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Proposed Rule

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, DME Face to Face Encounters, Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013; Hospital Outpatient Prospective and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Electronic Reporting Pilot; Inpatient Rehabilitation Facilities Quality Reporting Program; Quality Improvement Organization Regulations; Proposed Rules

Action

Proposed Rule.

Summary

This major proposed rule addresses changes to the physician fee schedule, payments for Part B drugs, 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 would also implement provisions of the Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment (DME) items. In addition, it would implement statutory changes regarding the termination of non-random prepayment review under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Finally, this proposed rule also includes a discussion regarding the Chiropractic Services Demonstration program.

Unified Agenda

 

Table of Contents Back to Top

Tables Back to Top

DATES: Back to Top

Comment date: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on September 4, 2012.

ADDRESSES: Back to Top

In commenting, please refer to file code CMS-1590-P. 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-1590-P, 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-1590-P, 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) 786-7195 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

Corinne Axelrod, (410) 786-5620, for any physician payment issue not identified below.

Ryan Howe, (410) 786-3355, for issues related to practice expense methodology and direct practice expense inputs, telehealth services, and issues related to primary care and care coordination.

Sara Vitolo, (410) 786-5714, for issues related to potentially misvalued services, malpractice RVUs, molecular pathology, and payment for new preventive service HCPCS G-codes.

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

Michael Moore, (410) 786-6830, for issues related to geographic practice cost indices and the sustainable growth rate.

Pam West, (410) 786-2302, for issues related to therapy services.

Chava Sheffield, (410) 786-2298, for issues related to certified registered nurse anesthetists.

Roberta Epps, (410) 786-4503, for issues related to portable x-ray.

Anne Tayloe-Hauswald, (410) 786-4546, for issues related to ambulance fee schedule and Part B drug payment.

Amanda Burd, (410) 786-2074, for issues related to the DME provisions.

Debbie Skinner, (410) 786-7480, for issues related to non-random prepayment complex medical review.

Latesha Walker, (410) 786-1101, for issues related to ambulance coverage-physician certification statement.

Alexandra Mugge, (410) 786-4457, for issues related to physician compare.

Christine Estella, (410) 786-0485, for issues related to the physician quality reporting system, incentives for e-prescribing, and Medicare shared savings program.

Pauline Lapin, (410) 786-6883, for issues related to the chiropractic services demonstration budget neutrality issue.

Gift Tee, (410) 786-9316, for issues related to the Physician Feedback Reporting Program and Value-Based Payment Modifier.

Jamie Hermansen, (410) 786-2064, for issues related to Medicare coverage for hepatitis B vaccine.

Andrew Morgan, (410) 786-2543, for issues related to e-prescribing under Medicare Part D.

SUPPLEMENTARY INFORMATION: Back to Top

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

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

Table of Contents Back to Top

I. Executive Summary and Background

II. Provisions of the Proposed Rule

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

B. Potentially Misvalued Codes Under the Physician Fee Schedule

C. Malpractice RVUs

D. Geographic Practice Cost Indices (GPCIs)

E. Medicare Telehealth Services for the Physician Fee Schedule

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

G. Therapy Services

H. Primary Care and Care Coordination

I. Payment for Molecular Pathology Services

J. Payment for New Preventive Services HCPCS G Codes

K. Certified Registered Nurse Anesthetists and Chronic Pain Management Services

L. Ordering of Portable X-Ray Services

III. Other Provisions of the Proposed Regulation

A. Ambulance Fee Schedule

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

C. Durable Medical Equipment (DME) Face-to-Face Encounters and Written Orders Prior to Delivery

D. Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review

E. Ambulance Coverage-Physician Certification Statement

F. Physician Compare Web site

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

H. Electronic Prescribing (eRx) Incentive Program

I. Medicare Shared Savings Program

J. Discussion of Budget Neutrality for the Chiropractic Services Demonstration

K. Physician Value-Based Payment Modifier and the Physician Feedback Reporting Program

L. Medicare Coverage of Hepatitis B Vaccine

M. Updating Existing Standards for E-Prescribing Under Medicare Part D and Lifting the LTC Exemption

IV. Technical Corrections

A. Waiver of Deductible for Surgical Services Furnished on the Same Date as a Planned Screening Colorectal Cancer Test and Colorectal Cancer Screening Test Definition

V. Collection of Information Requirements

VI. Response to Comments

VII. Regulatory Impact Analysis

Acronyms Back to Top

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

AHRQ[HHS] Agency for Healthcare Research and Quality

AMAAmerican Medical Association

AMA RUCAMA [Specialty Society] Relative [Value] Update Committee

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

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)

BIPA[Medicare, Medicaid, and SCHIP] Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)

BLSBureau of Labor Statistics

BNBudget neutrality

CAHCritical access hospital

CBSACore-Based Statistical Area

CFConversion factor

CFCConditions for Coverage

CFRCode of Federal Regulations

CNSClinical nurse specialist

CoPsConditions of Participation

CORF Comprehensive Outpatient Rehabilitation Facility

CPIConsumer Price Index

CPT[Physicians] Current Procedural Terminology (CPT codes, descriptions and other data only are copyright 2011 American Medical Association. All rights reserved.)

CRNACertified registered nurse anesthetist

CYCalendar year

DHSDesignated health services

DMEDurable medical equipment

DMEPOSDurable medical equipment, prosthetics, orthotics, and supplies

DOTPADevelopment of Outpatient Therapy Payment Alternatives

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

E/MEvaluation and management

EHR Electronic health record

EMTALAEmergency Medical Treatment and Active Labor Act (part of the Consolidated Omnibus Budget Reconciliation Act of 1985 (99)

eRxElectronic prescribing

FFSFee-for-service

FR Federal Register

GAFGeographic adjustment factor

GAO[U.S.] Government Accountability Office

GPROGroup Practice Reporting Option

GPCIGeographic practice cost index

HACHospital-acquired conditions

HCPCSHealthcare Common Procedure Coding System

HHAHome health agency

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)

HPSAHealth Professional Shortage Area

ICDInternational Classification of Diseases

IMRTIntensity Modulated Radiation Therapy

IOMInternet-only Manual

IPCIIndirect practice cost index

IPPSInpatient prospective payment system

IWPUTIntra-service work per unit of time

MACMedicare Administrative Contractor

MCTRJCAMiddle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96)

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

MedPACMedicare Payment Advisory Commission

MEIMedicare Economic Index

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)

MPMalpractice

MPPRMultiple procedure payment reduction

MQSAMammography Quality Standards Act of 1992 (102)

NPNurse practitioner

NPPNonphysician practitioner

OACT[CMS] Office of the Actuary

OBRAOmnibus Budget Reconciliation Act (101)

OIG[HHS] Office of Inspector General

PAPhysician assistant

PCProfessional component

PEPractice expense

PE/HRPractice expense per hour

PERC Practice Expense Review Committee

PFSPhysician Fee Schedule

PGP[Medicare] Physician Group Practice

PLIProfessional liability insurance

PPSProspective payment system

PQRSPhysician Quality Reporting System

PRAPaperwork Reduction Act

PPTRAPhysician Payment and Therapy Relief Act of 2010 (Pub. L. 111-286)

PVBPPhysician and Other Health Professional Value-Based Purchasing Workgroup

RAC[Medicare] Recovery Audit Contractor

RFARegulatory Flexibility Act

RIARegulatory impact analysis

RVURelative value unit

SBRTStereotactic body radiation therapy

SGRSustainable growth rate

TCTechnical component

TINTax identification number

TPTCCATemporary Payroll Tax Cut Continuation Act of 2011 (Pub. L.112-78)

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

VBPValue-based purchasing

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, effective 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 proposed 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 2013 PFS proposed rule with comment period, refer to item CMS-1590-P. Readers who experience any problems accessing any of the Addenda or other documents referenced in this proposed rule with comment period and posted on the CMS Web site identified above should contact Corinne Axelrod at (410) 786-5620.

CPT (Current Procedural Terminology) Copyright Notice Back to Top

Throughout this proposed rule, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2011 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. Executive Summary and Background Back to Top

A. Executive Summary

1. Purpose

This major proposed rule would revise payment polices under the Medicare Physician Fee Schedule (PFS) and make other policy changes related to Medicare Part B payment. These changes would be applicable to services furnished in CY 2013. It also would implement provisions of the Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment (DME) items. In addition, it would implement statutory changes regarding the termination of non-random prepayment review.

2. Summary of the Major Provisions

The Social Security Act (Act) requires us to establish payments under the PFS based on national uniform relative value units (RVUs) and the relative resources used in furnishing a service. The Act requires that national RVUs be established for physician work, practice expense (PE), and malpractice (MP) expense. In this major proposed rule, we propose payment rates for CY 2013 for the PFS, payments for Part B drugs, 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 proposes to implement provisions of the Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment (DME) items, and by removing certain regulations regarding the termination of non-random prepayment review. It also proposes new claims-based data reporting requirements for therapy services to implement a provision in the Middle Class Tax Relief and Jobs Creation Act (MCTRCA). In addition, this rule proposes:

  • Potentially Misvalued Codes to be Evaluated.
  • Additional Multiple Procedure Payment Reductions (MPPR).
  • Expanding Medicare Telehealth Services.
  • Regulatory Changes regarding Payment for Technical Component of Certain Physician Pathology Services to Conform to Statute.
  • Primary Care and Care Coordination Service.
  • Payment rates for Newly Covered Preventive Services.
  • Definition of Anesthesia and Related Care in the Certified Registered Nurse Anesthetists Benefit.
  • Ordering Requirements for Portable X-ray Services.
  • Updates to the Ambulance Fee Schedule.
  • Part B Drug Payment Rates.
  • Ambulance Coverage-Physician Certification Statement.
  • Updating the—

++ Physician Compare Web site.

++ Physician Quality Reporting System.

++ Electronic Prescribing (eRx) Incentive Program.

++ Medicare Shared Savings Program.

  • Providing Budget Neutrality Discussion on the Chiropractic Demonstration.
  • Physician Value-Based Payment Modifier and the Physician Feedback Reporting Program.
  • Medicare Coverage of Hepatitis B Vaccine.
  • Updating Existing Standards for e-prescribing under Medicare Part D and Lifting the LTC Exemption.

3. Summary of Costs and Benefits

The statute requires that we establish by regulation each year payment amounts for all physicians' service. These payment amounts are required to be adjusted to reflect the variations in the costs of providing services in different geographic areas. The statute also requires that annual adjustments to PFS RVUs not cause annual estimated expenditures to differ by more than $20 million from what they would have been had the adjustments not been made. If adjustments to RVUs would cause expenditures to change by more than $20 million, we must make adjustments to preserve budget neutrality.

Several proposed changes would affect the specialty distribution of Medicare expenditures. This proposed rule reflects the Administration's priority on improving payment for primary care services. Overall, payments for primary care specialties would increase and payments to select other specialties would decrease due to several changes in how we propose to calculate payments for CY 2013. Primary care payments would increase because of a proposed payment for managing a beneficiary's care when the beneficiary is discharged from an inpatient hospital, a SNF, an outpatient hospital observation, partial hospitalization services, or a community mental health center. Primary care payments also would increase due to redistributions from proposed reductions in payments for other specialties. Because of the budget-neutral nature of this system, proposed decreases in payments in one service result in proposed increases in payments in others.

Payments to primary care specialties are also impacted by the completion of the 4-year transition to new PE RVUs using the new Physician Practice Information Survey (PPIS) data that was adopted in the CY 2010 PFS final rule with comment period. The projected impacts of using the new PPIS data are generally consistent with the impacts discussed in the CY 2012 final rule with comment period (76 FR 72452).

Proposed changes in how we calculate payment when certain services are furnished together would result in reductions in total payments projected to cardiologists and ophthalmologists. Capital-intensive specialties are projected to decrease due to proposed changes in how the interest rate used in the PE calculation is estimated. Also, under our potentially misvalued codes initiative, we propose to adjust the payment rates for two common radiation oncology treatment delivery methods, intensity-modulated radiation treatment (IMRT), and stereotactic body radiation therapy (SBRT) to reflect more realistic time projections based upon publicly available data. The combined effect of the PPIS transition and the latter two proposals would be a reduction in payments to radiation therapy centers and radiation oncology.

B. Background

Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Act, “Payment for Physicians' Services.” The Act requires that CMS make payments under the PFS using 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, PE, and MP 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 proposed rule, 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) who are permitted to bill Medicare under the PFS for their services.

1. Development of the Relative Value System

a. 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 MP RVUs were based on average allowable charges.

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

Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia services are based on RVUs from a uniform relative value guide, 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/Specialty Society Relative Value Update Committee (AMA RUC).

b. 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 PE RVUs.

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

This resource-based system was based on two significant sources of actual PE data: The Clinical Practice Expert Panel (CPEP) data and the AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were collected from panels of physicians, practice administrators, and 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 physicians' service. (We have since refined and revised these inputs based on recommendations from the AMA RUC.) The SMS data provided aggregate specialty-specific information on hours worked and PEs.

Separate PE RVUs are established for procedures that can be furnished 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 furnishing the service, apart from payment under the PFS. The nonfacility RVUs reflect all of the direct and indirect PEs of furnishing a particular service.

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

In the CY 2007 PFS final rule with comment period (71 FR 69624), we revised the methodology for calculating direct PE RVUs from the top-down to the bottom-up methodology beginning in CY 2007. We adopted a 4-year transition to the new PE RVUs. This transition was completed in CY 2010. Direct PE RVUs were calculated for CY 2013 using this methodology, unless otherwise noted.

In the CY 2010 PFS final rule with comment period, we updated the practice expense per hour (PE/HR) data that are used in the calculation of PE RVUs for most specialties (74 FR 61749). For this update, we used the Physician Practice Information Survey (PPIS) conducted by the AMA. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) using a survey instrument and methods highly consistent with those of the SMS and the supplemental surveys used prior to CY 2010. We note that in CY 2010, for oncology, clinical laboratories, and independent diagnostic testing facilities (IDTFs), we continued to use the supplemental survey data to determine PE/HR values (74 FR 61752). Beginning in CY 2010, we provided for a 4-year transition for the new PE RVUs using the updated PE/HR data. In CY 2013, the final year of the transition, PE RVUs are calculated based on the new data.

c. Resource-Based Malpractice RVUs

Section 4505(f) of the BBA amended section 1848(c) of the Act requires that we implement resource-based MP RVUs for services furnished on or after CY 2000. The resource-based MP 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.

d. 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. Prior to CY 2013, we conducted periodic reviews of work RVUs and PE RVUs independently.

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 published in the CY 2012 PFS final rule with comment period (76 FR 73026).

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

In the CY 2012 PFS final rule with comment period (76 FR 73057), we finalized a proposal to consolidate reviews of work and PE RVUs under section 1848(c)(2)(B) of the Act and reviews of potentially misvalued codes under section 1848(c)(2)(K) of the Act into one annual process.

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

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 the amendments to Section 1848 of the Act, as enacted 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 PEs; (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 fee schedule (the so-called “Harvard valued codes”); and (7) other codes determined to be appropriate by the Secretary.

e. Application of Budget Neutrality to Adjustments of RVUs

Budget neutrality (BN) 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 would 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.

2. Components of the Fee Schedule Payment Amounts

To calculate the payment for each physicians' service, the components of the fee schedule (work, PE, and MP RVUs) are adjusted by geographic practice cost indices (GPCIs). The GPCIs reflect the relative costs of physician work, PE, and MP 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 MP × GPCI MP)] × CF.

3. Most Recent Changes to the Fee Schedule

The CY 2012 PFS final rule with comment period (76 FR 73026) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized many of the CY 2011 interim RVUs and implemented interim RVUs for new and revised codes for CY 2012 to ensure that our payment systems are updated to reflect changes in medical practice and the relative values of services. The CY 2012 PFS final rule with comment period also addressed other policies including certain statutory provisions including provisions of the Affordable Care Act and the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008.

In the CY 2012 PFS final rule with comment period, we announced the following for CY 2012: the total PFS update of −27.4 percent; the initial estimate for the sustainable growth rate (SGR) of −16.9 percent; and the conversion factor (CF) of $24.6712. These figures were calculated based on the statutory provisions in effect on November 1, 2011, when the CY 2012 PFS final rule with comment period was issued.

A correction notice was issued (77 FR 227) to correct several technical and typographical errors that occurred in the CY 2012 PFS final rule with comment period.

On December 23, 2011, the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) (Pub. L. 112-78) was signed into law. Section 301 of the TPTCCA specified a zero percent update to the PFS claims from January 1, 2012 through February 29, 2012. As a result, the CY 2012 PFS conversion factor was revised to $34.0376 for claims with dates of service on or after January 1, 2012 through February 29, 2012. In addition, TPTCCA extended several provisions affecting Medicare services furnished on or after January 1, 2012 through February 29, 2012, including:

  • Section 303—the 1.0 floor on the physician work geographic practice cost index;
  • Section 304—the exceptions process for outpatient therapy caps;
  • Section 305—the payment to independent laboratories for the TC of physician pathology services furnished to certain hospital patients, and
  • Section 307—the five percent increase in payments for mental health services.

On February 22, 2012, the MCTRJCA was signed into law. Section 3003 extended the zero percent PFS update to the remainder of CY 2012. As a result of the MCTRJCA, the CY 2012 PFS CF was maintained as $34.0376 for claims with dates of service on or after March 1, 2012 through December 31, 2012. In addition:

  • Section 3004 of MCTRJCA extended the 1.0 floor on the physician work geographic practice cost index through December 31, 2012;
  • Section 3006 continued payment to independent laboratories for the TC of physician pathology services furnished to certain hospital patients through June 30, 2012; and
  • Section 3005 extended the exceptions process for outpatient therapy caps through CY 2012 and made several other changes related to therapy claims and caps.

On March 1, 2012, as required by Section 1848(d)(1)(E) of the Act, we submitted to the Medicare Payment Advisory Committee (MedPAC) an estimate of the SGR and conversion factor applicable to Medicare payments for physicians' services for CY 2013. The actual values used to compute physician payments for CY 2013 will be based on later data and are scheduled to be published by November 1, 2012 as part of the CY 2013 PFS final rule.

II. Provisions of the Proposed Rule 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 otherwise 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 explanation 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 involved with furnishing 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 PEs 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 began using 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 1848(c)(2)(H)(i) of the Act 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 and spine surgery since these specialties currently are not separately recognized by Medicare, nor do we have a method to blend these data with Medicare-recognized specialty data. Similarly, we do not use the PPIS data for sleep medicine since there is not a full year of Medicare utilization data for that specialty.

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 for 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 were five specialties whose utilization data were newly incorporated into ratesetting for CY 2012. In accordance with the final policies adopted in the CY 2012 final rule with comment period (76 FR 73036), we 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; Intensive Cardiac Rehabilitation from Cardiology, and Certified Nurse Midwife from Obstetrics/gynecology.

For CY 2013, there are two specialties whose utilization data will be newly incorporated into ratesetting. We are proposing to use proxy PE/HR values for these specialties by crosswalking values from other specialties that furnish similar services as follows: Cardiac Electrophysiology from Cardiology; and Sports Medicine from Family Practice. These proposed changes are reflected in the “PE HR” file available on the CMS Web site under the supporting data files for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), CY 2013 is the final year of the 4-year transition to the PE RVUs calculated using the PPIS data. Therefore, the CY 2013 proposed PE RVUs were developed based entirely on the PPIS data, with the exceptions described in this section.

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 involved with furnishing 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 proposed rule describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocated 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 incorporated 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 furnish the service to determine an initial indirect allocator. For example, if the direct portion of the PE RVUs for a given service was 2.00 and direct costs, on average, represented 25 percent of total costs for the specialties that furnished 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 furnishing the first service with an allocator of 10.00 was half of the average indirect cost of the specialties furnishing 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 furnished independently or by different providers, or they may be furnished 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 1, the formulas were divided into two parts for each service.

  • The first part does not vary by service and is the indirect percentage (direct PE 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 furnished 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 in order to redistribute RVUs from step 18 to all PE RVUs in the PFS and 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.
Table 1—Specialties Excluded From Ratesetting Calculation Back to Top
Specialty code Specialty description
49 Ambulatory surgical center.
50 Nurse practitioner.
51 Medical supply company with certified orthotist.
52 Medical supply company with certified prosthetist.
53 Medical supply company with certified prosthetist-orthotist.
54 Medical supply company not included in 51, 52, or 53.
55 Individual certified orthotist.
56 Individual certified prosthetist.
57 Individual certified prosthetist-orthotist.
58 Individuals not included in 55, 56, or 57.
59 Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc.
60 Public health or welfare agencies.
61 Voluntary health or charitable agencies.
73 Mass immunization roster biller.
74 Radiation therapy centers.
87 All other suppliers (e.g., drug and department stores).
88 Unknown supplier/provider specialty.
89 Certified clinical nurse specialist.
95 Competitive Acquisition Program (CAP) Vendor.
96 Optician.
97 Physician assistant.
A0 Hospital.
A1 SNF.
A2 Intermediate care nursing facility.
A3 Nursing facility, other.
A4 HHA.
A5 Pharmacy.
A6 Medical supply company with respiratory therapist.
A7 Department store.
1 Supplier of oxygen and/or oxygen related equipment.
2 Pedorthic personnel.
3 Medical supply company with pedorthic personnel.

We are proposing to calculate the specialty mix for low volume services (fewer than 100 billed services in the previous year) using the same methodology we use for non-low volume services. We previously have used the survey data from the dominant specialty for these low volume services. However, because these services have such low utilization, the dominant specialty tends to change from year to year. We are proposing to calculate a specialty mix for these services rather than use the dominant specialty in order to smooth year-to-year fluctuations in PE RVUs due to changes in the dominant specialty.

  • 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 consistent with current payment policy as implemented in claims processing. 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. Similarly, for those services to which volume adjustments are made to account for the payment modifiers, time adjustments are applied as well. For time adjustments to surgical services, the intraoperative portion in the physician time file is used; where it is not present, the intraoperative percentage from the payment files used by Medicare contractors to process Medicare claims is used instead. Where neither is available, we use the payment adjustment ratio to adjust the time accordingly. Table 2 details the manner in which the modifiers are applied.
Table 2—Application of Payment Modifiers to Utilization Files Back to Top
Modifier Description Volume adjustment Time adjustment
80, 81, 82 Assistant at Surgery 16% Intraoperative portion.
AS Assistant at Surgery—Physician Assistant 14% (85% * 16%) Intraoperative portion.
50 or LT and RT Bilateral Surgery 150% 150% of physician time.
51 Multiple Procedure 50% Intraoperative portion.
52 Reduced Services 50% 50%.
53 Discontinued Procedure 50% 50%.
54 Intraoperative Care only Preoperative + Intraoperative Percentages on the payment files used by Medicare contractors to process Medicare claims Preoperative + Intraoperative portion.
55 Postoperative Care only Postoperative Percentage on the payment files used by Medicare contractors to process Medicare claims Postoperative portion.
62 Co-surgeons 62.5% 50%.
66 Team Surgeons 33% 33%.

We also make adjustments to volume and time that correspond to other payment rules, including special multiple procedure endoscopy rules and multiple procedure payment reductions (MPPR) including the proposed ophthalmology and cardiovascular diagnostic services MPPR discussed in section II.B.4. of this proposed rule. We note that section 1848(c)(2)(B)(v) of the Act exempts certain reduced payments for multiple imaging procedures and multiple therapy services from the budget-neutrality calculation under section 1848(c)(2)(B)(ii)(II) of the Act. These multiple procedure payment reductions are not included in the development of the relative value units.

For anesthesia services, we do not apply adjustments to volume since the average allowed charge is used when simulating RVUs and therefore includes all discounts. A time adjustment of 33 percent is made only for medical direction of two to four cases since that is the only occasion where time units are duplicative.

  • Work RVUs: The setup file contains the work RVUs from this proposed rule.

(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 = 0.5 is the standard 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).

price = price of the particular piece of equipment.

interest rate = sliding scale (see proposal below)

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

maintenance = factor for maintenance; 0.05.

The interest rate we have previously used was proposed and finalized during rulemaking for CY 1998 PFS (62 FR 33164). In the CY 2012 proposed rule (76 FR 42783), we solicited comment regarding reliable data on current prevailing loan rates for small businesses. In response to that request, the AMA RUC recommended that rather than applying the same interest rate across all equipment, CMS should consider a “sliding scale” approach which varies the interest rate based on the equipment cost, useful life, and SBA (Small Business Administration) maximum interest rates for different categories of loan size and maturity. The maximum interest rates for SBA loans are as follows:

  • Fixed rate loans of $50,000 or more must not exceed Prime plus 2.25 percent if the maturity is less than 7 years, and Prime plus 2.75 percent if the maturity is 7 years or more.
  • For loans between $25,000 and $50,000, maximum rates must not exceed Prime plus 3.25 percent if the maturity is less than 7 years, and Prime plus 3.75 percent if the maturity is 7 years or more.
  • For loans of $25,000 or less, the maximum interest rate must not exceed Prime plus 4.25 percent if the maturity is less than 7 years, and Prime plus 4.75 percent, if the maturity is 7 years or more.

The current Prime rate is 3.25 percent.

Based on that recommendation, for CY 2013, we are proposing to use a “sliding scale” approach based on the current SBA maximum interest rates for different categories of loan size (price of the equipment) and maturity (useful life of the equipment). Additionally, we are proposing to update this assumption through annual PFS rulemaking to account for fluctuations in the Prime rate and/or changes to the SBA's formula to determine maximum allowed interest rates.

The effects of this proposal on direct equipment inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. Additionally, we note that the proposed PE RVUs included in Addendum B to this proposed rule reflect the RVUs that result from application of this proposal.

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

3. Changes to Direct PE Inputs for Specific Services

In this section, we discuss other specific CY 2013 proposals and changes related to direct PE inputs for specific services. We note that we will address comments on the interim direct PE inputs established in the CY 2012 PFS final rule with comment period in the CY 2013 PFS final rule.

a. Equipment Minutes for Interrogation Device Evaluation Services

It has come to our attention that the pacemaker follow-up system (EQ138) associated with two interrogation device management service codes does not have minutes allocated in the direct PE input database. Based on our analysis of these services, we believe that 10 minutes should be allocated to the equipment for each of the following CPT codes: 93294 (Interrogation device evaluation(s) (remote), up to 90 days; single, dual, or multiple lead pacemaker system with interim physician analysis, review(s) and report(s)), and 93295 (Interrogation device evaluation(s) (remote), up to 90 days; single, dual, or multiple lead implantable cardioverter-defibrillator system with interim physician analysis, review(s) and report(s)). Therefore, we are proposing to modify the direct PE input database to allocate 10 minutes to the pacemaker follow-up system for CPT codes 93294 and 93295.

The proposed CY 2013 direct PE input database reflects these changes and is available on the CMS Web site under the supporting data files for the CY 2013 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs included in Addendum B to this proposed rule reflect the RVUs that result from application of this proposal.

b. Clinical Labor for Pulmonary Rehabilitation Services (HCPCS Code G0424)

It has come to our attention that the direct PE input database includes 15 minutes of clinical labor time in the nonfacility setting allocated for a CORF social worker/psychologist (L045C) associated with HCPCS code G0424 (Pulmonary rehabilitation, including exercise (includes monitoring), one hour, per session, up to two sessions per day). Based on our analysis of this service, we believe that these 15 minutes should be added to the 15 minutes currently allocated to the Respiratory Therapist (L042B) associated with this service. Therefore, we are proposing to modify the direct PE input database to allocate 15 additional minutes to the Respiratory Therapist (L042B) (for a total of 30 minutes) and delete the CORF social worker/psychologist (L045C) associated with HCPCS code G0424.

The proposed CY 2013 direct PE input database reflects these changes and is available on the CMS Web site under the supporting data files for the CY 2013 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs included in Addendum B to this proposed rule reflect the RVUs that result from application of this proposal.

c. Transcranial Magnetic Stimulation Services

For CY 2011, the CPT Editorial Panel converted Category III CPT codes 0160T and 0161T to Category I status (CPT codes 90867 (Therapeutic Repetitive Transcranial Magnetic Stimulation (TMS) treatment; initial, including cortical mapping, motor threshold determination, delivery and management), and 90868 (Therapeutic Repetitive Transcranial Magnetic Stimulation (TMS) treatment; subsequent delivery and management, per session)), which were contractor priced on the PFS. For CY 2012, the CPT Editorial Panel modified CPT codes 90867 and 90868, and created CPT code 90869 ((Therapeutic Repetitive Transcranial Magnetic Stimulation (TMS) treatment; subsequent motor threshold re-determination with delivery and management.) In the CY 2012 PFS final rule with comment period, we established interim final values based on refinement of RUC recommended work RVUs, direct PE inputs, and malpractice risk factor crosswalks for these services (76 FR 73201).

Subsequent to the development of interim final PE RVUs, it came to our attention that the application of our usual PE methodology resulted in anomalous PE values for these services. As we explain in section II.A.2.c.2 of this proposed rule with comment period, for a given service, we use the direct costs associated with a service (clinical staff, equipment, and supplies) and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that furnish the service to determine an initial indirect allocator.

For services almost exclusively furnished by one specialty, the average percentage of indirect costs relative to direct costs would ordinarily be used to determine the initial indirect allocator. For specialties that typically incur significant direct costs relative to indirect costs, the initial indirect allocator for their services is generally lower than for the specialties that typically incur lower direct costs relative to indirect costs. Relative to direct costs, the methodology generally allocates a greater proportion of indirect PE to services furnished by psychiatrists, for example, than to services furnished by specialties that typically incur significant direct costs, such as radiation oncologists. In the case of the TMS, however, the direct costs incurred by psychiatrists reporting the codes far exceed the direct costs typical to any other service predominantly furnished by psychiatrists. This drastic difference in the direct costs of TMS relative to most other services furnished by psychiatrists results in anomalous PE values since code-level indirect PE allocation relies on typical resource costs for the specialties that furnish the service. In other words, the amount of indirect PE allocated to TMS services is based on the proportion of indirect expense to direct expense that is typical of other psychiatric services, and is not on par with other services that require similar investments in capital equipment and high-cost, disposable supplies.

Historically, we have contractor-priced services with resource costs that cannot be appropriately valued within the generally applicable PE methodology used to price services across the PFS. Because there is no mechanism to develop appropriate payment rates for these services within our current methodology, we are proposing to contractor price these codes for CY 2013.

d. Spinal Cord Stimulation Trial Procedures in the Nonfacility Setting

Stakeholders have recently brought to our attention that CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural) is frequently furnished in the physician office setting but is not priced in that setting. 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. However, because these services are being furnished in the nonfacility setting, we believe that CPT code 63650 should be reviewed to establish appropriate nonfacility inputs. We propose to review CPT code 63650 and request recommendations from the AMA RUC and other public commenters on the appropriate physician work RVUs (as measured by time and intensity), and facility and nonfacility direct PE inputs for this service. We understand that disposable leads comprise a significant resource cost for this service and are currently separately reportable to Medicare for payment purposes when the service is furnished in the physician office setting. Disposable medical supplies are not considered prosthetic devices paid under the Durable Medical Equipment, Prosthetic/Orthotic, and Supplies (DMEPOS) fee schedule and generally are incorporated as nonfacility direct PE inputs to PE RVUs. We seek comment on establishing nonfacililty PE RVUs for CPT code 63650.

B. Potentially Misvalued Codes Under the Physician Fee Schedule

1. Valuing Services Under the PFS

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.” 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.B.1.b. and I.B.1.c. of this proposed rule, 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)(1)(C) of the Act defines the malpractice component as “the portion of the resources used in furnishing the service that reflects malpractice expenses in furnishing the service.” Sections 1848 (c)(2)(C)(ii) and (iii) of the Act specify that PE and malpractice expense RVUs shall be determined based on the relative PE/malpractice expense resources involved in furnishing the service.

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.B.1.a. of this proposed rule, each year we develop and propose appropriate adjustments to the RVUs, taking into account the recommendations provided by the American Medical Association Specialty Society Relative Value Scale Update Committee (AMA RUC), the Medicare Payment Advisory Commission (MedPAC), and others. For many years, the AMA RUC has provided us with recommendations on the appropriate relative values for new, revised, and potentially misvalued PFS services. We review these recommendations on a code-by-code basis and consider these recommendations in conjunction with analyses of data sources, such as claims data, to inform the decision-making process as authorized by the law. We may also consider analyses of physician time, work RVUs, or direct PE inputs using other data sources, such as Department of Veteran Affairs (VA) National Surgical Quality Improvement Program (NSQIP), the Society for Thoracic Surgeons (STS), and the Physician Quality Reporting Initiative (PQRI) databases. In addition to considering the most recently available data, we also assess the results of physician surveys and specialty recommendations submitted to us by the AMA RUC. We conduct a clinical review to assess the appropriate RVUs in the context of contemporary medical practice. 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. In accordance with section 1848(c) of the Act, we determine appropriate adjustments to the RVUs, explain the basis of these adjustments, and respond to public comments in the PFS proposed and final rules.

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services on 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 PFS, 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 as physicians build experience furnishing that service. Services can also become overvalued when PEs decline. This can happen when the costs of equipment and supplies fall, or when equipment is used more frequently than is estimated in the PE methodology, reducing its cost per use. Likewise, services can become undervalued when physician work increases or PEs 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 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 PEs;
  • 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 PFS (the so-called `Harvard-valued codes'); and
  • 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 any RVU 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 PFS.

In addition to these requirements, section 3003 (b)(1) of the Middle Class Tax Cut and Job Creation Act of 2012 (Pub. L. 112-96), requires that the Secretary conduct a study that examines options for bundled or episode-based payment to cover physicians' services currently paid under the PFS under section 1848 of the Act for one or more prevalent chronic conditions or episodes of care for one or more major procedures. In conducting the study, the Secretary shall consult with medical professional societies and other relevant stakeholders. Additionally, the study shall include an examination of related private payer payment initiatives. This section also requires that not later than January 1, 2013, the Secretary submit to certain committees of the Congress a report on the study. The report shall include recommendations on suitable alternative payment options for services paid under the PFS and on associated implementation requirements.

Bundling is one method for structuring payment that can improve payment accuracy and efficiency, assuming the bundling proposal has considered the payment system, context, and included services. Current work on bundling to date has targeted specific codes and sets of codes. Specifically, our ongoing work identifying, reviewing, and validating the RVUs of potentially misvalued services on the PFS will support the development of this report. As detailed above, through the potentially misvalued codes initiative we are currently identifying for review codes that are frequently billed together and codes with low relative values billed in multiples. Many of the codes identified through these screens have been referred to the CPT Editorial Panel for the development of a comprehensive or bundled code, and several bundled codes have already been created and valued. Additionally, in section II.B.2.d. of this CY 2013 PFS proposed rule, we discuss improving the value of the global surgical package and request public comment on methods of obtaining accurate and current data on E/M services furnished as part of global surgical procedures. This information on measuring post-operative work in our current payment bundles also will inform our report to the Congress. We will continue to examine options for bundled or episode-based payments and will include our recommendations and implementation options in our report to the Congress submitted no later than January 1, 2013.

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

In accordance with our statutory mandate, we have 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. In the current process, we identify potentially misvalued codes for review, and request recommendations from the AMA RUC and other public commenters on revised work RVUs and direct PE inputs for those codes. The AMA RUC, through its own processes, identifies potentially misvalued codes for review, and through our public nomination process for potentially misvalued codes established in the CY 2012 PFS final rule, other individuals and stakeholder groups submit nominations for review of potentially misvalued codes as well.

Since CY 2009, as a part of the annual potentially misvalued code review and Five-Year Review process, we have reviewed over 1,000 potentially misvalued codes to refine work RVUs and direct PE inputs. 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, listed above.A more detailed discussion of the extensive prior reviews of potentially misvalued codes is included in the CY 2012 PFS final rule with comment period (76 FR 73052 through 73055).

In last year's PFS proposed rule (CY 2012), we identified potentially misvalued codes in the category of “Other codes determined to be appropriate by the Secretary,” referring a list of the highest PFS expenditure services, by specialty, that had not been recently reviewed (76 FR 73059 through 73068). In the CY 2012 final rule with comment period we finalized policy to consolidate the review of physician work and PE at the same time (76 FR 73055 through 73958), and established a process for the annual public nomination of potentially misvalued services to replace the Five-Year review process (76 FR 73058 through 73059). Below we discuss proposals that support our continuing efforts to appropriately identify, review, and adjust values for potentially misvalued codes.

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 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, as part of the validation, 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) and CY 2012 PFS proposed rule (76 FR 42790), we solicited public comments on possible approaches, methodologies, and data sources that we should consider for a validation process. A summary of the comments along with our responses are included in the CY 2011 PFS final rule with comment period (75 FR 73217) and the CY 2012 PFS final rule with comment period (73054 through 73055). In CY 2012 we intend to enter into a contract to assist us in validating RVUs of potentially misvalued codes that will explore a model for the validation of physician work under the PFS, both for new and existing services. We plan to discuss this model further in future rulemaking.

d. Improving the Valuation of the Global Surgical Package

(1) Background

We applied the concept of payment for a global surgical package under the PFS at its inception on January 1, 1992 (56 FR 59502). For each global surgical procedure, we establish a single payment, which includes payment for a package of all related services typically furnished by the surgeon furnishing the procedure during the global period. Each global surgery is paid on the PFS as a single global surgical package. Each global surgical package payment rate is based on the work necessary for the typical surgery and related pre- and post-operative work. The global period may include 0, 10, or 90 days of post-operative care, depending on the procedure. For major procedures, those with a 90-day global period, the global surgical package payment also includes the day prior to the day of surgery.

Some global surgical packages have been valued by adding the RVU of the surgical procedure and all pre- and post-operative evaluation and management (E/M) services included in the global period. Others have been valued using magnitude estimation, in which case, the overall RVU for the surgical package was determined without factoring in the specific RVUs associated with the E/M services in the global period. The number and level of E/M services identified with a global surgery payment are based on the typical case. Even though a surgical package may have been developed with several E/M services included, a physician is not required to furnish each pre- or post-operative visit to bill for the global surgical package.

Similar to other bundled services on the PFS, when a global surgery code is billed, the bundled pre- and post-operative care is not separately payable; surgeons or other physicians billing a surgical procedure, cannot separately bill for the E/M services that are included in the global surgical package.

(2) Measuring Post-Operative Work

The use of different methodologies for valuing global surgical packages since 1992 has created payment rates with a wide range of E/M services included within the post-operative period. This is especially true among those with 90-day global periods. More recently reviewed codes tend to have fewer E/M services in the global period, and the work RVUs of those E/M services are often accounted for in the value for the global surgical package. The value of less recently reviewed global surgeries frequently do not appear to include the full work RVUs of each E/M service in the global surgical package, and the numbers of E/M services included in the post-operative period can be inconsistent within a family of procedures. For example, there is significant variation in the number and level of E/M services included in two transplantation procedures in Table 4. Pre-, intra-, and post-operative times, including the number of post-operative visits, for each global surgical package can be found in the physician time file on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=4&sortOrder=descending&itemID=CMS1253669&intNumPerPage=10.

Table 4—Transplantation Procedures Showing a Significant Range in the Number of Included E/M Services Back to Top
CPT Code Short descriptor Work RVU E/M services included in global period Total E/M Work RVU
99213 99231 99238 99291
50360 Transplantation of kidney 40.90 9 12 1 10 64.13
47135 Transplantation of liver 83.64 7 0 0 0 6.79

In 2005, the HHS Office of Inspector General (OIG) examined whether global surgical packages are appropriately valued. In its report on eye and ocular surgeries, “National Review of Evaluation and Management Services Included in Eye and Ocular Adnexa Global Surgery Fees for Calendar Year 2005” (A-05-07-00077), the OIG reviewed a sample of 300 eye and ocular surgeries, and counted the actual number of face-to-face services in the surgeons' medical records to establish whether the surgeon furnished post-operative E/M services. The OIG findings show that surgeons typically furnished fewer E/M services in the post-operative period than were identified with the global surgical package payment for each procedure. A smaller percentage of surgeons furnished more E/M services than were identified with the global surgical package payment. The OIG could only review the number of face-to-face services and was not able to review the level of E/M services that the surgeons furnished due to a lack of documentation in surgeons' medical records. The OIG concluded that the RVUs for the global surgical package are too high because they include the work of E/M services that are not typically furnished within the global period for the reviewed procedures.

Following the 2005 report, the OIG continued to investigate E/M services furnished during the global surgical period. In May 2012, the OIG published a report titled “Musculoskeletal Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided” (A-05-09-00053). For this investigation, the OIG sampled 300 musculoskeletal global surgeries and again found that, for the majority of sampled surgeries, physicians furnished fewer E/M services than were identified as part of the global period for that service. Once again, a smaller percentage of surgeons furnished more E/M services than were identified with the global surgical package payment. The OIG concluded that the RVUs for the global surgical package are too high because they include the work of E/M services that are not typically furnished within the global period for the reviewed procedures.

In both reports, the OIG recommended that we adjust the number of E/M services identified with the global surgical payments to reflect the number of E/M services that are actually being furnished. Under the PFS, we do not ask surgeons to report bundled services on their claim when billing for the global surgical package as we do providers furnishing bundled services under other Medicare payment systems. Since it is not necessary for a surgeon to identify the level and code of the E/M services actually furnished during the global period, there is very limited documentation on the frequency or level of post-operative services. Without sufficient documentation, a review of the medical record cannot accurately determine the number or level of E/M services furnished in the post-operative period.

As noted above, section 1848(c)(2)(K) of the Act (as added by section 3134 of the Affordable Care Act), which essentially codified the potentially misvalued codes initiative, requires that the Secretary identify and review potentially misvalued services with an emphasis on several categories, and recognizes the Secretary's discretion to identify additional potentially misvalued codes. Several of the categories of potentially misvalued codes support better valuation of global surgical package codes. We have made efforts to prioritize the review of RVUs for services on the PFS that have not been reviewed recently or for services where there is a potential for misuse. One of the priority categories for review of potentially misvalued codes is services that have not been subject to review since the implementation of the PFS (the so-called “Harvard-valued codes”). In the CY 2009 PFS proposed rule, we requested that the AMA RUC engage in an ongoing effort to review the remaining Harvard-valued codes, focusing first on the high-volume, low intensity codes (73 FR 38589). For the Fourth Five-Year Review (76 FR 32410), we requested that the AMA RUC review services that have not been reviewed since the original implementation of the PFS with utilization greater than 30,000 (Harvard-valued—Utilization > 30,000). In section II.B.3 of this proposed rule, we propose to review Harvard-valued services with annual allowed charges that total at least $10,000,000 (Harvard-valued—Allowed charges ≥ $10,000,000), and request recommendations from the AMA RUC and other public commenters on appropriate values for these services.

Of the more than 1,000 identified potentially misvalued codes, just over 650 are surgical services with a global period of 0, 10, or 90 days. We have completed our review of 450 of these potentially misvalued surgical codes. These efforts are important, but we believe the usual review process does not go far enough to assess whether the valuation of global surgical packages reflects the number and level of post-operative services that are typically furnished. To support our statutory obligation to identify and review potentially misvalued services and to respond to the OIG's concern that global surgical package payments are misvalued, we believe that we should begin gathering more information on the E/M services that are typically furnished with surgical procedures. Information regarding the typical work involved in surgical procedures with a global period is necessary to evaluate whether certain surgical procedures are appropriately valued. While the AMA RUC reviews and recommends RVUs for services on the PFS, we complete our own assessment of those recommendations, and may adopt different RVUs. However, for procedures with a global period, the lack of claims data and documentation restrict our ability to review and assess the appropriateness of their RVUs.

We are seeking comments on methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package. We are especially interested in and invite comments on a claims-based data collection approach that would include reporting E/M services furnished as part of a global surgical package, as well as other valid, reliable, generalizable, and robust data to help us identify the number and level of E/M services typically furnished in the global surgical period for specific procedures. We will carefully weigh all comments received as we consider ways to appropriately review values for global surgical packages.

3. CY 2013 Identification and Review of Potentially Misvalued Services

a. Public Nomination of Potentially Misvalued Codes

In the CY 2012 PFS final rule, we finalized a public nomination process for potentially misvalued codes (76 FR 73058). Under the previous Five-Year Reviews, the public nominated 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 established a process by which the public can submit codes, along with documentation supporting the need for review, on an annual basis. Stakeholders may nominate potentially misvalued codes for review 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. Supporting documentation for codes nominated for the annual review of potentially misvalued codes may include 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; and physician time.
  • An anomalous relationship between the code being proposed for review and other codes.
  • 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.

Under this newly established process, 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 evaluate the supporting documentation and assess whether they appear to be potentially misvalued codes appropriate for review under the annual process. In the following year's PFS proposed rule, we would publish the list of nominated codes, and indicate whether each nominated code will be reviewed as potentially misvalued.

This year is the first year we are considering codes we received through this public nomination process for potentially misvalued codes. In the 60 days following the release of the CY 2012 PFS final rule with comment period, we received nominations and supporting documentation for review of the codes listed in Tables 5 and 6. A total of 36 CPT codes were nominated. The majority of the nominated codes were codes for which we finalized RVUs in the CY 2012 PFS final rule. That is, the RVUs were interim in CY 2011 and finalized for CY 2012, or proposed in either the Fourth Five-Year Review of Work or the CY 2012 PFS proposed rule and finalized for CY 2012. Under this annual public nomination process, we note that it would be highly unlikely that we would determine that a nominated code is appropriate for review under the potentially misvalued codes initiative if it had been reviewed in the years immediately preceding its nomination since we believe that the best information on the level of physician work and PE inputs already would have been available through that recent review. Nonetheless, we evaluated the supporting documentation for each nominated code to ascertain whether the submitted information demonstrated that the code is potentially misvalued.

Table 5—CPT Codes Nominated as Potentially Misvalued in CY 2012 Final Rule Comment Period: Proposed Action Back to Top
CPT Code Short descriptor Last reviewed For: CMS proposed action Regulations.gov comment search
33282 Implant pat-active ht record CY 2000 Review and add nonfacility inputs. Not considered potentially misvalued CMS-2011-0131-1422.
33284 Remove pat-active ht record CY 2000 Review and add nonfacility inputs. Not considered potentially misvalued CMS-2011-0131-1422.
77336 Radiation physics consult CY 2003 (PE Only) Review as a potentially misvalued code CMS-2011-0131-1617.
94762 Measure blood oxygen level CY 2010 (PE Only) Propose revisions in the CY 2013 PFS proposed rule CMS-2011-0131-1615; CMS-2011-0131-1412; CMS-2011-0131-1632.

CPT codes 33282 (Implantation of patient-activated cardiac event recorder) and 33284 (Removal of an implantable, patient-activated cardiac event recorder) were nominated for review as potentially misvalued codes. The commenter asserted that CPT codes 33282 and 33284 are misvalued in the nonfacility setting because these CPT codes currently are only priced in the facility setting even though physicians perform these services in the office setting. The commenter requested that we establish appropriate payment for the services when furnished in a physician office. Specifically, they requested that CMS establish nonfacility PE RVUs for these services. We do not consider the lack of pricing in a particular setting as an indicator of a potentially misvalued code. However, given that these services are now furnished in the nonfacility setting, we believe that CPT codes 33282 and 33284 should be reviewed to establish appropriate nonfacility inputs. We note, as did the commenter, that the valuation of a service under the PFS in a particular setting does not address whether those services and the setting in which they are furnished are medically reasonable and necessary for a patient's medical needs and condition. We propose to review CPT codes 33282 and 33284 and request recommendations from the AMA RUC and other public commenters on the appropriate physician work RVUs (as measured by time and intensity), and facility and nonfacility direct PE inputs for these services.

Like CPT codes 33282 and 33284, stakeholders have requested that we establish appropriate payment for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural) when furnished in an office setting. This request was not submitted as a potentially misvalued code nomination. However, given that these services are now furnished in the nonfacility setting, we believe CPT code 63650 should be reviewed to establish appropriate nonfacility inputs. Please see section II.A.3 (Changes to Direct Inputs for Specific Services) for a discussion of spinal code stimulation trial procedures in the nonfacility setting.

CPT code 77336 (Continuing medical physics consultation, including assessment of treatment parameters, quality assurance of dose delivery, and review of patient treatment documentation in support of the radiation oncologist, reported per week of therapy) was nominated for review as a potentially misvalued code. The commenter asserted that CPT code 77336 is misvalued because changes in the technique for rendering continuing medical physics consultations have resulted in changes to the knowledge required, time, and effort expended, and complexity of technology associated with the tasks performed by the physicist other staff. Additionally the commenter believes that the direct PE inputs no longer accurately reflect the resources used to deliver this service and may be undervalued. CPT code 77336 was last reviewed for CY 2003. After evaluating the detailed supporting information that the commenter provided, we believe there may have been changes in technology and other PE inputs since we last reviewed the service, and that further review is warranted. As such, we propose to review CPT code 77336 as potentially misvalued and request recommendations from the AMA RUC and other public commenters on the direct PE inputs for this service, and physician work RVUs and direct PE inputs for the other services within this family of CPT codes.

CPT code 94762 (Noninvasive ear or pulse oximetry for oxygen saturation; by continuous overnight monitoring (separate procedure)) was nominated for review as a potentially misvalued code. Commenters asserted that CPT code 94762 is misvalued because the time currently allocated to the various direct PE inputs does not accurately reflect current practice. Commenters also asserted that independent diagnostic testing facilities are not appropriately accounted for in the current indirect PE methodology. In response to these stakeholder concerns, we reviewed the PE inputs for CPT code 94762, which was last reviewed for CY 2010. We believe CPT code 94762 is misvalued, and we are proposing changes to the PE inputs for CY 2013. Following clinical review, we believe that the current time allocated to clinical labor and supplies appropriately reflects current practice. However, we believe that 480 minutes (8 hours) of equipment time for the pulse oximetry recording slot and pulse oximeter with printer are more appropriate for this overnight monitoring procedure code. As such, we are proposing this refinement to the direct PE inputs for CPT code 94762 for CY 2013. These proposed adjustments are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

CPT code 53445 (Insertion of inflatable urethral/bladder neck sphincter, including placement of pump, reservoir, and cuff) was nominated for review as a potentially misvalued code. CPT code 53445 was identified through the site-of-service anomaly potentially misvalued code screen for CY 2008 and is currently interim for CY 2012 and open to public comment. We will consider the content of the potentially misvalued code nomination and supporting documentation for CPT code 53445 as comments on the interim final value, and will address the comments in the CY 2013 PFS final rule with comment period when we address the final value of the CPT code.

For purposes of CY 2013 rulemaking, we do not consider the other nominated codes, listed in Table 6 to be potentially misvalued because these codes were last reviewed and valued for CY 2012 and the supporting documentation did not provide sufficient evidence to demonstrate that the codes should be reviewed as potentially misvalued for CY 2013 or CY 2014. The supporting documentation for these services generally mirrored the public comments previously submitted, to which CMS has already responded.

Table 6—CPT Codes Nominated as Potentially Misvalued in CY 2012 Final Rule Comment Period: No Further Action Proposed Back to Top
CPT Code Short descriptor
* CPT code 53445 is currently interim and open for public comment. We are accepting as public comment the nomination information submitted and will address these comments in the CY 2013 PFS final rule with comment period.
28820 Amputation of toe.
28825 Partial amputation of toe.
35188 Repair blood vessel lesion.
35612 Artery bypass graft.
35800 Explore neck vessels.
35840 Explore abdominal vessels.
35860 Explore limb vessels.
36819 Av fuse uppr arm basilic.
36825 Artery-vein autograft.
43283 Lap esoph lengthening.
43327 Esoph fundoplasty lap.
43328 Esoph fundoplasty thor.
43332 Transab esoph hiat hern rpr.
43333 Transab esoph hiat hern rpr.
43334 Transthor diaphrag hern rpr.
43335 Transthor diaphrag hern rpr.
43336 Thorabd diaphr hern repair.
43337 Thorabd diaphr hern repair.
43338 Esoph lengthening.
47563 Laparo cholecystectomy/graph.
49507 Prp i/hern init block >5 yr.
49521 Rerepair ing hernia blocked.
49587 Rpr umbil hern block >5 yr.
49652 Lap vent/abd hernia repair.
49653 Lap vent/abd hern proc comp.
49654 Lap inc hernia repair.
49655 Lap inc hern repair comp.
53445* Insert uro/ves nck sphincter.
60220 Partial removal of thyroid.
60240 Removal of thyroid.
60500 Explore parathyroid glands.
95800 Slp stdy unattended.

b. Potentially Misvalued Code Lists

As mentioned above, in the last several annual PFS proposed rules we have identified lists of potentially misvalued codes for review. We believe it is imperative that we continue to identify new lists of potentially misvalued codes for review to appropriately identify, review, and adjust values for potentially misvalued codes for CY 2013.

(1) Review of Harvard-Valued Services With Medicare Allowed Charges of $10,000,000 or More

For many years, we have been reviewing `Harvard-valued' CPT codes through the potentially misvalued code initiative. The RVUs for Harvard-valued CPT codes have not been reviewed since they were originally valued in the early 1990s at the beginning of the PFS. While the principles underlying the relative value scale have not changed, over time the methodologies we use for valuing services on the PFS have changed, potentially disrupting the relativity between the remaining Harvard-valued codes and other codes on the PFS. At this time, nearly all CPT codes that were Harvard-valued and had Medicare utilization of over 30,000 allowed services per year have been reviewed. Moving forward, we propose to review Harvard-valued services with Medicare allowed charges of $10 million or greater per year. The CPT codes meeting these criteria have relatively low Medicare utilization (as we have reviewed the services with utilization over 30,000), but account for significant Medicare spending annually and have never been reviewed. We recognize that several of the CPT codes meeting these criteria have already been identified as potentially misvalued through other screens and may currently be scheduled for review for CY 2013. We also recognize that other codes meeting these criteria have been referred by the AMA RUC to the CPT Editorial Panel. In these cases, we are not proposing re-review of these already identified services, but for the sake of completeness, we include them as a part of this category of potentially misvalued services. We recognize that the relatively low Medicare utilization for these services may make gathering information on the appropriate physician work and direct PE inputs difficult. We request recommendations from the AMA RUC and other public commenters, and appreciate efforts expended to provide RVU and input recommendations to CMS for these lower volume services. Because survey sample sizes could be small for these lower volume services, we encourage the use of valid and reliable alternative data sources and methodologies when developing recommended values. In sum, we propose to review Harvard-valued CPT codes with annual allowed charges of $10 million or more as a part of the potentially misvalued codes initiative. Table 7 lists the codes that meet these criteria using CY 2011 Medicare claims data.

Table 7—Harvard-Valued CPT Codes With Annual Allowed Charges ≥$10,000,000 Back to Top
CPT Code Short descriptor
* Scheduled for CY 2012 AMA RUC Review.
** Referred by the AMA RUC to the CPT Editorial Panel.
13152* Repair of wound or lesion.
27446 Revision of knee joint.
29823 Shoulder arthroscopy/surgery.
36215** Place catheter in artery.
36245** Ins cath abd/l-ext art 1st.
43264** Endo cholangiopancreatograph.
50360 Transplantation of kidney.
52353* Cystouretero w/lithotripsy.
64450* N block other peripheral.
64590 Insrt/redo pn/gastr stimul.
66180 Implant eye shunt.
67036 Removal of inner eye fluid.
67917 Repair eyelid defect.
92286** Internal eye photography.
92982* Coronary artery dilation.
95860* Muscle test one limb.

