visit a month to be furnished in-person by a physician, CNS, NP, or PA in order to examine the vascular access site); individual and group MNT; neurobehavioral status exam; initial and follow-up inpatient telehealth consultations for beneficiaries in hospitals and skilled nursing facilities (SNFs); subsequent hospital care (with the limitation of one telehealth visit every 3 days); subsequent nursing facility care (with the limitation of one telehealth visit every 30 days); individual and group KDE; and individual and group DSMT services (with a minimum of 1 hour of in-person instruction to ensure effective injection training).

Requests to add services to the list of Medicare telehealth services must be submitted and received no later than December 31 of each calendar year to be considered for the next rulemaking cycle. For example, requests submitted before the end of CY 2011 will be considered for the CY 2013 proposed rule. Each request for adding a service to the list of Medicare telehealth services must include any supporting documentation the requester wishes us to consider as we review the request. Because we use the annual PFS rulemaking process as a vehicle for making changes to the list of Medicare telehealth services, requestors should be advised that any information submitted is subject to public disclosure for this purpose. For more information on submitting a request for an addition to the list of Medicare telehealth services, including where to mail these requests, we refer readers to the CMS Web site at http://www.cms.gov/telehealth/.

3. Submitted Requests for Addition to the List of Telehealth Services for CY 2012

We received requests in CY 2010 to add the following services as Medicare telehealth services effective for CY 2012: (1) Smoking cessation services; (2) critical care services; (3) domiciliary or rest home evaluation and management services; (4) genetic counseling services; (5) online evaluation and management services; (6) data collection services; and (7) audiology services. The following presents a discussion of these requests, including our proposals for additions to the CY 2012 telehealth list.

a. Smoking Cessation Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add smoking cessation services, reported by CPT codes 99406 (Smoking and tobacco use cessation counseling visit; intermediate, greater than 3 minutes up to 10 minutes) and 99407 (Smoking and tobacco use cessation counseling visit; intensive, greater than 10 minutes) to the list of approved telehealth services for CY 2012 on a category 1 basis.

Smoking Cessation services are defined as face-to-face behavior change interventions. We believe the interaction between a practitioner and a beneficiary receiving smoking cessation services is similar to the education, assessment, and counseling elements of individual KDE reported by HCPCS code G0420 (Face-to-face educational services related to the care of chronic kidney disease; individual, per session, per 1 hour), and individual MNT services, reported by HCPCS code G0270 (Medical nutrition therapy; reassessment and subsequent intervention(s) following second referral in the same year for change in diagnosis, medical condition or treatment regimen (including additional hours needed for renal disease), individual, face-to-face with the patient, each 15 minutes); CPT code 97802 (Medical nutrition therapy; initial assessment and intervention, individual, face-to-face with the patient, each 15 minutes); and CPT code 97803 (Medical nutrition therapy; re-assessment and intervention, individual, face-to-face with the patient, each 15 minutes), all services that are currently on the telehealth list.

Therefore, we proposed to add CPT codes 99406 and 99407 to the list of telehealth services for CY 2012 on a category 1 basis. Additionally, we proposed to add HCPCS codes G0436 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutes) and G0437 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutes) to the list of telehealth services for CY 2012 since these related services are similar to the codes for which we received formal public requests.

Consistent with this proposal, we also proposed to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include these smoking cessation services as Medicare telehealth services.

Comment: All commenters expressed support for CMS' proposal to add smoking cessation services to the list of Medicare telehealth services for CY 2012. One commenter stated that the proposal would contribute to ensuring that all Medicare beneficiaries—regardless of where they reside—have access to these services that are a valuable step toward reducing tobacco use among the Medicare population. Another commenter stated that the proposal would go far in helping many rural Americans gain access to these services that they would otherwise not have.

Response: We agree with the commenters that adding smoking cessation services to the list of Medicare telehealth services will help to provide greater access to the services for beneficiaries in rural or other isolated areas.

After consideration of the public comments we received, we are finalizing our CY 2012 proposal to add CPT codes 99406 and 99407 to the list of telehealth services for CY 2012 on a category 1 basis. Additionally, we are finalizing our proposal to add HCPCS codes G0436 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutes) and G0437 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutes) to the list of telehealth services for CY 2012 and to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include smoking cessation services as Medicare telehealth services.

b. Critical Care Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add critical care service CPT codes 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes) and 99292 (Critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 minutes) to the list of approved telehealth services. We previously received this request for the CY 2009 and CY 2010 PFS rulemaking cycles (73 FR 38517, 73 FR 69744 and 69745, 74 FR 33548, and 74 FR 61764) and did not add the codes on a category 1 basis due to the acute nature of the typical patient. We continue to believe that patients requiring critical care services are more acutely ill than those patients typically receiving any service currently on the list of telehealth services. Therefore, we cannot consider critical care services on a category 1 basis.

In the CY 2009 PFS proposed rule (73 FR 38517), we explained that we had no evidence suggesting that the use of telehealth could be a reasonable surrogate for the in-person delivery of critical care services; therefore, we would not add the services on a category 2 basis. Requestors submitted new studies for CY 2012, but none demonstrated that comparable outcomes to a face-to-face encounter can be achieved using telehealth to deliver these services. The studies we received primarily addressed other issues relating to telehealth services. Some studies addressed the cost benefits and cost savings of telehealth services. Others focused on the positive outcomes of telehealth treatment when compared with no treatment at all. One submitted study addressed the equivalency of patient outcomes for telehealth services delivered to patients in emergency rooms, but the study's authors specifically restricted their population to patients whose complaints were not considered to be genuine emergencies. Given that limitation, it seems unlikely that any of these patients would have required critical care services as defined by CPT codes 99291 and 99292.

We note that consultations are included on the list of Medicare telehealth services and may be billed by practitioners furnishing services to critically ill patients These services are described by the following HCPCS codes: G0425 (Initial inpatient telehealth consultation, typically 30 minutes communicating with the patient via telehealth), G0426 (Initial inpatient telehealth consultation, typically 50 minutes communicating with the patient via telehealth), G0427 (Initial inpatient telehealth consultation, typically 70 minutes or more communicating with the patient via telehealth), G0406 (Follow-up inpatient telehealth consultation, limited, physicians typically spend 15 minutes communicating with the patient via telehealth), G0407 (Follow-up inpatient telehealth consultation, intermediate, physicians typically spend 25 minutes communicating with the patient via telehealth), and G0408 (Follow-up inpatient telehealth consultation, complex, physicians typically spend 35 minutes or more communicating with the patient via telehealth). Critical care services, as reported by the applicable CPT codes and described in the introductory language in the CPT book, consist of direct delivery by a physician of medical care for a critically ill or injured patient, including high complexity decision-making to assess, manipulate, and support vital system functions. Critical care requires interpretation of multiple physiologic parameters and/or application of advanced technologies, including temporary pacing, ventilation management, and vascular access services. The payment rates under the PFS reflect this full scope of physician work. To add the critical services to the telehealth list would require the physician to be able to deliver this full scope of services via telehealth. Based on the code descriptions, we have previously believed that it is not possible to deliver the full range of critical care services without a physical physician presence with the patient.

We note that there are existing Category III CPT codes (temporary codes for emerging services that allow data collection) for remote real-time interactive video-conferenced critical care services that, consistent with our treatment of other Category III CPT codes, are not nationally priced under the PFS. The fact that the CPT Editorial Panel created these additional Category III CPT codes suggests to us that these video-conferenced critical care services are not the same as the in-person critical care services requested for addition to the telehealth list.

Because we did not find evidence that use of a telecommunications system to deliver critical care services produces similar diagnostic or therapeutic outcomes as compared with the face-to-face deliver of the services, we did not propose to add critical care services (as described by CPT codes 99291 and 99292) to the list of approved telehealth services. We reiterated that our decision not to propose to add critical care services to the list of approved telehealth services does not preclude physicians from furnishing telehealth consultations to critically ill patients using the consultation codes that are on the list of Medicare telehealth services.

Comment: One commenter supported CMS's decision not to add critical care services because the use of a telecommunications system to deliver critical services is unlikely to produce “similar diagnostic findings or therapeutic interventions as compared with the in-person delivery of the same service.”

Response: We appreciate this support for our proposal. As we stated in the CY 2012 PFS proposed rule (76 FR 42843), none of the submitted requests to add these services included evidence that demonstrated delivery via telehealth resulted in comparable outcomes to in-person care.

Comment: One commenter disagreed with CMS' decision not to add critical care services to the list of Medicare Telehealth Services. The commenter argued that because the patient who requires critical care is more acutely ill than patients receiving any of the services currently on the list of approved codes, these services should be added to the list. This commenter also suggested that the proposal to allow consulting physicians to use the inpatient telehealth g-codes to report care of critically ill patients through telehealth was inappropriate because not all critically ill patients are inpatients.

Response: We appreciate and share the commenter's concern for beneficiary access to care. However, we reiterate that no evidence that we received meets the criteria to add these services to the list of Medicare telehealth services. Regarding the appropriateness of the telehealth consultation g-codes in the emergency department setting, we refer the commenter to section II.E.5. of this final rule with comment period.

After consideration of the public comments we received, we are finalizing our decision not to add critical care services to the list of Medicare telehealth services for CY 2012.

c. Domiciliary or Rest Home Evaluation and Management Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add the following domiciliary or rest home evaluation and management CPT codes to the telehealth list for CY 2012:

  • 99334 (Domiciliary or rest home visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: A problem focused interval history; a problem focused examination; or straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are self-limited or minor. Physicians typically spend 15 minutes with the patient and/or family or caregiver).
  • 99335 (Domiciliary or rest home visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: An expanded problem focused interval history; An expanded problem focused examination; Medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of low to moderate severity. Physicians typically spend 25 minutes with the patient and/or family or caregiver).
  • 99336 (Domiciliary or rest home visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: A detailed interval history; a detailed examination; medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 40 minutes with the patient and/or family or caregiver).
  • 99337 (Domiciliary or rest home visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: A comprehensive interval history; a comprehensive examination; medical decision making of moderate to high complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to high severity. The patient may be unstable or may have developed a significant new problem requiring immediate physician attention. Physicians typically spend 60 minutes with the patient and/or family or caregiver).

A domiciliary or rest home is not permitted under current statute to serve as an originating site for Medicare telehealth services. Therefore, we did not propose to add domiciliary or rest home evaluation and management services to the list of Medicare telehealth services for CY 2012.

Comment: One commenter disagreed with our proposal not to add domiciliary or rest home evaluation and management services because neither domiciliaries nor rest homes are permitted under current statue to serve as an originating site for Medicare Telehealth services. The commenter argued that because CMS added new ESRD-related G-codes to the list of approved Medicare Telehealth services in 2005 despite the fact that dialysis centers were not then permitted under statute to serve as originating sites, CMS' current reasoning is invalid.

Comment: We acknowledge that we previously added certain ESRD services to the list of Medicare telehealth services when dialysis centers were not permitted under statute to serve as telehealth originating sites. However, the services in question can also be furnished in sites that were eligible originating sites when the codes were added to the list. At this time, we do not believe that domiciliary or rest home evaluation and management services can be furnished outside of domiciliaries or rest homes.

After consideration of the public comments we received, we are finalizing our decision not to add domiciliary or rest home evaluation and management services to the list of Medicare telehealth services for CY2012.

d. Genetic Counseling Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add CPT code 96040 (Medical genetics and genetic counseling services, each 30 minutes face-to-face with patient/family) to the telehealth list for CY 2012. We note that CPT guidance regarding reporting genetic counseling and education furnished by a physician to an individual directs physicians to evaluation and management (E/M) CPT codes and that services described by CPT code 96040 are provided by trained genetic counselors. Physicians and nonphysician practitioners who may independently bill Medicare for their service and who are counseling individuals would generally report office or other outpatient evaluation and management (E/M) CPT codes for office visits that involve significant counseling, including genetic counseling, and these office visit CPT codes are already on the list of telehealth services. CPT code 96040 would only be reported by genetic counselors for genetic counseling services. These practitioners cannot bill Medicare directly for their professional services and they are also not on the list of practitioners who can furnish telehealth services (specified in section 1834(m)(4)(E) of the Act). As such, we do not believe that it would be necessary or appropriate to add CPT code 96040 to the list of Medicare telehealth services. Therefore, we did not propose to add genetic counseling services to the list of Medicare telehealth services for CY 2012.

Comment: One commenter expressed concerns about beneficiary access concerns to genetic counseling but acknowledged the statutory constraints faced by CMS.

Response: We appreciate the commenter's concerns and their agreement with our conclusions regarding our statutory limitations.

After consideration of the public comments we received, we are finalizing our decision not to add genetic counseling services to the list of Medicare telehealth services for CY 2012.

e. Online Evaluation and Management Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add CPT code 99444 (Online evaluation and management service provided by a physician to an established patient, guardian, or health care provider not originating from a related E/M service provided within the previous 7 days, using the Internet or similar electronic communications network) to the list of Medicare telehealth services.

As we explained in the CY 2008 PFS final rule with comment period (72 FR 66371), we assigned a status indicator of “N” (Non-covered service) to these services because: (1) These services are non-face-to-face; and (2) the code descriptor includes language that recognizes the provision of services to parties other than the beneficiary and for whom Medicare does not provide coverage (for example, a guardian).

According to section 1834(m)(2)(A) of the Act, Medicare is required to pay for telehealth services at an amount equal to the amount that a practitioner would have been paid had such service been furnished without the use of a telecommunications system. As such, we do not believe it would be appropriate to make payment for services furnished via telehealth when those services would not otherwise be covered under Medicare. Because CPT code 99444 is currently noncovered, we did not propose to add online evaluation and management services to the list of Medicare Telehealth Services for CY 2012.

Comment: One commenter argued that adding online evaluation and management and other services to the list of Medicare telehealth services would support chronic care management and care coordination. The same commenter also asserted that adding these services would be administratively easy for CMS to implement.

Response: While we appreciate the potential value of maximizing the use of communication technology in care coordination and chronic care management, we cannot consider adding services that are not otherwise payable under the physician fee schedule to the Medicare telehealth benefit, as defined in 1834 (m) of the Act. Our decision not to add online evaluation and management or any other requested services to the list of Medicare telehealth services does not result from concern about administrative burden.

After consideration of the public comments we received, we are finalizing our decision not to add online evaluation and management services to the list of Medicare telehealth services for CY 2012.

f. Data Collection Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add CPT codes 99090 (Analysis of clinical data stored in computers (e.g., ECGs, blood pressures, hematologic data)) and 99091 (Collection and interpretation of physiologic data (e.g., ECG, blood pressure, glucose monitoring) digitally stored and/or transmitted by the patient and/or caregiver to the physician or other qualified health care professional, requiring a minimum of 30 minutes of time) to the list of Medicare telehealth services.

As we explained in the in CY 2002 PFS final rule with comment period (66 FR 55309), we assigned a status indicator of “B” (Payment always bundled into payment for other services not specified) to these services because the associated work is considered part of the pre- and post-service work of an E/M service. We note that many E/M codes are on the list of Medicare telehealth services.

According to section 1834(m)(2)(A) of the Act, Medicare is required to pay for telehealth services an amount equal to the amount that a practitioner would have been paid had such service been furnished without the use of a telecommunications system. Similar to the point noted previously for online E/M services, we do not believe it would be appropriate to make separate payment for services furnished via telehealth when Medicare would not otherwise make separate payment for the services. Moreover, we believe the payment for these data collection services should be bundled into the payment for E/M services, many of which are already on the Medicare telehealth list. Because CPT codes 99090 and 99091 are currently bundled, we did not propose to add data collection services to the list of Medicare telehealth services for CY 2012.

Comment: Two commenters argued that CMS should pay separately for services like data collection since when furnished they often mitigate the need for an in-person visit and in those cases cannot logically be considered to be bundled with other services.

Response: We thank the commenters for conveying their perspective on the value of such services. However, we continue to believe it would be inappropriate to add services that are not otherwise separately payable under the physician fee schedule to the Medicare telehealth benefit, as defined in 1834 (m) of the Act.

After consideration of the public comments we received, we are finalizing our decision not to add data collection services to the list of Medicare telehealth services for CY 2012.

g. Audiology Services

The American Academy of Audiology submitted a request that CMS add services that audiologists provide for balance disorders and hearing loss to the list of Medicare telehealth services. The request did not include specific HCPCS codes. Nevertheless, it is not within our administrative authority to pay audiologists for services furnished via telehealth. The statute authorizes the Secretary to pay for telehealth services only when furnished by a physician or a practitioner as physician or practitioner are defined in sections 1834(m)(4)(D) and (E) of the Act. Therefore, we did not propose to add services that are primarily provided by audiologists to the list of Medicare telehealth services for CY 2012.

Comment: Several commenters stated broad support for the value of audiology services when furnished through telehealth. These commenters urged CMS to consider other ways of implementing programs that allow audiology services to be furnished through telehealth.

Response: We appreciate the commenters' perspective on the value of audiology services. The statute authorizes payment for telehealth services only when furnished by a physician or practitioner as defined in sections 1834(m)(4)(D) and (E) of the Act. Audiologists do not fall within either of these definitions, and we do not believe there is another way to make payment to audiologists for telehealth services.

After consideration of the public comments we received, we are finalizing our decision not to add audiology services to the list of Medicare telehealth services for CY 2012.

4. The Process for Adding HCPCS Codes as Medicare Telehealth Services

Along with its submission of codes for consideration as additions to the Medicare telehealth list for CY 2012, the American Telemedicine Association (ATA) also requested that CMS consider revising the annual process for adding to or deleting services from the list of telehealth services. The existing process, adopted in the CY 2003 PFS rulemaking cycle (67 FR 43862 through 43863 and 67 FR 79988 through 79989), is described in section II.E.1. of this final rule with comment period. The following discussion includes a summary of recent requests by the ATA and other stakeholders for changes to the established process for adding services to the telehealth list, an assessment of our historical experience with the current process including the request review criteria, and our proposed refinement to the process for adding services to the telehealth list that would be used in our evaluation of candidate telehealth services beginning for CY 2013.

The ATA asked CMS to consider two specific changes to the process, including—

  • Broadening the factors for consideration to include shortages of health professionals to provide in-person services, speed of access to in-person services, and other barriers to care for beneficiaries; and
  • Equalizing the standard for adding telehealth services with the standard for deleting telehealth services by adopting a standard that allows services that are safe, effective or medically beneficial when furnished via telehealth to be added to the list of Medicare telehealth services. Similarly, we have received recommendations that CMS place all codes payable under the PFS on the telehealth list and allow physicians and practitioners to make a clinical determination in each case about whether a medically reasonable and necessary service could be appropriately furnished to a beneficiary through telehealth. Under this scenario, stakeholders have argued that CMS would only remove services from the telehealth list under its existing policy for service removal; specifically, that a decision to remove a service from the list of telehealth services would be made using evidence-based, peer-reviewed data which indicate that a specific service is not safe, effective, or medically beneficial when furnished via telehealth (67 FR 79988).

While we share the interests of stakeholders in reducing barriers to health care access faced by some beneficiaries, given that section 1834(m)(2)(F)(ii) of the Act requires the Secretary to establish a process that provides, on an annual basis, for the addition or deletion of telehealth services (and HCPCS codes), as appropriate, we do not believe it would be appropriate to add all services for which payment is made under the PFS to the telehealth list without explicit consideration as to whether the candidate service could be effectively furnished through telehealth. For example, addition of all codes to the telehealth list could result in a number of services on the list that could never be furnished by a physician or nonphysician practitioner who was not physically present with the beneficiary, such as major surgical procedures and interventional radiology services. Furthermore, we do not believe it would be appropriate to add services to the telehealth list without explicit consideration as to whether or not the nature of the service described by a candidate code allows the service to be furnished effectively through telehealth. Section 1834(m)(2)(A) of the Act requires that the distant site physician or practitioner furnishing the telehealth service must be paid an amount equal to the amount the physician or practitioner would have been paid under the PFS has such service been furnished without the use of a telecommunications system. Therefore, we believe that candidate telehealth services must also be covered when furnished in-person; and that any service that would only be furnished through a telecommunications system would be a new service and, therefore, not a candidate for addition to the telehealth list. In view of these considerations, we will continue to consider candidate additions to the telehealth list on a HCPCS code-specific basis based on requests from the public and our own considerations.

We also believe it continues to be most appropriate to consider candidate services for the telehealth list based on the two mutually exclusive established categories into which all services fall—specifically, services that are similar to services currently on the telehealth list (category 1) and services that are not similar to current telehealth services (category 2). Under our existing policy, we add services to the telehealth list on a category 1 basis when we determine that they are similar to services on the existing telehealth list with respect to the roles of, and interactions among, the beneficiary, physician (or other practitioner) at the distant site and, if necessary, the telepresenter (67 FR 43862). Since CY 2003, we have added 35 services to the telehealth list on a category 1 basis based on public requests and our own identification of such services. We believe it is efficient and valuable to maintain the existing policy that allows us to consider requests for additions to the telehealth list on a category 1 basis and proposed to add them to the telehealth list if the existing criteria are met. This procedure expedites our ability to identify codes for the telehealth list that resemble those services already on this list, streamlining our review process and the public request and information-submission process for services that fall into this category. Therefore, we believe that any changes to the process for adding codes to the telehealth list should be considered with respect to category 2 additions, rather than category 1 additions.

Our existing criteria for consideration of codes that would be category 2 additions, specifically those candidate telehealth services that are not similar to any current telehealth services, include an assessment of whether the use of a telecommunications system to deliver the services produces similar diagnostic findings or therapeutic interventions as compared with a face-to-face in-person delivery of the same service (67 FR 43682). In other words, the discrete outcome of the interaction between the clinician and patient facilitated by a telecommunications system should correlate well with the discrete outcome of the clinician-patient interaction when performed face-to-face. In the CY 2003 PFS proposed rule (67 FR 43862), we explained that requestors for category 2 additions to the telehealth list should submit evidence that the use of a telecommunications systems does not affect the diagnosis or treatment plan as compared to in-person delivery of the service. We indicated that if evidence shows that the candidate telehealth service is equivalent when furnished in person or through telehealth, we would add it to the list of telehealth services. We refer to this standard in further discussion in this final rule with comment period as the “comparability standard.” We stated in the CY 2003 PFS proposed rule (67 FR 43862) that if we determine that the use of a telecommunications system changes the nature or outcome of the service, for example, as compared with the in-person delivery of the service, we would review the telehealth service addition request as a request for a new service, rather than a different method of delivering an existing Medicare service. For coverage and payment of most services, Medicare requires that a new service must: (1) Fall into a Medicare benefit category; (2) be reasonable and necessary in accordance with section 1862(a)(1)(A) of the Act; and (3) not be explicitly excluded from coverage. In such a case, the requestor would have the option of applying for a national coverage determination for the new service.

We believe it is most appropriate to address the ATA and other stakeholder requests to broaden the current factors we consider when deciding whether to add candidate services to the telehealth list—to include factors such as the effects of barriers to in-person care and the safety, effectiveness, or medical benefit of the service furnished through telehealth, as potential refinements to our category 2 criteria. We initially established these category 2 criteria in the interest of ensuring that the candidate services were safe, effective, medically beneficial, and still accurately described by the corresponding codes when delivered via telehealth, while also ensuring that beneficiaries furnished telehealth services receive high quality care that is comparable to in-person care. We believed that the demonstration of comparable clinical outcomes (diagnostic findings and/or therapeutic interventions) from telehealth and in-person services would prove to be the best indicator that all of these conditions were met. While we continue to believe that safety, effectiveness, and medical benefit, as well as accurate description of the candidate telehealth services by the CPT or HCPCS codes, are necessary conditions for adding codes to the list of Medicare telehealth services, our recent experience in reviewing public requests for telehealth list additions and our discussions with stakeholders regarding contemporary medical practice and potential barriers to care, have led us to conclude that the comparability standard for category 2 requests should be modified.

In our annual evaluation of category 2 requests since we adopted the process for evaluating additions to the telehealth list almost 10 years ago, we have consistently observed that requestors have difficulty demonstrating that clinical outcomes of a service delivered via telehealth are comparable to the outcomes of the in-person service. The medical literature frequently does not include studies of the outcomes of many types of in-person services that allow for comparison to the outcomes demonstrated for candidate telehealth services. Furthermore, we know that in some cases the alternative to a telehealth service may be no service rather than an in-person service. The comparability standard may not sufficiently allow for the opportunity to add candidate services to the telehealth list that may be safe, effective, and medically beneficial when delivered via telehealth, especially to beneficiaries who experience significant barriers to in-person care. While we continue to believe that beneficiaries receiving services through telehealth are deserving of high quality health care and that in-person care may be very important and potentially preferable for some services when in-person care is possible, we are concerned that we have not added any services to the telehealth list on a category 2 basis as a result of our reviews. While some candidate services appear to have the potential for clinical benefit when furnished through telehealth, the requests have not met the comparability standard.

Therefore, we proposed to refine our category 2 review criteria for adding codes to the list of Medicare telehealth services beginning in CY 2013 by modifying the current requirement to demonstrate similar diagnostic findings or therapeutic interventions with respect to a candidate service delivered through telehealth compared to in-person delivery of the service (the comparability standard). We proposed to establish a revised standard of demonstrated clinical benefit when the service is furnished via telehealth. We refer to this proposed standard in further discussion in this final rule with comment period as the “clinical benefit standard.” To support our review using this revised standard, we would ask requestors to specify in their request how the candidate telehealth service is still accurately described by the corresponding HCPCS or CPT code when delivered via telehealth as opposed to in-person.

We proposed that our refined criteria for category 2 additions would be as follows:

  • Category 2: Services that are not similar to the current list of telehealth services. Our review of these requests would include an assessment of whether the service is accurately described by the corresponding code when delivered via telehealth and whether the use of a telecommunications system to deliver the service produces demonstrated clinical benefit to the patient. Requestors should submit evidence indicating that the use of a telecommunications system in delivering the candidate telehealth service produces clinical benefit to the patient.

The evidence submitted should include both a description of relevant clinical studies that demonstrate the service furnished by telehealth to a Medicare beneficiary improves the diagnosis or treatment of an illness or injury or improves the functioning of a malformed body part, including dates and findings and a list and copies of published peer-reviewed articles relevant to the service when furnished via telehealth. Some examples of clinical benefit include the following:

  • Ability to diagnose a medical condition in a patient population without access to clinically appropriate in-person diagnostic services.
  • Treatment option for a patient population without access to clinically appropriate in-person treatment options.
  • Reduced rate of complications.
  • Decreased rate of subsequent diagnostic or therapeutic interventions (for example, due to reduced rate of recurrence of the disease process).
  • Decreased number of future hospitalizations or physician visits.
  • More rapid beneficial resolution of the disease process treatment.
  • Decreased pain, bleeding, or other quantifiable symptom.
  • Reduced recovery time.

We believe the adoption of this clinical benefit standard for our review of candidate telehealth services on a category 2 basis is responsive to the requests of stakeholders that we broaden the factors taken into consideration to include barriers to care for beneficiaries. It allows us to consider the demonstrated clinical benefit of telehealth services for beneficiaries who might otherwise have no access to certain diagnostic or treatment services. Furthermore, we believe the focus on demonstrated clinical benefit in our review of category 2 requests for addition to the telehealth lists is equivalent to our standard for deleting services from the telehealth list that rests upon evidence that a service is not safe, not effective, or not medically beneficial. Finally, we believe the proposed clinical benefit standard for our review of candidate telehealth services on a category 2 basis is fully consistent with our responsibility to ensure that telehealth services are safe, effective, medically beneficial, and still accurately described by the corresponding codes that would be used for the services when delivered in-person.

We solicited public comments on the proposed refinement to our established process for adding codes to the telehealth list, including the information that requestors should furnish to facilitate our full review of requests in preparation for the CY 2013 PFS rulemaking cycle during which we will use the category 2 review criteria finalized in this final rule with comment period.

Comment: Many commenters supported the proposal to revise the category 2 criteria to incorporate the clinical benefit standard. Many of these commenters stated that they expect the revised criteria to result in both an expanded list of telehealth services and better medical care for beneficiaries who might otherwise not have access to certain diagnostic or treatment services. Several of these commenters explicitly stated that the criteria as described in the proposal presented a rigorous evidentiary standard for demonstrating clinical benefit.

Response: We appreciate the broad support for the proposal. We believe that the proposed clinical benefit standard would allow us to consider the demonstrated clinical benefit of telehealth services for beneficiaries who might otherwise have no access to certain diagnostic or treatment services. We also believe that the proposal would ensure that Medicare telehealth services are safe, effective, and medically beneficial.

Comment: Some commenters advocated for eliminating the process for adding and deleting codes. These commenters argued that the determination of which services can be furnished through telehealth should be left to the judgment of individual physicians. One commenter suggested that CMS should evaluate clinical equivalence for telemedicine procedures by limiting the scope to clinical procedures and interventions that would normally be performed in the hospital setting as a part of ongoing care. A commenting organization informed CMS that it had conducted an extensive study of services and determined a list of services that should be eligible based on positive correlation of discrete outcomes of those services furnished through telehealth and those same services furnished in-person. However, the organization did not provide this analysis with their comments.

Response: We understand the commenters' interests in making broader changes to the way that services are added to or deleted from list of Medicare telehealth services. As we stated in the proposal, we believe that because section 1834(m)(2)(F)(ii) of the Act requires the Secretary to establish a process that provides, on an annual basis, for the addition or deletion of telehealth services (and HCPCS codes), as appropriate, we do not believe it would be appropriate to add all services for which payment is made under the PFS to the telehealth list without explicit consideration as to whether the candidate service could be effectively furnished through telehealth. Furthermore, because section 1834(m)(2)(A) of the Act requires that the distant site physician or practitioner furnishing the telehealth service must be paid an amount equal to the amount the physician or practitioner would have been paid under the PFS had such service been furnished without the use of a telecommunications system, we do not believe it would be appropriate to add services to the telehealth list without explicit consideration as to whether or not the nature of the service described by a candidate code allows the service to be furnished as effectively through telehealth as in an in-person encounter. We believe continuing the current annual process, with the proposed amendment to the category 2 criteria, provides the appropriate opportunity to evaluate whether to add or delete specific services to the list of Medicare telehealth services. Although Medicare has not received many studies comparing clinical outcomes for in-person and telehealth delivery of the same service, we encourage stakeholders that conduct such comparison studies to submit such evidence to support category 2 requests for the addition of particular services to the list.

Comment: One commenter expressed support for the proposal but urged CMS to carefully evaluate its impact if implemented. That commenter suggested that the addition of new services under the proposed standard could incentivize changes in practice patterns where Medicare beneficiaries in remote areas receive consistently a lower level of care if clinical benefit has no relationship to the equivalent of an in-person visit. Another commenter disagreed with the proposal to amend the “comparability standard” for adding services to the list of Medicare telehealth services. The commenter asserted that telehealth services can be effective as a step to help patients get the care they need, but should not be used to replace in-person care. The commenter argued that paying for telehealth services that may have some minor benefit as equivalent to an in-person service is misleading to patients and would prevent Medicare beneficiaries from getting the actual in-person care they need.

Response: We appreciate these concerns and agree that Medicare beneficiaries in remote areas deserve access to high quality health care. As we noted in the proposal, we also believe that in-person care may be very important and potentially preferable for some services when in-person care is possible. However, we also know that in some cases the alternative to a telehealth service may be no service rather than an in-person service.

We continue to believe safety, effectiveness, and medical benefit, as well as accurate description of the candidate telehealth services by the CPT or HCPCS codes, are necessary conditions for adding codes to the list of Medicare telehealth services. While we believe that in many cases, the existing standard has led to appropriate category 2 determinations not to add services to the telehealth benefit, we also believe that the current standard has prevented consideration of some services that could be clinically beneficial because there are no studies that compare patient outcomes when services are delivered via telehealth versus in person. This does not support our interests in identifying beneficial services for the telehealth benefit. Specifically, we observe that the medical literature frequently does not include studies of the outcomes of many types of in-person services that allow for comparison to the outcomes demonstrated for candidate telehealth services. We believe that the proposed revision to the existing criteria will allow thorough consideration of a greater number of requests for addition to the list. We would also remind commenters that the annual process will continue to provide stakeholders who support or oppose adding particular services to the list the opportunity to contribute to our evaluations of particular requests through public comment.

