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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

Action

Final Rule With Comment Period.

Summary

This major final rule with comment period 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 also implements 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 implements statutory changes regarding the termination of non-random prepayment review. This final rule with comment period also includes a discussion in the Supplementary Information regarding various programs . (See the Table of Contents for a listing of the specific issues addressed in this final rule with comment period.)

Unified Agenda

 

Table of Contents Back to Top

Tables Back to Top

DATES: Back to Top

Effective date: The provisions of this final rule with comment period are effective on January 1, 2013 with the exception of provisions in § 410.38 which are effective on July 1, 2013. The incorporation by reference of certain publications listed in the rule was approved by the Director of the Federal Register on May 16, 2012.

Comment date: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on December 31, 2012. (See the SUPPLEMENTARY INFORMATION section of this final rule with comment period for a list of the provisions open for comment.)

ADDRESSES: Back to Top

In commenting, please refer to file code CMS-1590-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

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

1. Electronically. You may submit electronic comments on this regulation to 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-FC, P.O. Box 8013, Baltimore, MD 21244-8013.

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

3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1590-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

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

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

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

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

If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 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

Elliott Isaac, (410) 786-4735, 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, and the sustainable growth rate.

Carol Schwartz, (410) 786- 0576, for issues related to colonoscopy and preventive services.

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

Craig Dobyski, (410) 786-4584, for issues related to geographic practice cost indices.

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

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

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

Provisions open for comment: We will consider comments that are submitted as indicated above in the “Dates” and “Addresses” sections on the following subject areas discussed in this final rule with comment period:

  • Interim final work, practice expense, and malpractice RVUs (including physician time, direct practice expense (PE) inputs, and the equipment utilization rate assumption) for new, revised, potentially misvalued, and certain other CY 2013 HCPCS codes as indicated in the sections that follow and listed in Addendum C to this final rule with comment period; and
  • The appropriate direct PE inputs for establishing nonfacility PE RVUs for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural).

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: 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

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

I. Executive Summary and Background

II. Provisions of the Final Rule With Comment Period

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 Scope of Benefit

L. Ordering of Portable X-Ray Services

M. Addressing Interim Final Relative Value Units (RVUs) From CY 2012 and Establish Interim Final Rule RVU's for CY 2013

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

III. Other Provisions of the Final Rule With Comment Period

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

H1. Electronic Prescribing (eRx) Incentive Program

H2. The PQRS-Medicare EHR Incentive Pilot

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. Additional Provisions

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—Technical Correction

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

V. Collection of Information Requirements

VI. Waiver of Proposed Rulemaking

VII. Response to Comments

VIII. Regulatory Impact Analysis

Acronyms Back to Top

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

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

CORFComprehensive Outpatient Rehabilitation Facility

CPIConsumer Price Index

CPT[Physicians] Current Procedural Terminology (CPT codes, descriptions and other data only are copyright 2012 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

EHRElectronic health record

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)

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)

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

PERCPractice 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 final rule with comment period, the PFS Addenda no longer appear in the Federal Register. Instead these Addenda to the annual proposed and final rules with comment period will be available only through the Internet. The PFS Addenda along with other supporting documents and tables referenced in this final rule with comment period are available through the Internet on the CMS Web site at 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 final rule with comment period, refer to item CMS-1590-FC. Readers who experience any problems accessing any of the Addenda or other documents referenced in this final rule with comment period and posted on the CMS Web site identified above should contact Elliott Isaac at (410) 786-4735.