(2) Review of Services With Stand Alone PE Procedure Time

Improving the accuracy of procedure time assumptions used in PFS ratesetting continues to be a high priority of the potentially misvalued codes initiative. Procedure time is a critical measure of the resources typically used in furnishing particular services to Medicare beneficiaries, and procedure time assumptions are an important component in the development of work and PE RVUs. Discussions in the academic community have indicated that procedure times used for PFS ratesetting are overstated (McCall, N., J. Cromwell, et al. (2006). “Validation of physician survey estimates of surgical time using operating room logs.”Med Care Res Rev 63(6): 764-777. Cromwell, J., S. Hoover, et al. (2006). “Validating CPT typical times for Medicare office evaluation and management (E/M) services.”Med Care Res Rev 63(2): 236-255. Cromwell, J., N. McCall, et al. (2010). “Missing productivity gains in the Medicare physician fee schedule: where are they?”Med Care Res Rev 67(6): 236-255.) MedPAC and others have emphasized the importance of using the best available procedure time information in establishing accurate PFS payment rates. (MedPAC, Report to the Congress: Aligning Incentives in Medicare, June 2010, p. 230)

In recent years, CMS and the AMA RUC have taken steps to consider the accuracy of available data regarding procedure times used in the valuation of the physician work component of PFS payment. Generally, the AMA RUC derives estimates of physician work time from survey responses, and the AMA RUC reviews and analyzes those responses as part of its process for developing a recommendation for physician work. These procedure time assumptions are also used in determining the appropriate direct PE input values used in developing nonfacility PE RVUs. Specifically, physician intra-service time serves as the basis for allocating the appropriate number of minutes within the service period to account for the time used in furnishing the service to the patient. The number of intra-service minutes, or occasionally a particular proportion thereof, is allocated to both the clinical staff that assists the physician in furnishing the service and to the equipment used by either the physician or the staff in furnishing the service. This allocation reflects only the time the beneficiary receives treatment and does not include resources used immediately prior to or following the service. Additional minutes are often allocated to both clinical labor and equipment resources in order to account for the time used for necessary preparatory tasks immediately preceding the procedure or tasks typically performed immediately following it. For codes without physician work, the procedure times assigned to the direct PE inputs for such codes assume that the clinical labor performs the procedure. For these codes, the number of intra-service minutes assigned to clinical staff is independent and not based on any physician intra-service time assumptions. Consequently, the procedure time assumptions for these kinds of services have not been subject to all of the same mechanisms recently used by the AMA RUC and physician community in providing recommendations to CMS, and by CMS in the valuation of the physician work component of PFS payment. These independent clinical labor time assumptions largely determine the RVUs for the procedure. To ensure that procedure time assumptions are as accurate as possible across the Medicare PFS, we believe that codes without physician work should be examined with the same degree of scrutiny as services with physician work.

For CY 2012, a series of radiation treatment services were reviewed as part of the potentially misvalued code initiative. Among these were intensity modulated radiation therapy (IMRT) delivery services and stereotactic body radiation therapy (SBRT) delivery services reported with CPT codes 77418 (Intensity modulated treatment delivery, single or multiple fields/arcs, via narrow spatially and temporally modulated beams, binary, dynamic MLC, per treatment session) and 77373 (Stereotactic body radiation therapy, treatment delivery, per fraction to 1 or more lesions, including image guidance, entire course not to exceed 5 fractions), respectively. CPT code 77418 (IMRT treatment delivery) had been identified as potentially misvalued based on Medicare utilization data that indicated both fast growth in utilization and frequent billing with other codes. We identified this code as potentially misvalued in the CY 2009 PFS proposed rule (73 FR 38586). CPT code 77373 (SBRT treatment delivery) had been identified as potentially misvalued by the RUC as a recently established code describing services that use new technologies. There is no physician work associated with either of these codes since other codes are used to bill for planning, dosimetry, and radiation guidance. Both codes are billed per treatment session. Because the physician work associated with these treatments is reported using codes distinct from the treatment delivery, the primary determinant of PE RVUs for these codes is the number of minutes allocated for the procedure time to both the clinical labor (radiation therapist) and the resource-intensive capital equipment included as direct PE inputs.

In the CY 2012 PFS final rule with comment period, we received and accepted without refinement PE recommendations from the AMA RUC for these two codes. (We received the recommendation for CPT code 77418 (IMRT treatment delivery) too late in 2010 to be evaluated for CY 2011 and it was therefore included in the CY 2012 rulemaking cycle.) The AMA RUC recommended minor revisions to the direct PE inputs for the code to eliminate duplicative clinical labor, supplies, and equipment to account for the frequency with which the code was billed with other codes. For CPT code 77373 (SBRT treatment delivery), the RUC recommended no significant changes to the direct PE inputs.

Subsequent to the publication of the final rule, the AMA RUC and other stakeholders informed CMS that the direct PE input recommendation forwarded to CMS for IMRT treatment delivery (CPT code 77418) inadvertently omitted seven equipment items typically used in furnishing the service. These items had been used as direct PE inputs for the code prior to CY 2012. There is broad agreement among stakeholders that these seven equipment items are typically used in furnishing the services described by CPT code 77418. We were unable to reincorporate the items for CY 2012. These omitted items are listed in Table 8. In consideration of the comments from the AMA RUC and other stakeholders, we are proposing to include the seven equipment items omitted from the RUC recommendation for CPT code 77418. These proposed adjustments are also reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We note that the proposed PE RVUs included in Addendum B to this proposed rule reflect the RVUs that result from application of these proposals.

Table 8—Equipment Inputs Omitted From RUC Recommendation for CPT Code 77418 Back to Top
Equipment code Equipment description
[IMRT Treatment Delivery]
ED011 computer system, record and verify.
ED035 video camera.
ED036 video printer, color (Sony medical grade).
EQ139 intercom (incl. master, pt substation, power, wiring).
ER006 IMRT physics tools.
ER038 isocentric beam alignment device.
ER040 laser, diode, for patient positioning (Probe).

It has come to our attention that there are wide discrepancies between the procedure time assumptions used in establishing nonfacility PE RVUs for these services and the procedure times made widely available to Medicare beneficiaries and the general public. Specifically, the direct PE inputs for IMRT treatment delivery (CPT code 77418) reflect a procedure time assumption of 60 minutes. These procedure minutes were first assigned to the code for CY 2002 based on a recommendation from the AMA RUC indicating that the typical treatment time for the IMRT patient was 40 to 70 minutes. The most recent RUC recommendation that CMS received for CY 2012 rulemaking supported the procedure time assumption of 60 minutes.

Information publicly available to Medicare beneficiaries and the general public clearly indicates that IMRT sessions typically last between 10 and 30 minutes. For example, the American Society for Radiation Oncology (ASTRO) publishes a patient fact sheet that explains that for all external beam radiation therapy, including IMRT, “treatment is delivered in a series of daily sessions, each about 15 minutes long.” [“Radiation Therapy for Prostate Cancer: Facts to Help Patients Make an Informed Decision” available for purchase at www.astro.org/MyASTRO/Products/Product.aspx?AstroID=6901.] This fact sheet is intended for patients with prostate cancer, the typical diagnosis for Medicare beneficiaries receiving IMRT. Similarly, the American College of Radiology (ACR) and the Radiological Society of North America (RSNA) co-sponsor a Web site for patients called http://radiologyinfo.org that states that IMRT “treatment sessions usually take between 10 and 30 minutes.”

The direct PE inputs for SBRT treatment delivery (CPT code 77373) reflect a procedure time assumption of 90 minutes. These procedure minutes were first assigned to the code for CY 2007 based on a recommendation from the AMA RUC. The most recent RUC recommendation that CMS received for CY 2012 rulemaking supported continuing that procedure time assumption.

In 2012, information publicly available to Medicare beneficiaries and the general public states that SBRT treatment typically lasts no longer than 60 minutes. For example, the American College of Radiology (ACR) and the Radiological Society of North America (RSNA) Web site, http://radiologyinfo.org, states that SBRT “treatment can take up to one hour.”

Given the importance of the procedure time assumption in the development of RVUs for these services, using the best available information is critical to ensuring that these services are valued appropriately. We have no reason to believe that information medical societies and practitioners offer to their cancer patients regarding the IMRT or SBRT treatment experience is inaccurate or atypical. Therefore, we believe that the typical procedure time for IMRT delivery is between 10 and 30 minutes and that the typical procedure time for SBRT delivery is under 60 minutes. The services are currently valued using procedure time assumptions of 60 and 90 minutes, respectively. We believe these procedure time assumptions, distinct from necessary preparatory or follow-up tasks by the clinical labor, are clearly outdated and need to be updated using the best information available.

While we generally have not used publicly available resources to establish procedure time assumptions, we believe that the procedure time assumptions used in setting payment rates for the Medicare PFS should be derived from the most accurate information available. In the case of these services, we believe that the need to reconcile the vast discrepancies between our existing assumptions and more accurate information outweighs the potential value in maintaining relativity offered by only considering data from one source. We are proposing to adjust the procedure time assumption for IMRT delivery (CPT code 77418) to 30 minutes. We are proposing to adjust the procedure time assumption for SBRT delivery (CPT code 77373) to 60 minutes. These procedure time assumptions reflect the maximum number of minutes reported as typical in publicly available information. We note that in the case of CPT code 77418, the `accelerator, 6-18 MV' (ER010) and the `collimator, multileaf system w-autocrane' (ER017) are used throughout the procedure and currently have no minutes allocated for preparing the equipment, positioning the patient, or cleaning the room. Since these clinical labor tasks are associated with related codes typically reported at the same time, we are also proposing to allocate minutes to these equipment items to account for their use immediately before and following the procedure. All of these proposed adjustments are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs included in Addendum B to this proposed rule reflect the RVUs that result from the application of this proposal. We request recommendations from the AMA RUC and other public commenters on the direct PE inputs for these services.

While we recognize that using these procedure time assumptions will result in payment reductions for these particular services, we believe such changes are necessary to appropriately value these services. Recent attention from popular media sources like the Wall Street Journal (online.wsj.com/article/SB10001424052748703904804575631222900534954.html December 7, 2010) and the Washington Post (www.washingtonpost.com/wp-dyn/content/article/2011/02/28/AR2011022805378.html) February 28, 2011 has encouraged us to consider the possibility that potential overuse of IMRT services may be partially attributable to financial incentives resulting from inappropriate payment rates. In its 2010 Report to Congress, MedPAC referenced concerns that financial incentives may influence how cancer patients are treated. In the context of the growth of ancillary services in physicians' offices, MedPAC recommended that improving payment accuracy for discrete services should be a primary tool used by CMS to mitigate incentives to increase volume (Report to Congress: Aligning Incentives in Medicare, June 2010, p. 225). We note that in recent years, PFS nonfacility payment rates for IMRT treatment delivery have exceeded the Medicare payment rate for the same service paid through the hospital Outpatient Prospective Payment System (OPPS). We believe that such high-volume services that are widely furnished in both nonfacility and facility settings are highly unlikely to be more resource-intensive in freestanding radiation therapy centers or physicians' offices than when furnished in facilities like hospitals that generally incur higher overhead costs, maintain a 24 hour, 7 day per week capacity, are generally paid in larger bundles, and generally furnish services to higher acuity patients than the patients who receive services in physician offices or free-standing clinics. Given that the OPPS payment rates are based on auditable data on hospital costs, we believe the seemingly counterintuitive relationship between the OPPS and nonfacility PFS payment rates reflects inappropriate assumptions within the current direct PE inputs for CPT code 77418. The AMA RUC's most recent direct PE input recommendations reflect the same procedure time assumptions used in developing the recommendations for CY 2002. As we explained above, we do not understand how the AMA RUC can recommend these assumptions in the context of the procedure time information available to the general public. We believe that using procedure time assumptions that reflect the maximum times reported as typical to Medicare beneficiaries will improve the accuracy of those inputs and the resulting nonfacility payment rates.

These two treatment delivery codes are PE only codes and are fairly unique in that the resulting RVUs are largely comprised of resources for staff and equipment based on the minutes associated with clinical labor. There are several other codes on the PFS established through the same methodology. As we previously stated, we believe that the procedure time assumptions for these kinds of services have not been subject to all of the same mechanisms recently used by CMS in the valuation of the physician work component of PFS payment. In light of observations about publicly available procedure times for CPT codes 77418 (IMRT treatment delivery) and 77373 (SBRT treatment delivery) and public awareness of potential adverse financial incentives associated with IMRT treatment delivery in particular, we believe that similar codes are potentially misvalued.

Therefore, consistent with the requirement in section 1848(c)(2)(K)(ii) of the Act to examine other codes determined to be appropriate by the Secretary, we are proposing to review and make adjustments to CPT codes with stand alone procedure time assumptions used in developing nonfacility PE RVUs. These procedure time assumptions are not based on physician time assumptions. We are prioritizing for review CPT codes that have annual Medicare allowed charges of $100,000 or more, include direct equipment inputs that amount to $100 or more, and have PE procedure times of greater than 5 minutes. At this time, we are not including in this category services with payment rates subject to the OPPS cap (as specified in the statute under section 1848(b)(4) of the Act and listed in Addendum G to this proposed rule) or services with PE minutes established through code descriptors. (For example, an overnight monitoring code might contain 480 minutes of monitoring equipment time to account for 8 hours of overnight monitoring.) The CPT codes meeting these criteria appear in Table 9. We recognize that there are other CPT codes that are valued in the same manner. We may consider evaluating those services as potentially misvalued codes in future rulemaking.

For the services in Table 9, we request recommendations from the AMA RUC and other public commenters on the appropriate direct PE inputs for these services. We encourage the use of valid and reliable alternative data sources when developing recommended values, including electronic medical records and other independent data sources. We note that many of the CPT codes in Table 9 have been identified through other potentially misvalued code screens and have been recently reviewed. Given our observed concerns with the inputs for the recently reviewed IMRT and SBRT direct PE inputs discussed above, we believe it is necessary to re-review other recently reviewed services with stand alone PE procedure time.

Table 9—Services With Stand Alone PE Procedure Time Back to Top
CPT Code Short descriptor
77280 Set radiation therapy field.
77285 Set radiation therapy field.
77290 Set radiation therapy field.
77301 Radiotherapy dose plan imrt.
77338 Design mlc device for imrt.
77372 Srs linear based.
77373 Sbrt delivery.
77402 Radiation treatment delivery.
77403 Radiation treatment delivery.
77404 Radiation treatment delivery.
77406 Radiation treatment delivery.
77407 Radiation treatment delivery.
77408 Radiation treatment delivery.
77409 Radiation treatment delivery.
77412 Radiation treatment delivery.
77413 Radiation treatment delivery.
77414 Radiation treatment delivery.
77416 Radiation treatment delivery.
77418 Radiation tx delivery imrt.
77600 Hyperthermia treatment.
77785 Hdr brachytx 1 channel.
77786 Hdr brachytx 2-12 channel.
77787 Hdr brachytx over 12 chan.
88348 Electron microscopy.

c. Services With Anomalous Time

Each year when we publish the PFS proposed and final rules, we publish on the CMS Web site several files that support annual PFS rate-setting. One of these supporting files is the physician time file, which lists the physician time associated with the HCPCS codes on the PFS. The physician time file associated with this PFS proposed rule is available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

In our review of potentially misvalued codes and their inputs, we became aware of several HCPCS codes that have anomalous times in our physician time file. Physician work is a measure of physician time and intensity, so there should be no services that have payable physician work RVUs but no physician time in the time file, and there should be no payable services with physician time in the time file and no physician work RVUs. For CY 2013 we are proposing to make the physician time file changes detailed below to address these anomalous time file entries.

(1) Review of Services With Physician Work and No Listed Physician Time

CPT code 94014 (Patient-initiated spirometric recording per 30-day period of time; includes reinforced education, transmission of spirometric tracing, data capture, analysis of transmitted data, periodic recalibration and physician review and interpretation) has a physician work RVU of 0.52 and is currently listed with 0 physician time. CPT code 94014 is a global service that includes CPT code 94015 (Patient-initiated spirometric recording per 30-day period of time; recording (includes hook-up, reinforced education, data transmission, data capture, trend analysis, and periodic recalibration)) (the technical component), and CPT code 94016 (Patient-initiated spirometric recording per 30-day period of time; physician review and interpretation only) (the professional component). We believe it is appropriate for the physician time of CPT code 94014 to match the physician time of the code's component professional service—CPT code 94016. As such, for CPT code 94014 for CY 2013, we are proposing to assign 2 minutes of pre-service evaluation time, and 20 minutes of intra-service time, which matches the times associated with CPT code 94016. These proposed adjustments are reflected in the physician time file associated with this proposed rule, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

HCPCS codes G0117 (Glaucoma screening for high risk patients furnished by an optometrist or ophthalmologist) and G0118 (Glaucoma screening for high risk patient furnished under the direct supervision of an optometrist or ophthalmologist) both have physician work RVUs (0.45, and 0.17, respectively), but neither code is included in the physician time file. HCPCS codes G0117 and G0118 have a PFS procedure status indicator of T indicating that these services are only paid if there are no other services payable under the PFS billed on the same date by the same provider.

In the CY 2002 PFS final rule (66 FR 55274), we crosswalked the physician work of HCPCS code G0117 from CPT code 99212 (Level 2 office or other outpatient visit, established patient), and we crosswalked the physician work of HCPCS code G0118 from CPT code 99211 (Level 1 office or other outpatient visit, established patient). Based on these finalized physician work crosswalks, we propose to assign HCPCS code G0117 physician times matching CPT code 99212, and HCPCS code G0118 physician times matching CPT code 99211. Specifically, we are proposing 2 minutes of pre-service time, 10 minutes of intra-service time, and 4 minutes of immediate post-service time for HCPCS code G0117, and 5 minutes of intra-service time, and 2 minutes of immediate post-service time for HCPCS code G0118. These proposed adjustments are reflected in the physician time file associated with this proposed rule, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

HCPCS code G0128 (Direct (face-to-face with patient) skilled nursing services of a registered nurse provided in a comprehensive outpatient rehabilitation facility, each 10 minutes beyond the first 5 minutes) currently has a physician work RVU (0.08), but is not listed in the physician time file. After review of this HCPCS code, we do not believe that HCPCS code G0128 describes a service that includes physician work. Time for a registered nurse to furnish the service is included in the PE for the code. As such, for CY 2013, we propose to remove the physician work RVU for HCPCS code G0128. HCPCS code G0128 will continue to have PE and malpractice expense RVUs.

HCPCS codes 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), and 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 (that is, 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) have physician work RVUs of 0.88, 0.45, and 0.50, respectively, but are not listed in the physician time file. HCPCS codes G0245, G0246, and G0247 have a procedure status indicator of R on the PFS indicating that coverage of these services is restricted.

In the CY 2003 PFS final rule (67 FR 79990), we crosswalked the physician work of HCPCS code G0245 from CPT code 99202 (Level 2 office or other outpatient visits, new patient), we crosswalked the physician work of HCPCS code G0246 from CPT code 99212, and we crosswalked the physician work of HCPCS code G0257 from CPT code 11040 (Debridement; skin; partial thickness). Based on these finalized physician work crosswalks, we propose to assign HCPCS code G0245 physician times matching CPT code 99202, HCPCS code G0246 physician times matching CPT code 99212, and HCPCS code G0247 physician times matching CPT code 11040. Specifically, for HCPCS code G0245 we are proposing 2 minutes of pre-service time, 15 minutes of intra-service time, and 5 minutes of immediate post-service time. For HCPCS code G0246 we are proposing 2 minutes of pre-service time, 10 minutes of intra-service time, and 4 minutes of immediate post-service time. For HCPCS code G0247 we are proposing 7 minutes of pre-service time, 10 minutes of intra-service time, and 7 minutes of immediate post-service time. These proposed adjustments are reflected in the physician time file associated with this proposed rule, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

HCPCS code G0250 (Physician review, interpretation, and patient management of home INR (International Normalized Ratio) testing for patient with either mechanical heart valve(s), chronic atrial fibrillation, or venous thromboembolism who meets Medicare coverage criteria; testing not occurring more frequently than once a week; billing units of service include 4 tests) has a physician work RVU of 0.18 but is not listed in the physician time file. HCPCS code G0250 has a procedure status indicator of R on the PFS indicating that coverage of this service is restricted. In the CY 2003 final rule (67 FR 79991), we assigned HCPCS code G0250 a work RVU of 0.18, which corresponds to the work RVU of CPT code 99211. While we did not articulate this as a direct crosswalk in the CY 2003 final rule, after clinical review we believe that HCPCS code G0250 continues to require similar work as CPT code 99211, and should have the same amount of physician time as CPT code 99211. As such, we are proposing to assign HCPCS code G0250 the same physician time as CPT code 99211. Specifically, for HCPCS code G0250 we are proposing 5 minutes of intra-service time and 2 minutes of immediate post-service time. These proposed adjustments are reflected in the physician time file associated with this proposed rule, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

During our annual review of new, revised, and potentially misvalued CPT codes, the assessment of physician time used to furnish a service is an important part of the clinical review when determining the appropriate work RVU for a service. However, the time in the physician time file is not used to automatically adjust the physician work RVUs outside of that clinical review process. As such, the proposed addition of physician time to the HCPCS codes discussed above will have no impact on the current physician work RVUs for these services.

The time data in the physician time file is used in the PE methodology described in section II.A.2. In creating the indirect practice cost index (IPCI), 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 furnished by the specialty. The proposed addition of physician time to the HCPCS codes discussed above will affect the aggregate pools of indirect PE at the specialty level. However because the services discussed above have low utilization and low total time, the impact of the physician time changes on the IPCI is negligible, and likely would have a modest impact if any on the PE RVUs at the individual code level.

(2) Review of Services With Stand Alone PE Procedure Time

There are a number of services that have no physician work RVUs, yet include physician time in the physician time file. Many of these services are not payable under the PFS or are contractor priced services where the physician time is not used to nationally price the services on the PFS. We are not proposing to remove the physician time from the time file for these services as the time has no effect on the calculation of RVUs for the PFS. However, there are several CPT codes, listed in Table 10, that are payable under the PFS and have no physician work RVUs yet include time in the physician time file. We are proposing to remove the physician time from the time file for these seven CPT codes. These proposed adjustments are reflected in the physician time file associated with this proposed rule, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

Table 10—Payable CPT Codes With Physician Time and No Physician Work Back to Top
CPT code Short descriptor PFS procedure status CY 2012 total physician time (minutes)
22841 Insert spine fixation device B (Bundled, not separately payable) 5
51798 Us urine capacity measure A (Active, payable) 9
95990 Spin/brain pump refill & main A (Active, payable) 40
96904 Whole body photography R (Restricted coverage) 80
96913 Photochemotherapy uv-a or b A (Active, payable) 90
97545 Work hardening R (Restricted coverage) 120
97602 Wound(s) care non-selective B (Bundled, not separately payable) 36

As mentioned above and as discussed in section II.A.2. of this proposed rule, to create the IPCI used in the PE methodology, 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 proposed removal of physician time from the CPT codes discussed above will affect the aggregate pools of indirect PE at the specialty level. However because the services discussed above have low utilization and/or low total time, the impact of the physician time changes on the IPCI is negligible, and likely would have a modest impact if any on the PE RVUs at the individual code level.

4. Expanding the Multiple Procedure Payment Reduction Policy

Medicare has long employed multiple procedure payment reduction (MPPR) policies to adjust payment to more appropriately reflect reduced resources involved with furnishing the service for certain sets of services frequently furnished together. Under these policies, we reduce payment for the second and subsequent services within the same MPPR category furnished in the same session or same day. These payment reductions reflect efficiencies that typically occur in either the practice expense (PE) or professional work or both when services are furnished together. With the exception of a few codes that are always reported along with another code, the Medicare PFS values services independently to recognize relative resources involved when the service is the only one furnished in a session. While our general policy for MPPRs precedes the Affordable Care Act, this payment policy approach addresses the fourth category of potentially misvalued codes identified in section 1848(c)(2)(K) of the Act, as added by section 3134(a) of the Affordable Care Act, which is “multiple codes that are frequently billed in conjunction with furnishing a single service” (see 75 FR 73216).

For CY 2013, we are proposing to continue our work to recognize resource efficiencies when certain services are furnished together. We are proposing to apply an MPPR to the technical component (TC) of certain diagnostic tests. As discussed in the CY 2012 final rule with comment period (76 FR 73079), we are also proceeding with applying the current MPPR policy for imaging services to services furnished in the same session by physicians in the same group practice.

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 a single physician or physicians in the same group practice on the same day, largely based on the presence of efficiencies in the PE and pre- and post-surgical physician work. Effective January 1, 1995, the MPPR policy, with this 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, for CY 2006 PFS, we extended the MPPR policy to the TC of certain diagnostic imaging procedures furnished on contiguous areas of the body in a single session (70 FR 70261). This MPPR recognizes that for the second and subsequent imaging procedures furnished in the same session, there are some efficiencies in clinical labor, supplies, and equipment time. In particular, certain clinical labor activities and supplies are not duplicated for subsequent imaging services in the same session and, because equipment time and indirect costs are allocated based on clinical labor time, we also reduced those 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 and only applied to procedures furnished in a single session involving contiguous body areas within a family of codes, not across families. Additionally, the MPPR policy originally applied to TC-only services and to the TC of global services, and not to professional component (PC) services.

There have been several revisions to this policy since it was originally adopted. Under the current imaging MPPR policy, full payment is made for the TC of the highest paid procedure, and payment for the TC is reduced by 50 percent for each additional procedure subject to this MPPR policy. 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 BN provision. Effective July 1, 2010, section 1848(b)(4)(C) of the Act, as added by section 3135(b)(1) of the Affordable Care Act increased the MPPR on the TC of imaging services under the policy established in the CY 2006 PFS final rule with comment period from 25 to 50 percent. Section 1848(c)(2)(B)(v)(IV) of the Act, as added by section 3135(b)(2) of the Affordable Care Act exempted the reduced expenditures attributable to this further change from the PFS BN provision.

In the July 2009 U.S. Government Accountability Office (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 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 procedures furnished to the same patient in the same session, regardless of the imaging modality and is not limited to contiguous body areas.

As we noted in the CY 2011 PFS final rule with comment period (75 FR 73228), while section 1848(c)(2)(B)(v)(VI) of the 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 BN adjustment, it does not apply to reduced expenditures attributable to our policy change regarding additional code combinations across code families (non-continguous body areas) that are subject to BN under the PFS. The complete list of codes subject to the CY 2011 MPPR policy for diagnostic imaging services is included in Addendum F.

As a further step in applying the provisions of section 1848(c)(2)(K) of the Act, on 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. As we explained in the CY 2011 PFS final rule with comment period (75 FR 73232), the therapy MPPR does not apply to contractor-priced codes, bundled codes, and add-on codes. The complete list of codes subject to the MPPR policy for therapy services is included in Addendum H.

This MPPR for therapy services was first proposed in the CY 2011 proposed rule (75 FR 44075) as 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. It applies to services furnished by an individual or group practice or “incident to” a physician's service. 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 (PPTRA) (Pub. L. 111-286) revised the payment reduction percentage from 25 percent to 20 percent for therapy services for which payment is made under a fee schedule under section 1848 (which are services furnished in office settings, or non-institutional services). The payment reduction percentage remains at 25 percent for therapy services furnished in institutional settings. Section 4 of the PPTRA exempted the reduced expenditures attributable to the therapy MPPR policy from the PFS BN provision. Under our current policy as amended by the PPTRA, 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.

This MPPR policy applies to multiple units of the same therapy service, as well as to multiple different “always therapy” 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 that are furnished in the office setting and paid under the PFS, as well as institutional services that are furnished by outpatient hospitals, home health agencies, comprehensive outpatient rehabilitation facilities (CORFs), and other entities that are paid for outpatient therapy services at rates based on the PFS.

In its June 2011 Report to Congress, MedPAC highlighted continued growth in ancillary services subject to the in-office ancillary services exception. The in-office ancillary exception to the general prohibition under section 1877 of the Act as amended by the Ethics in Patient Referrals Act, also known as the Stark law, allows physicians to refer Medicare patients for designated health services, including imaging, radiation therapy, home health care, durable medical equipment, clinical laboratory tests, and physical therapy, to entities with which they have a financial relationship under specific conditions. MedPAC recommended that we apply a MPPR to the PC of diagnostic imaging services furnished by the same practitioner in the same session as one means to curb excess self-referral for these services. The GAO already had made a similar recommendation in its July 2009 report.

In continuing to apply the provisions of section 1848(c)(2)(K) of the Act, in the CY 2012 final rule (76 FR 73071), we expanded 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 applied (see Addendum F). Thus, this MPPR policy now applies to the PC and the TC of certain diagnostic imaging codes. Specifically, we expanded the payment reduction currently applied to the TC to apply also to the PC of the second and subsequent advanced imaging services furnished by the same physician (or by two or more physicians in the same group practice) to the same patient in the same session on the same day. However, in response to public comments, in the CY 2012 PFS final rule with comment period, we adopted a 25 percent payment reduction to the PC component of the second and subsequent imaging services.

Under this policy, full payment is made for the PC of the highest paid procedure, and payment is reduced by 25 percent for the PC for each additional procedure furnished to the same patient in the same session. This policy 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 intraservice period.

This policy is consistent with the statutory requirement for the Secretary to identify, review, and adjust the relative values of potentially misvalued services under the PFS as specified by section 1848(c)(2)(K) of the Act. This policy is also consistent both with our longstanding policy on surgical and nuclear medicine diagnostic procedures, under which we apply a 50 percent payment reduction to second and subsequent procedures. Furthermore, it was responsive to continued concerns about significant growth in imaging spending, and to MedPAC (March 2010 and June 2011) and GAO (July 2009) recommendations regarding the expansion of MPPR policies under the PFS to account for additional efficiencies.

In the CY 2012 proposed rule (76 FR 42812), we also invited public comment on the following MPPR policies under consideration. We noted that 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 furnished in the same session. Such an approach could define imaging consistent with our existing definition of imaging for purposes of the statutory cap on PFS 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 when multiple services are furnished together. 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 BN 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.

Such an 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 intraservice period, when multiple services are furnished together. 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 BN 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.

Such an approach would be based on the expected efficiencies due to duplication of clinical labor activities, supplies, and equipment time when multiple services are furnished together. The approach would apply to approximately 700 HCPCS codes, including the approximately 560 HCPCS codes that are currently subject to the OPPS cap. The savings would be redistributed to other PFS services as required by the statutory PFS BN provision.

b. MPPR Policy Clarifications

(1) Apply the MPPR to Two Nuclear Medicine Procedures

As indicated previously, effective January 1, 1995, we implemented an MPPR for six nuclear medicine codes. Under the current policy, full payment is made for the highest paid procedure, and payment is reduced by 50 percent for the second procedure furnished to the same patient on the same day. Due to a technical error, the MPPR is not being applied to CPT codes 78306 (Bone imaging; whole body when followed by CPT code 78320 (Bone imaging; SPECT). We will apply the MPPR to these procedures effective January 1, 2013.

(2) Apply the MPPR to the PC and TC of Advanced Imaging Procedures to Physicians in the Same Group Practice

As indicated in the CY 2012 final rule (76 FR 73077-73079), we finalized a policy to apply the MPPR to the PC and TC of the second and subsequent advanced imaging procedures furnished to the same patient in the same session by a single physician or by multiple physicians in the same group practice. Due to operational limitations, we were not able to apply this MPPR to multiple physicians in the same group practice during CY 2012. In addition, after we issued the CY 2012 final rule with comment period, some stakeholders asserted that they had not commented on the application of the MPPR to physicians in the same group practice because that policy was not explicit in the CY 2012 proposed rule discussion expanding the MPPR for advanced imaging to the PC. We have resolved the operational problems and, therefore, for services furnished on or after January 1, 2013 we will apply the MPPR to both the PC and the TC of advanced imaging procedures to multiple physicians in the same group practice (same group NPI). Under this policy, the MPPR will apply when one or more physicians in the same group practice furnish services to the same patient, in the same session, on the same day. This policy is consistent with other PFS MPPR policies for surgical and therapy procedures. We continue to believe that the typical efficiencies achieved when the same physician is furnishing multiple procedures also accrue when different physicians in the same group furnish multiple procedures involving the same patient in the same session. It is our general intention to apply this and future MPPRs to services furnished by one or more physicians in the same group unless special circumstances warrant a more limited application. In such circumstances, we will note in our proposal that an MPPR does not apply to one or more physicians in the same group as other MPPR policies do. We continue to welcome public comment on this provision as it applies to advanced diagnostic imaging and to the MPPR policy generally.

c. Proposed MPPR for the TC of Cardiovascular and Ophthalmology Services

As noted above, we continue to examine whether it would be appropriate to apply MPPR policies to other categories of services that are frequently billed together, including the TC for other diagnostic services. For CY 2013, we examined other diagnostic services to determine whether there typically are efficiencies in the technical component when multiple diagnostic services are furnished together on the same day. We have conducted an analysis of the most frequently furnished code combinations for all diagnostic services using CY 2011 claims data. Of the several areas of diagnostic tests that we examined, we found that billing patterns and PE inputs indicated that cardiovascular and ophthalmology diagnostic procedures, respectively, are frequently furnished together and that there is some duplication in PE inputs when this occurs. For cardiovascular diagnostic services, we reviewed the code pair/combinations with the highest utilization in code ranges 75600 through 75893, 78414 through 78496, and 93000 through 93990. For ophthalmology diagnostic services, we reviewed the code pair/combinations with the highest utilization in code ranges 76510 through 76529 and 92002 through 92371. The most frequently billed cardiovascular and ophthalmology diagnostic code combinations are listed in Tables 14 and 15.

Under the resource-based PE methodology, specific PE inputs of clinical labor, supplies, and equipment are used to calculate PE RVUs for each individual service. When multiple diagnostic tests are furnished to the same patient on the same day, most of the clinical labor activities and some supplies are not furnished twice. We have identified the following clinical labor activities that typically would not be duplicated for subsequent procedures:

  • Greeting and gowning the patient.
  • Preparing the room, equipment and supplies.
  • Education and consent.
  • Completing diagnostic forms.
  • Preparing charts.
  • Taking history.
  • Taking vitals.
  • Preparing and positioning the patient.
  • Cleaning the room.
  • Monitoring the patient.
  • Downloading, filing, identifying and storing photos.
  • Developing film.
  • Collating data.
  • QA documentation.
  • Making phone calls.
  • Reviewing prior X-rays, lab and echos.

We analyzed the CY 2011 claims data for the most frequently billed cardiovascular and ophthalmology diagnostic code combinations in order to determine the level of duplication present when multiple services are furnished to the same patient on the same day. Our MPPR determination excludes the clinical staff minutes associated with the activities that are not duplicated for subsequent procedures. For purposes of this analysis, we retained the higher number of minutes for each duplicated clinical activity, regardless of the code in the pair with which those clinical labor minutes were associated. Equipment time and indirect costs are allocated based on clinical labor time; therefore, these inputs were reduced accordingly. While we observed that some supplies are duplicated, we did not factor these into our calculations because they were low cost and had little impact on our estimate of the level of duplication for each code pair.

When we removed the PE inputs for activities that are not duplicated, and adjusted the equipment time and indirect costs, we found support for payment reductions ranging from 8 to 57 percent for second and subsequent cardiovascular procedures (volume-adjusted average reduction across all code pairs of 25 percent); and payment reductions ranging from 9 to 62 percent for second and subsequent ophthalmology procedures (volume-adjusted average reduction across all code pairs of 32 percent). Because we found a relatively wide range of reduction by code pair, we believe that an across-the-board reduction of 25 percent for second and subsequent procedures (which is approximately the average reduction supported by our analysis) would be appropriate. We propose to apply an MPPR to TC-only services and to the TC portion of global services for the procedures listed in Tables 12 and 13. The MPPR would apply independently to second and subsequent cardiovascular services and to second and subsequent ophthalmology services. We propose to make full payment for the TC of the highest priced procedure and to make payment at 75 percent (that is, a 25 percent reduction) of the TC for each additional procedure furnished by the same physician (or physicians in the same group practice, that is, the same group practice NPI) to the same patient on the same day. We are not proposing to apply an MPPR to the PC for cardiovascular and ophthalmology services at this time. In Table 11, we provide examples illustrating the current and proposed payment amounts:

Table 11—Illustration of Current and Proposed Payments Back to Top
* Dollar amounts are for illustrative purposes and may not reflect actual payment amounts.
Sample Cardiovascular Payment Reduction *          
Code 78452 Code 93306 Total current payment Total proposed payment Payment calculation
PC $77.00 $65.00 $142.00 $142.00 no reduction.
TC 427.00 148.00 575.00 538.00 $427 + (.75 × $148).
Global 504.00 213.00 717.00 680.00 $142 + $427 + (.75 × $148).
Sample Ophthalmology Payment Reduction *          
Code 92235 Code 92250 Total current payment Total proposed payment Payment calculation
PC 46.00 23.00 69.00 69.00 no reduction.
TC 92.00 53.00 145.00 131.75 $92 + (.75 × $53).
Global 138.00 76.00 214.00 200.75 $69 + $92 + (.75 × $53).

We believe that the proposed MPPR percentage represents an appropriate reduction for the typical delivery of multiple cardiovascular and ophthalmology services on the same day. Because the reduction is based on discounting the specific PE inputs that are not duplicated for second and subsequent services, the proposal is consistent with our longstanding policy on surgical and nuclear medicine diagnostic procedures and advanced imaging procedures which applies a 50 percent reduction to second and subsequent procedures, and our more recent policy on therapy services, which applies a 20 or 25 percent reduction depending on the setting.

Furthermore, it is consistent with section 1848(c)(2)(K) of the Act which specifies that the Secretary shall identify potentially misvalued codes by examining multiple codes that are frequently billed in conjunction with furnishing a single service, and review and make appropriate adjustments to their relative values.

Finally, it is responsive to continued concerns about significant growth in spending on imaging and other diagnostic services, and to MedPAC (March 2010) and GAO (July 2009) recommendations regarding the expansion of MPPR policies under the PFS to account for additional efficiencies. Savings resulting from this proposal would be redistributed to other PFS services as required by the general statutory PFS BN provision. In summary, for services furnished on or after January 1, 2013, we plan to apply the MPPR to nuclear medicine procedures to CPT codes 78306 (Bone imaging; whole body when followed by CPT code 78320 (Bone imaging; SPECT). We plan to apply the MPPR to the PC and the TC of advanced imaging procedures to multiple physicians in the same group practice (same group NPI). Therefore, the MPPR will apply when one or more physicians in the same group practice furnish services to the same patient, in the same session, on the same day. Finally, we propose to apply an MPPR to TC-only services and to the TC portion of global services for diagnostic cardiovascular and ophthalmology procedures. The reduction would apply independently to cardiovascular and ophthalmology services. We propose to make full payment for the TC of the highest priced procedure and payment at 75 percent of the TC for each additional procedure furnished by the same physician (or physicians in the same group practice, that is, the same group practice NPI) to the same patient on the same day.

Table 12—Diagnostic Cardiovascular Services Subject to the Multiple Procedure Payment Reduction Back to Top
Code Descriptor
75600 Contrast x-ray exam of aorta.
75605 Contrast x-ray exam of aorta.
75625 Contrast x-ray exam of aorta.
75630 X-ray aorta leg arteries.
75650 Artery x-rays head & neck.
75658 Artery x-rays arm.
75660 Artery x-rays head & neck.
75662 Artery x-rays head & neck.
75665 Artery x-rays head & neck.
75671 Artery x-rays head & neck.
75676 Artery x-rays neck.
75680 Artery x-rays neck.
75685 Artery x-rays spine.
75705 Artery x-rays spine.
75710 Artery x-rays arm/leg.
75716 Artery x-rays arms/legs.
75726 Artery x-rays abdomen.
75731 Artery x-rays adrenal gland.
75733 Artery x-rays adrenals.
75736 Artery x-rays pelvis.
75741 Artery x-rays lung.
75743 Artery x-rays lungs.
75746 Artery x-rays lung.
75756 Artery x-rays chest.
75774 Artery x-ray each vessel.
75791 Av dialysis shunt imaging.
75809 Nonvascular shunt x-ray.
75820 Vein x-ray arm/leg.
75822 Vein x-ray arms/legs.
75825 Vein x-ray trunk.
75827 Vein x-ray chest.
75831 Vein x-ray kidney.
75833 Vein x-ray kidneys.
75840 Vein x-ray adrenal gland.
75842 Vein x-ray adrenal glands.
75860 Vein x-ray neck.
75870 Vein x-ray skull.
75872 Vein x-ray skull.
75880 Vein x-ray eye socket.
75885 Vein x-ray liver.
75887 Vein x-ray liver.
75889 Vein x-ray liver.
75891 Vein x-ray liver.
75893 Venous sampling by catheter.
78428 Cardiac shunt imaging.
78445 Vascular flow imaging.
78451 Ht muscle image spect sing.
78452 Ht muscle image spect mult.
78453 Ht muscle image planar sing.
78454 Ht musc image planar mult.
78456 Acute venous thrombus image.
78457 Venous thrombosis imaging.
78458 Ven thrombosis images bilat.
78466 Heart infarct image.
78468 Heart infarct image (ef).
78469 Heart infarct image (3D).
78472 Gated heart planar single.
78473 Gated heart multiple.
78481 Heart first pass single.
78483 Heart first pass multiple.
78494 Heart image spect.
78496 Heart first pass add-on.
93005 Electrocardiogram tracing.
93017 Cardiovascular stress test.
93318 Echo transesophageal intraop.
93024 Cardiac drug stress test.
93025 Microvolt t-wave assess.
93041 Rhythm ecg tracing.
93225 Ecg monit/reprt up to 48 hrs.
93226 Ecg monit/reprt up to 48 hrs.
93229 Remote 30 day ecg tech supp.
93270 Remote 30 day ecg rev/report.
93271 Ecg/monitoring and analysis.
93278 ECG/signal-averaged.
93279 Pm device progr eval sngl.
93280 Pm device progr eval dual.
93281 Pm device progr eval multi.
93282 Icd device prog eval 1 sngl.
93283 Icd device progr eval dual.
93284 Icd device progr eval mult.
93285 Ilr device eval progr.
93286 Pre-op pm device eval.
93287 Pre-op icd device eval.
93288 Pm device eval in person.
93289 Icd device interrogate.
93290 Icm device eval.
93291 Ilr device interrogate.
93292 Wcd device interrogate.
93293 Pm phone r-strip device eval.
93296 Pm/icd remote tech serv.
93303 Echo transthoracic.
93304 Echo transthoracic.
93306 Tte w/doppler complete.
93307 Tte w/o doppler complete.
93308 Tte f-up or lmtd.
93312 Echo transesophageal.
93314 Echo transesophageal.
93318 Echo transesophageal intraop.
93320 Doppler echo exam heart.
93321 Doppler echo exam heart.
93325 Doppler color flow add-on.
93350 Stress tte only.
93351 Stress tte complete.
93701 Bioimpedance cv analysis.
93724 Analyze pacemaker system.
93786 Ambulatory BP recording.
93788 Ambulatory BP analysis.
93880 Extracranial study.
93882 Extracranial study.
93886 Intracranial study.
93888 Intracranial study.
93890 Tcd vasoreactivity study.
93892 Tcd emboli detect w/o inj.
93893 Tcd emboli detect w/inj.
93922 Upr/l xtremity art 2 levels.
93923 Upr/lxtr art stdy 3+ lvls.
93924 Lwr xtr vasc stdy bilat.
93925 Lower extremity study.
93926 Lower extremity study.
93930 Upper extremity study.
93931 Upper extremity study.
93965 Extremity study.
93970 Extremity study.
93971 Extremity study.
93975 Vascular study.
93976 Vascular study.
93978 Vascular study.
93979 Vascular study.
93980 Penile vascular study.
93981 Penile vascular study.
93990 Doppler flow testing.
Table 13—Diagnostic Ophthalmology Services Subject to the Multiple Procedure Payment Reduction Back to Top
Code Descriptor
76510 Ophth us b & quant a.
76511 Ophth us quant a only.
76512 Ophth us b w/non-quant a.
76513 Echo exam of eye water bath.
76514 Echo exam of eye thickness.
76516 Echo exam of eye.
76519 Echo exam of eye.
92025 Corneal topography.
92060 Special eye evaluation.
92081 Visual field examination(s).
92082 Visual field examination(s).
92083 Visual field examination(s).
92132 Cmptr ophth dx img ant segmt.
92133 Cmptr ophth img optic nerve.
92134 Cptr ophth dx img post segmt.
92136 Ophthalmic biometry.
92228 Remote retinal imaging mgmt.
92235 Eye exam with photos.
92240 Icg angiography.
92250 Eye exam with photos.
92265 Eye muscle evaluation.
92270 Electro-oculography.
92275 Electroretinography.
92283 Color vision examination.
92284 Dark adaptation eye exam.
92285 Eye photography.
92286 Internal eye photography.

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

C. 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, which amended section 1848(c) of the Act, 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 (75 FR 73208), 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. 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 malpractice 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.

For CY 2013, we will continue our current approach for determining malpractice RVUs for new/revised codes. We will publish a list of new/revised codes and the malpractice crosswalk(s) used for determining their malpractice RVUs in the final rule with comment period. The CY 2013 malpractice RVUs for new/revised codes will be implemented as interim final values in the CY 2013 PFS final rule with comment period, where they will be subject to public comment. They will then be finalized in the CY 2014 PFS final rule with comment period.

D. Geographic Practice Cost Indices (GPCIs)

1. Background

Section 1848(e)(1)(A) of the Act requires us to develop separate Geographic Practice Cost Indices (GPCIs) to measure resource cost differences among localities compared to the national average for each of the three fee schedule components (that is, work, practice expense (PE), and malpractice (MP)). While requiring that the PE and MP GPCIs reflect the full relative cost differences, section 1848(e)(1)(A)(iii) of the Act requires that the 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 2011. The statute was amended to extend the 1.0 floor for the work GPCIs through February 29, 2012 by section 303 of the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) (Pub. L. 112-78). The statute was again amended by section 3004 of the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA) (Pub. L. 112-399) to extend the 1.0 work floor for GPCIs throughout the remainder of CY 2012 (that is, for services furnished no later than December 31, 2012). During the development of the CY 2012 PFS final rule with comment period, neither TPTCCA nor MCTRJCA had been enacted and, because the work GPCI floor was set to expire at the end of 2011, the GPCIs published in Addendum E of the CY 2012 PFS final rule with comment period did not reflect the 1.0 work floor. Appropriate changes to the CY 2012 GPCIs were made to reflect the 1.0 work floor required by section 303 of the TPTCCA and section 3004 of the MCTRJCA.

Since the 1.0 work GPCI floor provided in section 1848(e)(1)(E) of the Act is set to expire prior to the implementation of the CY 2013 PFS, the proposed CY 2013 work GPCIs and summarized geographic adjustment factors (GAFs) published in addendums D and E of this CY 2013 PFS proposed rule do not reflect the 1.0 work GPCI floor for CY 2013. 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 are applicable in CY 2013.

In the CY 2012 PFS final rule with comment period we made several refinements to the GPCIs (76 FR 73081 through 73092), including revising the sixth GPCI update to reflect the most recent data, with modifications. Specifically, we finalized our proposal to change the GPCI cost share weights for CY 2012 to reflect the most recent rebased and revised Medicare Economic Index (MEI). As a result, the cost share weight for the work GPCI (as a percentage of the total) was updated from 52.466 percent to 48.266 percent, and the cost share weight for the PE GPCI was revised from 43.669 percent to 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 was changed from 12.209 percent to 10.223 percentage points (fixed capital with utilities), and the medical equipment, supplies, and other miscellaneous expenses component was updated to 9.968 percentage points. In addition, we finalized the weight for purchased services at 8.095 percentage points, of which 5.011 percentage points are adjusted for geographic cost differences. Lastly, the cost share weight for the MP GPCI was revised from 3.865 percent to 4.295 percent. Table 16 displays the cost share weights that were finalized in the CY 2012 final rule with comment period. Note that the employee compensation; office rent; purchased services; and equipment supplies and other cost share weights sum to the total PE GPCI cost share weights of 47.439 percent.

Table 16—Cost Share Weights Finalized in CY 2012 GPCI Update Back to Top
Expense category Cost share weights (%)
Physician Work 48.266
Practice Expense 47.439
Employee Compensation 19.153
Office Rent 10.223
Purchased Services 8.095
Equipment, Supplies, and Other 9.968
Malpractice Insurance 4.295

We also finalized several other policies including the use of 2006 through 2008 American Community Survey (ACS) two-bedroom rental data as a proxy for the relative cost difference in physician office rent. In addition, we created a purchased services index to account for labor-related services within the “all other services” and “other professional expenses” MEI components. In response to public commenters who recommended that we utilize Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) data to capture the “full range” of occupations included in the offices of physician industry to calculate the nonphysician employee wage component (also referred to as the employee wage index) of the PE GPCI, we finalized a policy of using 100 percent of the total wage share of nonphysician occupations in the offices of physicians' industry to calculate the nonphysician employee wage component of the PE GPCI.

2. Recommendations From the Institute of Medicine

Concurrent with our CY 2012 rulemaking cycle, the Institute of Medicine released the final version of its first of two anticipated reports entitled “Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy, Second Edition” on September 28, 2011. This report included an evaluation of the accuracy of geographic adjustment factors for the hospital wage index and the GPCIs, as well as the methodology and data used to calculate them. Several of the policies that we finalized in CY 2012 rulemaking addressed several of the recommendations contained in the Institute of Medicine's first report. Because we did not have adequate time to completely address the Institute of Medicine's Phase I report recommendations during CY 2012 rulemaking, we have included a discussion in this proposed rule about the recommendations that were not implemented or discussed in the CY 2012 final rule with comment period. We look forward to receiving comments on these recommendations.

The Institute of Medicine's second report, expected in summer 2012, will evaluate the effects of geographic adjustment factors (hospital wage index and GPCIs) on the distribution of the healthcare workforce, quality of care, population health, and the ability to provide efficient, high value care. We did not receive the Institute of Medicine's Phase II report in time for consideration for this CY 2013 proposed rule. We intend to address the Institute of Medicine's recommendations in the Phase II report once we have had an opportunity to fully evaluate the report and its recommendations.

3. GPCI Discussion for CY 2013

CY 2013 is the final year of the sixth GPCI update and, because we will propose updates next year, we are not including any proposals related to the GPCIs in this proposed rule. In response to public inquiries about exceptions to the calculated GPCIs, we are providing a brief discussion about the permanent 1.0 PE floor for frontier States, the 1.5 work floor for Alaska, the GPCIs for the Puerto Rico payment locality, and the expiration of the GPCI 1.0 work floor required under section 1848(e)(1)(E) of the Act. We also discuss recommendations from the first Institute of Medicine report that were not addressed during CY 2012 rulemaking in this proposed rule.

a. Alaska Work Floor and PE GPCI Floor for Frontier States

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. Therefore, the 1.5 work floor for Alaska will remain in effect in CY 2013. In addition, section 1848(e)(1)(I) of the Act establishes 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 proposed changes to those States identified as “Frontier States” for the CY 2013 proposed rule. The following States are considered to be “Frontier States” for CY 2013: Montana, North Dakota, Nevada, South Dakota, and Wyoming.

b. GPCI Assignments for the Puerto Rico Payment Locality

Recently, we have received inquiries from representatives of the Puerto Rico medical community regarding our policies for determining the GPCIs for the Puerto Rico payment locality. While we are not making any proposals related to the GPCIs for Puerto Rico, in response to those inquiries, we are providing the following discussion regarding the GPCIs assigned to the Puerto Rico payment locality. We anticipate recalculating all the GPCI's in the seventh GPCI update currently anticipated in CY 2014.

As noted above, we are required by section 1848(e)(1)(A) of the Act to develop separate GPCIs to measure relative resource cost differences among localities compared to the national average for each of the three fee schedule components: Work, PE and malpractice expense. To calculate these GPCI values, we rely on three primary data sources. We currently use the 2006-2008 BLS OES data to calculate the work GPCI, the nonphysician employee wage component of PE GPCI, and the labor costs associated with the purchased services component of PE GPCI. We use 2006-2008 ACS data to calculate the office rent component of the PE GPCI. Finally, we use 2006-2007 malpractice premium data to calculate the MP GPCI. For all localities, including Puerto Rico, we assume equipment, supplies, and other expenses are purchased in a national market and that the costs do not vary by geographic location. Therefore, we do not use data on the price of equipment, supplies, and expenses across localities in calculating PE GPCIs. With the exception of the MP GPCI, we have current data from the applicable sources allowing us to calculate the work and PE GPCIs for the Puerto Rico payment locality. The 2006-2008 BLS OES data and rental values derived from the 2006-2008 ACS indicate that the costs associated with operating a physician practice in Puerto Rico are the lowest among all payment localities.

In order to calculate the MP GPCI for the various Medicare PFS localities, we collect malpractice insurance market share and premium data from state departments of insurance and from state rate filings. As discussed in our contractor's report (Final Report on the Sixth Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule, pg. 41), for the fourth, fifth, and sixth GPCI updates we were not able to collect this data for the Puerto Rico payment locality. Therefore, we carried over the MP GPCI value of 0.249 from previous GPCI updates when malpractice premium data were last available. It is important that we have a source for more current malpractice premium data for Puerto Rico for use in the upcoming seventh GPCI update. We are working with the relevant officials in Puerto Rico to acquire these data for use in future rulemaking. We would encourage comments from stakeholders regarding potential data sources that may be available for calculating the Puerto Rico malpractice GPCI. For a detailed discussion regarding the methodology used to calculate the various components of the Puerto Rico GPCIs, we refer readers to our contractor's report from November of 2010 entitled “Final Report on the Sixth Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule” available on our Web site at http://www.cms.gov/PhysicianFeeSched/downloads/GPCI_Report.pdf.

c. Expiration of GPCI Work Floor

The work GPCIs are designed to capture the relative costs of physician labor by Medicare PFS locality. Previously, the 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 work GPCIs would effectively make the indices dependent upon Medicare payments. As required by law, the work GPCI reflects one quarter of the relative wage differences for each locality compared to the national average. The 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 BLS OES data as a replacement for the 2000 Census data.

Although we are not proposing any changes to the data or methodology used to calculate the work GPCI for CY 2013, we note that addenda D and E will reflect the expiration of the statutory 1.0 work GPCI floor. As noted above, 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 2011 until it was temporarily extended through February 29, 2012 by section 303 of the TPTCCA. The GPCI work floor was extended throughout the remainder of CY 2012 by section 3004 of the MCTRJCA.

4. Institute of Medicine Phase I Report

a. Background

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 the Institute of Medicine is evaluating include the following:

  • 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. healthcare marketplace, the Institute of Medicine 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 Institute of Medicine's first report entitled “Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy” evaluated the accuracy of geographic adjustment factors and the methodology and data used to calculate them. The recommendations included in the Institute of Medicine's Phase I report that relate to or would have an effect on the methodologies used to calculate the GPCIs and the configuration of Medicare PFS payment locality structure 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 thephysician 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, PE, and liability insurance) and the categories within the PE (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 PE 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 PE office expenses should be geographically adjusted as part of the wage component of the PE.

This report can be accessed on the Institute of Medicine 's Web site at http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.

As previously noted, the Institute of Medicine will consider the role of Medicare payments on matters such as the distribution of the healthcare workforce, population health, and the ability of providers to produce high-value, high-quality health care in its final report anticipated in summer 2012. We were not able to evaluate the recommendations contained in the Institute of Medicine's Phase II report, in time for discussion in this proposed rule.

b. Institute of Medicine Recommendations Implemented in CY 2012

In the CY 2012 final rule with comment period, we addressed three of the recommendations offered by the Institute of Medicine in their Phase I report. Specifically, the final CY 2012 GPCIs utilized the full range of non-physician occupations in the employee wage calculation consistent with Institute of Medicine recommendation 5-4. Additionally, we created a new purchased service index to account for non-clinical labor related expenses similar to Institute of Medicine recommendation 5-7. Lastly, we have consistently used national cost share weights to determine the appropriate weight attributed to each GPCI component, which is supported by Institute of Medicine recommendation 5-1 (76 FR 73081 through 73092). In order to facilitate a public discussion regarding the Institute of Medicine's remaining recommendations, we are providing a summary analysis of these recommendations in this proposed rule below. We will provide our technical analyses of the remaining Institute of Medicine Phase I recommendations in a report that will be released on the PFS Web site at http://www.cms.gov/PhysicianFeeSched. Since we have not yet had an opportunity to review the recommendations in the Institute of Medicine's Phase II report, these analyses focus exclusively on the recommendations as presented in the Institute of Medicine's Phase I release.

c. Discussion of Remaining Institute of Medicine Recommendations

(1) Institute of Medicine Recommendation Summaries

(A) Institute of Medicine 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. (Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy, pages 2-1 thru 2-29)

(i) Locality Background

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, and Virginia suburbs, Puerto Rico, and the Virgin Islands are additional localities that make up the remainder of the total of 89 localities. The development of the current locality structure is described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and the subsequent final rule with comment period (61 FR 59494).