Additionally, we note that the established process for deleting services from the list would allow Medicare to consider any available evidence suggesting that the addition of particular services to the list of Medicare telehealth services had detrimentally changed the quality of medical care for Medicare beneficiaries in remote areas. Such evidence could be considered in the context of either a public request or internally generated proposal to delete services from the list of Medicare telehealth services during annual PFS rulemaking. This process was established during CY 2003 PFS rulemaking. (67 FR 7988)

Finally, we agree with the commenter that argued that we should not add services to the telehealth list based on demonstrated evidence of minor benefit. We would like to clarify that our evidentiary standard of clinical benefit would not include minor or incidental benefits.

Comment: Some commenters offered feedback on the specific kind of information that requestors should furnish to facilitate CMS review of requests to add specific services. One commenter suggested that CMS should recognize any biometrics or clinical parameters known to affect morbidity/mortality as appropriate supporting evidence. Another commenter suggested that CMS should make clear that its list of clinical benefits that could be conferred by the use of telehealth services, as featured in the proposed rule, is not exhaustive. Rather, the list is illustrative. The commenter asked CMS to clarify that there are many kinds of clinical benefits that are possible for telehealth services as well as face-to-face services, and that CMS will consider clinical benefits on a case-by-case basis based on studies submitted by requestors. Another commenter expressed concern that the proposed evaluation criteria are inappropriate since they resemble the criteria for a Medicare coverage determination.

Response: We agree with the commenter who stated that the list of examples of demonstrated clinical benefits as presented in the proposed rule (76 FR 42827) is not exhaustive, but rather illustrative. Furthermore, we acknowledge that our proposal allows us to consider clinical benefits on a case-by-case basis depending on studies submitted by requestors, our own internal evaluation, and information submitted by commenters. While we acknowledge a similarity between some of the examples provided in the proposal and Medicare coverage criteria, we believe that such resemblance is appropriate given our interest in ensuring that services the Secretary adds to the telehealth benefit demonstrate clinical benefit to Medicare beneficiaries.

Comment: Several commenters requested that CMS provide more specific information about how the new criteria will be used to evaluate the requests to add services to the list of Medicare telehealth services. One of these commenters asked CMS to provide workshops and other outreach efforts related to the review criteria.

Response: We appreciate the commenters' interest in requesting greater specificity regarding how the new criteria will be used in evaluation of annual requests. In proposing the new category 2 criteria, we provided some examples of demonstrated benefit instead of establishing a series of specified clinical metrics because we expect the choice of appropriate evaluation criteria should be identified on a case-by-case basis specific to the information submitted with requests to add services through the established annual process.

We believe that establishing more rigid evaluation criteria (for example, criteria that rely on measurement of a series of demonstrated clinical outcomes specified by CMS) might present as many problems as has the current category 2 criteria, because under such a process requestors would be required to submit medical literature that passes a series of hurdles established by us prior to receiving a particular request. We would not be able to assess the benefit of the requested service within the context of the submitted evidence and the specific services. We also believe that such a process might lead to greater administrative burden for requestors and might require constant revision through annual rulemaking to adapt any specific criteria to changes in medical and communication technology as well as developments in medical literature.

Additionally, we note that the application of the proposed criteria to each request will remain subject to public notice and comment. Since we implemented the process to add or delete services, including the existing category 2 criteria, we have used the PFS notice and comment rulemaking process to propose, accept public comments, and ultimately explain how the established evaluation criteria apply to each service we evaluate for addition to the list of Medicare telehealth services. We are not proposing a change to that aspect of the process with this proposed change in category 2 criteria.

Comment: One commenter expressed concern regarding the aspect of the proposed criteria that includes CMS' review of whether the service is accurately described by the corresponding code when delivered via telehealth. The commenter asserted that that aspect of the criteria is self-fulfilling and might prevent the addition of otherwise appropriate services to the list of Medicare telehealth services since the codes were written to describe in-person services. Similarly, one commenter was concerned that accurate description of the code when delivered via telehealth might prevent CMS from adding critical care services to the list of Medicare telehealth services because there are category III CPT codes that describe remote real-time interactive videoconferenced critical care services.

Response: In general, we do not believe it would be appropriate to add services to the Medicare telehealth list if those services cannot be accurately described by CPT or HCPCS codes that could otherwise describe in-person services. Medicare payment for the services is based upon the services that the CPT or HCPCS code describes. As we explained in the CY 2012 PFS proposed rule with comment period (76 FR 42826), Section 1834(m)(2)(A) of the Act requires that the distant site physician or practitioner furnishing the telehealth service must be paid an amount equal to the amount the physician or practitioner would have been paid under the PFS had such service been furnished without the use of a telecommunications system. Therefore, we believe that candidate telehealth services must also be covered when furnished in-person; that the CPT and HCPCS code that is the basis for payment must accurately describe the service; and that any service that would only be furnished through a telecommunications system would be a distinct service from an in-person service, and therefore, not a candidate for addition to the Medicare telehealth list even when covered by Medicare. For example, remote services that utilize telecommunications technology are considered physicians' services in the same way as services that are furnished in-person without the use of telecommunications technology; they are paid under the same conditions as in-person physicians' services (with no requirements regarding permissible originating sites), and should be reported in the same way (that is, without the -GT or -GQ modifier appended). Medicare coverage for these types of services is distinct from the Medicare telehealth benefit.

With regard to the request to add critical care services to the list of Medicare telehealth services, the application of the proposed category 2 criteria to that request is contingent on both the finalization of the proposed criteria and our receipt of a new request to add the services. However, as we noted in the CY 2012 PFS proposed rule with comment period (76 FR 42824), the fact that the CPT Editorial Panel created the Category III CPT codes suggests to us that these video-conferenced critical care services are not the same as the in-person critical care services requested for addition to the telehealth list.

After consideration of the public comments we received, we are finalizing our proposal to revise the criteria we use to review category 2 requests to add services to the list of Medicare telehealth services beginning in CY 2013. We are modifying the current requirement to demonstrate similar diagnostic findings or therapeutic interventions with respect to a candidate service delivered through telehealth compared to in person delivery of the service (the comparability standard). Instead, we will assess category 2 requests to add services to the telehealth list using a standard of demonstrated clinical benefit (the clinical benefit standard) when the service is furnished via telehealth. To support our review using this revised standard, we ask requestors to specify in their request how the candidate telehealth service is still accurately described by the corresponding HCPCS or CPT code when delivered via telehealth as opposed to in person.

Our revised criteria for category 2 additions are as follows:

  • Category 2: Services that are not similar to the current list of telehealth services. Our review of these requests will include an assessment of whether the service is accurately described by the corresponding code when delivered via telehealth and whether the use of a telecommunications system to deliver the service produces demonstrated clinical benefit to the patient. Requestors should submit evidence indicating that the use of a telecommunications system in delivering the candidate telehealth service produces clinical benefit to the patient.

The evidence submitted should include both a description of relevant clinical studies that demonstrate the service furnished by telehealth to a Medicare beneficiary improves the diagnosis or treatment of an illness or injury or improves the functioning of a malformed body part, including dates and findings and a list and copies of published peer reviewed articles relevant to the service when furnished via telehealth. Our evidentiary standard of clinical benefit will not include minor or incidental benefits. Some examples of clinical benefit include the following:

  • Ability to diagnose a medical condition in a patient population without access to clinically appropriate in person diagnostic services.
  • Treatment option for a patient population without access to clinically appropriate in-person treatment options.
  • Reduced rate of complications.
  • Decreased rate of subsequent diagnostic or therapeutic interventions (for example, due to reduced rate of recurrence of the disease process).
  • Decreased number of future hospitalizations or physician visits.
  • More rapid beneficial resolution of the disease process treatment.
  • Decreased pain, bleeding, or other quantifiable symptom.
  • Reduced recovery time.

5. Telehealth Consultations in Emergency Departments

We have recently been asked to clarify instructions regarding appropriate reporting of telehealth services that, prior to our policy change regarding consultation codes, would have been reported as consultations furnished to patients in an emergency department. When we eliminated the use of consultation codes under the PFS beginning in CY 2010, we instructed practitioners, when furnishing a service that would have been reported as a consultation service, to report the E/M code that is most appropriate to the particular service for all office/outpatient or inpatient visits. Since section 1834(m) of the Act includes “professional consultations” (including the initial inpatient consultation codes “as subsequently modified by the Secretary”) in the definition of telehealth services, we established several HCPCS codes to describe the telehealth delivery of initial inpatient consultations. For inpatient hospital and skilled nursing facility care telehealth services, we instructed practitioners to use the inpatient telehealth consultation G-codes listed in Table 12 to report those telehealth services (74 FR 61763, 61774). However, we neglected to account for the fact that E/M emergency department visit codes (99281-99285) are not on the telehealth list. As a result, there has not been a clear means for practitioners to bill a telehealth consultation furnished in an emergency department. In order to address this issue, we proposed to change the code descriptors for the inpatient telehealth consultation G-codes to include emergency department telehealth consultations effective January 1, 2012. However, we requested public comment regarding other options, including creating G-codes specific to these services when furnished to patients in the emergency department.

Comment: Many commenters supported the proposal to change the code descriptors for the inpatient telehealth consultation G-codes to include emergency department telehealth consultations effective January 1, 2012. These commenters asserted that changing the code descriptors is an appropriate way for CMS to provide a clear means for practitioners to bill telehealth consultations furnished to emergency department patients.

Response: We appreciate the support for the proposal. We agree that changing the code descriptors will ensure that telehealth consultations can be reported appropriately when furnished to emergency department patients.

Comment: A few commenters expressed concerns that the proposal would blur the line between inpatient and outpatient services. One commenter disagreed with the proposal and suggested that CMS should create new G-codes since it is important to maintain the distinction between outpatient and inpatient services.

Response: We thank the commenters for bringing these concerns to our attention. While we understand that emergency department services are considered outpatient services, at this time we believe that allowing practitioners to report the G-codes we created for initial inpatient telehealth consultations when furnishing telehealth consultations to emergency department patients is the most appropriate way to resolve the immediate issue. We note that the G-codes we created for telehealth consultations are used exclusively under the telehealth benefit. In this unique circumstance, we believe that the use of single codes to describe what can be an inpatient or an outpatient emergency department service is an appropriate mechanism to allow practitioners to report these telehealth services.

However, the comments regarding site of service coding distinctions have prompted us to reconsider the need to provide a mechanism for follow-up consultations in the emergency department. While follow-up consultative services are furnished to hospital and SNF inpatients, we do not believe these services are furnished to patients in emergency departments since patients do not spend enough time in the emergency department to warrant a second consultative service by the same practitioner. Therefore, we are amending our proposal to pertain only to the G-codes that describe initial telehealth consultations.

Comment: One commenter disagreed with the code descriptor change based on the assertion that the existing G-codes do not sufficiently cover the intensity, risk and medical judgment involved in providing teleICU services to critically ill patients.

Response: We agree that the telehealth consultation codes do not fully describe critical care services. For additional information regarding the request to add critical care services to the list of Medicare telehealth services, we refer the commenter to our discussion in section II.E.1.b. of this final rule with comment period.

Comment: One commenter requested additional information regarding why Medicare only pays for consultations furnished through telehealth.

Response: While Medicare no longer recognizes CPT consultation codes for payment purposes, practitioners furnishing services that could be described by CPT consultation codes are still paid for those services when they are reported using the the most appropriate office or inpatient evaluation and management code. The telehealth consultation G-codes are intended to provide a mechanism for reporting telehealth consultation services to patients in the inpatient and SNF settings. We created these codes because inpatient and SNF evaluation and management codes were not included in the telehealth benefit and a practitioner could not bill an evaluation and management code when providing consultation services via telehealth furnished to patients in those settings. We refer the reader to our most recent thorough discussion of this issue in the CY 2010 PFS final rule with comment period (74 FR 61763 and 61767 through 61775).

After consideration of the public comments we received, we are finalizing our proposal to change the code descriptors for initial inpatient telehealth consultation G-codes to reflect telehealth consultations furnished to emergency department patients in addition to inpatient telehealth consultations effective January 1, 2012. The descriptors for these codes for CY 2012 appear in table 13. After consideration of the public comments we received, we are not finalizing our proposal to change the code descriptors for follow-up inpatient telehealth consultations, since we do not believe follow-up consultations are furnished to emergency department patients.

6. Telehealth Originating Site Facility Fee Payment Amount Update

Section 1834(m)(2)(B) of the Act establishes the payment amount for the Medicare telehealth originating site facility fee for telehealth services provided from October 1, 2001, through December 31, 2002, at $20. For telehealth services provided on or after January 1 of each subsequent calendar year, the telehealth originating site facility fee is increased by the percentage increase in the MEI as defined in section 1842(i)(3) of the Act. The MEI increase for 2012 is 0.6 percent. Therefore, for CY 2012, the payment amount for HCPCS code Q3014 (Telehealth originating site facility fee) is 80 percent of the lesser of the actual charge or $24.24. The Medicare telehealth originating site facility fee and MEI increase by the applicable time period is shown in Table 14.

III. Addressing Interim Final Relative Value Units (RVUs) From CY 2011, Proposed RVUs From CY 2012, and Establishing Interim RVUs for CY 2012 Back to Top

Under section 1848(c)(2)(B) of the Act, we review and make adjustments to RVUs for physicians' services at least once every 5 years. Under section 1848(c)(2)(K) of the Act (as added by section 3134 of the Affordable Care Act), we are required to identify and revise RVUs for services identified as potentially misvalued. Section 1848(c)(2)(K)(iii) specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In accordance with section 1848(c)(2)(K)(iii) of the Act, we develop and propose appropriate adjustments to the RVUs, taking into account the recommendations provided by the AMA RUC, the Medicare Payment Advisory Commission (MedPAC), and others. To respond to concerns expressed by MedPAC, the Congress, and other stakeholders regarding the accuracy of values for services under the PFS, the AMA RUC has used an annual process to systematically identify, review, and provide CMS with recommendations for revised work values for many existing potentially misvalued services.

For many years, the AMA RUC has provided CMS with recommendations on the appropriate relative values for PFS services. In recent years CMS and the AMA RUC have taken increasingly significant steps to address potentially misvalued codes. In addition to the Five-Year Reviews of Work, over the past several years CMS and the AMA RUC have identified and reviewed a number of potentially misvalued codes on an annual basis based on various identification screens for codes at risk for being misvalued, such as codes with high growth rates, codes that are frequently billed together in one encounter, and codes that are valued as inpatient services but that are now predominantly performed as outpatient services. This annual review of work RVUs and direct PE inputs for potentially misvalued codes was further bolstered by the Affordable Care Act mandate to examine potentially misvalued codes, with an emphasis on the following categories specified in section 1848(c)(2)(K)(ii) (as added by section 3134 of the Affordable Care Act):

  • Codes and families of codes for which there has been the fastest growth.
  • Codes or families of codes that have experienced substantial changes in practice expenses.
  • Codes that are recently established for new technologies or services.
  • Multiple codes that are frequently billed in conjunction with furnishing a single service.
  • Codes with low relative values, particularly those that are often billed multiple times for a single treatment.
  • Codes which have not been subject to review since the implementation of the RBRVS (the “Harvard-valued” codes).
  • Other codes determined to be appropriate by the Secretary. (For example, codes for which there have been shifts in the site-of-service (site-of-service anomalies).)

In addition to providing recommendations to CMS for work RVUs, the AMA RUC's Practice Expense Subcommittee reviews, and then the AMA RUC recommends, direct PE inputs (clinical labor, medical supplies, and medical equipment) for individual services. To guide the establishment of malpractice RVUs for new and revised codes before each Five-Year Review of Malpractice, the AMA RUC also provides crosswalk recommendations, that is, “source” codes with a similar specialty mix of practitioners furnishing the source code and the new/revised code.

CMS reviews the AMA RUC recommendations on a code-by-code basis. For AMA RUC recommendations regarding physician work RVUs, we determine whether we agree with the recommended work RVUs for a service (that is, whether we agree the valuation is accurate). If we disagree, we determine an alternative value that better reflects our estimate of the physician work for the service. Because of the timing of the CPT Editorial Panel decisions, the AMA RUC recommendations, and our rulemaking cycle, we publish these work RVUs in the PFS final rule with comment period as interim final values, subject to public comment. Similarly, we assess the AMA RUC's recommendations for direct PE inputs and malpractice crosswalks, and establish PE and malpractice interim final values, which are also subject to comment. We note that, with respect to interim final PE RVUs, the main aspect of our valuation that is open for public comment for a new, revised, or potentially misvalued code is the direct PE inputs and not the other elements of the PE valuation methodology, such as the indirect cost allocation methodology, that also contribute to establishing the PE RVUs for a code. The public comment period on the PFS final rule with comment period remains open for 60 days after the rule is issued.

If we receive public comments on the interim final work RVUs for a specific code indicating that refinement of the interim final work value is warranted based on sufficient information from the commenters concerning the clinical aspects of the physician work associated with the service (57 FR 55917), we refer the service to a refinement panel, as discussed in further detail in section III.B.1.a. of this final rule with comment period.

In the interval between closure of the comment period and the subsequent year's PFS final rule with comment period, we consider all of the public comments on the interim final work, PE, and malpractice RVUs for the new, revised, and potentially misvalued codes and the results of the refinement panel, if applicable. Finally, we address the interim final RVUs (including the interim final direct PE inputs) by providing a summary of the public comments and our responses to those comments, including a discussion of any changes to the interim final work or malpractice RVUs or direct PE inputs, in the following year's PFS final rule with comment period. We then typically finalize the direct PE inputs and the work, PE, and malpractice RVUs for the service in that year's PFS final rule with comment period, unless we determine it would be more appropriate to continue their interim final status for another year and solicit further public comment.

A. Methodology

We conducted a clinical review of each code identified in this section and reviewed the AMA RUC recommendations for work RVUs, time to perform the “pre-,” “intra-,” and “post-” service activities, as well as other components of the service which contribute to the value. Our clinical review generally includes, but is not limited to, a review of information provided by the AMA RUC, medical literature, public comments, and comparative databases, as well as a comparison with other codes within the Medicare PFS, consultation with other physicians and healthcare care professionals within CMS and the Federal Government, and the views based on clinical experience of the physicians on the clinical team. We also assessed the AMA RUC's methodology and data used to develop the recommendations and the rationale for the recommendations. As we noted in the CY 2011 PFS final rule with comment period (75 FR 73328 through 73329), the AMA RUC uses a variety of methodologies and approaches to assign work RVUs, including building block, survey data, crosswalk to key reference or similar codes, and magnitude estimation. The building block methodology is used to construct, or deconstruct, the work RVU for a CPT code based on component pieces of the code. Components may include pre-, intra-, or post-service time and post-procedure visits, or, when referring to a bundled CPT code, the components could be considered to be the CPT codes that make up the bundled code. Magnitude estimation refers to a methodology for valuing physician work that determines the appropriate work RVU for a service by gauging the total amount of physician work for that service relative to the physician work for similar service across the physician fee schedule without explicitly valuing the components of that work. The resource-based relative value system (RBRVS) has incorporated into it cross-specialty and cross-organ system relativity. This RBRVS requires assessment of relative value and takes into account the clinical intensity and time required to perform a service. In selecting which methodological approach will best determine the appropriate value for a service we consider the current physician work and time values, AMA RUC-recommended physician work and time values, and specialty society physician work and time values, as well as the intensity of the service, all relative to other services. During our clinical review to assess the appropriate values for the codes we developed systematic approaches to address particular areas of concern. Specifically, the application of work budget neutrality within clinical categories of CPT codes, CPT codes with site-of-service anomalies, and CPT codes for services typically furnished on the same day as an evaluation and management visit. A description of those methodologies follows.

○ Work Budget Neutrality for Clinical Categories of CPT Codes

We apply work budget neutrality to hold the aggregate work RVUs constant within a set of clinically related CPT codes, while maintaining the relativity of values for the individual codes within that set. In some cases, when the CPT coding framework for a clinically related set of CPT codes is revised by the creation of new CPT codes or existing CPT codes are revalued, the aggregate work RVUs recommended by the AMA RUC within that clinical category of CPT codes may change, although the actual physician work associated with the services has not changed. When this occurs, we may apply work budget neutrality to adjust the work RVUs of each clinically related code so that the sum of the new/revised code work RVUs (weighted by projected utilization) for a set of CPT codes would be the same as the sum of the current work RVUs (weighted by projected utilization) for that set of codes.

When the AMA RUC recommends work RVUs for new or revised CPT codes, we review the work RVUs and adjust or accept the recommended values as appropriate, making note of whether any estimated changes in aggregate work RVUs would result from true change in physician work, or from structural coding changes. We then determine whether the application of budget neutrality within sets of codes is appropriate. If the aggregate work RVUs would increase without a corresponding true increase in physician work, we generally view this as an indication that an adjustment to ensure work budget neutrality within the set of CPT codes is warranted. Ensuring work budget neutrality is an important principle so that structural coding changes are not unjustifiably redistributive among PFS services.

In the CY 2011 PFS final rule with comment period, there were four sets of clinically related CPT codes where we believed that the application of work budget neutrality was appropriate. These codes were in the areas of paraesophageal hernia procedures, esophageal motility and high resolution esophageal pressure topography, skin excision and debridement, and obstetrical care. The CY 2011 interim final values and CY 2012 final values for these services are discussed in section III.B.1.b. of this final rule with comment period.

○ 23-Hour Stay Site-of-Service Anomaly CPT Codes

Since CY 2009, CMS and the AMA RUC have reviewed a number of CPT codes that have experienced a change in the typical site-of-service since the original valuation of the codes. Specifically, these codes were originally furnished in the inpatient setting, but Medicare claims data show that the typical case has shifted to being furnished in the outpatient setting. As we discussed in the CY 2011 PFS final rule with comment period (75 FR 73221) and the CY 2012 PFS proposed rule (76 FR 42797), when the typical case for a service has shifted from the inpatient setting to an outpatient or physician's office setting, we do not believe the inclusion of inpatient hospital visits in the post-operative period is appropriate. Additionally, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both.

For CY 2009 and CY 2010, the AMA RUC reviewed and recommended—RVUs for 40 CPT codes we identified as being potentially misvalued under the Secretary's discretion to identify other categories of potentially misvalued codes (see section II.B. of this final rule) because a site-of-service anomaly exists. In the CYs 2009 and 2010 PFS final rule with comment period (73 FR 69883 and 74 FR 61776 through 61778, respectively), we indicated that although we would accept the AMA RUC valuations for these CPT codes on an interim basis, we had ongoing concerns about the methodology used by the AMA RUC to value these services, and in the CY 2010 PFS final rule with comment period (74 FR 61777) we encouraged the AMA RUC to utilize the building block methodology when revaluing services with site-of-service anomalies. In the CY 2011 final rule with comment period (75 FR 73221), we requested that the AMA RUC re-examine the site-of-service anomaly codes and adjust the work RVU, times, and post-service visits to reflect those typical of a service furnished in an outpatient or physician's office setting.

Following this request, the AMA RUC re-reviewed these site-of-service anomaly codes and recommended work RVUs to us for these services. Of the 40 CPT codes on the CY 2009 and CY 2010 site-of-service anomaly codes lists, 1 CPT code was not re-reviewed, as it was addressed in the CY 2011 PFS final rule with comment period. Ten of the remaining 39 site-of-service anomaly codes were addressed in the Fourth Five-Year Review of Work (76 FR 32410), and the remaining 29 CPT codes were addressed in the CY 2012 PFS proposed rule (76 FR 72798 through 42809). In addition, several other CPT codes were identified as having site-of-service anomalies and were addressed in the Fourth Five-Year Review of Work (76 FR 32410). In the CY 2012 PFS proposed rule (76 FR 42797), we stated that we would respond to public comments and adopt final work RVUs for these codes in the CY 2012 PFS final rule with comment period.

When Medicare claims data show that the typical setting for a CPT code has shifted from the inpatient setting to the outpatient setting, we believe that the work RVU, time, and post-service visits of the code should reflect a service furnished in the outpatient setting. For nearly all of the codes with site-of-service anomalies, the accompanying survey data suggest they are “23-hour stay” outpatient services. As we discussed in detail in the CY 2011 PFS final rule with comment period (75 FR 73226), the Fourth Five-Year Review of Work (76 FR 32410) and the CY 2012 PFS proposed rule (76 FR 42798), the “23-hour stay service” is a term of art describing services that typically have lengthy hospital outpatient recovery periods. For these 23-hour stay services, the typical patient is at the hospital for less than 24-hours, but often stays overnight at the hospital. Unless a treating physician has written an order to admit the patient as an inpatient, the patient is considered for Medicare purposes to be a hospital outpatient, not an inpatient, and our claims data support that the typical 23-hour stay service is billed as an outpatient service.

As we discussed in the Five-Year Review of Work (76 FR 32410), and CY 2012 PFS proposed rule (76 FR 42798) we believe that the values of the codes that fall into the 23-hour stay category should not reflect work that is typically associated with an inpatient service. However, as we stated in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), while the patient receiving the outpatient 23-hour stay service remains a hospital outpatient, the patient would typically be cared for by a physician during that lengthy recovery period at the hospital. While we do not believe that post-procedure hospital visits would be at the inpatient level since the typical case is an outpatient who would be ready to be discharged from the hospital in 23-hours or less, we believe it is generally appropriate to include the intra-service time of the inpatient hospital visit in the immediate post-service time of the 23-hour stay code under review. In addition, we indicated that we believe it is appropriate to include a half day, rather than a full day, of a discharge day management service.

We finalized this policy in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227) and applied this methodology when valuing 23-hour stay codes in the Fourth Five-Year Review and CY 2012 PFS proposed rule in order to ensure the consistent and appropriate valuation of the physician work for these services. A full description of our methodology for revaluing the site-of-service anomaly codes can be found in the Fourth Five-Year Review of Work (76 FR 32410), and the CY 2012 PFS proposed rule (76 FR 72798 through 42809). In brief, where Medicare claims data suggested a site-of-service anomaly (more than 50 percent of the Medicare PFS utilization is outpatient) and the AMA RUC's recommended value continued to include inpatient visits in the post-operative period, we removed any post-procedure inpatient visits or subsequent observation care services included in the AMA RUC-recommended values for these codes and adjusted the physician times accordingly. We also consistently included the value of a half day of discharge management service.

Comment: We received a number of comments that disagreed with the premise of the 23-hour site-of-service anomaly methodology arguing that the acuity of the patient as captured in patient status (inpatient or outpatient) is not an indicator of physician work. The commenters believe that if the procedure or service is typically performed in the hospital and the patient is kept overnight and/or admitted, the RUC should evaluate it as an inpatient service or procedure using the hospital visits as a work proxy regardless of the patient's status. Commenters noted that while physicians generally write admitting orders, the hospital frequently makes the determination to categorize a patient's stay as inpatient or outpatient, and that hospital attention to patient status is being driven by a fear of Recover Audit Contractor (RAC) audits and not clinical judgment. Commenters asserted that the AMA RUC-recommended values for site-of-service anomaly codes are based on physician specialty survey responses which identified the actual work performed in caring for these patients and that the physician work to treat the patient does not vary with regard to how the patient is later categorized for facility billing purposes as an inpatient or outpatient.

Response: As we noted in the CY 2011 PFS final rule with comment period (75 FR 73227), these services would be considered for hospital outpatient services, not inpatient services, for the typical patient, and our claims data support that the typical 23-hour stay service, usually a scheduled procedure, is billed as an outpatient service. Since the typical patient commonly remains in the hospital for less than 24 hours, even if the stay extends overnight, and the patient's encounter is relatively brief, the acuity of the typical patient and the risk of adverse outcomes is less than that of a typical inpatient who is admitted to the hospital, and we continue to believe that the intensity of the physician work involved in caring for the hospital outpatient immediately following a 23-hour stay procedure is less than for a hospital inpatient. The typical hospital outpatient for a 23-hour procedure has fewer comorbidities, less complications, lower risk and therefore less need for intensive nursing and physician care of the kind provided during an inpatient admission. Medicare pays for an inpatient admission when, among other criteria, the physician responsible for the care of the patient has an expectation of a minimum 24-hour stay and the patient requires an inpatient level of care, based on assessment of several factors including the severity of the signs and symptoms and the probability of an adverse event (Medicare Benefit Policy Manual 100-02, chapter 1, section 10).

There are many reasons that services move from the inpatient to outpatient setting that reduce the overall risk of adverse outcomes and intensity of physician work. Services frequently move to the outpatient setting when the technique matures; that is, the risk-benefit ratio of the service is better understood and the efficacy of the service is more clearly established. Services may move to the outpatient setting because technological advances decrease the need for intensive monitoring and allow the discharge of sicker patients. Patient-controlled analgesia, for example, reduces the iterative assessment and response work necessary to manage post-operative pain and allows earlier discharge. Technological advances in the procedures themselves also reduce the risk of adverse outcomes. Electronic imaging and robotic surgery both allow procedures to be performed with increasingly smaller incisions, decreasing post-operative morbidity. Accordingly, we believe that, generally, the valuation of the codes that fall into the 23-hour stay category should not reflect physician work that is typically associated with an inpatient service.

○ CPT Codes Typically Billed on the Same Day as an Evaluation and Management Service

Since CY 2011, we have reviewed a number of CPT codes that are typically billed with an E/M service on the same day. In cases where a service is typically furnished with an E/M service on the same day, we believe that there may be overlap between the two services in some of the activities conducted during the pre- and post-service times of the procedure code. Accordingly, in cases where the most recently available Medicare PFS claims data show the code is typically billed with an E/M visit on the same day, and where we believe that the AMA RUC did not adequately account for overlapping activities in the recommended value for the code, we systematically adjusted the physician times for the code to account for the overlap. After clinical review of the pre- and post-service work, we believe that at least one-third of the physician time in both the pre-service evaluation and post-service period is duplicative of the E/M visit in this circumstance. Therefore, for a number of CPT codes discussed in the following paragraphs, we adjusted the pre-service evaluation portion of the pre-service time to two-thirds of the AMA RUC-recommended time. Similarly, we also adjusted the post-service time to two-thirds of the AMA RUC-recommended time.

B. Finalizing CY 2011 Interim and CY 2012 Proposed Values for CY 2012

In this section, we address the interim final values published in Appendix C of the CY 2011 PFS final rule with comment period (75 FR 73810 through 73815), as subsequently corrected in the January 11, 2011 (76 FR 1670) correction notice; the proposed values published in the Fourth Five-Year Review of Work (76 FR 32410 through 32813); and the proposed values published in the CY 2012 PFS proposed rule (76 FR 42772 through 42947). We discuss the results of the CY 2011 multi-specialty refinement panel, respond to public comments received on specific interim final and proposed values (including direct PE inputs), and address the other new, revised, or potentially misvalued codes with interim final or proposed values. In section II.B.3. of this final rule with comment period, we emphasized the importance of reviewing the full value for services (the work, PE, and malpractice components of codes) that are identified as part of the potentially misvalued code initiative in order to maintain appropriate relativity and key relationships within the components of codes. The final CY 2012 direct PE database that lists the direct PE inputs is available on the CMS Web site under the downloads for the CY 2012 PFS final rule with comment period at: https://www.cms.gov/PhysicianFeeSched/. The final CY 2011 work, PE, and malpractice RVUs are displayed in Addendum B to this final rule with comment period at: https://www.cms.gov/PhysicianFeeSched/.

1. Finalizing CY 2011 Interim and Proposed Work Values for CY 2012

a. Refinement Panel

(1) Refinement Panel Process

As discussed in the 1993 PFS final rule with comment period (57 FR 55938), we adopted a refinement panel process to assist us in reviewing the public comments on CPT codes with interim final work RVUs for a year and in developing final work values for the subsequent year. We decided that the panel would be comprised of a multispecialty group of physicians who would review and discuss the work involved in each procedure under review, and then each panel member would individually rate the work of the procedure. We believed that establishing the panel with a multispecialty group would balance the interests of the specialty societies who commented on the work RVUs with the budgetary and redistributive effects that could occur if we accepted extensive increases in work RVUs across a broad range of services.