CPT (Current Procedural Terminology) Copyright Notice Back to Top

Throughout this final rule with comment period, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2012 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 final rule with comment period revises payment policies under the Medicare Physician Fee Schedule (PFS) and makes other policy changes related to Medicare Part B payment. These changes are applicable to services furnished in CY 2013. It also implements 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 implements 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 expense. In this major final rule with comment period, we establish 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 in the relative value of services. It also implements 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 establishes 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:

  • Identifies Potentially Misvalued Codes to be Evaluated.
  • Establishes Additional Multiple Procedure Payment Reductions (MPPR).
  • Expands Medicare Telehealth Services.
  • Implements Regulatory Changes Regarding Payment for Technical Component of Certain Physician Pathology Services to Conform to Statute.
  • Requires the Inclusion of Specific Information on Claims for Therapy Services.
  • Establishes New Transitional Care Management Services.
  • Clarifies Services Included in the Certified Registered Nurse Anesthetists Scope of Benefit.
  • Modifies Ordering Requirements for Portable X-ray Services.
  • Updates the Ambulance Fee Schedule.
  • Sets Part B Drug Payment Rates for 2013.
  • Addresses Ambulance Coverage—Physician Certification Statement.
  • Updates policies regarding the—

++ Physician Compare Web site.

++ Physician Quality Reporting System.

++ Electronic Prescribing (eRx) Incentive Program.

++ Electronic Health Record (EHR) Incentive Program.

++ Medicare Shared Savings Program.

  • Discusses Budget Neutrality for the Chiropractic Demonstration.
  • Addresses Implementation of the Physician Value-Based Payment Modifier and the Physician Feedback Reporting Program.
  • Establishes Medicare Coverage of Hepatitis B Vaccine.
  • Updates 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 the 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 changes affect the specialty distribution of Medicare expenditures. This final rule with comment period reflects the Administration's priority to improve payment for primary care services. As described in Section II.N, in the absence of Congressional action, an overall reduction of 26.5 percent will be imposed in the conversion factor used to calculate payment for physicians' services on or after January 1, 2013 due to the Sustainable Growth Rate (SGR). To isolate the impact of changes that we are proposing in this final rule with comment period, we analyze and discuss the policies' impact with a constant conversion factor. In the absence of a change in the conversion factor, payments to primary care specialties will increase and payments to select other specialties will decrease due to several changes in how we calculate payments for CY 2013.

The largest payment increase for primary care specialties overall will result from a new 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. Payments to primary care specialties also will increase due to redistributions from changes in payments for services furnished by other specialties. Because of the budget-neutral nature of this system, decreases in payments for one service result in 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).

Several types of providers are projected to see decreases in Medicare PFS payments, mainly as a result of the potentially misvalued codes initiative. We have received numerous new codes with new values and revised codes with new values for CY 2013 as a result of our ongoing misvalued codes initiative, an effort to improve payment accuracy. Many of the new and revised codes that we valued on an interim basis for CY 2013 originated with the potentially misvalued codes initiative. Reductions for pathology, neurology, and independent laboratories are a result of the misvalued code initiative. In the case of independent laboratories, we note that independent laboratories receive the majority of the Medicare revenue from the Clinical Lab Fee Schedule, which is unaffected by the misvalued code initiative. Radiation therapy centers will see an overall decrease of 9 percent primarily as a result of the PPIS transition discussed above and a change in the interest rate assumption used to calculate PE. Radiation oncology sees a 7 percent decrease for the same reasons as radiation therapy centers.

B. Background

We note that throughout this final rule with comment period, unless otherwise noted, the term “practitioner” is used to describe both physicians and nonphysician practitioners (such as physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, psychologists, or clinical social workers) who are permitted to bill Medicare under the PFS for their services. 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 malpractice expense. Before the establishment of the resource-based relative value system, Medicare payment for physicians' services was based on reasonable charges.

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.

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)

Initially, only the physician work RVUs were resource-based, and the PE and malpractice RVUs were based on average allowable charges. Section 121 of the Social Security Act Amendments of 1994 (103), and 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 and required us to develop resource-based PE RVUs for each physicians' service. We were to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs.

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. 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. Based on the BBA 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. Panels of physicians, practice administrators, and nonphysician health professionals (for example, registered nurses (RNs)), who were nominated by physician specialty societies and other groups identified the direct inputs required for each physicians' service. (We have since refined and revised these inputs based on recommendations from the AMA RUC.) Aggregate specialty-specific information on hours worked and PEs was obtained from the AMA's Socioeconomic Monitoring System (SMS).

Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) directed us 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 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 to require that we implement resource-based malpractice RVUs for services furnished on or after CY 2000. The resource-based malpractice RVUs were implemented in the PFS final rule with comment period published November 2, 1999 (64 FR 59380). The malpractice RVUs were based on malpractice insurance premium data collected from commercial and physician-owned insurers.

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 separate periodic reviews of work RVUs and PE RVUs. 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 malpractice RVUs (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). The second Five-Year Review and update of resource-based malpractice RVUs was published in the CY 2010 PFS final rule with comment period (74 FR 61758) and was effective in CY 2010.

In addition to the Five-Year Reviews, beginning for CY 2009, CMS and the AMA RUC have identified and reviewed a number of potentially misvalued codes on an annual basis based on various identification screens. This annual review of work and PE RVUs for potentially misvalued codes was supplemented by 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 malpractice RVUs) are adjusted by geographic practice cost indices (GPCIs). The GPCIs reflect the relative costs of physician work, PE, and malpractice in an area compared to the national average costs for each component.

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

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

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

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. 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 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, the 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 technical component (TC) of physician pathology services furnished to certain hospital patients, and
  • Section 307—the 5 percent increase in payments for mental health services.

On February 22, 2012, the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96) (MCTRJCA) was signed into law. Section 3003 of the MCTRJCA 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.

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

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

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments of 1994 (103), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act to require 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 the CY 2010 PFS for almost all of the Medicare-recognized specialties that participated in the survey.

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 given when the specialty code was created.

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 proposed 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 final rule with comment period at www.cms.gov/PhysicianFeeSched/.

We did not receive any comments regarding our proposal to use these proxy PE/HR values for these specialties, and we continue to believe that the values crosswalked from other specialties that furnish similar services are appropriate. Therefore, we are finalizing our CY 2013 proposals to update the PE/HR data as reflected in the “PE HR” file available on the CMS Web site under the supporting data files for the CY 2013 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), CY 2013 is the final year of the 4-year transition to the PE RVUs calculated using the PPIS data. Therefore, the CY 2013 PE RVUs are developed based entirely on the PPIS data, except as noted 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 final rule with comment period 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.
  • Next, we 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.
  • Next, 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 prosthestist.
57 Individual certified prosthetist-orthotist.
58 Individuals not included in 55, 56, or 57.
59 Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc.
60 Public health or welfare agencies.
61 Voluntary health or charitable agencies.
73 Mass immunization roster biller.
74 Radiation therapy centers.
87 All other suppliers (e.g., drug and department stores).
88 Unknown supplier/provider specialty.
89 Certified clinical nurse specialist.
95 Competitive Acquisition Program (CAP) Vendor.
96 Optician.
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.

In the CY 2013 PFS proposed rule, we proposed to calculate the specialty mix for low volume services (fewer than 100 billed services in the previous year) using the same methodology we used for non-low volume services. We currently use the survey data from the dominant specialty for these low volume services. We proposed 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. However, the PE RVUs for the affected HCPCS codes were inadvertently displayed in Addendum B for the CY 2013 PFS proposed rule using our previously established methodology of using the dominant specialty for these services. While we received comments on our proposal, including some suggesting alternative methods for handling low volume services, we do not believe that it would be appropriate to make changes to the current methodology since the correct impact of the proposed calculation was not reflected in the displayed PE RVUs. We appreciate the commenters' perspective on the proposal, and will take those comments into account as we consider the best methodology for calculating the specialty mix for low volume services in future rulemaking.

  • 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 final ophthalmology and cardiovascular diagnostic services MPPR discussed in section II.B.4. of this final rule with comment period. 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 MPPRs are not included in the development of the RVUs.

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 it is the only occasion where time units are duplicative.

Comment: One commenter expressed concern regarding the accuracy of the 33 percent time adjustment made for these services.

Response: We note that we did not make any proposals regarding the 33 percent time adjustment for medical direction in the CY 2013 PFS proposed rule. As such, we do not believe it would be appropriate to modify that figure in this final rule. However, we would welcome any independently verifiable data that could inform the accuracy of our assumption regarding duplicative time units. The 33 percent time adjustment effectively assumes medical direction of three cases. We would consider any such data for future rulemaking.