Prior to 1992, Medicare payments for physicians' services were made under the reasonable charge system. Payments were based on the charging patterns of physicians. This resulted in large differences among types of services, geographic payment areas, and physician specialties. Recognizing this, the Congress replaced the reasonable charge system with the Medicare PFS in the Omnibus Budget Reconciliation Act (OBRA) of 1989, effective January 1, 1992. Payments under the fee schedule are based on the relative resources required to provide services and vary among areas as resource costs vary geographically as measured by the GPCIs.

Payment localities were established under the reasonable charge system by local Medicare carriers based on their knowledge of local physician charging patterns and economic conditions. These localities changed little between the inception of Medicare in 1967 and the beginning of the PFS. As a result, a study was begun in 1994 which resulted in a comprehensive locality revision, which was implemented in 1997 (61 FR 59494).

The revised locality structure reduced the number of localities from 210 to the current 89 and the number of statewide localities increased from 22 to 34. The revised localities were based on locality resource cost differences as reflected by the GPCIs. A full discussion of the methodology can be found in the CY 1997 PFS final rule with comment period (61 FR 59494). The current 89 fee schedule areas are defined alternatively by state boundaries (for example, Wisconsin), metropolitan areas (for example, Metropolitan St. Louis, MO), portions of a metropolitan area (for example, Manhattan), or rest-of-state areas that exclude metropolitan areas (for example, Rest of Missouri). This locality configuration is used to calculate the GPCIs that are in turn used to calculate payments for physicians' services under the PFS.

As was stated in the CY 2011 final rule with comment period (75 FR 73261), we currently require that changes to the PFS locality structure be done in a budget neutral manner within a state. For many years, we have sought consensus for any locality changes among the professionals whose payments would be affected. We have also considered more comprehensive changes to locality configurations. In 2008, we issued a draft comprehensive report detailing four different locality configuration options (http://www.cms.gov/physicianfeesched/downloads/ReviewOfAltGPCIs.pdf). The alternative locality configurations in the report are described below.

  • Option 1: CMS Core-Based Statistical Area (CBSA) Payment Locality Configuration: CBSAs are a combination of Office of Management and Budget (OMB's) Metropolitan Statistical Areas (MSAs) and their Micropolitan Statistical Areas. Under this option, MSAs would be considered as urban CBSAs. Micropolitan Statistical Areas (as defined by OMB) and rural areas would be considered as non-urban (rest of State) CBSAs. This approach would be consistent with the areas used in the Inpatient Prospective Payment System (IPPS) pre-reclassification wage index, which is the hospital wage index for a geographic area (CBSA or non-CBSA) calculated from submitted hospital cost report data before statutory adjustments reconfigure, or “reclassify” a hospital to an area other than its geographic location, to adjust payments for difference in local resource costs in other Medicare payment systems. Based on data used in the 2008 locality report, this option would increase the number of PFS localities from 89 to 439.
  • Option 2: Separate High-Cost Counties from Existing Localities (Separate Counties): Under this approach, higher cost counties are removed from their existing locality structure, and they would each be placed into their own locality. This option would increase the number of PFS localities from 89 to 214, using a 5 percent GAF differential to separate high-cost counties.
  • Option 3: Separate MSAs from Statewide Localities (Separate MSAs): This option begins with statewide localities and creates separate localities for higher cost MSAs (rather than removing higher cost counties from their existing locality as described in Option 2). This option would increase the number of PFS localities from 89 to 130, using a 5 percent GAF differential to separate high-cost MSAs.
  • Option 4: Group Counties Within a State Into Locality Tiers Based on Costs (Statewide Tiers): This option creates tiers of counties (within each State) that may or may not be contiguous but share similar practice costs. This option would increase the number of PFS localities from 89 to 140, using a 5 percent GAF differential to group similar counties into statewide tiers.

For a detailed discussion of the public comments on the contractor's 2008 draft report detailing four different locality configurations, we refer readers to the CY 2010 PFS proposed rule (74 FR 33534) and subsequent final rule with comment period (74 FR 61757). There was no public consensus on the options, although a number of commenters expressed support for Option 3 (separate MSAs from Statewide localities) because the commenters believed this alternative would improve payment accuracy and could mitigate potential reductions to rural areas compared to Option 1 (CMS CBSAs).

In response to some public comments regarding the third of the four locality options, we had our contractor conduct an analysis of the impacts that would result from the application of Option 3. Those results were displayed in the final locality report released in 2011. The final report, entitled “Review of Alternative GPCI Payment Locality Structures—Final Report,” is accessible from the CMS PFS Web page 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.

(ii) Institute of Medicine Recommendation Discussion

The Institute of Medicine recommends altering the current locality structure that was originally based on areas set by local contractors and, in 1996, reduced from 210 to current 89 using a systematic iterative methodology. Rather than using the current uniform fee schedule areas in adjusting for relative cost differences as compared to the national average, the Institute of Medicine recommends a three-tiered system for defining fee schedule areas. In the first tier, the Institute of Medicine proposes applying county-based fee schedule areas to calculate the employee wage component of the PE GPCI. Although the Institute of Medicine's report states that it recommends that “Metropolitan statistical areas and statewide non-metropolitan statistical areas should serve as the basis for defining these labor markets,” the Institute of Medicine also recommends applying an out-commuting adjustment, which would permit employee wage index values to vary by county. Since the employee wage index is one component of the PE GPCI, these values also would vary by county under the Institute of Medicine's proposal.

To understand why the employee wage index would vary by county under the Institute of Medicine's recommendation, consider the three steps that would be required to calculate the employee wage index. The first step calculates the average hourly wage (AHW) for workers employed in each MSA or residual (rest of state) area. The wages of workers in each occupation are weighted by the number of workers employed in physicians' offices nationally. The second step applies a commuting-based smoothing adjustment to create area index wages for each county. The commuting-adjusted county index wages are equal to a weighted average of the AHW values calculated in the first step, where the weights are county-to-MSA out-commuting patterns. The Institute of Medicine's out-commuting-based weights equal the share of health care workers that live in a county where a physician's office is located who commute out of the county to work in a physician office in each MSA. The third step sets each physician's employee index wage equal to the estimated area index wage (calculated in Step 2) of the county in which the physician office is located. Because the out-commuting adjustment envisioned by the Institute of Medicine in the second step varies by county, the employee wage index value—and thus the PE GPCI as a whole—would also potentially vary by county depending on the smoothing option chosen. If implemented, the number of employee wage index payment areas could potentially increase from 89 to over 3,000.

The Institute of Medicine's second tier of fee schedule areas would use an MSA-based approach. The Institute of Medicine proposes using the MSA-based system for the work GPCI, the office rent index, the purchased services index, and the MP GPCI. An MSA is made up of one or more counties, including the counties that contain the core urban area with a population of 50,000 or more, as well as surrounding counties that exhibit a high degree of social and economic integration (as measured by commuting patterns) with the urban core. MSAs are designed to be socially and economically integrated units based on the share of workers who commute to work within the urban core of each MSA. Implementing an MSA-based locality structure would expand the number of fee schedule areas from 89 to upwards of 400 plus additional MSAs for U.S. territories (for example, Virgin Islands, American Samoa, Guam, Northern Marianna Islands).

In its third payment area tier, the Institute of Medicine proposes creating a national payment area for the “equipment, supplies and other” index. We currently do not adjust PEs associated with supplies and equipment since we believe they are typically purchased in a national market. Thus, this approach is equivalent to using a national fee schedule area to define this index. The Institute of Medicine proposes no change to the fee schedule area used to compute the “equipment, supplies and other” index.

Based on our contractor's analysis, there would be significant redistributive impacts if we were to implement a policy that would reconfigure the PFS localities based on the Institute of Medicine's three-tiered recommendation. Many rural areas would see substantial decreases in their corresponding GAF and GPCI values as higher cost counties are removed from current “Rest of State” payment areas. Conversely, many urban areas, especially those areas that are currently designated as “Rest of State” but reside within higher cost MSAs, would experience increases in their applicable GPCIs and GAFs.

The localities used to calculate the GPCIs have been a subject of substantial discussion and debate since the implementation of the PFS. The intensity of those discussions has increased since the last comprehensive update to the locality structure in 1997. Physicians and other suppliers in areas such as Santa Cruz County, California and Prince William County, Virginia have expressed concern that the current locality structure does not appropriately capture economic and demographic shifts that have taken place since the last PFS locality update. On the other hand, rural practitioners have argued that revisions to the current PFS payment localities will reduce their payments and exacerbate the problems of attracting physicians and other practitioners to rural areas. In the past, we have also heard concerns from representatives of some statewide localities regarding the potential implications of adopting an alternative locality structure that would change their current statewide payment area (74 FR 33536).

The Institute of Medicine stated in its Phase I report regarding its locality recommendation that, “While the payment areas would stay the same for the HWI (hospital wage index), implementing this recommendation would mean that the GPCI payment areas would expand from 89 to 441 areas, which would be a significant change. The impact of the change in payment areas will be assessed in the Phase II report.” (“Geographic Adjustment in Medicare Payment: Phase I: Improving Accuracy, Second Edition” on September 28, 2011, pg 5-6.) Moreover, the Institute of Medicine's Phase II report will evaluate the effects of geographic adjustment factors on the distribution of the healthcare workforce, quality of care, population health, and the ability to provide efficient, high value care. Over the years, commenters that have opposed revisions to localities have claimed that changes to the PFS areas could have a significant impact on the ability of rural areas to attract physicians. Certainly, one of our major goals when we last comprehensively revised the Medicare PFS localities in 1996 was to avoid excessively large urban/rural payment differences (61 FR 59494). In 1996, we were hopeful that the revisions would improve access to care for rural areas (61 FR 59494). Some areas may have experienced both economic and demographic shifts since the last comprehensive locality update. Before moving forward with the Institute of Medicine's three tiered locality recommendation, or any other potential locality revision, we need to assess, and prepare to inform the public of, the impact of any change for all Medicare stakeholders. The Institute of Medicine's Phase II report, scheduled for release this summer 2012, should contain an evaluation of many of these important factors including:

  • 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 for hospitals and other facilities to maintain an adequate and skilled workforce;

++ Patient access to providers and needed medical technologies;

++ Effect of adjustment factors on population health and quality of care; and

++ Effect of adjustment factors on the ability of providers to furnish efficient, high value care.

To fully assess the broader public policy implications associated with the Institute of Medicine's locality recommendation, we must first fully assess and analyze the recommendations contained in the Institute of Medicine's phase II report. Accordingly, we believe that it would be premature to propose any change to the PFS localities at this time.

In conjunction with a specific proposal for changing the locality configuration during future rulemaking, we would provide detailed analysis on the impact of the changes for physicians in each county. We would also provide opportunities for public input (for example, Town Hall meetings or Open Door Forums), as well as opportunities for public comments afforded by the rulemaking process.

While we are making no proposal in this proposed rule to change the current locality configuration, we are seeking public comment regarding Institute of Medicine's recommended three-tiered PFS payment locality definition. In addition, we will make our technical analyses of the Institute of Medicine locality recommendations, specific to the Phase I report, available on the PFS Web site at http://www.cms.gov/PhysicianFeeSched/.

(B) Institute of Medicine Recommendation 2-2: The data used to construct the hospital wage index and the physician geographic adjustment factor should come from all healthcare employers (Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy, pages 2-1 thru 2-29) and; 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. (Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy, pg 5-38.)

The Institute of Medicine recommends altering the data used to calculate the employee wage index. Specifically, Institute of Medicine recommends using wage data for workers in the healthcare industry rather than wage data for workers across all-industries. Although all-industry wage data has the largest sample size, the Institute of Medicine “* * * is concerned that the [all-industry] sample does not represent physician offices.” BLS OES occupation wage data by MSA, however, are not publicly available for the healthcare industry. Using healthcare-industry wages requires the use of confidential BLS OES data, to which CMS does not have access at this time. Although the Institute of Medicine recommends that CMS secure an agreement with BLS to use the confidential wage data, the current employee wage index relies on publicly-available all-industry wage data. We seek comment on the use of confidential employee wage index data rather than the publicly available all-industry wage data.

Regardless of whether healthcare-industry or all-industry wage data is used, the Institute of Medicine recommends following the current approach adopted by CMS in CY 2012 for calculating the employee wage index. This approach constructs the employee wage index as a weighted average of occupation wages for the full-range of occupations employed in physicians' offices, where the weights are equal to the fixed national weight based on the hours of each occupation employed in physicians' offices nationwide. We adopted this approach for calculating the GPCI employee wage index in the CY 2012 PFS final rule with comment period (76 FR 73088).

(C) Institute of Medicine 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 (Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy, pg 5-36) and; Recommendation 5-3: CMS should consider an alternative method for setting the percentage of the work adjustment based on a systematic empirical process. (Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy, pages 5-36 thru 5-37.)

The Institute of Medicine recommends replacing the current work GPCI methodology with a regression-based approach. We currently use three steps to calculate the work GPCI. These steps include:

(1) Selecting the proxy occupations and calculating an occupation-specific index for each proxy;

(2) Assigning weights to each proxy-occupation index based on the each occupation's share of total national wages to create an aggregate proxy-occupation index; and

(3) Adjusting the aggregate proxy-occupation index by a physician inclusion factor to calculate the final work GPCI.

By using this approach, the current methodology reduces the circularity problem that occurs when work GPCI values are based on direct measurements of physician earnings. Because physician earnings are made up of both wages and a return on investment from ownership of the physician practice, calculating the work GPCI using physician earnings information would assign areas where physician practices are more profitable higher work GPCI values. Although the Institute of Medicine recommends that we continue to use proxy occupations in the work GPCI methodology, its regression-based approach alters each of the three steps described above.

To modify the first step, the Institute of Medicine recommends that we empirically evaluate the validity of seven proxy occupations we currently use. The current proxy occupations in the work GPCI are intended to represent highly educated, professional employee categories. Although the Institute of Medicine recommends re-evaluating the proxy occupations used in the work GPCI, it does not define specific criteria to use for this purpose.

To modify the second step, the Institute of Medicine recommends using a regression-based approach to weight the selected proxy occupation indices based on their correlation with physician earnings. This Institute of Medicine proposal would replace the current approach where occupations are weighted by the size of their share of total national wages. Such an approach presumes that wages for proxy occupations are not related to physician profits.

Finally, the Institute of Medicine proposes an empirically-based approach to determine the inclusion factor for work. The inclusion factor for work refers to section 1848(e)(1)(A)(iii) of the Act requiring that the work GPCI reflect only 25 percent of the difference between the relative value of physicians' work effort in each locality and the national average of such work effort. Therefore, under current law, only one quarter of the measured regional variation in physician wages is incorporated into the work GPCI. The Institute of Medicine recommends calculating an inclusion factor based on the predicted values of the regression described above. Under the Institute of Medicine's approach, the inclusion factor is larger when the proxy occupations have a higher correlation with physicians' earnings and smaller when the proxy occupations have a lower correlation with physicians' earnings. We note that using such an empirical approach to weight the proxy occupation indices and to estimate the inclusion factor requires the identification of a viable source of physician wage information in addition to the wage information of proxy occupations to accurately measure regional variation in physician wages.

We seek comment on the Institute of Medicine recommendations to revise the work GPCI methodology. In addition, we look forward to the MedPAC study on this issue required under section 3004 of the MCTRJCA. This study will assess whether any geographic adjustment to physician work is appropriate and, if so, what the level should be and where it should be applied.

(D) Institute of Medicine 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. (Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy, pages 5-38 thru 5-39.)

The Institute of Medicine recommends the development of a new source of data to determine the variation in the price of commercial office rent per square foot. However, the Institute of Medicine does not explicitly recommend where the data should come from or how it should be collected. Before coming to this recommendation, the Institute of Medicine identified and evaluated several public and commercially available sources of data to determine whether an accurate alternative is available to replace the residential rent data currently used as a proxy to measure regional variation in physicians' cost to rent office space in the PE GPCI; these sources include rental data from the U.S. Department of Housing and Urban Development, American Housing Survey, General Services Administration, Basic Allowance for Housing (U.S. Department of Defense), U.S. Postal Service, Medical Group Management Association (MGMA), and REIS, Inc. The Institute of Medicine concluded that these sources had substantial limitations, including lack of representativeness of the market in which physicians rent space, small sample size, low response rates, and sample biases. Although we agree that a suitable source for commercial office rent data would be preferable to the use of residential rent data in our PE office rent methodology, we have still been unable to identify an adequate commercial rent source that sufficiently covers rural and urban areas. We will continue to evaluate possible commercial rent data sources for potential use in the office rent calculation. We also encourage public commenters to notify us of any publicly available commercial rent data sources, with adequate data representation of urban and rural areas that could potentially be used in the calculation of the office rent component of PE.

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 furnished. 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 furnished to an eligible telehealth individual notwithstanding the fact that the individual practitioner furnishing 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. Under the BIPA, originating sites were 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 (DSMT); and
  • Smoking cessation services.

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 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 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 telehealth services to one of two categories. In the November 28, 2011 Federal Register (76 FR 73102), we finalized revisions to criteria that we use to review requests in the second category. The two categories are:

  • 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 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. In reviewing these requests, we look for evidence indicating that the use of a telecommunications system in delivering the candidate telehealth service produces clinical benefit to the patient. Submitted evidence 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 does 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.

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 (with a minimum of 1 hour of in-person instruction to ensure effective injection training), and smoking cessation services.

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 2012 will be considered for the CY 2014 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 www.cms.gov/telehealth/.

3. Submitted Request and Other Additions to the List of Telehealth Services for CY 2013

We received a request in CY 2011 to add alcohol and/or substance abuse and brief intervention services as Medicare telehealth services effective for CY 2013. The following presents a discussion of this request, and our proposals for additions to the CY 2013 telehealth list.

a. Alcohol and/or Substance Abuse and Brief Intervention Services

The American Telemedicine Association submitted a request to add alcohol and/or substance abuse and brief intervention services, reported by CPT codes 99408 (Alcohol and/or substance (other than tobacco) abuse structured screening (for example, AUDIT, DAST), and brief intervention (SBI) services; 15 to 30 minutes) and 99409 (Alcohol and/or substance (other than tobacco) abuse structured screening (for example, AUDIT, DAST), and brief intervention (SBI) services; greater than 30 minutes) to the list of approved telehealth services for CY 2013 on a category 1 basis.

We note that we assigned a status indicator of “N” (Noncovered) to CPT codes 99408 and 99409 as explained in the CY 2008 PFS final rule with comment period (72 FR 66371). At the time, we stated that because Medicare only provides payment for certain screening services with an explicit benefit category, and these CPT codes incorporate screening services along with intervention services, we believed that these codes were ineligible for payment under the PFS. We continue to believe that these codes are ineligible for payment under PFS and, additionally, under the telehealth benefit. We do not believe it would be appropriate to make payment for claims using these CPT codes for the services furnished via telehealth, but not when furnished in person. Because CPT codes 99408 and 99409 are currently assigned a noncovered status indicator, and because we continue to believe this assignment is appropriate, we are not proposing to add these CPT codes to the list of Medicare Telehealth Services for CY 2013.

However, we created two parallel G-codes for 2008 that allow for appropriate Medicare reporting and payment for alcohol and substance abuse assessment and intervention services that are not furnished as screening services, but that are furnished in the context of the diagnosis or treatment of illness or injury. The codes are HCPCS code G0396 (Alcohol and/or substance (other than tobacco) abuse structured assessment (for example, AUDIT, DAST) and brief intervention, 15 to 30 minutes) and HCPCS code G0397 (Alcohol and/or substance (other than tobacco) abuse structured assessment (for example, AUDIT, DAST) and intervention greater than 30 minutes). Since these codes are used to report comparable alcohol and substance abuse services under certain conditions, we believe that it would be appropriate to consider the ATA's request as it applies to these services when appropriately reported by the G-codes. The ATA asked that CMS consider this request as a category 1 addition based on the similarities between these services and 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). We agree that the interaction between a practitioner and a beneficiary receiving alcohol and substance abuse assessment and intervention services is similar to their interaction in smoking cessation services. We also believe that the interaction between a practitioner and a beneficiary receiving alcohol and substance abuse assessment and intervention services is similar to the assessment and intervention elements of CPT code 96152 (health and behavior intervention, each 15 minutes, face-to-face; individual), which also is currently on the telehealth list.

Therefore, we are proposing to add HCPCS codes G0396 and G0397 to the list of telehealth services for CY 2013 on a category 1 basis. Consistent with this proposal, we are also proposing to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include alcohol and substance abuse assessment and intervention services as Medicare telehealth services.

b. Preventive Services

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. As we stated in the CY 2012 proposed rule (76 FR 42826), we believe that the category 1 criteria not only streamline our review process for publically requested services that fall into this category, the criteria also expedite our ability to identify codes for the telehealth list that resemble those services already on this list.

During CY 2012, CMS added coverage for several preventive services through the national coverage determination (NCD) process as authorized by section 1861(ddd) of the Act. These services add to Medicare's existing portfolio of preventive services that are now available without cost sharing under the Affordable Care Act. We believe that for several of these services, the interactions between the furnishing practitioner and the beneficiary are similar to services currently on the list of Medicare telehealth services. Specifically, we believe that the assessment, education, and counseling elements of the following services are similar to existing telehealth services:

  • Screening and behavioral counseling interventions in primary care to reduce alcohol misuse, reported by HCPCS codes G0442 (Annual alcohol misuse screening, 15 minutes) and G0443 (Brief face-to-face behavioral counseling for alcohol misuse, 15 minutes).
  • Screening for depression in adults, reported by HCPCS code G0444 (Annual Depression Screening, 15 minutes).
  • Screening for sexually transmitted infections (STIs) and high-intensity behavioral counseling (HIBC) to prevent STIs, reported by HCPCS code G0445 (High-intensity behavioral counseling to prevent sexually transmitted infections, face-to-face, individual, includes: Education, skills training, and guidance on how to change sexual behavior, performed semi-annually, 30 minutes).
  • Intensive behavioral therapy for cardiovascular disease, reported by HCPCS code G0446 (Annual, face-to-face intensive behavioral therapy for cardiovascular disease, individual, 15 minutes).
  • Intensive behavioral therapy for obesity, reported by HCPCS code G0447 (Face-to-face behavioral counseling for obesity, 15 minutes). We believe that the interactions between practitioners and beneficiaries receiving these services are similar to individual KDE services reported by HCPCS code G0420 (Face-to-face educational services related to the care of chronic kidney disease; individual, per session, per one hour), individual MNT 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), and HBAI reported by CPT code 96150 (Health and behavior assessment (for example, health-focused clinical interview, behavioral observations, psychophysiological monitoring, health-oriented questionnaires), each 15 minutes face-to-face with the patient; initial assessment); CPT code 96151 (Health and behavior assessment (for example, health-focused clinical interview, behavioral observations, psychophysiological monitoring, health-oriented questionnaires), each 15 minutes face-to-face with the patient re-assessment); CPT code 96152 (Health and behavior intervention, each 15 minutes, face-to-face; Individual); CPT code 96153 (Health and behavior intervention, each 15 minutes, face-to-face; Group (2 or more patients)); CPT code 96154 (Health and behavior intervention, each 15 minutes, face-to-face; family (with the patient present)), all services that are currently on the telehealth list.

Therefore, we are proposing to add HCPCS codes G0442, G0443, G0444, G0445, G0446, and G0447 to the list of telehealth services for CY 2013 on a category 1 basis. We note that all coverage guidelines specific to the services would continue to apply when these services are furnished via telehealth. For example, when the national coverage determination requires that the service be furnished to beneficiaries in a primary care setting, the qualifying originating telehealth site must also qualify as a primary care setting. Similarly, when the national coverage determination requires that the service be furnished by a primary care practitioner, the qualifying primary distant site practitioner must also qualify as primary care practitioner. For more detailed information on coverage requirements for these services, we refer readers to the Medicare National Coverage Determinations Manual, Pub. 100-03, Chapter 1, Section 210, available at http://www.cms.gov/manuals/downloads/ncd103c1_Part4.pdf. Consistent with this proposal, we are also proposing to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include these preventive services as Medicare telehealth services.

4. Technical Correction To Include Emergency Department Telehealth Consultations in Regulation

In the CY 2012 PFS final rule with comment period (76 FR 73103), we finalized 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. However, we did not amend the description of the services within the regulation at § 414.65(a)(1)(i). Therefore, we are proposing to make a technical revision to our regulation at § 414.65(a)(1)(i) to reflect telehealth consultations furnished to emergency department patients in addition to hospital and SNF inpatients.

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

1. Background and Statutory Authority

Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554) provided payment to independent laboratories furnishing the technical component (TC) of physician pathology services to fee-for-service Medicare beneficiaries who are inpatients or outpatients of a covered hospital for a 2-year period beginning on January 1, 2000. This section has been amended by section 732 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173), section 104 of division B of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), section 104 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), section 136 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), section 3104 of the Affordable Care Act (Pub. L. 111-148), section 105 of the Medicare and Medicaid Extenders Act of 2010 (MMEA) (Pub. L. 111-309), section 305 of the Temporary Payroll Tax Cut Continuation Act of 2011 (Pub. L. 112-78) and section 3006 of the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96) to continue payment to independent laboratories furnishing the technical component (TC) of physician pathology services to fee-for-service Medicare beneficiaries who are inpatients or outpatients of a covered hospital for various time periods. As discussed in detail below, Congress most recently acted to continue this payment through June 30, 2012. The TC of physician pathology services refers to the preparation of the slide involving tissue or cells that a pathologist interprets. The professional component (PC) of physician pathology services refers to the pathologist's interpretation of the slide.

When the hospital pathologist furnishes the PC service for a hospital patient, the PC service is separately billable by the pathologist. When an independent laboratory's pathologist furnishes the PC service, the PC service is usually billed with the TC service as a combined or global service.

Historically, any independent laboratory could bill the Medicare contractor under the PFS for the TC of physician pathology services for hospital patients even though the payment for the costs of furnishing the pathology service (but not its interpretation) was already included in the bundled inpatient stay payment to the hospital. In the CY 2000 PFS final rule with comment period (64 FR 59408 and 59409), we stated that this policy has contributed to the Medicare program paying twice for the TC service: (1) To the hospital, through the inpatient prospective payment rate, when the patient is an inpatient; and (2) To the independent laboratory that bills the Medicare contractor, instead of the hospital, for the TC service. While the policy also permits the independent laboratory to bill for the TC of physician pathology services for hospital outpatients, in this case, there generally would not be duplicate payment because we would expect the hospital to not also bill for the pathology service, which would be paid separately to the hospital only if the hospital were to specifically bill for it. We further indicated that we would implement a policy to pay only the hospital for the TC of physician pathology services furnished to its inpatients.

Therefore, in the CY 2000 PFS final rule with comment period, we revised § 415.130(c) to state that for physician pathology services furnished on or after January 1, 2001 by an independent laboratory, payment is made only to the hospital for the TC of physician pathology services furnished to a hospital inpatient. Ordinarily, the provisions in the PFS final rule with comment period are implemented in the following year. However, the change to § 415.130 was delayed 1-year (until January 1, 2001), at the request of the industry, to allow independent laboratories and hospitals sufficient time to negotiate arrangements.

Full implementation of § 415.130 was further delayed by section 542 of the BIPA and section 732 of the MMA, which directed us to continue payment to independent laboratories for the TC of physician pathology services for hospital patients for a 2-year period beginning on January 1, 2001 and for CYs 2005 and 2006, respectively. In the CY 2007 PFS final rule with comment period (71 FR 69788), we amended § 415.130 to provide that, for services furnished after December 31, 2006, an independent laboratory may not bill the carrier for the TC of physician pathology services furnished to a hospital inpatient or outpatient. However, section 104 of the MIEA-TRHCA continued payment to independent laboratories for the TC of physician pathology services for hospital patients through CY 2007, and section 104 of the MMSEA further extended such payment through the first 6 months of CY 2008.

Section 136 of the MIPPA extended the payment through CY 2009. Section 3104 of the Affordable Care Act amended the prior legislation to extend the payment through CY 2010. Section 105 of the MMEA extended the payment through CY 2011. Subsequent to publication of the CY 2012 PFS final rule with comment period, section 305 of the Temporary Payroll Tax Cut Continuation Act of 2011 extended the payment through February 29, 2012 and section 3006 of the Middle Class Tax Relief and Job Creation Act of 2012 extended the payment through June 30, 2012.

2. Revisions to Payment for TC of Certain Physician Pathology Services

In the CY 2012 PFS final rule with comment period, we finalized our policy that an independent laboratory may not bill the Medicare contractor for the TC of physician pathology services furnished after December 31, 2011, to a hospital inpatient or outpatient (76 FR 73278 through 73279, 73473). As discussed above, subsequent to publication of this final rule with comment period, Congress acted to continue payment to independent laboratories through June 30, 2012. Therefore, the policy that we finalized in the CY 2012 PFS final rule with comment period is superseded by statute for six months. To be consistent with the statutory changes and our current policy, we are proposing conforming changes to § 415.130(d) such that we will continue payment under the PFS to independent laboratories furnishing the TC of physician pathology services to fee-for-service Medicare beneficiaries who are inpatients or outpatients of a covered hospital on or before June 30, 2012. Independent laboratories may not bill the Medicare contractor for the TC of physician pathology services furnished after June 30, 2012, to a hospital inpatient or outpatient.

G. Therapy Services

1. Outpatient Therapy Caps for CY 2013

Section 1833(g) of the Act applies annual, per beneficiary, limitations (therapy caps) on expenses incurred for outpatient therapy services under Medicare Part B. There is one therapy cap for physical therapy (PT) and speech-language pathology (SLP) services combined and a second separate therapy cap for outpatient occupational therapy (OT) services. Although therapy services furnished in an outpatient hospital setting have been exempt from the application of the therapy caps, section 3005(b) of the MCTRJCA amended section 1833(g) of the Act to require therapy services furnished in an outpatient hospital setting during 2012 be subject to the therapy caps beginning not later than October 1, 2012.

The therapy caps amount for CY 2013 will be announced in the CY 2013 PFS final rule with comment period. The annual change in each therapy cap is computed by multiplying the cap amount for CY 2012, which is $1,880, by the MEI for CY 2013, then rounding to the nearest $10. This amount is added to the CY 2012 therapy cap amount to obtain the CY 2013 therapy cap amount.

An exceptions process to the therapy caps has been in effect since January 1, 2006—originally authorized by section 5107 of the DRA, which amended section 1833(g)(5) of the Act. Since that time, the exceptions process for the therapy caps has been extended through subsequent legislation (MIEA-TRHCA, MMSEA, MIPPA, the Affordable Care Act, MMEA, and TPTCCA). Last amended by section 3005 of the MCTRJCA, the Agency's authority to provide for an exception process to therapy caps expires on December 31, 2012. To request an exception to the therapy caps, therapy suppliers and providers use the KX modifier on claims for services that are over the cap amount. Use of the KX modifier indicates that the services are reasonable and necessary and that there is documentation of medical necessity in the beneficiary's medical record.

Section 3005 of the MCTRJCA also requires two additional changes to Medicare policies for outpatient therapy services. Section 3005(a)(5) adds a new subparagraph (C) to section 1833(g)(5) of the Act, effective October 1 through December 31, 2012, that requires application of a manual medical review process (similar to the process used in 2006 for certain therapy cap exceptions) for exceptions to the therapy caps after expenses incurred for the beneficiary's therapy services (including services furnished in a hospital outpatient department) exceed the threshold of $3,700 for the year. As with the therapy caps, there are two separate thresholds for the manual medical review process—one threshold of $3,700 for PT and SLP services combined and one threshold of $3,700 for OT services. Requests for exceptions to the therapy caps for services above the thresholds are subject to a manual medical review process. The applicable amount of expenses incurred for therapy services counted towards these thresholds for the year begins on January 1, 2012. Since the exceptions process is set to expire on December 31, 2012, the requirement for a manual medical review process will also expire then.

Section 3005(c) adds a new section 1842(t)(2) to the Act, effective beginning on October 1, 2012, that requires the National Provider Identifier (NPI) of the physician (or NPP, where applicable), who periodically reviews the therapy plan of care, to be reported on the claim for therapy services. This reporting requirement applies to all claims for outpatient therapy services.

2. Claims-Based Data Collection Strategy for Therapy Services

a. Introduction

Section 3005(g) of the MCTRJCA requires CMS to implement, beginning on January 1, 2013, “* * * a claims-based data collection strategy that is designed to assist in reforming the Medicare payment system for outpatient therapy services subject to the limitations of section 1833(g) of the Act. Such strategy shall be designed to provide for the collection of data on patient function during the course of therapy services in order to better understand patient condition and outcomes.”

b. History/Background

In 2010, more than 7.6 million Medicare beneficiaries received outpatient therapy services, including physical therapy (PT), occupational therapy (OT), and speech-language-pathology (SLP). Medicare payments for these services exceeded $5.6 billion. Between 1998-2008, Medicare expenditures for outpatient therapy services increased at a rate of 10.1 percent per year while the number of Medicare beneficiaries receiving therapy services only increased by 2.9 percent per year. Although a significant number of Medicare beneficiaries benefit from therapy services, the rapid growth in Medicare expenditures for these services has long been of concern to the Congress and the Agency. To address this concern, efforts have been focused on developing Medicare payment incentives that encourage delivery of reasonable and necessary care while discouraging overutilization of therapy services and the provision of medically unnecessary care. A brief review of these efforts is useful in understanding our proposal for CY 2013.

(1) Therapy Caps

Section 4541 of the Balanced Budget Act of 1997 (Pub. L. 105-33) (BBA) amended section 1833(g) of the Act to impose financial limitations on outpatient therapy services (the “therapy caps” discussed above) in an attempt to limit Medicare expenditures for therapy services. Prior to the BBA amendment, these caps had applied to services furnished by therapists in private practice, but the BBA expanded the caps effective January 1, 1999, to include all outpatient therapy services except those furnished in outpatient hospitals. Since that time, the Congress has amended the statute several times to impose a moratorium on the application of the caps or has required us to implement an exceptions process for the caps. The therapy caps have only been in effect without an exceptions process for less than two years. (See the discussion about the therapy cap exceptions process above.) Almost from the inception of the therapy caps, the Congress and the Agency have been exploring potential alternatives to the therapy caps.

(2) Multiple Procedure Payment Reduction (MPPR)

In the CY 2011 PFS final rule with comment period (75 FR 73232-73242), we adopted a MPPR of 25 percent applicable to the practice expense (PE) component of the second and subsequent therapy services when more than one of these services is furnished in a single session. This reduction applies to nearly 40 therapy services. (For a list of therapy services to which this policy applies, see Addenda H.) The Physician Payment and Therapy Relief Act of 2010 (PPTRA) subsequently revised the reduction to 20 percent for services furnished in an office setting, leaving the 25 percent reduction in place for services furnished in institutional settings. We adopted this MPPR as part of our directive under section 1848(c)(2)(k) of the statute (as added by section 3134(a) of the Affordable Care Act) to identify and evaluate potentially misvalued codes. By taking into consideration the expected efficiencies in direct PE resources that occur when services are furnished together, this policy results in more appropriate payment for therapy services. Although we did not adopt this MPPR policy specifically as an alternative to the therapy caps, paying more appropriately for combinations of therapy services that are commonly furnished in a single session reduces the number of beneficiaries impacted by the therapy caps in a given year. For more details on the MPPR policy, see section II.C.4. of this proposed rule.

(3) Studies Performed

A uniform dollar value therapy cap sets a limit on the volume of services furnished unrelated to the specific services furnished or the beneficiary's condition or needs. One uniform cap does not deter unnecessary care or encourage efficient practice for low complexity beneficiaries. In fact, it may even encourage the provision of services up to the level of the cap. Conversely, a uniform cap without an exceptions process restricts necessary and appropriate care for certain high complexity beneficiaries. Recognizing these limitations in a uniform dollar value cap, we have been studying therapy practice patterns and exploring ways to refine payment for these services as an alternative to therapy caps.

On November 9, 2004, the Secretary delivered the Report to Congress, as required by the BBA as amended by the BBRA, “Medicare Financial Limitations on Outpatient Therapy Services.” That report included two utilization analyses. Although these analyses provided details on utilization, neither specifically identified ways to improve therapy payment. In the report, we indicated that further study was underway to assess alternatives to the therapy caps. The report and the analyses are available on the CMS Web site at http://www.cms.gov/TherapyServices/.

Since 2004, we have periodically updated the utilization analyses and posted other reports on the CMS Web site to respond to the additional BBRA requirements. Subsequent reports highlighted the expected effects of limiting services in various ways and presented plans to collect data about beneficiary condition, including functional limitations, using available tools. Through these efforts, we have made progress in identifying the outpatient therapy services that are billed to Medicare, the demographics of the beneficiaries who utilize these services, the types of therapy services furnished, the HCPCS codes used to bill the services, the allowed and paid amounts of the services, the providers of these services, the states in which the services are furnished and the type of practitioner furnishing services.

From these and other analyses in our ongoing research effort, we have concluded that without the ability to define the services that are typically needed to address specific clinical cohorts of beneficiaries (those with similar risk-adjusted conditions), it is not possible to develop payment policies that encourage the delivery of reasonable and necessary services while discouraging the provision of services that do not produce a clinical benefit. Although there is widespread agreement that beneficiary condition and functional limitations are critical to developing and evaluating an alternative payment system for therapy services, a system for collecting such data does not exist. Diagnosis information is available from Medicare claims. However, we believe that the primary diagnosis on the claim is a poor predictor for the type and duration of therapy services required. Much additional work is needed to develop an appropriate system for classifying clinical cohorts.

A 5-year CMS project titled “Development of Outpatient Therapy Payment Alternatives” (DOTPA) is expected to provide some of this information. The project is now in its final stages of data collection. The purpose of the DOTPA project is to identify a set of measures that we could routinely and reliably collect in support of payment alternatives to the therapy caps. Specifically, the measures being collected are to be assessed in terms of their administrative feasibility and their usefulness in identifying beneficiary need for outpatient therapy services and the outcomes of those services. A final report is expected during the second half of CY 2013. In addition to developing alternatives to the therapy caps, the DOTPA project reflects our interest in value-based purchasing by identifying components of value, namely, beneficiary need and the effectiveness of therapy services. Although we expect DOTPA to provide meaningful data and practical information to assist in developing improved methods of paying for appropriate therapy services, DOTPA will not deliver a standardized measurement instrument for use in outpatient therapy services. Further, it is unlikely that this one project alone will provide adequate information to implement a new payment system for therapy. This study combined with data from a wider group of Medicare beneficiaries would enhance our ability to develop alternative payment policy for outpatient therapy services.

c. Proposal

(1) Overview

As required by section 3005(g) of MCTRJCA, we are proposing to implement a claims-based data collection strategy on January 1, 2013. This claims-based data collection system is designed to gather information on beneficiary function and condition, therapy services furnished, and outcomes achieved. This information will assist in reforming the Medicare payment system for outpatient therapy services. By collecting data on beneficiary function over an episode of therapy services, we hope to better understand the Medicare beneficiary population that uses therapy services, how their functional limitations change as a result of therapy services, and the relationship between beneficiary functional limitations and furnished therapy services over an episode of care. The term “functional limitation” generally encompasses both the terms “activity limitations” and “participation restrictions” as described by the International Classification of Functioning, Disability and Health (ICF). (For information on ICF, see http://www.who.int/classifications/icf/en/ and for specific ICF nomenclature (including activity limitations and participation restrictions), see http://apps.who.int/classifications/icfbrowser/.)

We are proposing to encompass, under this proposal, the Medicare Part B outpatient therapy benefit and PT, OT, and SLP under the Comprehensive Outpatient Rehabilitation Facilities (CORF) benefit. “Incident to” therapy services furnished by physicians or nonphysician practitioners (NPPs) would also be included. This broad applicability would include services furnished in hospitals, critical access hospitals (CAHs), skilled nursing facilities (SNFs), CORFs, rehabilitation agencies, and home health agencies (when the beneficiary is not under a home health plan of care) and private offices.

When used in this section “therapists” means all practitioners who furnish outpatient therapy services, including physical therapists, occupational therapists, and speech-language pathologists in private practice and those therapists who furnish services in the institutional settings, physicians and NPPs (including, physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists (CNSs), as applicable.)

This proposal is based upon an option for claims-based data collection that was discussed during the CY 2011 rulemaking (75 FR 40096 through 40100 and 73284 through 73293). This option was developed under a contract with CMS as part of the Short Term Alternatives for Therapy Services (STATS) project. The STATS project provided three options for alternative payment to the therapy caps that could be considered in the short-term before completion of the DOTPA project. In developing options, the STATS project drew upon the analytical expertise of CMS contractors and the clinical expertise of various outpatient therapy stakeholders to consider policies and available claims data. The options developed were:

  • Capturing additional clinical information regarding the severity and complexity of beneficiary functional impairments on therapy claims in order to facilitate medical review and at the same time gather data that would be useful in the long term to develop a better payment mechanism;
  • Introducing additional claims edits regarding medical necessity, in order to reduce overutilization; and
  • Adopting a per-session bundled payment that would vary based on beneficiary characteristics and the complexity of evaluation and treatment services furnished in a session.

While we did not propose to adopt any of these alternatives at that time, we discussed these three options during the CY 2011 rulemaking and solicited public comments on all aspects of these alternatives, including the potential associated benefits or problems, clinical concerns, practitioner administrative burden, consistency with other Medicare and private payer payment policies, and claims processing considerations. In general, public commenters on the data collection effort questioned the ability to collect the needed information using this type of system. Commenters raised specific concerns about the training and education of therapists that would be needed prior to implementation. Although concerns were expressed about claims-based data reporting, no one questioned the need for data on beneficiary condition and functional limitations. The Congress has now included in section 3005(g) of the MCTRJCA a requirement to implement a claims-based data collection effort. While the proposed system is based upon the data collection alternative discussed in the CY 2011 PFS rulemaking, it has been modified in response to the comments received on the CY 2011 proposed rule.

The long-term goal is to develop an improved payment system for Medicare therapy services. The desired payment system would pay appropriately and similarly for efficient and effective services furnished to beneficiaries with similar conditions and functional limitations who have good potential to benefit from the services furnished. Importantly, such a system would not encourage the furnishing of medically unnecessary or excessive services. At this time, the data on Medicare beneficiaries' use and benefit from therapy services from which to develop an improved system does not exist. This proposed data collection effort would be the first step towards collecting the data needed for this type of payment reform. Once the initial data have been collected and analyzed, we expect to be able to identify gaps in information and determine what additional data are needed to develop a new payment policy. Without a better understanding of the diversity of beneficiaries receiving therapy services and the variations in type and volume of treatments provided, we lack the information to develop a comprehensive strategy to map the way to an improved payment policy. While this claims-based data collection proposal is only the first step in a long-term effort, it is an essential step.

We are proposing to require that claims for therapy services include nonpayable G-codes and modifiers. Through the use of these codes and modifiers, we would capture data on the beneficiary's functional limitations (a) at the outset of the therapy episode, (b) at specified points during treatment and (c) at discharge from the outpatient therapy episode of care. In addition, the therapist's projected goal for functional status at the end of treatment would be reported on the first claim for services and periodically throughout an episode of care.

Specifically, G-codes would be used to identify what is being reported—current status, goal status or discharge status. Modifiers would indicate the extent of the severity/complexity of the functional limitation being tracked. The difference between the reported functional status at the start of therapy and projected functional status at the end of the course of therapy represents the progress the therapist anticipates the beneficiary would make during the course of treatment/episode of care. As the beneficiary progresses through the course of treatment, one would expect progress toward the goal established by the therapist.

By tracking changes in functional limitations throughout the therapy episode and at discharge, we would have information about the furnished therapy services and the outcomes of such services. The ICD-9 diagnosis codes reported on the claim form would provide information on beneficiary condition.

Since 2006, we have paid claims for therapy services that exceed the annual per beneficiary caps when the claims include the KX modifier. The presence of the KX modifier on a therapy claim indicates that the therapist attests that the services on the claim are medically necessary and that the justification for medical necessity is documented in the beneficiary's medical record. We propose to apply the additional G-code and modifier reporting requirements to all claims, including claims with the KX modifier and those subject to any manual medical review process, if such manual medical review or the KX modifier were applicable, after December 31, 2012. (See the discussion about therapy caps above.)

(2) Proposed Nonpayable G-Codes on Beneficiary Functional Status

For the proposed reporting, therapists would report G-codes and modifiers on Medicare claims for outpatient therapy services. Table 17 shows the proposed G-codes and their definitions. (An appropriate status indicator will be assigned to these codes if finalized.)

Table 17—Proposed Nonpayable G-Codes for Reporting Functional Limitations Back to Top
Functional limitation for primary functional limitation    
GXXX1 Primary Functional limitation Current status at initial treatment/episode outset and at reporting intervals.
GXXX2 Primary Functional limitation Projected goal status.
GXXX3 Primary Functional limitation Status at therapy discharge or end of reporting.
Functional limitation for a secondary functional limitation if one exists    
GXXX4 Secondary Functional limitation Current status at initial treatment/outset of therapy and at reporting intervals.
GXXX5 Secondary Functional limitation Projected goal status.
GXXX6 Secondary Functional limitation Status at therapy discharge or end of reporting.
Provider attestation that functional reporting not required    
GXXX7 Provider confirms functional reporting not required.

The proposed claims-based data collection system using G-codes and severity modifiers builds upon current Medicare requirements for therapy services. Section 410.61 requires that a therapy plan of care (POC) be established before treatment begins. This POC must include: The type, amount, frequency, and duration of the PT, OT, SLP services to be furnished to each beneficiary, the diagnosis and the anticipated goals. Section 410.105(c) contains similar requirements for services furnished in the CORF setting. We have long encouraged therapists, through our manual provisions, to express the POC-required goals for each beneficiary in terms that are measureable and relate to identified functional impairments. See Pub 100-02, Chapter 15, Section 220.1.2. The evaluation and the goals developed as part of the POC would be the foundation for the initial reporting under the proposed system.

Using the first set of G-codes (GXXX1, GXXX2, and GXXX3) with appropriate modifiers, the therapist would report the beneficiary's primary functional limitation or the most clinically relevant functional limitation at the time of the initial therapy evaluation and the establishment of the POC. In combination with appropriate modifiers, these G-codes would describe the current functional limitation (GXXX1) and the projected goal (GXXX2) for the functional limitation and the status at the end of a course of therapy (GXXX3). At specified intervals during treatment, claims would also include GXXX1 to show the status at that time and GXXX2 to show the goal, which would not change during therapy, except as described below. At the time the beneficiary is discharged from therapy, the final claim for this episode of care would use GXXX2 to show the goal and GXXX3 to denote status at the end of reporting for this functional limitation.

Therapists frequently use measurement tools to quantify beneficiary function. The Patient Inquiry by Focus on Therapeutic Outcomes, Inc. (FOTO) and the National Outcomes Measurement System (NOMS) by the American Speech-Language-Hearing Association (ASHA) are two such assessment tools in the public domain that can be used to determine a composite or overall score for an assessment of beneficiary function. Therapists could use the score produced by such measurement tools, provided they are valid and reliable, to select the appropriate modifier for reporting the beneficiary's functional status. While we support the use of consistent, objective tools to determine beneficiary functional limitation, for several reasons, at this time we are not endorsing, nor are we proposing to require, use of a particular tool to determine the severity modifier discussed in the next section. Some tools are proprietary, and others in the public domain cannot be modified to explicitly address this data collection project. Further, this data collection effort spans several therapy disciplines. Requiring a specific instrument could create burdens for therapists that would have to be considered in light of any potential improvement in data accuracy, consistency and appropriateness that such an instrument would generate. We may reconsider this decision once we have more experience with claims-based data collection on beneficiary function associated with furnished therapy services. We are seeking public comment on the use of assessment tools. In particular, we are interested in feedback regarding the benefits and burdens associated with use of a specific tool to assess beneficiary functional limitations. We request that those favoring a requirement to use a specific tool provide information on the preferred tool and describe why the tool is preferred.

Early results from the DOTPA project suggest that most beneficiaries have more than one functional limitation at treatment outset. In fact, only 21 percent of the DOTPA assessments reported just one functional limitation. Slightly more than half (54 percent) reported two, three or four functional limitations.

To the extent that the DOTPA experience is typical, the therapist may need to make a determination as to which functional limitation is primary for reporting purposes. In cases where this is unclear, the therapist may choose the functional limitation that is most clinically relevant to a successful outcome for the beneficiary, the one that would yield the quickest and greatest mobility, or the one that is the greatest priority for the beneficiary. In all cases, this primary functional limitation should reflect the predominant limitation that the furnished therapy services are intended to address.

To allow for more complete reporting, the second set of G-codes in Table 17 could be used to describe a secondary functional limitation, when one exists. Two examples demonstrate the applicability of the second set of G-codes.

(1) A beneficiary under a PT plan of care is being treated simultaneously for mobility restriction, for example, “walking and moving” (including, for example, climbing stairs) due to complications following a total knee replacement and for a “self-care” restriction due to a stabilized and immobilized upper extremity after a shoulder dislocation.

(2) A beneficiary under a SLP plan of care may be treated simultaneously for both a swallowing dysfunction and a communication impairment resulting from a stroke.

This secondary G-code set is used to report the functional limitation that the therapist considers secondary to the primary one at the outset of a course of therapy. For example, in the first scenario above, the therapist determines the “self-care” to be secondary to the beneficiary's primary one (“walking and moving”). The therapist would report the secondary functional limitation using a current status (GXXX4) along with the associated goal (GXXX5).

In some cases, a secondary functional limitation may not develop or be identified until after the course of treatment has begun. In such situations, the therapist would begin reporting this secondary set at the time the functional limitation is identified. Just as in the example above, the therapist would report GXXX4 and GXXX5.

For beneficiaries having more than two functional limitations, once the goal for the primary functional limitation has been reached or the beneficiary's potential to reach the goal has been maximized, the reporting on that functional limitation ends and reporting can begin on a new functional limitation. The therapist would use the set of G-codes (and associated modifiers) for the primary functional limitation, that is, GXXX1-GXXX3, to report functional status of the beneficiary's third functional restriction. This process of adding a new functional limitation, for example, for the fourth and the fifth, can continue until therapy ends. Following this process, the set of G-codes that the therapist uses originally to report each functional limitation does not change throughout the episode of care, even though the originally reported secondary functional limitation (reported with GXXX4 through GXXX6) may have become the primary one, for clinical purposes, once the goal for the originally reported primary functional limitation was reached. The therapist is not expected to change the G-code set used originally to report a particular functional limitation; we believe requiring therapists to do so would be too burdensome and would confuse the data we are collecting for programmatic purposes.

We are seeking comment on specific issues regarding reporting data on a secondary limitation. Specifically, we request comments regarding whether reporting on secondary functional limitations should be required or optional. We would also be interested in information regarding what percentage of Medicare therapy beneficiaries has more than one functional limitation at the outset of therapy, and for those with multiple functional limitations, what is the average number. We would also be interested in information on the percentage of these functional limitations for which therapists go on to measure, document, and develop related therapy goals.

The proposed G-codes differ from the three separate pairs of G-codes discussed in the CY 2011 PFS rulemaking. The CY 2011 discussion included these three pairs of G-codes, all of which reflect specific ICF terminology:

  • Impairments of Body Functions and/or Impairments of Body Structures;
  • Activity Limitations and Participation Restrictions; and
  • Environmental Factors Barriers.

Each pair contained a G-code to represent the beneficiary's current functional status and another G-code to represent the beneficiary's projected goal status. Like the G-codes in this proposal, these G-codes would have been used with modifiers to reflect the severity/complexity of each element.

This set of G-codes appeared to us to be potentially redundant and confusing since we are using the term functional limitations to be synonymous with the ICF terminology “activity limitations and participation restrictions.” Requiring separate reporting on three elements would have imposed a burden on therapists without providing a meaningful benefit in the value of the data provided. Further, because environmental barriers as discussed in CY 2011 are contextual, we do not believe collecting information on them would contribute to developing an improved payment system or assist with medical review. Since our goal is to develop a system that imposes the minimal additional burden while providing adequate data to accomplish the statutory directive (to assist in reforming the Medicare payment system for outpatient therapy services), we are proposing to require that just one set of G-codes be used for reporting the primary functional limitation. We added a second set of G-codes for a secondary functional limitation, which are identical to those used for the primary functional limitation. We are interested in public comment on whether these proposed G-codes allow adequate reporting on beneficiary's functional limitations. We would particularly appreciate receiving specific suggestions for any missing elements.

(3) Severity/Complexity Modifiers

For each functional G-code used on a claim, a modifier would be required to report the severity/complexity for that functional limitation. We propose to adopt a 12-point scale to report the severity or complexity of the functional limitation involved. The proposed modifiers are listed in Table 18.

Table 18—Proposed Modifiers Back to Top
Modifier Impairment limitation restriction difficulty
XA 0%.
XB Between 1-9%.
XC Between 10-19%.
XD Between 20-29%.
XE Between 30-39%.
XF Between 40-49%.
XG Between 50-59%.
XH Between 60-69%.
XI Between 70-79%.
XJ Between 80-89%.
XK Between 90-99%.
XL 100%.

An example of how a therapist would translate data from another assessment tool to this scale may be helpful. In our example, the physical therapist used the Berg Balance Scale (the long original version) to document the beneficiary's functional balance restriction and the beneficiary's test score is 33. (The scores on this test range from 0-56. A score below 41 is considered to be at moderate risk of falling.) Once the test is completed, the therapist maps the beneficiary's score to our severity modifier scale. To do so, the beneficiary's score must first be converted to a percentage. A score of 33 on a scale of 56 would equal 59 percent. To map the percentage from the Berg Balance Scale to the modifier scale, it must be subtracted from 100, since zero on the Berg Balance Scale reflects 100 percent limitation/disability. When 59 percent is subtracted from 100 percent, the result is 41 percent. This number falling between 40 percent and 49 percent is mapped to the severity modifier of “XF.”

As already noted, there are many other valid and reliable measurement tools that therapists use to quantify functional limitations. Among these are four assessment tools we discussed in CY 2011 PFS rulemaking—namely, the Activity Measure—Post Acute Care (AM-PAC) tool, the FOTO Patient Inquiry, OPTIMAL, and NOMS. We list these tools as recommended for use by therapists, though not required, in the outpatient therapy IOM provision of the Benefits Policy Manual, Chapter 15, Section 220.3C “Documentation Requirements for Therapy Services.” The scores from these and other measurement tools already in use by therapy disciplines produce numerical or percentage scores that can be mapped or crosswalked to the proposed severity modifier scale. The advantage of using an assessment tool that yields a composite score, such as NOMS, would be that only the G-codes for the primary functional limitation would need to be reported even if we required reporting of secondary limitations.

In assessing the ability of therapists to provide the required severity information regardless of what assessment tool they use, if any, we considered the comments received on the CY 2011 PFS proposed rule discussion and our preliminary experience from the DOTPA project. Both indicated that we needed greater granularity in our severity scale to more accurately assess changes in functional limitation over the course of therapy. Specifically, most commenters favored the 7-point scale over the 5-point ICF-based scale. They preferred a scale with more severity levels since it would allow the therapist to document smaller changes that many therapy beneficiaries make towards their goals. For example, the “severe” level of the 5-point scale includes a 45-point spread (from 50-95 percent) making it difficult to document a change or improvement in a beneficiary's condition whose limitation being rated falls into this category. Commenters also liked the equal increments of the 7-point scale.

We believe that neither the five- or seven-point scales are adequate for this reporting system, and developed a new scale. The 12-point scale we are proposing is an enhancement of the 7- point scale. It achieves the ability to more accurately capture changes in functional limitations over the course of treatment and is easier to use and understand. It addresses the concern of a major association, which supported the 7-point scale, but suggested that an even more sensitive rating scale (one with more increments) might be necessary to show progress of certain beneficiaries toward their projected goals, particularly those beneficiaries with neurological conditions, such as strokes. In addition, the proposed scale's 10-percentage point increments make it easier for therapists to convert composite and overall scores from assessment instruments or other measurement tools to this scale.