Historically, the refinement panel's recommendation to change a work value or to retain the interim value had hinged solely on the outcome of a statistical test on the ratings (an F-test of panel ratings among the groups of participants). Depending on the number and range of codes that specialty societies request be subject to refinement through their public comments, we establish refinement panels with representatives from 4 groups of physicians: Clinicians representing the specialty most identified with the procedures in question; physicians with practices in related specialties; primary care physicians; and contractor medical directors (CMDs). Typically, the refinement panels meet in the summer prior to the promulgation of the PFS final rule with comment period that finalizes the RVUs for the codes. Typical panels have included 8 to 10 physicians across the 4 groups. Over time, we found that the statistical test used to evaluate the RVU ratings of individual panel members became less reliable as the physicians in each group have tended to select a previously discussed value, rather than developing a unique value, thereby reducing the observed variability needed to conduct a robust statistical test. In addition, reliance on values developed using the F-test also occasionally resulted in rank order anomalies among services (that is, a more complex procedure is assigned lower RVUs than a less complex procedure).

Recently, section 1848(c)(2)(K) of the Act (as added by section 3134 of the Affordable Care Act) authorized the Secretary to review potentially misvalued codes and make appropriate adjustments to the relative values. In addition, MedPAC has encouraged CMS to critically review the values assigned to the services under the PFS. As detailed in the CY 2011 PFS final rule with comment period (75 FR 73306), we believed the refinement panel process may provide an opportunity to review and discuss the proposed and interim final work RVUs with a clinically diverse group of experts, which then provides informed recommendations. Therefore, we indicated that we would like to continue the refinement process, including the established composition that includes representatives from the 4 groups of physicians, but with administrative modification and clarification. We eliminated the use of the statistical F-test and instead indicated that we would base revised RVUs on the median work value of the individual panel members' ratings. We believed this approach would simplify the refinement process administratively, while resulting in a final panel recommendation that reflects the summary opinion of the panel members based on a commonly used measure of central tendency that is not significantly affected by outlier values. We clarified that we have the final authority to set the RVUs, including making adjustments to the work RVUs resulting from refinement process if policy concerns warrant modification (75 FR 73307).

Due to the major increase in the number of codes reviewed by the CY 2011 multi-specialty refinement panels as compared to refinement panels in recent years, and public comments requesting more clarification about the refinement panels, we would like to remind readers that historically the refinement panels were not intended to review every code for which we did not propose to accept the AMA RUC-recommended RVUs. Furthermore, in the past, we have asked commenters requesting refinement panel review to submit sufficient information concerning the clinical aspects of the work assigned for a service to indicate that referral to the refinement panel is warranted (57 FR 55917). We note that the majority of the information that was presented during the CY 2011 refinement panel discussions was duplicative of the information provided to the AMA RUC during its development of recommendations. As detailed in section III.B. of this final rule with comment period, we consider information and recommendations from the AMA RUC when assigning proposed and interim final RVUs to services. To facilitate the selection of services for the refinement panels, we would like to remind specialty societies seeking reconsideration of proposed or interim final work RVUs, including consideration by a refinement panel, to specifically request refinement panel review in their public comment letters. Also, we request that commenters seeking refinement panel review of work RVUs submit supporting information that has not already been considered by the AMA RUC in creating recommended work RVUs or by CMS in assigning proposed and interim final work RVUs. In order to make the best use of the agency's limited resources and avoid inefficient duplicative consideration of information by the AMA RUC, CMS, and then a refinement panel, CMS will more critically evaluate the need to refer codes to refinement panels in future years, specifically considering any new information provided by commenters.

(2) Proposed and Interim Final Work RVUs Referred to the Refinement Panels in CY 2011

We referred to the CY 2011 refinement panel 143 CPT codes with proposed or interim final work values for which we received comments from least one major specialty society. For these 143 CPT codes, all commenters requested increased work RVUs. For ease of discussion, we will be referring to these services as “refinement codes.” Consistent with past practice (62 FR 59084), we convened a multi-specialty panel of physicians to assist us in the review of the comments. The panel was moderated by our physician advisors, and consisted of the following voting members:

  • One to two clinicians representing the commenting organization;
  • One to two primary care clinicians nominated by the American Academy of Family Physicians and the American College of Physicians;
  • One to three contractor medical directors (CMDs); and
  • One to two clinicians with practices in related specialties who were expected to have knowledge of the services under review.

The panel process was designed to capture each participant's independent judgment and his or her clinical experience which informed and drove the discussion of the refinement code during the refinement panel proceedings. Following the discussion, each voting participant rated the physician work of the refinement code. Ratings were obtained individually and confidentially, with no attempt to achieve consensus among the panel members.

As finalized in the CY 2011 PFS final rule with comment period (75 FR 73307), we reviewed the ratings from each panel member and determined the median value for each service that was reviewed by the refinement panels. Our decision to convene multi-specialty panels of physicians has historically been based on our need to balance the interests of those who commented on the interim final work values with the redistributive effects that would occur in other specialties if the work values were changed. We refer readers to section III.I. of the CY 2011 PFS final rule with comment period for a full discussion of the changes to the refinement process that we adopted for refinement panels beginning in CY 2011.

We note that individual codes, including those that were reviewed by the refinement panels, and their final work RVUs are discussed in section III.B.1.b. of this final rule with comment period. Also, see Table 15 for the refinement panel ratings and the final work RVUs for the codes that were reviewed by the CY 2011 multi-specialty refinement panels.

b. Code-Specific Issues

In this section we discuss all code families for which we received a comment on an interim final physician work value in CY 2011 PFS final rule with comment period, on a proposed value in the Fourth Five-Year Review of Work, or on a proposed value in the CY 2012 PFS proposed rule. Table 15 provides a comprehensive list of all final values.

(1) Integumentary System: Skin, Subcutaneous, and Accessory Structures (CPT codes 10140, 10160, 11010-11012, 11042-11047) and Active Wound Care Management (CPT codes 97597 and 97598)

For the Fourth Five-Year Review, we identified CPT codes 10140 and 10160 as potentially misvalued though the Harvard-Valued—Utilization > 30,000 screen. The related specialty societies surveyed their members, and the AMA RUC issued recommendations to us for the Fourth Five-Year Review.

As detailed in the Fourth Five-Year Review, for CPT codes 10140 (Incision and drainage of hematoma, seroma or fluid collection) and 10160 (Puncture aspiration of abscess, hematoma, bulla, or cyst) we believed that the current (CY 2011) work RVUs continued to accurately reflect the work of these services. For CPT code 10140 we proposed a work RVU of 1.58, and for CPT code 10160 we proposed a work RVU of 1.25. The AMA RUC recommended maintaining the current work RVUs for these services as well. For CPT code 10160, the AMA RUC recommended a pre-service evaluation time of 7 minutes. As CPT codes 10160 and 10140 have the same description of pre-service work, we believed that they should have the same pre-service time. Therefore, we reduced the pre-service evaluation time for CPT code 10140 from 17 minutes to 7 minutes, to match the pre-service evaluation time of CPT code 10160 (76 FR 32431 through 32432).

Comment: In its public comment to CMS on the Fourth Five-Year Review, the AMA RUC wrote that there was a typographical error in its recommendation to CMS for CPT code 10160, and the correct pre-service evaluation time for that code should have been 17 minutes. The AMA RUC wrote that they agree that CPT codes 10140 and 10160 should have the same pre-service time, but that both should have 17 minutes of pre-service evaluation time, and not 7 minutes. They requested that CMS change the pre-service time for both CPT codes 10140 and 10160.

Response: In response to comments, we re-reviewed CPT codes 10140 and 10160. After reviewing the descriptions of pre-service work and the recommended pre-service time packages, we agree that both CPT codes 10140 and 10160 should have 17 minutes of pre-service evaluation work. We thank the AMA RUC for pointing out this time error. For CPT code 10140 we are finalizing a work RVU of 1.50 and a pre-service evaluation time of 17 minutes. For CPT code 10160 we are finalizing a work RVU of 1.25 and a pre-service evaluation time of 17 minutes. CMS time refinements can be found in Table 16.

CPT codes 11043 (Debridement; skin, subcutaneous tissue, and muscle) and 11044 (Debridement; skin, subcutaneous tissue, muscle, and bone) were identified by the AMA RUC's Five-Year Review Identification Workgroup through the “site-of-service anomalies” potentially misvalued codes screen in September 2007. The AMA RUC recommended that the entire family of services described by CPT codes 11040 through 11044, and 97597 and 97598 be referred to the CPT Editorial Panel because the current descriptors allowed reporting of the codes for a bimodal distribution of patients and also to better define the terms excision and debridement. The CPT Excision and Debridement Workgroup and the CPT Editorial Panel reviewed and revised the CPT code descriptors for CPT codes 11042 through 11047, along with the descriptors for other related CPT codes. Following the descriptor changes, the related specialty societies surveyed their members, gathering information for work RVU and time recommendations for these services, and the AMA RUC issued recommendations to us for CY 2011. We reviewed these CPT codes, and published the CY 2011 interim final work RVUs in the CY 2011 PFS final rule with comment period (75 FR 73329 through 73330). Based on comments received during the public comment period, we referred CPT codes 11042 through 11047 to the CY 2011 multi-specialty refinement panel for further review.

As detailed in the CY 2011 PFS final rule with comment period, for CPT code 11042 (Debridement, subcutaneous tissue (includes epidermis and dermis, if performed); first 20 sq cm or less) we assigned a work RVU of 0.80 on an interim final basis for CY 2011. After clinical review, we believed that the then current (2010) work RVU of 0.80 continued to accurately reflect the work of the service relative to similar services, including reference CPT code 16020 (Dressings and/or debridement of partial-thickness burns, initial or subsequent; small (less than 5 percent total body surface area)). We found no grounds to increase the work RVU for this service. The AMA RUC recommended a work RVU of 1.12 for CPT code 11042 for CY 2011 (75 FR 73329).

Comment: Commenters disagreed with the interim final work RVU of 0.80 assigned to CPT code 11042 by CMS and believe that the AMA RUC-recommended work RVU of 1.12 is more appropriate for this service. Commenters reiterated the arguments that the specialty societies presented to the AMA RUC that—(1) the 2005 survey for this code did not include podiatry, which is now the dominant specialty for this service; and (2) the original Harvard valuation of this code was based on a 10-day global period, and that since the original valuation CMS has reduced the work RVU and changed global period for this service through the refinement process in previous years. Commenters also noted that, while CMS indicated that the AMA RUC-recommended work RVU of 1.12 was based on an old surveyed value, the AMA RUC agreed that a work RVU of 1.12 continues to be an appropriate valuation for this service relative to other services.

Response: Based on the comments received, we referred CPT code 11042 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU for CPT code 11042 was 1.01. As a result of the refinement panel ratings and our clinical review, we are assigning a work RVU of 1.01 to CPT code 11042 as the final value for CY 2012.

As detailed in the CY 2011 PFS final rule with comment period, for CPT code 11045 (Debridement, subcutaneous tissue (includes epidermis and dermis, if performed); each additional 20 sq cm, or part thereof (List separately in addition to code for primary procedure)) we assigned a work RVU of 0.33 on an interim final basis for CY 2011. CPT code 11045 is the add-on code to CPT code 11042. To obtain the appropriate RVU for this add-on service, we started with the CMS-assigned CY 2011 interim final RVU of 0.80 for the primary code (CPT code 11042), and removed the work RVUs corresponding to the pre- and post-service time (add-on codes generally do not have pre- and post-service time because that work is captured by the primary service). The AMA RUC recommended a work RVU of 0.69 for CPT code 11045 for CY 2011 (75 FR 73329 and 73330).

Comment: Commenters disagreed with the interim final work RVU of 0.33 assigned to CPT code 11045 by CMS and believe that the AMA RUC-recommended work RVU of 0.69 is more appropriate for this service. Commenters noted that removing the RVUs related to the pre- and post-service time results in a work RVU of 0.34, not a work RVU of 0.33. Commenters offered reference service CPT code 36575 (Repair of tunneled or non-tunneled central venous access catheter, without subcutaneous port or pump, central or peripheral insertion site) to support the AMA RUC-recommended work RVU of 0.69.

Response: Based on the comments received, we referred CPT code 11045 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU for CPT code 11045 was 0.50. As a result of the refinement panel ratings and our clinical review, we are assigning a work RVU of 0.50 to CPT code 11045 as the final value for CY 2012.

As detailed in the CY 2011 PFS final rule with comment period, for CPT code 11043 (Debridement, muscle and/or fascia (includes epidermis, dermis, and subcutaneous tissue, if performed); first 20 sq cm or less) we assigned a work RVU of 2.00 on an interim final basis for CY 2011. After clinical review, we believed that the work RVU of 2.00 (the survey low) appropriately reflected the AMA RUC-recommended decrease in clinical time and follow-up E/M visits attributed to the performance of this service (CY 2010 work RVU=3.14). The AMA RUC recommended a work RVU of 3.00 for CPT code 11043 for CY 2011. (75 FR 73330)

Comment: Commenters disagreed with the interim final work RVU of 2.00 assigned to CPT code 11043 by CMS and believe that the AMA RUC-recommended work RVU of 3.00 is more appropriate for this service. Commenters noted that the AMA RUC-recommended value for this service corresponds to the specialty society survey 25th percentile value, and that the CMS-assigned value corresponds to the survey low. Commenters asserted that CMS ignored the survey results by selecting the survey low, noting that the low of any survey could be construed as an outlier and that they believe it is not appropriate to value services based on the survey low.

Response: Based on the comments received, we referred CPT code 11043 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU for CPT code 11043 was 2.70. As a result of the refinement panel ratings and our clinical review, we are assigning a work RVU of 2.70 to CPT code 11043 as the final value for CY 2012.

As detailed in the CY 2011 PFS final rule with comment period, for CPT code 11046 (Debridement, muscle and/or fascia (includes epidermis, dermis, and subcutaneous tissue, if performed); each additional 20 sq cm, or part thereof (List separately in addition to code for primary procedure)) we assigned a work RVU of 0.70 on an interim final basis for CY 2011. After clinical review, we believed that the work RVU of 0.70 (the survey low) appropriately placed this add-on service relative to its primary service, CPT code 11043. The AMA RUC recommended a work RVU of 1.29 for CPT code 11046 for CY 2011 (75 FR 73330).

Comment: Commenters disagreed with the interim final work RVU of 0.70 assigned to CPT code 11046 by CMS and believe that the AMA RUC-recommended work RVU of 1.29 is more appropriate for this service. Commenters noted that the AMA RUC-recommended value for this service corresponds to the specialty society survey 25th percentile value, and that the CMS-assigned value corresponds to the survey low. Commenters asserted that CMS ignored the survey results by selecting the survey low, noting that the low of any survey could be construed as an outlier and that they believe it is not appropriate to value services based on the survey low.

Response: Based on the comments received, we referred CPT code 11046 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU for CPT code 11046 was 1.03. As a result of the refinement panel ratings and our clinical review, we are assigning a work RVU of 1.03 to CPT code 11046 as the final value for CY 2012.

As detailed in the CY 2011 PFS final rule with comment period, for CPT code 11044 (Debridement, bone (includes epidermis, dermis, subcutaneous tissue, muscle and/or fascia, if performed); first 20 sq cm or less) we assigned a work RVU of 3.60 on an interim final basis for CY 2011. After clinical review, we believed that the work RVU of 3.60 (the survey low) appropriately reflected the AMA RUC-recommended decrease in clinical time and follow-up E/M visits attributed to the performance of this service (CY 2010 work RVU = 4.26). The AMA RUC recommended a work RVU of 4.56 for CPT code 11044 for CY 2011 (75 FR 73330).

Comment: Commenters disagreed with the interim final work RVU of 3.60 assigned to CPT code 11044 by CMS and believe that the AMA RUC-recommended work RVU of 4.56 is more appropriate for this service. Commenters noted that the AMA RUC-recommended value for this service corresponds to the specialty society survey 25th percentile value, and that the CMS-assigned value corresponds to the survey low. Commenters asserted that CMS ignored the survey results by selecting the survey low, noting that the low of any survey could be construed as an outlier and that they believe it is not appropriate to value services based on the survey low.

Response: Based on the comments received, we referred CPT code 11044 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU for CPT code 11044 was 4.10. As a result of the refinement panel ratings and our clinical review, we are assigning a work RVU of 4.10 to CPT code 11044 as the final value for CY 2012.

As detailed in the CY 2011 PFS final rule with comment period, for CPT code 11047 (Debridement, bone (includes epidermis, dermis, subcutaneous tissue, muscle and/or fascia, if performed); each additional 20 sq cm, or part thereof (List separately in addition to code for primary procedure)) we assigned a work RVU of 1.20 on an interim final basis for CY 2011. After clinical review, we believed that the work RVU of 1.20 (the survey low) appropriately placed this add-on service relative to its primary service, CPT code 11044. The AMA RUC recommended a work RVU of 2.00 for CPT code 11047 for CY 2011 (FR 75 73330).

Comment: Commenters disagreed with the interim final work RVU of 1.20 assigned to CPT code 11047 by CMS and believe that the AMA RUC-recommended work RVU of 2.00 is more appropriate for this service. Commenters noted that the AMA RUC-recommended value for this service corresponds to the specialty society survey 25th percentile value, and that the CMS-assigned value corresponds to the survey low. Commenters asserted that CMS ignored the survey results by selecting the survey low, noting that the low of any survey could be construed as an outlier and that they believe it is not appropriate to value services based on the survey low.

Response: Based on the comments received, we referred CPT code 11047 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU for CPT code 11047 was 1.80. As a result of the refinement panel ratings and our clinical review, we are assigning a work RVU of 1.80 to CPT code 11047 as the final value for CY 2012.

As stated in the CY 2011 PFS final rule with comment period (75 FR 73338 and 73339), in the excision and debridement set of services, for CY 2011 two CPT codes were deleted and the services that would previously have been reported under those CPT codes are now reported under two revised codes, CPT code 97597 (Debridement (e.g., high pressure waterjet with/without suction, sharp selective debridement with scissors, scalpel and forceps), open wound, (e.g., fibrin, devitalized epidermis and/or dermis, exudate, debris, biofilm), including topical application(s), wound assessment, use of a whirlpool, when performed and instruction(s) for ongoing care, per session, total wound(s) surface area; first 20 sq cm or less) and CPT code 97598 (Debridement (e.g., high pressure waterjet with/without suction, sharp selective debridement with scissors, scalpel and forceps), open wound, (e.g., fibrin, devitalized epidermis and/or dermis, exudate, debris, biofilm), including topical application(s), wound assessment, use of a whirlpool, when performed and instruction(s) for ongoing care, per session, total wound(s) surface area; each additional 20 sq cm, or part thereof (List separately in addition to code for primary procedure)). These two revised wound management CPT codes were restructured from describing two distinct procedures reported based on wound surface area to describing a primary procedure and an add-on procedure that would additionally be reported in the case of a larger wound. We believed that the increase in aggregate work RVUs that would results from adoption of the RVUs, even after the adjustments we later discuss, did not represent a true increase in physician work for these procedures. Therefore, we believed it would be appropriate to apply work budget neutrality to this set of CPT codes. After reviewing the HCPAC-recommended work RVUs, we adjusted the work RVU for CPT code 97598, and then applied work budget neutrality to these two CPT codes, which constitute the set of clinically related CPT codes. The work budget neutrality factor for these 2 codes was 0.9422. The HCPAC-recommended work RVU, CMS-adjusted work RVU prior to the budget neutrality adjustment, and the CY 2011 interim final work RVU for these skin excision and debridement codes (CPT code 97597 and 97598) follow.

As mentioned previously, and detailed in the CY 2011 PFS final rule with comment period, for CPT code 97598, we disagreed with the HCPAC-recommended work RVU of 0.40 and assigned alternate work RVU of 0.25 prior to the application of work budget neutrality (75 FR 73330). We believed that a work RVU of 0.25, which corresponded to the specialty society survey low value, was consistent with new CY 2011 add-on CPT code 11045 (Debridement, subcutaneous tissue (includes epidermis and dermis, if performed); each additional 20 sq cm, or part thereof (List separately in addition to code for primary procedure)), which we assigned a CY 2011 interim final work RVU of 0.33.

Comment: Commenters agreed with the application of work budget neutrality to CPT codes 97597 and 97598, and requested that the codes be re-reviewed after additional claims data are available to ensure that the frequency estimates were accurate. Commenters disagreed with the CMS pre-budget neutrality work RVU of 0.25 for CPT code 97598 and believed that the HCPAC-recommended work RVU of 0.40 is more appropriate for this service. Commenters asserted that CMS ignored the survey results by selecting the survey low, noting that the low of any survey could be construed as an outlier and that they believe it is not appropriate to value services based on the survey low.

Response: Based on the comments received, we referred CPT codes 97597 and 97598 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel result supported the HCPAC-recommended work RVU of 0.54 for CPT code 97597, and the CY 2011 interim final work RVU of 0.24 for CPT code 97598. Thus, the refinement panel result was in line with the pre-work budget neutrality work RVU for CPT code 97597, and in line with the post-work budget neutrality interim final work RVU for CPT code 97598. The refinement panel does not consider whether the application of work budget neutrality is appropriate. We continue to believe that these codes, although revalued, do not constitute new physician work in aggregate and that the application of work budget neutrality is appropriate for this set of clinically related CPT codes. Additionally, we continue to believe that the post-budget neutrality work RVU of 0.24, which was supported by the refinement panel result, appropriately reflects the work associated with CPT code 97598. After consideration of the public comments, refinement panel results, and our clinical review, we are finalizing a work RVU of 0.51 for CPT code 97597, and a work RVU of 0.24 for CPT code 97598 for CY 2012.

For CY 2012, we received no comments on the CY 2011 interim final work RVUs of 4.19 for CPT code 11010 (Debridement including removal of foreign material at the site of an open fracture and/or an open dislocation (e.g., excisional debridement); skin and subcutaneous tissues), 4.94 for CPT code 11011(Debridement including removal of foreign material at the site of an open fracture and/or an open dislocation (e.g., excisional debridement); skin, subcutaneous tissue, muscle fascia, and muscle), and 6.87 for CPT code 11012 (Debridement including removal of foreign material at the site of an open fracture and/or an open dislocation (e.g., excisional debridement); skin, subcutaneous tissue, muscle fascia, muscle, and bone). We believe these values continue to be appropriate and are finalizing them without modification.

(2) Integumentary System: Nails (CPT Codes 11732 and 11765)

For the Fourth Five-Year Review, we identified CPT codes 11732 and 11765 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. The related specialty societies surveyed their members and the HCPAC issued recommendations to us for the Fourth Five-Year Review.

As detailed in the Fourth Five-Year Review, for CPT code 11732 (Avulsion of nail plate, partial or complete, simple; each additional nail plate (List separately in addition to code for primary procedure)) we proposed a work RVU of 0.44, with refinement to time. After clinical review, we believed that Multi-Specialty Points of Comparison (MPC) CPT code 92250 (Fundus photography with interpretation and report) (work RVU=0.44) provided an appropriate crosswalk work RVU for this service. We found the HCPAC-recommended decrease in work RVU (from 0.57 to 0.48) to be too small, given the recommended reduction in time (from 20 minutes total time in CY 2011, to a recommended 15 minutes total time for CY 2012). Additionally, we refined the post-service time for CPT code 11732 to 1 minute, as we believed the HCPAC-recommended 3 minutes of post-service time was excessive for this service (76 FR 32459).

Comment: Commenters disagreed with the proposed work RVU of 0.44 assigned to CPT code 11732 by CMS and believe that the HCPAC-recommended work RVU of 0.48 is more appropriate for this service. Commenters recommended that CMS utilize the survey data when valuing this service rather than a crosswalk methodology. Commenters noted that the HCPAC reviewed the survey results from 38 podiatrists and determined that the 25th percentile work RVU of 0.48 and total time of 15 minutes appropriately accounted for the work and times required to perform this service. Commenters wrote that the CMS-proposed reduction in time is unsubstantiated. Commenters reiterated the HCPAC recommendation stating that a work RVU of 0.48 maintains the proper relativity between this service and the comparison services of CPT codes 99212 (Level 3 Office or other outpatient visit) (work RVU=0.48) and 11721 (Debridement of nail(s) by any method(s); 6 or more) (work RVU=0.54). Commenters requested that CMS accept the HCPAC-recommended work RVU of 0.48 and total time of 15 minutes for CPT code 11732.

Response: Based on the comments received, we re-reviewed CPT code 11732. We continue to believe that a work RVU of 0.44 accurately reflects the work associated with this service and that MPC CPT code 92250 is a more appropriate comparison for this service than CPT codes 99212 or 11721. After reviewing the pre-, intra-, and post- service work descriptions for this service, we continue to believe that the recommended pre-, and intra- service times are appropriate, and that the recommended post-service time is in excess of the time required to perform the post-service work. We continue to believe that one minute of post-service time is sufficient for this add-on service. We are maintaining the interim final value, assigning a work RVU of 0.44, with 13 minutes of total time, as the final values for CPT code 11732 for CY 2012. A complete listing of the times associated with this, and all CPT codes, is available on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.

As detailed in the Fourth Five-Year Review, for CPT code 11765 (Wedge excision of skin of nail fold (e.g., for ingrown toenail)) we proposed a work RVU of 1.22, with refinement to time. We compared CPT code 11765 with reference CPT code 11422 (Excision, benign lesion including margins, except skin tag (unless listed elsewhere), scalp, neck, hands, feet, genitalia; excised diameter 1.1 to 2.0 cm) (work RVU=1.68), as well as with CPT code 10060 (Incision and drainage of abscess (e.g., carbuncle, suppurative hidradenitis, cutaneous or subcutaneous abscess, cyst, furuncle, or paronychia); simple or single) (work RVU=1.22), and determined that CPT code 10060 was more similar in intensity and complexity to CPT code 11765, and thus the better comparator code for this service. We also refined the time associated with this service. CPT code 11765 is typically performed on the same day as an E/M visit and we believed that some of the activities conducted during the pre- and post- service times of the procedure code and the E/M visit overlap. To account for this overlap, we reduced the pre-service evaluation and post-service time by one third (76 FR 32459 through 32460).

Comment: Commenters disagreed with the CMS-proposed work RVU of 1.22 for CPT code 11765, and believe that the HCPAC-recommended work RVU of 1.48 is more appropriate for this service. Commenters noted that CMS crosswalked the work RVU for CPT code 11765 to CPT code 10060 which, commenters pointed out, is a revised code for this final rule with comment period. Commenters urged CMS not to crosswalk CPT code 11765 to CPT code 10060 as it is currently under review and asserted that a direct crosswalk is inappropriate when survey data are available. Commenters also noted that CY 2009 Medicare claims data indicated that CPT code 11765 was billed with an E/M less than 50 percent of the time. Commenters reiterated the HCPAC recommendation stating that the HCPAC compared CPT code 11765 to CPT code 11422 (work RVU=1.68) and noted that the reference code requires more intra-service time, more mental effort and judgment, and higher psychological stress to perform as compared to CPT code 11765. Ultimately, commenters requested that CMS accept the HCPAC- recommended work RVU of 1.48 and total time of 59 minutes for CPT code 11765.

Response: Based on comments received, we re-reviewed CPT code 11765. We continue to believe that a work RVU of 1.22 accurately reflects the work associated with this service and that CPT code 10060 is an appropriate comparison code for this service. CPT code 10060 recently was surveyed by related specialty society members, and the AMA RUC issued a new recommendation to us for CPT code 10060 for this final rule with comment period. As discussed in section III.C.1.b. of this final rule with comment period after a review of the new survey results for 10060, the AMA RUC recommendations, and our clinical review, we are setting an interim final work RVU of 1.22 for CPT code 10060 for CY 2012, which maintains the current (CY 2011) value. As such, we believe that the crosswalk work RVU of 1.22 for CPT code 11765 continues to be appropriate. For CY 2012 we are finalizing a work RVU of 1.22 for CPT code 11765.

In response to commenters' note that CPT code 11765 was billed with an E/M visit less than 50 percent of the time and therefore, should not be subject to the same day E/M adjustment, we looked back at the data for this and all other Five-Year Review CPT codes for which we proposed a same day E/M adjustment. When calculating the number of times a service was performed on the same day as an E/M visit, we likely over-counted multiple billings of a CPT code and depending on billing patterns may have identified an inappropriately higher percentage of same day E/M billing. We recalculated these figures using combined occurrence pairs, which we now believe is the more appropriate measure of same day E/M billings for this purpose. We note that for all codes reviewed for the CY 2012 PFS proposed and final rules we used figures calculated based on combined occurrence pairs. After recalculating the same day E/M percentages for the Five-Year Review CPT codes, CPT code 11765 was the only code that had originally appeared to be billed over 50 percent with an E/M visit, but under the revised calculation is billed less than 50 percent with an E/M visit. As such, we no longer believe it is appropriate to remove one-third of the pre-service evaluation time and one-third of the post service time to account for the E/M visit on the same date of service. For CY 2012 we are finalizing the HCPAC-recommended times of 17 minutes of pre-service evaluation time, 1 minute of pre-service positioning time, 5 minutes of pre-service dress, scrub and wait time, 5 minutes of intra-service time, 5 minutes of post-service time, and 1 CPT code 99212 office or outpatient visit for CPT code 11765.

(3) Integumentary System: Repair (Closure) (CPT Codes 11900-11901, 12001-12018, 12031-12057, 13100-13101, 15120-15121, 15260, 15732, 15823)

In the Fourth Five-Year Review, we identified CPT codes 12031, 12051, 13101, and 15260 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. CPT codes 12032-12047, 12052-12057, and 13100 were added as part of the family of services for review. Also for the Fourth Five-Year Review, we identified CPT code 15732 as potentially misvalued through the site-of-service anomaly screen. CPT code 15121 was added as part of the family of services for review. The related specialty societies surveyed their members and the AMA RUC issued recommendations to us for the Fourth Five-Year Review.

As detailed in the Fourth Five-Year Review, in its review of this set of CPT codes, the AMA RUC determined that the original Harvard-valued work RVUs led to compression within these code families, which the AMA RUC recommended correcting by reducing the relative values for the smallest wound size repair codes and increasing the relative values for the larger wound size repair codes. Our proposed range of work RVUs for these CPT codes, while not as large as the range that would have resulted from our adoption of the AMA RUC recommendations, nevertheless is greater than the current range of work RVUs for the variety of wound sizes described by the repair codes (76 FR 32431 through 32432).

For CPT codes 12035 (Repair, intermediate, wounds of scalp, axillae, trunk and/or extremities (excluding hands and feet); 12.6 cm to 20.0 cm), 12036 (Repair, intermediate, wounds of scalp, axillae, trunk and/or extremities (excluding hands and feet); 20.1 cm to 30.0 cm), 12037 (Repair, intermediate, wounds of scalp, axillae, trunk and/or extremities (excluding hands and feet); over 30.0 cm), 12045 (Repair, intermediate, wounds of neck, hands, feet and/or external genitalia; 12.6 cm to 20.0 cm), 12046 (Repair, intermediate, wounds of neck, hands, feet and/or external genitalia; 20.1 cm to 30.0 cm), 12047 (Repair, intermediate, wounds of neck, hands, feet and/or external genitalia; over 30.0 cm), 12055 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous membranes; 12.6 cm to 20.0 cm), 12056 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous membranes; 20.1 cm to 30.0 cm), and 12057 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous membranes; over 30.0 cm), we proposed specialty society survey 25th percentile work RVU. The specialty society surveys of physicians furnishing these services indicated that the work of performing these services has not changed in the past 5 years and that the complexity of patients requiring the services has also remained constant. The survey 25th percentile work RVUs were somewhat higher than the current work RVUs for CPT codes 12035-12037, 12045-12047, 12055 and 12056, and the survey 25th percentile work RVU for CPT code 12057 was the same as the current (CY 2011) work RVU. Given the survey responses indicating that the work and complexity of these services has remained constant, we believed that adopting the survey 25th percentile work RVUs both accurately valued the work associated with these services and addressed the compression-related relativity adjustments recommended by the AMA RUC. For CPT codes 12035-12037, 12045-12047, and 12055-12057 the AMA RUC recommended the survey median work RVU, which was higher than both the current (CY 2011) and survey 25th percentile work RVU. The CY 2011, CMS-proposed survey 25th percentile, and AMA RUC-recommended survey median work RVUs are listed in Table 15.