  • Work RVUs: The setup file contains the work RVUs from this final rule with comment period.

(6) Equipment Cost per Minute

The equipment cost per minute is calculated as:

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

Where:

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

usage = 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 proposed 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 proposed 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.

Comment: Both MedPAC and the AMA RUC supported the proposal. MedPAC stated:

We support CMS's proposal to use more accurate interest rate information because this will improve the accuracy of practice expense payment rates and redistribute dollars from overvalued codes to undervalued codes.

The AMA RUC commented:

The RUC appreciates that CMS intends to adopt the RUC recommendation of implementing a “sliding scale” for the interest rate utilized in computing equipment costs.

Other commenters, also supported the proposal. However, while physician organizations that represent specialties that provide medical equipment intensive services and medical equipment manufacturers generally acknowledged that the interest rate used in the calculation had not been updated in over 12 years, they did not support the specific proposed update approach. These commenters assertions included: The proposal is “overly complicated” to administer since the interest rates vary by loan size and maturity, and interest rates can fluctuate; the SBA loan program is designed to encourage loans to small businesses so the SBA rates are below market rates unrelated to the cost of capital for physician practices; the proposed methodology may be inconsistent with the statute since it does not reflect relative resources; CMS should factor in the opportunity cost for practices that pay cash for the equipment (a weighted average cost of capital (WACC) approach) using WACC measures available in the private sector; CMS should transition this policy given the investments in equipment that have already been made; CMS should use a multiyear average of the Prime rate rather than the most recent Prime rate in the calculation; and, CMS should only update the interest rate every few years to help ensure more stable practice expenses.

Response: We agree with MedPAC, the AMA RUC, and the commenters who supported our proposed approach for the interest rate calculation. Our proposed approach recognizes that the goal of the practice expense methodology is to calculate, as accurately as possible given the available data sources, the relative resources required to furnish services that are paid under the physician fee schedule. To continue to use an 11 percent interest rate assumption in the calculation of the equipment portion of the practice expense RVUs when this rate does not reflect a market rate would unnecessarily distort this relativity. We are unaware of, nor did commenters suggest, a readily available and transparent data source that specifically provides nationally representative data on the typical interest rates charged to physicians when obtaining financing for medical equipment. We believe that the use of the SBA maximum loan rates leads to a more reasonable estimate of relative resource used across the fee schedule and, consistent with the MedPAC comment, that the continued use of an 11 percent interest rate would inappropriately skew physician fee schedule relativity towards equipment intensive services.

Additionally, we disagree that the maximum SBA loan rates are not sufficient as an assumption for the rate at which a typical physician practice would obtain financing, nor did the commenters offer nationally representative data indicating that this is the case.

We agree with commenters that, in an ideal world, the interest rate assumption used in the equipment calculation would explicitly factor in the opportunity costs for practices that pay cash for the equipment (a WACC approach) and not just the cost of financing. However, as with the interest rates typically charged to physicians for medical equipment financing, we are unaware of any nationally representative data source that would provide the opportunity cost for physician practices deciding on purchasing medical equipment. Some commenters suggested we use proprietary WACC measures designed for industry and company stock valuations. We do not believe it would be appropriate to use proprietary measures in this calculation, nor do we believe that measures developed to value the stock prices of individual medical equipment companies or the medical device industry are necessarily applicable to the opportunity costs of typical medical practices. Also, we do not agree that the opportunity cost of a physician practice purchase of medical equipment, if known or estimable, would exceed the SBA maximum loan rates.