(4) Adaptation for G-Codes by Select Categories of Functional Limitations

The ultimate goal of gathering information on beneficiary function is to have adequate information to develop an alternative payment system for therapy services. Although the information that would be collected pursuant to the proposal discussed above would greatly increase our understanding of the therapy services furnished and any progress made as a result of these services, it would leave us far short of the data needed for developing a new payment system. A significant limitation of this proposal is that it would not provide data by type of functional limitation involved. We have been unable to identify an existing system that categorizes the variety of functional limitations addressed by therapists. Without an existing system that could be used to collect data on specific functional limitations, we could not develop and implement a complete system categorizing all functional limitations within the time period allowed by the statute.

However, we could begin to collect data on select categories of functional limitations by adapting the reporting system described above to include some category specific-reporting in addition to the generic reporting. Should we decide to use a system with category-specific reporting, we would expect to develop specific nonpayable G-codes for select categories of functional limitations in the final rule. Under this adaptation, if one of the select categories of functional limitations created describes the functional limitation being reported, that G-code set would be used to report the current, projected goal, and discharge status of the beneficiary.

Any functional limitation not identified in this limited G-code set would be reported using the generic G-codes previously described.

To demonstrate this approach, we have created G-codes that describe the two most frequently reported functional limitations by each of the three therapy disciplines in the DOTPA project. (See Table 19.) When appropriate, these G-codes would be used exactly as the generic ones.

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

The benefit of having these select G-code sets in addition to the general G-codes is that the data collected could be analyzed by specific diagnoses/conditions and categories of functional limitations. We believe that in order to develop an improved payment system for therapy services this type of information is needed. Moreover, expansion of these categorical G-codes to encompass many more categories of functional limitations is essential. However, implementing specific G-codes for a select set of functional limitations could be a starting point. An initial data set could allow us to begin collecting the necessary data. It would also help us to evaluate how such a system works and make improvements before imposing requirements across the board.

We seek input from therapists on categories of functional limitations, such as those described in this section. We specifically request comments regarding the following questions. Would data collected on categories of functional limitations provide more meaningful data on therapy services than that collected through use of the generic G-codes in our proposal? Should we choose to implement a system that is based on at least some select categories of functional limitation, which functional limitations should we collect data on in 2013? Is it more, less or the same burden to report on categories of functional limitations or generic ones? The categories of functional limitations described above are based on the ICF categories, but these ICF categories also have subcategories. Should we use subcategories for reporting? Are there specific conditions not covered by these ICF categories? Would we need to have G-codes for the same categories of secondary limitations?

(5) Reporting Frequency

We propose to require this claims-based reporting in conjunction with the initial service at the outset of a therapy episode, at established intervals during treatment and at discharge. The number of G-codes required on a particular claim would vary from one to four, depending on the circumstances. Table 20 shows a graphic example of which codes are used for specified reporting. We would note that the example represents a therapy episode of care occurring over an extended time period. This example might be typical for a beneficiary receiving therapy for the late effects of a stroke. We chose to use an example with a much higher than average number of treatment days in order to show a greater variety of reporting scenarios.

  • Outset. Under this proposal, the first reporting of G-codes and modifiers would occur when the outpatient therapy episode of care begins. This would typically be the date of service when the therapist furnishes the evaluation and develops the required plan of care for the beneficiary. At the outset, the therapist would use the G-codes and modifiers to report a current status and a projected goal for the primary functional limitation. If a secondary functional limitation needs to be reported at this time, the same information would be reported using G-codes and associated modifiers for the secondary functional limitation.
  • Every 10 Treatment Days or 30 Calendar Days, Whichever Is Less. We propose to require that the reporting frequency for G-codes and associated modifiers be once every 10 treatment days or at least once during each 30 calendar days, whichever time period is shorter. The first treatment day for purposes of reporting would be the day that the initial visit takes place. The date the episode of care begins, typically at the evaluation, even when the therapist does not furnish a separately billable procedure in addition to the evaluation for this day, would be considered treatment day one, effectively beginning the count of treatment days or calendar days for the first reporting period.

In calculating the 10 treatment days, a treatment day is defined as a calendar day in which treatment occurs resulting in a billable service. Often a treatment day and a therapy “session” or “visit” may be the same, but the two terms are not interchangeable. Infrequently, for example, a beneficiary might receive certain services twice a day—these two different sessions (or visits) in the same day are counted as one treatment day).

On the claim for service on the 10th treatment day or the 30th calendar day after treatment day one, the therapist would only report GXXX1 and the appropriate modifier to show the beneficiary's functional status at the end of this reporting period. If also reporting on a secondary functional limitation, GXXX4 and the appropriate modifier would be included as well.

The next reporting period begins on the next treatment day, that is, the time period between the end of one reporting period and the next treatment day does not count towards the 30 calendar day period. On the claim for services furnished on this date, the therapist would report both the G-code and modifier showing the current functional status at this time along with the G-code and modifier reflecting the projected goal that was identified at the outset of the therapy episode. This process would continue until the beneficiary concludes the course of therapy treatment.

On a claim for a service that does not require specific reporting of a G-code with modifier (that is, a claim for services between the first and the tenth day of service and that is less than 30 days from the initial assessment), GXXX7 would be used. By using this code, the therapist would be confirming that the claim does not require specific functional limitation reporting. This is the only G-code that is reported without a severity modifier.

The count of days, both treatment and calendar, for the second reporting period and any others thereafter, would begin on the first treatment day after the end of the previous reporting period.

We selected the 10/30 frequency of reporting to be consistent with our timing requirements for progress reports. These timing requirements are included in the Documentation Requirements for Therapy Services (see Pub. 100-02, Chapter 15, Section 220.3, Subsection D). By making these reporting timeframes consistent with Medicare's other requirements, therapists, who are already furnishing therapy services to Medicare outpatients, would have a familiar framework for successfully adopting our new reporting requirement. This should minimize the additional burden. In addition to reflecting the Medicare required documentation for progress reports, we believe that this simplifies the process and minimizes the new burden on practitioners since many therapy episodes would be completed by the 10th treatment day. In 2008, the average number of days in a therapy episode was nine treatment days for SLP, 11 treatment days for PT, and 12 treatment days for OT. When reporting on two functional limitations, the therapist would report the G-codes and modifiers for the second condition in the manner described above. In other words, at the end of the reporting period, two G-codes would be reported to show current functional status—one for the primary (GXXX1) and one for the secondary (GXXX4) limitation. Similarly, at the beginning of the reporting period four G-codes would be reported. GXXX1 and GXXX4 would be used to report current status for the primary and secondary functional limitations, respectively; and, GXXX2 and GXXX5 would be used to report the goal status for the primary and secondary functional limitations, respectively.

The reporting periods must be the same for both the primary and secondary functional limitation. The therapist can accomplish this by starting them at the same time or if the secondary functional limitation is added at some point in treatment, the primary functional limitation's reporting period must be re-started by reporting GXXX1 and GXXX2 at the same time the new secondary functional limitation is added using GXXX4 and GXXX5.

Further, for those therapy treatment episodes lasting longer periods of time, the periodic reporting of the G-codes and associated modifiers would reflect any progress that the beneficiary made toward the identified goal. In summary, we propose to require the reporting of G-codes and modifiers at episode outset (evaluation or initial visit), and once every 10th treatment day or at least every 30 calendar days, whichever time period is less.

We believe it is important that the requirements for this reporting system be consistent with the requirements for documenting any progress in the medical record as specified in our manual. Given the current proposal for claims-based data collection, we believe it is an appropriate time to reassess the manual requirements. Toward this vein, we are seeking comment on whether it would be appropriate to modify the progress note requirement in the IOM to one based solely on the number of treatment days, such as six or ten. Should this modification be made, a corresponding change would be made in the reporting periods. We seek comments regarding clinical impact of such a change.

  • Discharge. In addition, we are proposing to require reporting of the G-code/modifier functional data at the conclusion of treatment so that we have a complete set of data for the therapy episode of care. Requiring the reporting at discharge mirrors the IOM requirement of a discharge note or summary. This set of data would reveal any functional progress or improvement the beneficiary made toward the projected therapy goal during the entire therapy episode. Specifically, having information on the beneficiary's functional status at the time of discharge shows whether or to what degree the projected therapy goal was met.

To report the current status of the functional limitation at the time of discharge, the therapist would use GXXX3 and the appropriate modifier. Where there is a secondary functional limitation, GXXX6, along with its appropriate modifier, would also be reported. In addition, GXXX2, along with the modifier established at the outset of therapy, is used to report the projected goal status of the primary functional limitation. And, GXXX4 and its corresponding modifier is reported to show the projected goal status for the secondary functional limitation that was established at the outset of therapy. The imposition of this reporting requirement does not justify scheduling an additional, and perhaps medically unnecessary, final session in order to measure the beneficiary's function for the sole purpose of reporting.

Although collection of discharge data is important in achieving our goals, we recognize that data on functional status at the time therapy concludes is likely to be incomplete for some beneficiaries receiving outpatient therapy services. The DOTPA project has found this to be true. There are various reasons as to why the therapist would not be able to report functional status using G-codes and modifiers at the time therapy ends. Sometimes, beneficiaries may discontinue therapy without alerting their therapist of their intention to do so, simply because they feel better, they can no longer fit therapy into their work schedules, or their transportation is unavailable. Whatever the reason, there would be situations where the therapy ends without a discharge visit. In these situations, we would not require the reporting at discharge. However, we encourage therapists to include discharge reporting whenever possible on the final claims.

For example, since the therapist is typically reassessing the beneficiary during the therapy sessions, the data critical to the severity/complexity of the functional measure may be available even when the final therapy session does not occur. In these instances, the G-codes and modifiers appropriate to discharge should be reported.

We are particularly interested in how often the therapy community finds that beneficiaries discontinue therapy without the therapist knowing in advance that it is the last treatment session and other situations in which the discharge data would not be available for reporting.

  • Significant Change in Beneficiary Condition. We are proposing that, in addition to reporting at the intervals discussed above, the G-code/modifier measures would be required to be reported when a formal and medically necessary re-evaluation of the beneficiary results in an alteration of the goals in the beneficiary's POC. This could result from new clinical findings, an added comorbidity, or a failure to respond to treatment described in the POC. This reporting affords the therapist the opportunity to explain a beneficiary's failure to progress toward the initially established goal(s) and permits either the revision of the severity status of the existing goal or the establishment of a new goal or goals. The therapist would be required to begin a new reporting period when submitting a claim containing a CPT code for an evaluation or a re-evaluation. These G-codes, along with the associated modifiers, could be used to show an increase in the severity of one or two functional limitations; or, they could be used to reflect the severity of newly identified functional limitations as delineated in the revised plan of care.

(6) Documentation

We propose to require that documentation of the information used for reporting under this system must be included in the beneficiary's medical record. The therapist would need to track in the medical record the G-codes and the corresponding severity modifiers that were used to report the status of the functional limitations at the outset of the therapy episode, at the beginning and end of each reporting period, and at the time of discharge (or to report that the projected goal has been achieved and reporting on the particular functional limitation has ended). It is important to include this information in the record in order to create an auditable record and so that this record would also serve to improve the quality of data CMS collects as it will help the therapist keep track of assessment and treatment information for particular beneficiaries.

For example, the therapist selects the functional limitation of “walking and moving” as the primary limitation and determines that at therapy outset the beneficiary has a 60 percent limitation and sets the goal to reduce the limitation to 5 percent. The therapist uses GXXX1-XH to report the current status of the functional impairment; and GXXX2-XB to report the goal. The therapist should note in the beneficiary's medical record that the functional limitation is “walking and moving” and document the G-codes and severity modifiers used to report this functional limitation on the claim for therapy services.

(7) Claims Requirements

Except for the addition of the proposed G-codes and modifiers, nothing in this proposal would modify other existing requirements for submission of therapy claims. For example, the therapy modifiers—GO, GP, and GN—are still required to indicate that the therapy services, for which the G-codes and modifiers are used to report function on, are furnished under a OT, PT, or SLP plan of care, respectively.

Claims from institutional providers, which are submitted to the fiscal intermediaries (FIs) and A/B MACs, would require that a charge be included on the service line for each one of these G-codes in the series, GXXX1-GXXX7. This charge would not be used for payment purposes and would not affect processing. Claims for professional services submitted to carriers and A/B MACs do not require that a charge be included for these nonpayable G-codes but reporting a charge for the nonpayable G-codes would not affect claims processing.

Medicare does not process claims that do not include a billable service. As a result, reporting under this system would need to be included on the same claim as a furnished service that Medicare covers.

(8) Implementation Date

In accordance with section 3005(g) of the MCTRJCA, we propose to implement these data reporting requirements on January 1, 2013. We recognize that with electronic health records and electronic claims submission, therapists may encounter difficulty in including this new data on claims. To accommodate those that may experience operational or other difficulties with moving to this new reporting system and to assure smooth transition, we are proposing a testing period from January 1, 2013 until July 1, 2013. We would expect that all those billing for outpatient therapy services would take advantage of this testing period and begin attempting to report the new G-codes and modifiers as quickly as possible on or after January 1, 2013, in preparation for required reporting beginning on July 1, 2013. Taking advantage of this testing period would help to minimize potential problems after July 1, 2013, when claims without the appropriate G-codes and modifiers would be returned unpaid.

(9) Compliance Required as a Condition for Payment and Regulatory Changes

To implement the reporting system required by MCTRJCA and described above we are proposing to amend the regulations establishing the conditions for payment governing PT, OT, SLP, and CORFs to add a requirement that the claims include information on beneficiary functional limitations. In addition, we propose to amend the plan of care requirements set forth in the regulations for outpatient therapy services and CORFs to require that the therapy goals, which must be included in the POC, are consistent with the beneficiary function reporting on claims for services.

Specifically, we propose to amend the regulations for outpatient OT, PT, and SLP (§ 410.59, § 410.60, and § 410.62, respectively) by adding a new paragraph (a)(4) to require that claims submitted for furnished services contain the information on beneficiary functional limitations as described in this rule.

We also propose to amend the plan of care requirements set forth at § 410.61(c) to require that the therapy goals, which must be included in the treatment plan, must be consistent with those reported on claims for services. This requirement is in addition to those already existing conditions for the POC

To achieve consistency in the provision of PT, OT, and SLP services across settings, we propose to amend § 410.105 to include the same requirements for these services furnished in CORFs. These proposed revisions would require that the goals in the treatment plan be consistent with the beneficiary function reported on claims for services and that claims submitted for furnished services contain specified information on beneficiary functional limitations, respectively. Respiratory therapy services furnished in CORFs are not subject to the reporting requirements, and therefore, these requirements would not apply to them.

(10) Consulting With Relevant Stakeholders

Section 3005(g) of the MCTRJCA requires us to consult with relevant stakeholders as we propose and implement this reporting system. We are meeting this requirement through the publication of this proposal, and specifically solicit public comment on the various aspects of our proposals. In addition, we plan to meet with key stakeholders and will discuss this issue in Open Door Forums over the course of the summer.

H. Primary Care and Care Coordination

In recent years, we have recognized primary care and care coordination as critical components in achieving better care for individuals, better health for individuals, and reduced expenditure growth. Accordingly, we have prioritized the development and implementation of a series of initiatives designed to ensure accurate payment for, and encourage long-term investment in, primary care and care management services. These initiatives include the following programs and demonstrations:

  • The Medicare Shared Savings Program (described in “Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations; Final Rule” which appeared in the Federal Register on November 2, 2011 (76 FR 67802)).

++ The testing of the Pioneer ACO model, designed for experienced health care organizations (described on the Center for Medicare and Medicaid Innovation's (Innovation Center's) Web site at http://innovations.cms.gov/initiatives/ACO/Pioneer/index.html).

++ The testing of the Advance Payment ACO model, designed to support organizations participating in the Medicare Shared Savings Program (described on Innovation Center's Web site at http://innovations.cms.gov/initiatives/ACO/Advance-Payment/index.html).

  • The Primary Care Incentive Payment (PCIP) Program (described on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/PCIP-2011-Payments.pdf).
  • The patient-centered medical home model in the Multi-payer Advanced Primary Care Practice (MAPCP) Demonstration designed to test whether the quality and coordination of health care services are improved by making advanced primary care practices more broadly available. (described on the CMS Web site at http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/downloads/mapcpdemo_Factsheet.pdf). The goal of the MAPCP demonstration is to take a multi-payer approach to creating more advanced primary care services or “medical homes” that utilize a team approach to care, while emphasizing prevention, health information technology, care coordination, and shared decision making. CMS will pay a monthly care management fee for Medicare fee-for-service beneficiaries receiving primary care from advanced primary care practices participating in the demonstration. The following states are participating in the MAPCP demonstration: Maine, Vermont, Rhode Island, New York, Pennsylvania, North Carolina, Michigan, and Minnesota. [1]
  • The Federally Qualified Health Center (FQHC) Advanced Primary Care Practice demonstration (described on the CMS Web site at http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/downloads/mapcpdemo_Factsheet.pdf and Innovation Center's Web site at http://innovations.cms.gov/initiatives/FQHCs/index.html). Participating FQHCs in the demonstration are expected to achieve National Committee for Quality Assurance (NCQA) Level 3 Patient-Centered Medical Home recognition by the end of the demonstration as well as help patients manage chronic conditions and actively coordinate care for patients. To help participating FQHCs make the needed investments in patient care and infrastructure, CMS is paying a monthly care management fee for each eligible Medicare fee-for-service beneficiary receiving primary care services. In addition, both CMS and the Health Resources Services Administration (HRSA) are providing technical assistance to FQHCs participating in the demonstration.
  • The Comprehensive Primary Care (CPC) initiative (described on the Innovation Center's Web site at http://innovations.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/index.html). The CPC initiative is a multi-payer initiative fostering collaboration between public and private health care payers to strengthen primary care in the following markets: Arkansas, Colorado, New Jersey, New York in the Capital-District-Hudson Valley Region, Ohio and Kentucky in the Cincinnati-Dayton Region, Oklahoma in the Greater Tulsa Region, and Oregon. CMS pays a monthly care management fee to selected primary care practices on behalf of their fee-for-service Medicare beneficiaries and in years 2-4 of the initiative, each practice has the potential to share in savings to the Medicare program.

In coordination with these initiatives, we also continue to explore other potential refinements to the PFS that would appropriately value primary care and care coordination within Medicare's statutory structure for fee-for-service physician payment and quality reporting. We believe that improvements in payment for primary care and recognizing care coordination initiatives are particularly important as EHR technology diffuses and improves the ability of physicians and other providers of health care to work together to improve patient care. We view these potential refinements to the PFS as part of a broader strategy that relies on input and information gathered from the initiatives described above, research and demonstrations from other public and private stakeholders, the work of all parties involved in the potentially misvalued code initiative, and from the public at large.

The annual PFS notice and comment rulemaking process provides an important avenue for interested parties to provide input on discrete proposals intended to achieve these goals. Should any of these discrete proposals become final policy, we would expect many of them to be short-term payment strategies that would be modified and/or revised to be consistent with broader primary care and care management and coordination services if the agency decides to pursue payment for a broader set of management and coordination services in future rulemaking.

In the CY 2012 PFS proposed rule (76 FR 42793 through 42794), we initiated a discussion to gather information about how primary care services have evolved to focus on preventing and managing chronic disease. We also proposed to review evaluation and management (E/M) services as potentially misvalued and suggested that the American Medical Association Relative (Value) Update Committee (AMA RUC) might consider changes in the practice of chronic disease management and care coordination as key reason for undertaking this review. In the CY 2012 PFS final rule with comment period, we did not finalize our proposal to review E/M codes due to consensus from an overwhelming majority of commenters that a review of E/M services using our current processes could not appropriately value the evolving practice of chronic care coordination, and therefore, would not accomplish the agency's goal of paying appropriately for primary care services. We stated that we would continue to consider ongoing research projects, demonstrations, and the numerous policy alternatives suggested by commenters. In addition, in the CY 2012 PFS proposed rule (76 FR 42917 through 42920), we initiated a public discussion regarding payments for post-discharge care management services. We sought broad public comment on how to further improve care management for a beneficiary's transition from the hospital to the community setting within the existing statutory structure for physician payment and quality reporting. We specifically discussed how post discharge care management services are coded and valued under the current E/M coding structure, and we requested public comment.

The physician community responded that comprehensive care coordination services are not adequately represented in the descriptions of, or payments for, office/outpatient E/M services. The American Medical Association (AMA) and the American Academy of Family Physicians (AAFP) created workgroups to consider new options for coding and payment for primary care services. The AAFP Task Force recommended that CMS create new primary care E/M codes and pay separately for non-face-to-face E/M Current Procedural Terminology (CPT) codes. (A summary of these recommendations is available at http://www.aafp.org/online/en/home/publications/news/news-now/inside-aafp/20120314cmsrecommendations.html.) The AMA workgroup, Chronic Care Coordination Workgroup (C3W), is developing codes to describe care transition and care coordination activities. (Several workgroup meeting minutes and other related items are available at http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/care-coordination.page.) We are continuing to monitor the progress of this workgroup and look forward to receiving its final recommendations. For this CY 2013 PFS proposed rule, we have decided to proceed with a proposal to refine PFS payment for post discharge care management services. We also include a discussion of how we could incorporate the idea of advanced primary care through practices certified as medical homes in the FFS setting. In developing the proposal and discussion described below, we have thoroughly considered documented concerns regarding Medicare payment for non-face-to-face elements of E/M services that are crucial to care coordination. We will continue to consider other enhancements to payment for primary care services and complex chronic care coordination services, and we may make further proposals to improve payment mechanisms and foster quality care for these and similar services in future rulemaking.

Under current PFS policy, care coordination is a component of E/M services which are generally reported using E/M CPT codes. The pre- and post-encounter non face-to-face care management work is included in calculating the total work for the typical E/M services, and the total work for the typical service is used to develop RVUs for the E/M services. In the CY 2012 PFS proposed rule, we highlighted some of the E/M services that include substantial care coordination work. Specifically, we noted that the vignettes that describe a typical service for mid-level office/outpatient services (CPT codes 99203 and 99213) include providing care coordination, communication, and other necessary care management related to the office visit in the post-service work. We also highlighted vignettes that describe a typical service for hospital discharge day management (CPT codes 99238 and 99239), which include providing care coordination, communication, and other necessary management related to the hospitalization in the post-service work.

As we have indicated many times in prior rulemaking, the payment for non-face-to-face care management services is bundled into the payment for face-to-face E/M visits. Moreover, Medicare does not pay for services that are furnished to parties other than the beneficiary and which Medicare does not cover, for example, communication with caregivers. Accordingly, we do not pay separately for CPT codes for telephone calls, medical team conferences, prolonged services without patient contact, or anticoagulation management services.

However, we continue to hear concerns from the physician community that the care coordination included in many of the E/M services, such as office visits, does not adequately describe the non-face-to-face care management work involved in primary care. Because the current E/M office/outpatient visit CPT codes were designed to support all office visits and reflect an overall orientation toward episodic treatment, we agree that these E/M codes may not reflect all the services and resources required to furnish comprehensive, coordinated care management for certain categories of beneficiaries such as those who are returning to a community setting following discharge from a hospital or SNF stay. We are therefore considering new options to recognize the additional resources typically involved in furnishing coordinated care to particular types of beneficiaries.

As described below, we are proposing to address the significant non-face-to-face work involved in coordinating services for a beneficiary after discharge from a hospital or skilled nursing facility (SNF). Specifically, we propose to create a HCPCS G-code to describe care management involving the transition of a beneficiary from care furnished by a treating physician during a hospital stay (inpatient, outpatient observation services, or outpatient partial hospitalization), SNF stay, or community mental health center (CMHC) partial hospitalization program to care furnished by the beneficiary's primary physician in the community. We consider this proposal to be part of a multiple year strategy exploring the best means to encourage care coordination services. Furthermore, in the interest of encouraging comprehensive primary care services furnished in advanced primary care practices, we have included a discussion regarding how care furnished in these settings might be incorporated into the current fee-for-service structure of the PFS. We look forward to continued development of these ideas through current research and demonstration projects, experience with ACOs and other programs, and further discourse on these issues with stakeholders.

1. Hospital, SNF, or CMHC Post-Discharge Care Management

a. Background

Care management involving the transition of a beneficiary from care furnished by a treating physician during a hospital, SNF, or CMHC stay to the beneficiary's primary physician in the community can avoid adverse events such as readmissions or subsequent illnesses, improve beneficiary outcomes, and avoid a financial burden on the health care system. Successful efforts to improve hospital discharge care management and care transitions could improve the quality of care while simultaneously decreasing costs.

Currently, there are several agency initiatives aimed at hospital and community-based organizations. In April 2011, HHS launched the Partnership for Patients, 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. (More information on this initiative is available at http://innovations.cms.gov/initiatives/partnership-for-patients/index.html.) The Partnership for Patients includes the Community-based Care Transitions Program, created by section 3026 of the Affordable Care Act, which provides funding to community-based organizations partnering with eligible hospitals to coordinate a continuum of post-acute care to test models for improving care transitions for high risk Medicare beneficiaries.

Section 1886(q) of the Act (as added by section 3025 of the Affordable Care Act) directs the Secretary to establish a Hospital Readmissions Reduction Program, beginning in FY 2013, for certain potentially preventable Medicare inpatient hospital readmissions covering three conditions: heart attack; pneumonia; and congestive heart failure. Beginning in FY 2015, the number of applicable conditions can be expanded beyond the initial three conditions. Under this program, a portion of Medicare's payment amounts for inpatient services to certain hospitals will be reduced by an adjustment factor based the hospital's excess Medicare readmissions. In the FY 2012 IPPS final rule (76 FR 51662-51676), we provided an overview of the Hospital Readmission Reduction program and finalized policies regarding selection of applicable conditions, definition of “readmissions,” measures of the applicable conditions chosen for readmissions, methodology for calculating the excess readmissions ratio, public reporting of readmission data, and definition of applicable period. In the FY2013 IPPS proposed rule (77 FR 27955-27968), we made proposals regarding the base operating DRG payment amount, the adjustment factor, aggregate payments for excess readmissions, and the hospitals that would be included in the program.

In its 2007 Report to Congress: Promoting Greater Efficiency in Medicare, MedPAC found that, in 2005, 17.6 percent of admissions resulted in readmissions within 30 days of discharge, accounting for $15 billion in spending. MedPAC estimated that 76 percent of the 30 day readmissions were potentially preventable, resulting in $12 billion in spending. In the same report, MedPAC also found that the rate of potentially avoidable rehospitalizations after discharges from skilled nursing facilities was 17.5 percent in 2004 (an increase of 2.8 percentage points from 2000.) MedPAC noted: “We focus on the hospital's role but recognize that other types of providers, including physicians and various post-acute care providers, can be instrumental in avoiding readmissions * * * [C]ommunity physicians and post-acute care providers receiving the patient may not be sufficiently informed about the patient's care needs and history to enable effective care.” We agree with MedPAC that primary care physicians and practitioners play a key role in post-acute care and reducing hospital readmissions.

In the CY 2012 PFS proposed rule (76 FR 42917 through 42920), we initiated a public discussion regarding payments for post-discharge care coordination services. We sought broad public comment on how to further improve physician care coordination within the statutory structure for physician payment and quality reporting, particularly for a beneficiary's transition from the hospital to the community. As noted above, we also proposed to review E/M services as potentially misvalued and suggested that the AMA RUC might consider chronic disease management and care coordination in its review (76 FR 42793). While the commenters agreed that care coordination would lead to better care for beneficiaries, they believed this care would be better described by new codes, and not the current E/M codes.

b. Hospital and SNF Discharge Services

We believe that the successful transition of a beneficiary from care furnished by a hospitalist physician to care furnished by the beneficiary's primary physician or qualified nonphysician practitioner could avoid adverse events such as readmissions or subsequent illnesses, improve beneficiary outcomes, and avoid a financial burden on the health care system.

We also believe that the current hospital discharge management codes (CPT codes 99238 and 99239) and nursing facility discharge services (CPT codes 99315 and 99316) adequately capture the care coordination services required to discharge a beneficiary from hospital or skilled nursing facility care. The work relative values for those discharge management services include a number of pre-, post-, and intra-care coordination activities. For example, the hospital discharge management codes include the following pre-, intra-, and post-service activities relating to care coordination:

Pre-service care coordination activities include:

  • Communicate with other professionals and with patient or patient's family. Intra-service care coordination activities include:
  • Discuss aftercare treatment with the patient, family and other healthcare professionals;
  • Provide care coordination for the transition including instructions for aftercare to caregivers;
  • Order/arrange for post discharge follow-up professional services and testing; and
  • Inform the primary care or referring physician or qualified nonphysician practitioner of discharge plans.

Post-service care coordination activities include:

  • Provide necessary care coordination, telephonic or electronic communication assistance, and other necessary management related to this hospitalization; and
  • Revise treatment plan(s) and communicate with patient and/or caregiver, as necessary.

The hospital and nursing facility discharge management codes also include a number of other pre-, intra- and post-service activities.

Because these activities are critical to successfully avoiding readmissions, we seek comment about the best ways to ensure that all the activities of the discharge day management codes for hospital and nursing facility discharge, including the care coordination activities, are understood and furnished by the physicians or qualified nonphysician practitioners who bill for these services. Potential ways could include physician education or MEDLEARN articles.

c. Defining Post-Discharge Transitional Care Management Services

While we believe that current hospital and nursing facility discharge management service codes adequately capture the care management activities involved with discharging a beneficiary from a hospital or skilled nursing facility, we do not believe that current E/M office or other outpatient visit CPT codes appropriately describe comparable care management work of the community physician or qualified nonphysician practitioner coordinating care for the beneficiary post-discharge. This is because the E/M codes represent the typical outpatient office visit and do not capture or reflect the significant care coordination activities that need to occur when a patient transitions from institutional to community-based care. We believe that the work of the discharging physician or qualified nonphysician practitioner should be complemented by corresponding work of a receiving physician or qualified nonphysician practitioner in the community in order to ensure better continuity of care through establishing or revising a plan of care for the beneficiary after discharge. We acknowledge that many, if not most, physicians or qualified nonphysician practitioners caring for beneficiaries following a hospital or nursing facility discharge have been furnishing coordinated care and reporting office or other outpatient CPT codes. However, we agree with commenters to the CY 2012 proposed and final rules that the services described by current E/M office or other outpatient CPT codes 99201 through 99215 may not appropriately capture the significant coordination services involved in post-discharge care.

We are proposing to create a HCPCS G-code that specifically describes post-discharge transitional care management services. The code would describe all non-face-to-face services related to the transitional care management furnished by the community physician or qualified nonphysician practitioner within 30 calendar days following the date of discharge from an inpatient acute care hospital, psychiatric hospital, long-term care hospital, skilled nursing facility, and inpatient rehabilitation facility; hospital outpatient for observation services or partial hospitalization services; and a partial hospitalization program at a CMHC to community-based care. The post-discharge transitional care management service includes non-face-to-face care management services furnished by clinical staff member(s) or office-based case manager(s) under the supervision of the community physician or qualified nonphysician practitioner. We use the term community physician and practitioner in this discussion to refer to the community-based physician managing and coordinating a beneficiary's care in the post-discharge period. We anticipate that most community physicians will be primary care physicians and practitioners. We have based the concept of this proposal, in part, on our policy for care plan oversight services. We currently pay physicians for the non face-to-face care plan oversight services furnished for patients under care of home health agencies or hospices. These patients require complex and multidisciplinary care modalities that involve: regular physician development and/or revision of care plans, subsequent reports of patient status, review of laboratory and other studies, communication with other health professionals not employed in the same practice who are involved in the patient's care, integration of new information into the care plan, and/or adjustment of medical therapy. Physicians providing these services bill HCPCS codes G0181 (Physician supervision of a patient receiving Medicare-covered services provided by a participating home health agency (patient not present) requiring complex and multidisciplinary care modalities involving regular physician development and/or revision of care plans, review of subsequent reports of patient status, review of laboratory and other studies, communication (including telephone calls) with other health care professionals involved in the patient's care, integration of new information into the medical treatment plan and/or adjustment of medical therapy, within a calendar month, 30 minutes or more), or G0182 (Physician supervision of a patient under a Medicare-approved hospice (patient not present) requiring complex and multidisciplinary care modalities involving regular physician development and/or revision of care plans, review of subsequent reports of patient status, review of laboratory and other studies, communication (including telephone calls) with other health care professionals involved in the patient's care, integration of new information into the medical treatment plan and/or adjustment of medical therapy, within a calendar month, 30 minutes or more). (See the Medicare benefit manual, 100-02, Chapter 15, Section 30 for detailed description of these services.)

For CY 2013, we are proposing to create a new code to describe post-discharge transitional care management. This service would include:

  • Assuming responsibility for the beneficiary's care without a gap.

++ Obtaining and reviewing the discharge summary.

++ Reviewing diagnostic tests and treatments.

++ Updating of the patient's medical record based on a discharge summary to incorporate changes in health conditions and on-going treatments related to the hospital or nursing home stay within 14 business days of the discharge.

  • Establishing or adjusting a plan of care to reflect required and indicated elements, particularly in light of the services furnished during the stay at the specified facility and to reflect result of communication with beneficiary.

++ An assessment of the patient's health status, medical needs, functional status, pain control, and psychosocial needs following the discharge.

  • Communication (direct contact, telephone, electronic) with the beneficiary and/or caregiver, including education of patient and/or caregiver within 2 business days of discharge based on a review of the discharge summary and other available information such as diagnostic test results, including each of the following tasks:

++ An assessment of the patient's or caregiver's understanding of the medication regimen as well as education to reconcile the medication regimen differences between the pre- and post-hospital, CMHC, or SNF stay.

++ Education of the patient or caregiver regarding the on-going care plan and the potential complications that should be anticipated and how they should be addressed if they arise.

++ Assessment of the need for and assistance in establishing or re-establishing necessary home and community based resources.

++ Addressing the patient's medical and psychosocial issues, and medication reconciliation and management.

When indicated for a specific patient, the post-discharge transitional care service would also include:

  • Communication with other health care professionals who will (re)assume care of the beneficiary, education of patient, family, guardian, and/or caregiver.
  • Assessment of the need for and assistance in coordinating follow up visits with health care providers and other necessary services in the community.
  • Establishment or reestablishment of needed community resources.
  • Assistance in scheduling any required follow-up with community providers and services.

The post-discharge transitional care services HCPCS G-code we are proposing would be used by the community physician or qualified nonphysician practitioner to report the services furnished in the community to ensure the coordination and continuity of care for patients discharged from a hospital (inpatient stay, outpatient observation, or outpatient partial hospitalization), SNF stay, or CMHC. The post-discharge transitional care service would parallel the discharge day management service for the community physician or qualified nonphysician practitioner and complement the E/M office/outpatient visit CPT codes.

The post-discharge transitional care service would support the patient's physical and psychosocial health. In our recent Decision Memorandum for Screening for Depression in Adults, CAG-00425N, we noted that depression in older adults occurs in a complex psychosocial and medical context and that, currently, we believe opportunities are missed to improve mental health and general medical outcomes when mental illness is under-recognized and undertreated in primary care settings. We wish to emphasize the equal importance of the patient's mental health to the patient's physical condition to successful re-entry into the community.

We propose that the post-discharge transitional care service HCPCS G-code would be used to report physician or qualifying nonphysician practitioner services for a patient whose medical and/or psychosocial problems require moderate or high complexity medical decision making during transitions in care from hospital (inpatient stay, outpatient observation, and partial hospitalization), SNF stay, or CMHC settings to community-based care. Moderate and high complexity medical decision making are defined in the Evaluation and Management Guidelines. In general, moderate complexity medical decision-making includes multiple diagnoses or management options, moderate complexity and amount of data to be reviewed, a moderate amount and/or complexity of data to be reviewed; and a moderate risk of significant complications, morbidity, and/or mortality. High complexity decision-making includes an extensive number of diagnoses or management options, an extensive amount and/or complexity of data to be reviewed, and high risk of significant complications, morbidity, and/or mortality (See Evaluation and Management Services Guide, Centers for Medicare & Medicaid Services, December 2010.) We propose that the post-discharge transitional care HCPCS code (GXXX1) would be payable only once in the 30 days following a discharge, per patient per discharge, to a single community physician or qualified nonphysician practitioner (or group practice) who assumes responsibility for the patient's post-discharge transitional care management. The service would be billable only at 30 days post discharge or thereafter. The post-discharge transitional care management service would be distinct from services furnished by the discharging physician or qualified nonphysician practitioner reporting CPT codes 99238 (Hospital discharge day management, 30 minutes or less); 99239 (Hospital discharge day management, more than 30 minutes); 99217 (Observation care discharge day management); or Observation or Inpatient Care services, CPT codes 99234-99236; as appropriate.

We propose to pay the first claim that we receive for the beneficiary at 30 days after discharge. Given the elements of the service and the short window of time following a discharge during which a physician or qualifying nonphysician practitioner will need to perform several tasks on behalf of a beneficiary, we believe it is unlikely that two or more physicians or practitioners would have had a face-to-face E/M contact with the beneficiary in the specified window of 30 days prior or 14 days post discharge and have furnished the proposed post-discharge transitional care management services listed above. Therefore, we do not believe it is necessary to take further steps to identify a beneficiary's community physician or qualified nonphysician practitioner who furnishes the post-discharge transitional care management services. We propose to pay only one claim for the post-discharge transitional care GXXX1 billed per beneficiary at the conclusion of the 30 day post-discharge period. Post-discharge transitional care management relating to any subsequent discharges for a beneficiary in the same 30-day period would be included in the single payment. Practitioners billing this post-discharge transitional care code accept responsibility for managing and coordinating the beneficiary's care over the first 30 days after discharge. Although we currently envision billing happening as it does for most services, after the conclusion of the service, we welcome comment on whether in this case there would be merit to allowing billing for the code to occur at the time the plan of care is established.

We have explicitly constructed this proposal as a payment for non face-to-face post-discharge transitional care management services separate from payment for E/M or other medical visits. However, we believe that it is important to ensure that the community physician or qualified nonphysician practitioner furnishing post-discharge transitional care management either have or establish a relationship with the patient. As such, we propose that the community physician or qualified nonphysician practitioner reporting post-discharge transitional care management GXXX1 should already have a relationship with the beneficiary, or establish one soon after discharge, prior to furnishing transitional care management and billing this code. Therefore, we propose that the community physician or qualified nonphysician practitioner reporting a transitional care management HCPCS G-code must have billed an E/M visit for that patient within 30 days prior to the hospital discharge (the start of post-discharge transitional care management period), or must conduct an E/M office/outpatient visit (99201 to 99215) within the first 14 days of the 30-day post-discharge period of transitional care management services. The E/M visit would be separately billed.

While we are proposing that the post-discharge transitional care management code would not include a face-to-face visit, and that physicians or qualified nonphysician practitioners would bill and be paid for this care management service separately from a medical visit, we are seeking comments about whether we should require a face-to-face visit when billing for the post-discharge transitional care management service. We are also seeking comments regarding how we might incorporate such a required visit on the same day into the payment for the proposed code. We considered several reasons for requiring a face-to-face visit on the same day. We wondered whether, with a face-to-face visit immediately after discharge, the plan of care would be more accurate given that the patient's medical or psychosocial condition may have changed from the time the practitioner last met with the patient and the practitioner could better develop a plan of care through an in-person visit and discussion. We also wondered whether beneficiaries would understand their coinsurance liability for the post-discharge transitional care service when they did not visit the physician's or qualified nonphysician practitioner's office. On the other hand, we have contemplated several scenarios where it is not possible for a beneficiary to get to the physician's or qualified nonphysician practitioner's office and welcome comment on whether an exception process would be appropriate if we were to finalize a same day face-to-face visit as a requirement for billing the post-discharge transitional care management code.

The proposed post-discharge transitional care HCPCS G-code would be described as follows:

GXXX1—Post-discharge transitional care management with the following required elements:

  • Communication (direct contact, telephone, electronic) with the patient or caregiver within 2 business days of discharge.
  • Medical decision making of moderate or high complexity during the service period.
  • To be eligible to bill the service, physicians or qualified nonphysician practitioners must have had a face-to-face E/M visit with the patient in the 30 days prior to the transition in care or within 14 business days following the transition in care.

We contemplated establishing a requirement that post-discharge transitional care management be furnished by a physician or qualified nonphysician practitioner or other clinical staff in the practice who are qualified to assist beneficiaries in managing post-transition changes in conditions and treatments. We welcome public comment on whether this would be an appropriate requirement for GXXX1.

We propose that a physician or qualified nonphysician practitioner who bills for discharge management during the time period covered by the transitional care management services code may not also bill for HCPCS code GXXX1. The CPT discharge management codes are 99217, 99234-99236, 99238-99239, 99281-99285, or 99315-99316, home health care plan oversight services (HCPCS code G0181), or hospice care plan oversight services (HCPCS code G0182) . We believe these codes describe care management services for which Medicare makes separate payment and should not be billed in conjunction with GXXX1, which is a comprehensive post-discharge transitional care management service. Further, we propose that a physician or qualified nonphysician practitioner billing for a procedure with a 10- or 90-day global period would not also bill HCPCS code GXXX1 in conjunction with that procedure because any follow-up care management would be included in the post-operative portion of the global period. Many of the global surgical packages include discharge management codes. We believe that any physician or qualified nonphysician practitioner billing separately for the discharge management code that also is the community physician or nonphysician practitioner for the beneficiary would be paid for post-discharge transitional care management through the discharge management code.

We are making this proposal to provide a separate reporting mechanism to the community physician for these services in the context of the broader HHS and CMS multi-year strategy to recognize and support primary care and care management. Should any of these discrete proposals, like this one, become final policy, they may be short-term payment strategies that would be modified and/or revised to be consistent with broader primary care and care management and coordination services if the agency decides to pursue payment for a broader set of management and coordination services in future rulemaking. We would also note that this proposal dovetails with our discussion under section III.J. of this proposed rule on the Value-based Payment Modifier and Physician Feedback Reporting Program which discusses hospital admission measures and a readmission measure as outcome measures for the proposed value-based payment modifier adjustment beginning in CY 2015.

c. Proposed Payment for Post-Discharge Transitional Care Management Service

To establish a physician work relative value unit (RVU) for the proposed post-discharge transitional care management, HCPCS code GXXX1, we compared GXXX1 with CPT code 99238 (Hospital discharge day management; 30 minutes or less) (work RVU = 1.28). We recognize that, unlike CPT code 99238, HCPCS code GXXX1 is not a face-to-face visit. However, we believe that the physician time and intensity involved in post-discharge community care management is most equivalent to CPT code 99238 which, like the proposed new G-code, involves a significant number of care management services. Therefore, we are proposing a work RVU of 1.28 for HCPCS code GXXX1 for CY 2013. We also are proposing the following physician times: 8 minutes pre-evaluation; 20 minutes intra-service; and 10 minutes immediate post-service. The physician time file associated with this PFS proposed rule is available on the CMS Web site in the Downloads section for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

In addition, we are proposing to crosswalk the clinical labor inputs from CPT code 99214 (Level 4 established patient office or other outpatient visit) to the post-discharge transitional care code. The proposed CY 2013 direct PE input database reflects these inputs and is available on the CMS Web site under the supporting data files for the CY 2013 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. The proposed PE RVUs included in Addendum B to this proposed rule reflect the RVUs that result from application of this proposal.

For malpractice expense, we are proposing a malpractice crosswalk of CPT code 99214 for HCPCS code GXXX1 for CY 2013. We believe the malpractice risk factor for CPT code 99214 appropriately reflects the relative malpractice risk associated with furnishing HCPCS code GXXX1. The malpractice RVUs included in Addendum B to this proposed rule reflect the RVUs that result from the application of this proposal.

We note that as with other services paid under the PFS the 20 percent beneficiary coinsurance would apply to the post-discharge transitional care management service as would the Part B deductible.

For BN calculations, we estimated that physicians or qualified nonphysician practitioners would provide post-discharge transitional care management services for 10 million discharges in CY 2013. This number roughly considers the total number of hospital inpatient and SNF discharges, hospital outpatient observation services and partial hospitalization patients that may require with moderate to high complexity decision-making.

For purposes of the Primary Care Incentive Payment Program (PCIP), we are proposing to exclude the post discharge transitional care management services from the total allowed charges used in the denominator calculation to determine whether a physician is a primary care practitioner. Under section 1833(x) of the statute the PCIP provides a 10 percent incentive payment for primary care services within a specific range of E/M services when furnished by a primary care practitioner. Specific physician specialties and qualified nonphysician practitioners can qualify as primary care practitioners if 60 percent of their PFS allowed charges are primary care services. As we explained in the CY 2011 PFS final rule (75 FR 73435-73436), we do not believe the statute authorizes us to add codes (additional services) to the definition of primary care services. However, in order to avoid inadvertently disqualifying community primary care physicians who follow their patients into the hospital setting, we finalized a policy to remove allowed charges for certain E/M services furnished to hospital inpatients and outpatients from the total allowed charges in the PCIP primary care percentage calculation.

We believe that the proposed transitional care management code should be treated in the same manner as those services for the purposes of PCIP because post-discharge transitional care management services are a complement in the community setting to the hospital-based discharge day management services already excluded from the PCIP denominator. Similar to the codes already excluded from the PCIP denominator, we are concerned that inclusion of the transitional care management code in the denominator of the primary care percentage calculation could produce unwarranted bias against “true primary care practitioners” who are involved in furnishing post-discharge care to their patients. Therefore, while physicians and qualified nonphysician practitioners who furnish transitional care management would not receive an additional incentive payment under the PCIP for the service itself (because it is not considered a “primary care service” for purposes of the PCIP), the allowed charges for transitional care management would not be included in the denominator when calculating a physician's or practitioner's percent of allowed charges that were primary care services for purposes of the PCIP.

2. Primary Care Services Furnished in Advanced Primary Care Practices

a. Background

As we have discussed above, we are committed to considering new options and developing future proposals for payment of primary care services under the MPFS. Such options would promote comprehensive and continuous assessment, care management, and attention to preventive services that constitute effective primary care by establishing appropriate payment when physicians furnish such services. One method for ensuring that any targeted payment for primary care services would constitute a minimum level of care coordination and continuous assessment under the MPFS would be to pay physicians for services furnished in an “advanced primary care practice” that has implemented a medical home model supporting patient-specific care. The medical home model has been the subject of extensive study in medical literature. Since 2007, the AMA, American Academy of Family Physicians (AAFP), the American Academy of Pediatrics (AAP), the American College of Physicians (ACP), and the American Osteopathic Association (AOA), and many other physician organizations have also endorsed “Joint Principles of the Patient-Centered Medical Home.” In February 2011, the AAFP, the AAP, the ACP, and AOA also published formal “Guidelines for Patient-Centered Medical Home (PCMH) Recognition and Accreditation Programs” to develop and promote the concept and practice of the PCMH. (These guidelines are available at http://www.aafp.org/online/etc/medialib/aafp_org/documents/membership/pcmh/pcmhtools/pcmhguidelines.Par.0001.File.dat/GuidelinesPCMHRecognitionAccreditationPrograms.pdf.) As we have discussed above, the Innovation Center has been conducting a several initiatives based on the medical home concept.

The medical home concept emphasizes establishing an extensive infrastructure requiring both capital investments and new staffing, along with sophisticated processes, to support continuous and coordinated care with an emphasis on prevention and early diagnosis and treatment. The literature, reports, and guidelines dealing with the medical home concept define the requisite elements or functions that constitute this infrastructure and processes in various ways. For example, the Innovation Center's CPC initiative identified a set of five “comprehensive primary care functions,” which form the service delivery model being tested and the required framework for practice transformation under the CPC initiative. We believe these five “comprehensive primary care functions” provide an appropriate starting point for discussing the incorporation of the comprehensive primary care services delivered in advanced primary care practices (practices implementing a medical home model) into the MPFS:

1. Risk-Stratified Care Management

One of the hallmarks of comprehensive primary care is the provision of intensive care management for high-risk, high-need, high-cost patients. Providers must provide routine, systematic assessment of all patients to identify and predict which patients need additional interventions. In consultation with their patients, they should create a plan of care to assure care that is provided is congruent with patient choices and values. Once patient needs, including social needs and functional deficits, have been identified, they should be systematically addressed. Markers of success include policies and procedures describing routine risk assessment and the presence of appropriate care plans informed by the risk assessment.

2. Access and Continuity

Health providers who know the patient should be accessible when a patient needs care. Providers must have access to patient data even when the office is closed so they can continue to participate in care decisions with their patients. Patients need access to the patient care team 24/7. Every patient is assigned to a designated provider or care team with whom they are able to get successive appointments. Markers of success include care continuity and availability of the EHR when the office is closed.

3. Planned Care for Chronic Conditions and Preventive Care

Primary care must be proactive. Practitioners must systematically assess all patients to determine his or her needs (one way would be through the annual wellness visit [2] ) and provide proactive, appropriate care based on that assessment. Pharmaceutical management, including medication reconciliation and review of adherence and potential interactions, and oversight of patient self-management of medications for diabetes, anti-coagulation management or warfarin therapy, and other chronic conditions, should be a routine part of all patient assessments. Markers of success include completion of the Annual Wellness Visit and documentation of medication reconciliation.

4. Patient and Caregiver Engagement

Truly patient-centered care assumes the mantra “nothing about me without me.” Providers should establish systems of care that include the patient in goal setting and decision making, creating opportunities for patient engagement throughout the care delivery process. Markers of success include policies and procedures designed to ensure that patient preferences are sought and incorporated into treatment decisions.

5. Coordination of Care Across the Medical Neighborhood

The “medical neighborhood” is the totality of providers, related non-health services and patients in an area, and the ways in which they work together. [3] Primary care can be seen as the hub of the neighborhood and must take the lead in coordinating care. In particular, primary care providers must move towards leadership of health teams both within and outside their practice's walls. Providers must have the ability to access a single medical record shared by the whole team; the content of this record can be leveraged to manage communication and information flow in support of referrals to other clinicians, and to support safe and effective transitions from the hospital and skilled nursing facilities back to the community. The primary care practice must also include personnel who are qualified to assist patients to manage post transition changes in conditions and treatments required to support patients' health and reduce their need for readmission. Markers of success include the presence of standard processes and documents for communicating key information during care transitions or upon referral to other providers.

b. Advanced Primary Care Practices Accreditation and Infrastructure

1. Accreditation Utilizing Nationally Recognized Organizations

In the event that we were to establish an enhanced payment for primary care services furnished to Medicare beneficiaries in an advanced primary care practice environment, we would need to establish a set of parameters to determine whether or not a clinical practice could be considered an advanced primary care practice (medical home). The foundation for our assessment could be whether the practice has the capacity to deliver comprehensive primary care services that mirror the five functions of the CPC initiative. However, we would need to identify explicit criteria in the form of documented processes and quantifiable practice attributes, such as the availability and capacity of electronic health records, to assess the presence of these five functions.

We could make our determination that a practice has implemented all identified functions and is, therefore, an advanced primary care practice, by recognizing one or more of the nationally available accreditation programs currently in use by major organizations that provide accreditation for advanced primary care practices, frequently credentialed as “PCMHs”. Having established recognition of accreditation by one of several national accreditation organizations, we might require that a provider document through the enrollment process (PECOS) that the practice meets the definition of an Advanced Primary Care Practice to furnish comprehensive primary care services. We have identified four national models that provide accreditation for organizations wishing to become an advanced primary care practice; the Accreditation Association for Ambulatory Health, The Joint Commission, the NCQA, and the Utilization Review Accreditation Commission (URAC). While there are similarities between all four of the national models for PCMH accreditation, each model has different standards and areas of emphasis in its review and approval of organizational capacity and function as a PCMH. For instance, according to a report prepared for CMS by the Urban Institute entitled, “Patient-Centered Medical Home Recognition Tools: A Comparison of Ten Surveys' Content and Operational Details” released in March of 2012, the NCQA places a heavier emphasis on Health IT than the other accrediting bodies in their measurement standards. This report can be viewed at the following link: http://www.urban.org/uploadedpdf/412338-patient-centered-medical-home-rec-tools.pdf.

We believe that basing our determination on accreditation as a PCMH by a national accreditation organization would offer a number of benefits, including that their accreditation tools, which review specific aspects of practice including information systems and organizational processes already are well known, widely used, and well respected. Level 3 NCQA accreditation, URAC, the Accreditation Association for Ambulatory Health and Joint Commission accreditation standards are, despite their differences, very similar to the concepts of the comprehensive primary care services, and CMS could consider accepting accreditation from any of these as documentation that a group practice is an advanced primary care practice. Other payers currently recognize PCMH accreditation by these organizations for payment. A publication from the Medical Group Management Association (MGMA) “The Patient Centered Medical Home Guidelines: A Tool to Compare National Programs” found that all four of the national accreditation programs met the guidelines set forth by the AAFP, the AAP, the ACP, and AOA in their 2011 guidelines. The MGMA report can be downloaded from the following Web site: http://www.mgma.com/Books/Patient-Centered-Medical-Home-Guidelines/. However, we recognize that the cost to a practice to acquire accreditation from one of these accrediting organizations could be significant. In addition, the processes to receive accreditation as an advanced primary care practice under these guidelines can be lengthy. We also are concerned that some parts of the accreditation processes for these accrediting organizations would be considered proprietary. We believe that Medicare payment should rely whenever feasible on criteria and tools that are in the public domain. We also recognize that it could be challenging for us to address how we could rely on a set of standards from a private accrediting body while still retaining responsibility for accreditation outcomes. It is unclear at this time how we would balance the proprietary interests of these private organizations in their accreditation models with our responsibility to establish and maintain appropriate transparency in our decision-making processes.

If we were to move forward with a process that would use the accreditation standards from a private sector organization to make determinations as to whether a practice is an advanced primary care practice, we would need to determine whether to recognize one, some, or all of the available and established accreditation models. As we stated above, because each accreditation tool has different standards and emphasizes different criteria, we are concerned that there could be consistency issues if we were to recognize accreditation from all four organizations as evidence of certification to provide advanced primary care. It would be important to ensure that any of the accreditation tool(s) we selected met the goals of our policy. We specifically invite comments regarding the processes that we should consider for application, confirmation that recognized accreditation standards are met, and notification of recognition as a PCMH if we were to recognize practices as advanced primary care practices based on accreditation as a PCMH by one or more of the national accreditation organizations.

2. CMS-Developed Advanced Primary Care Accreditation Criteria

Alternatively, we could develop our own criteria using, for example, the five functions of comprehensive primary care used in the CPC initiative and described above, to determine what constitutes advanced primary care for purposes of Medicare payment. We would then need to develop a process for determining whether specific physician practices meet the criteria for advanced primary care. This could include creating our own criteria and processes for review or could include using existing accrediting bodies to measure compliance against advanced primary care criteria determined by CMS. This would create more consistent standards for identifying advanced primary care practices and provide greater transparency in the certification process. If CMS was able to determine the validity of an organization's application to be recognized to be an advanced primary care practice, this could reduce the cost to the physician practice for accreditation. However, practices would still need to invest in organizational process and infrastructure to meet advanced primary care criteria. Implementing an internal process to accredit practices as advanced primary care for purposes of Medicare payment could involve significant administrative cost. The amount of cost likely would depend on the rigor of the required criteria, and the amount of documentation and review required prior to approval as an advanced primary care practice.