In addition to proposed changes to the AMA RUC-recommended work RVUs for these services, we also refined the time associated with several of these services. For CPT codes 12036, and 12055-12057, we found the survey median intra-service times to be more appropriate for these services than the higher AMA RUC-recommended times. After clinical review, we believed that these survey median times accurately reflected the work associated with performing these services. We also refined the times for CPT codes 12046 and 12047. Both CPT codes are typically performed on the same day as an E/M visit and we believed that some of the activities conducted during the pre- and post- service times of the procedure code and the E/M visit overlap. To account for this overlap, we reduced the pre-service evaluation and post-service time by one third.

Comment: Commenters disagreed with the CMS-proposed work RVUs for CPT codes 12035-12037, 12045-12047, and 12055-12057, and recommended that CMS accept the AMA RUC-recommended work RVUs. Commenters believe that the proposal by CMS to select the survey 25th percentile survey value for these codes is flawed because, since these codes are not provided by a homogeneous group of providers, selecting a consistent survey marker does not ensure relativity between services. Commenters noted that CMS stated that use of the 25th percentile survey value was appropriate because survey respondents indicated that there has not been a change in complexity in these services in the last 5 years. Commenters asserted that a change in work was irrelevant, and that the revaluation was intended to correct compression within the family of services. Furthermore, commenters noted that the proposed work RVUs create rank order anomalies between similar services.

Commenters also disagreed with the CMS-proposed reductions in time for CPT codes 12036, 12046-12047, and 12055-12057, and recommended that CMS accept the AMA RUC-recommended times. For CPT codes 12036, 12055, and 12057 commenters noted that a significant number of providers who do not typically perform the procedure responded to the survey, resulting in an artificially reduced median intra-service time. Commenters asserted that in this case it is more valid to utilize the results from the providers with experience performing this service. For CPT codes 12046 and 12047 commenters asserted that it was not appropriate for CMS to reduce the pre-evaluation and post service time to account for a same day E/M visit. Commenters noted that these services have very low utilization, and that the CMS data showing that these services are typically billed with an E/M may be incorrect. Commenters also noted that the recommended pre-service time for these two codes was already reduced from 19 minutes to 13 minutes so they believed that a further reduction was not justified.

Response: Based on comments received, we referred CPT codes 12035-12037, 12045-12047, and 12055-12057 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel results largely supported the AMA RUC-recommended work RVUs for these services. However, we are going to maintain the CMS-proposed work RVUs and times for these services as interim, pending the AMA RUC review of the complex wound repair codes which we anticipate will be complete for CY 2013. Following the receipt of the AMA RUC recommendations for the complex wound repair codes, we will reevaluate the work RVU and times for these services, especially relative to the complex wound repair services. With regards to the accuracy of the same day E/M data, for this final rule with comment period, for all the five-year review CPT codes, we recalculated the percentage of time they are billed with an E/M visit using combined occurrence pairs, as discussed under III.B.1.b.(2). of this final rule with comment period. Using a 5 percent sample of CY 2009 Medicare claims data, CPT code 12046 is billed with an E/M visit for 50 percent of the services, and CPT code 12047 is billed with an E/M for 60 percent of the services. Therefore, we continue to believe that it is appropriate to reduce the pre-service evaluation and post service times by one-third. We recognize that these services are low volume and we will take this into consideration when reevaluating the times and work RVUs for these codes for CY 2013.

In sum, we are holding as interim for CY 2012 the Fourth Five-Year Review proposed work RVUs and times for CPT codes 12035-12037, 12045-12047, and 12055-12057 (the larger of the intermediate wound repair services), so we can review these services alongside the complex wound repair codes before finalizing their values. For clarification, we do not expect that the AMA RUC would resurvey these codes. For CY 2012 the interim work RVUs are as follows: A work RVU of 3.50 for CPT code 12035, a work RVU of 4.23 for CPT code 12036, a work RVU of 5.00 for CPT code 12037, a work RVU of 3.75 for CPT code 12045, a work RVU of 4.30 for CPT code 12046, a work RVU of 4.95 for CPT code 12047, a work RVU of 4.50 for CPT code 12055, a work RVU of 5.30 for CPT code 12056, and a work RVU of 6.00 for CPT code 12057. A complete listing of the times associated with these, and all CPT codes, is available on the CMS web site at: https://www.cms.gov/PhysicianFeeSched/.

As detailed in the Fourth Five-Year Review, for CPT code 13100 (Repair, complex, trunk; 1.1 cm to 2.5 cm) and 13101 (Repair, complex, trunk; 2.6 cm to 7.5 cm) the AMA RUC reviewed the specialty society survey results and determined that the current (CY 2011) work RVUs maintain the appropriate relativity for these services. We noted that the AMA RUC reviewed only two CPT codes in the complex wound repair family. We agreed with the AMA RUC-recommended work RVUs for these two services, and requested that, in order to ensure consistency, the AMA RUC review the entire set of codes in the complex wound repair family and assess the appropriate gradation of the work RVUs in this family. We maintained the current (CY 2011) work RVUs and times for CPT codes 13100 and 13101 pending the AMA RUC review of the other CPT codes in this family (76 FR 32434 through 32435).

Comment: Commenters requested that CMS adopt the AMA RUC-recommended times for CPT codes 13100 and 13101. Commenters believe it would be unfair to ask the specialty to re-survey these services and that the review of other complex repair codes is unlikely to change the AMA RUC-recommended times for CPT code 13100 and 13101. Commenters note that the current (CY 2011) Harvard times are very similar to the AMA RUC-recommended times.

Response: In response to comments received, we re-reviewed CPT code 13100 and 13101. While we appreciate commenters' assertion that the review of other complex repair codes is unlikely to change the AMA RUC-recommended times for CPT code 13100 and 13101, we would like to refrain from revising the current (CY 2011) times and work RVUs for these codes until we can review them alongside the other complex wound repair codes. In the CY 2013 PFS final rule with comment period, we anticipate publishing interim final values for CPT codes 13100 and 13101 along with the other complex wound repair codes.

In the Fourth Five-Year Review (76 FR 32435), we identified CPT codes 15120 and 15732 as potentially misvalued through the site-of-service anomaly screen. CPT code 15121 was added as part of the family of services for AMA RUC review. In addition, we identified CPT code 15260 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. For CPT code 15120 (Split-thickness autograft, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits; first 100 sq cm or less, or 1 percent of body area of infants and children (except 15050)), we proposed a work RVU of 10.15 for CY 2012, which was in agreement with the AMA RUC-recommended work RVU for this CPT code. Because the most recent Medicare PFS claims data showed that CPT code 15120 is a code with a site-of-service anomaly, we adjusted the times in accordance with the policy discussed in section III.A. of this final rule with comment period. Specifically, we removed the current (CY 2011) 0.5 subsequent hospital care day, added 5 minutes to the immediate post-operative period, and reduced the discharge day management service to one-half. These time changes were reflected in the Five-Year Review physician time file available on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/. Though this time refinement was listed in the physician time file, we unintentionally did not note this time refinement in the Fourth Five-Year Review proposed notice text. As such, we are holding CPT code 15120 as interim final for CY 2012, with the previously discussed AMA RUC-recommended work RVU of 10.15 and the site-of-service time refinement discussed previously. A complete listing of the times assigned to CPT code 15120 follow in Table 16.

For CPT code 15732 (Muscle, myocutaneous, or fasciocutaneous flap; head and neck (e.g., temporalis, masseter muscle, sternocleidomastoid, levator scapulae)), we proposed a work RVU of 16.38 for CY 2012, with refinements to the time. The most recent Medicare PFS claims data showed that CPT code 15732 is a code with a site-of-service anomaly. Upon review, it was clear that this code was being billed for services furnished to hospital outpatients, and we had no reason to believe that miscoding was the main reason that outpatient settings were the dominant place of service for this code in historical PFS claims data. Therefore, in accordance with the policy discussed in section III.A. of this final rule with comment period, we removed the inpatient hospital visit, reduced the discharge day management service to one-half, and adjusted times. These adjustments resulted in a work RVU of 16.38.

The AMA RUC asserted that claims data indicating that this service was furnished in an outpatient setting was the result of miscoding but, until the claims data indicate that this service typically was furnished in the inpatient setting (greater than 50 percent), we believed it was inappropriate for the service to be valued including inpatient E/M building blocks. We also stated that we will continue to monitor site-of-service utilization for this code and may consider reviewing the work RVU for this code again in the future if utilization patterns change (76 FR 32435).

Comment: Commenters disagreed with the proposed work RVU of 16.38 for CPT code 15732, and supported the AMA RUC-recommended work RVU of 19.83. Commenters noted that the proposed value was derived from the reverse building block methodology, which removed the subsequent hospital care codes and reduced the full hospital discharge day code to a half day. Commenters stated that the service described by CPT code 15732 is furnished in the inpatient setting, and that data showing otherwise are the result of miscoding. Commenters noted that education is still needed for this family of codes. Commenters noted that the AMA RUC-recommended value is more similar to the key reference code 15734 (Muscle, myocutaneous, or fasciocutaneous flap; trunk) (work RVU=19.86). Commenters expressed concerns that the proposed work RVU will create a rank order anomaly within the family, and requested that CMS accept the AMA RUC-recommended work RVU of 19.83 for CPT code 15732.

Response: Based on comments we received, we referred CPT code 15732 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel voted for a work RVU of 17.38 for CPT code 15732. We appreciate commenters' interest in physician education to alleviate the potential for miscoding. However, the Medicare PFS data show that this service is typically furnished in the outpatient setting. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. As stated previously, we will continue to monitor site-of-service utilization for this code and may consider reviewing the work RVU for this code again in the future if utilization patterns change. In order to ensure consistent and appropriate valuation of physician work, we are upholding the application of our methodology to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are finalizing a work RVU of 16.38 for CPT code 15732 and our proposed refinements to physician time. CMS time refinements can be found in Table 16.

For CY 2012, we received no comments on the CY 2011 interim final work RVUs for CPT codes 11900, 11901, 12001-12018, and 15823. Additionally, for CY 2012, we received no comments on the Fourth Five-Year Review proposed work RVUs for CPT codes 12041-12044, 12051-12054, 15120, 15121, and 15260. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(4) Integumentary System: Destruction (CPT Codes 17250-17286)

In the Fourth Five-Year Review (76 FR 32436), we identified CPT codes 17271, 17272 and 17280 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. The dominant specialty for this family—dermatology—identified several other codes in the family to be reviewed concurrently with these services and submitted to the AMA RUC recommendations for CPT codes 17260 through 17286. The AMA RUC concluded that, with the exception of one CPT code, 17284, the survey data validated the current values of the destruction of skin lesion services. We agreed with this assessment, with a few refinements to physician time.

As detailed in the Fourth Five-Year Review (76 FR 32436), we proposed work RVUs of 1.37 for CPT codes 17270 (Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, feet, genitalia; lesion diameter 0.5 cm or less); 1.54 for CPT code 17271 (Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, feet, genitalia; lesion diameter 0.6 to 1.0 cm); and 2.64 for CPT code 17274 (Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, feet, genitalia; lesion diameter 3.1 to 4.0 cm) with refinements to physician time. The AMA RUC recommended a work RVU of 1.37 for CPT code 17270, a work RVU of 1.54 for CPT code 17271, and a work RVU of 2.64 for CPT code 17274. For CPT codes 17270, 17271, and 17274, we believed that the survey median intra-service times accurately reflected the time required to conduct the intra-service work associated with these services, the survey median. Therefore, for CPT code 17270, we increased the intra-service time from 15 minutes to 16 minutes. For CPT code 17271, we maintained the intra-service time of 18 minutes, the survey median. For CPT code 17274, we increased the intra-service time from 32 minutes to 33 minutes.

Comment: In their public comment on the Fourth Five-Year Review, the AMA RUC noted that there was a typographical error in specialty society's recommendation to CMS for CPT codes 17270, 17271, and 17274, which the specialty society later corrected. They requested that CMS change the intra-service times to the AMA RUC-recommended times of 15 minutes for CPT code 17270, the corrected 19 minutes for CPT code 17271, and 32 minutes for CPT code 17274.

Response: In response to comments, we re-reviewed CPT codes 17270, 17271, and 17274. We thank the AMA RUC for pointing out this time error. After reviewing the descriptions of intra-service work, we agree that CPT codes 17270, 17271, and 17274 should have 15 minutes, 19 minutes, and 32 minutes of intra-service physician time, respectively. For CPT code 17270, we are finalizing a work RVU of 1.37 and an intra-service time of 15 minutes. For CPT code 17271, we are finalizing a work RVU of 1.54 and an intra-service time of 19 minutes. For CPT code 17274, we are finalizing a work RVU of 2.64 and an intra-service time of 32 minutes.

For CY 2012, we received no comments on the Fourth Five-Year Review proposed work RVUs for CPT codes 17250, 17260-17264, 17266, 17272, 17273, 17276, 17280-17284, and 17286. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(5) Integumentary System: Breast (CPT Codes 19302-19357)

In the Fourth Five-Year Review (76 FR 32437), we identified CPT code 19302 as potentially misvalued through the site-of-service anomaly screen. For CPT code 19302 (Mastectomy, partial (e.g., lumpectomy, tylectomy, quadrantectomy, segmentectomy); with axillary lymphadenectomy), we proposed a work RVU of 13.87. We agreed with the AMA RUC that CPT code 19302 is similar in work intensity and time to CPT code 38745 (Axillary lymphadenectomy; complete) (work RVU = 13.87), which overlaps significantly with CPT code 19302. As such, we believed these two procedures should have the same work RVU of 13.87. The AMA RUC recommended a work RVU of 13.99 for CPT code 19302 (76 FR 32437).

Comment: Commenters disagreed with the CMS-proposed work RVU of 13.87 for CPT code 19302, and asserted that the AMA RUC-recommended work RVU of 13.99 is more appropriate for this service. Commenters noted that we compared CPT code 19302 with CPT code 38745, which has an intra-service time of 90 minutes. Commenters stated that the slightly greater intra-service time of CPT code 19302 supports the current work RVU of 13.99, and request that we accept the AMA RUC-recommended work RVU of 13.99.

Response: Based on the comments we received, we referred CPT code 19302 to the CY 2011 multi-specialty refinement panel for further review. Refinement panel results supported the AMA RUC recommendation and validated the current work RVU of 13.99. As a result of the refinement panel ratings and our clinical review, for CY 2012 we are finalizing a work RVU of 13.99 for CPT code 19302.

For CY 2012, we received no comments on the Fourth Five-Year Review proposed work RVU for CPT code 19357. We believe this value continue to be appropriate and are finalizing it without modification (Table 15).

(6) Musculoskeletal: Spine (Vertebral Column) (CPT Codes 22315, 22520-22525, 22551, 22552, 22554, 22585, and 22851)

In the Fourth Five-Year Review, we identified CPT code 22521 as potentially misvalued through the site-of-service anomaly screen. CMS also requested that the AMA RUC review other CPT codes in the family including CPT codes 22520, 22522, 22523, 22524 and 22525.

In the Fourth Five-Year Review, we proposed a work RVU of 8.01 for CPT code 22521 (Percutaneous vertebroplasty, 1 vertebral body, unilateral or bilateral injection; lumbar); a work RVU of 8.62 for CPT code 22523 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (e.g., kyphoplasty); thoracic); and a work RVU of 8.22 for CPT code 22524 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (e.g., kyphoplasty); lumbar). The current valuation of these codes includes one full discharge management day consistent with performance in an inpatient setting for these services. As these CPT codes are typically performed in the outpatient setting, the AMA RUC recommended, and we agreed, that the discharge management day should be reduced by half as this is consistent with our adjustment methodology for site-of-service anomaly codes. Although the AMA RUC reduced the discharge day management by half, it discovered that an inadvertent clerical error had led these codes to appear as if they had been valued with one full discharge management day. The AMA RUC stated that these codes were valued as outpatient services using only half a discharge management day during the 2006 Third Five-Year Review of Work (71 FR 37271). The AMA RUC concluded that the current (CY 2011) work RVU for these codes should not be reduced to reflect the removal of the half discharge day. The AMA RUC recommended maintaining the current work RVU of 8.65 for CPT code 22521, 9.26 for CPT code 22523, and 8.86 for CPT code 22524 (76 FR 32437).

Comment: Commenters disagreed with our proposed work RVUs of 8.01 for CPT code 22521, 8.62 for CPT code 22523, and 8.22 for CPT code 22524. Additionally, commenters stated that our action to reduce the work RVUs of codes 22521, 22523 and 22524 disregarded that the AMA RUC previously had accounted for the outpatient location in its recommendation. Moreover, commenters disagreed with CMS removing the value of the half discharge management day which is 0.64 of a work RVU from each code, and recommended that we accept the AMA RUC-recommended values for these three CPT codes.

Response: Based on the public comments received, we referred CPT codes 22521, 22523, and 22524 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVUs were 8.65 for CPT code 22521, 9.04 for CPT code 22523, and 8.54 for CPT code 22524. In response to the AMA RUC's comments on the Fourth Five-Year Review, we re-reviewed the Medicare PFS claims data for CPT codes 22521, 22523, and 22524. The PFS claims data showed that these services were utilized in outpatient settings more than 50 percent of the time at the time these codes were last reviewed. These codes are not considered to be site-of-service anomaly codes since they were previously valued as outpatient services. We do not believe it would be appropriate to apply our site-of-service methodology of removing a half discharge day management (work RVU = 0.64) from the current (CY 2011) values in this final rule with comment period. Instead, we are finalizing the refinement panel median work RVUs of 8.65 for CPT code 22521, 9.04 for CPT code 22523, and 8.54 for CPT code 22524 for CY 2012. We received no comments on the CY 2012 proposed work RVUs for CPT codes 22315, 22520, 22522, and 22525. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

The AMA RUC identified CPT code 22554 (Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for decompression); cervical below C2) through the “Codes Reported Together” potentially misvalued code screen. After review, the AMA RUC referred CPT code 22554 to the CPT Editorial Panel to create a new coding structure for this family of services. For CY 2011, the CPT Editorial Panel created 2 new CPT codes—22551 (Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below C2) and 22552 (Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below C2, each additional interspace (List separately in addition to code for separate procedure)—to describe fusion and discectomy of the anterior cervical spine.

In the CY 2011 PFS final rule with comment period (75 FR 73331), we assigned a work RVU of 25.00 to CPT code 22551 on an interim final basis for CY 2011. The AMA RUC recommended a work RVU of 24.50. The specialty society requested a work RVU of 25.00. Upon review of the AMA RUC-recommended value and the reference codes used, it was unclear why the AMA RUC decided not to accept the specialty society's recommended work RVU of 25.00. We agreed with the specialty society and believed a work RVU of 25.00 was appropriate for this service. We also requested that the specialty society, with the AMA RUC, re-review the pre-service times for codes in this family since concerns were noted in the AMA RUC recommendation about the pre-service time for this service.

We did not receive any public comments that disagreed with the interim final work values. Therefore, we are finalizing a work RVU of 25.00 for CPT code 22551. For CY 2012, we received no comments on the CY 2011 interim final work RVUs for CPT codes 22552, 22554, 22585, and 22851. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(7) Musculoskeletal: Forearm and Wrist (CPT Codes 25116—25605)

In the Fourth Five-Year Review, we identified CPT codes 25600 (Closed treatment of distal radial fracture (e.g., Colles or Smith type) or epiphyseal separation, includes closed treatment of fracture of ulnar styloid, when performed; without manipulation) and 25605 (Closed treatment of distal radial fracture (e.g., Colles or Smith type) or epiphyseal separation, includes closed treatment of fracture of ulnar styloid, when performed; with manipulation) as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen.

As detailed in the Fourth Five-Year Review of Work, for CPT code 25600, we proposed a work RVU of 2.64 for CY 2012. After clinical review, we believed that CPT code 25600 required more work than key reference CPT code 26600 (Closed treatment of metacarpal fracture, single; without manipulation, each bone), and found that CPT code 27767 (Closed treatment of posterior malleolus fracture; without manipulation) (work RVU = 2.64) is similar in complexity and intensity to CPT code 25600. In addition to the work RVU adjustment for CPT code 25600, we refined the time associated with this CPT code. We believed some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap. Therefore, to account for this overlap, we refined the time for CPT code 25600 by reducing the pre-service evaluation and post service time by one-third. Specifically, we believed that 5 minutes pre-service evaluation time and 7 minutes post-service time accurately reflect the time required to conduct the work associated with this service. The AMA RUC recommended that CMS continue the current work RVU of 2.78 for CPT code 25600 (76 FR 32438) based on the results of a recent survey.

Comment: Commenters disagreed with the CMS-proposed work RVU of 2.64 for CPT 25600 and believe that the AMA RUC-recommended work RVU of 2.78 is more appropriate for this service. Furthermore, the commenters noted that the AMA RUC and the surveying specialty societies had already taken account of pre-operative work by reducing the specialty society recommended pre-service time from 9 minutes to 7 minutes. Commenters noted that AMA RUC submission to CMS mistakenly failed to allocate the 7 minutes of pre-service time between pre-service evaluation and pre-service positioning, and noted that they had intended to recommend 5 minutes of pre-service evaluation time and 2 minutes of pre-service positioning time. They also argued that there is no overlapping post-operative work because the patient E/M visit would have been completed prior to the surgical service and thus, by definition, prior to the post-service period. As such, commenters requested that CMS accept the clarified pre-service times of 5 minutes for pre-service evaluation and 2 minutes for pre-service positioning, as well as the recommended 10 minutes of post-service time. Additionally, commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU of 2.78.

Response: Based on comments received, we referred CPT code 25600 to the CY 2011 multi-specialty refinement panel for further review. The median refinement panel work RVU was 2.78. As a result of the refinement panel rating and our clinical review, we are assigning a work RVU of 2.78 to CPT code 25600 as the final value for CY 2012. In response to comments received regarding the times associated with CPT code 25600, we re-reviewed our proposed pre- and post-service minutes. We agree with the AMA RUC that 5 minutes of pre-service evaluation work adequately accounts for the time required to furnish this service and appropriately accounts for the E/M visit performed on the same day. However, for the pre-service positioning time, we believe that 1 minute of pre-service positioning time, rather than the revised recommendation of 2 minutes, is appropriate. CPT code 25605 (Closed treatment of distal radial fracture (e.g., Colles or Smith type) or epiphyseal separation, includes closed treatment of fracture of ulnar styloid, when performed; with manipulation) is assigned 1 minute of pre-service positioning time and includes manipulation, while CPT code 25600 is used for the same service, but without manipulation. As such, we do not believe that CPT code 25600 should have more pre-service positioning time than CPT code 25605. Therefore, for CPT code 25600, we are finalizing a pre-service evaluation time of 5 minutes and a pre-service positioning time of 1 minute.

With regard to the post-service time, though the procedure described by CPT code 25600 would occur after the E/M service, after a review of the post-service work associated with the E/M visit and the procedure, we continue to believe that there is overlap, and that this overlap was appropriately accounted for by removing one-third of the post-service minutes from CPT code 25600, thereby reducing the post-service time from 10 minutes to 7 minutes. In sum, for CY 2012 we are finalizing the refinement panel result median work RVUs of 2.78 and the following pre- and post-service times: 5 minutes pre-service evaluation time, 1 minute pre-service positioning time, and 7 minutes post-service time for CPT code 25600. CMS time refinements are listed in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 25605, we proposed a work RVU of 6.00 for CY 2012. After clinical review, including comparison to CPT code 28113 (Ostectomy, complete excision; fifth metatarsal head), we believed that an RVU of 6.00 (the survey low) correctly reflected relativity across these services. The AMA RUC recommended a work RVU of 6.50 for CPT code 25605 for CY 2011 (76 FR 32438). In addition to the work RVU adjustment for CPT code 25605, we refined the time associated with this code. Recent Medicare PFS claims data show that this service is typically performed on the same day as an E/M visit. We believed that, in its time recommendation to us, the AMA RUC accounted for duplicate E/M work associated with the pre-service period, but not the post service period. To account for this post-service overlap, we proposed to reduced the post service time by one-third.

Comment: Commenters disagreed with the proposed work RVU of 6.00 for CPT code 25605 and believe that the AMA RUC-recommended work RVU of 6.50 is more appropriate. In addition, commenters noted that the AMA RUC-recommended value for this service corresponds to the specialty society survey 25th percentile, whereas the CMS-assigned value corresponds to the survey low. Commenters noted that making a recommendation based on the survey low value which is potentially an outlier data point is not statistically sound methodology and assert that it is inappropriate to value services based on the survey low. Furthermore, the commenters noted that the AMA RUC and the surveying societies had already taken account of pre-operative overlap in work and reduced estimated times accordingly, and that there is no overlapping post-operative work because the patient E/M would have been completed prior to the surgical service and thus, by definition, prior to the post-service period. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, and requested CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 25605 to the CY 2011 multi-specialty refinement panel for further review. The median refinement panel work RVU was 6.25. In response to comments received regarding the times associated with CPT code 25605, we re-reviewed out proposed pre- and post-service minutes. We note that we did not propose a reduction in pre-service minutes from the AMA RUC-recommended time, and that we did propose a one-third reduction in post-service minutes to account for the same day E/M visit. After a review of the post-service work associated with the E/M visit and the procedure, we continue to believe that there is overlap, and that this overlap was appropriately accounted for by removing one-third of the post-service minutes from CPT code 25605, thereby reducing the post-service time from 20 minutes to 13 minutes. In sum, for CY 2012 we are finalizing the refinement panel result median work RVUs of 6.25 and the following pre- and post-service times: 14 minutes of pre-service evaluation time, 1 minute of pre-service positioning time, 5 minutes of pre-service dress, scrub and wait time, and 13 minutes of post-service time for CPT code 25605. CMS time refinements can be found in Table 50.

(8) Musculoskeletal: Femur (Thigh Region) and Knee Joint (CPT Codes 27385-27530)

In the Fourth Five-Year Review, we identified CPT codes 27385 and 27530 as potentially misvalued through the site-of-service anomaly screen.

As detailed in the Fourth Five-Year Review of Work, for CPT code 27385 (Suture of quadriceps or hamstring muscle rupture; primary), we proposed a work RVU of 6.93 for CY 2012. Medicare PFS claims data indicated that CPT code 27385 is typically performed as an outpatient rather than inpatient service. In accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 27385, we removed the hospital visit, reduced the discharge day management service by one-half, and increased the post-service time to 30 minutes. The AMA RUC recommended a work RVU of 8.11 for CPT code 27385 (76 FR 32438). The AMA RUC reviewed the survey results from physicians who frequently perform this service and decided that the work required to perform this service had not changed. The AMA RUC recommended that this service be valued as a service performed predominately in the inpatient setting, as the survey data indicated that half of patients have an overnight stay.

Comment: Commenters disagreed with the CMS-proposed work RVU of 6.93 for CPT code 27385 and believe that that AMA RUC-recommended work RVU of 8.11 is more appropriate for this service. Commenters asserted that CPT code 27385 is not a site-of-service anomaly code because it is utilized more than 50 percent of the time in the inpatient setting. Commenters noted that the CMS value was derived from the reverse building block methodology, which removed the subsequent hospital care code and reduced the full hospital discharge day management code to a half day, along with the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on the public comments received, we referred CPT code 27385 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 7.77 for CPT code 27385. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. The most recent Medicare PFS claims data indicates that this service is now typically furnished in the outpatient setting. As such, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time and intensity. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is necessary in the case of CPT code 27385 to apply the methodology, described previously, to address 23-hour stay site-of-service anomalies. Therefore, we are finalizing the proposed work RVU of 6.93 for CPT code 27385. Additionally, we are finalizing a pre-service evaluation time of 33 minutes, a pre-service positioning time of 9 minutes, pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 60 minutes, and a post-service time of 30 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 27385. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 27530 (Closed treatment of tibial fracture, proximal (plateau); without manipulation), we proposed a work RVU of 2.65 for CY 2012. Recent Medicare PFS claims data has shown that this service is typically performed on the same day as an E/M visit. We believed there was some overlap in the activities conducted during the pre- and post-service times between the procedure code and the E/M visit and, therefore, the time should not be counted twice in developing the procedure's work value. As described earlier in section III.A. of this final rule with comment period, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. We believed that 5 minutes pre-service evaluation time and 7 minutes post-service time accurately reflected the time required to conduct the work associated with this service. We also removed the 2 minutes of pre-service positioning time, as it does not appear from the vignette that positioning is required for a non-manipulated extremity.

In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU. The AMA RUC recommended a work RVU of 2.81 for CPT code 27530 (76 FR 32438).

Comment: Commenters disagreed with the CMS-proposed work RVU of 2.65 for CPT code 27530 and believe that the AMA RUC-recommended work RVU of 2.81 is more appropriate for this service. Commenters disagree with CMS' use of the reverse building block methodology, which reduced pre- and post-service times because of overlap with same day E/M services. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on the public comments received, we referred CPT code 27530 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 2.76 for CPT code 27530. In response to comments received, we reviewed the pre- and post- service time and work for this procedure. We continue to believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and should not be counted in developing this procedure's work value. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply the methodology, described previously for services typically billed in conjunction with an E/M service, and remove a total of 7 minutes from the AMA RUC-recommended pre- and post-service time, which amounts to the removal of 0.16 of a work RVU as described previously. Therefore, we are finalizing a work RVU of 2.65 for CPT code 27530. In addition, after reviewing the descriptions pre- and post-service work, we are finalizing a pre-service time of 4 minutes, an intra-service time of 15 minutes, and a post-service time of 7 minutes. CMS time refinements can be found in Table 16.

(9) Musculoskeletal: Leg (Tibia and Fibula) and Ankle Joint (CPT Code 27792)

In the Fourth Five-Year Review, we identified CPT code 27792 (Open treatment of distal fibular fracture (lateral malleolus), includes internal fixation, when performed) as potentially misvalued through the site-of-service anomaly screen. In addition, we proposed a work RVU of 8.75 for CPT code 27792. Medicare PFS claims data indicated that CPT code 27792 is typically performed in an outpatient setting. However, the current AMA RUC-recommended values for this code reflect work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 27792, we removed the subsequent observation care service, reduced the discharge day management service by one-half, and adjusted the physician times accordingly. For CPT code 27792, the AMA RUC used magnitude estimation and recommended that the current value of this service, 9.71 RVUs, be maintained; and the AMA RUC replaced the current inpatient hospital E/M visit included in the value with a subsequent observation care service while maintaining a full discharge day management service (76 FR 32439).

Comment: Commenters disagreed with the CMS-proposed work RVU of 8.75 for CPT code 27792 and believe that that AMA RUC-recommended work RVU of 9.71 is more appropriate for this service. Commenters disagreed with CMS' use of the reverse building block methodology, which removed the subsequent observation care code and reduced the full hospital discharge day management code to a half day, along with the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on the public comments received, we referred CPT 27792 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 9.71, which was consistent with the AMA RUC recommendation to maintain the current (CY 2011) work RVU for CPT code 27792. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply the methodology described previously to address 23-hour stay site-of-service anomalies. Therefore, we are finalizing a work RVU of 8.75 for CPT code 27792. In addition, after reviewing the descriptions of the pre- and post-service work, we are finalizing a pre-service evaluation time of 33 minutes, a pre-service positioning time of 10 minutes, a pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 60 minutes, and a post-service time of 30 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 27792. CMS time refinements can be found in Table 16.