If we established our own criteria in order to resolve the lack of standardization between the standards adopted by the various national accreditation organizations for PCMH, it is possible that the accrediting bodies would then be able to assist us in determining compliance with the CMS criteria. Depending on the nature of the criteria, the CMS criteria may cost less to implement but would likely require a practice to incur the cost for an accrediting body to review the practice's compliance. We invite public comment on the potential approaches we could use to identify advanced primary care practices for purposes of Medicare payment, including the possible use of one or more national accrediting organizations (and whether meaningful use of certified electronic health record technology should be required for such accreditation) as part of a Medicare approval process, as well as any other potential approaches to accrediting advanced primary care practices that we have not discussed here.

c. Beneficiary Attribution for Purposes of Payment

One potential issue surrounding comprehensive primary care services delivered in an advanced primary care practice is attribution of a beneficiary to an advanced primary care practice. We would not expect that there would be more than one practice functioning as an advanced primary care practice for a beneficiary at any given time. However, in a fee-for-service environment we would need to determine which practice is currently serving as the advanced primary care practice for the beneficiary in order to ensure appropriate payment. One method of attribution could be that each beneficiary prospectively chooses an advanced primary care practice. We seek comment on how such a choice might be documented and incorporated into the fee-for-service environment. Other attribution methodologies might examine the quantity and type of E/M or other designated services furnished to that beneficiary by the practice. We welcome input on the most appropriate approach to the issue of how to best determine the practice that is functioning as the advanced primary care practice for each beneficiary. We are not considering proposals that would restrict a beneficiary's free choice of practitioners.

In summary, we believe that targeting primary care management payments to advanced primary care practices would have many merits including ensuring a basic level of care coordination and care management. We recognize that the advanced primary care model has demonstrated efficacy in improving the value of health care in several contexts, and we are exploring whether we can achieve these outcomes for the Medicare population through several demonstration projects. Careful analysis of the outcomes of these demonstration projects will inform our understanding of how this model of care affects the Medicare population and of potential PFS payment mechanisms for these services. At the same time, we also believe that there are many policy and operational issues to be considered when nationally implementing such a program within the PFS. Therefore, we generally invite broad public comment on the accreditation and attribution issues discussed above and any other aspect, including payment, of integrating an advanced primary care model in to the PFS.

I. Payment for Molecular Pathology Services

For CY 2012, the AMA CPT Editorial Panel began creating new CPT codes to replace the current codes used to bill for molecular pathology services. The new codes describe distinct molecular pathology tests and test methods. CPT divided these new molecular pathology codes into Tiers. Tier 1 codes describe common gene-specific and genomic procedures. Tier 2 codes capture reporting for less common tests and each Tier 2 code represents a group of tests that involve similar technical resources and interpretive work. For CY 2012, CPT created 101 new molecular pathology codes; 92 new Tier 1 codes for individual tests and nine Tier 2 codes for common groups of tests. These codes appear in Table 21. We anticipate that CPT will create additional molecular pathology codes for CY 2013.

We stated in our notice for the Clinical Laboratory Fee Schedule (CLFS) Annual Public Meeting (to be held July 16-17, 2012 at CMS headquarters in Baltimore, Maryland, more information at https://www.cms.gov//Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Public_Meetings.html) that we are following our process to determine the appropriate basis and payment amounts for new clinical diagnostic laboratory tests, including the molecular pathology tests, under the CLFS for CY 2013. However, we also stated that we understand stakeholders in the molecular pathology community continue to debate whether Medicare should pay for molecular pathology tests under the CLFS or the PFS. Medicare pays for clinical diagnostic laboratory tests through the CLFS and for services that ordinarily require physician work through the PFS. We stated that we believe we would benefit from additional public comments on whether these tests are clinical diagnostic laboratory tests that should be paid under the CLFS or whether they are physicians' services that should be paid under the PFS. Therefore, we said that we intend to solicit comment on this issue in this proposed rule, as well as public comment on pricing policies for these tests under the CLFS at the Annual Public Meeting. This section first discusses and requests comment on whether these molecular pathology CPT codes describe services that ordinarily require physician work, and then discusses our proposal to address payment for these CPT codes on the PFS, pending public comment on the first question. This proposal is parallel to the invitation to discuss at the CLFS Annual Public Meeting, the appropriate basis for establishing a payment amount for the molecular pathology CPT codes as clinical diagnostic laboratory tests under the CLFS.

As detailed in section II.B.1. of this proposed rule, Medicare establishes payment under the PFS by setting RVUs for physician work, practice expense (PE), and malpractice expense for services that ordinarily require physician work. To establish RVUs for physician work, we conduct a clinical review of the relative physician work (time by intensity) required for each PFS service. This clinical review includes the review of RVUs recommended by the American Medical Association Relative Value Scale Update Committee (AMA RUC) and others. The AMA RUC-recommended physician work RVUs typically are based in part on results of a survey conducted by the relevant specialty society for a service. CMS establishes RVUs for PE under a resource-based PE methodology that considers the cost of direct inputs, as well as indirect PE costs. The AMA RUC, through the Practice Expense Subcommittee, recommends direct PE inputs to CMS, and the relevant specialty societies provide pricing information for those direct inputs to CMS. After we determine the appropriate direct PE inputs, the PE methodology is used to develop proposed PE RVUs. Physician work and PE RVUs for each CPT code are constructed to reflect the typical case; that is, they reflect the service as it is furnished in greater than 50 percent of Medicare cases. CMS establishes resource-based malpractice expense RVUs using weighted specialty-specific malpractice insurance premium data collected from commercial and physician-owned insurers in CY 2010 (74 FR 61758). For most services paid under the PFS, beneficiary cost-sharing is 20 percent of the payment amount.

CMS establishes a payment rate for new clinical diagnostic laboratory tests under the CLFS by either crosswalking or gap-filling. Crosswalking is used when a new test code is comparable to an existing test code, multiple existing test codes, or a portion of an existing test code on the CLFS. Under this methodology, the new test code is assigned the local fee schedule amounts and the national limitation amount (NLA) of the existing test, with payment made at the lesser of the local fee schedule amount or the NLA. Gap-filling is used when no comparable test exists on the CLFS. In the first year, carrier-specific amounts are established for the new test code using the following sources of information: Charges for the test and routine discounts to charges; resources required to perform the test; payment amounts determined by other payers; and charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant. For the second year, the NLA is calculated, which is the median of the carrier-specific amounts. See § 414.508. Services paid under the CLFS do not include any physician work, although tests paid under the CLFS can involve interpretation by a laboratory technician, a chemist, or a geneticist—none of which are occupations that meet the statutory definition of a physician. While payments can vary geographically due to contractor discretion across locality areas (which are the same localities used for the GPCIs under the PFS), payments cannot exceed a NLA nor can they be adjusted once rates are determined. In the CY 2008 PFS final rule with comment period, we adopted a prospective reconsideration process for new tests paid under the CLFS, allowing a single year for Medicare and stakeholders to review pricing for new tests after the payment is initially established (72 FR 66275 through 66279, 66401 through 66402). Finally, the statute waives beneficiary cost-sharing for clinical laboratory diagnostic tests paid on the CLFS.

For a handful of clinical laboratory services paid under the CLFS, we allow an additional payment under the PFS for the professional services of a pathologist when they meet the requirements for clinical consultation service as defined in § 415.130. The PFS pays for services that ordinarily require the work of a physician and, with regard to pathology services, explicitly pays for both the professional and technical component of the services of a pathologist as defined in § 415.130 including surgical pathology, cytopathology, hematology, certain blood banking services, clinical consultations, and interpretive clinical laboratory services.

Molecular pathology tests are currently billed using combinations of longstanding CPT codes that describe each of the various steps required to perform a given test. This billing method is called “stacking” because different “stacks” of codes are billed depending on the components of the furnished test. Currently, all of the stacking codes are paid through the CLFS. One stacking code, CPT code 83912 (molecular diagnostics; interpretation and report) is paid on both the CLFS and the PFS. Payment for the interpretation and report of a molecular pathology test when furnished and billed by a physician is made under the PFS using the professional component (PC, or 26) of CPT code 83912 (83912-26). Payment for the interpretation and report of a molecular pathology test when furnished by non-physician laboratory staff is made under the CLFS using CPT code 83912.

Since the creation of new molecular pathology CPT codes, there has been significant debate in the stakeholder community regarding whether these new molecular pathology codes describe physicians' services that ordinarily require physician work and would be paid under the PFS, or whether they describe clinical diagnostic laboratory tests that would be paid on the CLFS. The AMA RUC reviewed the 101 new molecular pathology CPT codes and concluded that 79 of 101 new molecular pathology codes include work furnished by a physician. The American Clinical Laboratory Association (ACLA) has indicated that 32 of the 101 new molecular pathology codes are interpreted by a physician and that a physician may perform the technical component associated with 2 of the 101 CPT codes. Only 15 of the 101 new codes appear on both the AMA RUC and ACLA list of codes that each believe include work furnished by a physician. Additionally, some stakeholders have suggested that all molecular pathology tests require physician interpretation and report. Other stakeholders have suggested that the interpretation and report of a molecular pathology test is not ordinarily required because the majority of the molecular pathology tests are clearly negative so interpretation and reporting generally are not necessary. In addition, some stakeholders have argued that molecular pathology tests are becoming more and more automated, and therefore generally do not require interpretation by a physician.

In the CY 2012 PFS final rule (76 FR 73190), we stated that for CY 2012, Medicare would continue to use the existing stacking codes for the reporting and payment of these molecular pathology services, and that the 101 new CPT codes would not be valid for payment for CY 2012. We did this because we were concerned that we did not have sufficient information to know whether these new molecular pathology CPT codes describe clinical diagnostic laboratory tests or services that ordinarily require physician work. For CY 2013, we continue to have many of the same concerns that led us not to recognize the 101 molecular pathology CPT codes for payment for CY 2012. Specifically, we acknowledge that we are lacking definitive answers to the following questions:

  • Do each of the 101 molecular pathology CPT codes describe services that are ordinarily furnished by a physician?
  • Do each of these molecular pathology CPT codes ordinarily require interpretation and report?
  • What is the nature of that interpretation and does it typically require physician work?
  • Who furnishes interpretation services and how frequently?

We are seeking public comment on these questions and the broader issue of whether the new molecular pathology codes describe physicians' services that should be paid under the PFS, or if they describe clinical diagnostic laboratory tests that should be paid under the CLFS.

As we continue to consider public comment on whether these molecular pathology CPT codes describe services that ordinarily require physician work, we want to ensure that there is a payment mechanism in place to pay for these CPT codes for CY 2013. We propose to price all of the 101 new molecular pathology codes through a single fee schedule, either the CLFS or the PFS. After meeting with stakeholders and reviewing each CPT code, we believe that there is little variation in the laboratory methodologies, as all of them employ gene sequencing processes. However, there are very different processes for establishing payment rates under the PFS and the CLFS. As discussed above, Medicare sets payment under the CLFS by either crosswalking or gap-filling and, after the prospective reconsideration process, currently cannot adjust the payment amount further. In contrast, Medicare sets payment under the PFS through a set of resource-based methodologies for physician work, PE, and malpractice expense, and payment can be reviewed and adjusted as the resources required to furnish a service change. We are concerned that establishing different prices for comparable laboratory services across two different payment systems would create a financial incentive to choose one test over another simply because of its fee schedule placement. We are also concerned that the differences in prices would become more pronounced over time as the PFS continues to review the values for physician work and PE inputs relative to established CLFS prices. Therefore, because of the homogeneity of the laboratory methodologies behind these procedure test codes, we believe that it is appropriate for all 101 new molecular pathology CPT codes to be priced on the same fee schedule using the same methodology. We invite public comment on this proposal.

In our effort to determine the appropriate Medicare payment for these new molecular pathology codes, stakeholders will have the opportunity to discuss the CLFS payment basis for establishing payment amounts for the molecular pathology codes discussed above at the CLFS Annual Public Meeting in July 2012. Section 1833(h)(8)(A) of the Act, which discusses the CLFS, requires the Secretary to “establish by regulation procedures for determining the basis for, and amount of, payment [under the CLFS] for any clinical diagnostic laboratory test with respect to which a new or substantially revised HCPCS code is assigned on or after January 1, 2005.” Clauses (i) and (ii) of section 1833(h)(8)(B) of the Act requires the Secretary to: 1) Make “available to the public (through an Internet Web site and other appropriate mechanisms) a list that includes any such test for which establishment of a payment amount * * * is being considered for a year;” and, “on the same day such list is made available, causes to have published in the Federal Register notice of a meeting to receive comments and recommendations (and data on which recommendations are based) from the public on the appropriate basis * * * for establishing payment amounts for the tests on such list.” Because we believe that these molecular pathology codes may be clinical diagnostic laboratory tests payable on the CLFS, comments and recommendations from the public on the appropriate basis for establishing payment amounts on the CLFS will be discussed at the CY 2013 CLFS Annual Public Meeting. More information on the CLFS Annual Public Meeting is available in the Federal Register at 77 FR 31620 through 31622 and on the CMS Web site at http://www.cms.hhs.gov/ClinicalLabFeeSched.

As a parallel to our invitation to discuss these molecular pathology codes as clinical diagnostic laboratory tests at the CLFS Annual Public Meeting in July 2012, we also propose payment amounts for these codes under the PFS for CY 2013. The AMA RUC provided CMS with recommendations for physician work RVUs and PE inputs for the 79 CPT codes it believes include physician work. At our request, CAP provided CMS with direct PE input recommendations for 15 of the remaining 22 CPT codes to the best of their ability. We do not have recommendations on physician work RVUs or direct PE inputs for 7 of 101 codes which represent tests that are patented, and therefore the methodology used to furnish the service is proprietary and has been unavailable to the AMA RUC or CMS to support developing appropriate direct PE inputs. For the 79 CPT codes, the AMA RUC-recommended physician work RVUs range from 0.13 to 2.35, with a median work RVU of 0.45. The AMA RUC-recommended physician intra-service times (which, for these codes, equals the total times) range from 7 minutes to 80 minutes, with a median intra-service time of 18 minutes. We would note that the physician work RVU for CPT code 83912-26 and all but one of the other clinical diagnostic laboratory services for which CMS recognizes payment for clinical interpretation is 0.37. Table 21 lists AMA RUC-recommended physician work RVUs and times for these services.

Molecular pathology tests can be furnished in laboratories of different types and sizes (for example a large commercial laboratory or a pathologist's office), and tests may be furnished in small or large batches. The methodologies used and resources involved in furnishing a specific test can vary from laboratory to laboratory. When developing direct PE input recommendations for CMS, CAP and the AMA RUC made assumptions about the typical laboratory setting and batch size to determine the typical direct PE inputs for each service. Given that many of these services are furnished by private laboratories, providing recommendations on the typical inputs was challenging for many services, and not possible for other services. The AMA RUC and CAP-recommended direct PE inputs are available on the CMS Web site in the files supporting this CY 2013 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. We appreciate all of the effort CAP has made to develop national pricing inputs. However, we agree with its view that, in many cases, there is no established protocol for executing many of these tests and that the potential means to execute these tests can vary considerably.

In addition to recommendations on physician work and direct PE inputs, the AMA RUC provided CMS with recommended utilization crosswalks for the 79 molecular pathology services it believes are typically furnished by a physician. When there are coding changes, the utilization crosswalk tracks Medicare utilization from an existing code to a new code. The existing code utilization figures are drawn from Medicare claims data. We use utilization crosswalk assumptions to ensure PFS BN and to create PE RVUs through the PE methodology. Currently, payment for the interpretation and report of a molecular pathology test when furnished and billed by a physician is made under the PFS using CPT code 83912-26. Because CPT created the new molecular pathology codes to replace the current stacking codes, when recommending utilization crosswalks, the AMA RUC started with the total utilization for CPT code 83912-26, and divided that utilization among the 79 CPT codes. CAP has indicated that it distributed the utilization based, in part, on ICD-9 diagnosis data. Table 22 lists the AMA RUC-recommended utilization crosswalks for these services.

We are concerned that the RUC-recommended utilization is too low because it is based on the utilization of CPT code 83912-26 only. Instead, we believe that the utilization assumptions for the technical component of the 101 new CPT codes should be based on the utilization of the corresponding CPT codes currently billed on the CLFS. Several laboratories provided us with a list of the molecular pathology tests that they perform, and identified the stacking codes that are currently used to bill for each test and the new CPT code that would be billed for each test. However, because the same molecular pathology test may be billed using different stacks, and the same stack may be billed for different tests, it is not possible to determine which stacks match which new CPT codes for all Medicare claims. Additionally, if a beneficiary has more than one test on the same date of service and both stacks are billed on the same Medicare claim, it is not possible to determine which stacking codes on the claim make up each stack. Furthermore, some tests described by the new CPT codes are currently billed using general “not otherwise classified” (NOC) pathology CPT codes that capture a range of services and not just the molecular pathology tests described by the new CPT codes. Given these factors, it is difficult to estimate the utilization of the 101 new molecular pathology codes based on the Medicare billing of the current stacking and NOC codes.

If we were to finalize payment for molecular pathology services under the PFS, we do not believe that we could propose national payment rates at this time. Many outstanding questions remain including:

  • If these services are furnished by a physician, what are the appropriate physician work RVUs and times relative to other similar services?
  • Where and how are each of these services typically furnished—for example, what is the typical laboratory setting and batch size?
  • What is the correct projected utilization for each of these services?

Given these major areas of uncertainty, if CMS determined that new molecular pathology CPT codes should be paid under the PFS for CY 2013, we are proposing to allow the Medicare contractors to price these codes because we do not believe we have sufficient information to engage in accurate national pricing and because the price of tests can vary locally. As previously discussed, this proposal is a parallel to the invitation to discuss at the CLFS Annual Public Meeting the appropriate basis for establishing a payment amount for these molecular pathology tests as clinical diagnostic laboratory tests under the CLFS. If we decide to finalize payment for these new codes under the PFS, we would consider modifying § 415.130 as appropriate to provide for payment to a pathologist for molecular pathology services.

After reviewing comments received on the proposals contained within this CY 2013 PFS proposed rule, and after hearing the discussion at the CLFS Annual Public Meeting, we will determine the appropriate basis for establishing payment amounts for the new molecular pathology codes. We intend to publish our final decision in the CY 2013 PFS final rule with comment period and, at the same time that rule is published, as stated in the CLFS Public Meeting Notice, to post final payment determinations, if any, for the molecular pathology tests that will be paid under the CLFS.

Table 21—AMA RUC-Recommended Physician Work RVUs and Times for New Molecular Pathology CPT Codes Back to Top
CPT Code Short descriptor AMA RUC-Recommended physician work RVU AMA RUC-Recommended physician intra-service time (minutes)
81206 Bcr/abl1 gene major bp 0.37 15
81207 Bcr/abl1 gene minor bp 0.15 11
81208 Bcr/abl1 gene other bp 0.46 18
81210 Braf gene 0.37 15
81220 Cftr gene com variants 0.15 10
81221 Cftr gene known fam variants 0.40 20
81222 Cftr gene dup/delet variants 0.22 13
81223 Cftr gene full sequence 0.40 20
81224 Cftr gene intron poly t 0.15 10
81225 Cyp2c19 gene com variants 0.37 13
81226 Cyp2d6 gene com variants 0.43 15
81227 Cyp2c9 gene com variants 0.38 14
81240 F2 gene 0.13 7
81241 F5 gene 0.13 8
81243 Fmr1 gene detection 0.37 15
81244 Fmr1 gene characterization 0.51 20
81245 Flt3 gene 0.37 15
81256 Hfe gene 0.13 7
81257 Hba1/hba2 gene 0.50 20
81261 Igh gene rearrange amp meth 0.52 21
81262 Igh gene rearrang dir probe 0.61 20
81263 Igh vari regional mutation 0.52 23
81264 Igk rearrangeabn clonal pop 0.58 22
81265 Str markers specimen anal 0.40 17
81266 Str markers spec anal addl 0.41 15
81267 Chimerism anal no cell selec 0.45 18
81268 Chimerism anal w/cell select 0.51 20
81270 Jak2 gene 0.15 10
81275 Kras gene 0.50 20
81291 Mthfr gene 0.15 10
81292 Mlh1 gene full seq 1.40 60
81293 Mlh1 gene known variants 0.52 28
81294 Mlh1 gene dup/delete variant 0.80 30
81295 Msh2 gene full seq 1.40 60
81296 Msh2 gene known variants 0.52 28
81297 Msh2 gene dup/delete variant 0.80 30
81298 Msh6 gene full seq 0.80 30
81299 Msh6 gene known variants 0.52 28
81300 Msh6 gene dup/delete variant 0.65 30
81301 Microsatellite instability 0.50 20
81302 Mecp2 gene full seq 0.65 30
81303 Mecp2 gene known variant 0.52 28
81304 Mecp2 gene dup/delet variant 0.52 28
81310 Npm1 gene 0.39 19
81315 Pml/raralpha com breakpoints 0.37 15
81316 Pml/raralpha 1 breakpoint 0.22 12
81317 Pms2 gene full seq analysis 1.40 60
81318 Pms2 known familial variants 0.52 28
81319 Pms2 gene dup/delet variants 0.80 30
81331 Snrpn/ube3a gene 0.39 15
81332 Serpina1 gene 0.40 15
81340 Trb@ gene rearrange amplify 0.63 25
81341 Trb@ gene rearrange dirprobe 0.45 19
81342 Trg gene rearrangement anal 0.57 25
81350 Ugt1a1 gene 0.37 15
81355 Vkorc1 gene 0.38 15
81370 Hla i & ii typing lr 0.54 15
81371 Hla i & ii type verify lr 0.60 30
81372 Hla i typing complete lr 0.52 15
81373 Hla i typing 1 locus lr 0.37 15
81374 Hla i typing 1 antigen lr 0.34 13
81375 Hla ii typing ag equiv lr 0.60 15
81376 Hla ii typing 1 locus lr 0.50 15
81377 Hla ii type 1 ag equiv lr 0.43 15
81378 Hla i & ii typing hr 0.45 20
81379 Hla i typing complete hr 0.45 15
81380 Hla i typing 1 locus hr 0.45 15
81381 Hla i typing 1 allele hr 0.45 12
81382 Hla ii typing 1 loc hr 0.45 15
81383 Hla ii typing 1 allele hr 0.45 15
81400 Mopath procedure level 1 0.32 10
81401 Mopath procedure level 2 0.40 15
81402 Mopath procedure level 3 0.50 20
81403 Mopath procedure level 4 0.52 28
81404 Mopath procedure level 5 0.65 30
81405 Mopath procedure level 6 0.80 30
81406 Mopath procedure level 7 1.40 60
81407 Mopath procedure level 8 1.85 60
81408 Mopath procedure level 9 2.35 80
Table 22—AMA RUC-Recommended Utilization Crosswalks for New Molecular Pathology CPT Codes Back to Top
Source Destination Analytic ratio*
* Percentage of source code utilization transferred to the destination code
83912 26 81206 0.116
83912 26 81207 0.003
83912 26 81208 0.003
83912 26 81210 0.020
83912 26 81220 0.017
83912 26 81221 0.003
83912 26 81222 0.003
83912 26 81223 0.003
83912 26 81224 0.003
83912 26 81225 0.006
83912 26 81226 0.006
83912 26 81227 0.011
83912 26 81240 0.073
83912 26 81241 0.110
83912 26 81243 0.003
83912 26 81244 0.000
83912 26 81245 0.014
83912 26 81256 0.050
83912 26 81257 0.014
83912 26 81261 0.014
83912 26 81262 0.002
83912 26 81263 0.001
83912 26 81264 0.011
83912 26 81265 0.043
83912 26 81266 0.001
83912 26 81267 0.006
83912 26 81268 0.001
83912 26 81270 0.050
83912 26 81275 0.050
83912 26 81291 0.017
83912 26 81292 0.003
83912 26 81293 0.001
83912 26 81294 0.002
83912 26 81295 0.003
83912 26 81296 0.001
83912 26 81297 0.002
83912 26 81298 0.001
83912 26 81299 0.002
83912 26 81300 0.001
83912 26 81301 0.003
83912 26 81302 0.001
83912 26 81303 0.000
83912 26 81304 0.000
83912 26 81310 0.014
83912 26 81315 0.017
83912 26 81316 0.003
83912 26 81317 0.002
83912 26 81318 0.001
83912 26 81319 0.001
83912 26 81331 0.001
83912 26 81332 0.003
83912 26 81340 0.011
83912 26 81341 0.003
83912 26 81342 0.017
83912 26 81350 0.002
83912 26 81355 0.011
83912 26 81370 0.043
83912 26 81371 0.029
83912 26 81372 0.011
83912 26 81373 0.011
83912 26 81374 0.029
83912 26 81375 0.006
83912 26 81376 0.006
83912 26 81377 0.006
83912 26 81378 0.006
83912 26 81379 0.003
83912 26 81380 0.003
83912 26 81381 0.003
83912 26 81382 0.003
83912 26 81383 0.003
83912 26 81400 0.007
83912 26 81401 0.007
83912 26 81402 0.007
83912 26 81403 0.007
83912 26 81404 0.007
83912 26 81405 0.007
83912 26 81406 0.003
83912 26 81407 0.003
83912 26 81408 0.003

J. Payment for New Preventive Service HCPCS G-Codes

Under section 1861(ddd) of the Act, as amended by Section 4105 of the Affordable Care Act, CMS is authorized to add coverage of “additional preventive services” if certain statutory criteria are met as determined through the national coverage determination (NCD) process, including that the service meets all of the following criteria: (1) They must be reasonable and necessary for the prevention or early detection of illness or disability, (2) they must be recommended with a grade of A or B by the United States Preventive Services Task Force (USPSTF), and (3) they must be appropriate for individuals entitled to benefits under Part A or enrolled under Part B. After reviewing the USPSTF recommendations for the preventive services, conducting evidence reviews, and considering public comments under the NCD process, we determined that the above criteria were met for the services listed in Table 23. Medicare now covers each of the following preventive services:

  • Screening and Behavioral Counseling Interventions in Primary Care to Reduce Alcohol Misuse, effective October 14, 2011;
  • Screening for Depression in Adults, effective October 14, 2011;
  • Screening for Sexually Transmitted Infections (STIs) and High Intensity Behavioral Counseling (HIBC) to Prevent STIs, effective November 8, 2011;
  • Intensive Behavioral Therapy for Cardiovascular Disease, effective November 8, 2011; and
  • Intensive Behavioral Therapy for Obesity, effective November 29, 2011.

Table 23 lists the HCPCS G-codes created for reporting and payment of these services. The Medicare PFS payment rates for these services are discussed below. The NCD process establishing coverage of these preventive services was not complete at the time of publication of the CY 2012 PFS final rule in early November, so we could not indicate interim RVUs for these preventive services in our final rule addenda. However, we were able to include HCPCS G-codes and national payment amounts for these services in the CY 2012 PFS national relative value files, which became available at the end of the year and were effective January 1, 2012. From the effective date of each service to December 31, 2011, the payment amount for these codes was established by the Medicare Administrative Contractors.

Table 23—New Preventive Service HCPCS G-Codes Back to Top
HCPCS Code HCPCS Code long descriptor CMS National Coverage Determination (NCD) CMS Change Request (CR)
G0442 Annual alcohol misuse screening, 15 minutes Screening and Behavioral Counseling Interventions in Primary Care to Reduce Alcohol Misuse (NCD 210.8) CR7633
G0443 Brief face-to-face behavioral counseling for alcohol misuse, 15 minutes Screening Behavioral Counseling Interventions in Primary Care to Reduce Alcohol Misuse (NCD 210.8) CR7633
G0444 Annual Depression Screening, 15 minutes Screening for Depression in Adults (NCD 210.9) CR7637
G0445 High-intensity behavioral counseling to prevent sexually transmitted infections, face-to-face, individual, includes: education, skills training, and guidance on how to change sexual behavior; performed semi-annually, 30 minutes Screening for Sexually Transmitted infections (STIs) and High-Intensity Behavioral Counseling (HIBC) to prevent STIs (NCD 210.10) CR7610
G0446 Annual, face-to-face intensive behavioral therapy for cardiovascular disease, individual, 15 minutes Intensive Behavioral Therapy for Cardiovascular Disease (NCD 210.11) CR7636
G0447 Face-to-face behavioral counseling for obesity, 15 minutes Intensive Behavioral Therapy for Obesity (NCD 210.12) CR7641

Two new HCPCS codes, G0442 (Annual alcohol misuse screening, 15 minutes), and G0443 (Brief face-to-face behavioral counseling for alcohol misuse, 15 minutes), were created for the reporting and payment of screening and behavioral counseling interventions in primary care to reduce alcohol misuse.

We believe that the screening service described by HCPCS code G0442 requires similar physician work as CPT code 99211 (Level 1 office or other outpatient visit, established patient), that may not require the presence of a physician. CPT code 99211 has a work RVU of 0.18 and we believe HCPCS code G0442 should be valued similarly. As such, we are proposing a work RVU of 0.18 for HCPCS code G0442 for CY 2013. For physician time, we are proposing 15 minutes, which is the amount of time specified in the HCPCS code descriptor. For malpractice expense, we are proposing a malpractice expense crosswalk to CPT code 99211. The proposed direct PE inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed values for HCPCS code G0442, which are the same as the current (CY 2012) values for this service.

We believe that the behavioral counseling service described by HCPCS code G0443 requires similar physician work to CPT code 97803 (Medical nutrition therapy; re-assessment and intervention, individual, face-to-face with the patient, each 15 minutes) (work RVU = 0.45) and should be valued similarly. As such, we are proposing a work RVU of 0.45 for HCPCS code G0443 for CY 2013. For physician time, we are proposing 15 minutes, which is the amount of time specified in the HCPCS code descriptor. For malpractice expense, we are proposing a malpractice expense crosswalk to CPT code 97803. The proposed direct PE inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed values for HCPCS code G0443, which are the same as the current (CY 2012) values for this service.

HCPCS code G0444 (Annual Depression Screening, 15 minutes) was created for the reporting and payment of screening for depression in adults.

We believe that the screening service described by HCPCS code G0444 requires similar physician work as CPT code 99211 (work RVU = 0.18) and should be valued similarly. As such, we are proposing a work RVU of 0.18 for HCPCS code G0444 for CY 2013. For physician time, we are proposing 15 minutes, which is the amount of time specified in the HCPCS code descriptor. For malpractice expense, we are proposing a malpractice expense crosswalk to CPT code 99211. The proposed direct PE inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed values for HCPCS code G0444, which are the same as the current (CY 2012) values for this service.

HCPCS code G0445 (high-intensity behavioral counseling to prevent sexually transmitted infections, face-to-face, individual, includes: education, skills training, and guidance on how to change sexual behavior, performed semi-annually, 30 minutes) was created for the reporting and payment of HIBC to prevent STIs.

We believe that the behavioral counseling service described by HCPCS code G0445 requires similar physician work to CPT code 97803 (work RVU = 0.45) and should be valued similarly. As such, we are proposing a work RVU of 0.45 for HCPCS code G0445 for CY 2013. For physician time, we are proposing 30 minutes, which is the amount of time specified in the HCPCS code descriptor. For malpractice expense, we are proposing a malpractice expense crosswalk to CPT code 97803. The proposed direct PE inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed values for HCPCS code G0445, which are the same as the current (CY 2012) values for this service.

HCPCS code G0446 (Annual, face-to-face intensive behavioral therapy for cardiovascular disease, individual, 15 minutes) was created for the reporting and payment of intensive behavioral therapy for cardiovascular disease.

We believe that the behavioral therapy service described by HCPCS code G0446 requires similar physician work to CPT code 97803 (work RVU = 0.45) and should be valued similarly. As such, we are proposing a work RVU of 0.45 for HCPCS code G0446 for CY 2013. For physician time, we are proposing 15 minutes, which is the amount of time specified in the HCPCS code descriptor. For malpractice expense, we are proposing a malpractice expense crosswalk to CPT code 97803. The proposed direct PE inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed values for HCPCS code G0446, which are the same as the current (CY 2012) values for this service.

HCPCS G0447 (Face-to-face behavioral counseling for obesity, 15 minutes) was created for the reporting and payment of intensive behavioral therapy for obesity.

We believe that the behavioral counseling service described by HCPCS code G0447 requires similar physician work to CPT code 97803 (work RVU = 0.45) and should be valued similarly. As such, we are proposing a work RVU of 0.45 for HCPCS code G0447 for CY 2013. For physician time, we are proposing 15 minutes, which is the amount of time specified in the HCPCS code descriptor. For malpractice expense, we are proposing a malpractice expense crosswalk to CPT code 97803. The proposed direct PE inputs are reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed values for HCPCS code G0447, which are the same as the current (CY 2012) values for this service.

K. Certified Registered Nurse Anesthetists and Chronic Pain Management Services

The benefit category for services furnished by a certified registered nurse anesthetist (CRNA) was added to Medicare by section 9320 of the Omnibus Budget Reconciliation Act (OBRA) 1986. Since this benefit was implemented on January 1, 1989, CRNAs have been eligible to bill Medicare directly for the specified services. Section 1861(bb)(2) of the Act defines a CRNA as “a certified registered nurse anesthetist licensed by the State who meets such education, training, and other requirements relating to anesthesia services and related care as the Secretary may prescribe. In prescribing such requirements the Secretary may use the same requirements as those established by a national organization for the certification of nurse anesthetists.”

Section 410.69(b) defines a CRNA as a registered nurse who: (1) Is licensed as a registered professional nurse by the State in which the nurse practices; (2) meets any licensure requirements the State imposes with respect to nonphysician anesthetists; (3) has graduated from a nurse anesthesia educational program that meets the standards of the Council on Accreditation of Nurse Anesthesia Programs, or such other accreditation organization as may be designated by the Secretary; and (4) meets one of the following criteria: (i) Has passed a certification examination of the Council on Certification of Nurse Anesthetists, the Council on Recertification of Nurse Anesthetists, or any other certification organization that may be designated by the Secretary; or (ii) is a graduate of a program described in paragraph (3) of this definition and within 24 months after that graduation meets the requirements of paragraph (4)(i) of this definition.

Section 1861(bb)(1) of the Act defines services of a CRNA as “anesthesia services and related care furnished by a certified registered nurse anesthetist (as defined in paragraph (2)) which the nurse anesthetist is legally authorized to perform as such by the State in which the services are furnished”. CRNAs are paid at the same rate as physicians for furnishing such services to Medicare beneficiaries. Payment for services furnished by CRNAs only differs from physicians in that payment to CRNAs is made only on an assignment-related basis (§ 414.60) and supervision requirements apply in certain circumstances.

At the time that the Medicare benefit for CRNA services was established, CRNA practice largely occurred in the surgical setting and services other than anesthesia (medical and surgical) were furnished in the immediate pre- and post-surgery timeframe. The scope of “anesthesia services and related care” as delineated in section 1861(bb)(1) of the Act reflected that practice standard. As CRNAs have moved into other practice settings, questions have arisen regarding what services are encompassed under the “related care” aspect of the benefit category. Specifically, some CRNAs now offer chronic pain management services that are separate and distinct from a surgical procedure. Changes in CRNA practice have prompted questions as to whether these services fall within the scope of section 1861(bb)(1) of the Act. Medicare Administrative Contractors (MACs) have reached different conclusions as to whether the statutory description of “anesthesia services and related care” encompasses the chronic pain management services delivered by CRNAs. As a result, we have been asked to address whether or not chronic pain management is included within the scope of the statutory benefit for CRNA services.

To determine whether chronic pain management is included in the statutory benefit for CRNA services, we reviewed our current regulations and subregulatory guidance. We found that the existing guidance does not specifically address chronic pain management. In the Internet Only Manual (Pub 100-04, Ch 12, Sec 140.4.3), we discuss the medical or surgical services that fall under the “related care” language stating, “These may include the insertion of Swan Ganz catheters, central venous pressure lines, pain management, emergency intubation, and the pre-anesthetic examination and evaluation of a patient who does not undergo surgery.” Some have interpreted the reference to “pain management” in this language as authorizing direct payment to CRNAs for chronic pain management services, while others have taken the view that the services highlighted in the manual language are services furnished in the perioperative setting and refer only to acute pain management associated with the surgical procedure.

Since existing guidance was not determinative, we assessed the issue of CRNA practice of chronic pain management more broadly. We found that chronic pain management is an emerging field. The Institute of Medicine (IOM) issued a report entitled “Relieving Pain in America: A Blueprint for Transforming Prevention, Care, Education and Research” on June 29, 2011, discussing the importance of pain management and focusing on the many challenges in delivering effective chronic pain management. The available interventions to treat chronic pain have been expanding. In addition to the use of medications and a variety of diagnostic tests, techniques include neural blocks, neuromodulatory techniques, and implanted pain management devices. The healthcare community continues to examine the appropriateness and effectiveness of these many and varied treatment techniques and modalities. As part of this evolution, Medicare established a physician specialty code for interventional pain management in 2003.

The healthcare community continues to debate whether CRNAs are qualified to provide chronic pain management. Some have stated that interventional pain management for beneficiaries with chronic pain is the practice of medicine, that CRNAs do not receive the sufficient education on chronic pain management, and that CRNAs do not have the skills required to furnish chronic pain management services. Others have stated that both acute and chronic pain management and treatment are within the CRNA professional scope and are comparable services, and that CRNAs receive the clinical training and experience necessary to furnish both acute and chronic pain management services. Recently, several State legislatures have debated the scope of CRNA practice, including those in the States of California, Colorado, Missouri, South Carolina, Nevada, and Virginia.

In the context of Medicare, some have pointed to Medicare policies allowing other advanced practice nurses such as nurse practitioners or clinical nurse specialists to furnish and bill for physicians' services as support for recognizing a broader interpretation of the scope of CRNA practice. We would note that the statutory benefit category definition for CRNAs substantively differs from that for other advanced practice nurses. Section 1861(s)(2)(K) of the Act authorizes certain nonphysician practitioners (NPPs) to bill Medicare directly for services they are legally authorized to perform under State law, and “which would be physicians' services if furnished by a physician.” With certain conditions (such as physician supervision or collaboration), the statute allows these NPPs to bill Medicare for physicians' services that fall within their State scope of practice.

Since State governments regulate the licensure and practice of specific types of health care professionals, we have looked to the State scope of practice laws to determine if chronic pain management was within the scope of practice for CRNAs. State scope of practice laws vary with regard to the range of services that CRNAs may perform, and some include chronic pain management. As discussed earlier, several States are debating whether to include chronic pain management services within the CRNA scope of practice.

After assessing the information available to us, we have concluded that chronic pain management is an evolving field, and we recognize that certain States have determined that the scope of practice for a CRNA should include chronic pain management in order to meet health care needs of their residents and ensure their health and safety. Therefore, we propose to revise our regulations at § 410.69(b) to define the statutory description of CRNA services. Specifically, we propose to add the following language: “Anesthesia and related care includes medical and surgical services that are related to anesthesia and that a CRNA is legally authorized to perform by the State in which the services are furnished.” This proposed definition would set a Medicare standard for the services that can be furnished and billed by CRNAs while allowing appropriate flexibility to meet the unique needs of each State. The proposal also dovetails with the language in section 1861(bb)(1) of the Act requiring the State's legal authorization to perform CRNA services as a key component of the CRNA benefit category. Finally, the proposed definition is also consistent with our policy to recognize State scope of practice as one parameter defining the services that can be furnished and billed by other NPPs.

Simply because the State allows a certain type of health care professional to furnish certain services does not mean that all members of that profession are adequately trained to provide the service. In the case of chronic pain management, the IOM report specifically noted that many practitioners lack the skills needed to help patients with the day-to-day self-management that is required to properly serve individuals with chronic pain. As with all practitioners who furnish services to Medicare beneficiaries, CRNAs practicing in States that allow them to furnish chronic pain management services are responsible for obtaining the necessary training for any and all services furnished to Medicare beneficiaries.

L. Ordering of Portable X-Ray Services

Portable x-ray suppliers provide diagnostic imaging services at a patient's location. These services are most often furnished in residences, including private homes and group living facilities (for example, nursing homes) rather than in a traditional clinical setting (for example, a doctor's office or hospital). The supplier transports mobile diagnostic imaging equipment to the patient's location, sets up the equipment, and administers the test onsite. The supplier may interpret the results itself or it may provide the results to an outside physician for interpretation. Portable x-ray services may avoid the need for expensive ambulance transport of frail patients to a radiology facility or hospital.

In the Medicare Conditions for Coverage regulations established in 1969, § 486.106(a), requires that “portable x-ray examinations are performed only on the order of a doctor of medicine (MD) or doctor of osteopathy (DO) licensed to practice in the State * * *” With the exception of portable x-ray services, Medicare payment regulations at § 410.32 allow physicians, including limited-license practitioners such as doctors of podiatry and optometry, and most nonphysician practitioners who furnish physicians' services to order diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests so long as those nonphysician practitioners are operating within the scope of their authority under State law and within the scope of their Medicare statutory benefit.

Nonphysician practitioners have become an increasingly important component of clinical care, and we believe that delivery systems should take full advantage of all members of a healthcare team, including nonphysician practitioners.

Although current Medicare regulations limit ordering of portable x-ray services to a MD or a DO, the Office of the Inspector General (OIG) in its December 2011 report entitled “Questionable Billing Patterns of Portable X-Ray Suppliers” (OEI-12-10-00190) found that Medicare was paying for portable x-ray services ordered by physicians other than MDs and DOs, including podiatrists and chiropractors, and by nonphysician practitioners. We issued a special education article on January 20, 2012, through the Medicare Learning Network (MLN) “Important Reminder for Providers and Suppliers Who Provide Services and Items Ordered or Referred by Other Providers and Suppliers,” reiterating our current policy that portable x-ray services can only be ordered by a MD or DO. The article is available at http://www.cms.gov/MLNMattersArticles/downloads/SE1201.pdf on the CMS Web site. Since the publication of the above mentioned article, several stakeholders have told us that members of the healthcare community fail to distinguish ordering for portable x-ray services from ordering for other diagnostic services where our general policy is to allow nonphysician practitioners and physicians other than MDs and DOs to order diagnostic tests within the scope of their authority under State law and their Medicare statutory benefit. They report finding the different requirements confusing.

We propose to revise our current regulations, which limit ordering of portable x-ray services to only a MD or DO, to allow other physicians and nonphysician practitioners acting within the scope of their Medicare benefit and State law to order portable x-ray services. Specifically, we propose revisions to the Conditions for Coverage at § 486.106(a) and § 486.106(b) to permit portable x-ray services to be ordered by a physician or nonphysician practitioner in accordance with the ordering policies for other diagnostic services under § 410.32(a).

This proposed change would allow a MD or DO, as well as an nurse practitioner, clinical nurse specialist, physician assistant, certified nurse-midwife, doctor of optometry, doctor of dental surgery and doctor of dental medicine, doctor of podiatric medicine, clinical psychologist, and clinical social worker to order portable x-ray services within their State scope of practice and the scope of their Medicare benefit. Although all of these physicians and nonphysician practitioners are authorized to order diagnostic services in accordance with § 410.32(a), their Medicare benefit delimits the services that they can provide.

We also propose to revise the language included in § 410.32(c) to recognize the same authority for physicians and nonphysician practitioners to order diagnostic tests as is prescribed for other diagnostic services in § 410.32(a). Finally, we are proposing two technical corrections. One is to § 410.32(d)(2), where we currently cite to subsection (a)(3) for the definition of qualified nonphysician practitioner. The definition of qualified nonphysician practitioner is in paragraph (a)(2) and paragraph (a)(3) does not exist; therefore, we are changing the citation to the correct citation. The second technical correction is § 410.32(b)(2)(iii) to better reflect statutory authority to provide neuropsychological testing in addition to psychological testing.

Although we believe that this proposal is appropriate given overall changes in practice patterns since the beginning of the Medicare program, we remain concerned about the OIG's recent findings. The OIG observed questionable billing patterns for portable x-ray services in addition to ordering by nonphysician practitioners. Of specific note was the observation that some portable x-ray suppliers are delivering services on the same day that the patient also receives services in a clinical setting, such as the physician office or hospital. Under our current regulation at § 486.106(a)(2), the order for portable x-ray services must include a statement concerning the condition of the patient which indicates why portable x-ray services are necessary. If the patient was able, on the same day that a portable x-ray service was furnished, to travel safely to a clinical setting, the statement of need for portable x-ray services could be questionable. We also are concerned that the OIG observed some portable x-ray suppliers billing for multiple trips to a facility. Medicare makes a single payment for each trip the portable x-ray supplier makes to a particular location. We make available multiple modifiers to allow the portable x-ray supplier to indicate the number of patients served on a single trip to a facility. We expect portable x-ray suppliers to use those modifiers and not to bill multiple trips to the same facility when only one trip was made. Additionally, we strongly encourage portable x-ray suppliers to make efficient use of resources and consolidate trips rather than making multiple trips on the same day as clinically appropriate.

In conjunction with our proposal to expand the scope of physicians and nonphysician practitioners who can order portable x-ray services, we intend to develop, as needed, monitoring standards predicated by these and other OIG findings. In addition, we will be conducting data analysis of ordering patterns for portable x-ray and other diagnostic services to determine if additional claims edits, provider audits, or fraud investigations are required to prevent abuse of this service and to allow for the collection of any potential overpayments. We encourage providers, as with any diagnostic test, to proactively determine and document the medical necessity for this testing.

We are also considering whether to make other revisions to the current regulations at 42 CFR, Part 486, Subpart C—Conditions for Coverage: Portable X-Ray Services through future rulemaking, as we are aware stakeholders have suggested regulatory changes to consider since the last update of this regulation. The last time this regulation was updated was in 2008, but many of the sections in Part 486, Subpart C have not been updated since 1995. Since we are proposing to update part of Part 486, Subpart C in this proposed rule, we are using this opportunity to seek public comment on suggestions for updating in the future the rest of the regulations at Part 486, Subpart C. We are open to all suggestions for updates; therefore we did not pose specific questions for response by the public.

We are specifically seeking public comment on suggestions for updating Subpart C—Conditions for Coverage: Portable X-Ray Services; noting that any regulatory changes would be addressed through separate notice-and-comment rulemaking.

III. Other Provisions of the Proposed Regulation Back to Top

A. Ambulance Fee Schedule

1. Amendment to Section 1834(l)(13) of the Act

Section 146(a) of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA) amended section 1834(l)(13)(A) of the Act to specify that, effective for ground ambulance services furnished on or after July 1, 2008 and before January 1, 2010, the ambulance fee schedule amounts for ground ambulance services shall be increased as follows:

  • For covered ground ambulance transports that originate in a rural area or in a rural census tract of a metropolitan statistical area, the fee schedule amounts shall be increased by 3 percent.
  • For covered ground ambulance transports that do not originate in a rural area or in a rural census tract of a metropolitan statistical area, the fee schedule amounts shall be increased by 2 percent.

Sections 3105(a) and 10311(a) of the Affordable Care Act further amended section 1834(l)(13)(A) of the Act to extend the payment add-ons described above for an additional year, such that these add-ons also applied to covered ground ambulance transports furnished on or after January 1, 2010 and before January 1, 2011. In the CY 2011 PFS final rule (75 FR 73385 and 73386, 73625), we revised § 414.610(c)(1)(ii) to conform the regulations to this statutory requirement.

Section 106(a) of the MMEA again amended section 1834(l)(13)(A) of the Act to extend the payment add-ons described above for an additional year, such that these add-ons also applied to covered ground ambulance transports furnished on or after January 1, 2011 and before January 1, 2012. In the CY 2012 End-Stage Renal Disease Prospective Payment System (ESRD PPS) final rule (76 FR 70228, 70284 through 70285, 70315), we revised § 414.610(c)(1)(ii) to conform the regulations to this statutory requirement. However, in doing so, paragraphs (c)(1)(ii)(A) and (B) were inadvertently deleted from the Code of Federal Regulations. Therefore, we propose to reinstate paragraphs (c)(1)(ii)(A) and (B), as further revised below to conform to subsequent legislation.

Subsequently, section 306 (a) of the Temporary Payroll Tax Cut Continuation Act of 2011 (Pub. L. 112-78) (TPTCCA) amended section 1834(l)(13)(A) of the Act to extend the payment add-ons described above through February 29, 2012; and section 3007(a) of the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96) (MCTRJCA) further amended section 1834(l)(13)(A) to extend these payment add-ons through December 31, 2012. Thus, these payment add-ons also apply to covered ground ambulance transports furnished on or after January 1, 2012 and before January 1, 2013. Accordingly, we are proposing to revise § 414.610(c)(1)(ii) to conform the regulations to these statutory requirements. These statutory requirements are self-implementing. A plain reading of the statute requires only a ministerial application of the mandated rate increase, and does not require any substantive exercise of discretion on the part of the Secretary.

2. Amendment to Section 146(b)(1) of MIPPA

Section 146(b)(1) of the MIPPA amended the designation of rural areas for payment of air ambulance services. This section originally specified that any area that was designated as a rural area for purposes of making payments under the ambulance fee schedule for air ambulance services furnished on December 31, 2006, must continue to be treated as a rural area for purposes of making payments under the ambulance fee schedule for air ambulance services furnished during the period July 1, 2008 through December 31, 2009.

Sections 3105(b) and 10311(b) of the Affordable Care Act amended section 146(b)(1) of MIPPA to extend this provision for an additional year, through December 31, 2010. In the CY 2011 PFS final rule (75 FR 73385 through 86, 73625 through 26), we revised § 414.610(h) to conform the regulations to this statutory requirement.

Section 106(b) of the MMEA amended section 146(b)(1) of MIPPA to extend this provision again through December 31, 2011. In the CY 2012 ESRD PPS final rule (76 FR 70284 through 70285, 70315), we revised § 414.610(h) to conform the regulations to this statutory requirement.

Subsequently, section 306 (b) of the TPTCCA amended section 146(b)(1) of MIPPA to extend this provision through February 29, 2012; and section 3007(b) of the MCTRJCA further amended section 146(b)(1) of MIPPA to extend this provision through December 31, 2012. Therefore, we are proposing to revise § 414.610(h) to conform the regulations to these statutory requirements. These statutory requirements are self-implementing. A plain reading of the statute requires only a ministerial application of a rural indicator, and does not require any substantive exercise of discretion on the part of the Secretary. Accordingly, for areas that were designated as rural on December 31, 2006, and were subsequently re-designated as urban, we have re-established the “rural” indicator on the ZIP Code file for air ambulance services through December 31, 2012.

3. Amendment to Section 1834(l)(12) of the Act

Section 414 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) added paragraph (12) to section 1834(l) of the Act, which specified that in the case of ground ambulance services furnished on or after July 1, 2004, and before January 1, 2010, for which transportation originates in a qualified rural area (as described in the statute), the Secretary shall provide for a percent increase in the base rate of the fee schedule for such transports. The statute requires this percent increase to be based on the Secretary's estimate of the average cost per trip for such services (not taking into account mileage) in the lowest quartile of all rural county populations as compared to the average cost per trip for such services (not taking into account mileage) in the highest quartile of rural county populations. Using the methodology specified in the July 1, 2004 interim final rule (69 FR 40288), we determined that this percent increase was equal to 22.6 percent. As required by the MMA, this payment increase was applied to ground ambulance transports that originated in a “qualified rural area”; that is, to transports that originated in a rural area included in those areas comprising the lowest 25th percentile of all rural populations arrayed by population density. For this purpose, rural areas included Goldsmith areas (a type of rural census tract).

Sections 3105(c) and 10311(c) of the Affordable Care Act amended section 1834(l)(12)(A) of the Act to extend this rural bonus for an additional year through December 31, 2010. In the CY 2011 PFS final rule (75 FR 73385 through 73386 and 73625), we revised § 414.610(c)(5)(ii) to conform the regulations to this statutory requirement.

Section 106(c) of the MMEA again amended section 1834(l)(12)(A) of the Act to extend the rural bonus described above for an additional year, through December 31, 2011. Therefore, in the CY 2012 ESRD PPS final rule (76 FR 70284 through 70285, 70315), we revised § 414.610(c)(5)(ii) to conform the regulations to this statutory requirement.

Subsequently, section 306 (c) of the TPTCCA amended section 1834(l)(12)(A) of the Act to extend this rural bonus through February 29, 2012; and section 3007(c) of the MCTRJCA further amended section 1834(l)(12)(A) of the Act to extend this rural bonus through December 31, 2012. Therefore, we are continuing to apply the 22.6 percent rural bonus described above (in the same manner as in previous years), to ground ambulance services with dates of service on or after January 1, 2012 and before January 1, 2013 where transportation originates in a qualified rural area.

This rural bonus is sometimes referred to as the “Super Rural Bonus” and the qualified rural areas (also known as “super rural” areas) are identified during the claims adjudicative process via the use of a data field included on the CMS supplied ZIP Code File.

Accordingly, we are proposing to revise § 414.610(c)(5)(ii) to conform the regulations to the statutory requirements set forth at section 306(c) of the TPTCCA and section 3007(c) of the MCTRJCA. These statutory requirements are self-implementing. Together, these provisions require a one-year extension of the rural bonus (which was previously established by the Secretary) through December 31, 2012, and does not require any substantive exercise of discretion on the part of the Secretary.

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

Section 1847A of the Act requires use of the average sales price (ASP) payment methodology for payment for drugs and biologicals described in section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP methodology applies to most drugs furnished incident to a physician's service, many drugs furnished under the DME benefit, certain oral anti-cancer drugs, and oral immunosuppressive drugs.

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

For a drug or biological that is found to have exceeded the WAMP of AMP by a threshold percentage, section 1847A(d)(3)(C) of the Act authorizes the Secretary to substitute, the lesser of—

  • The widely available market price for the drug or biological, or
  • 103 percent of the average manufacturer price as determined under section 1927(k)(1) of the Act.”

The applicable threshold percentage is specified in section 1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and subsequent years, section 1847A(d)(3)(B)(ii) of the Act authorizes the Secretary to specify the threshold percentage for the WAMP or the AMP, or both. In the CY 2006 (70 FR 70222), CY 2007 (71 FR69680), CY 2008 (72 FR 66258), CY 2009 (73 FR 69752), and CY 2010 (74 FR 61904) PFS final rules with comment period, we specified an applicable threshold percentage of 5 percent for both the WAMP and AMP. We based this decision on the fact that data was too limited to support an adjustment to the 5 percent threshold. Beginning in CY 2011, we treated the WAMP and AMP based adjustments to the applicable threshold percentages separately.

a. WAMP Threshold and Price Substitution

After soliciting and reviewing comments, we finalized proposals to continue the 5 percent WAMP threshold for CY 2011 (75 FR 73469), and CY 2012 (76 FR 73287). For CY 2013, we again have no additional information from OIG studies or other sources that leads us to consider an alternative threshold. When making comparisons to the WAMP, we propose that the applicable threshold percentage remain at 5 percent until such time that a change in the threshold amount is warranted, and we propose to update § 414.904(d)(3)(iv) accordingly. As mentioned above, the threshold has remained at 5 percent since 2005. Our proposal will eliminate the need for annual rulemaking until a change is warranted.

We are not proposing to make any WAMP based price substitutions at this time. As we noted in the CY 2011 PFS final rule with comment period (75 FR 73470) and reiterated in CY 2012 (76 FR 73287), we understand that there are complicated operational issues associated with the WAMP based substitution policy, and we continue to proceed cautiously in this area. We remain committed to providing stakeholders, including providers and manufacturers of drugs impacted by potential price substitutions with adequate notice of our intentions, including the opportunity to provide input with regard to the processes for substituting the WAMP for the ASP.

b. AMP Threshold

Like the WAMP threshold, for CY 2013, we have no information that leads us to believe that the 5 percent threshold percentage for AMP-based price substitution is inappropriate or should be changed. We propose that the applicable threshold percentage remain at 5 percent until such time that a change in the threshold amount is warranted, and we propose to update § 414.904(d)(3)(iii) accordingly. The AMP threshold has remained at 5 percent since 2005. Our proposal will eliminate the need for annual rulemaking until a change is warranted.

c. AMP Price Substitution-Additional Condition

In the CY 2012 PFS rule, we specified that the substitution of AMP for ASP will be made only when the ASP exceeds the AMP by 5 percent in two consecutive quarters immediately prior to the current pricing quarter, or three of the previous four quarters immediately prior to the current quarter, and that matching sets of NDCs had to be used in the comparison (76FR 73289 through 73295). The value of the AMP based price substation must also be less than the ASP payment limit that is calculated for the quarter in which the substitution is applied.