(10) Musculoskeletal: Foot and Toes (CPT Codes 28002-28825)

For the Fourth Five-Year Review, we identified CPT codes 28002, 28715, 28820 as potentially misvalued though the site-of-service anomaly screen. CPT code 28003 was added as a part of the family of services for review. We also identified CPT code 28285 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. The related specialty societies surveyed these codes and the AMA RUC issued recommendations to us for the Fourth Five-Year Review of Work.

CPT codes 28120 and 28122 were identified in 2007 by the AMA RUC Relativity Assessment Workgroup as potentially misvalued through the site-of-service anomaly screen. The related specialty societies surveyed these codes and the AMA RUC issued recommendations to us for CY 2010. As described in section III.A. of this final rule with comment period, we accepted these CY 2010 site-of-service anomaly code values on an interim basis but requested that the AMA RUC re-examine the site-of-service anomaly codes and adjust the work RVUs, times, and post-operative visits to reflect those typical of a service furnished in an outpatient or physician's office setting. The AMA RUC re-reviewed the survey data for these codes and issued recommendations to us for the Fourth Five-Year Review of Work.

We reviewed CPT codes 28002-28003, 28120-21822, 28285, 28715, 28820, and 28825, and published proposed work RVUs in the Fourth Five-Year Review of Work (76 FR 32440). Based on comments received during the public comment period, we referred CPT codes 28002, 28120-21822, 28285, 28715, 28820, and 28825 to the CY 2011 multi-specialty refinement panel for further review.

As detailed in the Fourth Five-Year Review of Work, for CPT code 28002 (Incision and drainage below fascia, with or without tendon sheath involvement, foot; single bursal space), we proposed a work RVU of 4.00 for CY 2012. After clinical review, including comparison to CPT code 58353 (Endometrial ablation, thermal, without hysteroscopic guidance) (work RVU=3.60), we believed that the survey low value work RVU of 4.00 accurately reflected the work associated with this service. The AMA RUC recommended a work RVU of 5.34 for CPT code 28002 for CY 2011 (76 FR 32440).

Comment: Commenters disagreed with the CMS-proposed work RVU of 4.00 for CPT code 28002 and believe that the AMA RUC-recommended work RVU of 5.34 is more appropriate for this service. Commenters disagreed with the reference service put forward by CMS, and asserted that the AMA RUC-chosen reference service is a strong comparison code. Commenters noted that the AMA RUC-recommended value for this service corresponds to the specialty society survey 25th percentile value, and that the CMS-assigned value corresponds to the survey low. Commenters asserted that establishing a value based on the survey low, which potentially is an outlier data point, is not a statistically sound methodology, and believe that it is inappropriate to value services based on the survey low.

Response: Based on the comments received, we referred CPT code 28002 to the CY 2011 multi-specialty refinement panel for further review. The median refinement panel work RVU was 5.34. As a result of the refinement panel ratings and clinical review by CMS, we are assigning the AMA RUC-recommended work RVU of 5.34 to CPT code 28002 as the final value for CY 2012. For CY 2012, we received no comments on the proposed CY 2012 work RVU for CPT code 28003. We believe this value continues to be appropriate and are finalizing it without modification (Table 15).

As detailed in the Fourth Five-Year Review of Work, for CPT code 28120 (Partial excision (craterization, saucerization, sequestrectomy, or diaphysectomy) bone (e.g., osteomyelitis or bossing); talus or calcaneus), we proposed a work RVU of 7.31 for CY 2012. Medicare PFS claims data indicated that CPT code 28120 is typically performed in an outpatient setting. However, the current and AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described previously, for CPT code 28120, we removed the subsequent observation care service, reduced the discharge day management service by one-half, and adjusted the physician times accordingly. The AMA RUC recommended maintaining the current work RVU of 8.27 for CPT code 28120 for CY 2012 (76 FR 32440).

Comment: Commenters disagreed with the CMS-proposed work RVU of 7.31 for CPT code 28120 and believe that the AMA RUC-recommended work RVU of 8.27 is more appropriate for this service. Commenters disagreed with CMS' use of the reverse building block methodology, which removed the subsequent observation care code and reduced the full hospital discharge management code to a half day, and the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 28120 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 8.27, which is consistent with the AMA-RUC recommendation to maintain the current work RVU for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 7.31 to CPT code 28120 as the final value for CY 2012. In addition, after reviewing the descriptions pre- and post-service work, we are finalizing a pre-service evaluation time of 33 minutes, a pre-service positioning time of 10 minutes, a pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 50 minutes, and a post-service time of 30 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 28120. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 28122 (Partial excision (craterization, saucerization, sequestrectomy, or diaphysectomy) bone (e.g., osteomyelitis or bossing); tarsal or metatarsal bone, except talus or calcaneus), we proposed a work RVU of 6.76 for CY 2012. Medicare PFS claims data indicated that CPT code 28122 is typically performed in an outpatient setting. However, the current and AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described previously, for CPT code 28122, we removed the subsequent observation care service, reduced the discharge day management service by one-half, and adjusted the physician times accordingly. The AMA RUC recommended maintaining the current work RVU of 7.72 for CPT code 28122 for CY 2012 (76 FR 32440).

Comment: Commenters disagreed with the CMS-proposed work RVU of 6.76 for CPT code 28122 and believe that the AMA RUC-recommended work RVU of 7.72 is more appropriate for this service. Commenters noted that the CMS value was derived from the reverse building block methodology, which removed the subsequent observation care code and reduced the full hospital discharge management code to a half day, along with the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 28122 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 7.72, which was consistent with the AMA RUC recommendation to maintain the current work RVU for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 6.76 to CPT code 28122 as the final value for CY 2012. In addition, after reviewing the descriptions of pre- and post-service work, we are finalizing a pre-service evaluation time of 33 minutes, a pre-service positioning time of 10 minutes, a pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 45 minutes, and a post-service time of 30 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 28122. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 28285 (correction, hammertoe (e.g., interphalangeal fusion, partial or total phalangectomy), we proposed a work RVU of 4.76 for CY 2012. The AMA RUC recommended a work RVU of 5.62 for CPT code 28285. We disagreed with the AMA RUC-recommended work RVU for CPT code 28285 and believed that a work RVU of 4.76, the current work RVU, was more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (67 percent), and that there has been no change in complexity among the patients requiring this service (81 percent) (76 FR 32440).

Comment: Commenters disagreed with the CMS-proposed work RVU of 4.76 for CPT code 28285 and believe that the AMA RUC-recommended work RVU of 5.62 is more appropriate for this service. Commenters contend that compelling evidence for changes in work, technology, and/or patient complexity should not be restricted to the previous 5 years, and generally that CPT code 28285 is misvalued because there has been a change in the way this procedure is performed today resulting in more complex and more intense work as compared to 15 to 20 years ago. Commenters also noted that the Harvard study did not involve podiatrists, which were then and are now the dominant provider of this service.

Response: Based on the comments received, we referred CPT code 28285 to the CY 2011 multi-specialty refinement panel for further review. The median refinement panel work RVU was 5.62. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 5.62 to CPT code 28285 as the final value for CY 2012.

As detailed in the Fourth Five-Year Review of Work, for CPT code 28715 (Arthrodesis; triple), we proposed a work RVU of 13.42 for CY 2012. Medicare PFS claims data indicated that CPT code 28715 is typically performed in an outpatient setting. However, the current and AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described previously, for CPT code 28715, we removed the subsequent hospital care service, reduced the discharge day management service by one-half, and adjusted the physician times accordingly. The AMA RUC recommended maintaining the current work RVU of 14.60 for CPT code 28715 for CY 2012 (76 FR 32441).

Comment: Commenters disagreed with the CMS-proposed work RVU of 13.42 for CPT code 28715 and believe that the AMA RUC-recommended work RVU of 14.60 is more appropriate for this service. Commenters noted that the CMS value was derived from the reverse building block methodology, which removed the subsequent hospital care code and reduced the full hospital discharge management code to a half day, along with the associated work RVUs and time. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 28715 to the CY 2011 multi-specialty refinement panel for further review. The median refinement panel work RVU was 14.60, which was consistent with the AMA RUC-recommendation to maintain the current work RVU for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we are believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 13.42 to CPT code 28715 as the final value for CY 2012. In addition, after reviewing the descriptions pre- and post-service work, we are finalizing a pre-service evaluation time of 40 minutes, a pre-service positioning time of 3 minutes, a pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 125 minutes, and a post-service time of 40 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 28715. CMS time refinements can be found in Table 16.

As discussed in the CY 2012 MPFS proposed rule, for CPT code 28725 (Arthrodesis; subtalar) and 28730 (Arthrodesis, midtarsal or tarsometatarsal, multiple or transverse), we proposed work RVUs of 11.22 for CPT code 28725, and work RVUs of 10.70 for CPT code 28730 respectively. The most recently available Medicare claims data suggested that these site-of-service anomaly codes could be “23-hour stay” outpatient services. As detailed in the CY 2012 MPFS proposed rule, for CY 2010, CPT codes 28725 and 28730 were identified as potentially misvalued through the site-of-service anomaly screen and were reviewed by the AMA RUC. For both of these services, based on reference services and specialty survey data, the AMA RUC recommended maintaining the current (CY 2009) work RVU, which saw a slight increase based on the redistribution of RVUs that resulted from the CY 2010 policy to no longer recognize the CPT consultation codes (74 FR 61775). The AMA RUC re-reviewed CPT codes 28725 and 28730 for CY 2012 and, contrary to the 23-hour stay valuation policy we finalized in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), recommended replacing the hospital inpatient post-operative visit in the current work values with a subsequent observation care service, specifically CPT code 99224 (Level 1 subsequent observation care, per day) and recommended maintaining the current interim value for the two CPT codes. Specifically, for CY 2012 the AMA RUC recommended a work RVU of 12.18 for CPT code 28725 and a work RVU of 12.42 for CPT code 28730 (76 FR 42798).

We disagreed with the AMA RUC-recommended values for CPT codes 28725 and 28730. We believed the appropriate methodology for valuing these codes entails accounting for the removal of the inpatient visits in the work value for the site-of-service anomaly codes since these services are no longer typically furnished in the inpatient setting. We did not believe it is appropriate to simply exchange the inpatient post-operative visits in the original value with subsequent observation care visits and maintain the current work RVUs.

Comment: Commenters stated that just because the patient may be discharged prior to 24-hours post-operatively does not mean that the post-operative visit would not include the standard pre-service and post-service work and instead would only include intra-service work. Furthermore, the commenters noted that physicians do not conduct shorter or less intense inpatient post-operative visits based on when the patient may be discharged. Commenters also stated that CMS is not consistent in the application of its methodology of applying intra-service time and value only. Commenters encouraged CMS to accept the RUC-recommended values for 28725 and 28730.

Response: Based on the public comments received, we referred CPT codes 28725 and 28730 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 12.18 for CPT code 28725 and 12.42 for CPT code 28730. The current (CY 2011) work RVUs for these services were developed based on these services being typically furnished in the inpatient setting. As these services are now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for these services, which are typically performed on an outpatient basis, to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. Therefore, we are finalizing a work RVU of 11.22 for CPT code 28725 and a work RVU of 10.70 for CPT code 28730 with refinements to physician time. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 28820 (Amputation, toe; metatarsophalangeal joint), we proposed a work RVU of 5.82 for CY 2012. Medicare PFS claims data indicated that CPT code 28820 is typically performed in an outpatient setting. However, the current and AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology described previously to address 23-hour stay and site-of-service anomalies, for CPT code 28820, we removed the subsequent hospital care service, reduced the discharge day management service to one-half, and adjusted the physician times accordingly. The AMA RUC recommended the survey median work RVU of 7.00 for CPT code 28820 for CY 2012 (76 FR 32441).

Comment: Commenters disagreed with the CMS-proposed work RVU of 5.82 for CPT code 28820 and believe that the AMA RUC-recommended work RVU of 7.00 is more appropriate for this service. Commenters disagreed with CMS' use of the reverse building block methodology, which removed the subsequent hospital care code and reduced the full hospital discharge management code to a half day, as well as the associated work RVUs and time. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 28820 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 7.00, which was consistent with the AMA-RUC recommendation for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting, and the CY 2012 AMA RUC recommendation continued to include building blocks typical of an inpatient service. Because we removed those building blocks, we believe that it is appropriate to reduce the work RVU to reflect the reduction in physician work, as measured by time and intensity. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 5.82 to CPT code 28820 as the final value for CY 2012. In addition, after reviewing the descriptions pre- and post- service work, we are finalizing a pre-service evaluation time of 33 minutes, a pre-service positioning time of 10 minutes, a pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 30 minutes, and a post-service time of 30 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 28820. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 28825 (Amputation, toe; interphalangeal joint), we proposed a work RVU of 5.37 for CY 2012. Medicare PFS claims data indicated that CPT code 28825 is typically performed in an outpatient setting. However, the current and AMA RUC recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described previously, for CPT code 28825, we reduced the discharge day management service to one-half, and adjusted the physician times accordingly. The AMA RUC recommended maintaining the current work RVU of 6.01 for CPT code 28825 for CY 2012 (76 FR 32441).

Comment: Commenters disagreed with the CMS proposed work RVU of 5.37 for CPT code 28825 and believe that the AMA RUC-recommended work RVU of 6.01 is more appropriate for this service. Commenters disagreed with CMS' use of the reverse building block methodology, which reduced the full hospital discharge management code to a half day, along with the associated work RVUs and time. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 28825 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 6.01, which was consistent with the AMA-RUC recommendation to maintain the current work RVU of 6.01 for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 5.37 to CPT code 28825 as the final value for CY 2012. In addition, we are finalizing a pre-service evaluation time of 33 minutes, a pre-service positioning time of 10 minutes, a pre-service dress, scrub, and wait time of 15 minutes, an intra-service time of 30 minutes, and a post-service time of 20 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 28825. CMS time refinements can be found in Table 16.

(11) Musculoskeletal: Application of Casts and Strapping (CPT codes 29125-29916)

In the Fourth Five-Year Review, we identified CPT code 29125 (Application of short arm splint (forearm to hand); static), as potentially misvalued through the Harvard-Valued-Utilization > 30,000 screen. CPT codes 29126 (Application of short arm splint (forearm to hand); dynamic) and 29425 were added as part of the family of services for AMA RUC review.

As detailed in the Fourth Five-Year Review of Work, for CPT code 29125 (Application of short arm splint (forearm to hand); static), we proposed a work RVU of 0.50 for CY 2012. Medicare PFS claims data affirmed that this service is typically performed on the same day as an E/M visit. We believed some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section III.A. to account for this overlap, we reduced the pre-service evaluation and post-service time by one third. We believed that 5 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service as described by the CPT code-associated specialties to the AMA RUC. The AMA RUC recommended maintaining the current work RVU of 0.59 for CPT code 29125 (76 FR 32441).

Comment: Commenters disagreed with the CMS-proposed work RVU of 0.50 for CPT code 29125 and believe that the AMA RUC-recommended work RVU of 0.59 is more appropriate. Commenters noted that the CMS value was derived from the reverse building block methodology, which removed the pre- and post-service time by one-third. Furthermore, commenters recommended CMS change our proposed values for this code and accept the RUC-recommended value as the pre-service time and values are already reduced to account for E/M work on the same day. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on the public comments received, we referred CPT 29125 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel results agreed with the CMS-assigned work RVU of 0.50 for CPT code 29125. Our clinical review confirmed that this value reflects our methodology described previously to reduce the pre-service evaluation and post-service time by one-third for codes for which there is typically a same-day E/M service. Based on the comments received, we re-reviewed the pre- and post-service time and work assigned to this service. We continue to believe that there is overlap in the pre- and post-service work between the E/M visit and service described by CPT code 29125. We believe that this overlap was appropriately accounted for by removing one-third of the pre-service evaluation minutes, and one-third of the post service minutes, thereby reducing the pre-service evaluation time from 7 minutes to 5 minutes, and the post-service time from 5 minutes to 3 minutes. Therefore, for CY 2012 we are finalizing a work RVU for CPT code 29125 of 0.50, with a pre-service evaluation time of 5 minutes, and a post-service time of 3 minutes. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work, for CPT code 29126 (Application of short arm splint (forearm to hand); dynamic), we proposed a work RVU of 0.68 for CY 2012. Medicare PFS claims data affirmed that this service is typically performed on the same day as an E/M visit. We believed some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section III.A. of this final rule with comment period, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. The AMA RUC recommended maintaining the current work RVU of 0.77 for CPT code 29126 (76 FR 32442).

Comment: Commenters disagreed with the CMS-proposed work RVU of 0.68 for CPT code 29126 and believe that the AMA RUC-recommended work RVU of 0.77 is more appropriate. Commenters noted that the CMS value was derived from the reverse building block methodology, which reduced the pre- and post service time by one-third. Furthermore, commenters recommended CMS change the proposed values for this code and accept the RUC-recommended values because, commenters asserted, the AMA RUC-recommended pre-service time as values were already reduced to account for E/M work on the same day. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested that CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on the comments received, we referred CPT code 29126 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 0.77, which supported the AMA RUC recommendation to maintain the current work RVU for this service. Based on the comments received, we re-reviewed the pre- and post-service time and work assigned to this service. We continue to believe that there is overlap in the pre- and post-service work between the E/M visit and service described by CPT code 29126. We believe that this overlap was appropriately accounted for by removing one-third of the pre-service evaluation minutes, and one-third of the post service minutes, thereby reducing the pre-service evaluation time from 7 minutes to 5 minutes, and the post-service time from 5 minutes to 3 minutes. We do not believe it is appropriate for the work RVU of this service to reflect the aforementioned overlap in pre- and post-service work between the E/M visit and the service described by CPT code 29126. Therefore, for CY 2012 we are finalizing the proposed work RVU of 0.68, with a pre-service evaluation time of 5 minutes, and a post-service time of 3 minutes. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review, for CPT code 29515 (Application of short leg splint (calf to foot)) we believed that the current (CY 2011) work RVU continued to accurately reflect the work of this service. For CPT code 29515 we proposed the current (CY 2011) work RVU of 0.73. The AMA RUC recommended maintaining the current work RVUs for this service as well. For CPT code 29515, the AMA RUC recommended 7 minutes of pre-service evaluation time and 5 minutes of post-service time. We proposed to reduce the AMA RUC-recommended times to 5 minutes of pre-service evaluation time and 3 minutes of post-service time for CPT code 29515 (76 FR 32442).

Comment: In its public comments to CMS on the Fourth Five-Year Review, the AMA RUC wrote that CMS agreed with the AMA RUC-recommended work RVU, but noted that CMS disagreed with the AMA RUC-recommended pre-service and post-service time components due to an E/M service typically being provided on the same day of service. Commenters recommended that CMS accept the AMA RUC-recommended pre-service evaluation time of 7 minutes and immediate post-service time of 5 minutes for CPT code 29515.

Response: Based on the comments received, we re-reviewed the pre- and post-service time and work assigned to this service. We continue to believe that there is overlap in the pre- and post-service work between the E/M visit and service described by CPT code 29126. We believe that this overlap was appropriately accounted for by removing one-third of the pre-service evaluation minutes, and one-third of the post service minutes, thereby reducing the pre-service evaluation time from 7 minutes to 5 minutes, and the post-service time from 5 minutes to 3 minutes. In sum, for CPT code 29515 for CY 2012, we are finalizing the Five-Year Review proposed and AMA RUC-recommended work RVU of 0.73, with a pre-service evaluation time of 5 minutes, and a post-service time of 3 minutes. CMS time refinements can be found in Table 16. In CPT code 29540 (Strapping; ankle and/or foot) was identified by the Five-Year Review Identification Workgroup through the HarvardValued—Utilization > 100,000 screen. Upon review, the AMA RUC recommended this family of services be surveyed.

As detailed in the CY 2011 final rule with comment period (75 FR 73331), for CPT code 29540, we assigned an interim final work RVU of 0.32. The HCPAC-recommended a work RVU of 0.39. The HCPAC compared the total time required for CPT code 29540 to CPT code 29580 (Strapping; Unna boot), 18 and 27 minutes, respectively, and noted that CPT code 29540 requires less time, mental effort/judgment, technical skill and psychological stress than CPT code 29580. The HCPAC determined that CPT code 29540 was approximately 30 percent less intense and complex than CPT code 29580, resulting in work RVUs of 0.39 for CPT code 29540 (75 FR 73331). We disagreed with the HCPAC-recommended work RVU for this service and believed work RVUs of 0.32 were appropriate. We believed CPT code 11720 (Debridement of nail(s) by any method(s); 1 to 5) (work RVUs = 0.32) was a more appropriate crosswalk (75 FR 73331).

Comment: Commenters disagreed with the CMS-proposed work RVU of 0.32 for CPT code 29540 and believe that the HCPAC work RVU of 0.39 is more appropriate for this service. Additionally, commenters supported HCPAC's original recommendation of 0.39 for code 29540 because they believe this code is more closely related to reference code 29580 (work RVU = 0.55). Commenters disagreed with the reference service put forward by CMS, and asserted that the HCPAC-chosen reference service is a stronger comparison code.

Response: Based on the comments received, we referred CPT code 29540 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 0.39. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 0.39 to CPT code 29540 as the final value for CY 2012.

As detailed in the CY 2011 final rule with comment period (75 FR 73331), for CPT code 29550 (Strapping; toes), we assigned an interim final work RVU of 0.15. The HCPAC recommended a work RVU of 0.25. The HCPAC compared this service to CPT code 97762 (Checkout for orthotic/prosthetic use, established patient, each 15 minutes) (work RVU = 0.25), which it believed requires the same intensity and complexity to perform as CPT code 29550. The HCPAC recommended crosswalking the work RVUs for 29550 to reference CPT code 97762. The HCPAC reviewed the survey time and determined that 7 minutes pre-service, 5 minutes intra-service, and 1 minute immediate post-service time were appropriate to perform this service. We disagreed with the HCPAC-recommended value for this service and believed a work RVU of 0.15, the survey low value, was appropriate, with 5 minutes of pre- and intra-service time and 1 minute of post-service time, as we believed the HCPAC-recommended pre-service time of 7 minutes was excessive (75 FR 73331).

Comment: Commenters expressed concerns noting that CMS has recommended the interim value be set equal to the survey low, which they believe goes against the spirit of the surveys and in fact may be based on the response of an outlier, and without a reference service to further support the interim recommendation. Commenters agreed with the HCPAC request, and requested that CMS accept the HCPAC-recommended work RVU of 0.25 and 7 minutes pre-service time, 5 minutes intra-service time and 1 minute post-service time for CPT code 29550.

Response: Based on the comments received, we referred CPT code 29550 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 0.25. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 0.25, with 5 minutes of pre- and intra-service time and 1 minute of post-service time, to CPT code 29550 as the final values for CY 2012. For CY 2012, we received no comments on the CY 2011 interim final work RVUs for CPT codes 29914, 29915, and 29916. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(12) Respiratory: Lungs and Pleura (CPT Codes 32405, 32851-32854, 33255)

We discussed CPT code 32851 (Lung transplant, single; without cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 32444). As noted in the proposed notice, the AMA RUC reviewed the survey responses and concluded that the survey 25th percentile work RVU of 63.00 appropriately accounted for the physician work required to perform this service. We disagreed with the AMA RUC-recommended work RVU for CPT code 32851 and upon a clinical review where we compared this service to other services, we concluded that a work RVU of 59.64 was more appropriate for this service. Comparing CPT code 33255 (Operative tissue ablation and reconstruction of atria, extensive (e.g., maze procedure); without cardiopulmonary bypass) (work RVU = 29.04) with CPT code 33256 (Operative tissue ablation and reconstruction of atria, extensive (e.g., maze procedure); with cardiopulmonary bypass) (work RVU = 34.90), there is a difference in work RVU of 5.86. We stated that we believed this difference in work RVUs reflects the additional time and physician work performed while the patient is on cardiopulmonary bypass.

In addition, we stated that we believed this was the appropriate interval in physician work distinguishing CPT code 32852 (Lung transplant, single; with cardiopulmonary bypass), from CPT code 32851 (Lung transplant, single; without cardiopulmonary bypass). Since we proposed a work RVU of 65.05 for CPT code 32852 (see below), we believed a work RVU of 59.64 accurately reflects the work associated with CPT code 32851 and maintains appropriate relativity among similar services. Therefore, we proposed an alternative work RVU of 59.64 for CPT code 32851 for CY 2012.

For CPT code 32852 (Lung transplant, single; with cardiopulmonary bypass), the AMA RUC reviewed the survey responses and concluded that the survey 25th percentile work RVU was too low and the median work RVU was too high. Therefore, the AMA RUC recommended a work RVU of 74.37 for CPT code 32582. We disagreed with the AMA RUC-recommended work RVU for CPT code 32582 and believed that the survey 25th percentile value of a work RVU of 65.50 was more appropriate for this service. Therefore, we proposed an alternative work RVU of 65.50 for CPT code 32582 for CY 2012.

Comment: The commenters disagreed with CMS' rationale to use the survey 25th percentile work RVU for CPT code 32852 and then use a reverse building block methodology to determine the proposed work RVUs for CPT code 32851. The commenters asserted that the AMA RUC considered and rejected the 25th percentile survey result for CPT code 32852, noting that the AMA RUC believed that the survey 25th percentile work RVU is insufficient to reflect the physician work involved in furnishing this service.

Response: Based on the comments received, we referred CPT codes 32851 and 32852 to the CY 2011 multi-specialty refinement panel for further review. CPT code 32851 has a current (CY 2011) work RVU of 41.61, in the Five-Year Review we proposed a work RVU of 59.64, and the AMA RUC recommended a work RVU of 63.00. The median refinement panel work RVU was 63.00. CPT code 32852 has a current (CY 2011) work RVU of 45.48, in the Five-Year Review we proposed a work RVU of 65.50, and the AMA RUC recommended a work RVU of 74.37. The median refinement panel work RVU was 74.37. For CPT codes 32851 and 32852, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 59.64 for CPT code 32851 and 65.50 for CPT code 32852, are more appropriate in order to preserve appropriate relativity across code families. Accordingly, we are assigning a work RVU of 59.64 to CPT code 32851 and 65.50 to CPT code 32852 as final values for CY 2012.

We discussed CPT code 32853 (Lung transplant, double (bilateral sequential or en bloc); without cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 32444). As noted in the proposed notice the AMA RUC reviewed the survey responses and concluded that the survey median work RVU of 90.00 appropriately accounted for the physician work required to perform this service. We disagreed with the AMA RUC-recommended work RVU for CPT code 32853 and believed that the survey 25th percentile value of 84.48 was more appropriate for this service as a reflection of the time and intensity of the service in relation to other major surgical procedures. Therefore, we proposed an alternative work RVU of 84.48 for CPT code 32853 for CY 2012.

For CPT code 32854 (Lung transplant, double (bilateral sequential or en bloc); with cardiopulmonary bypass), the AMA RUC reviewed the survey responses and concluded that the survey median work RVU of 95.00 appropriately accounted for the physician work required to perform this service. We disagreed with the AMA RUC-recommended work RVU for CPT code 32854 and believed that the survey 25th percentile value of 90.00 was more appropriate for this service. We stated that a work RVU of 90.00 maintains the relativity between CPT code 32851 (Lung transplant, single; without cardiopulmonary bypass) and CPT code 32854, which describes a double lung transplant. We believed this work RVU reflects the increased intensity in total service for CPT code 32584 when compared to CPT code 32851. Therefore, we proposed an alternative work RVU of 90.00 for CPT code 32854 for CY 2012.

Comment: The commenters disagreed with CMS' rationale to use the survey 25th percentile values for CPT codes 32853 and 32584. The commenters asserted that the AMA RUC recommendations were based on a careful and deliberate evaluation of the work involved in the provision of double lung transplantation, as compared with the work involved in other services.

Response: Based on the comments received, we referred CPT codes 32853 and 32854 to the CY 2011 multi-specialty refinement panel for further review. CPT code 32853 has a current (CY 2011) work RVU of 50.78, in the Five-Year Review we proposed a work RVU of 84.48, and the AMA RUC recommended a work RVU of 90.00. The median refinement panel work RVU was 85.00, slightly higher than the proposed work RVU. CPT code 32854 has a current (CY 2011) work RVU of 54.74, in the Five-Year Review we proposed a work RVU of 90.00, and the AMA RUC recommended a work RVU of 95.00. The median refinement panel work RVU was 95.00. For CPT codes 32853 and 32854, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 84.48 to CPT code 32853 and 90.00 to CPT code 32854, are more appropriate. Accordingly, we are assigning a work RVU of 84.48 to CPT code 32853 and 90.00 to CPT code 32854 as final values for CY 2012.

We note that CPT code 32405 (Biopsy, Lung or mediastinum) was also reviewed in this family for the Fourth Five-Year Review. We agreed with the AMA RUC's methodology and recommended value for this code. Accordingly, we are finalizing a work RVU of 1.93 for CPT code 32405. We note the CY 2012 final values for the codes in this family are summarized in Table 15.

(13) Cardiovascular: Heart and Pericardium (CPT Codes 33030-37766)

We discussed CPT code 33030 (Pericardiectomy, subtotal or complete; without cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 32444) where we noted the AMA RUC reviewed the survey responses and concluded that the survey median work RVUs of 39.50 for CPT code 33030 appropriately accounted for the work required to perform this service.

We disagreed with the AMA RUC-recommended work RVUs for CPT code 33030. Following comparison with similar codes, we believed that the survey 25th percentile value of 36.00 was more appropriate for this service. Therefore, we proposed an alternative work RVUs of 36.00 for CPT code 33030 for CY 2012.

Comment: The commenters disagreed with this proposed value and stated that they preferred that CMS accept the AMA RUC-recommended work RVUs of 39.50 based on the AMA RUC rationale. The commenters believed this would place the value of CPT code 33030 appropriately as far as time and intensity of physician work in relation to 33031.

Response: Based on the comments received, we referred CPT code 33030 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33030 has current (CY 2011) work RVUs of 22.29, in the Five-Year Review we proposed work RVUs of 36.00, and the AMA RUC recommended work RVUs of 39.50. The median refinement panel work RVUs were 37.10, between the proposed work RVUs and the AMA RUC recommendation. For CPT code 33030, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 36.00, which are the survey 25th percentile work RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 36.00 to CPT code 33030 as the final value for CY 2012.

We discussed CPT code 33120 (Excision of intracardiac tumor, resection with cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 32444), where we noted the AMA RUC reviewed the survey responses and concluded that the 25th percentile work RVUs for CPT code 33120 appropriately accounted for the work required to furnish this service. The AMA RUC recommended work RVUs of 42.88 for CPT code 33120.

We disagreed with the AMA RUC-recommended work RVUs for CPT code 33120 and believed that work RVUs of 38.45 were more appropriate for this service. We compared CPT code 33120 with CPT code 33677 (Closure of multiple ventricular septal defects; with removal of pulmonary artery band, with or without gusset) (work RVUs = 38.45) and found the codes to be similar in complexity and intensity. We believed that work RVUs of 38.45 accurately reflect the work associated with CPT code 33677 and properly maintains the relativity of similar services. Therefore, we proposed an alternative work RVUs of 38.45 for CPT code 33120 for CY 2012.

Comment: The commenters noted that CMS' proposed value, based on a direct crosswalk to 33677, (Closure of multiple ventricular septal defects; with removal of pulmonary artery band, with or without gusset), was less than the 25th percentile RUC-recommended value of 42.88. Commenters strongly disagreed with the direct crosswalk and requested that CMS review CPT code 33120 in relation to the key reference code selected by physicians who furnish the procedure, CPT code 33426 (Valvuloplasty, mitral valve, with cardiopulmonary bypass; with prosthetic ring). The commenters stated that this procedure is very similar to operating to remove the typical left atrial tumor, utilizing the same cardiac incision and the same cannulation strategy for cardiopulmonary bypass. The commenters also noted that CPT code 33426 is also an MPC list code and is furnished frequently by adult cardiac surgeons who also perform CPT code 33120.

Response: Based on the comments received, we referred CPT code 33120 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33120 has current (CY 2011) work RVUs of 27.45, in the Five-Year Review we proposed work RVUs of 38.45, and the AMA RUC recommended work RVUs of 42.88. The median refinement panel work RVUs were also 42.88. For CPT code 33120, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe that a comparison of CPT code 33120 with CPT code 33677 (Closure of multiple ventricular septal defects; with removal of pulmonary artery band, with or without gusset) (work RVUs = 38.45) shows the codes to be similar in complexity and intensity. Therefore, we believe that work RVUs of 38.45 accurately reflect the work associated with CPT code 33677 and properly maintains the relativity of similar services. Accordingly, we are assigning work RVUs of 38.45 to CPT code 33120 as the final value for CY 2012.

We discussed CPT code 33412 (Replacement, aortic valve; with transventricular aortic annulus enlargement (Konno procedure)) in the Fourth Five-Year Review of Work (76 FR 32444) where we noted the AMA RUC reviewed the survey responses and concluded that the survey median work RVUs for CPT code 33412 appropriately accounted for the work required to furnish this service. The AMA RUC recommended work RVUs of 60.00 for CPT code 33412. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33412 and believed that the survey 25th percentile value of 59.00 was more appropriate for this service. Therefore, we proposed alternative work RVUs of 59.00 for CPT code 33412 for CY 2012.

Comment: Commenters disagreed with CMS' proposed value and asserted that the AMA RUC workgroup closely reviewed this service and compared it to key reference service CPT code 33782 (Aortic root translocation with ventricular septal defect and pulmonary stenosis repair (i.e., Nikaidoh procedure); without coronary ostium reimplantation) (work RVUs = 60.08 and intra-time = 300 minutes). The commenters believed that these two services require the same intensity and complexity, physician work and time to furnish.

Response: Based on the comments received, we referred CPT code 33412 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33412 has current (CY 2011) work RVUs of 43.94, in the Five-Year Review we proposed work RVUs of 59.00, and the AMA RUC recommended work RVUs of 60.00. The median refinement panel work RVUs were 59.00, which were also the proposed work RVUs. For CPT code 33412, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 59.00, which are consistent with the refinement panel median RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 59.00 to CPT code 33412 as the final value for CY 2012.

We discussed CPT code 33468 (Tricuspid valve repositioning and plication for Ebstein anomaly) in the Fourth Five-Year Review of Work (76 FR 32444) where we noted the AMA RUC reviewed the survey responses and concluded that the survey median work RVUs for CPT code 33468 appropriately accounted for the work required to furnish this service. The AMA RUC recommended work RVUs of 50.00 for CPT code 33468. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33468 and believed that the survey 25th percentile value of 45.13 was more appropriate for this service. Therefore, we proposed alternative work RVUs of 45.13 for CPT code 33468 for CY 2012.

Comment: Commenters disagreed with CMS' proposed value and stated that the AMA RUC workgroup closely reviewed this service and compared CPT code 33468 to key reference service CPT code 33427, (Valvuloplasty, mitral valve, with cardiopulmonary bypass; radical reconstruction, with or without ring) (work RVUs = 44.83 and intra-time = 221 minutes). The commenters asserted that CPT code 33468 is more intense and complex, and requires more physician work and time to perform than the key reference service CPT code 33427.

Response: Based on the comments received, we referred CPT code 33468 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33468 has current (CY 2011) work RVUs of 32.94, in the Five-Year Review we proposed work RVUs of 45.13, and the AMA RUC recommended work RVUs of 50.00. The median refinement panel work RVUs were 46.00. For CPT code 33468, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 45.13, which are the survey 25th percentile work RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 45.13 to CPT code 33468 as the final value for CY 2012.

We discussed CPT code 33645 (Direct or patch closure, sinus venosus, with or without anomalous pulmonary venous drainage) in the Fourth Five-Year Review of Work (76 FR 32445) where we noted the AMA RUC reviewed survey responses and concluded that the survey median work RVUs for CPT code 33645 appropriately accounts for the work required to perform this service. The AMA RUC recommended work RVUs of 33.00 for CPT code 33645. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33645 and believed that the survey 25th percentile value of 31.30 appropriately captures the total work for the service. Therefore, we proposed alternative work RVUs of 31.30 for CPT code 33645 for CY 2012.

Comment: Commenters disagreed with CMS' proposed value and stated that the AMA RUC workgroup closely reviewed this service and compared 33645 to key reference service CPT codes 33641, (Repair atrial septal defect, secundum, with cardiopulmonary bypass, with or without patch) (work RVUs = 29.58 and intra-time = 164 minutes) and 33681, (Closure of single ventricular septal defect, with or without patch) (work RVUs = 32.34 and intra-time = 150 minutes). The commenters asserted that 33645, (Surveyed intra-service time = 175 minutes) requires more intensity and complexity to furnish compared to these reference services.

Response: Based on the comments received, we referred CPT code 33645 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33645 has current (CY 2011) work RVUs of 28.10, in the Five-Year Review we proposed work RVUs of 31.30, and the AMA RUC recommended work RVUs of 33.00. The median refinement panel work RVUs were 31.50, slightly higher than the proposed work RVUs. For CPT code 33645, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 31.30, which are the survey 25th percentile work RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 31.30 to CPT code 33645 as the final value for CY 2012.

We discussed CPT code 33647 (Repair of atrial septal defect and ventricular septal defect, with direct or patch closure) in the Fourth Five-Year Review of Work (76 FR 32445) where we noted the AMA RUC reviewed survey responses and concluded that the survey median work RVUs for CPT code 33467 appropriately account for the work required to furnish this service. The AMA RUC recommended work RVUs of 35.00 for CPT code 33647. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33647 and believed that the survey 25th percentile value of 33.00 was more appropriate for this service. Therefore, we proposed alternative work RVUs of 33.00 for CPT code 33647 for CY 2012.

Comment: Commenters disagreed with CMS' proposed value and stated that the AMA RUC workgroup closely reviewed this service and compared CPT code 33647 to key reference service CPT code 33681, (Closure of single ventricular septal defect, with or without patch) (work RVUs = 32.34 and intra-time = 150 minutes). The commenters asserted that CPT code 33647 are similarly intense and complex, and requires more physician work and time to furnish compared to the key reference service.

Response: Based on the comments received, we referred CPT code 33647 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33647 has current (CY 2011) work RVUs of 29.53, in the Five-Year Review we proposed work RVUs of 33.00, and the AMA RUC recommended work RVUs of 35.00. The median refinement panel work RVUs were 33.00, the same as the proposed work RVUs. For CPT code 33647, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 33.00, which are consistent with the refinement panel median work RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 33.00 to CPT code 33647 as the final value for CY 2012.

Fourth Five-Year Review of Work (76 FR 32445) where we noted the AMA RUC reviewed survey responses, and recommended the survey median work RVUs of 38.75 for CPT code 33692. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33692 and believed that the survey 25th percentile value of 36.15 was more appropriate for this service. Therefore, we proposed alternative work RVUs of 36.15 for CPT code 33692 for CY 2012.

Comment: Commenters disagreed with CMS' proposed value and stated that the AMA RUC workgroup closely reviewed this service and compared the service to key reference service CPT code 33684, (Closure of single ventricular septal defect, with or without patch; with pulmonary valvotomy or infundibular resection (acyanotic)) (work RVUs = 34.37 and intra-time = 200 minutes). Commenters asserted that CPT code 33692 is similarly intense and complex, and requires more physician work and time to furnish than the key reference service.

Response: Based on the comments received, we referred CPT code 33692 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33692 has current (CY 2011) work RVUs of 31.54, in the Five-Year Review we proposed work RVUs of 36.15, and the AMA RUC recommended work RVUs of 38.75. The median refinement panel work RVUs were 38.75. For CPT code 33692, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 36.15, which are the survey 25th percentile work RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 36.15 to CPT code 33692 as the final value for CY 2012.

We recommended work RVUs of 43.00 for CPT code 33710, the survey median work RVUs. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33710 and believed that the survey 25th percentile value of 37.50 was more appropriate for this service. We believed the physician time and intensity for CPT code 33710 reflected the appropriate incremental adjustment when compared to the key reference service, CPT code 33405 (Replacement, aortic valve, with cardiopulmonary bypass; with prosthetic valve other than homograft or stentless valve) (work RVUs = 41.32 and intra-service time = 198 minutes). Therefore, we proposed alternative work RVUs of 37.50 for CPT code 33710 for CY 2012.

Commenters disagreed with CMS' proposed value and stated that the AMA RUC workgroup closely reviewed this service and compared 33710 to key reference service CPT code 33405. The commenters asserted that 33710 is similarly intense and complex, and requires more physician work and time to furnish than the key reference service.

Response: Based on the comments received, we referred CPT code 33710 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33710 has current (CY 2011) work RVUs of 30.41, in the Five-Year Review we proposed work RVUs of 37.50, and the AMA RUC recommended work RVUs of 43.00. The median refinement panel work RVUs were also 43.00. For CPT code 33710, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 37.50, which are the survey 25th percentile work RVUs, and more comparable to the reference service, are more appropriate. Accordingly, we are assigning work RVUs of 37.50 to CPT code 33710 as the final value for CY 2012.

We discussed CPT code 33875 (Descending thoracic aorta graft, with or without bypass) in the Fourth Five-Year Review of Work (76 FR 32445) and noted that the AMA RUC reviewed survey responses and concluded that the 25th percentile work RVUs for code 33875 appropriately account for the work required to furnish this service. The AMA RUC recommended work RVUs of 56.83 for CPT code 33875. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33875 and believed that work RVUs of 50.72 were more appropriate for this service. We compared CPT code 33875 with CPT code 33465 (Replacement, tricuspid valve, with cardiopulmonary bypass) (work RVUs = 50.72) and believed that CPT code 33875 was similar to CPT code 33465, with similar inpatient and outpatient work. We believed these work RVUs corresponded better to the value of the service than the survey 25th percentile work RVUs. Therefore, we proposed alternative work RVUs of 50.72 for CPT code 33875 for CY 2012.

Comment: Commenters disagreed with CMS' proposed direct crosswalk to CPT code 33465, and stated that patients and procedures are substantially different for CPT 33875. The commenters requested that CMS reconsider its proposed work value of 50.72 and, instead, accept the AMA RUC-recommended values of 56.83, which are the 25th percentile of the physician survey.

Response: Based on the comments received, we referred CPT code 33875 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33875 has current (CY 2011) work RVUs of 35.78, in the Five-Year Review we proposed work RVUs of 50.72, and the AMA RUC recommended work RVUs of 56.83. The median refinement panel work RVUs were also 56.83. For CPT code 33875, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We compared CPT code 33875 with CPT code 33465 and believed that CPT code 33875 is similar to CPT code 33465, with similar inpatient and outpatient work. We continue to believe these work RVUs corresponds better to the value of the service than the survey 25th percentile work RVUs. Accordingly, we are assigning work RVUs of 50.72 to CPT code 33875 as the final value for CY 2012.

We discussed CPT code 33910 (Pulmonary artery embolectomy; with cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 32445) and noted that after reviewing the service, the AMA RUC recommended work RVUs of 52.33 for CPT code 33910. We disagreed with the AMA RUC-recommended work RVUs for CPT code 33910 and believed that work RVUs of 48.21 were more appropriate for this service. We compared CPT code 33910 with CPT code 33542 (Myocardial resection (e.g., ventricular aneurysmectomy)) (work RVUs = 48.21). We recognized that CPT code 33542 is not an emergency service. Nevertheless, this procedure requires cardiopulmonary bypass and has physician time and visits that are consistently necessary for the care required for the patient that are similar to CPT code 33910. We believed that work RVUs of 48.21 accurately reflected the work associated with CPT code 33910 and properly maintained the relativity for a similar service. Therefore, we proposed alternative work RVUs of 48.21 for CPT code 33910 for CY 2012.

Comment: Commenters requested that CMS reconsider the proposed work value of 48.21, and accept the AMA RUC-recommended work value of 52.33, the survey median value. Commenters disagreed with the CMS-proposed direct crosswalk to the value of CPT code 33542. Commenters asserted that, although some of the technical composition of the two codes (time and visits) is similar, the intensity and complexity measures are different and easily account for the additional RVUs of 4.12 that would result from utilizing the survey median work value.

Response: Based on the comments received, we referred CPT code 33910 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33910 has current (CY 2011) work RVUs of 29.71, in the Five-Year Review we proposed work RVUs of 48.21, and the AMA RUC recommended work RVUs of 52.33. The median refinement panel work RVUs were 52.33. For CPT code 33910, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 48.21, which are the survey 25th percentile work RVUs and properly maintain the relativity with CPT code 33542 are more appropriate. Accordingly, we are assigning work RVUs of 48.21 to CPT code 33910 as the final value for CY 2012.

Fourth Five-Year Review of Work (76 FR 32445) and noted that the AMA RUC reviewed survey responses and recommended work RVUs of 100.00, the survey median work RVUs, for CPT code 33935. We disagreed with the AMARUC-recommended work RVUs for CPT code 33935 and believed that the survey 25th percentile value of 91.78 was more appropriate for this service. We believed this service is more intense and complex than the reference CPT code 33945 (Heart transplant, with or without recipient cardiectomy) (work RVU = 89.50) and that the survey 25th percentile work RVUs accurately reflected the increased intensity and complexity when compared to the reference CPT code 33945. Therefore, we proposed alternative work RVUs of 91.78 for CPT code 33935 for CY 2012.

Comment: Commenters requested that CMS reconsider its proposed work RVUs of 91.78 and accept the RUC-recommended survey median work RVUs of 100.00 for CPT code 33935. Commenters noted that CMS acknowledged the increased intensity, complexity, and physician work compared to the key reference service CPT code 33945 Heart Transplant. However, commenters asserted that CPT code 33935 has substantially higher intensity and complexity than CPT code 33945, and CMS did not adequately account for the additional physician work.

Response: Based on the comments received, we referred CPT code 33935 to the CY 2011 multi-specialty refinement panel for further review. CPT code 33935 has current (CY 2011) work RVUs of 62.01, in the Five-Year Review we proposed work RVUs of 91.78, and the AMA RUC recommended work RVUs of 100.00. The median refinement panel work RVUs were also 100.00. For CPT code 33935, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe work RVUs of 91.78, which are the survey 25th percentile work RVUs, are more appropriate. Accordingly, we are assigning work RVUs of 91.78 to CPT code 33935 as the final value for CY 2012.

We discussed CPT code 33980 (Removal of ventricular assist device, implantable intracorporeal, single ventricle) in the Fourth Five-Year Review of Work (76 FR 32445). We noted the AMA RUC reviewed the survey results and recommended the survey median work RVUs of 40.00. Additionally, the AMA RUC recommended a global period change from 090 (Major surgery with a 1-day pre-operative period and a 90-day postoperative period included in the fee schedule amount) to XXX (the global concept does not apply to the code). We agreed with the AMA RUC-recommended global period change from 090 to XXX. However, we disagreed with the AMA RUC-recommended work RVUs for CPT code 33980. We believed the work RVUs of 33.50 were more appropriate, given the significant reduction in physician times and decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 33980. For CY 2012, we proposed alternative work RVUs of 33.50, the survey 25th percentile work RVUs.

Comment: Commenters disagreed with the proposed work RVUs, and asserted that CPT code 33980 was surveyed as an XXX code with no post-operative visits. Commenters stated that CPT code 33980 is one of the most intense, complex, and demanding procedures that their specialty furnishes. The commenters noted that this is an obligatory reoperation, which is almost always furnished during a one-six month time frame when the adhesions are new, tenacious, and very vascular. The commenters asserted that the reoperation CPT code 33530 (Reoperation, coronary artery bypass procedure or valve procedure, more than 1 month after original operation (List separately in addition to code for primary procedure)) its value (work RVUs = 10.13) should be considered. Commenters noted, however, that because CPT code 33530 is a ZZZ code (code is related to another service and is included in the global period of the other service) its value would not apply here. Secondly, the commenters noted this procedure requires reconstruction of the large bore defect in the apex of the left ventricle, which is technically demanding, particularly in patients destined for survival with a fragile and compromised left ventricle that must now support the circulation without VAD support. The commenters believed these features justify the higher AMA RUC-recommended RVUs of 40.00.

Response: Based on the comments received, we referred CPT code 33980 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVUs of 40.00, which were consistent with the AMA RUC recommendation. We believe work RVUs of 33.50, which are the survey 25th percentile work RVU are more appropriate, given the significant reduction in physician times and decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 33980. Accordingly, we are assigning work RVUs of 33.50 to CPT code 33980 as the final value for CY 2012.

We discussed CPT code 35188 (Repair, acquired or traumatic arteriovenous fistula; head and neck) in the Fourth Five-Year Review of Work (76 FR 32446) and noted the AMA RUC reviewed the survey results and recommended the survey median work RVUs of 18.50 for CPT code 35188. We disagreed with the AMA RUC-recommended work RVUs for CPT code 35188 and proposed alternative work RVUs of 18.00, which are the survey 25th percentile work RVUs. We believed the work RVUs of 18.00 are more appropriate, given the decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 35188.

Comment: Commenters noted the AMA RUC compared the service to key reference CPT code 35011 (Direct repair of aneurysm, pseudoaneurysm, or excision (partial or total) and graft insertion, with or without patch graft; for aneurysm and associated occlusive disease, axillary-brachial artery, by arm incision) (work RVUs = 18.58) and agreed they were similar services in the sense that they are both vascular operations on similar sized vessels in the upper body. The AMA RUC also compared 35188 to MPC codes 19318 Reduction mammoplasty (work RVUs = 16.03) and 44140 Colectomy, partial; with anastomosis (work RVUs = 22.59), which are similarly intensive surgical procedures requiring technical skill to successfully complete the operation. Commenters asserted the differences between CPT codes 35188, 19318, and 44140 lie in the post-operative work, which are quite different, yet in proper rank order, and requested that CMS reconsider this issue.

Response: Based on the comments received, we referred CPT code 35188 to the CY 2011 multi-specialty refinement panel for further review. CPT code 35188 has current (CY 2011) work RVUs of 15.16, in the Five-Year Review we proposed work RVUs of 18.00, and the AMA RUC recommended work RVUs of 18.50. The median refinement panel work RVUs were also 18.50. For CPT code 35188, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 18.00, which are the survey 25th percentile work RVUs, are more appropriate, given the decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 35188. Accordingly, we are assigning work RVUs of 18.00 to CPT code 35188 as the final value for CY 2012.

We discussed CPT code 35612 (Bypass graft, with other than vein; subclavian) in the Fourth Five-Year Review of Work (76 FR 32446) and noted the AMA RUC reviewed the survey results and recommended work RVUs of 22.00 for CPT code 35612. We disagreed with the AMA RUC-recommended work RVUs for CPT code 35612 and proposed alternative work RVUs of 20.35, which were the survey 25th percentile work RVUs. We believed the work RVUs of 20.35 were more appropriate, given the decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 35612.

Comment: Commenters disagreed with the proposed RVUs for CPT code 35612. Commenters noted that the AMA RUC compared the service to key reference CPT code 35661 (Bypass graft, with other than vein; femoral-femoral) (work RVUs = 20.35) and agreed the work value for CPT code 35612 should be higher than for the work value for CPT code 35661. The AMA RUC also compared the surveyed code to MPC codes 22595 (Arthrodesis, posterior technique, atlas-axis (C1-C2)) (work RVUs = 20.46) and 62165 (Neuroendoscopy, intracranial; with excision of pituitary tumor, transnasal or trans-sphenoidal approach) (work RVUs = 23.23), which have similar work intensities. Commenters requested that CMS accept the AMA RUC-recommended work RVUs of 22.00 for CPT code 35612.

Response: Based on the comments received, we referred CPT code 35612 to the CY 2011 multi-specialty refinement panel for further review. CPT code 35612 has current (CY 2011) work RVUs of 16.82, in the Five-Year Review we proposed work RVUs of 20.35, and the AMA RUC recommended work RVUs of 22.00. The median refinement panel work RVUs were also 22.00. For CPT code 35612, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 20.35, which are the survey 25th percentile work RVUs, are more appropriate, given the decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 35612. Accordingly, we are assigning work RVUs of 20.35 to CPT code 35612 as the final value for CY 2012.

We discussed CPT code 35800 (Exploration for postoperative hemorrhage, thrombosis or infection; neck) in the Fourth Five-Year Review of Work (76 FR 32446) and noted the AMA RUC used magnitude estimation to recommend work RVUs for CPT code 35800 between the survey 25th percentile (12.00 RVUs) and median (15.00 RVUs) work value. Accordingly, the AMA RUC recommended work RVUs of 13.89 for CPT code 35800. We disagreed with the AMA RUC-recommended work RVUs for CPT code 35800 and proposed alternative work RVUs of 12.00, which were the survey 25th percentile work RVUs. We believed the work RVU of 12.00 were more appropriate, given that two of the key reference codes to which this service has been compared have identical intra-service time (60 minutes), but significantly lower work RVUs.

Comment: Commenters noted that the AMA RUC compared the service to key reference codes. Commenters agreed with the intensity, physician work, and proper rank order amongst the comparison codes achieved when CPT code 35800 was valued between the survey 25th percentile (12.00 RVUs) and median work value (15.00 RVUs) with work RVUs of 13.89. Commenters believed it was inappropriate for CMS to reduce the value of CPT code 35800 based on a comparison to two services with much less total time. Commenters requested that CMS accept the AMA RUC-recommended work RVUs of 13.89.

Response: Based on the comments received, we referred CPT code 35800 to the CY 2011 multi-specialty refinement panel for further review. CPT code 35800 has current (CY 2011) work RVUs of 8.07, in the Five-Year Review we proposed work RVUs of 12.00, and the AMA RUC recommended work RVUs of 13.89. The median refinement panel work RVU were also 13.89. For CPT code 35800, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be an appropriate when compared to other codes with similar physician time and intensity in different code families. That is, as when considering the values for the two reference services previously discussed, comparing CPT code 35800 to codes outside of the code family but with identical intra-service time (60 minutes) demonstrates that in order to maintain inter-family relativity in the PFS, the 25th percentile survey work RVUs of 12.00 are more appropriate than the higher work RVUs recommended by the AMA RUC and the refinement panel. Accordingly, we are assigning work RVUs of 12.00 to CPT code 35800 as the final value for CY 2012.

We discussed CPT code 35840 (Exploration for postoperative hemorrhage, thrombosis or infection; abdomen) in the Fourth Five-Year Review of Work (76 FR 32446) and noted the AMA RUC used magnitude estimation to recommend work RVUs for CPT code 35840 between the survey 25th percentile (19.25 RVU) and survey median (22.30 RVUs) work value. Accordingly, the AMA RUC recommended a work RVU of 21.19 for CPT code 35840. We disagreed with the AMA RUC-recommended work RVU for CPT code 35840 and proposed alternative work RVUs of 20.75, which were between the survey 25th percentile and survey median work RVUs. We believed the work RVUs of 20.75 were more appropriate given the comparison to the two reference codes.

Comment: Commenters disagreed with the proposed work RVUs for CPT code 35840. Commenters noted that the AMA RUC compared CPT code 35840 to the following two services: CPT code 49002 (Reopening of recent laparotomy) (work RVUs = 17.63, 75 minutes intra-service time), and CPT code 37617 (Ligation, major artery (e.g., post-traumatic, rupture); abdomen) (work RVUs = 23.70, 120 minutes intraservice time). Commenters agreed with the intensity, physician work, and proper rank order amongst the comparison codes when code 35840 was valued between the survey 25th percentile (19.25 RVUs) and median work value (22.30 RVUs). Commenters requested that CMS accept the AMA RUC-recommended work RVUs of 21.19.

Response: Based on the comments received, we referred CPT code 35840 to the CY 2011 multi-specialty refinement panel for further review. CPT code 35840 has current (CY 2011) work RVUs of 10.96, in the Five-Year Review we proposed work RVUs of 20.75, and the AMA RUC recommended work RVUs of 21.19. The median refinement panel work RVUs were also 21.19. For CPT code 33840, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be an appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 20.75 are more appropriate given the two reference codes to which this service has been compared. Accordingly, we are assigning work RVUs of 20.75 to CPT code 35840 as the final value for CY 2012.

We discussed CPT code 35860 (Exploration for postoperative hemorrhage, thrombosis or infection; extremity) in the Fourth Five-Year Review of Work (76 FR 32446-32447) and noted the AMA RUC used magnitude estimation to recommend work RVUs between the survey 25th percentile (15.25 RVUs) and median work value (18.00 RVUs). The AMA RUC recommended work RVUs of 16.89 for CPT code 35860. We disagreed with the AMA RUC-recommended work RVUs for CPT code 35860 and proposed alternative work RVUs of 15.25, which were the survey 25th percentile work RVUs. We believed these work RVU maintained appropriate relativity within the family of related services for the exploration of postoperative hemorrhage.

Comment: Commenters disagreed with CMS' proposed RVUs of 15.25 for CPT code 35860. Commenters stated the complexity and intensity of this service is higher because it is typically furnished to elderly patients for whom reoperation imposes more risks. Commenters asserted that the family of services was undervalued in the Harvard study. Commenters disagreed with CMS's assertion that the proposed work value is more relative to similar services in comparison to the RUC recommendation. During its review, the AMA RUC compared CPT code 35860 to two similar services: CPT code 34203 (Embolectomy or thrombectomy, popliteal-tibioperoneal artery, by leg incision) (work RVU = 17.86, 108 minutes intra-service time) and CPT code 44602 (Suture of small intestine for perforation) (work RVU = 24.72, 90 minutes intra-service time). Commenters agreed with the intensity, physician work, and proper rank order amongst the comparison codes achieved when CPT code 35860 is valued between the survey 25th percentile (15.25 RVUs) and median work value (18.00 RVUs), at 16.89 work RVUs. Commenters requested that CMS accept the RUC recommended work RVUs of 16.89 for CPT code 35860.

Response: Based on the comments received, we referred CPT code 35860 to the CY 2011 multi-specialty refinement panel for further review. CPT code 35860 has current (CY 2011) work RVUs of 6.80, in the Five-Year Review we proposed work RVUs of 15.25, and the AMA RUC recommended work RVUs of 16.89. The median refinement panel work RVUs were also 16.89. For CPT code 35860, as well as the other CPT codes in this family, the Five-Year Review proposed work RVUs represent a significant increase over the current (CY 2011) work RVUs. We believe that the even higher AMA RUC-recommended work RVUs and refinement panel results would create a new higher standard of relativity for codes within this family that would not be appropriate when compared to other codes with similar physician time and intensity in different code families. We continue to believe the work RVUs of 15.25, which are the survey 25th percentile work RVUs, maintain appropriate relativity. Accordingly, we are assigning work RVUs of 15.25 to CPT code 35860 as the final value for CY 2012.

As detailed in the Fourth Five-Year Review, for CPT code 36600 (Arterial puncture, withdrawal of blood for diagnosis) we believed that the current (CY 2011) work RVUs continued to accurately reflect the work of these services and, therefore, proposed work RVUs of 0.32 for CPT code 36600. The AMA RUC also recommended maintaining the current (CY 2011) work RVUs for these services. For CPT code 36600, the AMA RUC recommended a pre-service evaluation time of 5 minutes and immediate post service time of 5 minutes. We proposed a pre-service evaluation time for CPT code 36600 of 3 minutes and a post service time of 3 minutes (76 FR 32447).

Comment: In its public comments to CMS on the Fourth Five-Year Review, the AMA RUC wrote that CMS agreed with the AMA RUC-recommended work RVU, but noted that CMS disagreed with the AMA RUC-recommended pre-service and post-service time components due to an E/M service typically being provided on the same day of service. The AMA RUC recommends that CMS accept the AMA RUC-recommended pre-service evaluation time of 5 minutes and immediate post-service time of 5 minutes for CPT code 36600.

Response: In response to comments, we re-reviewed CPT code 36600. After reviewing the descriptions of pre-service work and the recommended pre-service time packages, we disagree with the times recommended by the AMA RUC. For CPT code 36600 we are finalizing a work RVU of 0.32 and a pre-service evaluation time of 3 minutes. In addition, we are finalizing an intra-service time of 10 minutes, and a post-service time of 3 minutes for CPT code 36600. CMS time refinements can be found in Table 16.

We discussed CPT code 36247 (Selective catheter placement, arterial system; initial third order or more selective abdominal, pelvic, or lower extremity artery branch, within a vascular family) in the Fourth Five-Year Review of Work (76 FR 32445) and proposed a CY 2012 work RVU of 6.29 and a global period change from 90-days (Major surgery with a 1-day pre-operative period and a 90-day postoperative period included in the fee schedule amount) to XXX (the global concept does not apply to the code). The AMA RUC recommended the survey median work RVU of 7.00 for this service. We disagreed with the RUC-recommended value noting that a reduced global period would support a reduction in the RVUs.

Comment: Commenters noted that the dominant specialty for CPT code 36247 has changed since the original Harvard valuations that therefore physician practice also has changed. Commenters pointed out that CMS' discussion of the global period was not correct, that the specialty societies had surveyed the code based on a change to the global period of 000 (endoscopic or minor procedure with related preoperative and post-operative relative values on the day of the procedure only included in the fee schedule payment amount; evaluation and management services on the day of the procedure generally not payable) from the current global period indicator of XXX. Commenters also asserted that there had been a change in the physician work for CPT code 36247 due to patient population changes and the inclusion of moderate sedation as inherent in the procedure. Finally, commenters argued that the creation of the lower extremity revascularization codes in CY 2011 PFS final rule with comment period (75 FR 73334) increased the complexity of procedures described by CPT code 36247. Commenters requested that CMS reconsider the proposed value and global period.

Response: Based on the comments received, we referred CPT code 36247 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median value was a work RVU of 7.0, the AMA RUC-recommended value. Upon clinical review, we believe that our proposed value of 6.29 in more appropriate. We observe a significant decrease in the physician times reported for this service that argue for a lower value, notwithstanding that the survey was conducted for a 0-day global period, which includes an evaluation and management service on the same day. We agree with commenters that our discussion of the global period in the Fourth Five-Year review of work was inconsistent with the commenters' original request. Therefore, we are assigning the work RVU of 6.29 and a global period of 000 to CPT code 37247on an interim basis for CY 2012 and invite additional public comment on this code.

We discussed CPT code 36819 (Arteriovenous anastomosis, open; by upper arm basilic vein transposition) in the Fourth Five-Year Review of Work (76 FR 32447) where we noted this code was identified as a code with a site-of- service anomaly. Medicare PFS claims data indicated that this code is typically furnished in an outpatient setting. However, the current and AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. As discussed in section III.A. of this final rule with comment period, our policy is to remove any post-procedure inpatient and subsequent observation care visits remaining in the values for these codes and adjust physician times accordingly. It is also our policy for codes with site-of-service anomalies to consistently include the value of half of a discharge day management service. While the AMA RUC recommended maintaining the current (CY 2011) work RVU of 14.47, utilizing our methodology, we proposed an alternative work RVU for CY 2012 of 13.29 with refinements in time for CPT code 36819.

Comment: Commenters disagreed with the CMS-proposed work RVU and requested that CMS accept the AMA RUC-recommended work RVU of 14.47 for 36819. Furthermore, commenters asked that the AMA RUC-recommended physician time should also be restored. Commenters disagreed with CMS' use of the reverse building block methodology. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time. Commenters noted that the AMA RUC reviewed the survey data, compared this service to other services, and concluded that there was no was no compelling evidence to suggest a change in the current work RVUs was warranted.

Response: Based on comments received, we referred CPT code 36819 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 14.47, which was consistent with the AMA RUC recommendation to maintain the current (CY 2011) work value. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a final work RVU of 13.29 with refinements in time for CPT code 36819 for CY 2012.

We discussed CPT code 36825 (Creation of arteriovenous fistula by other than direct arteriovenous anastomosis (separate procedure); autogenous graft) in the Fourth Five-Year Review of Work (76 FR 32445 and 32446) where we noted this code was identified as a code with a site-of-service anomaly. Medicare PFS claims data indicated that this code is typically furnished in an outpatient setting. However, the current and AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. As discussed in section III.A. of this final rule with comment period, consistent with that methodology, we removed the subsequent observation care service, reduced the discharge day management service by one-half, and adjusted times for CPT code 36825. While the AMA RUC recommended maintaining the current (CY 2011) work RVU of 15.13, utilizing our methodology for codes with site-of-service anomalies, we proposed an alternative work RVU of 14.17 with refinements to the time for CPT code 36825 for CY 2012.