We did not apply the price substitution policy in April 2012 because access concerns led us to reconsider whether it was prudent to proceed with price substitution during a developing situation that was related to a drug shortage that had not met the definition of a public health emergency under section 1847A(e) of the Act. In light of recent concerns about drug shortages, the resulting impact on patient care, beneficiary and provider access, as well as the potential for shortages to suddenly affect drug prices for the provider, under the authority in section 1847A(d)(3)(C) of the Act, we propose adding § 414.904(d)(3)(ii)(C) that would prevent the AMP price substitution policy from taking effect if the drug and dosage form represented by the HCPCS code are reported by the FDA on their Current Drug Shortage list (or other FDA reporting tool that identifies shortages of critical or medically necessary drugs) to be in short supply at the time that ASP payment limits are being finalized for the next quarter. Further, we also would like to clarify that this proposal to add to the safeguards finalized in CY 2012 only applies to calculations under the AMP-based price substitution policy. Our proposal is intended to continue the cautious approach described in previous rules and to strike a balance between operational requirements associated with receiving manufacturers' ASP reports, calculating the payment limits, and posting stable payment limits that will be used to pay claims. We believe that this proposal also addresses concerns about access to care, known program issues identified by the OIG, and provides an opportunity for some modest program savings. At this time, we are not proposing any other changes to the safeguards, timing, or notification that identifies the codes that will be substituted each quarter. We welcome comments on our approach as well as comments regarding additional specific safeguards for the AMP price substitution policy.

2. Billing for Part B Drugs Administered Incident to Physicians' Services

In this section, we propose to clarify payment policies regarding billing for certain drugs under Medicare Part B. In 2010 and 2011, we issued two change requests (CRs 7109 and 7397) that summarized a number of longstanding drug payment policy and billing requirements. We considered these CRs to be merely clarifying, rather than changing, our policy. However, one item in the CRs, which stated that pharmacies may not bill for drugs that are used incident to physicians' service, has caused some concern. Specifically, we understand that some nonphysician suppliers—operating in part on the basis of guidance from a Medicare contractor—have been submitting claims for drugs that they have shipped to physicians' offices for use in refilling implanted intrathecal pumps. In light of concern over its potential effect on suppliers, we delayed implementation of the most recently updated CR (CR 7397 Transmittal 2437, April 4, 2012) until January 1, 2013 so that we could undertake rulemaking, evaluate public comments on this issue, and determine whether CR 7397 should be implemented as planned, revised, or rescinded.

Implanted pumps may qualify as Durable Medical Equipment (DME); however, unlike external pumps used to administer drugs, implanted pumps are typically refilled in a physician's office. The implanted intrathecal pump is refilled by injecting the drug into a pump's reservoir, which lies below the patient's skin. The reservoir is connected to the pump, which delivers the drug to the intrathecal space through a tunneled catheter. The procedure of refilling an intrathecal pain pump is a service that is typically performed by the physician because of risk and complexity.

To be covered by Medicare, an item or service must fall within one or more benefit categories within Part A or Part B, and must not be otherwise excluded from coverage. Drugs and biologicals paid under Medicare part B drugs fall into three basic categories as follows:

  • Drugs furnished “incident to” a physician's services: These are typically injectable drugs that are bought by the physician, administered in the physician's office and then billed by the physician to the Medicare Administrative Contractor (MAC).
  • Drugs administered through a covered item of DME: These drugs are supplies necessary for the effective use of DME and are typically furnished to the beneficiary by suppliers that are either pharmacies (or general DME suppliers that utilize licensed pharmacists) for administration in a setting other than the physician's office. Most DME drugs are billed to the DME MAC.
  • Drugs specified by the statute: Include a variety of drugs, such as oral immunosuppressives and certain vaccines.

Drugs used to refill an implanted intrathecal pump can be considered to be within either the “incident to” or the DME benefit category. The CMS Benefit Policy Manual (100-02 Chapter 15 Section 50.3) states that drugs paid under the “incident to” provision are of a form that is not usually self-administered; are furnished by a physician; and are administered by the physician, or by auxiliary personnel employed by the physician and under the physician's personal supervision. In what we believe is a typical situation, when physicians' services are used to refill an intrathecal pump, the “incident to” requirements can be met because, consistent with our guidance and longstanding policy, the physician or other professional employed by his or her office performs a procedure to inject the drug into the implanted pump's reservoir (that is, the drug is not self-administered) and the drug represents a cost to the physician because he or she has purchased it.

Conversely, we believe that in the typical situation, payment to a pharmacy or other nonphysician supplier under the DME benefit for a drug dispensed for use in the physician's office is both inappropriate and inconsistent with existing guidance. For example, DME prosthetics, orthotics, and supplies (POS) policy does not permit payment for prosthetics dispensed prior to a procedure. Moreover, in the case of prescription drugs used in conjunction with DME, our guidance is clear that the entity that dispenses the drug needs to furnish it directly to the patient for whom a prescription is written. We do not believe that an arrangement whereby a pharmacy (or supplier) ships a drug to a physician's office for administration to a patient constitutes furnishing the drug directly to the patient.

We note that payment to pharmacies (or suppliers) for drugs used to refill an implanted pump can be made under the DME benefit category where the drug is dispensed to a patient and the implanted pump is refilled without a physician's service. However, it is our understanding that implanted pumps are rarely refilled without utilizing the service of a physician.

We are concerned about stakeholders' reports that, due to guidance from a contractor, Medicare payment policy on this issue has been applied in an inconsistent manner. We consider the contractor's guidance to be erroneous. This inconsistency has permitted supplier claims for drugs dispensed by pharmacies to physicians' offices to be paid in some jurisdictions and has denied such payment in others. We understand that the inconsistent application of our payment policy has influenced the business and professional practices of pharmacies/DME suppliers that prepare drugs for implanted pumps. However, we do not believe that payment for drugs used to refill implanted DME should continue to be made because such action is not supported under long standing policy and, as discussed above, is not appropriate.

We therefore propose to clarify that we consider drugs used by a physician to refill an implantable item of DME to be within the “incident to” benefit category and not the DME benefit category. Therefore, the physician must buy and bill for the drug, and a non- physician supplier that has shipped the drug to the physician's office may not do so (except as may be permitted pursuant to a valid reassignment). We welcome comments on this proposal and its potential impact on beneficiaries and providers.

C. Durable Medical Equipment (DME) Face-to-Face Encounters and Written Orders Prior to Delivery

1. Background

Sections 1832, 1834, and 1861 of the Act establish that the provision of durable medical equipment, prosthetic, orthotics, and supplies (DMEPOS) is a covered benefit under Part B of the Medicare program.

Section 1834(a)(11)(B)(i) of the Act, as redesignated by the Affordable Care Act, authorizes us to require, for specified covered items, that payment may only be made under section 1834(a) of the Act if a physician has communicated to the supplier a written order for the item, before delivery of the item. Section 1834(h)(3) of the Act states that section 1834(a)(11) applies to prosthetic devices, orthotics, and prosthetics in the same manner as it applies to items of durable medical equipment (DME). In a December 7, 1992 final rule (57 FR 57675), we implemented this provision in § 410.38(g), for DME items and § 410.36(b) for prosthetic devices, orthotics, and prosthetics. Both of these sections state that as a requirement for payment, CMS, a carrier, or, more recently, a Medicare Administrative Contractor (MAC) may determine that an item of DME requires a written physician order before delivery. In addition to our regulations at § 410.38(g) and § 410.36(b), we have stated in Chapter 5, Section 5.2.3.1 of the Program Integrity Manual, that the following items require a written order prior to delivery: (1) Pressure reducing pads, mattress overlays, mattresses, and beds; (2) seatlift mechanisms; (3) transcutaneous electrical nerve stimulation (TENS) units; (4) power operated vehicles (POVs) and power wheelchairs.

Section 6407(b) of the Affordable Care Act amended section 1834(a)(11)(B) of the Act. It added language that requires a written order for certain items of DME, which under section 1834(h)(3) of the Act also could include prosthetic devices, orthotics, and prosthetics, to be issued per a physician documenting that a physician, a physician assistant (PA), a nurse practitioner (NP), or a clinical nurse specialist (CNS) has had a face-to-face encounter with the beneficiary. The encounter must occur during the 6 months prior to the written order for each item or during such other reasonable timeframe as specified by the Secretary.

2. Provisions of the Proposed Regulations

a. DME Face-to-Face Encounters

(1) General Requirements

We are proposing to first revise § 410.38(g) to require, as a condition of payment for certain covered items of DME, that a physician must have documented and communicated to the DME supplier that the physician or a PA, an NP, or a CNS has had a face-to-face encounter with the beneficiary no more than 90 days before the order is written or within 30 days after the order is written.

We make this proposal because we believe that a face-to-face encounter that occurs within 90 days prior to the written order for DME should be relevant to the reason for the beneficiary's need for the item of DME, and therefore, this face-to-face encounter should substantiate that the beneficiary's condition warrants the covered item of DME and be sufficient to meet the goals of this statutory requirement. However, we recognize that there may be circumstances when it may not be possible to meet this general requirement of “prior to the written order,” and that in such cases, beneficiary access to needed items must be protected. If a face-to-face encounter occurs within 90 days of the written order, but is not related to the condition warranting the need for the item of DME, or if the beneficiary has not seen the physician or PA, NP, or CNS within the 90 days prior to the written order, we propose to allow a face-to-face encounter up to and including 30 days after the order is written in order to ensure access to needed items.

During the face-to-face encounter the physician, a PA, a, NP, or a CNS must have evaluated the beneficiary, conducted a needs assessment for the beneficiary or treated the beneficiary for the medical condition that supports the need for each covered item of DME. As a matter of practice, this information would be part of the beneficiary's medical record, which identifies the practitioner who provided the face-to-face assessment. We believe that requiring a face-to-face encounter that supports the need for the covered item of DME would reduce the risk of fraud, waste, and abuse since these visits would help ensure that a beneficiary's condition warrants the covered item of DME.

Section 1834(a)(11)(B)(ii) of the Act, as amended by section 6407(b) of the Affordable Care Act states that a physician must document that the physician, a PA, a NP, or a CNS has had a face-to-face encounter (other than with respect to encounters that are incident to services involved) with the beneficiary. Incident to services are defined in section 1861(s)(2)(A) of the Act. Likewise, for the purpose of this regulation, a face-to-face encounter must be documented by a physician and any encounter that is covered as an “incident to” service does not satisfy the requirements of this regulation.

We note that a face-to-face encounter may be accomplished via a telehealth encounter if all Medicare telehealth requirements as defined under section 1834(m) of the Act and the implementing regulations in § 410.78 and § 414.65 are met. Specifically, Medicare telehealth services can only be furnished to an eligible telehealth beneficiary in an originating site. The requirements in this proposed rule do not supersede the requirements of telehealth and merely apply to the telehealth benefit where applicable. In general, originating sites must be located in a rural health professional shortage area (HPSA) or in a county outside of a metropolitan statistical area (MSA). The practitioner at the distant site may be a physician, PA, NP, or CNS, and the encounter must be reported with a healthcare procedure common coding system (HCPCS) code for a service on the list of approved Medicare telehealth services for the applicable year. In the May 5, 2010 Federal Register (76 FR 25550), we published a final rule that revised the conditions of participation (CoPs) for hospitals and critical access hospitals (CAHs). These revisions implement a new credentialing and privileging process for physicians and other practitioners providing telemedicine services. We refer readers to the CMS Web site for more information regarding telehealth services at http://www.cms.gov/Telehealth/.

A single face-to-face encounter, including those facilitated through the appropriate use of telehealth, can support the need for multiple covered items of DME as long as it is clearly documented in the pertinent medical record that the beneficiary was evaluated or treated for a condition that supports the need for each covered item of DME, during the specified period of time.

To promote the authenticity and comprehensiveness of the written order and as part of our efforts to reduce the risk of waste, fraud, and abuse, we propose that as a condition of payment a written order must include: (1) The beneficiary name; (2) the item of DME ordered; (3) prescribing practitioner NPI; (4) the signature of the prescribing practitioner; (5) the date of the order; (6) the diagnosis; and (7) necessary proper usage instructions, as applicable. Examples of necessary proper usage instruction could include duration of use, method of utilization, and correct positioning. We recognize that standards of practice may require that orders contain additional information. However, for purposes of this proposed rule, which is focused on implementing section 1834(a)(11)(B) of the Act and reducing fraud, waste, and abuse, an order without these minimum elements would be considered incomplete and would not support a claim for payment. We believe including this information on the written order would be a safeguard against waste, fraud, and abuse by promoting authenticity and comprehensiveness of the order by the practitioner.

Based on our commitment to the general principles of the President's Executive Order entitled “Improving Regulation and Regulatory Review” (released January 18, 2011) and to be consistent with other provisions in the amendments made by section 6407(a) of the Affordable Care Act and the provisions of section 6407 (d) of the Affordable Care Act as discussed above, we are proposing to require that the face-to-face encounter occur no earlier than 90 days prior to each written order for a covered item of DME or within 30 days after the order is written. This proposal is consistent with the Medicare and Medicaid home health face-to-face requirement which increases physician accountability and specifies a timeframe within the discretion of the Secretary. (For more information on the Medicare and Medicaid home health face-to-face requirements see the November 17, 2010 final rule (75 FR 70372) and the July 12, 2011 proposed rule (76 FR 41032) for Medicare and Medicaid respectively.) We have exercised our discretion to set a timeframe other than 6 months because we believe that our proposal strikes an appropriate balance among several factors: (1) The potential for fraud, waste, abuse associated with certain DME items; (2) the potential inconvenience and cost to practitioners and beneficiaries; and (3) potential health benefits to beneficiaries from increased practitioner involvement and more periodic reviews of their status and progress.

We perform ongoing education on many topics including the requirements of the other face-to-face provisions. This education includes, but is not limited to, various Medicare Learning Network® products such as MLN Matters® articles, brochures, fact sheets, Web-based training courses, and podcasts; Open Door forums; and national provider conference calls. Medicare is already working proactively with home health agencies, physicians, and other providers to educate them on implementing the face-to-face requirement. We plan to conduct similar provider education and outreach in implementing the DME face-to-face requirement.

As noted previously, section 1834(h)(3) of the Act adds prosthetic devices, orthotics, and prosthetics to the items encompassed by section 1834(a)(11)(B) of the Act. At this time, we are not proposing changes to § 410.36(b) to require documentation of a face-to-face encounter for prosthetic devices, orthotics, and prosthetics that, according to § 410.36(b), require a written order before delivery in this proposed rule. We intend to use future rulemaking to determine which prosthetic devices, orthotics, and prosthetics, require, as a condition of payment, a written order before delivery supported by documentation of a face-to-face encounter with the beneficiary consistent with section 1834(a)(11)(B)(ii) of the Act. We welcome comments on including prosthetic devices, orthotics, and prosthetics in future rulemaking, including any criteria that should be used for determining what items should require a written order before delivery supported by documentation of a face-to-face encounter.

This proposed requirement does not supersede any regulatory requirements that more specifically address a face-to-face encounter requirement for a particular item of DME. For example, § 410.38(c), which implemented section 1834(a)(1)(E)(iv) of the Act, specifically addresses prescription and face-to-face encounter requirements for power mobility devices (PMDs) and uses a 45-day period between the date of the face-to-face encounter and the date of the written order. That requirement is specific to the unique factors, including equipment expense and complex medical necessity determinations that affect PMDs.

(2) Physician Documentation

The statute requires that a physician document that the physician or a PA, NP or CNS has had a face-to-face encounter with the beneficiary. We propose that when the face-to-face encounter is performed by a physician, the submission of the pertinent portion(s) of the beneficiary's medical record, containing sufficient information to document that the face-to-face encounter meets our requirements, would be considered sufficient and valid documentation of the face-to-face encounter when submitted to the supplier and made available to CMS or its agents upon request. Some examples of pertinent parts of the beneficiary's medical record that can demonstrate that a face-to-face encounter has occurred can include: history; physical examination; diagnostic tests; summary of findings; diagnoses; treatment plans; or other information as appropriate. As an alternative, we are requesting comments on a second option for physicians to document the face-to-face encounter when it is performed by the physician, by requiring this physician documentation to be identical to what is required for a PA, a NP, or a CNS as discussed later in this section. We strive to find the option that strikes a balance between minimizing the effect on physicians, while still meeting the statutory objective to limit fraud, waste, and abuse.

(3) Physician Documentation of Face-to-Face Encounters Performed by a Physician Assistant, Nurse Practitioner, or Clinical Nurse Specialist

We are considering the following proposed options for physician documentation of a face-to-face encounter performed by a PA, NP, or CNS. We are reserving judgment as to which of these proposed options best accomplishes our goals until the final regulation and have not provided language reflecting these options in the proposed regulations text. The options are as follows:

  • Option 1: Attestation stating: “I, Doctor (Name) (NPI number) have reviewed the medical record and attest that (PA, NP or CNS) has performed a face-to-face encounter with (beneficiary) on (date) and evaluated the need for (the item of DME).” (Sign) (Date). This option would provide all the needed information to document that a face-to-face encounter has occurred between the PA, NP or CNS and the beneficiary in a standardized manner. However, this attestation would not eliminate the need for the medical record to support the medical necessity of the ordered item. The attestation serves only as physician documentation of the face-to-face encounter.
  • Option 2: The physician signs or cosigns the pertinent portion of the medical record, for the beneficiary for the date of the face-to-face encounter, thereby documenting that the beneficiary was evaluated or treated for a condition relevant to an item of DME on that date of service. This option would provide evidence that the physician has reviewed the relevant documentation to support that a face-to-face encounter occurred for that date of service. A signed order by the physician alone would not satisfy the requirement described in this option that the physician “sign/cosign the pertinent portion of the medical record.”
  • Option 3: The physician specifically initials the history and physical examination for the beneficiary for the date of the face-to-face encounter, thereby documenting that the beneficiary was evaluated or treated for a condition relevant to an item of DME on that date of service. This option would provide evidence that the physician has reviewed the relevant documentation to support that a face-to-face encounter occurred for that date of service. A signed order would not satisfy the requirement described in this option that the physician “initial the history and physical examination for the beneficiary for the date of the face-to-face encounter”.

We welcome comment on how physician documentation requirements should be handled when the face-to-face encounter with the beneficiary is conducted by a PA, a NP, or a CNS. We are looking for the alternative that best accomplishes the objective of reducing waste, fraud, and abuse by having a physician document the face-to-face encounter if it is performed by a PA, NP, or CNS without creating undue impact.

(4) Supplier Notification

Since the supplier submits the claims for the covered items of DME, the supplier must have access to the documentation of the face-to-face encounter. We welcome comment on the type of communication that should occur between the physician or PA, NP, or CNS, and the supplier. All documentation to support the appropriateness of the item of DME ordered including documentation of the face-to-face encounter, must be available to the supplier. As with all items and services, we require both the ordering practitioner and the supplier to maintain access to the written order and supporting documentation relating to written orders for covered items of DME and provide them to us upon our request or at the request of our contractors.

We are considering adding one of the following proposed options on how documentation of the face-to-face encounter must be delivered to the supplier. We are reserving judgment on these proposed options until the final regulation. The options are as follows:

  • Option 1: Require the practitioner who wrote the order to provide the physician documentation of the face-to-face encounter directly to the DME supplier. This option may increase practitioner accountability, since it requires practitioners to submit the required documentation to the supplier.
  • Option 2: Require the physician who completes the documentation of the face-to-face encounter to provide that documentation directly to the DME supplier. This option is consistent with current policies where the entity who submits the claims collects the necessary documentation even if it comes from multiple sources. For example, the supplier must have access to all documentation necessary to support the claim upon request.
  • Option 3: Require that the documentation, no matter who completes it, be provided to the DME supplier through the same process as the written order for the covered item of DME. The option ensures that the same pathway followed for the order is also followed for the face-to-face documentation. In most circumstances, we would expect the order and the face-to-face documentation to travel together, the exception being those circumstances where the face-to-face encounter was conducted after the order.
  • Option 4: Require a physician to provide a copy of the face-to-face documentation to the beneficiary for the beneficiary to deliver to the DME supplier of his or her choice. This would ensure that the supplier receives the documentation of the face-to-face encounter directly and limits the supplier's need to rely on the PA, NP, or CNS to receive this documentation completed by the physician.

We welcome comment on these options in order to facilitate open communication and enhanced coordination of documentation of a face-to-face encounter between the supplier, physician or when applicable, the PA, NP or CNS.

b. Covered Items

Section 1834(a)(11)(B)(i) of the Act (as redesignated by the Affordable Care Act authorizes us to specify covered items that require a written order prior to delivery of the item. Under section 1834(a)(11)(B)(ii) of the Act, these orders must be written pursuant to a physician documenting that a face-to-face encounter has occurred. Accordingly, to reduce the risk of fraud, waste, and abuse, we are proposing a list of Specified Covered Items that would require a written order prior to delivery. Our proposed list of Specified Covered Items is below. In future years, updates to this list would appear annually in the Federal Register and the full updated list would be available on the CMS Web site.

As highlighted in the January 2007 Government Accountability Office (GAO) report entitled, “Improvements Needed to Address Improper Payments for Medical Equipment and Supplies” it is estimated that there were $700 million in improper payments across the spectrum of DMEPOS from April 1, 2005, through March 31, 2006. GAO did not specifically recommend the use of DME face-to-face encounters as a remedial action in its report. However, the GAO did recommend making improvements to address improper payments in the DMEPOS arena. This proposed rule is one way in which we are working to prevent improper payments.

Though we initially considered making all items encompassed by section 1834(a)(11)(B) of the Act (including prosthetic and orthotic items described in section 1834(h)(3) of the Act) subject to a face-to-face encounter requirement, we have first proposed a more limited criteria driven list to balance what we believe to be broad statutory intent to establish a face-to-face requirement to prevent waste, fraud, and abuse with concerns that including all items could have an undue negative effect on practitioners and suppliers. We welcome comment on limiting the associated burden of this proposed rule by refining the number of items subject to a face-to-face encounter, while still protecting the Medicare Trust Funds.

In this section of the proposed rule, we describe our proposed criteria, as well as the reasons we selected these criteria. We first note that our proposed list of Specified Covered Items contains DME items only. We intend to use future rulemaking to apply section 1834(a)(11)(B)(ii) of the Act to prosthetics and orthotics. We believe that our proposed current focus on DME items is an appropriate way of balancing our goals of reducing waste, fraud, and abuse and limiting burden on beneficiaries and the supplier community.

We propose to focus initially on DME items for several reasons. First, these items are often marketed directly to beneficiaries and requiring a face-to-face encounter would help ensure that a practitioner has met with the beneficiary and considered whether the item is appropriate. Additionally, requiring a face-to-face encounter would help ensure that practitioners who order DME items are familiar with the beneficiary's medical condition, that this condition is documented, and that the item is reasonable and necessary. Although we are also concerned about fraud, waste, and abuse associated with prosthetics and prosthetic devices, these items are, as stated in the Medicare Claims Processing Manual Chapter 20 (Section 10.1.2) “devices that replace all or part of an internal body organ or replace all or part of the function of a permanently inoperative or malfunctioning internal body organ.” The body member that is being replaced by the prosthetic device can often be identified based on previous claims history. We will consider this separately as there may be different burden issues and other considerations that apply. Therefore we are not pursuing a face-to-face requirement on these items at this time. Further, since orthotics are treated in a manner similar to prosthetics for billing and coverage purposes, in order to apply consistent criteria these items will be considered together for future rulemaking.

We welcome comment on limiting the associated burden of this proposed regulation by refining the number of items subject to a face-to-face encounter, while still protecting the Medicare Trust Funds and also meeting the requirements of the statute.

The proposed list of Specified Covered Items contains items that meet at least one of the following four criteria: (1) Items that currently require a written order prior to delivery per instructions in our Program Integrity Manual; (2) items that cost more than $1,000; (3) items that we, based on our experience and recommendations from the DME MACs, believe are particularly susceptible to fraud, waste, and abuse; (4) items determined by CMS as vulnerable to fraud, waste and abuse based on reports of the HHS Office of Inspector General, Government Accountability Office or other oversight entities.

We are proposing to include items already listed in the Program Integrity Manual (PIM), Chapter 5, section 5.2.3.1. These items were added to the PIM originally since they were seen as posing vulnerabilities to the Medicare program that could be mitigated through requiring a written order prior to delivery. We believe that requiring a face-to-face encounter is consistent with our previous initiatives and strengthens our efforts to address this vulnerability.

We are also proposing to include any items of DME with a price ceiling greater than or equal to $1,000 in the price ceiling column on the DMEPOS Fee Schedule, which is updated annually and lists Medicare allowable pricing for DME. We believe that improper claims related to these high dollar items have a greater effect on the Medicare Trust Funds based on amounts paid by Medicare for these items. Therefore, any items that are $1,000 or greater would be added annually to the list of Specified Covered Items on a prospective basis. For administrative simplicity we would not annually adjust this value for inflation, any changes to this threshold will go through rulemaking. We see this price point as striking a balance between our responsibility to protect the Medicare Trust Funds and ensuring these requirements do not place an additional burden on beneficiaries, practitioners, and suppliers. Our objective is to minimize inappropriate use of high dollar DME items to help protect and preserve the Medicare Trust Funds.

The third criterion added items that we believe, based on our experience and recommendations from our DME Medicare MACs are particularly susceptible to fraud, waste, and abuse. Based on their experience, the DME MACs suggested items that warrant increased practitioner involvement because these items are often marketed directly to beneficiaries, thus highlighting the important role of the practitioner in conducting a needs assessment, evaluating, or treating the beneficiary to ensure that his/her condition warrants the item. The evaluations may assist in ensuring that the DME items are medically necessary for the beneficiary. Increasing the practitioner's role in evaluating the beneficiary's need for such items, would help ensure proper ordering of DME items, thereby minimizing the risk of waste, fraud, and abuse. The items recommended by the DME contractors were pressure reducing pads, mattress overlays, mattress, beds, seat lift mechanisms, TENS units, AEDs, external infusion pumps, glucose monitors, wheelchairs and wheelchair accessories, nebulizers, negative pressure wound therapy pumps, oxygen and oxygen equipment, pneumatic compression devices, positive airway pressure devices, respiratory assists devices, and cervical traction devices.

This criterion was also influenced by our experience with the Health Care Fraud and Prevention and Enforcement Action Teams (HEAT). These teams were established by HHS and the Department of Justice (DOJ) to investigate, among other things, fraudulent DME suppliers and have recovered millions of dollars in DME fraud. The HEAT strike force teams, which are now in nine cities nationwide, have assisted in investigating and prosecuting DME suppliers who were fraudulently seeking payment for DME items and services. HEAT investigations have resulted in indictments against DME suppliers relating to the following items: pressure reducing mattresses, oxygen equipment, manual wheelchairs, hospital beds, infusion supplies, and nebulizers. Further information about DME fraud by State is available at www.stopmedicarefraud.gov.

We are also proposing the inclusion of certain items of DME on the list of Specified Covered Items because OIG has expressed concerns (as expressed in DHHS-OIG reports since 1999) that these items are vulnerable to fraud, waste and abuse. These reports detailed vulnerabilities and called for CMS to address these issues. For example, in an OIG Report entitled “Inappropriate Medicare Payments for Pressure Reducing Support Surfaces” (OEI-02-07-00420), the OIG noted as a vulnerability the fact that the vast majority of pressure reducing pads that were billed failed to meet the coverage criteria. Home oxygen therapy was highlighted as a vulnerability in the OIG Report entitled “Usage and Documentation of Home Oxygen Therapy” (OEI-03-96-00090). Documentation and communication problems associated with negative pressure wound therapy pumps were highlighted in a report titled “Comparison of Prices for Negative Pressure Wound Therapy Pumps” (OEI-02-07-00660). As the OIG explained in that report, “[s]uppliers are required to communicate with the beneficiary's treating clinician to assess wound healing progress and to determine whether the beneficiary continues to qualify for Medicare coverage of the pump * * * [S]uppliers reported not having contact with clinicians for almost one-quarter of the beneficiaries.”

Our proposed list of Specified Covered Items is in Table 24 of this proposed rule. We further propose to update this list of Specified Covered Items annually in order to add any new items that are described by a HCPCS code for the following types of DME:

  • TENS unit
  • Rollabout chair
  • Manual Wheelchair accessories
  • Oxygen and respiratory equipment
  • Hospital beds and accessories
  • Traction-cervical

Note that the proposed list does not include power mobility devices, which are subject to already existing face-to-face requirements, as previously discussed. In addition, we propose to add to the list any item of DME that in the future appears on the DMEPOS Fee Schedule with a price ceiling at or greater than $1,000. Items not included in one of the proposed automatic pathways would be added to the list of Specified Covered Items through notice and comment rulemaking.

Through updates in the Federal Register, we propose removing HCPCS codes from the list that are no longer covered by Medicare or that are discontinued HCPCS codes.

Table 24—DME List of Specified Covered Items Back to Top
HCPCS Code Description
E0185 Gel or gel-like pressure mattress pad.
E0188 Synthetic sheepskin pad.
E0189 Lamb's wool sheepskin pad.
E0194 Air fluidized bed.
E0197 Air pressure pad for mattress standard length and width.
E0198 Water pressure pad for mattress standard length and width.
E0199 Dry pressure pad for mattress standard length and width.
E0250 Hospital bed fixed height with any type of side rails, mattress.
E0251 Hospital bed fixed height with any type side rails without mattress.
E0255 Hospital bed variable height with any type side rails with mattress.
E0256 Hospital bed variable height with any type side rails without mattress.
E0260 Hospital bed semi-electric (Head and foot adjustment) with any type side rails with mattress.
E0261 Hospital bed semi-electric (head and foot adjustment) with any type side rails without mattress.
E0265 Hospital bed total electric (head, foot and height adjustments) with any type side rails with mattress.
E0266 Hospital bed total electric (head, foot and height adjustments) with any type side rails without mattress.
E0290 Hospital bed fixed height without rails with mattress.
E0291 Hospital bed fixed height without rail without mattress.
E0292 Hospital bed variable height without rail without mattress.
E0293 Hospital bed variable height without rail with mattress.
E0294 Hospital bed semi-electric (head and foot adjustment) without rail with mattress.
E0295 Hospital bed semi-electric (head and foot adjustment) without rail without mattress.
E0296 Hospital bed total electric (head, foot and height adjustments) without rail with mattress.
E0297 Hospital bed total electric (head, foot and height adjustments) without rail without mattress.
E0300 Pediatric crib, hospital grade, fully enclosed.
E0301 Hospital bed Heavy Duty extra wide, with weight capacity 350-600 lbs with any type of rail, without mattress.
E0302 Hospital bed Heavy Duty extra wide, with weight capacity greater than 600 lbs with any type of rail, without mattress.
E0303 Hospital bed Heavy Duty extra wide, with weight capacity 350-600 lbs with any type of rail, with mattress.
E0304 Hospital bed Heavy Duty extra wide, with weight capacity greater than 600 lbs with any type of rail, with mattress.
E0424 Stationary compressed gas Oxygen System rental; includes contents, regulator, nebulizer, cannula or mask and tubing.
E0431 Portable gaseous oxygen system rental includes portable container, regulator, flowmeter, humidifier, cannula or mask, and tubing.
E0433 Portable liquid oxygen system.
E0434 Portable liquid oxygen system, rental; includes portable container, supply reservoir, humidifier, flowmeter, refill adaptor, content gauge, cannula or mask, and tubing.
E0439 Stationary liquid oxygen system rental, includes container, contents, regulator, flowmeter, humidifier, nebulizer, cannula or mask, and tubing.
E0441 Oxygen contents, gaseous (1 months supply).
E0442 Oxygen contents, liquid (1 months supply).
E0443 Portable Oxygen contents, gas (1 months supply).
E0444 Portable oxygen contents, liquid (1 months supply).
E0450 Volume control ventilator without pressure support used with invasive interface.
E0457 Chest shell.
E0459 Chest wrap.
E0460 Negative pressure ventilator portable or stationary.
E0461 Volume control ventilator without pressure support node for a noninvasive interface.
E0462 Rocking bed with or without side rail.
E0463 Pressure support ventilator with volume control mode used for invasive surfaces.
E0464 Pressure support vent with volume control mode used for noninvasive surfaces.
E0470 Respiratory Assist Device, bi-level pressure capability, without backup rate used non-invasive interface.
E0471 Respiratory Assist Device, bi-level pressure capability, with backup rate for a non-invasive interface.
E0472 Respiratory Assist Device, bi-level pressure capability, with backup rate for invasive interface.
E0480 Percussor electric/pneumatic home model.
E0482 Cough stimulating device, alternating positive and negative airway pressure.
E0483 High Frequency chest wall oscillation air pulse generator system.
E0484 Oscillatory positive expiratory device, non-electric.
E0570 Nebulizer with compressor.
E0575 Nebulizer, ultrasonic, large volume.
E0580 Nebulizer, durable, glass or autoclavable plastic, bottle type for use with regulator or flowmeter.
E0585 Nebulizer with compressor & heater.
E0601 Continuous airway pressure device.
E0607 Home blood glucose monitor.
E0627 Seat lift mechanism incorporated lift-chair.
E0628 Separate seat lift mechanism for patient owned furniture electric.
E0629 Separate seat lift mechanism for patient owned furniture non-electric.
E0636 Multi positional patient support system, with integrated lift, patient accessible controls.
E0650 Pneumatic compressor non-segmental home model.
E0651 Pneumatic compressor segmental home model without calibrated gradient pressure.
E0652 Pneumatic compressor segmental home model with calibrated gradient pressure.
E0655 Non-segmental pneumatic appliance for use with pneumatic compressor on half arm.
E0656 Non-segmental pneumatic appliance for use with pneumatic compressor on trunk.
E0657 Non-segmental pneumatic appliance for use with pneumatic compressor chest.
E0660 Non-segmental pneumatic appliance for use with pneumatic compressor on full leg.
E0665 Non-segmental pneumatic appliance for use with pneumatic compressor on full arm.
E0666 Non-segmental pneumatic appliance for use with pneumatic compressor on half leg.
E0667 Segmental pneumatic appliance for use with pneumatic compressor on full-leg.
E0668 Segmental pneumatic appliance for use with pneumatic compressor on full arm.
E0669 Segmental pneumatic appliance for use with pneumatic compressor on half leg.
E0671 Segmental gradient pressure pneumatic appliance full leg.
E0672 Segmental gradient pressure pneumatic appliance full arm.
E0673 Segmental gradient pressure pneumatic appliance half leg.
E0675 Pneumatic compression device, high pressure, rapid inflation/deflation cycle, for arterial insufficiency.
E0692 Ultraviolet light therapy system panel treatment 4 foot panel.
E0693 Ultraviolet light therapy system panel treatment 6 foot panel.
E0694 Ultraviolet multidirectional light therapy system in 6 foot cabinet.
E0720 Transcutaneous electrical nerve stimulation, two lead, local stimulation.
E0730 Transcutaneous electrical nerve stimulation, four or more leads, for multiple nerve stimulation.
E0731 Form fitting conductive garment for delivery of TENS or NMES.
E0740 Incontinence treatment system, Pelvic floor stimulator, monitor, sensor, and/or trainer.
E0744 Neuromuscular stimulator for scoliosis.
E0745 Neuromuscular stimulator electric shock unit.
E0747 Osteogenesis stimulator, electrical, non-invasive, other than spine application.
E0748 Osteogenesis stimulator, electrical, non-invasive, spinal application.
E0749 Osteogenesis stimulator, electrical, surgically implanted.
E0760 Osteogenesis stimulator, low intensity ultrasound, non-invasive.
E0762 Transcutaneous electrical joint stimulation system including all accessories.
E0764 Functional neuromuscular stimulator, transcutaneous stimulations of muscles of ambulation with computer controls.
E0765 FDA approved nerve stimulator for treatment of nausea & vomiting.
E0782 Infusion pumps, implantable, Non-programmable.
E0783 Infusion pump, implantable, Programmable.
E0784 External ambulatory infusion pump.
E0786 Implantable programmable infusion pump, replacement.
E0840 Tract frame attach to headboard, cervical traction.
E0849 Traction equipment cervical, free-standing stand/frame, pneumatic, applying traction force to other than mandible.
E0850 Traction stand, free standing, cervical traction.
E0855 Cervical traction equipment not requiring additional stand or frame.
E0856 Cervical traction device, cervical collar with inflatable air bladder.
E0958 Manual wheelchair accessory, one-arm drive attachment.
E0959 Manual wheelchair accessory-adapter for Amputee.
E0960 Manual wheelchair accessory, shoulder harness/strap.
E0961 Manual wheelchair accessory wheel lock brake extension handle.
E0966 Manual wheelchair accessory, headrest extension.
E0967 Manual wheelchair accessory, hand rim with projections.
E0968 Commode seat, wheelchair.
E0969 Narrowing device wheelchair.
E0971 Manual wheelchair accessory anti-tipping device.
E0973 Manual wheelchair accessory, adjustable height, detachable armrest.
E0974 Manual wheelchair accessory anti-rollback device.
E0978 Manual wheelchair accessory positioning belt/safety belt/pelvic strap.
E0980 Manual wheelchair accessory safety vest.
E0981 Manual wheelchair accessory Seat upholstery, replacement only.
E0982 Manual wheelchair accessory, back upholstery, replacement only.
E0983 Manual wheelchair accessory power add on to convert manual wheelchair to motorized wheelchair, joystick control.
E0984 Manual wheelchair accessory power add on to convert manual wheelchair to motorized wheelchair, Tiller control.
E0985 Wheelchair accessory, seat lift mechanism.
E0986 Manual wheelchair accessory, push activated power assist.
E0990 Manual wheelchair accessory, elevating leg rest.
E0992 Manual wheelchair accessory, elevating leg rest solid seat insert.
E0994 Arm rest.
E0995 Wheelchair accessory calf rest.
E1002 Wheelchair accessory Power seating system, tilt only.
E1003 Wheelchair accessory Power seating system, recline only without shear.
E1004 Wheelchair accessory Power seating system, recline only with mechanical shear.
E1005 Wheelchair accessory Power seating system, recline only with power shear.
E1006 Wheelchair accessory Power seating system, tilt and recline without shear.
E1007 Wheelchair accessory Power seating system, tilt and recline with mechanical shear.
E1008 Wheelchair accessory Power seating system, tilt and recline with power shear.
E1010 Wheelchair accessory, addition to power seating system, power leg elevation system, including leg rest pair.
E1014 Reclining back, addition to pediatric size wheelchair.
E1015 Shock absorber for manual wheelchair.
E1020 Residual limb support system for wheelchair.
E1028 Wheelchair accessory, manual swing away, retractable or removable mounting hardware for joystick, other control interface or positioning accessory.
E1029 Wheelchair accessory, ventilator tray.
E1030 Wheelchair accessory, ventilator tray, gimbaled.
E1031 Rollabout chair, any and all types with castors 5″ or greater.
E1035 Multi-positional patient transfer system with integrated seat operated by care giver.
E1036 Patient transfer system.
E1037 Transport chair, pediatric size.
E1038 Transport chair, adult size up to 300 lb.
E1039 Transport chair, adult size heavy duty >300 lb.
E1161 Manual Adult size wheelchair includes tilt in space.
E1227 Special height arm for wheelchair.
E1228 Special back height for wheelchair.
E1232 Wheelchair, pediatric size, tilt-in-space, folding, adjustable with seating system.
E1233 Wheelchair, pediatric size, tilt-in-space, folding, adjustable without seating system.
E1234 Wheelchair, pediatric size, tilt-in-space, folding, adjustable without seating system.
E1235 Wheelchair, pediatric size, rigid, adjustable, with seating system.
E1236 Wheelchair, pediatric size, folding, adjustable, with seating system.
E1237 Wheelchair, pediatric size, rigid, adjustable, without seating system.
E1238 Wheelchair, pediatric size, folding, adjustable, without seating system.
E1296 Special sized wheelchair seat height.
E1297 Special sized wheelchair seat depth by upholstery.
E1298 Special sized wheelchair seat depth and/or width by construction.
E1310 Whirlpool non-portable.
E2502 Speech Generating Devices prerecord messages between 8 and 20 minutes.
E2506 Speech Generating Devices prerecord messages over 40 minutes.
E2508 Speech Generating Devices message through spelling, manual type.
E2510 Speech Generating Devices synthesized with multiple message methods.
E2227 Rigid pediatric wheelchair adjustable.
K0001 Standard wheelchair.
K0002 Standard hemi (low seat) wheelchair.
K0003 Lightweight wheelchair.
K0004 High strength ltwt wheelchair.
K0005 Ultra Lightweight wheelchair.
K0006 Heavy duty wheelchair.
K0007 Extra heavy duty wheelchair.
K0009 Other manual wheelchair/base.
K0606 AED garment with electronic analysis.
K0730 Controlled dose inhalation drug delivery system.

c. Physician Payment

We understand that there is a burden associated with the requirement placed on the physician to document that a face-to-face encounter has occurred between a PA, a NP or a CNS, and the beneficiary. Accordingly, we are proposing the introduction of a G-code, estimated at $15, to compensate a physician who documented that a PA, a NP, or a CNS practitioner has performed a face-to-face encounter for the list of specified covered items above. This G-code would become effective when this provision becomes effective. We believe that the existing Evaluation and Management (E&M) codes are sufficient for practitioners performing face-to-face encounters. This new G-code would be specifically designed and mapped only for a physician who completes the documentation of the face-to-face encounter performed by a PA, a NP, or a CNS. Only a physician who does not bill an E&M code for the beneficiary in question would be eligible for this G-code. If multiple written orders for covered items of DME originate from one visit, the physician can receive the G-code payment only once for documenting that the face-to-face encounter has occurred. The G-code would be mapped so that only eligible DME items would be covered. Upon request, we will need to see documentation of the face-to-face encounter in order to verify the appropriateness of the G-code payment.

D. Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review (§ 421.500 Through § 421.505)

Medical review is the process performed by Medicare contractors to ensure that billed items or services are covered and are reasonable and necessary as specified under section 1862(a)(1)(A) of the Act. We enter into contractual agreements with contractors to perform medical review functions. On December 8, 2003, the Congress enacted the MMA. Section 934 of the MMA amended section 1874A of the Act by adding a new subsection (h)—regarding random prepayment reviews and non-random prepayment complex medical reviews and requiring us to establish termination dates for non-random prepayment complex medical reviews. Although section 934 of the MMA set forth requirements for random prepayment review, our contractors do not perform random prepayment review. However, our contractors do perform non-random prepayment complex medical review.

On September 26, 2008, we published a final rule in the Federal Register (73 FR 55753) entitled, “Medicare Program; Termination of Non-Random Prepayment Complex Medical Review” that specified the criteria contractors would use for the termination of providers and suppliers from non-random prepayment complex medical review as required under the MMA. The final rule required contractors to terminate the non-random prepayment complex medical review of a provider or supplier no later than 1 year following the initiation of the complex medical review or when calculation of the error rate indicates the provider or supplier has reduced its initial error rate by 70 percent or more. (For more detailed information, see the September 26, 2008 final rule (73 FR 55753)).

On March 23, 2010, the Congress enacted the Patient Protection and Affordable Care Act (Pub. L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (HCERA) (Pub. L. 111-152) (together known as the Affordable Care Act). Section 1302 of the HCERA, repealed section 1874A(h) of the Act.

Section 1302 of the HCERA repealed section 1874A (h) of the Act, and therefore, removed the statutory basis for our regulation. Thus, we propose to remove the regulatory provisions in 42 CFR part 421, subpart F, that require contractors to terminate a provider or supplier from non-random prepayment complex medical review no later than 1 year following the initiation of the medical review or when the provider or supplier has reduced its initial error rate by 70 percent or more. As a result of this proposal, contractors would not be required to terminate non-random prepayment medical review by a prescribed time but would instead terminate each medical review when the provider or supplier has met all Medicare billing requirements as evidenced by an acceptable error rate as determined by the contractor.

E. Ambulance Coverage-Physician Certification Statement

We propose to revise § 410.40(d)(2) by incorporating nearly the same provision found at § 410.40(d)(3)(v) to clarify that a physician certification statement (PCS) does not, in and of itself, demonstrate that a nonemergency, scheduled, repetitive ambulance service is medically necessary for Medicare coverage. The Medicare ambulance benefit at section 1861(s)(7) of the Act allows for “ambulance service where the use of other methods of transportation is contraindicated by the individual's condition, but * * * only to the extent provided in regulations.” In other words, the definition of the benefit itself embodies the clinical medical necessity requirement that other forms of transportation must be contraindicated by a beneficiary's condition. Section 410.40(d) interprets the medical necessity requirement. Notably, even aside from the requirements of section 1861(s)(7), section 1862(a)(1)(A) of the Act dictates that any service that is not medically necessary under the Act and regulations is not a covered benefit.

Despite these statutory provisions and the language of the present regulation at section 410.40(d)(2) that we believe already requires both medical necessity and a PCS, some courts have recently concluded that § 410.40(d)(2) establishes that a sufficiently detailed and timely order from a beneficiary's physician, to the exclusion of any other medical necessity requirements, conclusively demonstrates medical necessity with respect to nonemergency, scheduled, repetitive ambulance services.

Absent explicit statutorily-based exceptions, we have consistently maintained that the Secretary is the final arbiter of whether a service is reasonable and necessary and qualifies for Medicare coverage. For example, in HCFA Ruling 93-1, we said “[i]t is HCFA's ruling that no presumptive weight should be assigned to the treating physician's medical opinion in determining the medical necessity of inpatient hospital or SNF services under section 1862(a)(1) of the Act. A physician's opinion will be evaluated in the context of the evidence in the complete administrative record. Even though a physician's certification is required for payment, coverage decisions are not made based solely on this certification; they are made based on objective medical information about the patient's condition and the services received. This information is available from the claims form and, when necessary, the medical record which includes the physician's certification.”

Medical necessity is not just an integral requirement of Medicare's ambulance benefit in particular, but as we mentioned, section 1862(a)(1)(A) of the Act dictates that services must be reasonable and necessary to qualify for any Medicare coverage. Numerous U.S. Circuit Courts of Appeal have held that PCSs or certificates of medical necessity do not, in and of themselves, conclusively demonstrate medical necessity. The same applies in the context of nonemergency, scheduled, repetitive ambulance services—the PCS is not, in and of itself, the sole determinant of medical necessity, and, as we discuss below, we believe the existing regulation at § 410.40(d)(2) already demonstrates that. To erase any doubt, however, we propose a revision to § 410.40(d)(2) to explicitly clarify this principle.

Since being finalized in the February 27, 2002 Federal Register (67 FR 9100, 9132), § 410.40(d)(2) has stated that “Medicare covers medically necessary nonemergency, scheduled, repetitive ambulance services if the ambulance provider or supplier, before furnishing the service to the beneficiary, obtains a written order from the beneficiary's attending physician certifying that the medical necessity requirements of paragraph (d)(1) of this section are met.” (emphasis added). Although a physician certifies with respect to medical necessity, the Secretary is the final arbiter of whether a service is medically necessary for Medicare coverage. Indeed, the phrase “medically necessary” would have been surplus had we intended the PCS to be the sole determinant of medical necessity. Rather, as demonstrated by the fact that we did include that phrase, and by various other clarifying points, we made clear that a PCS, while necessary, does not on its own conclusively demonstrate the medical necessity of nonemergency, scheduled, repetitive ambulance services.

The preamble to the February 27, 2002 final rule (Medicare Program; Fee Schedule for Payment of Ambulance Services and Revisions to the Physician Certification Requirements for Coverage of Nonemergency ambulance Services (67 FR 9100)) and the 1999 final rule with comment (FRC) (Medicare Program; Coverage of Ambulance Services and Vehicle and Staff Requirements (64 FR 3637)) support this interpretation.

For example, in describing comments regarding medical necessity and physician certification in the 1999 FRC, we said: “[t]wo ambulance suppliers commented that physicians are unaware of the coverage requirements for ambulance services and that their decisions to request ambulance services may be based on `family preference or the inability to safely transport the beneficiary by other means rather than on the medical necessity requirement imposed by Medicare.'” We responded that section 1861(s)(7) of the Act allows coverage only under certain limited circumstances, and suggested that “[t]o facilitate awareness of the Medicare rules as they relate to the ambulance service benefit, ambulance suppliers may need to educate the physician (or the physician's staff members) when making arrangements for the ambulance transportation of a beneficiary.” We continued that “[s]uppliers may wish to furnish an explanation of applicable medical necessity requirements, as well as requirements for physician certification, and to explain that the certification statement should indicate that the ambulance services being requested by the attending physician are medically necessary.” (76 FR 3637, 3641) In light of our acknowledging a significant program vulnerability—that the physicians writing PCSs might not be fully cognizant of the Medicare ambulance benefit's medical necessity requirements—and encouraging suppliers themselves to help remedy that by educating physicians, it would have been irrational of us to (and we did not) abrogate the Secretary's judgment and vest exclusively in the PCS the authority to demonstrate an ambulance transport's medical necessity. We made a similar point in response to a separate comment: “It is always the responsibility of the ambulance supplier to furnish complete and accurate documentation to demonstrate that the ambulance service being furnished meets the medical necessity criteria.” (76 FR 3637, 3639).

In the section of the February 27, 2002 final rule preamble describing the PCS requirements, we said: “[i]n all cases, the appropriate documentation must be kept on file and, upon request, presented to the carrier or intermediary. It is important to note that the presence of the signed physician certification statement does not necessarily demonstrate that the transport was medically necessary. The ambulance supplier must meet all coverage criteria for payment to be made.” (67 FR 9100, 9111). Although we incorporated that passage into the final rule only at § 410.40(d)(3)(v), we intended, and we believe our intent is clear from the preamble narrative, that the principle apply equally to all nonemergency ambulance transports.

The OIG report titled “Medicare Payments for Ambulance Transports” (OEI-05-02-00590) (January 2006) also supports our position. Based on its analysis of a sample of calendar year 2002 claims, the OIG reported that “27 percent of ambulance transports to or from dialysis facilities did not meet Medicare's coverage criteria.” The OIG added “the ongoing and repetitive nature of dialysis treatment makes transports to and from such treatment vulnerable to abuse. Although the condition of some patients warrants repetitive, scheduled ambulance transports for dialysis treatment, many dialysis transports do not meet coverage criteria.” The OIG recommended that we instruct our contractors to implement prepayment edits with respect to dialysis transports and have them request wide-ranging documents when conducting postpayment medical review. The fact that we agreed with the OIG's recommendations demonstrated our belief that the PCS was not the sole determinant of medical necessity. Likewise, the fact that the OIG mentioned our ambulance coverage regulations, including the PCS requirement, but did not recommend altering or clarifying the regulations with respect to medical necessity demonstrated that we were of like mind; that, while a physician certifies with respect to medical necessity, the Secretary is the final arbiter of whether a service is medically necessary.

Accordingly, we propose to revise § 410.40(d)(2) to add nearly the same provision presently found at § 410.40(d)(3)(v), except without reference to a “signed return receipt” that does not pertain to nonemergency, scheduled, repetitive ambulance services. We propose to accomplish this by redesignating the current language as § 410.40(d)(2)(i), and adding the clarifying language to a new § 410.40(d)(2)(ii). The proposed § 410.40(d)(2)(ii) clarifies that a signed physician certification statement does not, in and of itself, demonstrate that an ambulance transport was reasonable and necessary. Rather, for all ambulance services, providers and suppliers must retain on file all appropriate documentation and present such documentation upon request to a Medicare contractor. A CMS contractor may use such documentation to assess, among other things, whether the service satisfied Medicare's medical necessity, eligibility, coverage, benefit category, or any other criteria necessary for Medicare payment to be made. For example, the patient's condition must be such that other means of transportation would be contraindicated, and the expenses incurred must be reasonable and necessary for the diagnosis or treatment of illness or injury.

We also propose to fix the typographical error “fro,” which should be “from” in the existing § 410.40(c)(3)(ii).

F. Physician Compare Web Site

1. Background and Statutory Authority

Section 10331(a)(1) of the Affordable Care Act requires that, by no later than January 1, 2011, we develop a Physician Compare Internet Web site with information on physicians enrolled in the Medicare program under section 1866(j) of the Act, as well as information on other eligible professionals who participate in the Physician Quality Reporting System under section 1848 of the Act.

We launched the first phase of the Physician Compare Internet Web site (http://www.medicare.gov/find-a-doctor/provider-search.aspx) on December 30, 2010. This initial phase included the posting of the names of eligible professionals that satisfactorily submitted quality data for the 2009 Physician Quality Reporting System, consistent with section 1848(m)(5)(G) of the Act. Since the initial launch of the Web site, we have continued to build and improve Physician Compare. Currently users can search by selecting a location and specialty for physicians or other healthcare professionals. Search results provide basic information about approved Medicare providers, such as primary and secondary specialties, practice locations, group practice affiliations, hospital affiliations, Medicare Assignment, education, languages spoken, and gender. As required by section 1848(m)(5)(G) of the Act, we have added the names of those eligible professionals who are successful electronic prescribers under the Medicare Electronic Prescribing (eRx) Incentive Program. As such, physician and other healthcare professional profile pages indicate if professionals satisfactorily participated in the Physician Quality Reporting System and/or are successful electronic prescribers under the eRx Incentive Program based on the most recent data available for these two quality initiatives.

2. Public Reporting of Physician Performance

Section 10331(a)(2) of the Affordable Care Act also requires that, no later than January 1, 2013, and for reporting periods that begin no earlier than January 1, 2012, we implement a plan for making publicly available through Physician Compare, information on physician performance that provides comparable quality and patient experience measures. This plan is outlined below. To the extent that scientifically sound measures are developed and are available, we are required to include, to the extent practicable, the following types of measures for public reporting:

  • Measures collected under the Physician Quality Reporting System.
  • An assessment of patient health outcomes and functional status of patients.
  • An assessment of the continuity and coordination of care and care transitions, including episodes of care and risk-adjusted resource use.
  • An assessment of efficiency.
  • An assessment of patient experience and patient, caregiver, and family engagement.
  • An assessment of the safety, effectiveness, and timeliness of care.
  • Other information as determined appropriate by the Secretary.

As required under section 10331(b) of the Affordable Care Act, in developing and implementing the plan, we must include, to the extent practicable, the following:

  • Processes to ensure that data made public are statistically valid, reliable, and accurate, including risk adjustment mechanisms used by the Secretary.
  • Processes for physicians and eligible professionals whose information is being publicly reported to have a reasonable opportunity, as determined by the Secretary, to review their results before posting to Physician Compare.
  • Processes to ensure the data published on Physician Compare provides a robust and accurate portrayal of a physician's performance.
  • Data that reflects the care provided to all patients seen by physicians, under both the Medicare program and, to the extent applicable, other payers, to the extent such information would provide a more accurate portrayal of physician performance.
  • Processes to ensure appropriate attribution of care when multiple physicians and other providers are involved in the care of the patient.
  • Processes to ensure timely statistical performance feedback is provided to physicians concerning the data published on Physician Compare.
  • Implementation of computer and data infrastructure and systems used to support valid, reliable, and accurate reporting activities.

Section 10331(d) of the Affordable Care Act requires us to consider input from multi-stakeholder groups in selecting quality measures for Physician Compare, which we seek to accomplish through rulemaking and focus groups. In developing the plan for making information on physician performance publicly available through Physician Compare, section 10331(e) of the Affordable Care Act requires the Secretary, as the Secretary deems appropriate, to consider the plan to transition to value-based purchasing for physicians and other practitioners that was developed under section 131(d) of the Medicare Improvements for Patients and Providers Act of 2008.

We are required, under section 10331(f) of the Affordable Care Act, to submit a report to the Congress by January 1, 2015, on Physician Compare development, and include information on the efforts and plans to collect and publish data on physician quality and efficiency and on patient experience of care in support of value-based purchasing and consumer choice. Section 10331(g) of the Affordable Care Act provides that any time before that date, we may continue to expand the information made available on Physician Compare.

We believe section 10331 of the Affordable Care Act supports our overarching goals of providing consumers with quality of care information to make informed decisions about their health care, while encouraging clinicians to improve on the quality of care they provide to their patients. In accordance with section 10331 of the Affordable Care Act, we intend to utilize the Physician Compare Web site to publicly report physician performance results.