Comment: Commenters disagreed with the CMS proposed work RVU of 14.17. Commenters disagreed with CMS' use of the reverse building block methodology, which removed the subsequent observation care code and reduced the full hospital discharge day management code to a half day, along with the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time. Commenters contend that if the patient is stable and can safely be discharged on a day subsequent to the day of the procedure, then there should be no reduction in discharge management work. Commenters requested that CMS reconsider this issue and accept the AMA RUC-recommended work RVU of 15.13 as a valid relative measure using magnitude estimation and comparison to codes with similar work and intensity.

Response: Based on comments received, we referred CPT code 36825 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 15.13, which is consistent with AMA RUC recommendation to maintain the current (CY 2011) work RVU for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU for CY 2012 of 14.17 with refinements to the time for CPT code 36825 for CY 2012. CMS time refinements can be found in Table 16.

For CY 2012, we received no comments on the Fourth Five-Year Review of Work proposed work RVUs for CPT codes 33916, 33975, 33976, 33977, 33978, 33979, 33981, 33982, 33983, 36200, 36246, 36470, 36471, 36600, 36821, 37140, 37145, 37160, 37180, and 37181. Additionally, we received no comments on the CY 2011 final rule with comment period work RVUs for CPT codes 33620, 33621, 33622, 33860, 33863, 33864, 34900, 35471, 36410, 37205, 37206, 37207, 37208, 37220, 37221, 37222, 37223, 37224, 37225, 37226, 37228, 37229, 27230, 37231, 37232, 37233, 37234, 37235, 37765, 37766. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(14) Digestive: Salivary Glands and Ducts (CPT Codes 42415-42440)

In the Fourth Five-Year Review, we identified CPT codes 42415 and 42420 as potentially misvalued through the site-of-service anomaly screen. The related specialty societies surveyed these codes and the AMA RUC issued recommendations to us for the Fourth Five-Year Review of Work.

As detailed in the Fourth Five-Year Review of Work (76 FR 32447), for CPT code 42415 (Excision of parotid tumor or parotid gland; lateral lobe, with dissection and preservation of facial nerve), we proposed a work RVU of 17.16 for CY 2012. Medicare PFS claims data indicated that CPT code 42415 is typically furnished in an outpatient setting. However, the current AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 42415, we removed the observation care service, reduced the discharge day management service by one-half, and adjusted the physician times accordingly. The AMA RUC recommended maintaining the current work RVU of 18.12 for CPT code 42415.

Furthermore, as detailed in the Fourth Five-Year Review of Work (76 FR 32447), for CPT code 42420 (Excision of parotid tumor or parotid gland; total, with dissection and preservation of facial nerve) we proposed a work RVU of 19.53 for CY 2012. Medicare PFS claims data indicated that CPT code 42420 is typically furnished in an outpatient setting. However, the current AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 42420, we removed the subsequent observation care service, reduced the discharge day management service by one-half, and adjusted the physician times accordingly. The AMA RUC recommended maintaining the current work RVU of 21.00 for CPT code 42420.

Comment: Commenters disagreed with the proposed work RVUs for CPT codes 42415 and 42420 and requested that CMS accept the AMA RUC-recommended RVUs of 18.12 and 21.00, respectively, for these services. Commenters stated that patients typically stay overnight, receiving these specific services require close monitoring for airway patency, formation of hematoma, and facial nerve function, and for 42420, intervention for any noted deficits, drain function, and control of nausea. Moreover, commenters stated that survey data show that the typical patient receives this procedure in the hospital (91 percent for 42415 and 97 percent for 42420) and receives an E/M service on the same date (53 percent for 42415 and 64 percent for 42420). Commenters also noted that whether or not the service is designated outpatient or inpatient, the physician work is the same. Commenters requested that CMS not apply the site-of-service anomaly reductions to work RVUs and physician times, and accept the AMA RUC recommended RVUs of 18.12 for 42415 and 21.00 for 42420.

Response: Based on the public comments received, we referred both CPT codes 42415 and 42420 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVUs were 18.12 for 42415 and 21.00 for 42420, which was consistent with the AMA RUC recommendation to maintain the current (CY 2011) work RVUs. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. Therefore, we removed the subsequent observation care services, reduced the discharge day management service to one-half, and increased the post-service times. We are finalizing work RVUs of 17.16 for CPT code 42415 and 19.53 for CPT code 42420 with refinements to physician time. CMS time refinements can be found in Table 16.

As detailed in the CY 2012 PFS proposed rule (76 FR 42799), for CPT code 42440 (Excision of submandibular (submaxillary) gland), we proposed a work RVU of 6.14 for CY 2012. As stated in section III.A. of this final rule with comment period, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not just removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. To appropriately revalue this CPT code to reflect an outpatient service we started with the original CY 2008 work RVU of 7.05 then, in accordance with the policy discussed in section III.A. of this final rule with comment period, we removed the value of the subsequent hospital care service and one-half discharge day management service, and added back the subsequent hospital care intra-service time to the immediate post-operative care service. The AMA RUC recommended maintaining the current work RVU of 7.13 for CPT code 42440 (76 FR 42799).

Comment: Commenters disagreed with the CMS-proposed work RVU of 6.14 for CPT code 42440 and believe that the AMA RUC-recommended work RVU of 7.13 was more appropriate for this service. Commenters disagreed with CMS' use of the reverse building block methodology, which removed the work RVUs associated with the subsequent hospital care code and half a hospital discharge day management service. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time. Commenters also noted that there was an increase in intensity of office visits, because rather than an overnight stay in the hospital, the typical patient is discharged the same day with tubes in their neck, and a more intense office visit is needed to remove the tube and manage other dressings.

Response: Based on the public comments received, we referred CPT code 42440 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work was 7.13, which was consistent with AMA RUC recommendation to maintain the current (CY 2011) work RVU for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation does not reflect a decrease in physician work. We believe the appropriate methodology for valuing site-of-service anomaly codes entails not just removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. Furthermore, we believe it is appropriate to remove the value of the subsequent hospital care service and one-half discharge day management service, and add back the subsequent hospital care intra-service time to the immediate post-operative care service. Therefore, we are finalizing a work RVU for CPT code 42440 of 6.14 with refinements to time. CMS time refinements can be found in Table 16.

(15) Digestive: Esophagus (CPT codes 43262, 43327-43328, and 43332-43338)

As detailed in the Fourth Five-Year Review (76 FR 32448), for CPT code 43262 (Endoscopic retrograde cholangiopancreatography (ERCP); with sphincterotomy/papillotomy), we believed that the current (CY 2011) work RVU of 7.38 continued to accurately reflect the work of this service. We proposed to maintain the current work RVU and physician times for CPT code 43262. The AMA RUC recommended maintaining the current work RVUs for these services as well. However, the AMA RUC recommended a pre-service evaluation time of 15 minutes and immediate post service time of 20 minutes. Additionally, the AMA RUC recommended a pre-service positioning time of 5 minutes; a pre-service dress/scrub time of 5 minutes; and an intra-service time of 45 minutes. We noted that based on a preliminary review of the intra-service times for these codes, we were concerned the codes in this family are potentially misvalued. We requested that the AMA RUC undertake a comprehensive review of the entire family of ERCP codes, including the base CPT code 43260, and provide us with work RVU recommendations.

Comment: In its public comments to CMS on the Fourth Five-Year Review, the AMA RUC stated that it intends to review this family of codes in 2012. The AMA RUC also noted that CMS disagreed with the AMA RUC-recommended physician times for CPT code 43262. The AMA RUC requested that CMS accept the AMA RUC-recommended times be utilized for CY 2012.

Response: We appreciate the AMA RUC accepting family of ERCP codes for review in 2012. We continue to have concerns about the recommended intra-service times for this code, and believe it is appropriate to maintain the current physician times. CMS time refinements can be found in Table 16.

For CY 2012, we did not receive any public comments on the Fourth Five-Year Review proposed work RVUs for CPT code 43262. We believe this value continues to be appropriate and are finalizing it without modification (Table 15).

For CY 2011 the CPT Editorial Panel deleted six existing CPT codes and created ten new CPT codes (CPT codes 43283, 43327-43328, 43332-43338) to better report current surgical techniques for paraesophageal hernia procedures. The specialty societies surveyed their members, and the AMA RUC issued recommendations to us for the CY 2011 PFS final rule with comment period.

As stated in the CY 2011 PFS final rule with comment period, after reviewing these new CPT codes, we believed that this coding change resulted in more codes that describe the same physician work with a greater degree of precision, and that the aggregate increase in work RVUs that would result from the adoption of the CMS-adjusted pre-budget neutrality RVUs would not represent a true increase in physician work. Therefore, we believed it was appropriate to apply work budget neutrality to this set of CPT codes. After reviewing the AMA RUC-recommended work RVUs, we adjusted the work RVUs for two CPT codes (CPT code 43333 and 43335), and then applied work budget neutrality to the set of clinically related CPT codes. The work budget neutrality factor for the 10 paraesophageal hernia procedure CPT codes was 0.7374. The AMA RUC-recommended work RVU, CMS-adjusted work RVU prior to the budget neutrality adjustment, and the CY 2011 interim final work RVU for these paraesophageal hernia procedure codes follow (CPT codes 43283, 43327-43328, 43332-43338) (75 FR 73338).

As mentioned previously, and detailed in the CY 2011 PFS final rule with comment period, for CPT codes 43333 (Repair, paraesophageal hiatal hernia (including fundoplication), via laparotomy, except neonatal; with implantation of mesh or other prosthesis) and 43335 (Repair, paraesophageal hiatal hernia (including fundoplication), via thoracotomy, except neonatal; with implantation of mesh or other prosthesis), we disagreed with the AMA RUC-recommended work RVUs and assigned alternate RVUs prior to the application of work budget neutrality (75 FR 73331). For CPT code 43333 we assigned a pre-budget neutrality work RVU of 29.10 and for CPT code 43335 we assigned a pre-budget neutrality work RVU of 32.50. We arrived at these values by starting with the AMA RUC-recommended values for the repair of papaesophageal hernia without mesh, CPT codes 43332 (Repair, paraesophageal hiatal hernia (including fundoplication), via laparotomy, except neonatal; without implantation of mesh or other prosthesis) and 43334 (Repair, paraesophageal hiatal hernia (including fundoplication), via thoracotomy, except neonatal; without implantation of mesh or other prosthesis) then adjusted them upward by a work RVU of 2.50 to account for the incremental difference associated with the implantation of mesh or other prosthesis. The AMA RUC recommended a work RVU of 30.00 for CPT code 43333 and a work RVU of 33.00 for CPT 43335 for CY 2011.

Comment: Commenters disagreed with the application of work budget neutrality to this set of services and noted that the specialty societies and AMA RUC agreed that there was compelling evidence that technology has changed the physician work to repair esophageal hernias. Commenters stated that the work described by the deleted CPT codes was intended for patients with acid reflux or blockage and that, with the advent of medical management and less invasive treatments, the patients' currently undergoing surgery are symptomatic, typically with blockage. They stated that the typical patient has more advanced disease and requires more complex repair. Commenters also stated that the CY 2011 interim final values would create rank order anomalies between these CPT codes and other major inpatient surgical procedures.

With regard to CPT codes 43333 and 43335, commenters disagreed with the CMS-assigned pre-budget neutrality work RVU of 29.10 for CPT code 43333 and 32.50 for CPT code 43335, and believe that the AMA RUC-recommended work RVUs of 30.00 for CPT code 43333 and 33.00 for CPT code 43335 are more appropriate for these services. Commenters noted that CMS adjusted the AMA RUC-recommended values for CPT codes 43333 and 43335 by 2.50 work RVUs, an increment established in the AMA RUC's valuation of CPT codes 43336 and 43337. In other words CMS added 2.50 work RVUs to the AMA RUC-recommended work RVUs of 26.60 for CPT code 43332, which resulted in a value of 29.10 for CPT code 43333. Also, CMS added 2.50 work RVUs to the AMA RUC-recommended work RVUs of 30.00 for CPT code 43334, which resulted in a value of 32.50 for CPT code 43335. Commenters disagreed with this method because CMS' interim values were not supported by the survey results or AMA RUC recommendations. Commenters note that the AMA RUC recommendations were based on magnitude estimation rather than the building block methodology, which considers the total work of the service rather than the work of the component parts of the service. Commenters did not agree with adding component parts on to values that were based through magnitude estimation. Commenters asserted that these,services should be valued through magnitude estimation, rather than incremental addition of work RVUs of 2.50 in order to account for both the work related to inserting mesh, as well as other patient factors that in turn make the insertion of mesh necessary. Based on these arguments, commenters stated that work budget neutrality should not be applied to these codes, and urged CMS to accept the AMA RUC-recommended values for these services.

Response: Based on comments received, we referred this set of paraesophageal hernia procedures (CPT codes 43283, 43327-43328, and 43332-43338) to the CY 2011 multi-specialty refinement panel for further review. Though the refinement panel median work RVUs were work RVUs of 30.00 for CPT code 43333 and 33.00 for CPT 43335, which were consistent with the AMA RUC-recommended values for these services. We continue to believe that the application of work budget neutrality is appropriate for this set of clinically related CPT codes. While we understand that the practice of medicine has changed since these codes were originally valued, we do not believe these changes have resulted in more aggregate physician work. As such, we believe that allowing an increase in utilization-weighted RVUs within this set of clinically related CPT codes would be unjustifiably redistributive among PFS services. Additionally, we continue to believe that a work RVU of 2.50, which was based on a differential that was recommended by the AMA RUC between a pair of with/without implantation of mesh codes in this family, appropriately accounts for the incremental difference in work between CPT codes 43332 and 43333, and 43334 and 43335. After consideration of the public comments, refinement panel results, and our clinical review, we are finalizing the CY 2011 interim final work RVU values for paraesophageal hernia procedures (CPT codes 43283, 43327-43328, and 43332-43338) for CY 2012. The CY 2012 final work RVUs for these services are as follows:

Additionally, we received no public comments on the Fourth Five-Year Review proposed work RVUs for CPT code 43415. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(16) Digestive: Rectum (CPT code 45331)

As detailed in the Fourth Five-Year Review, for CPT code 45331 (Sigmoidoscopy, flexible; with biopsy, single or multiple) we believed that the current (CY 2011) work RVUs continued to accurately reflect the work of these services and, therefore, proposed a work RVU of 1.15 for CPT code 45331. The AMA RUC recommended maintaining the current work RVUs for this service as well. For CPT code 45331, the AMA RUC recommended a pre-service time of 15 minutes, intra-service time of 15 minutes, and post-service time of 10 minutes. While the AMA RUC recommended pre-service times based on the 75th percentile of the survey results, we believed it was more appropriate to accept the median survey physician times. Accordingly, we proposed to refine the times to the following: 5 minutes for pre-evaluation; 5 minutes for pre-service other, 5 minutes for pre- dress, scrub, and wait; 10 minutes intra-service; and 10 minutes immediate post-service (76 FR 32448).

Comment: In its public comment to CMS on the Fourth Five-Year Review, the AMA RUC wrote that CMS agreed with the AMA RUC recommended work RVU, but noted that CMS disagreed with the AMA RUC recommended time components. The commenters further noted that CMS proposed to use the median survey time for CPT code 45331. The AMA RUC recommends that CMS accept the AMA RUC recommended intra-service time of 15 minutes for CPT code 45331.

Response: In response to comments, we re-reviewed CPT code 45331. After reviewing the descriptions of pre-service work and the recommended pre-service time packages, we disagree with the times recommended by the AMA RUC. For CPT code 45331 we are finalizing a work RVU of 1.15. In addition, we are finalizing the following times for CPT code 45331: 5 minutes for pre-evaluation; 5 minutes for pre-service other, 5 minutes for pre- dress, scrub, and wait; 10 minutes intra-service; and 10 minutes immediate post-service. CMS time refinements can be found in Table 16.

(17) Digestive: Biliary Tract (CPT Codes 47480, 47490, 47563, and 47564)

In the Fourth Five-Year Review, CMS identified CPT code 47563 as potentially misvalued through the Harvard Valued—Utilization > 30,000 screen and site-of-service anomaly screen. The AMA RUC reviewed CPT codes 47564 and 47563.

As detailed in the Fourth Five-Year Review (76 FR 32448), for CPT code 47563 (Laparoscopy, surgical; cholecystectomy with cholangiography), we proposed a work RVU of 11.47 with refinements in time for CPT code 47563 for CY 2012. The survey data show 95 percent (57 out of 60) of survey respondents stated they furnish the procedure “in the hospital.” However, of those respondents who stated that they typically furnish the procedure in the hospital, 30 percent (17 out of 57) stated that the patient is “discharged the same day”; 46 percent (26 out of 57) stated the patient is “kept overnight (less than 24 hours)”; and 25 percent (14 out of 57) stated the patient is “admitted (more than 24 hours).” These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. Based on the survey data, we valued this service based on our methodology to address 23-hour stay site-of-service anomaly services.

As we discussed in section III.A. of this final rule with comment period, for codes with site-of-service anomalies, our policy is to remove any post-procedure inpatient visits remaining in the values for these codes and adjust physician times accordingly. It is also our policy for codes with site-of-service anomalies to consistently include the value of half of a discharge day management service, adjusting physician times accordingly. The AMA RUC recommended that this service be valued as a service furnished predominately in the facility setting with a work RVU of 12.11 for CPT code 47563 (76 FR 32448).

Comment: Commenters disagreed with the proposed work RVU of 11.47, and supported the AMA RUC-recommended work RVU of 12.11 for CPT code 47563. Commenters disagreed with CMS' methodology to address 23-hour stay site-of-service anomaly services of removing half of a discharge day management service. Commenters noted the change in physician work in the past five years; specifically, a more complex patient population. Commenters also stated that the physician's discharge work remains the same, independent of facility status. Commenters stated that CPT code 47563 is more intense and has a higher intra-service time than the key reference code 47562 (Laparoscopy, surgical; cholecystectomy), and cautioned against a rank order anomaly within the family with CPT code 47562 (work RVU = 11.76). Commenters requested that CMS accept the AMA RUC-recommended work RVU of 12.11 and include a full day discharge service for CPT code 47563.

Response: Based on the comments we received, we referred CPT code 47563 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 12.11, which was consistent with the AMA RUC recommendation and the current (CY 2011) work RVU. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this 23-hour stay service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are finalizing a work RVU of 11.47 to CPT code 47563. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review (76 FR 32449), for CPT code 47564 (Laparoscopy, surgical; cholecystectomy with exploration of common duct), we proposed a work RVU of 18.00, the survey low work RVU, for CY 2012. We accepted the AMA RUC-recommended median survey times and believed the work RVU of 18.00 for CPT code 35860 was more appropriate given the significant reduction in recommended physician times in comparison to the current times. The AMA RUC recommended a work RVU of 20.00, the 25th survey percentile, for CPT code 47564.

Comment: Commenters disagreed with the proposed work RVU of 18.00, and supported the AMA RUC-recommended work RVU of 20.00 for CPT code 47564. Commenters disagreed with CMS' acceptance of the survey low, while the AMA RUC recommended the 25th survey percentile. Commenters noted that the physician times for CPT code 47564 were crosswalked in 1994 and were not accurate. Therefore, they state that reducing the work value based on the reduction in physician time is not appropriate.

Response: Based on comments we received, we referred CPT code 47564 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 20.00, which was consistent with the AMA RUC recommendation for this service. We find that the median survey times, recommended by the AMA RUC, do not support the AMA RUC-recommended increase in work RVUs. We believe that the proposed work RVU is more appropriate with the AMA RUC-recommended physician times that we accepted. After consideration of the public comments, refinement panel results, and our clinical review, we are finalizing a work RVU of 18.00 for CPT code 47564. CMS time refinements can be found in Table 16.

For CY 2012, we received no comments on the Fourth Five-Year Review proposed work RVUs for CPT codes 47480 and 47490. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(18) Digestive: Abdomen, Peritoneum, and Omentum (CPT codes 49324-49655)

We discussed CPT codes 49507 (Repair initial inguinal hernia, age 5 years or over; incarcerated or strangulated), 49521 (Repair recurrent inguinal hernia, any age; incarcerated or strangulated), and 49587 (Repair umbilical hernia, age 5 years or over; incarcerated or strangulated) in the Fourth Five-Year Review (76 FR 32449) where we noted these codes were identified as codes with a site-of- service anomaly. Medicare PFS claims data indicated that these codes are typically furnished in an outpatient setting. However, the current and AMA RUC-recommended values for these codes reflected work that is typically associated with an inpatient service. As discussed in section III.A. of this final rule with comment period, our policy is to remove any post-procedure inpatient and subsequent observation care visits remaining in the values for these codes and adjust physician times accordingly. It is also our policy for codes with site-of- service anomalies to consistently include the value of half of a discharge day management service. While the AMA RUC recommended maintaining the current work RVUs, utilizing our methodology, we proposed an alternative work RVU of 9.09 for CPT code 49507, 11.48 for CPT code 49521, and 7.08 for CPT code 49587, with appropriate refinements to the time.

Comment: Commenters disagreed with the CMS-proposed work RVU for CPT codes 49507 49521, and 49587. The commenters noted that for these three hernia repair codes, the AMA RUC survey data show 98-100 percent of survey respondents stated they furnish the procedure “in the hospital.” Commenters disagreed with CMS' use of the reverse building block methodology, which removed the subsequent observation care code and reduced the full hospital discharge day management code to a half day, along with the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time. Commenters requested that CMS reconsider this issue and accept the AMA RUC recommended work RVU as a valid relative measure using magnitude estimation and comparison to codes with similar work and intensity.

Response: Based on comments received, we referred CPT codes 49507, 49521, and 49587 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVUs were 10.05 for CPT code 49507, 12.44 for CPT code 49521, and 8.04 for CPT code 49587, which was consistent with the AMA RUC recommendation to maintain the current (CY 2011) work RVU for this service. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. While the commenter noted that the survey respondents overwhelmingly indicated that they furnish this procedure “in the hospital,” the Medicare claims data show these patients are typically in the hospital as outpatients, not inpatients and we do not believe that maintaining the current value, which reflects work that is typically associated with an inpatient service, is appropriate. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU for CY 2012 of 9.09 for CPT code 49507, 11.48 for CPT code 49521, and 7.08 for CPT code 49587, with appropriate refinements to the time. CMS time refinements can be found in Table 16.

We discussed CPT code 49652 (Laparoscopy, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); reducible), CPT code 49653 (Laparoscopy, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); incarcerated or strangulated), CPT code 49654 (Laparoscopy, surgical, repair, incisional hernia (includes mesh insertion, when performed); reducible), and CPT code 49655 (Laparoscopy, surgical, repair, incisional hernia (includes mesh insertion, when performed)) in the Fourth Five-Year Review of Work (76 FR 32450-32452) where we noted these codes were identified as codes with a sites-of-services anomaly. Medicare PFS claims data indicated that these codes are typically furnished in an outpatient setting. However, the current and AMA RUC-recommended values for these codes reflected work that is typically associated with an inpatient service. As discussed in section III.A. of this final rule with comment period, our policy is to remove any post-procedure inpatient and subsequent observation care visits remaining in the values for these codes and adjust physician times accordingly. It is also our policy for codes with site-of-service anomalies to consistently include the value of half of a discharge day management service. While the AMA RUC recommended maintaining the current work RVUs, utilizing our methodology, we proposed an alternative work RVU of 11.92 with refinements to the time for CPT code 49652, 14.92 with refinements to the time for CPT code 49653, 13.76 with refinements to the time for CPT code 49654, and 16.84 with refinements to the time for CPT code 49655.

Comment: Commenters disagreed with the CMS-proposed work RVU for CPT codes 49652, 49653, 49654, and 49655. Commenters noted that similar to the three hernia repair codes previously discussed, the AMA RUC survey data show 98-100 percent of survey respondents stated they furnish these laparoscopic hernia repair procedures “in the hospital.” Commenters disagreed with CMS' use of the reverse building block methodology, which removed the subsequent observation care codes and reduced the full hospital discharge day management code to a half day, along with the associated work RVUs and times. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time. Commenters also contended the surgeon's post-operative work has not changed and has not become easier because of a change in facility designation. Commenters requested that CMS reconsider this issue and accept the AMA RUC recommended work RVU as a valid relative measure using magnitude estimation and comparison to codes with similar work and intensity.

Response: Based on comments received, we referred CPT codes 49652, 49653, 49654, and 49655 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVUs were 12.88, 16.21, 15.03, and 18.11 for CPT codes 49652, 49653, 49654, and 49655, respectively, which were consistent with the AMA RUC recommendation to maintain the current work RVUs for this services. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. We note again that while survey respondents overwhelmingly indicated that they furnish these procedures “in the hospital,” the Medicare claims data show these patients are typically in the hospital as outpatients, not inpatients and we do not believe that maintaining the current value, which reflects work that is typically associated with an inpatient service, is appropriate. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU for CY 2012 of 11.92 with refinements to the time for CPT code 49652, 14.92 with refinements to the time for CPT code 49653, 13.76 with refinements to the time for CPT code 49654, and 16.84 with refinements to the time for CPT code 49655.

For CY 2012, we received no public comments on the CY 2011 interim final work RVUs for CPT codes 49324, 49327, 49412, 49418, 49419, 49421, and 49422. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(19) Urinary System: Bladder (CPT Codes 51705-53860)

As detailed in the Fourth Five-Year Review, for CPT code 51710 (Change of cystostomy tube; complicated), we agreed with the AMA RUC-recommended work RVU, and proposed a work RVU of 1.35 for CY 2012. The AMA RUC noted that a request was sent to CMS to have the global service period changed from a 10-day global period (010) to a 0-day global period (000), which only includes RVUs for the same day pre- and post-operative period. The AMA RUC indicated that in the standards of care for this procedure, there is no hospital time and there are no follow up visits. The AMA RUC also noted that while the service was surveyed as a 10-day global, the respondents inadvertently included a hospital visit, CPT code 99231 (Subsequent hospital care), and removed the RVUs for that visit.

Consequently, the AMA RUC did not use the survey results to value the code. Rather, comparing the physician work within the family of services, the AMA RUC compared CPT code 51710 to CPT code 51705 (Change of cystostomy tube; simple) and recommended a work RVU of 1.35 for CPT code 51710.

We agreed to change the global period from a 10-day global to 0-day global. However, we noted that while we believed that changing a cystostomy tube in a complicated patient may be more time consuming than in a patient that requires a simple cystostomy tube change, we believed that the prepositioning time is unnecessarily high given the recommended pre-positioning time of 5 minutes for CPT code 51705, which has an identical pre-positioning work description. Hence, we proposed refinements in time for CPT code 51710 for CY 2012 (76 FR 32452).

Comment: In their public comment to CMS on the Fourth Five-Year Review, the AMA RUC wrote that CMS agreed with the AMA RUC recommended work RVU and the request to change the global period from a 10-day global to 0-day global period. Commenters disagreed with CMS that the pre-service positioning time is identical between codes 51710 and 51705. Commenters also state that the service does require more time for positioning since many times patients must be transferred from a wheelchair to an examination table. Lastly, commenters recommend that CMS accept the AMA RUC-recommended pre-service positioning time of 10 minutes for CPT code 51710.

Response: In response to comments, we re-reviewed CPT code 51710. After reviewing the descriptions of pre-service work and the recommended pre-service time packages, we continue to disagree with the times recommended by the AMA RUC. We believe that the prepositioning time is unnecessarily high given the recommended pre-positioning time of 5 minutes for CPT code 51705, which has an identical pre-positioning work description. For CPT code 51710, we are finalizing a work RVU of 1.35. In addition, we are finalizing the following times for CPT code 51710: 7 minutes for pre-evaluation; 5 minutes for pre-service positioning, 15 minutes for intra-service; and 15 minutes post-service. CMS time refinements can be found in Table 16.

CPT codes 52281 (Cystourethroscopy, with calibration and/or dilation of urethral stricture or stenosis, with or without meatotomy, with or without injection procedure for cystography, male or female) and 52332 (Cystourethroscopy, with insertion of indwelling ureteral stent (e.g., Gibbons or double-J type)) were identified as a potentially misvalued code through the Five-Year Review Identification Workgroup under the Harvard-Valued potentially misvalued codes screen for services with utilization over 100,000.

As detailed in the CY 2011 final rule with comment period (75 FR 73339), for CPT code 52281, we assigned an interim final work RVU of 2.60. The AMA RUC reviewed the survey results and determined that the physician time of 16 minutes pre-, 20 minutes intra-, and 10 minutes immediate post-service time and maintaining the current work RVUs of 2.80 appropriately accounted for the time and work required to furnish this procedure. We disagreed with the AMA RUC recommendation to maintain the current RVUs for this code because the physician time to furnish this service (a building block of the code) has changed since the original “Harvard values” were established, as indicated by the AMA RUC-recommended reduction in pre-service time. Accounting for the reduction in pre-service time, we calculated work RVUs that were close to the survey 25th percentile.

Comment: Commenters disagreed with the interim final work RVU of 2.60. Commenters acknowledged that CPT code 52281 had significant reductions to the pre-service times. However, commenters stated that the work for this service had not changed. Commenters asserted that because this service was valued using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, it is not appropriate to remove RVUs based on time (a building block of the code). For CPT code, commenters requested that CMS accept the AMA RUC-recommended work RVU of 2.80.

Response: Based on the comments received, we referred CPT code 52281 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 2.75. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 2.75 to CPT code 52281 as the final value for CY 2012.

As detailed in the CY 2011 final rule with comment period (75 FR 73339), for CPT code 52332, we assigned an interim final work RVU of 2.60. We disagreed with the AMA RUC's CY 2011 work RVU recommendation to maintain the current value due significant reduction in pre-service time. Based on the same building block rationale we applied to CPT code 52281, the other code within this family, we believed 2.60, which is the survey 25th percentile and maintains rank order, was a more appropriate valuation for 52332.

Comment: Commenters believed that CMS made a mistake on the valuation for code 52332 in the CY 2011 PFS final rule with comment period. The information in the final rule with comment period prior to correction stated that the 25th percentile work RVU was 1.47. The commenters noted that the RUC states that the 25th percentile is 3.20 not 1.47 as stated in the final rule. Additionally, the commenters stated that if CMS maintains the 1.47 work RVU, then 52332 will have less value than cystoscopy (52000) at 2.23 work RVUs. Moreover, commenters stated that the procedure identified as 52332 is a more intense procedure than 52000.

Commenters also acknowledged that CPT code 52332 had significant reductions to the pre-service times. However, commenters stated that the work for this service had not changed. Commenters asserted that because this service was valued using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, it is not appropriate to remove RVUs based on time (a building block of the code). For CPT code, commenters requested that CMS accept the AMA RUC-recommended work RVU of 2.83.

Response: We corrected a typographical error in the CY 2011 PFS final rule with comment period that improperly valued the work RVU for CPT code 52332 at 1.47, instead of the interim final work RVU of 2.60 for CY 2011 (76 FR 1673). Based on the comments received, we referred CPT code 52332 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 2.82. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 2.82 for CPT code 52332 as the final value for CY 2012.

In the Fourth Five-Year Review, we identified CPT codes 51705, 52005 and 52310 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. CPT codes 51710, 52007 and 52315 were added as part of the family of services for AMA RUC review. In addition, we identified CPT codes 52630, 52649, 53440 and 57288 as potentially misvalued through the site-of-service anomaly screen. The specialty agreed to add CPT codes 52640 and 57287 as part of the family of services for AMA RUC review.

As detailed in the Fourth Five-Year Review of Work (76 FR 32452), for CPT code 52630 (Transurethral resection; residual or regrowth of obstructive prostate tissue including control of postoperative bleeding, complete (vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, and internalurethrotomy are included)), we proposed a work RVU of 6.55 for CY 2012. Medicare PFS claims data indicated that CPT code 52630 is typically furnished in an outpatient setting. However, the current AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 52630, we removed the post procedure inpatient visit remaining in the AMA RUC-recommended value and adjusted the physician times accordingly. We also reduced the discharge day management service by one-half. The AMA RUC recommended maintaining the current work RVU of 7.73 for CPT code 52630.

Comment: Commenters disagreed with the CMS-proposed work RVU of 6.55 for CPT code 52630 and believe that the AMA RUC-recommended work RVU of 7.73 is more appropriate for this service. The commenters disagreed with CMS' reduction to half of a discharge day management service. Furthermore, commenters stated that one full discharge day management code (either 99238 or 99217 1.28 RVU) should be included in the valuation of 52630. The commenters asserted that there was not appropriate justification for CMS to remove 0.64 work RVUs from the RUC's recommendation to reduce the full day of discharge management services to one-half day. Commenters also stated that the AMA RUC-recommended physician time should be restored.

Response: Based on comments received, we referred CPT code 52630 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 7.14. The AMA RUC recommended maintaining the current (CY 2011) work RVU of 7.73. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not adequately reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 6.55 to CPT code 52630 as the final value for CY 2012. Therefore, we are finalizing a pre-service time of 33 minutes, a pre-service positioning time of 5 minutes, a pre-service (dress, scrub, wait) time of 15 minutes, an intra-service time of 60 minutes, and a post-service time of 35 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 52630. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work (76 FR 32453), for CPT code 52649 (Laser enucleation of the prostate with morcellation, including control of postoperative bleeding, complete (vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, internal urethrotomy and transurethral resection of prostate are included if performed)), we proposed a work RVU of 14.56 for CY 2012. Medicare PFS claims data indicated that CPT code 52649 is typically furnished in an outpatient setting. However, the current AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, CPT code 52649, we reduced the discharge day management service to one-half and adjusted the physician times accordingly. The AMA RUC recommended a work RVU of 15.20 for CPT code 52649.

Comment: Commenters disagreed with the CMS proposed work RVU of 14.56 for CPT code 52649 and believe that the AMA RUC-recommended work RVU of 15.20 is more appropriate for this service. In addition, the commenters disagreed that a half-day of discharge management services is appropriate for this code. The commenters support the utilization of a full discharge day that takes into account the time the physician spends returning to the hospital later that night or the next morning to review charts, furnish an examination of the patient, check on post-operative status, speak with the patient's family, and provide any subsequent discharge services that usually require more than 30 minutes. Commenters also stated that the AMA RUC physician time should be restored.

Response: Based on comments received, we referred CPT code 52649 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 14.88. The AMA RUC recommendation for this service was a work RVU of 15.20. The AMA RUC-recommended work value for this service included a full discharge day management service, which we do not believe is appropriate for an outpatient service. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. The AMA RUC-recommendation and refinement panel results do not adequately reflect the appropriate decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 14.56 to CPT code 52649 as the final value for CY 2012. In addition, we are finalizing a pre-service time of 33 minutes, a pre-service positioning time of 5 minutes, a pre-service (dress, scrub, wait) time of 15 minutes, an intra-service time of 120 minutes, and a post-service time of 25 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 52649. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work (76 FR 32453), for CPT code 53440 (Sling operation for correction of male urinary incontinence (e.g., fascia or synthetic)), we proposed a work RVU of 13.36 for CY 2012. Medicare PFS claims data indicated that CPT code 53440 is typically furnished in a hospital setting as an outpatient service. However, the current AMA RUC-recommended values for this code reflected work that is typically associated with an inpatient service. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 53440, we reduced the discharge day management service to one-half. The AMA RUC recommended a work RVU of 14.00 for CPT code 53440.

Comment: Commenters disagreed with the CMS proposed work RVU of 13.36 for CPT code 53440 and believe that the AMA RUC-recommended work RVU of 14.00 is more appropriate for this service. In addition, the commenters disagreed that a half-day of discharge management services is appropriate for this code. The commenters support the utilization of a full discharge day that takes into account the time the physician spends returning to the hospital later that night or the next morning to review charts, furnish an examination of the patient, check on post-op status, speak with the patient's family, and provide any subsequent discharge services that usually require more than 30 minutes. Commenters also stated that the AMA RUC-recommended physician time should be restored.

Response: Based on comments received, we referred CPT code 53440 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 13.68. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not adequately reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU of 13.36 to CPT code 53440 as the final value for CY 2012. In addition, we are finalizing a pre-service time of 33 minutes, a pre-service positioning time of 7 minutes, a pre-service (dress, scrub, wait) time of 15 minutes, an intra-service time of 90 minutes, and a post-service time of 22 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 53440. CMS time refinements can be found in Table 16.

For CY 2009, CPT code 53445 (Insertion of inflatable urethral/bladder neck sphincter, including placement of pump, reservoir, and cuff) was identified as potentially misvalued through the site-of-service anomaly screen. As detailed in the CY 2012 PFS proposed rule (76 FR 42799), we proposed a work RVU of 13.00 for CY 2012. Medicare PFS claims data indicated that CPT code 53445 is typically furnished in a hospital setting as an outpatient service. Upon clinical review of this service and the time and visits associated with it, we believe that the survey 25th percentile work RVU of 13.00 appropriately accounts for the work required to furnish this service (76 F42800).

Comment: Commenters disagreed with the CMS-proposed work RVU of 13.00 for CPT code 53445 and stated that a work RVU of 15.39 is more appropriate for this service. Some commenters opposed the reduction in RVUs for this service and our utilization of a reverse building block methodology. Additionally, some commenters expressed concerns regarding the use of the 25th percentile in the CMS and whether this methodology accounts for the resources required to furnish this service. However, the AMA RUC clarified that the AMA RUC recommendation was misstated in the proposed rule due to an error, and that the AMA RUC-recommended work RVU is 13.00 for CPT 53445.

Response: We agree with the AMA RUC that the 25th percentile value of 13.00 work RVUs is appropriate for this service. Therefore, we are finalizing a work RVU of 13.00 for CPT code 53445 for CY 2012.

For CY 2012, we received no public comments on the CY 2011 interim final work RVUs for CPT codes 50250, 50542, 51736, 51741, 53860, 55866, and 55876. Also, for CY 2012, we received no public comments on the CY 2012 proposed work RVUs for CPT codes 52341, 52342, 52343, 52344, 52345, 52346, 52400, 52500, 54410, and 54530. Finally, for CY 2012, we received no public comments on the Fourth Five-Year Review proposed work RVUs for CPT codes 51705, 52005, 52007, 52310, 52315, and 52640. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(20) Female Genital System: Vagina (CPT Codes 57155-57288)

We discussed CPT code 57155 (Insertion of uterine tandems and/or vaginal ovoids for clinical brachytherapy) in the CY 2011 PFS final rule with comment period (75 FR 73330). For CY 2011, the AMA RUC reviewed survey responses, concluded that the survey median work RVU appropriately accounts for the physician work required to furnish this service, and recommended a work RVU of 5.40 for CPT code 57155. We disagreed with the AMA RUC-recommended value for this service because the description of the AMA RUC's methodology was unclear to us. We believed the work RVU of 3.37 was more appropriate for this service, which is the same as the value assigned to CPT code 58823 (Drainage of pelvic abscess, transvaginal or transrectal approach, percutaneous (e.g., ovarian, pericolic)), which we believed was an appropriate crosswalk. Therefore, we assigned an alternative work RVU of 3.37 to CPT code 57155 on an interim final basis for CY 2011.

Comment: Commenters disagreed with this proposed value. Commenters did not believe comparison of CPT code 57155 to CPT code 58823 was acceptable, asserting CPT code 57155 is a much higher intensity procedure that is not clinically parallel in work or intensity to CPT code 58823. Commenters stated that they preferred CMS accept the AMA RUC recommendation.

Response: Based on the comments received, we referred CPT code 57155 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 5.40. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 5.40 to CPT code 57155 as the final value for CY 2012.

We discussed CPT code 57156 (Insertion of a vaginal radiation afterloading apparatus for clinical brachytherapy) in the CY 2011 PFS final rule with comment period (75 FR 73330). For CY 2011, the AMA RUC reviewed survey responses, concluded that the survey 25th work RVU appropriately accounts for the physician work required to furnish this service, and recommended a work RVU of 2.69. We disagreed with the AMA RUC's valuation of the work associated with this service and determined it was more appropriate to crosswalk CPT code 57156 to CPT code 62319 (Injection, including catheter placement, continuous infusion or intermittent bolus, not including neurolytic substances, with or without contrast (for either localization or epidurography), of diagnostic or therapeutic substance(s) (including anesthetic, antispasmodic, opioid, steroid, other solution), epidural or subarachnoid; lumbar, sacral (caudal)) (work RVUs = 1.87), which has the same intra-service time (30 minutes) and overall lower total time than the comparison services referenced by the AMA RUC. We assigned an alternative value of 1.87 work RVUs to CPT code 57156 on an interim final basis for CY 2011.

Comment: The commenters disagreed with interim final value, noting the AMA RUC recommended the survey 25th percentile value which the commenters preferred over CMS' crosswalk. The commenters requested that CMS accept the AMA RUC recommendation.

Response: Based on the comments received, we referred CPT code 57156 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 2.69. As a result of the refinement panel ratings and clinical review by CMS, we are assigning a work RVU of 2.69 to CPT code 57156 as the final value for CY 2012.

Additionally, we note there were two other codes in the Female Genital System: Vagina family for which we agreed with the AMA RUC recommendations. We received no public comments on CPT codes 57287 (Revise/remove sling repair) and 57288 (Repair bladder defect). For CY 2012, we received no public comments on the Fourth Five-Year Review of Work proposed work RVUs for CPT codes 57287 and 57288. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(21) Maternity Care and Delivery (CPT Codes 59400-59410, 59510-59515, and 59610-59622)

CPT codes 54900-59622 were identified as potentially misvalued codes “High IWPUT” screen. The specialty societies surveyed their members, and the AMA RUC issued recommendations to us for the CY 2011 PFS final rule with comment period.

As stated in the CY 2011 PFS final rule with comment period (75 FR 73338), for CY 2011 the AMA RUC reviewed 17 existing obstetrical care codes as part of the potentially misvalued code initiative. The AMA RUC recommended significant increases in the work RVUs for some of the comprehensive obstetrical care codes, largely to address the management of labor. While we generally agreed with the resulting AMA RUC-recommended rank order of services in this family, we believed that the aggregate increase in work RVUs for the obstetrical services that would result from the adoption of the CMS-adjusted pre-budget neutrality work RVUs was not indicative of a true increase in physician work for the services. Therefore, we believed that it would be appropriate to apply work budget neutrality to this set of CPT codes. After reviewing the AMA RUC-recommended work RVUs, we adjusted the work RVUs for several codes, then applied work budget neutrality to the set of clinically related CPT codes. The work budget neutrality factor for the 17 obstetrical care CPT codes was 0.8922. The AMA RUC-recommended work RVU, CMS-adjusted work RVU prior to the budget neutrality adjustment, and the CY 2011 interim final work RVU for obstetrical care codes (CPT codes 59400-59410, 59510-59515, and 59610-59622) follow.

As mentioned previously, and detailed in the CY 2011 PFS final rule with comment period, we disagreed with the AMA RUC-recommended work RVUs for a subset of the obstetrical care CPT codes, and assigned alternate RVUs prior to the application of work budget neutrality (75 FR 73340). For obstetrical care services that include postpartum care with delivery, the AMA RUC included one CPT code 99214 visit (Level 4 established patient office or other outpatient visit). We believed that one CPT code 99213 visit (Level 3 established patient office or other outpatient visit) more accurately reflected the services furnished at this postpartum care visit. Therefore, for the obstetrical care services that include postpartum care following delivery, we converted the CPT code 99214 visit to a 99213 visit and revised the work RVUs accordingly. This includes the following CPT codes: 59400 (Routine obstetric care including antepartum care, vaginal delivery (with or without episiotomy, and/or forceps) and postpartum care), 59410 (Vaginal delivery only (with or without episiotomy and/or forceps); including postpartum care), 59510 (Routine obstetric care including antepartum care, cesarean delivery, and postpartum care), 59515 (Cesarean delivery only; including postpartum care), 59610 (Routine obstetric care including antepartum care, vaginal delivery (with or without episiotomy, and/or forceps) and postpartum care, after previous cesarean delivery), 59614 (Vaginal delivery only, after previous cesarean delivery (with or without episiotomy and/or forceps); including postpartum care), 59618 (Routine obstetric care including antepartum care, cesarean delivery, and postpartum care, following attempted vaginal delivery after previous cesarean delivery), and 59622 (Cesarean delivery only, following attempted vaginal delivery after previous cesarean delivery; including postpartum care).

Comment: Commenters disagreed with the application of work budget neutrality to this set of services and noted that the specialty societies and AMA RUC agreed that there was compelling evidence that the work RVUs for these services should be increased. Commenters stated that the original work RVUs for the obstetrical care codes were established using a flawed building block methodology, and that discharge day management was not accounted for. Commenters also stated that the original building blocks that were used to develop RVUs for the obstetrical care codes included evaluation and management codes, and that the RVUs for these obstetrical care codes had not been increased though the evaluation and management codes have had significant RVU increases in the past 17 years. Based on these arguments, commenters stated that work budget neutrality should not be applied to these codes, and urged CMS to accept the AMA RUC-recommended values for these services.

Additionally, commenters disagreed with the CMS decision to change the post-partum visit building block from a CPT code 99214 office visit to a CPT code 99213 office visit. Commenters noted that the post-partum visit includes not only a post-procedure physical exam, but also counseling and screening. They reiterated that they believe the CPT code 99214 office visit best reflects the amount of services provided by the physician at this visit. Therefore, commenters requested that CMS accept the AMA RUC-recommended values for all of the obstetrical care services.

Response: We appreciate the specialty society's comprehensive application of the building block methodology to value the obstetrical care services and the detailed rationale they provided. After clinical review, we continue to believe that CPT code 99213, rather than CPT code 99214, accurately reflects the work associated with the provision of the post-partum office visit, and are maintaining the CMS-adjusted pre-budget neutrality RVUs for these services. After reviewing public comments and the history of the valuation of the obstetrical care CPT codes, we agree with commenters that the increase in work RVUs reflects a true increase in aggregate work for this set of service, and not just a structural coding change. As such, we are not applying the budget neutrality scaling factor of 0.8922 discussed in the CY 2011 PFS final rule with comment period for these obstetrical care services. After consideration of the public comments, refinement panel results, and our clinical review, we are finalizing the following values for obstetrical care services (CPT codes 59400-59410, 59510-59515, and 59610-59622) for CY 2012:

(22) Endocrine System: Thyroid Gland (CPT Codes 60220-60240)

In the Fourth Five-Year Review, we identified CPT codes 60220, 60240, and 60500 as potentially misvalued through the sites-of-service anomaly screen. The related specialty societies surveyed these codes and the AMA RUC issued recommendations to CMS for the Fourth Five-Year Review of Work.

As detailed in the Fourth Five-Year Review of Work (76 FR 32453), for CPT code 60220 (Total thyroid lobectomy, unilateral; with or without isthmusectomy), we proposed a work RVU of 11.19 for CY 2012. Medicare PFS claims data indicated that CPT code 60220 is typically furnished as an outpatient rather than inpatient service. However, the AMA RUC recommended that this service be valued as a service furnished predominately in the facility setting. The AMA RUC indicated that since the typical patient is kept overnight, the AMA RUC believes that one inpatient hospital visit as well as one discharge day management service should be maintained in the post operative visits for this service. Using magnitude estimation, the AMA RUC recommended the current work RVU of 12.37 for CPT code 60220. In accordance with our methodology to address 23-hour stay and site-of-service anomalies described in III.A. of this final rule with comment period, for CPT code 60220, we removed the hospital visit, reduced the discharge day management service by one-half, and adjusted times.

Comment: Commenters disagreed with the CMS-proposed work RVU of 11.19 for CPT code 60220 and believe that that AMA RUC recommended work RVU is more appropriate for this service. Commenters noted that the CMS value was derived from the reverse building block methodology, which removed the subsequent hospital care code and reduced the full hospital discharge day management code to a half day. Commenters also stated that our reverse building block methodology is incorrect because Harvard did not use RVU's for E/M codes to build the values-minutes were used. Commenters recommended maintaining the current work RVU of 12.37 for CPT code 60220. Commenters also stated that the AMA RUC-recommended physician time should be restored.

Response: Based on the public comments received, we referred CPT 60220 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 12.37, which is consistent with the AMA RUC recommendation to maintain the current (CY 2011) work RVU for CPT code 60220. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this now outpatient service to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. Therefore, we are finalizing a work RVU for CPT code 60220 of 11.19. In addition, after reviewing the descriptions of the AMA RUC-recommended time packages, we disagree with the post-service time recommended by the AMA RUC. Therefore, we are finalizing a pre-service time of 40 minutes, a pre-service positioning time of 12 minutes, a pre-service (dress, scrub, wait) time of 20 minutes, an intra-service time of 90 minutes, and a post-service time of 40 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 60220. CMS time refinements can be found in Table 16.

As detailed in the Fourth Five-Year Review of Work (76 FR 32454), for CPT code 60240 (Thyroidectomy, total or complete), we proposed a work RVU of 15.04 for CY 2012. Medicare PFS claims data indicated that CPT code 60240 is typically furnished as an outpatient rather than inpatient service. Using magnitude estimation, the AMA RUC believed the current work RVU of 16.22 for CPT code 60240 was appropriate. However, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 60240, we removed the post-procedure inpatient visit and reduced the discharge day management service to one-half. The AMA RUC recommended maintaining the current work RVU of 16.22 for CPT code 60240.

Comment: Commenters disagreed with the CMS-proposed work RVU of 15.04 of CPT code 60240 and believe that the AMA RUC-recommended work RVU of 16.22 is more appropriate. Additionally, commenters noted that the CMS value was derived from the reverse building block methodology, which removed the post-procedure inpatient visit and reduced the discharge day management service to one-half. Commenters also stated that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, and requested that CMS accept the AMA RUC-recommended work RVU of 16.22 for CPT code 60420. Commenters also stated that the AMA RUC-recommended physician time should be restored.

Response: Based on the public comments received, we referred CPT 60240 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 16.22, which was consistent with the AMA RUC recommendation to maintain the current (CY 2011) work RVU for CPT code 60240. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this service, which is typically furnished on an outpatient basis, to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies finalized in the CY 2011 PFS final rule with comment period (75 FR 73220). Therefore, we are finalizing a work RVU for CPT code 60240 of 15.04. In addition, after reviewing the descriptions of the AMA RUC-recommended time packages, we disagree with the post-service time recommended by the AMA RUC. Therefore, we are finalizing a pre-service time of 40 minutes, a pre-service positioning time of 12 minutes, a pre-service (dress, scrub, wait) time of 20 minutes, an intra-service time of 150 minutes, and a post-service time of 40 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 60240. CMS time refinements can be found in Table 16.

(23) Endocrine System: Parathyroid, Thymus, Adrenal Glands, Pancreas, and Cartoid Body (CPT Code 60500)

As detailed in the Fourth Five-Year Review of Work (76 FR 32454), for CPT code 60500 (Parathyroidectomy or exploration of parathyroid(s)), we proposed a work RVU of 15.60 for CY 2012. Medicare PFS claims data indicated that CPT code 60500 is typically furnished as an outpatient rather than inpatient service. Using magnitude estimation, the AMA RUC believed the current work RVU of 16.78 for CPT code 60500 was appropriate. Therefore, in accordance with our methodology to address 23-hour stay and site-of-service anomalies described in section III.A. of this final rule with comment period, for CPT code 60500, we removed the hospital visit, reduced the discharge day management service by one-half, and adjusted times. The AMA RUC recommended maintaining the current work RVU of 16.78 for CPT code 60500.

Comment: Commenters disagreed with the CMS-proposed work RVU of 15.60 for CPT code 60500 and believe that the AMA RUC-recommended work RVU of 16.78 is more appropriate. Additionally, commenters noted that the CMS value was derived from the reverse building block methodology, which removed the hospital visit and reduced the discharge day management service to one-half. Commenters also stated that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, and requested that CMS accept the AMA RUC recommended work RVU of 16.78 for CPT code 60500. Commenters also stated that the AMA RUC recommended physician time should be restored.

Response: Based on the public comments received, we referred CPT 60500 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 16.78, which was consistent with the AMA RUC recommendation to maintain the current (CY 2011) work RVU for CPT code 60500. The current (CY 2011) work RVU for this service was developed when this service was typically furnished in the inpatient setting. As this service is now typically furnished in the outpatient setting, we believe that it is reasonable to expect that there have been changes in medical practice for these services, and that such changes would represent a decrease in physician time or intensity or both. However, the AMA RUC-recommendation and refinement panel results do not reflect a decrease in physician work. We do not believe it is appropriate for this service, which is typically furnished on an outpatient basis, to continue to reflect work that is typically associated with an inpatient service. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology described previously to address 23-hour stay site-of-service anomalies. Therefore, we are finalizing a work RVU for CPT code 60500 of 15.60. In addition, after reviewing the descriptions of the AMA RUC-recommended time packages, we disagree with the post-service time recommended by the AMA RUC. Therefore, we are finalizing a pre-service time of 40 minutes, a pre-service positioning time of 12 minutes, a pre-service (dress, scrub, wait) time of 20 minutes, an intra-service time of 120 minutes, and a post-service time of 40 minutes. We are also reducing the hospital discharge day by 0.5 for CPT code 60500. CMS time refinements can be found in Table 16.

(24) Nervous System: Skull, Meninges, Brain and Extracranial Peripheral Nerves, and Autonomic Nervous System (CPT Codes 61781-61885, 64405-64831)

We discussed CPT code 61885 (Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to a single electrode array) in the CY 2011 final rule with comment period (75 FR 73332) where we noted that this code was identified as a site-of-service anomaly code in September 2007. After reviewing the vagal nerve stimulator family of services, the specialty societies agreed that the family lacked clarity and the CPT Editorial Panel created three new codes to accurately describe revision of a vagal nerve stimulator lead, the placement of the pulse generator and replacement or revision of the vagus nerve electrode. For CY 2011, the AMA RUC recommended a work RVU of 6.44 for CPT code 61885. Although the AMA RUC compared this service to the key reference service, CPT code 63685 (Insertion or replacement of spinal neurostimulator pulse generator or receiver, direct or inductive coupling) (work RVUs = 6.05) and other relative services and noted the similarities in times, the AMA RUC elected not to recommend this value of 6.05 for CPT code 61885. We believed the AMA RUC-recommended work RVUs did not adequately account for the elimination of two inpatient visits and the reduction in outpatient visits for this service. We disagreed with the AMA RUC recommended value and believed 6.05 work RVUs, the survey 25th percentile, was appropriate for this service. Therefore, we assigned an alternative value of 6.05 work RVUs to CPT code 61885 on an interim final basis for CY 2011.

Comment: Commenters stated that assumptions by CMS that the RUC recommendations did not adequately account for the elimination of two inpatient visits and the reduction in outpatient visits for this service is flawed. Furthermore, the commenters asserted that the rationale in the RUC database indicates that the initial RUC recommended value for this code included a reduction in value due to an adjustment of the post-operative E/M visits. Commenters recommended we accept the AMA RUC-recommended work RVU of 6.44 for CPT code 61885.

Response: Based on the comments received, we referred CPT code 61885 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 6.44, which was consistent with the AMA RUC-recommendation to maintain the current work RVU for this service. We believe that the AMA RUC-recommended work RVUs did not adequately account for the elimination of two inpatient visits and the reduction in outpatient visits for this service. We believe that 6.05 work RVUs, the survey 25th percentile, is appropriate for this service. Therefore, we are finalizing a work RVU of 6.05 for CPT code 61885 in CY 2012.

In the Fourth Five-Year Review (76 FR 32455), CMS identified CPT code 64405 as potentially misvalued through the Harvard-Valued—Utilization > 30,000 screen. As detailed in the Fourth Five-Year Review of Work, for CPT code 64405 ((Injection, anesthetic agent; greater occipital nerve), we proposed a work RVU of 0.94 for CY 2012. The AMA RUC reviewed the survey results and recommended the median survey work RVU of 1.00 for CPT code 64405. We disagreed with the AMA RUC-recommended work RVU for CPT code 64405. Upon clinical review and a consideration of physician time and intensity, we believed this code is comparable to the key reference CPT code 20526 (Injection, therapeutic (e.g., local anesthetic, corticosteroid), carpal tunnel) (work RVU = 0.94).

Comment: Commenters disagreed with the CMS-proposed work RVU of 0.94 of CPT code 64405 and believe that the AMA RUC-recommended work RVU of 1.00 is more appropriate. The commenters noted survey findings stating that 97 percent of the respondents agreed that the vignette described the typical patient for this service. Furthermore, the commenters stated that CMS does not provide any rationale explaining use of CPT code 20526 as a comparison over the AMA RUC vignette and survey results. Commenters believed that CMS should give more consideration to the survey results when valuing an occipital nerve block.

Response: Based on the public comments received, we referred CPT 64405 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU supported the AMA RUC-recommended work RVU of 1.00 for CPT code 64405. We believe that the comparison to CPT code 20526 is appropriate for this service and related work RVUs. Therefore, we are finalizing a work RVU of 0.94 for CPT code 64405.

For CPT code 64568 (Incision for implantation of cranial nerve (e.g., vagus nerve) neurostimulator electrode array and pulse generator), the AMA RUC recommended 11.19 work RVUs; however, the methodology was unclear. As with CPT code 61885 discussed previously, to which this code is related, we conducted a clinical review and compared the physician intensity and time associated with providing this service and determined that the survey 25th percentile, 9.00 work RVUs, was appropriate. Therefore, we assigned an alternative value of 9.00 work RVUs to CPT code 64568 on an interim final basis for CY 2011 (75 FR 73332).

In the CY 2011 PFS final rule with comment period (75 FR 73332), for CPT codes 64569 (Revision or replacement of cranial nerve (e.g., vagus nerve) neurostimulator electrode array, including connection to existing pulse generator) and 64570 (Removal of cranial nerve (e.g., vagus nerve) neurostimulator electrode array and pulse generator), we assigned interim final work RVUs of 11.00 and 9.10, respectively, for CY 2011. In section II.B.3. of this final rule with comment period, we described maintaining relativity for the codes in families as a priority in the review of misvalued codes. Based on the reduction in work RVUs for CPT codes 61885 and 64568 that we adopted on an interim final basis for CY 2011, we believed work RVUs of 11.00, the survey 25th percentile, were appropriate for CPT code 64569 and work RVUs of 9.10, the survey 25th percentile, were appropriate for CPT code 64570. Therefore, we assigned alternative work RVUs of 11.00 to CPT code 64569 and 9.10 to CPT code 64570 on an interim final basis for CY 2011.

Comment: Commenters noted that CMS makes its interim recommendations based on the selection of a reference code which has similar time and intensity. Additionally, commenters asserted that CMS does not offer any reference codes to support the proposed interim values for any of these services. Moreover, the commenters disagreed with CMS's interim final values for 64568, 64569, and 64570, which were based on CMS' rationale to support the valuation of 61885, a site-of-service anomaly code. The commenters requested that CMS accept the AMA RUC-recommended values of 11.19 for CPT code 64568.

Response: Based on the comments received, we referred CPT code 64568, 64569, and 64570 to the CY 2011 multi-specialty refinement panel for further review. Although the refinement panel median work RVUs were 11.47 for CPT code 64568, 15.00 for CPT code 64569, and 13.00 for 64570, we believe it is imperative to maintain appropriate relativity within the code family as well as across code families in order to ensure accuracy in the entire PFS system. Accordingly, to maintain appropriate relativity with CPT code 61885, we are finalizing the following work RVUs for CY 2012: 9.00 for CPT code 64568, 11.00 for CPT code 64569 and 9.10 for CPT code 64570.

For CY 2012, we received no public comments on the CY 2011 interim final work RVUs for CPT codes 61781, 61782, 61783, 64415, 64445, 64447, 64479, 64480, 64484, 64566, 64581, 64611, 64708, 64712, 64713, and 64714. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

Finally, we received no public comments on the CY 2012 proposed work RVUs for CPT codes 64831 and 64708. We believe these values continue to be appropriate and are finalizing them without modification (Table 15).

(25) Nervous System: Spine and Spinal Cord (CPT Codes 62263-63685)

As we discussed in the CY 2012 PFS proposed rule (76 FR 42800), CPT code 62263 (Percutaneous lysis of epidural adhesions using solution injection (e.g., hypertonic saline, enzyme) or mechanical means (e.g., catheter) including radiologic localization (includes contrast when administered), multiple adhesiolysis sessions; 2 or more days), was identified for CY 2009 as potentially misvalued through the site-of-service anomaly screen. We referred this code back to the AMA RUC for review because of our ongoing concern that the AMA RUC did not believe the AMA RUC appropriately accounted for the change in site-of-service when providing the recommendation for work RVUs. That is, for CY 2009, the AMA reviewed survey data, compared this code to other services, and concluded that while it was appropriate to remove the inpatient subsequent hospital care visits to reflect the current outpatient place of service, the AMA RUC recommended maintaining the CY 2008 work RVU for this service. We disagreed with the AMA RUC's methodology because we believe the appropriate methodology for valuing site-of-service anomaly codes entails not just removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. Accordingly, while we accepted the AMA RUC-recommended work RVU for this code on an interim basis for CYs 2009 and 2010 (with a slight adjustment in CY 2010 due to the consultation code policy (74 FR 61775)), we referred the code back to the AMA RUC to be reexamined.

Upon re-review for CY 2012, the AMA RUC reaffirmed its previous recommendation and recommended that the current work RVU of 6.54 for CPT code 62263 be maintained. In the CY 2012 PFS proposed rule (76 FR 42800), we indicated that we continue to disagreed with the AMA RUC recommended work RVU for this service because we believe the appropriate methodology for valuing site-of-service anomaly codes entails not just removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. We noted also that the AMA RUC disregarded survey results that indicated the respondents believed this service should be valued lower. In fact, the median survey work RVU was 5.00. After CMS clinical review of this service where we considered this code in comparison to other codes in the PFS and accounted for the change in the site-of-service, we believed that the survey median work RVU of 5.00 appropriately accounted for the removal of the inpatient visits. Therefore, we proposed a work RVU of 5.00 for CPT code 62263 for CY 2012.

Comment: Commenters disagreed with CMS' proposed work RVU, stating that they remained concerned that CMS still assumes that the starting values for these services were correct. Commenters noted that the AMA RUC originally valued this service using magnitude estimation based on comparison reference codes, which considers the total work of the service rather than the work of the component parts of the service, and requested CMS accept the AMA RUC-recommended work RVU and physician time.

Response: Based on comments received, we referred CPT code 62263 to the CY 2011 multi-specialty refinement panel for further review. The refinement panel median work RVU was 6.02. We do not believe that either the AMA RUC recommended work RVU or the refinement panel result adequately accounts for the removal of all the inpatient visits for this service which was originally identified as having a site-of-service anomaly. As we specified previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails both removing the inpatient visits and modifying the work RVU to adequately account for the removal of all the inpatient visits originally included. In order to ensure consistent and appropriate valuation of physician work, we believe it is appropriate to apply our methodology to address codes with site-of-service anomalies as discussed in detail in section III.A. of this final rule with comment period. After consideration of the public comments, refinement panel results, and our clinical review, we are assigning a work RVU for CY 2012 of 5.00 for CPT code 62263 with refinements to time. CMS time refinements can be found in Table 16.

As we discussed in the CY 2012 PFS proposed rule (76 FR 42800), CPT code 62355 (Removal of previously implanted intrathecal or epidural catheter) was identified as potentially misvalued through the site-of-service anomaly screen for CY 2009. The AMA RUC reviewed this service and recommended a work RVU of 4.30, approximately midway between the survey median and 75th percentile. The AMA RUC also recommended removing the inpatient building blocks to reflect the outpatient site-of-service, removing all but 1 of the post-procedure office visits to reflect the shift in global period from 90 days to 10 days, and reducing the physician time associated with this service. While we accepted the AMA RUC-recommended work RVU for this