In implementing our plan to publicly report physician performance, we will use data reported under the existing Physician Quality Reporting System as an initial step for making physician “measure performance” information public on Physician Compare. By “measure performance” in relation to the Physician Quality Reporting System, we mean the percent of times that a particular clinical quality action was reported as being performed, or a particular outcome was attained, for the applicable persons to whom a measure applies as described in the denominator for the measure. For measures requiring risk adjustment, “measure performance” refers to the risk adjusted percentage of times a particular outcome was attained.

We previously finalized a decision to make public on Physician Compare the performance rates of the quality measures that group practices submit under the 2012 Physician Quality Reporting System group practice reporting option (GPRO) (76 FR 73417). Therefore, we anticipate, no earlier than 2013, posting performance information collected through the GPRO web interface for group practices participating in the Physician Quality Reporting System GPRO CY 2012 on Physician Compare. Specifically, we will make public performance information for measures included in the 2012 Physician Quality Reporting System that meet the minimum sample size, and that prove to be statistically valid and reliable. As we previously established, if the minimum threshold is not met for a particular measure, or the measure is otherwise deemed not to be suitable for public reporting, the group's performance rate for that measure will be suppressed and not publicly reported. We previously established a minimum threshold of 25 patients for reporting performance information on the Physician Compare Web site (76 FR 73418). Although we considered keeping the threshold for reporting performance data on Physician Compare at 25 patients, we propose to change the minimum patient sample size, from 25 patients to 20 patients, beginning with data collected for services furnished in 2013, to align with the proposed minimum patient reporting thresholds for Physician Quality Reporting System measures group reporting for the 2013 and 2014 incentives, and the proposed reliability thresholds for the physician value-based payment modifier. We invite comment on the proposed new minimum patient sample size for Physician Compare, including whether or not we should retain the existing threshold of 25 patients.

Furthermore, in the Shared Savings Program final rule (76 FR 67948) as codified at § 425.308, we finalized ACO public reporting provisions in the interest of promoting greater transparency regarding the ACOs participating in the program. We finalized requirements for ACOs to publicly report certain data as well as data that we would publicly report. Because ACO providers/suppliers that are eligible professionals are considered to be group practices for purposes of qualifying for a Physician Quality Reporting System incentive under the Shared Savings Program, we indicated that performance on quality measures reported by ACOs at the ACO TIN level, on behalf of their ACO providers/suppliers who are eligible professionals, using the GPRO web interface would be reported on Physician Compare in the same way as for the groups that report under the Physician Quality Reporting System.

In April 2012, we added functionality to Physician Compare allowing users to search for group practices in preparation for the addition of 2012 Physician Quality Reporting System GPRO data. A full Web site redesign is slated for early 2013 to further prepare the site for the introduction of quality data. With each enhancement, we work to improve the usability and functionality of the site, providing consumers with more tools to help them make informed healthcare decisions.

In CY 2012, we intend to enhance the accuracy of “administrative” information displayed on the eligible professional's profile page, and to add additional data. By “administrative” data, we are referring to information about eligible professionals that is pulled from the Provider Enrollment, Chain, and Ownership System (PECOS) and other readily available external data sources. Specifically, we intend to add whether a physician/other health care professional is accepting new Medicare patients, board certification information, and to improve the foreign language and hospital affiliation data. We also intend to include the names of those eligible professionals who participated in the Medicare EHR Incentive Program and the names of those eligible professionals who satisfactorily participated under the Physician Quality Reporting System GPRO. We will continue to update the names of those eligible professionals and group practices who satisfactorily participated under the Physician Quality Reporting System, and those who are successful electronic prescribers under the eRx Incentive Program based on the most recent program year data available.

In support of the HHS-wide Million Hearts Initiative, we propose to post the names of the eligible professionals who report the Physician Quality Reporting System Cardiovascular Prevention measures group. This is consistent with the requirements under section 10331 of the Affordable Care Act to provide information about physicians and other eligible professionals who participate in the Physician Quality Reporting System.

3. Future Development of Physician Compare

Consistent with Affordable Care Act requirements, we intend to phase in an expansion of Physician Compare over the next several years by incorporating quality measures from a variety of sources, if technically feasible. For our next phase, we propose to make public on Physician Compare, performance rates on the quality measures that group practices submit through the GPRO web interface under the 2013 Physician Quality Reporting System GPRO and the Medicare Shared Savings Program. We anticipate that the 2013 Physician Quality Reporting System GPRO web interface measures data would be posted no sooner than 2014. This data would include measure performance rates for measures included in the 2013 Physician Quality Reporting System GPRO web interface that meet the proposed minimum sample size of 20 patients, and that prove to be statistically valid and reliable.

When technically feasible, but no earlier than 2014, we propose to publicly report composite measures that reflect group performance across several related measures. As an initial step we intend to develop disease module level composite scores for Physician Quality Reporting System GPRO measures. Under the Medicare Shared Savings Program, ACOs are required to report on composite measures for Diabetes Mellitus (DM) and Coronary Artery Disease (CAD) (76 FR 67891). Accordingly, in an effort to align the PQRS GPRO measures with the GPRO measures under the Shared Savings Program, we have proposed in Table 35 of this proposed rule to add composite measures for DM and CAD into the Physician Quality Reporting System starting in 2013. We will also consider future development of composites for the remaining disease level modules within the GPRO web interface. As more data are added to Physician Compare over time, we will consider adding additional disease level composites across measure types as technically feasible and statistically valid.

Consistent with the requirement under section 10331(a)(2) under the Affordable Care Act to implement a plan to make publically available comparable information on patient experience of care measures, we propose to add patient experience survey-based measures such as, but not limited to, the Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CG-CAHPS). As discussed in section G.6.c. of this proposed rule, we propose to collect the following patient experience of care measures for group practices participating in the Physician Quality Reporting System GPRO;

  • CAHPS: Getting Timely Care, Appointments, and Information
  • CAHPS: How Well Your Doctors Communicate
  • CAHPS: Patients' Rating of Doctor
  • CAHPS: Access to Specialists
  • CAHPS: Health Promotion and Education

These measures capture patients' experiences with clinicians and their staff, and patients' perception of care. We propose, no earlier than 2014, to publicly report 2013 patient experience data for all group practices participating in the 2013 Physician Quality Reporting System GPRO, not limited to those groups participating via the GPRO web interface, on Physician Compare. At least for 2013, we intend to administer and collect patient experience survey data on a sample of the group practices' beneficiaries. As we intend to administer and collect the data for these surveys, we do not anticipate any notable burden on the groups.

For ACOs participating in the Shared Savings Program, consistent with the Physician Quality Reporting System proposal to publicly report patient experience measures on Physician Compare starting in 2013, we propose to publicly report patient experience data in addition to the measure data reported through the GPRO web interface. Specifically, the patient experience measures that would be reported for ACOs include the CAHPS measures in the Patient/Caregiver Experience domain finalized in the Shared Savings Program final rule (76 FR 67889):

  • CAHPS: Getting Timely Care, Appointments, and Information
  • CAHPS: How Well Your Doctors Communicate
  • CAHPS: Patients' Rating of Doctor
  • CAHPS: Access to Specialists
  • CAHPS: Health Promotion and Education
  • CAHPS: Shared Decision Making

For patient experience data reported under either the Physician Quality Reporting System GPRO or the Medicare Shared Savings Program, we also considered an alternative option of providing confidential feedback to group practices and ACOs using 2013 patient experience data before publicly reporting patient experience data on Physician Compare. In lieu of publicly reporting the patient experience data relating to 2013 Physician Quality Reporting System GPRO and ACOs participating in the Shared Savings Program, we considered using the 2013 results as a baseline to be shared confidentially with the group practices and ACOs, during which time the group practices and ACOs would have the opportunity to review their data, and implement changes to improve patient experience scores. Under this alternative option, program year 2014 patient experience data would be the first to be publicly reported on Physician Compare, and we would publicly report 2014 patient experience data for ACOs and group practices participating in the 2014 Physician Quality Reporting System GPRO on Physician Compare no earlier than 2015. We invite public comment on our proposal to begin publicly reporting patient experience data for program year 2013, and also the alternative option of delaying public reporting of patient experience of care data on Physician Compare until program year 2014 in order to give group practices and ACOs the opportunity to make changes to the processes used in their practices based on the review of their data from program year 2013.

As we continue to improve administrative and provider level data, we propose posting the names of those physicians who earned a Physician Quality Reporting System Maintenance of Certification Program incentive as data becomes available, but no sooner than 2014. Additionally, we are considering allowing measures that have been developed and collected by approved and vetted specialty societies to be reported on Physician Compare, as deemed appropriate, and as they are found to be scientifically sound and statistically valid. We propose including additional claims-based process, outcome and resource use measures on Physician Compare, and intend to align measure selection for Physician Compare with measures selected for the Value Based Modifier (section III.K).

As an initial step, we propose to include group level ambulatory care sensitive condition admission measures of potentially preventable hospitalizations developed by the HHS Agency for Healthcare Research and Quality (AHRQ) that meet the proposed minimum sample size of 20 patients, and that prove to be statistically valid and reliable (measure details are available at http://www.qualitymeasures.ahrq.gov/content.aspx?id=27275). We propose reporting these measures on Physician Compare no earlier than 2015 for those group practices comprised of 2—99 eligible professionals participating in the proposed 2014 physician Quality Reporting System GPRO, and for ACOs. As our next step, we propose to publicly report performance rates on quality measures included in the 2015 Physician Quality Reporting System and value-based payment modifier for individual eligible professionals. Further details on what measures would be included in the 2015 reporting period will be addressed in future rule making. Public reporting of 2015 PQRS and administrative claims-based quality measures for individuals would occur no earlier than 2016. For all measures publicly reported on the Physician Compare Web site, we propose to post a standard of care, such as those endorsed by the National Quality Forum. Such information will serve as a standard for consumers to measure individual provider, and group level data.

We are committed to making Physician Compare a constructive tool for Medicare beneficiaries, successfully meeting the Affordable Care Act mandate, and in doing so, providing consumers with information needed to make informed healthcare decisions. CMS has developed a plan, and started to implement a phased approach to adding quality data to Physician Compare. We believe a staged approach to public reporting of physician information allows for the use of information currently available while we develop the infrastructure necessary to support the collection of additional types of measures and public reporting of individual physicians' quality measure performance results. Implementation of subsequent phases of the plan will need to be developed and addressed in future notice and comment rulemaking, as needed.

We invite comments regarding our proposals to: (1) Reduce the minimum reporting threshold from 25 patients to 20 patients for reporting on Physician Compare; (2) post the names of the eligible professionals who report the Physician Quality Reporting System Cardiovascular Prevention measures group for purposes of recognition and in support of the Million Hearts Initiative; (3) develop composite measures at the disease module level, initially with CY 2013 GPRO data, and incorporating additional measures; (4) to publicly report 2013 patient experience data for group practices participating in the 2013 Physician Quality Reporting System GPRO, or who are part of an ACO under the Medicare Shared Savings Program, on the Physician Compare Web site no earlier than 2014; (5) the alternative option of providing confidential feedback to group practices and ACOs on 2013 patient experience data to allow them to make necessary changes to their processes prior to publicly reporting of 2014 patient experience data on Physician Compare; (6) report names of participants who earn a 2013 Physician Quality Reporting System Maintenance of Certification Program Incentive no earlier than 2014; (7) allow measures that have been developed and collected by specialty societies to be reported on the Physician Compare Web site as deemed appropriate; (8) to report 2014 group level ambulatory care sensitive condition measures of potentially preventable hospitalizations developed by the AHRQ no earlier than 2015 for groups participating in the 2014 Physician Quality Reporting System and ACOs, (measure details are available at http://www.qualitymeasures.ahrq.gov/content.aspx?id=27275); (9) publicly report performance on 2015 Physician Quality Reporting System and value-based payment modifier quality measures for individuals. Public reporting of 2015 Physician Quality Reporting System and claims derived quality measures for individuals would occur no earlier than 2016; and (10) post a standard of care for measures posted on Physician Compare. For the above proposals, we note that we would only post data on Physician Compare if it is technically feasible; the data is available; the system is set up/adjusted to post information and the data is useful, sufficiently reliable, and accurate.

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

There are several healthcare quality improvement programs that affect physician payments under the Medicare PFS. The National Quality Strategy establishes three aims for quality improvement across the nation: better health, better healthcare, and lower costs. This strategy, the first of its kind, outlines a national vision for quality improvement and creates an opportunity for programs to align quality measurement and incentives across the continuum of care. CMS believes that this alignment is especially critical for programs involving physicians. The proposals that follow facilitate the alignment of programs, reporting systems, and quality measures to make this vision a reality. We believe that alignment of CMS quality improvement programs will decrease the burden of participation on physicians and allow them to spend more time and resources caring for beneficiaries. Furthermore, as the leaders of care teams and the healthcare systems, physicians and other clinicians serve beneficiaries both as frontline and system-wide change agents to improve quality. CMS believes, however, that in order to improve quality, physicians must first engage in quality measurement and reporting. It is CMS's intent that the following proposals will improve alignment of physician-focused quality improvement programs, decrease the burden of successful participation on physicians, increase engagement of physicians in quality improvement, and ultimately lead to higher quality care for beneficiaries.

This section contains our proposals related to the Physician Quality Reporting System (PQRS). The PQRS, as set forth in section 1848(a), (k), and (m) of the Act, is a quality reporting program that provides incentive payments and payment adjustments to eligible professionals who satisfactorily report data on quality measures for covered professional services furnished during a specified reporting period. We note that, in developing these proposals, it was our goal to align program requirements between these quality reporting programs, such as the eRx Incentive Program, EHR Incentive Program, Medicare Shared Savings Program, and value-based payment modifier, wherever possible. We believe that alignment of these quality reporting programs will lead to greater overall participation in these programs, as well as minimize the reporting burden on eligible professionals.

For example, we have aligned the definition of group practice under the eRx Incentive Program with PQRS' definition of group practice. Our proposals with respect to reporting as a group practice for the eRx Incentive Program are intended to conform to our proposals for reporting as a group practice for PQRS.

With respect to integration with the EHR Incentive Program, section 1848(m)(7) of the Act requires us to develop a plan to integrate reporting on quality measures under the PQRS with reporting requirements under the EHR Incentive Program. We began integrating requirements for these two programs in 2012 with the alignment of reporting requirements via the Physician Quality Reporting System—Medicare EHR Incentive Pilot (76 FR 73422) and the alignment of reportable EHR measures (76 FR 73364). Our proposals in this section are intended to move the PQRS and EHR Incentive Program towards greater alignment, benefiting those eligible professionals who wish to participate in both programs. The vision is to report once for multiple programs on a set of measures aligned across programs and with the National Quality Strategy.

With respect to integration with the value-based payment modifier, we note that we began our efforts to integrate our program requirements with the value-based payment modifier in the CY 2012 Medicare PFS final rule, when CY 2013 was established as the reporting period for the 2015 PQRS payment adjustment (76 FR 73391) and the initial performance period for the application of the value modifier (76 FR 73435). Our proposals in this section, particularly as they relate to the proposed requirements for satisfactory reporting for the PQRS payment adjustments, are intended to align with the proposals for the application of the value modifier.

The regulation governing the PQRS is located at § 414.90. The program requirements for years 2007-2012 of the PQRS that were previously established, as well as information on the PQRS, including related laws and established requirements, are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html. Please also note that in this proposed rule, we are proposing to make technical changes to § 414.90 to aid in the readability of the regulation.

1. Methods of Participation

There are two ways an eligible professional can participate in the PQRS: (1) as in individual or (2) as part of a group practice participating in the PQRS group practice reporting option (GPRO).

a. Participation as an Individual Eligible Professional

(1) Participation for the 2013 and 2014 Incentives

As defined at § 414.90(b) the term “eligible professional” means any of the following: (1) A physician; (2) a practitioner described in section 1842(b)(18)(C) of the Act; (3) a physical or occupational therapist or a qualified speech-language pathologist; or (4) a qualified audiologist. For more information on which professionals are eligible to participate in the Physician Quality Reporting System, we refer readers to the “List of Eligible Professionals” download located in the “How to Get Started” section of the PQRS CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/How_To_Get_Started.html. There is no requirement to self-nominate to participate in PQRS as an individual eligible professional for the incentive or to use the claims, registry, or EHR reporting mechanisms.

(2) Proposed Requirement for Eligible Professionals and Group Practices Electing To Use the Administrative Claims-based Reporting Mechanism for the 2015 and 2016 Payment Adjustments

Unlike using the traditional PQRS reporting mechanisms (claims, registry, EHRs) to satisfy the reporting requirements for the 2015 and 2016 payment adjustments, we propose that eligible professionals and group practices wishing to use the administrative claims reporting mechanism, which is discussed in section K, and available for the 2015 and/or 2016 payment adjustments, must elect to use the administrative claims reporting mechanism (please note that since the same proposed requirements would apply to both individual eligible professionals and group practices, we address both in this discussion). We believe this election requirement is necessary because CMS must be notified that CMS must analyze and calculate data from an eligible professional or group practice's claims. This election requirement is not necessary for eligible professionals and group practices using traditional PQRS reporting mechanisms because, for these traditional reporting mechanisms, CMS is not involved with analyzing claims data to determine whether a clinical quality action related to a quality measure was performed.

For eligible professionals, we propose that this election process would consist of a registration statement that includes: the eligible professional's name and practice name, the eligible professional's TIN and NPI for analytical purposes, and the eligible professional's contact information. For group practices, we propose that this election process would also consist of a registration statement that includes: The group practice's business name and contact information, the group practice's TIN, and contact information of the group practice's contact(s) who will be contacted for program, clinical, and/or technical purposes. With respect to the method of submitting this registration statement, we propose the following options:

—If technically feasible, submission of this statement via the Web and

—If technically feasible, submission of an eligible professional's or group practice's intent to register to use the administrative claims-based reporting mechanism by placing a G-code on at least 1 Medicare Part B claim.

In the event the two proposed options are not technically feasible, we also considered allowing for submission of the registration statement by submitting a mailed letter to CMS at Centers for Medicare & Medicaid Services, Office of Clinical Standards and Quality, Quality Measurement and Health Assessment Group, 7500 Security Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-1850a. However, we note that using this mailing option would be a more burdensome and time-intensive process for CMS. We invite public comment on this considered option.

The eligible professional would be required to complete this election process by January 31 of the applicable payment adjustment reporting period (for example, by January 31, 2015 for the 2015 payment adjustment). However, we note that we propose that we may extend this deadline based on the submission method that is finalized. For example, because processing mailed letters would take the longest to process (out of the 3 methods), we anticipate that if we were to include the option of mailed letters the deadline for submitting a mailed registration letter would be January 31 of the applicable payment adjustment reporting period. Since it would be more efficient to process registration statements received via the Web or via a G-code on a claim, we anticipate that we would be able to extend the registration deadline to as late as December 31 of the applicable payment adjustment reporting period. Once an eligible professional makes an election to participate in PQRS using the administrative claims-based reporting mechanism for the PQRS payment adjustments, the eligible professional would be assessed under the administrative claims-based reporting mechanism.

For group practices participating in the GPRO, we propose that these group practices would use the 2 methods described above (mailed letter, Web, or G-code submission) and have the same deadline as eligible professionals wishing to elect to use the administrative claims-based reporting mechanism for an applicable payment adjustment. In the alternative, we propose that a group practice participating in the GPRO would be required to elect to use the administrative claims-based reporting mechanism in its self-nomination statement. We are proposing to provide less time for group practices to elect to use the administrative claims-based reporting mechanism because it is necessary for CMS to receive this information in the beginning of the applicable reporting period to indicate to CMS how these group practices should be analyzed throughout the reporting period. This early notification is especially important for large group practices, which may have hundreds or thousands of eligible professionals to track as a group practice. Therefore, we feel it is appropriate to request that a group practice elect to use the administrative claims-based reporting mechanism when the group practice self-nominates.

We further propose that an eligible professional or group practice would be required to make this election for each payment adjustment year the eligible professional or group practice seeks to be analyzed under this mechanism. For example, if the eligible professional seeks to report under the administrative claims mechanism for the 2015 and 2016 payment adjustments, the eligible professional would be required to make this election by the applicable deadline, for the 2015 payment adjustment and again by the applicable deadline, for the 2016 payment adjustment. We invite public comment on the proposed election requirement for eligible professionals and group practices electing to participate in the 2015 and 2016 payment adjustments using the administrative claims-based reporting mechanism.

b. Participation as a Group Practice in the GPRO

(1) Proposed Definition of Group Practice

We propose to modify § 414.90(b) to define group practice as “a single Tax Identification Number (TIN) with 2 or more eligible professionals, as identified by their individual National Provider (NPI), who have reassigned their Medicare billing rights to the TIN.” We are proposing to change the number of eligible professionals comprising a PQRS group practice from 25 or more to 2 or more to allow all groups of smaller sizes to participate in the GPRO. We believe that expanding the scope of group practices eligible to participate under the program will lead to greater program participation. To participate in the GPRO, a group practice would be required to meet this proposed definition at all times during the reporting period for the program year in which the group practice is selected to participate in the GPRO. We invite public comment on the proposed definition of group practice.

(2) Proposed Election Requirement for Group Practices Selected To Participate in the GPRO

We established the process for group practices to be selected to participate in the GPRO in the CY 2012 PFS final rule with comment period (76 FR 73316). However, this section contains additional processes with respect to a group practice's self-nomination statement that we are proposing for group practices selected to participate in the GPRO for 2013 and beyond. With respect to the requirement that group practices wishing to participate in the GPRO submit a self-nomination statement (76 FR 73316), for 2012, we accepted these self-nomination statements via a letter accompanied by an electronic file submitted in a format specified by CMS because it was not operationally feasible to receive self-nomination statements via the Web at that time. In the CY 2012 Medicare PFS final rule with comment period, we noted that we anticipated that CMS would have the ability to collect self-nomination statements via the Web for the 2013 Physician Quality Reporting System. We are therefore proposing that, for 2013 and beyond, a group practice must submit its self-nomination statement via the Web.

We note that this Web-based functionality is still being developed by CMS. Therefore, in the event this Web-based functionality would not be available in time to accept self-nomination statements for the 2013 Physician Quality Reporting System, we propose that, in lieu of submitting self-nomination statements via the Web, a group practice would be required to submit its self-nomination statement via a letter accompanied by an electronic file submitted in a format specified by CMS (such as a Microsoft excel file). We propose that this self-nomination statement would be mailed to the following address: Centers for Medicare & Medicaid Services,Office of Clinical Standards and Quality, Quality Measurement and Health Assessment Group,7500 Security Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-1850. If mailing the self-nomination statement, we would require that this self-nomination statement be received by no later than 5 p.m. Eastern Standard Time on January 31 of the year in which the group practice wishes to participate in the GPRO.

In the CY 2012 Medicare PFS final rule with comment period, we also established what information is required to be included in a group practice's self-nomination statement (76 FR 73316). In previous years, the group practice only had one reporting mechanism available on which to report data on PQRS quality measures: The GPRO web-interface. However, beginning 2013, we are proposing to allow group practices to report data on quality measures using the claims, registry, and EHR-based reporting mechanisms for the PQRS incentive and payment adjustment. Additionally, we are proposing to allow group practices to use the proposed administrative claims reporting option. We propose that a group practice wishing to participate in the GPRO for a program year would be required to indicate the reporting mechanism the group practice intends to use for the applicable reporting period in its self-nomination statement. Furthermore, once a group practice is selected to participate in the GPRO and indicates which reporting mechanism the group practice would use, we propose that the group practice would not be allowed to change its selection. Therefore, under this proposal, the reporting mechanism the group practice indicates it will use in its self-nomination statement for the applicable reporting period would be the only reporting mechanism under which CMS will analyze the group practice to determine whether the group practice has met the criteria for satisfactory reporting for the PQRS incentive and/or payment adjustment. We acknowledge that this proposal would depart from the way we analyze an individual eligible professional, as CMS analyzes an individual eligible professional (who is permitted to use multiple reporting mechanisms during a reporting period) under every reporting method the eligible professional uses. Unfortunately, due to the complexity of analyzing group practices under the GPRO, such as having to associate multiple NPIs under a single TIN, it is not technically feasible for us to allow group practices using the GPRO to use multiple reporting mechanisms or switch reporting mechanisms during the reporting period. We invite public comment on the proposed election requirement and the proposed restriction noted above for group practices under the GPRO for 2013 and beyond.

(3) Proposed GPRO Selection Process

Group practices must be selected by CMS to participate in the PQRS GPRO for a program year. Please note that if a group practice is selected to participate in the PQRS as a GPRO, the eligible professionals in the selected group practice cannot participate in the PQRS individually. When selecting group practices to participate in the GPRO, CMS bases its decision on the information the group practice provides in its self-nomination statement. We believe that changes in a group practice's size or TIN constitute such a significant change in the group practice's composition that it would cause CMS to reconsider its decision to allow the group practice to participate in the GPRO for the applicable program year. Specifically, we understand that a group practice's size may vary throughout the program year. For example, we understand that eligible professionals enter into and leave group practices throughout the year. Similarly, we understand that group practices may undergo business reorganizations during the program year. We note that size fluctuations may affect the criteria under which a group practice would use to report after being selected to participate in the GPRO. As indicated in section III.G.4., we are proposing that groups of varying sizes be subject to different criteria for satisfactory reporting for the 2013 and 2014 incentives, as well as for the payment adjustments. Therefore, we propose that, for analysis purposes, the size of the group practice must be established at the time the group practice is selected to participate in the GPRO. We invite public comment on this proposal.

We also understand that, for various reasons, a group practice may change TINs within a program year. For example, a group practice may undergo a mid-year reorganization that leads to the group practice changing its TIN mid-year. We propose that, if a group practice changes its TIN after the group practice is selected to participate in the GPRO, the group practice cannot continue participate in PQRS as a GPRO. We consider the changing of a group practice's TIN a significant change to the makeup of the group practice, as the group practice is evaluated under the TIN the group practice provided to CMS at the time the group is selected to participate in the GPRO for the applicable year. Therefore, we view a group practice that changes its TIN as an entirely new practice, associated with a new TIN. We understand that this proposal may pose a disadvantage for those group practices who find it beneficial to report PQRS quality measures using the GPRO. However, we note that eligible professionals in a group practice that has changed its TIN within a year may still participate as individuals. We invite public comment on this proposal.

We understand that a group practice may decide not to participate in PQRS using the GPRO after being selected. Therefore, we propose that group practices be provided with an opportunity to opt out of participation in the GPRO after selection. We note that it is necessary for a group practice to indicate to CMS the group practices' intent not to use the GPRO because, once a group practice is selected to participate in the GPRO for the applicable reporting period, CMS will not separately assess the NPIs associated with the group practice's TIN to see if they meet the criteria for satisfactory reporting for individual eligible professionals. Therefore, CMS must be notified of the group practice's decision not to participate in the GPRO so the eligible professionals within the group practice could be assessed at the individual TIN/NPI level. We propose that group practices have until April 1 of the year of the applicable reporting period (for example, by April 1, 2013 for reporting periods occurring in 2013) to opt out of participating in the GPRO. We invite public comment on the proposed selection process for group practices wishing to participate in the GPRO.

(4) Proposed Requirement for Group Practices Electing To Use the Administrative Claims-Based Reporting Mechanism for 2015 and 2016 Payment Adjustments

We propose an election requirement for group practices that elect to participate in the PQRS for the 2015 and 2016 payment adjustment using administrative claims-based reporting mechanism, which is discussed in full in section III.G.5. (which also addresses election requirements for eligible professionals). We seek comment on our proposal on election requirements for group practices that intend to report using the proposed administrative claims reporting option for the 2015 and 2016 payment adjustment.

2. Proposed Reporting Periods for the PQRS Payment Adjustments for 2016 and Beyond

For the PQRS incentives, we previously established 12 and 6-month reporting periods for satisfactorily reporting PQRS quality measures at § 414.90(f)(1). Under section 1848(a)(8)(C)(iii) of the Act, we are authorized to specify the quality reporting period (reporting period) with respect to a payment adjustment year. We propose to modify the regulation to establish the reporting periods for the PQRS payment adjustments for 2015 and beyond.

For the 2015 payment adjustment, in the CY 2012 Medicare PFS final rule, we established CY 2013 (that is, January 1, 2013 through December 31, 2013) as the reporting period for the 2015 payment adjustment (76 FR 73392). We established a 12-month reporting period occurring 2 years prior to the application of the payment adjustments for group practices and for individual eligible professionals to allow time to perform all reporting analysis prior to applying payment adjustments on eligible professionals' Medicare Part B PFS claims. However, we note that we might specify additional reporting periods for the 2015 payment adjustment. To coincide with the 6-month reporting period associated with the 2013 incentive for the reporting of measures groups via registry, we propose to modify the regulation at newly designated § 414.90(h) to add a 6-month reporting period occurring July 1, 2013—December 31, 2013, for the 2015 payment adjustment for the reporting of measures groups via registry.

For 2016 payment adjustments, to coincide with the reporting periods for the 2014 incentive, we propose to modify the regulation at newly designated § 414.90(h) to specify a 12-month (January 1, 2014—December 31, 2014) and, for individual eligible professionals reporting measures groups via registry only, a 6-month (July 1, 2014—December 31, 2014) reporting periods for the 2016 payment adjustments.

We believe that data on quality measures collected based on 12-months provides a more accurate assessment of actions performed in a clinical setting than data collected based on a 6-month reporting period. Therefore, it is our intention to move towards using solely a 12-month reporting period once the reporting periods for the 2013 and 2014 incentives conclude. Therefore, for payment adjustments occurring in 2017 and beyond, we propose to modify the regulation at newly designated § 414.90(h) to specify only a 12-month reporting period occurring January 1-December 31, that falls 2 years prior to the applicability of the respective payment adjustment (for example, January 1, 2015 through December 31, 2015, for the 2017 payment adjustment). We invite public comment on the proposed reporting periods for the PQRS payment adjustments for 2015 and beyond.

3. Proposed Requirements for the PQRS Reporting Mechanisms

This section contains our proposals for the following reporting mechanisms: Claims, registry, EHR (including direct EHR products and EHR data submission vendor products), GPRO web-interface, and administrative claims. We previously established at § 414.90(f)(2) that eligible professionals reporting individually may use the claims, registry, and EHR-based reporting mechanisms. We propose to modify § 414.90 to allow group practices comprised of 2-99 eligible professionals to use the claims, registry, and EHR-based reporting mechanisms as well, because we recognize the need to provide varied reporting criteria for smaller group practices, particularly since we are proposing to expand the definition of group practice. For example, we understand that a smaller group practice may not have a sufficiently varied practice to be able to meet the proposed satisfactory reporting criteria for the GPRO web-interface that would require a smaller group practice to report on all of the proposed PQRS quality measures specified in Table 35. These proposals are reflected in our proposed changes to § 414.90, which we are proposing to re-designate § 414.90(g) and § 414.90(h). We invite public comment on this proposal to make the claims, registry, and EHR-based reporting options applicable to group practices.

a. Claims-Based Reporting: Proposed Requirements for Using Claims-Based Reporting for 2013 and Beyond

Eligible professionals and group practices wishing to report data on PQRS quality measures via claims for the incentives and for the payment adjustments must submit quality data codes (QDCs) on claims to CMS for analysis. QDCs for the eligible professional's or group practice's selected PQRS (individual or measures groups) quality measures that are reported on claims may be submitted to CMS at any time during the reporting period for the respective program year. However, as required by section 1848(m)(1)(A) of the Act, all claims for services furnished during the reporting period, would need to be processed by no later than the last Friday occurring two months after the end of the reporting period, to be included in the program year's PQRS analysis. For example, all claims for services furnished during a reporting period that occurs during calendar year 2013 would need to be processed by no later than the last Friday of the second month after the end of the reporting period, that is, processed by February 28, 2014 for the reporting periods that end December 31, 2013. In addition, after a claim has been submitted and processed, we propose at re-designated § 414.90(g)(2)(i)(A) and newly added § 414.90(h)(2)(i)(A) to indicate that EPs cannot submit QDCs on claims that were previously submitted and processed (for example, for the sole purpose of adding a QDC for the PQRS). We invite public comment on our proposed requirements for using the claims-based reporting mechanism for the incentives and for the payment adjustments for 2013 and beyond.

b. Registry-Based Reporting

(1) Proposed Qualification Requirements for Registries for 2013 and Beyond

For 2013 and beyond, we propose that registries wishing to submit data on PQRS quality measures for a particular reporting period would be required to be qualified for each reporting period the registries wish to submit quality measures data. This qualification process is necessary to verify that registries are able to submit data on PQRS quality measures on behalf of eligible professionals and group practices to CMS. Registries who wish to become qualified to report PQRS quality measures for a reporting period undergo (1) a self-nomination process and (2) a qualification process regardless of whether the registry was qualified the previous program year.

For the self-nomination process, we propose that the self-nomination process would consist of the submission of a self-nomination statement submitted via the web by January 31 of each year in which the registry seeks to submit data on PQRS quality measures on behalf of eligible professionals and group practices. For example, registries that wish to become qualified to report data in 2013 under the program, that is, to report during all of the reporting periods for the 2013 incentive and the 2015 payment adjustment, would be required to submit its self-nomination statement by January 31, 2013. We propose that the self-nomination statement contain all of the following information:

  • The name of the registry.
  • The reporting period start date the registry will cover.
  • The measure numbers for the PQRS quality measures on which the registry is reporting.

We note that CMS is currently developing the functionality to accept registry self-nomination statements via the web and anticipate development of this functionality to be complete for registries to submit their self-nomination statements via the web in 2013. However, in the event that it is not technically feasible to collect this self-nomination statement via the web, we propose that registry vendors would submit its self-nomination statement via a mailed letter to CMS. The self-nomination statement would be mailed to the following address: Centers for Medicare & Medicaid Services, Office of Clinical Standards and Quality, Quality Measurement and Health Assessment Group, 7500 Security Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-1850. We propose that these self-nomination statements must be received by CMS by 5 Eastern Standard Time on January 31 of the applicable year.

For the qualification process, we propose that all registries, regardless of whether or not they have been qualified to report PQRS quality measures in a prior program year, undergo a qualification process to verify that the registry is prepared to submit data on PQRS quality measures for the reporting period in which the registry seeks to be qualified. To become qualified for a particular reporting period, we propose that a registry would be required to:

  • Be in existence as of January 1 the year prior to the program year in which the registry seeks qualification (for example, January 1, 2012, to be qualified to submit data in 2013).
  • Have at least 25 participants by January 1 the year prior to the program year in which the registry seeks qualification (for example, January 1, 2012, to be qualified for the reporting periods occurring in 2013).
  • Provide at least 1 feedback report to participating eligible professionals and group practices for each program year in which the registry submits data on PQRS quality measures on behalf of eligible professionals and group practices. This feedback reporting would be based on the data submitted by the registry to CMS for the applicable reporting period or periods occurring during the program year. For example, if a registry was qualified for the reporting periods occurring in 2013, the registry would be required to provide a feedback report to all participating eligible professionals and group practices based on all 12 and 6-month reporting periods for the 2013 incentive and the 12-month reporting period for 2015 payment adjustment. Although we propose to require that qualified registries provide at least 1 feedback report to all participating eligible professionals and group practices, we encourage registries to provide an additional, interim feedback report, if feasible, so that an eligible professional may determine what steps, if any, are needed to meet the criteria for satisfactory reporting.
  • For purposes of distributing feedback reports to its participating eligible professionals and group practices, the registry must collect each participating eligible professional's email address and have documentation from each participating eligible professional authorizing the release of his or her email address.
  • Not be owned or managed by an individual, locally-owned, single-specialty group (for example, single-specialty practices with only 1 practice location or solo practitioner practices would be precluded from becoming a qualified PQRS registry).
  • Participate in all ongoing PQRS mandatory support conference calls and meetings hosted by CMS for the program year in which the registry seeks to be qualified. For example, a registry wishing to be qualified for reporting in 2013 would be required to participate in all mandatory support conference calls hosted by CMS related reporting in 2013 under the PQRS.
  • Be able to collect all needed data elements and transmit to CMS the data at the TIN/NPI level for at least 3 measures.
  • Be able to calculate and submit measure-level reporting rates and/or, upon request, the data elements needed to calculate the reporting rates by TIN/NPI.
  • Be able to calculate and submit, by TIN/NPI, a performance rate (that is, the percentage of a defined population who receive a particular process of care or achieve a particular outcome based on a calculation of the measure's numerator and denominator specifications) for each measure on which the eligible professional or group practice (as identified by the TIN/NPI) reports and/or, upon request, the Medicare beneficiary data elements needed to calculate the reporting rates.
  • Be able to separate out and report on Medicare Part B FFS patients.
  • Report the number of eligible instances (reporting denominator).
  • Report the number of instances a quality service is performed (reporting/performance numerator).
  • Report the number of performance exclusions, meaning the quality action was not performed for a valid reason as defined by the measure specification.
  • Report the number of reported instances, performance not met, meaning the quality action was not performed for any valid reason as defined by the measure specification. Please note that an eligible professional receives credit for reporting, not performance.
  • Be able to transmit data on PQRS quality measures in a CMS-approved XML format.
  • Comply with a CMS-specified secure method for data submission, such as submitting the registry's data in an XML file through an identity management system specified by CMS or another CMS-approved method, such as use of appropriate Nationwide Health Information Network specifications, if technically feasible.
  • Submit an acceptable “validation strategy” to CMS by March 31 of the reporting year the registry seeks qualification (for example, if a registry wishes to become qualified for reporting in 2013, this validation strategy would be required to be submitted to CMS by March 31, 2013). A validation strategy details how the registry will determine whether eligible professionals and group practices have submitted accurately and on at least the minimum number (80 percent) of their eligible patients, visits, procedures, or episodes for a given measure. Acceptable validation strategies often include such provisions as the registry being able to conduct random sampling of their participant's data, but may also be based on other credible means of verifying the accuracy of data content and completeness of reporting or adherence to a required sampling method.
  • Perform the validation outlined in the strategy and send the results to CMS by June 30 of the year following the reporting period (for example, June 30, 2014, for data collected in the reporting periods occurring in 2013).
  • Enter into and maintain with its participating professionals an appropriate Business Associate agreement that provides for the registry's receipt of patient-specific data from the eligible professionals and group practices, as well as the registry's disclosure of quality measure results and numerator and denominator data and/or patient-specific data on Medicare beneficiaries on behalf of eligible professionals and group practices who wish to participate in the PQRS.
  • Obtain and keep on file signed documentation that each holder of an NPI whose data are submitted to the registry has authorized the registry to submit quality measure results and numerator and denominator data and/or patient-specific data on Medicare beneficiaries to CMS for the purpose of PQRS participation. This documentation would be required to be obtained at the time the eligible professional signs up with the registry to submit PQRS quality measures data to the registry and would be required to meet any applicable laws, regulations, and contractual business associate agreements.
  • Upon request and for oversight purposes, provide CMS access to review the Medicare beneficiary data on which PQRS registry-based submissions are founded or provide to CMS a copy of the actual data.
  • Provide CMS a signed, written attestation statement via mail or email which states that the quality measure results and any and all data including numerator and denominator data provided to CMS are accurate and complete.
  • Use PQRS measure specifications and the CMS provided measure calculation algorithm, or logic, to calculate reporting rates or performance rates unless otherwise stated. We will provide registries a standard set of logic to calculate each measure and/or measures group they intend to report for each reporting period.
  • Provide a calculated result using the CMS-supplied measure calculation logic and XML file format for each measure that the registry intends to calculate. The registries may be required to show that they can calculate the proper measure results (that is, reporting and performance rates) using the CMS-supplied logic and send the calculated data back to CMS in the specified format. The registries will be required to send in test files with fictitious data in the designated file format.
  • Describe to CMS the cost for eligible professionals and group practices that the registry charges to submit PQRS and/or eRx Incentive Program data to CMS.
  • Agree to verify the information and qualifications for the registry prior to posting (includes names, contact, measures, cost, etc.) and furnish/support all of the services listed for the registry on the CMS Web site.
  • Agree that the registry's data for Medicare beneficiaries may be inspected or a copy requested by CMS and provided to CMS under our oversight authority.
  • Be able to report consistent with the satisfactory reporting criteria requirements for the PQRS incentives and payment adjustments.

In addition to meeting all the requirements specified previously for the reporting of individual quality measures via registry, for registries that intend to report on PQRS measures groups, we propose that these registries, regardless of whether or not registries were qualified in previous years, would be required to:

  • Indicate the reporting period chosen for each eligible professional who chooses to submit data on measures groups.
  • Base reported information on measures groups only on patients to whom services were furnished during the relevant reporting period.
  • If the registry is reporting using the measures group option for 20 patients, the registry on behalf of the eligible professional may include non-identifiable data for non-Medicare beneficiaries as long as these patients meet the denominator of the measure and the eligible professional includes a majority Medicare Part B patients in their cohort of 20 patients for the measures group.

We intend to post the final list of registries qualified for each reporting period by the Summer of each the year in which the reporting periods occur on the CMS Web site at http://http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html. For example, we intend to post the list of registries qualified for 2013 reporting periods by the Summer 2013. For each reporting period, the list of qualified registries would contain the following information: the registry name, registry contact information, the measures and/or measures group(s) the registry is qualified and intends to report for the respective reporting period.

This proposed registry qualification process is largely the same process we established to qualify registries for the reporting periods occurring in 2012. We are proposing a similar process to the 2012 qualification process because, registries are already familiar with this qualification process, so we believe there would be a greater likelihood that registries wishing to be qualified to report quality measures data for a particular reporting period would be able to pass the qualification process. We believe this will provide eligible professional with more qualified registry products from which to choose.

Lastly, in the CY 2012 Medicare PFS proposed rule, we raised the issue of disqualifying registries that submit inaccurate data (76 FR 42845). We did not adopt a disqualification process but noted the importance of such a process, as well as our intention to provide detailed information regarding a disqualification process in future rulemaking (76 FR 73322). In an effort to ensure that registries provide accurate reporting of quality measures data, we propose to modify § 414.90 to indicate that we would audit qualified registries. If, during the audit process, we find that a qualified registry has submitted grossly inaccurate data, we propose, under § 414.90, to indicate that we would disqualify such a registry from the subsequent year under the program, meaning that a registry would not be allowed to submit PQRS quality measures data on behalf of eligible professionals and group practices for the next year. Under this proposal, a disqualified registry would not be included in the list of qualified registries that is posted for the applicable reporting periods under which the registry attempted to qualify. For example, if a qualified registry submits quality measures data for the reporting periods occurring in 2013 but is then audited and later disqualified, the registry would not be allowed to submit PQRS quality measures data on behalf of participating eligible professionals and group practices to CMS for the reporting periods occurring in 2014 or later. One example of submitting grossly inaccurate data that CMS has encountered in the past is if a registry reports inaccurate TIN/NPIs on 5 percent or more of the registry's submission. As CMS calculates data on a TIN/NPI level, it is important for registries to provide correct TIN/NPI information. We invite public comment as to the threshold of grossly inaccurate data for the purpose of disqualifying a registry.

Under our proposal, our decision to disqualify would be final. We further propose to post a registry's disqualification status on the CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html.

In proposing registry disqualification, we considered other alternatives, such as placing registries in a probationary status. However, we believe it is important for registries to submit correct data once it is qualified to submit data on behalf of its eligible professionals and therefore, find that immediate disqualification to be appropriate. This becomes especially important particularly as the program moves from the use of incentives to payment adjustments.

We invite public comment on our proposals regarding registry qualification and disqualification for 2013 and beyond.

In addition, the Nationwide Health Information Network (NwHIN) is an initiative developed by the Department of Health and Human Services that provides for the exchange of healthcare information. Traditionally, CMS has not collected data received via a registry through NwHIN. However, we strive to encourage the collection of data via the NwHIN and intend to do so when it is technically feasible to do so (as early as 2014). Therefore, we seek public comment on collecting data via registry for PQRS via NwHIN.

c. EHR-Based Reporting

(1) Proposed Requirements for a Vendor's Direct EHR Products for 2014 and Beyond

We are proposing to modify § 414.90(b) to define a direct electronic health record (EHR) product as “an electronic health record vendor's product and version that submits data on Physician Quality Reporting System measures directly to CMS.” Please note that the self-nomination and qualification requirements for a vendor's direct EHR products for 2012 and 2013 were established in the CY 2012 Medicare PFS final rule (76 FR 73323).

In lieu of continuing this process in future years of the program, we propose to no longer require qualification of EHR products in order to be used for reporting under the PQRS. Although we would still allow EHR vendors to submit test files to the PQRS and continue to provide support calls, we would no longer require vendors to undergo this testing process. Although vendors and their products would no longer be required to undergo this testing or qualification process, we propose that CMS would only accept the data if the data are:

  • Transmitted in a CMS-approved XML format utilizing a Clinical Document Architecture (CDA) standard such as Quality Reporting Data Architecture (QRDA) level 1 and
  • In compliance with a CMS-specified secure method for data submission, such as submitting the direct EHR vendor's data (for testing) through an identity management system specified by CMS or another approved method.

In addition, upon request and for oversight purposes, we propose that the vendor would still be expected to provide CMS access to review the Medicare beneficiary data on which PQRS direct EHR-based submissions are founded or provide to CMS a copy of the actual data. CMS, however, would no longer be posting a list of qualified EHR vendors and their products on the CMS Web site. Therefore, eligible professionals would need to work with their respective EHR vendor to determine whether their specific EHR product has undergone any testing with the PQRS and/or whether their EHR product can produce and transmit the data in the CMS-specified format and manner. While we no longer believe that this process is necessary, we invite public comment as to whether CMS should continue to require that direct EHR products undergo self-nomination and qualification processes prior to being authorized to submit quality measures data to CMS for PQRS reporting purposes.

We are proposing to not to continue the qualification requirement (that is, no longer propose this process for future years of the program) because we believe adequate checks are in place to ensure that a direct EHR product is able to submit quality measures data for the PQRS. For example, to the extent possible, we intend to align with the Medicare EHR Incentive Program with respect to our criteria for satisfactory reporting and measures available for reporting under the EHR-based reporting mechanism. The Medicare EHR Incentive Program requires that a vendor's EHR system be certified under the program established by the Office of the National Coordinator for Health Information Technology (ONC). In future years, we anticipate that the ONC certification process could include testing related to the reporting of the proposed PQRS EHR measures indicated in Tables 32 and 33, since we are proposing to align the PQRS EHR-based measures with the measures available for reporting under the EHR Incentive Program. We invite public comment as to whether, in lieu of qualification, CMS should require that direct EHR products that would be used to submit data on PQRS quality measures for a respective reporting period be classified as certified under the program established by ONC.

Please note that, regardless of whether the qualification process is in place and not withstanding any CEHRT requirements that may apply, we note that eligible professionals bear the burden of determining choosing a direct EHR product that is able to adequately submit PQRS quality measures data to CMS.

We also invite public comment on the above proposals related to the proposed requirements for direct EHR products.

In addition, the Nationwide Health Information Network (NwHIN) is an initiative developed by the Department of Health and Human Services that provides for the exchange of healthcare information. Traditionally, CMS has not collected data received via a direct EHR product through NwHIN, but we would like to encourage this method with EHR-based reporting. However, we strive to encourage the collection of data via the NwHIN and intend to do so when it is technically feasible to do so (as early as 2014). Therefore, we seek public comment on collecting data via an EHR for PQRS via NwHIN.

(2) Proposed Requirements for a Vendor's EHR Data Submission Vendor Products for 2013 and Beyond

The EHR data submission vendor reporting mechanism was a mechanism that was newly established in the CY 2012 Medicare PFS final rule (76 FR 73324). We indicated that these EHR data submission vendors, some of which included previous registries, were entities that are able to receive and transmit clinical quality data extracted from an EHR to CMS. We propose to modify § 414.90(b) to define an electronic health record (EHR) data submission vendor as “an electronic health record vendor's product and version that acts as an intermediary to submit data on Physician Quality Reporting System measures on behalf of an eligible professional or group practice.”

Please note that the qualification requirements for a vendor's EHR data submission vendor products for 2013 were established in the CY 2012 Medicare PFS final rule (76 FR 73327). Specifically, we established that a qualification and testing process would occur in 2012 to qualify EHR data submission vendor products to submit PQRS quality measures data for reporting periods occurring in CY 2013. Operationally, we were unable to establish a qualification and testing process in 2012 to qualify EHR data submission vendor products for reporting periods occurring in CY 2013. Therefore, we propose to perform, in 2013, the qualification and testing process established in the CY 2012 Medicare PFS final rule (76 FR 73327) that was supposed to occur in 2012. We invite public comment on this proposal.

As for 2014 and beyond, we propose to no longer qualify EHR data submission vendor products in order to use such products under the PQRS for the same reasons we have articulated in our proposal not to continue qualifying direct EHR products. Although we would still allow EHR data submission vendors to submit test files to the PQRS and continue to provide support calls, we would no longer require vendors to undergo this testing process. Although EHR data submission vendor products would no longer be required to undergo this testing or qualification process, we propose that CMS would only accept the data if the data are:

  • Transmitted in a CMS-approved XML format utilizing a Clinical Document Architecture (CDA) standard such as Quality Reporting Data Architecture (QRDA) level 1 and for EHR data submission vendors who intend to report for purposes of the proposed PQRS Medicare EHR Incentive Program pilot, if the aggregate data are transmitted in a CMS-approved XML format.
  • In compliance with a CMS-specified secure method for data submission.

In addition, upon request and for oversight purposes, we propose that the vendor would still be expected to provide CMS access to review the Medicare beneficiary data on which PQRS direct EHR-based submissions are founded or provide to CMS a copy of the actual data. CMS, however, would no longer be posting a list of qualified EHR data submission vendors on the CMS Web site. Therefore, eligible professionals would need to work with their respective EHR data submission vendor to determine whether the vendor has undergone any testing with the PQRS and/or whether EHR data submission vendor can produce and transmit the data in the CMS-specified format and manner.

We invite public comment on our proposal to, beginning 2014, not require qualification of EHR data submission vendor products. We also invite public comment as to whether CMS should continue to require that EHR data submission vendor products undergo these self-nomination and qualification processes prior to being authorized to submit quality measure data to CMS on an eligible professional's behalf for PQRS reporting purposes.

We are proposing to not to continue the qualification requirement (that is, no longer propose this process for 2014 and future years of the program) because we believe adequate checks are in place to ensure that a direct EHR product is able to submit quality measures data for the PQRS. For example, to the extent possible, we intend to align with the Medicare EHR Incentive Program with respect to our criteria for satisfactory reporting and measures available for reporting under the EHR-based reporting mechanism. The Medicare EHR Incentive Program requires that a vendor's EHR system be certified under the program established by the Office of the National Coordinator for Health Information Technology (ONC). In future years, we anticipate that the ONC certification process could include testing related to the reporting of the proposed PQRS EHR measures indicated in Tables 32 and 33, since we are proposing to align the PQRS EHR-based measures with the measures available for reporting under the EHR Incentive Program. We invite public comment as to whether, in lieu of qualification, CMS should require that EHR data submission vendor products wishing to submit data on PQRS quality measures for a respective reporting period be certified under the program established by ONC.

Please note that, if the qualification process is no longer required or we do not require that an EHR data submission vendor product be certified under ONC's program, we note that eligible professionals bear the burden of determining choosing an EHR data submission vendor product that is able to adequately submit PQRS quality measures data to CMS.

In addition, the Nationwide Health Information Network (NwHIN) is an initiative developed by the Department of Health and Human Services that provides for the exchange of healthcare information. Traditionally, CMS has not collected data received via an EHR data submission vendor through NwHIN, but we would like to encourage this method with EHR-based reporting. However, we strive to encourage the collection of data via the NwHIN and intend to do so when it is technically feasible to do so (as early as 2014). Therefore, we seek public comment on collecting data via an EHR for PQRS via NwHIN.

d. GPRO Web-Interface: Proposed Requirements for Group Practices Using the GPRO Web-Interface for 2013 and Beyond

The GPRO web-interface is a reporting mechanism established by CMS that is used by group practices that are selected to participate in the GPRO. For 2013 and beyond, we propose to modify newly designated § 414.90(g) and § 414.90(h) to identify the GPRO web-interface as a reporting mechanism available for reporting under the PQRS by group practices comprised of 25 or more eligible professionals. Consistent with the GPRO satisfactory reporting criteria we established for the 2012 PQRS (76 FR 73338), as well as the GPRO satisfactory reporting criteria we are proposing for 2013 and beyond, we propose to limit reporting via the GPRO web-interface during a respective reporting period to group practices comprised of at least 25 eligible professionals (that is, this reporting option would not be available to group practices that contain 2-24 eligible professionals) and selected to participate in the GPRO for the year under which the reporting period occurs. For example, a group practice wishing to submit quality measure data via the GPRO web-interface for 2013 must be a group practice selected to participate in the GPRO for the 2013 program year. We believe it is necessary to limit use of the GPRO web-interface to group practices comprised of at least 25 eligible professionals selected to participate in the GPRO because the 17 measures that are proposed to be reportable via the GPRO web-interface (as specified in Table 35) reflect a variety of disease modules: patient/caregiver experience, care coordination/patient safety, preventive health, diabetes, hypertension, ischemic vascular disease, heart failure, and coronary artery disease.

We believe that the reporting of these 18 proposed measures spanning across various settings lends this reporting mechanism more ideal for larger group practices that are more likely to be multi-specialty practices (which are typically group practices consisting of larger than 25 eligible professionals). The GPRO web-interface was modeled after the CMS Physician Group Practice (PGP) demonstration, and this demonstration was originally intended for large group practices. From our experience with the PGP demonstration, we believe a group practice comprised of 25 eligible professionals is the smallest group practice that could benefit from use of the GPRO web-interface as a reporting mechanism. We also do not believe that excluding group practices comprised of 2-24 eligible professionals from using the GPRO web-interface as a reporting mechanism would harm these smaller group practices as we are proposing to allow groups comprised of 2-99 eligible professionals to report using the claims, qualified registry, EHR, and administrative claims-based reporting mechanisms.

We propose to provide group practices that are selected to participate in the GPRO using GPRO web-interface reporting option with access to the GPRO web-interface by no later than the first quarter of the year following the end of the reporting period under which the group practice intends to report. For example, for group practices selected for the GPRO for the 2013 incentive using the GPRO web-interface tool, we propose to provide group practices selected to participate in the GPRO with access to the GPRO web-interface by no later than the first quarter of 2014 for purposes of reporting for the applicable 2013 reporting period for the incentive. In addition, should CMS encounter operational issues with using the GPRO web-interface, we reserve the right to use a similar tool for group practices to use in lieu of reporting via the GPRO web-interface. We invite public comment on our proposed requirements for group practices using the GPRO web-interface for 2013 and beyond.

In addition, the Nationwide Health Information Network (NwHIN) is an initiative developed by the Department of Health and Human Services that provides for the exchange of healthcare information. Traditionally, CMS has not collected data received via the GPRO web-interface through NwHIN. However, we strive to encourage the collection of data via the NwHIN and intend to do so when it is technically feasible to do so (as early as 2014). Therefore, we seek public comment on collecting data via the GPRO web-interface for PQRS via NwHIN.

e. Administrative Claims

For purposes of reporting for the 2015 and 2016 PQRS payment adjustments only, we propose to modify § 414.90(h) to allow eligible professionals and group practices to use an administrative claims reporting mechanism. The administrative claims reporting mechanism builds off of the traditional PQRS claims-based reporting mechanism. Under the traditional PQRS claims-based reporting mechanism, eligible professionals and group practices wishing to report data on PQRS quality measures via claims for the incentives and for the payment adjustments must submit quality data codes (QDCs) on claims to CMS for analysis. Under the proposed administrative claims reporting mechanism, unlike the traditional claims-based reporting option, an eligible professional or group practice would not be required to submit QDCs on claims to CMS for analysis. Rather, CMS would analyze every eligible professional's or group practice's patient's Medicare claims to determine whether the eligible professional or group practice has performed any of the clinical quality actions indicated in the proposed PQRS quality measures in Table 63. We propose that, for purposes of assessing claims for quality measures under this option, all claims for services furnished that occurs during the 2015 and/or 2016 PQRS reporting period would need to be processed by no later than 60 days after the end of the respective 2015 and 2016 payment adjustment reporting periods (that is, December 31, 2013 and December 31, 2014). We invite public comment on our proposed requirements for using the administrative claims-based reporting mechanism for the 2015 and 2016 payment adjustments.

4. Proposed Criteria for Satisfactory Reporting for the 2013 and 2014 Incentives

For 2013 and 2014, in accordance with § 414.90(c)(3), eligible professionals that satisfactorily report data on PQRS quality measures are eligible to receive an incentive equal to 0.5 percent of the total estimated Medicare Part B allowed charges for all covered professional services furnished by the eligible professional or group practice during the applicable reporting period. This section contains our proposed criteria for satisfactory reporting for the 2013 and 2014 incentives, which are the last two incentives authorized under the PQRS.

a. Proposed Criteria for Satisfactory Reporting for Individual Eligible Professionals

Please note that, in large part, we are proposing many of the same criteria for satisfactory reporting for individual eligible professionals for the 2013 and 2014 incentives that we established for the 2012 incentive, as eligible professionals are already familiar with these reporting criteria.

(1) Proposed Criteria for Satisfactory Reporting on Individual PQRS Quality Measures via Claims

According to the “2010 Physician Quality Reporting System and eRx Reporting Experience and Trends,” available for viewing in the “downloads” section of the main page the PQRS Web site (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html), reporting via the claims-based reporting mechanism was the most commonly used reporting method. We believe that this trend continues, so we anticipate that, with respect to the 2013 and 2014 incentives, the criteria for satisfactory reporting for the claims-based reporting mechanism will be the method most widely used by individual eligible professionals. So as not to change reporting criteria that a large number of individual eligible professionals are familiar with using, we established the same reporting criteria for the 2011 and 2012 incentives (76 FR 73330). Therefore, for the respective 12-month reporting periods for the 2013 and 2014 incentives, based on our authority under section 1848(m)(3)(D) of the Act to revise the reporting criteria for satisfactory reporting specified under the statute and our desire to maintain the same reporting criteria we established for individual eligible professionals for the 2012 PQRS incentive (76 FR 73330), we propose the following criteria for satisfactory reporting of PQRS individual measures for individual eligible professionals using the claims-based reporting mechanism: Report at least 3 measures, OR, if less than 3 measures apply to the eligible professional, report 1—2 measures, AND report each measure for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a 0 percent performance rate would not be counted. For an eligible professional who reports fewer than 3 measures via the claims-based reporting mechanism, we propose that the eligible professional be subject to the Measures Applicability Validation (MAV) process, which would allow us to determine whether an eligible professional should have reported quality data codes for additional measures. We believe the MAV process is necessary to review whether there are other closely related measures (such as those that share a common diagnosis or those that are representative of services typically provided by a particular type of eligible professional). Under the MAV process, if an eligible professional who reports on fewer than 3 measures reports on a measure that is part of an identified cluster of closely related measures, then the eligible professional would not qualify as a satisfactory reporter for the 2013 and/or 2014 incentives. We are proposing this MAV process for the claims-based reporting mechanism only because it is more likely for EPs to report on more than 3 measures under the registry and EHR-based reporting mechanisms, as a registry or EHR product will typically automatically report on all measures that apply to the eligible professional's practice. We note that, consistent with section 1848(m)(3)(A)(i) of the Act, this proposed claims-based reporting criteria is the only proposed criteria where an eligible professional may report on fewer than 3 measures. We invite public comment on the proposed criteria for satisfactory reporting of individual measures by individual eligible professionals via claims for the 2013 and 2014 incentives.

(2) Proposed Criteria for Satisfactory Reporting on Individual PQRS Quality Measures via Registry

In addition, we note that section 1848(m)(3)(A)(ii) of the Act provides that, to meet the criteria for satisfactory reporting under PQRS, an eligible professional would be required to report on at least 3 measures for at least 80 percent of the cases in which the respective measure is reportable under the system. Although we have the authority under section 1848(m)(3)(D) of the Act to revise the criteria for satisfactory reporting, with respect to registry-based reporting, we have largely followed these reporting criteria for the PQRS incentives. According to the “2010 Physician Quality Reporting System and eRx Reporting Experience and Trends,” eligible professionals are more likely to meet the requirements for a PQRS incentive using the satisfactory reporting criteria for the registry-based reporting mechanism than claims. In fact, in 2010, approximately 87 percent of the eligible professionals reporting individual PQRS quality measures via registry were eligible and met the criteria for satisfactory reporting for the 2010 incentive. Since eligible professionals have had success with using these satisfactory reporting criteria, we believe such criteria are appropriate and see no reason to change the criteria for satisfactory reporting via registry that has been in place since 2010. Therefore, for those reasons and our desire to maintain the same reporting criteria we established for individual eligible professionals for the 2012 PQRS incentive (76 FR 73331), we propose the following criteria for satisfactory reporting of PQRS individual measures for individual eligible professionals using the registry-based reporting mechanism for the 12-month reporting periods for the 2013 and 2014 incentives, respectively: Report at least 3 measures AND report each measure for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted. We invite public comment on the proposed criteria for satisfactory reporting of individual measures by individual eligible professionals via a registry for the 2013 and 2014 incentives.

(3) Proposed Criteria for Satisfactory Reporting on Individual PQRS Quality Measures via EHR

As stated previously, section 1848(m)(7) of the Act requires us to develop a plan to integrate reporting requirements for PQRS and the EHR Incentive Program. Therefore, with respect to EHR-based reporting, it is our main goal to align our EHR reporting requirements with the reporting requirements an eligible professional must meet in order to satisfy the clinical quality measure (CQM) component of meaningful use (MU) under the EHR Incentive Program. In the EHR Incentive Program—Stage 2 NPRM (77 FR 13698), we proposed the CQM reporting requirements for the EHR Incentive Program for 2013, 2014, 2015, and potentially subsequent years. For the EHR reporting periods in CY 2013, we proposed (77 FR 13745) to continue the CQM reporting requirements that were established for eligible professionals for CYs 2011 and 2012 in the EHR Incentive Program—Stage 1 final rule (75 FR 44398-44411). Therefore, to align with the reporting requirements for meeting the CQM component of meaningful use, and based on our authority under section 1848(m)(3)(D) of the Act to revise the reporting criteria for satisfactory reporting identified under the statute, we propose the following criteria for the 12-month reporting period for the 2013 incentive:

  • As required by the Stage 1 final rule, eligible professionals must report on three Medicare EHR Incentive Program core or alternate core measures, plus three additional measures. The EHR Incentive Program' core, alternate core, and additional measures can be found in Table 6 of the EHR Incentive Program's Stage 1 final rule (75 FR 44398) or in Tables 32 and 33 of this section. We refer readers to the discussion in the Stage 1 final rule for further explanation of the requirements for reporting those CQMs (75 FR 44398 through 44411).

Under this proposal, eligible professionals using these reporting criteria would be required to report on 6 measures. For the proposed PQRS EHR measures that are also Medicare EHR Incentive Program core, alternate core, or additional measures that the eligible professional reports (75 FR 44398 through 44411), an eligible professional would be required to report the applicable measure for 100 percent of the eligible professionals Medicare Part B FFS patients.

In addition, we note that section 1848(m)(3)(A)(ii) of the Act provides that, to meet the criteria for satisfactory reporting under PQRS, an eligible professional would be required to report on at least 3 measures for at least 80 percent of the cases in which the respective measure is reportable under the system. Although we have the authority under section 1848(m)(3)(D) of the Act to revise the criteria for satisfactory reporting, for EHR-based reporting, we have largely kept these reporting criteria for the 2010—2012 incentives. As we have seen some eligible professionals succeed with these criteria, we are proposing the following similar criteria for the 12-month reporting period for the 2013 incentive: Report at least 3 measures AND report each measure for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted.

We note that the Medicare EHR Incentive Program has proposed options for meeting the CQM component of achieving meaningful use beginning with CY 2014 (for more information on these options, please see 77 FR 13746—13748). To align our EHR-based reporting requirements with those proposed under the Medicare EHR Incentive Program, we are proposing the following criteria for satisfactory reporting using the EHR-based reporting mechanism for the 12-month reporting period for the 2014 incentive:

  • Option 1a: Select and submit 12 clinical quality measures available for EHR-based reporting from Tables 32 and 33, including at least 1 measure from each of the following 6 domains—(1) patient and family engagement, (2) patient safety, (3) care coordination, (4) population and public health, (5) efficient use of healthcare resources, and (6) clinical process/effectiveness.
  • Option 1b: Submit 12 clinical quality measures composed of all 11 of the proposed Medicare EHR Incentive Program core clinical quality measures specified in Tables 32 and 33 plus 1 menu clinical quality measure from Tables 32 and 33. It is our intention to finalize the reporting criteria that aligns with the criteria that will be established for meeting the CQM component of meaningful use beginning with CY 2014 for the Medicare EHR Incentive Program. Furthermore, to the extent that the final criteria for meeting the CQM component of achieving meaningful use differ from what was proposed, our intention is to align with the reporting criteria the EHR Incentive Program ultimately establishes. Therefore, eligible professionals who participate in both PQRS and the EHR Incentive Program would be able to use one reporting criterion, during overlapping reporting periods, to satisfy the satisfactory reporting criteria under PQRS and the CQM component of meaningful use under the Medicare EHR Incentive Program. We invite public comment on this considered proposal.

In addition to this proposed criterion, the Medicare EHR Incentive Program proposed that, beginning with CY 2014, eligible professionals who participate in both the Physician Quality Reporting System and the Medicare EHR Incentive Program may satisfy the CQM component of meaningful use if they submit and satisfactorily report Physician Quality Reporting System clinical quality measures under the Physician Quality Reporting System's EHR reporting option using Certified EHR Technology (77 FR 13748). Since this language suggests that the Medicare EHR Incentive Program may defer to the satisfactory reporting criteria for the EHR-based reporting mechanism that we will establish for 2014, we are proposing the following reporting criteria for the 12-month reporting period for the 2014 incentive that largely conform to the criteria set forth under section 1848(m)(3)(A)(ii) of the Act that we established for the 2012 incentive and that we are proposing for the 2013 incentive: report at least 3 measures AND report each measure for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted. We invite public comment on the proposed criteria for satisfactory reporting on PQRS measures via EHR.

(4) Proposed Criteria for Satisfactory Reporting on PQRS Measures Groups via Claims

In the CY 2012 Medicare PFS final rule, we established the following criteria for satisfactorily reporting PQRS measures groups for the 12-month reporting period for the 2012 incentive (76 FR 73335):

  • Report at least 1 PQRS measures group, AND report each measures group for at least 30 Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted; OR
  • Report at least 1 PQRS measures group, AND report each measures group for at least 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT report each measures group on no less than 15 Medicare Part B FFS patients seen during the reporting period to which the measures group applies. Measures groups containing a measure with a 0 percent performance rate will not be counted.

We received stakeholder feedback that it is difficult for some specialties to meet the 30 Medicare Part B FF patient threshold. Therefore, based on our authority under section 1848(m)(3)(D) of the Act to revise the reporting criteria for satisfactory reporting, we propose the following criteria for the satisfactory reporting PQRS measures groups for individual eligible professionals using the claims-based reporting mechanism for the 12-month reporting periods for the 2013 and 2014 incentives: Report at least 1 measures group AND report each measures group for at least 20 Medicare Part B FFS patients. Measures groups containing a measure with a zero percent performance rate will not be counted.

We note that, in an effort to simplify the satisfactory reporting criteria, we are only proposing 1 option for meeting the criteria for satisfactory reporting using PQRS measures groups via claims. We invite public comment on the proposed criterion for satisfactory reporting of measures groups via claims for the 2013 and 2014 incentives.

(5) Proposed Criteria for Satisfactory Reporting on PQRS Measures Groups via Registry

In the CY 2012 Medicare PFS final rule, we established the following criteria for satisfactorily reporting PQRS measures groups for the 12-month reporting period for the 2012 incentive (76 FR 73337):

  • Report at least 1 PQRS measures group AND report each measures group for at least 30 Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted; OR
  • Report at least 1 PQRS measures group, AND report each measures group for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT report each measures group on no less than 15 Medicare Part B FFS patients seen during the reporting period to which the measures group applies. Measures groups containing a measure with a 0 percent performance rate will not be counted.

In addition, we established the following criteria for satisfactorily reporting PQRS measures groups for the 6-month reporting period for the 2012 incentive (76 FR 73337): Report at least 1 PQRS measures group, AND report each measures group for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT report each measures group on no less than 8 Medicare Part B FFS patients seen during the reporting period to which the measures group applies. Measures groups containing a measure with a 0 percent performance rate will not be counted.

We received stakeholder feedback that it is difficult for some specialties to meet the 30 Medicare Part B FF patient threshold. Therefore, based on our authority under section 1848(m)(3)(D) of the Act to revise the reporting criteria for satisfactory reporting, we propose the following criteria for satisfactory reporting of PQRS measures groups for individual eligible professionals using the registry-based reporting mechanism for the 2013 and 2014 incentives:

(1) For the 12-month reporting periods for the respective 2013 and 2014 incentives, report at least 1 measures group, AND report each measures group for at least 20 patients, a majority of which must be Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted.

(2) For the 6-month reporting period for the respective 2013 and 2014 incentives, report at least 1 measures group, AND report each measures group for at least 20 patients, a majority of which must be Medicare Part B FFS patients. Measures group containing a measure with a zero percent performance rate will not be counted. Please note that this is the same criterion established for the 12-month reporting period. We are proposing the same criterion for both reporting periods in an effort to simplify the reporting criterion for satisfactory reporting.

We note that, while we still are proposing to require that an eligible professional report on at least 20 patients, we understand that a patient's personal identification information may be stripped when data is collected via a qualified registry. As such, we understand that it may be difficult to distinguish Medicare and non-Medicare patients. Given this difficulty and that the eligible professionals generally would be attempting to report data on Medicare patients, we believe the reporting of some non-Medicare patients could serve a proxy for the reporting of Medicare patients whose data is not easily distinguishable as data on Medicare patients under this reporting mechanism.

Finally, we note that these proposals would satisfy the requirement under section 1848(m)(5)(F) of the Act that we provide for alternative reporting periods and criteria for satisfactory reporting with regard to measures groups and registry-based reporting. We invite public comment on the proposed criteria for satisfactory reporting of measures groups by individual eligible professionals via registry for the 2013 and 2014 incentives.

Tables 25 and 26 provide a summary of our proposals for the satisfactory reporting of PQRS quality measures for the 2013 and 2014 incentives.

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b. Proposed Criteria for Satisfactory Reporting for Group Practices Selected To Participate in the GPRO

This section contains our proposed criteria for satisfactory reporting for group practices selected to participate in the GPRO for the 2013 and 2014 incentives, which are the last two incentives authorized under the Physician Quality Reporting System. Please note that, in addition to offering the GPRO web-interface tool that we've previously included under the program, we are proposing new criteria for group practices under the GPRO that allow group practices to use the claims, registry, and EHR-based reporting mechanisms. In prior program years, large group practices have been successful in reporting quality measures data via the GPRO web-interface. We are proposing new criteria under the claims, qualified registry, and EHR-based reporting mechanisms because we believe that smaller groups may benefit from different reporting criteria and also other reporting mechanisms. Since the introduction of smaller group practices comprised of 25-99 eligible professionals under the GPRO is fairly recent, and given that we are proposing to modify the definition for group practice such that the PQRS GPRO would include beginning in 2013 group practices comprised of 2-24 eligible professionals, we are proposing additional criteria for reporting because we believe it may be more practicable that smaller group practices report on PQRS quality measures via claims, qualified registry, or direct EHR or EHR data submission vendor versus the GPRO web-interface, which was designed for use by larger group practices.

(1) Proposed Criteria for Beneficiary Assignment Methodology and Satisfactory Reporting on PQRS Quality Measures via the GPRO Web-Interface

In order to populate the GPRO web-interface, we must first assign beneficiaries to each group practice and then from those assigned beneficiaries draw a sample of beneficiaries for the disease modules in the GPRO web interface. This assignment and sampling methodology is based on what we learned from the PGP demonstration. The PGP demonstration aims to encourage coordination of the care furnished to individuals under Medicare parts A and B by institutional and other providers, practitioners, and suppliers of health care items and services; encourage investment in administrative structures and processes to ensure efficient service delivery; and reward physicians for improving health outcomes and reducing the rate of growth in health care expenditures. In the PGP Transition demonstration, the goal of beneficiary assignment criteria is to identify Medicare beneficiaries that have a plurality of their allowed charges for office evaluation and management (E & M) services furnished at a participating PGP during the year. If they do not have any primary care physician visits, then they are assigned using plurality of allowed charges for all office E & M physician visits regardless of specialty.

In 2012, the beneficiaries that we assigned to group practices, for purposes of reporting on the PQRS quality measures via the GPRO web-interface, were limited to those Medicare Part B FFS beneficiaries with Medicare Parts A and B claims for whom Medicare is the primary payer. Assigned beneficiaries did not include Medicare Advantage enrollees. We assigned a beneficiary to the group practice if the practice provided the plurality of a beneficiary's office or other outpatient office evaluation and management allowed charges. Beneficiaries with only one office visit to the group practice were eliminated from the group practice's assigned patient population. Please note that, for the GPRO web-interface, similar to the PGP demonstration, also takes eligible professional services other than physician services when evaluating a group practice's office E & M services. We are proposing to continue using this assignment methodology for 2013 and subsequent years because it is already in place operationally. We believe the assignment methodology we are currently using adequately captures sufficient data to reflect the quality of care furnished by group practices reporting under the GPRO web-interface. We invite public comment on our proposal to continue to use this methodology for assigning beneficiaries.

We note that the Medicare Shared Savings Program uses a somewhat different assignment methodology. More information regarding the assignment methodology that is used in the Shared Savings Program be found on the program Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/sharedsavingsprogram/. However, we note that consistent with the requirements of section 1899(c) of the Act, the assignment methodology used in the Shared Savings Program (which involves a 2-step process) has a greater focus on physician-provided primary care services.

In order to more closely align with the Medicare Shared Savings Program, we considered proposing to modify the assignment method PQRS uses to assign beneficiaries to a group practice to be similar to the two-step assignment method specified in § 425.402 that is used under the Medicare Shared Savings Program to assign beneficiaries to an ACO. Consistent with that two-step methodology, in order for a beneficiary to be eligible for assignment to a group practice, the beneficiary must have received at least one primary care service from a physician (as defined in § 425.20) within the group practice during the reporting period. Accordingly, we would identify beneficiaries who received at least one primary care service from any group practice physician (regardless of specialty) participating in the group practice during the reporting period. Under the first assignment step, we would assign the beneficiary to the group practice if the beneficiary had at least one primary care service furnished by a primary care physician at the participating group practice, and more primary care services (measured by Medicare allowed charges) furnished by primary care physicians in the participating group practice than furnished by primary care physicians at any other group practice or non-group practice physician. The second step applies only for those beneficiaries who do not receive any primary care services from a primary care physician during the reporting period. We would assign the beneficiary to the participating group practice in this step if the beneficiary had at least one primary care service furnished by a group practice physician, regardless of specialty, and more primary care services were furnished by group practice professionals (including non-primary care physicians, nurse practitioners, physician assistants or clinical nurse specialists) (measured by Medicare allowed charges) at the participating group practice than at any other group practice or non-group practice physician. We would then pull samples of beneficiaries for the relevant measures/modules from this population of assigned beneficiaries to populate the GPRO web interface. We considered making this change to the assignment method beginning with the 2013 PQRS GPRO web-interface so that the rules used to assign beneficiaries to group practices participating in PQRS and ACOs participating in the Medicare Shared Savings Program would be consistent. Since both group practices that are participating in the PQRS GPRO and ACOs participating in the Medicare Shared Savings Program would be using the same GPRO web interface to report the same set of quality measures to CMS, we believe that applying consistent assignment methods across the two programs would allow us to streamline our processes and could potentially reduce confusion among group practices considering participation in the PQRS GPRO or ACOs considering participation in the Medicare Shared Savings Program. We invite public comment on this alternative option of adopting a methodology similar to the one the Medicare Shared Savings Program uses to assign beneficiaries to ACOs to assign beneficiaries to group practices that report on PQRS quality measures via the GPRO web-interface beginning in 2013.

Consistent with the group practice reporting requirements under section 1848(m)(3)(C) of the Act, we propose the following criteria for the satisfactory reporting of PQRS quality measures for group practices selected to participate in the GPRO for the 12-month reporting periods for the 2013 and 2014 incentives, respectively, using the GPRO Web-interface for groups practices of 25-99 eligible professionals: Report on all measures included in the web interface; AND populate data fields for the first 218 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each disease module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 218, then report on 100 percent of assigned beneficiaries. In other words, we understand that, in some instances, the sampling methodology CMS provides will not be able to assign at least 218 patients on which a group practice may report, particularly those group practices on the smaller end of the range of 25-99 eligible professionals. If the group practice is assigned less than 218 Medicare beneficiaries, then the group practice would report on 100 percent of its assigned beneficiaries. In addition, we propose the following criteria for the satisfactory reporting of PQRS quality measures for group practices selected to participate in the GPRO for the 2013 and 2014 incentives, respectively, using groups practices of 100 or more eligible professionals: Report on all measures included in the web interface; AND populate data fields for the first 411 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each disease module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 411, then report on 100 percent of assigned beneficiaries.

The satisfactory criteria we proposed for the GPRO web-interface for large group practices for the 2013 and 2014 incentives is consistent with the reporting criteria we established for the 2012 PQRS incentive (76 FR 73339). The satisfactory criteria we proposed for groups of 25-99 eligible professionals are consistent with the reporting criteria we established for the 2012 PQRS incentive (76 FR 73339). We are proposing these same criteria because the thresholds proposed in these criteria are based on analysis performed on group reporting based on the PGP demonstration to determine reasonable thresholds for group practice reporting. Therefore, we believe the satisfactory reporting criteria that we have proposed for the GPRO web-interface for the 2013 and 2014 incentives are appropriate criteria and reasonable for groups to meet.

Furthermore, we propose using Medicare Part B claims data for dates of service on or after January 1 and submitted and processed by approximately the last Friday in October of the applicable 12-month reporting period under which the group practice participates in the GPRO to assign Medicare beneficiaries to each group practice. For example, for a group practice participating under the GPRO for the reporting periods occurring in 2013, for the sampling model, we propose that we would assign beneficiaries on which to report based on Medicare Part B claims with dates of service beginning January 1, 2013 and processed by October 25, 2013. We invite public comment on our proposal to continue to use this methodology for assigning beneficiaries.

(2) Proposed Criteria for Satisfactory Reporting on Individual PQRS Quality Measures for Group Practices Selected To Participate in the GPRO via Claims, Registry, and EHR

We are proposing to have the claims, registry, and EHR reporting mechanisms available for group practices of 2-99 eligible professionals to use to report PQRS quality measures. We note that we are not proposing to make the claims, registry, and EHR reporting mechanisms available to larger groups of 100 or more eligible professionals, because we believe that these larger group practices do not face the potential limitations that smaller group practices may face when using the GPRO web-interface. Although group practices of 100-249 were also only introduced to the GPRO web-interface in 2012, we note that we believe these practices are sufficiently large enough to account for the varied measures required for reporting under the GPRO web-interface. For example, the proposed criteria for satisfactory reporting on individual PQRS quality measures for group practices using the GPRO web-interface would require a group practice to report on all 18 measures that are indicated in Table 35. Larger group practices tend to have more varied practices, so it would be easier for larger groups to report on a measure set that covers multiple domains, such as the one proposed in Table 35, than smaller group practices that tend to be focused on a limited set of specialties. We certainly think this is the case for the smallest group practices comprised of 2-24 eligible professionals, which is the reason why we are not proposing that the GPRO web-interface be available for use for these smaller group practices. With respect to group practices comprised of 25-99 eligible professionals, we believe it is possible for these group practices to have a practice that is sufficiently varied to be able to report on measures that cut across multiple domains. However, we note that use of the GPRO web-interface as a reporting mechanism was only introduced to groups of 2-99 in 2012, so no data is available to determine the feasibility of groups of 25-99 using the GPRO web-interface. Therefore, in the event these groups feel that reporting using the GPRO web-interface would be difficult, we are proposing criteria alternative to that proposed under the GPRO web-interface for satisfactory reporting for the 2013 and 2014 incentives using the claims, registry, and EHR-based reporting mechanisms that mirror the criteria we are proposing for individual reporting for the claims, registry, and EHR-based reporting mechanisms from the 2013 and 2014 incentives. We note that the criteria we are proposing for the 2013 and 2014 incentives using the claims, registry, and EHR-based reporting mechanisms are similar to the criteria for individual reporting, because we believe smaller group practices are more akin to individuals with respect to practice scope. The larger the group practice, the more likely the group practice would benefit using the reporting options under the GPRO web-interface.

Therefore, based on our authority under section 1848(m)(3)(C) of the Act, we propose the following satisfactory reporting criteria via claims for group practices comprised of 2-99 eligible professionals under the GPRO for the 2013 and 2014 incentives via claims: Report at least 3 measures AND report each measure for at least 50 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted.

For those group practices that choose to report using a qualified registry, we propose the following satisfactory reporting criteria via qualified registry for group practices comprised of 2-99 eligible professionals under the GPRO for the 2013 and 2014 incentives: Report at least 3 measures AND report each measure for at least 80 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted. Please note that we are only proposing these satisfactory reporting criteria for group practices comprised of 2-99 eligible professionals because we believe that larger group practices should have the technical capacity and resources to report on the more expansive measure set that is collected via the GPRO web-interface.

For group practices choosing to report PQRS quality measures via EHR, we propose the following 2 options for the satisfactory reporting criteria via a direct EHR product or EHR data submission vendor for group practices comprised of 2-99 eligible professionals under the GPRO for the 2013 incentive:

Option 1: Eligible professionals in a group practice must report on three Medicare EHR Incentive Program core or alternate core measures, plus three additional measures. The EHR Incentive Program' core, alternate core, and additional measures can be found in Table 6 of the EHR Incentive Program's Stage 1 final rule (75 FR 44398) or in Tables 32 and 33 of this section. We refer readers to the discussion in the Stage 1 final rule for further explanation of the requirements for eligible professionals reporting those CQMs (75 FR 44398 through 44411).

Option 2: Report at least 3 measures AND report each measure for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted.

We note that the Medicare EHR Incentive Program has proposed 2 options for meeting the CQM component of achieving meaningful use beginning with CY 2014 (for more information on these options, please see 77 FR 13746-13748). To align our EHR-based reporting requirements with those proposed under the Medicare EHR Incentive Program, we are proposing the following criteria for satisfactory reporting using the EHR-based reporting mechanism for the 12-month reporting period for the 2014 incentive:

  • Option 1a: Select and submit 12 clinical quality measures available for EHR-based reporting from Tables 32 and 33, including at least 1 measure from each of the following 6 domains—(1) patient and family engagement, (2) patient safety, (3) care coordination, (4) population and public health, (5) efficient use of healthcare resources, and (6) clinical process/effectiveness.
  • Option 1b: Submit 12 clinical quality measures composed of all 11 of the proposed Medicare EHR Incentive Program core clinical quality measures specified in Tables 32 and 33 plus 1 menu clinical quality measure from Tables 32 and 33. We propose to adopt the group reporting criteria that aligns with the criteria that will be established for meeting the CQM component under CY 2014 for the Medicare EHR Incentive Program. Furthermore, to the extent that the final group reporting criteria for meeting the CQM component of achieving meaningful use differ from what was proposed, our intention is to align with the group reporting criteria the EHR Incentive Program ultimately establishes. We invite public comment on this proposal.

We also considered proposing the following satisfactory reporting criteria for the 2014 PQRS incentive for groups of 2-99 that was similar to the satisfactory reporting criteria being proposed for the 2013 PQRS incentive: report at least 3 measures, AND report each measure for at least 80 percent of the group practice's Medicare Part B FFS patients seen during the reporting period to which the measure applies. Measures with a zero percent performance rate will not be counted. We invite public comment on this considered proposal.

We note that we believe these proposed criteria meets the requirements for group practice reporting specified in section 1848(m)(3)(C) of the Act. Section 1848(m)(3)(C) requires that the criterion for group reporting use a statistical sampling model, such as the model used in the PGP demonstration. We note that, although these criteria depart from the model used in the PGP demonstration, we believe that these criteria still meet the statistical sampling model requirement in that the group practices would still be required to report the measures on a sample of their patients. Rather than CMS choosing which sample of patients the group practice must report, with these proposed criteria, the group practice decides on which sample of patients to report for either 50 percent, 80 percent, or 100 percent of its patients depending on the reporting mechanism the group practice chooses. For example, if a group practice who sees 100 patients during the 2013 incentive reporting period chooses to report PQRS quality measures using the claims-based reporting mechanism, for the 2013 incentive, the group practice would have to report at least 3 measures for 50 percent of the practice's patients. The group practice may pick which patients on which to report, as long as the group practice reports on at least 50 of the patients the practice sees in 2013. If the same group practice decides to report on PQRS quality measures using the Option 1 criteria for EHR-based reporting for the 2013 incentive, the group practice would report on all 100 patients. We note that although reporting on 100 percent of patients is not a sample, for data collection purposes, CMS would only collect data on the group practice's patients to which the EHR measures apply. Therefore, even though a group practice would report on 100 percent of patients to which the measure applies, not all of the EHR measures would necessarily apply to all of the group practice's patients. Since the group practice is then only providing information on its applicable patients, we believe the proposed EHR reporting criteria would still meet the statistical sampling model requirement. We invite public comment on the proposed criteria for satisfactory reporting of individual measures by group practices via claims, registry, or EHR for the 2013 and 2014 incentives.

A summary of the proposed criteria for satisfactory reporting for group practices selected to participate in the GPRO for the 2013 and 2014 incentives is specified in Tables 27 and 28:

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

c. Proposed Analysis of the Criteria for Satisfactory Reporting for the 2013 and 2014 Incentives

For the proposed criteria for satisfactory reporting for the 2013 and 2014 incentives described in this section, we propose that eligible professionals and group practices may not combine different satisfactory reporting criteria under different reporting mechanisms to meet the requirements of satisfactory reporting for the 2013 and 2014 incentives. For example, an eligible professional may not meet the requirements for the 2013 incentive by reporting on 2 applicable PQRS quality measures via claims and 1 applicable PQRS quality measure via qualified registry, because the eligible professional did not meet the criteria for satisfactory reporting under at least one reporting mechanism. Similarly, a group practice would be required to select a single reporting mechanism for the entire group practice. For example, for a group practice consisting of 4 eligible professionals, the group practice would not be able to meet the requirements for the 2013 incentive by reporting 2 individual measures via claims and 1 measure via the direct EHR submission method.

For individual eligible professionals and group practices reporting on individual measures and/or measures groups, please note that, although an eligible professional or group practice could meet more than one criterion for satisfactory reporting, only one incentive payment will be made to the eligible professional or group practice. For example, if an eligible professional meets the criteria for satisfactory reporting of individual measures via claims and measures groups via claims for the 2013 incentive, the eligible professional would nonetheless only be entitled to one incentive payment. CMS would consider the eligible professional to be incentive eligible under whichever reporting criterion yields the greatest bonus. We invite public comment on our proposed analysis of the criteria for satisfactory reporting for the 2013 and 2014 incentives.

5. Proposed Criteria for Satisfactory Reporting for the Payment Adjustments

Section 1848(a)(8) of the Social Security Act, as added by section 3002(b) of the Affordable Care Act, provides that for covered professional services furnished by an eligible professional during 2015 or any subsequent year, if the eligible professional does not satisfactorily report data on quality measures for covered professional services for the quality reporting period for the year, the fee schedule amount for services furnished by such professional during the year shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services. The applicable percent for 2015 is 98.5 percent. For 2016 and subsequent years, the applicable percent is 98.0 percent.

This section contains the proposed criteria for satisfactory reporting for purposes of the 2015 and 2016 payment adjustments for eligible professionals and group practices, as well as some discussion of what we are considering for the payment adjustments for 2017 and beyond.

As stated previously, the majority of eligible professionals currently are not participating in the PQRS. Yet, the payment adjustment will apply to all eligible professionals who are not satisfactory reporters during the reporting period for the year. Therefore, in implementing the PQRS payment adjustment, we seek to achieve two overarching policy goals. First, and foremost, we seek to increase participation in the PQRS and to implement the payment adjustment in a manner that will allow eligible professionals who have never participated in the program to familiarize themselves with the program. Second, we seek to align the reporting requirements under the PQRS with the quality reporting requirements being proposed for the physician value-based payment modifier discussed in section III.K of this proposed rule.

a. Proposed Criteria for Satisfactory Reporting for the 2015 and 2016 Payment Adjustments for Eligible Professionals and Group Practices Using the Claims, Registry, EHR, and GPRO Web-Interface Reporting Mechanisms

This section contains our proposals for the criteria for satisfactory reporting for the 2015 and 2016 payment adjustments using the claims, registry, EHR-based, and GPRO web-interface reporting mechanisms. First, we propose that for purposes of the 2015 and 2016 payment adjustments (which would be based on data reported during 12 and 6-month reporting periods that fall within 2013and 2014, respectively), an eligible professional or group practice would meet the requirement to satisfactorily report data on quality measures for covered professional services for the 2015 and 2016 payment adjustments by meeting the requirement for satisfactory reporting for the 2013 and 2014 incentives respectively. That is, we are proposing the exact same criteria for satisfactory reporting for the 2015 and 2016 payment adjustments that we are proposing for the 2013 and 2014 incentives, described in Tables 25 and 26, with the exception of one additional alternative criterion. Since we have already proposed satisfactory reporting criteria for the 2013 and 2014 incentives and the reporting periods for the respective 2013 and 2014 incentives and 2015 and 2016 payment adjustments coincide, we believe it is appropriate that the proposed criteria for the 2013 and 2014 respective incentives apply to satisfy the satisfactory reporting requirements for the 2015 and 2016 payment adjustments, respectively. Please note that these proposed criteria for the 2013 and 2014 PQRS incentives are the only criteria we are proposing to establish for the respective 2015 and 2016 PQRS payment adjustments for group practices using the GPRO web-interface.

With respect to individual eligible professionals also participating in the EHR Incentive Program, it is our intention to align our proposed criteria for satisfactory reporting for the 2015 and 2016 PQRS payment adjustments with the criteria for meeting the CQM component of meaningful use applicable during the 2015 and 2016 PQRS payment adjustment reporting periods. For eligible professionals participating in PQRS and the EHR Incentive Program using a direct EHR product or EHR data submission vendor that is CEHRT, please note that since we are proposing to align our proposed EHR criteria for satisfactory reporting for the 2013 and 2014 PQRS incentives with the proposed criteria for meeting the CQM component of meaningful use for CYs 2013 and 2014, if these proposals are established and we meet our goal of aligning the two programs, we note that an eligible professional meeting the CQM component of meaningful use during the PQRS 2015 and 2016 payment adjustment reporting periods using a direct EHR product or EHR data submission vendor that is CEHRT would be able to meet the requirements for satisfactory reporting for the 2015 and 2016 PQRS payment adjustments by submitting a single set of data.

As a result of the overarching goals we have articulated above about encouraging participation and concern about eligible professionals' familiarity and experience with the program, we propose the following alternative criteria for satisfactory reporting during the 12-month reporting periods for the 2015 and 2016 payment adjustments for eligible professionals and group practices: report 1 measure or measures group using the claims, registry, or EHR- based reporting mechanisms. We understand that this particular proposed alternative criterion for satisfactory reporting are significantly less stringent that the satisfactory reporting criteria we have proposed for the 2013 and 2014 incentives. However, we stress that we are proposing less stringent criteria only to ease eligible professionals and group practices who have not previously participated in PQRS into reporting. We note that we are only proposing these criteria for the 2015 and 2016 payment adjustments. As indicated in section III.G.5.c., for 2017 and beyond, we anticipate eliminating these alternative proposed criteria and establishing criteria that more closely resembles the proposed satisfactory reporting criteria for the 2013 and 2014 incentives.

With respect to group practices, section 1848(m)(3)(C) requires that the criterion for group reporting use a statistical sampling model, such as the model used in the PGP demonstration, we note that this proposed reporting criteria meets this standard, as the group practice would decide on which sample of patients to report. In these proposed criteria, the group practice would select the sample number, meaning the group could choose to report on all applicable patients or a certain number of patients to which the particular measure applied. Please note that, although the group practice may choose the sample, we anticipate that the sample the group practice selects would represent a sufficient picture of the beneficiaries the group practice sees. We invite public comment on the proposed criteria for satisfactory reporting for the 2015 and 2016 payment adjustments for eligible professionals and group practices using the claims, registry, EHR-based reporting mechanisms.

b. Proposed Criteria for Satisfactory Reporting for the 2015 and 2016 Payment Adjustments for Eligible Professionals and Group Practices Using the Administrative Claims-Based Reporting Mechanism

(1) Proposed Criteria for Satisfactory Reporting for the 2015 and 2016 Payment Adjustments for Eligible Professionals and Group Practices Using the Administrative Claims-Based Reporting Mechanism

Unlike the traditional PQRS claims-based reporting mechanism, the proposed administrative claims-based reporting mechanism does not require an eligible professional to submit quality data codes (QDCs) on Medicare Part B claims. Rather, using the administrative claims-based reporting mechanism only requires that an eligible professional or group practice submit Medicare claims to CMS. Since CMS, rather than the eligible professional or group practice, is performing the analysis and collecting the data provided in an eligible professional's or group practice's Medicare claims for an eligible professional's or group practice's Medicare beneficiaries, we believe it is appropriate to propose a reporting threshold that is more stringent than that proposed for the 2013 and 2014 incentives that use traditional PQRS reporting mechanisms. Therefore, we propose the following criteria for satisfactory reporting for the 12-month reporting periods for the 2015 and 2016 payment adjustments for eligible professionals and group practices using the administrative claims-based reporting mechanism: Report ALL measures in Table 63 for 100 percent of the cases in which the measures apply.

Section 1848(m)(3)(C) requires that the criterion for group reporting use a statistical sampling model, such as the model used in the PGP demonstration. We note that, although these criteria depart from the model used in the PGP demonstration, similar to our arguments for the satisfactory reporting criteria we are proposing for group practices using the claims, registry, and EHR-based reporting mechanisms, we believe that these criteria still meet the statistical sampling model requirement in that the group practices would still be required to report the measures on a sample of their patients. We understand that, with these proposed criteria, the group practice provides claims data to CMS on 100 percent of its patients for which the measure applies. We note that although reporting on 100 percent of patients is not a sample, for data collection purposes, CMS would only collect data on the group practice's patients to which the administrative claims measures apply. Therefore, even though a group practice who sees 100 patients during the applicable PQRS payment adjustment reporting period would report on 100 percent of patients to which the measure applies, not all of the proposed administrative claims measures would necessarily apply to all of the group practice's patients. Since the group practice is then only providing information on its applicable patients, we believe these reporting criteria would still meet the statistical sampling model requirement. We invite public comment on these proposed criteria.

When considering proposals for reporting criteria for the 2015 and 2016 PQRS payment adjustments, we considered satisfactory reporting options that would encourage eligible professionals and group practices to report for the 2013 and/or 2014 incentives but, should eligible professionals or group practices come up shy of meeting the 2013 and/or 2014 incentive reporting criteria, would still allow an eligible professional to meet the criteria for satisfactory reporting for the 2015 and/or 2016 payment adjustments. In lieu or more lenient satisfactory reporting criteria we proposed for the 2015 and 2016 payment adjustment, e.g. to report at least 1 measure or measures group or to elect the administrative claims-based reporting option, we considered the option of defaulting those eligible professionals who report but fail to meet the criteria for satisfactory reporting using the proposed criteria for the 2013 and/or 2014 incentives to the administrative claims-based reporting option. We would therefore analyze the claims of all eligible professionals who report at least 1 measure under a traditional reporting method during the respective 2015 and 2016 payment adjustment reporting periods under the administrative claims-based reporting option. We considered this proposal because it is our intention to encourage eligible professionals to report PQRS measures using the proposed reporting criteria for the 2013 and 2014 PQRS incentives. However, given our concern about new eligible professionals' familiarity and experience with the program, we believe it is necessary to propose an alternative, less stringent reporting option. We invite public comment on this considered proposal.

c. Proposed Analysis of Eligible Professionals and Group Practices Who Will Be Assessed a PQRS Payment Adjustment

As noted in § 414.90(b), an eligible professional is assessed at the TIN/NPI level and a group practice selected to participate in the GPRO is assessed at the TIN level. As there is a 1-year lapse in time between the end of a proposed respective payment adjustment reporting period and when an eligible professional is expected to receive a PQRS payment adjustment for not meeting the requirements for satisfactory reporting for the respective payment adjustment, we understand that an eligible professional may change his or her TIN/NPIs during this lapse of time. Likewise, a group practice selected to participate in the GPRO may change its TIN during this lapse in time. We believe this raises issues with regard to the subsequent application of the payment adjustment and concerns about the potential for abuse (e.g., “gaming the system”). Accordingly, we invite public comment this issue, including what parameters, if any, CMS should impose regarding the changes in TIN/NPIs and compositions of group practices with regard to the payment adjustment.

d. Criteria for Satisfactory Reporting for the Payment Adjustments for 2017 and Beyond for Eligible Professionals and Group Practices

We have stressed the importance of allowing eligible professionals and group practices who are new to the program to gain familiarity with PQRS's reporting requirements. However, we note that, as we move towards the sole implementation of payment adjustments (which would serve as the reporting period for the 2017 payment adjustment), it is our intention that eligible professionals would be expected to meet reporting criteria that more closely align to the reporting criteria that we have proposed for the 2014 incentives above. It is our expectation that in two years' time, eligible professionals who are new to PQRS would have enough familiarity with the program that CMS could reasonably expect a majority of participating eligible professionals to meet the requirements that are identical or very similar to those that have been required for incentive payment purposes. We invite public comment on goals for future criteria for satisfactory reporting we may require under the program for the 2017 payment adjustment that are identical or similar to the criteria we have proposed for the 2014 incentive payments. We also invite commenters to provide alternative criteria for us to consider in future rulemaking for the payment adjustments for 2017 and beyond.

6. PQRS Quality Measures for 2013 and Beyond

a. Statutory Requirements for the Selection of Proposed PQRS Quality Measures for 2013 and Beyond

Under section 1848(k)(2)(C)(i) of the Act, the PQRS quality measures shall be such measures selected by the Secretary from measures that have been endorsed by the entity with a contract with the Secretary under subsection 1890(a) of the Act (currently, that is the National Quality Forum, or NQF). However, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the NQF, section 1848(k)(2)(C)(ii) of the Act authorizes the Secretary to specify a measure that is not so endorsed as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary, such as the AQA alliance. In light of these statutory requirements, we believe that, except in the circumstances specified in the statute, each PQRS quality measure must be endorsed by the NQF. Additionally, section 1848(k)(2)(D) of the Act requires that for each PQRS quality measure, “the Secretary shall ensure that eligible professionals have the opportunity to provide input during the development, endorsement, or selection of measures applicable to services they furnish.”

The statutory requirements under section 1848(k)(2)(C) of the Act, subject to the exception noted previously, require only that the measures be selected from measures that have been endorsed by the entity with a contract with the Secretary under section 1890(a) (that is, the NQF) and are silent for how the measures that are submitted to the NQF for endorsement were developed. The basic steps for developing measures applicable to physicians and other eligible professionals prior to submission of the measures for endorsement may be carried out by a variety of different organizations. We do not believe there needs to be any special restrictions on the type or make-up of the organizations carrying out this basic process of development of physician measures, such as restricting the initial development to physician-controlled organizations. Any such restriction would unduly limit the basic development of quality measures and the scope and utility of measures that may be considered for endorsement as voluntary consensus standards for purposes of the PQRS.

In addition to section 1848(k)(2)(C) of the Act, section 1890A of the Act, as amended by adding section 3014 of the Patient Protection and Affordable Care Act (PPACA), requires that the entity with a contract with the Secretary under subsection 1890(a) of the Act (currently that, is the NQF) establish a multi-stakeholder group that would provide for a transparent process for selecting quality measures, such as the quality measures selected for reporting under the PQRS. Pursuant to section 3014 of Affordable Care Act, the NQF created the Measure Applications Partnership. Section 1890(b)(7)(B) requires that the Secretary establish a pre-rulemaking process whereby the multi-stakeholder group will provide input to the Secretary on the selection of quality measures. To receive input from the Measures Applications Partnership, we submitted all the measures we are proposing in this section with the exception of the administrative claims measures that we are incorporating to align with the Value-Based Modifier and the measures that we are incorporating to align with the Medicare Shared Savings Program specified in Tables 29 through 62. The list of measures the Measures Application Partnership have considered for 2012 are available at http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx.

b. Other Considerations for the Selection of Proposed PQRS Quality Measures for 2013 and Beyond

As we noted above, section 1848(k)(2)(C)(ii) of the Act provides an exception to the requirement that the Secretary select measures that have been endorsed by the entity with a contract under section 1890(a) of the Act (that is, the NQF). We may select measures under this exception if there is a specified area or medical topic for which a feasible and practical measure has not been endorsed by the entity. Under this exception, aside from NQF endorsement, we requested that stakeholders apply the following considerations when submitting measures for possible inclusion in the PQRS measure set:

  • High impact on healthcare.
  • Measures that are high impact and support CMS and HHS priorities for improved quality and efficiency of care for Medicare beneficiaries.
  • Measures that address gaps in the quality of care delivered to Medicare beneficiaries.
  • Address Gaps in the PQRS measure set.
  • Measures impacting chronic conditions (chronic kidney disease, diabetes mellitus, heart failure, hypertension and musculoskeletal).
  • Measures applicable across care settings (such as, outpatient, nursing facilities, domiciliary, etc.).
  • Broadly applicable measures that could be used to create a core measure set required of all participating eligible professionals.
  • Measures groups that reflect the services furnished to beneficiaries by a particular specialty.

On October 7, 2011, we ended a Call for Measures that solicited new measures for possible inclusion in the PQRS for 2013 and beyond. During the Call for Measures, we solicited measures that were either consistent with section 1848(k)(2)(C) of the Act or fell under the exception specified in section 1848(k)(2)(C)(ii) of the Act. Although the deadline to submit measures for consideration for the 2013 PQRS program year has ended, we invite public comment on future considerations related to the selection of new PQRS quality measures.

c. Proposed PQRS Quality Measures

This section focuses on the proposed PQRS individual Measures available for reporting via claims, registry, and/or EHR-based reporting for 2013 and beyond. To align with the proposed measure domains provided in the EHR Incentive Program (77 FR 13743), we classify all proposed measures against six domains based on the National Quality Strategy's six priorities, as follows:

(1) Patient and Family Engagement. These are measures that reflect the potential to improve patient-centered care and the quality of care delivered to patients. They emphasize the importance of collecting patient-reported data and the ability to impact care at the individual patient level as well as the population level through greater involvement of patients and families in decision making, self care, activation, and understanding of their health condition and its effective management.

(2) Patient Safety. These are measures that reflect the safe delivery of clinical services in both hospital and ambulatory settings and include processes that would reduce harm to patients and reduce burden of illness. These measures should enable longitudinal assessment of condition-specific, patient-focused episodes of care.

(3) Care Coordination. These are measures that demonstrate appropriate and timely sharing of information and coordination of clinical and preventive services among health professionals in the care team and with patients, caregivers, and families in order to improve appropriate and timely patient and care team communication.

(4) Population and Public Health. These are measures that reflect the use of clinical and preventive services and achieve improvements in the health of the population served and are especially focused on the leading causes of mortality. These are outcome-focused and have the ability to achieve longitudinal measurement that will demonstrate improvement or lack of improvement in the health of the US population.

(5) Efficient Use of Healthcare Resources. These are measures that reflect efforts to significantly improve outcomes and reduce errors. These measures also impact and benefit a large number of patients and emphasize the use of evidence to best manage high priority conditions and determine appropriate use of healthcare resources.

(6) Clinical Processes/Effectiveness. These are measures that reflect clinical care processes closely linked to outcomes based on evidence and practice guidelines.

Please note that the PQRS quality measure specifications for any given proposed PQRS individual quality measure may differ from specifications for the same quality measure used in prior years. For example, for the proposed PQRS quality measures that were selected for reporting in 2012, please note that detailed measure specifications, including the measure's title, for the proposed individual PQRS quality measures for 2013 and beyond may have been updated or modified during the NQF endorsement process or for other reasons. In addition, due to our desire to align measure titles with the measure titles that were proposed for 2013, 2014, 2015, and potentially subsequent years of the EHR Incentive Program, we note that the measure titles for measures available for reporting via EHR may change. To the extent that the EHR Incentive Program updates its measure titles to include version numbers (77 FR 13744), we intend to use these version numbers to describe the PQRS EHR measures that will also be available for reporting for the EHR Incentive Program. We will continue to work toward complete alignment of measure specifications across programs whenever possible.

Through NQF's measure maintenance process, NQF endorsed measures are sometimes updated to incorporate changes that we believe do not substantially change the nature of the measure. Examples of such changes could be updated diagnosis or procedure codes, changes to exclusions to the patient population, definitions, or extension of the measure endorsement to apply to other settings. We believe these types of maintenance changes are distinct from more substantive changes to measures that result in what are considered new or different measures, and that they do not trigger the same agency obligations under the Administrative Procedure Act. In this proposed rule, we are proposing that if the NQF updates an endorsed measure that we have adopted for the PQRS in a manner that we consider to not substantially change the nature of the measure, we would use a subregulatory process to incorporate those updates to the measure specifications that apply to the program. Specifically, we would revise the Specifications Manual so that it clearly identifies the updates and provide links to where additional information on the updates can be found. We would also post the updates on the CMS QualityNet Web site at https://www.QualityNet.org. We would provide sufficient lead time for [insert applicable party; i.e. hospitals, LTCHs, etc.] to implement the changes where changes to the data collection systems would be necessary.

We would continue to use the rulemaking process to adopt changes to measures that we consider to substantially change the nature of the measure. We believe that this proposal adequately balances our need to incorporate NQF updates to NQF—endorsed [insert name of applicable program] measures in the most expeditious manner possible, while preserving the public's ability to comment on updates that so fundamentally change an endorsed measure that it is no longer the same measure that we originally adopted. We invite public comment on this proposal.

To receive more information on the proposed measures contained in this section, including the measure specifications for these proposed measures, please contact the respective measure owners. Contact information for the measure owners of these proposed PQRS measures is available at the PQRS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html.

(1) Proposed PQRS Individual Core Measures Available for Claims, Qualified Registry, and EHR-Based Reporting for 2013 and Beyond

In 2011, the Department of Health and Human Services (HHS) started the Million Hearts Initiative, which is an initiative to prevent 1 million heart attacks and strokes in five years. We are dedicated to this initiative and seek to encourage eligible professionals to join in this endeavor. Therefore, based on our desire to support the Million Hearts initiative and maintain our focus on cardiovascular disease prevention, we are proposing the following proposed individual PQRS Core Measures specified in Table 29 for 2013 and beyond. Please note that these measures are the same measures we finalized under the 2012 PQRS in the CY 2012 Medicare PFS final rule (76 FR 73345).

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Please note that, although we are proposing that the measures in Table 29 serve as core PQRS quality measures, we are not proposing to require that eligible professionals report on these proposed PQRS core measures. We invite public comment on the proposed PQRS core measures for 2013 and beyond.

(2) Proposed PQRS quality measures Available for Reporting via the Claims, Qualified Registry, EHR, and GPRO Web-Interface Reporting Mechanisms for 2013 and Beyond

This section contains our proposals for individual PQRS quality measures for 2013 and beyond. Please note that, in large part, we are proposing to retain most of the quality measures we finalized for reporting for the 2012 PQRS (76 FR 42865 through 42872). However, in 2013 and 2014, we are proposing to include new measures, as well as remove measures that were available for reporting under the 2012 PQRS (not re-propose certain measures for 2013 and beyond). Table 30 specifies the measures we are proposing to be available for reporting under the PQRS for 2013 and beyond.

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Although we are proposing to add measures that were not available for reporting under the 2012 PQRS, we note that we are not proposing to retain certain measures from the 2012 PQRS. For reference, in Table 31 we list 14 measures from the 2012 PQRS that we are not proposing for the 2013 PQRS.

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A summary of the measures we are proposing for 2013 and beyond are specified in Table 32. Table 32 specifies our proposals to propose all measures that were available for reporting in PQRS in 2012, with the exception of the measures listed in Table 31, as well as propose new measures specified in Table 30 not available for reporting under PQRS in prior years.

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Beginning with reporting periods occurring in 2014, we are proposing the following 45 individual quality measures specified in Table 33 available for reporting under the PQRS:

We also note that we are not proposing to include the following 9 measures specified in Table 34 for 2014.

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For the 2012 PQRS, the PQRS aligned the measures the program had available for EHR-based reporting with the EHR measures available for reporting under the EHR Incentive Program (76 FR 73364) and CMS proposes to retain those measures for 2013 and beyond. In fact, we are proposing to add or remove measures available for EHR-based reporting that align with what has been proposed for reporting under the EHR Incentive Program for CY 2014 (77 FR 13746). We also intend to align the PQRS measure set with other CMS programs such as the Value-based Modifier and Medicare Shared Savings Program.

As indicated in Tables 29 through 34, we are proposing a total of 264 measures in 2013. Of these proposed measures, we note that 250 of these measures were measures previously established for reporting under the 2012 PQRS. 14 of these proposed measures are newly proposed in 2013. In 2013, we are also proposing to retire 14 measures that were previously established for reporting under the 2012 PQRS. In 2014, we are proposing 34 additional new measures that were not previously established for reporting under the 2012 PQRS and proposing to retire 8 measures that were previously established for reporting under the 2012 PQRS.

For Table 31, which specifies the tables we are not proposing to retain in the PQRS measure set for 2013 and beyond, we are not proposing the following measures for the following reasons:

(1) Stroke and Stroke Rehabilitation: Computed Tomography (CT) or Magnetic Resonance Imaging (MRI) Reports: We are not proposing that this measure be because the measure is no longer endorsed by NQF and therefore does not satisfy the requirement for PQRS to provide consensus-based quality measures under section 1848(k)(2)(C)(i) of the Act. Although section 1848(k)(2)(C)(ii) of the Act provides an exception to proposing PQRS measures endorsed by the NQF, we are not exercising our authority to use this exception. The measure was not recommended for reporting by the Measure Application Partnership and we agree with the Measure Applications Partnership's (MAP) assessment. More information on the MAP's assessment can be found in the “MAP Pre-Rulemaking Report: Input on Measures Under Consideration by HHS for 2012 Rulemaking” available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.(2) Emergency Medicine: Community-Acquired Pneumonia (CAP): Assessment of Oxygen Saturation: The measure was not recommended for reporting by the MAP and we agree with the MAP's assessment. More information on the MAP's assessment can be found in the “MAP Pre-Rulemaking Report: Input on Measures Under Consideration by HHS for 2012 Rulemaking” available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.

(3) Emergency Medicine: Community-Acquired Pneumonia (CAP): Assessment of Mental Status; Acute Otitis Externa (AOE): Pain Assessment: The measure was not recommended for reporting by the MAP and we agree with the MAP's assessment. More information on the MAP's assessment can be found in the “MAP Pre-Rulemaking Report: Input on Measures Under Consideration by HHS for 2012 Rulemaking” available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.

(4) Carotid Endarterectomy: Use of Patch During Conventional Carotid Endarterectom: The measure was not recommended for reporting by the MAP and we agree with the MAP's assessment. More information on the MAP's assessment can be found in the “MAP Pre-Rulemaking Report: Input on Measures Under Consideration by HHS for 2012 Rulemaking” available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.

(5) Chronic Wound Care: Use of Compression System in Patients with Venous Ulcers: The measure was not recommended for reporting by the MAP and we agree with the MAP's assessment. More information on the MAP's assessment can be found in the