We also do not believe that our proposal is overly complicated to administer. The Prime rate is readily available, as are the SBA loan maximums. As such, we believe our proposal is a very transparent approach. We stated that we would update the rate through our annual PFS rulemaking process. In response to comments on this aspect of our proposal, we are clarifying that we generally intend to update the interest rate calculation through future rulemaking when we broadly update one or more of the other direct practice expense inputs, such as pricing or labor wage rates, to maintain relatively between the practice expense components. Given that we do not anticipate updating the interest rate assumption every year, we do not believe it is necessary to use a rolling average in the calculation. Periodic updates using the most recent Prime rate will balance commenters' desire for stability in the PE RVUs with the need to maintain appropriate relativity under the PFS. We also do not believe a transition is appropriate in this situation. We believe it is important to update the interest rate assumptions to appropriately adjust the relativity of equipment in relation to other PE inputs and the relation of equipment intensive services to other services on the PFS.

In summary, we are finalizing without modification our proposal 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). We will update the interest rate assumption through PFS rulemaking to account for fluctuations in the Prime rate and/or changes to the SBA's formula to determine maximum allowed interest rates. We are clarifying that we generally intend to update the interest rate calculation through future rulemaking only in years when we broadly update one or more of the other direct practice expense inputs. Accordingly, we anticipate updating the interest rate calculation less frequently than annually.

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

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. The changes we proposed and are finalizing are included in the final rule CY 2012 direct PE database, which is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at www.cms.gov/PhysicianFeeSched/. We note that we address comments on the interim direct PE inputs established in the CY 2012 PFS final rule with comment period in section II.M. of this final rule with comment period.

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 believed 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, the direct PE input database was modified to allocate 10 minutes to the pacemaker follow-up system for CPT codes 93294 and 93295.

Comment: One commenter expressed support for this modification.

Response: We appreciate the support for the modification and will maintain the allocated equipment minutes in the final direct PE input database.

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 believed that these 15 minutes should be added to the 15 minutes currently allocated to the Respiratory Therapist (L042B) associated with this service. Therefore, we proposed to modify the direct PE input database to allocate 15 additional minutes to the Respiratory Therapist (L042B) (for a total of 30 minutes) and to delete the CORF social worker/psychologist (L045C) associated with HCPCS code G0424.

Comment: One commenter supported the modification as accurate and fair. Another commenter suggested that the appropriate clinical staff time for the code should be 60 minutes since the code describes an hour long session. Furthermore, the same commenter expressed opposition to reassigning the 15 minutes to the Respiratory Therapist because the rate per minute of the Respiratory Therapist is lower than the rate per minute of the CORF social worker/psychologist and the change, however modest, may potentially reduce the PE RVUs for the service.

Response: We appreciate the support for the modification and understand the commenter's concerns. We recognize that for many services with code descriptors that include procedure time assumptions, the number of clinical labor minutes allocated during the service period corresponds to the time as described by the code. However, as we explained in the CY 2011 PFS final rule with comment period (75 FR 73299), because pulmonary rehabilitation services reported under HCPCS code G0424 can be furnished either individually or in groups, we believe that 30 minutes of respiratory therapist time would be more appropriate for valuing the typical pulmonary rehabilitation service. We also recognize that reclassifying the direct PE input labor category from CORF social worker/psychologist to Respiratory Therapist for 15 minutes will reduce the direct labor costs used in calculating PE RVUs for the service. However, we continue to believe that the Respiratory Therapist is the most appropriate labor category to include as a direct PE input for this service.

After consideration of the comments we received, we are finalizing the modification of the direct PE labor inputs for this service to allocate 15 additional minutes to the Respiratory Therapist (L042B) (for a total of 30 minutes) and to delete the CORF social worker/psychologist (L045C) associated with HCPCS code G0424.

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 final 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 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 (meaning our claims processing contractors develop payment rates) for 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 proposed to contractor price these codes for CY 2013.

Comment: One commenter objected to the proposal to contractor price these codes for CY 2013 and suggested that CMS should establish PE RVUs using the generally applicable PE methodology and must endeavor in ensuing rulemaking to revise the methodology to refine any values the agency views as “anomalous.” The commenter also questioned CMS's assumption that the direct costs for psychiatrists who furnish these services “far exceed” the direct costs for psychiatrists who do not furnish these services. The commenter stated that CMS made this assessment without any empirical support and that CMS needs to conduct a survey or obtain other data from psychiatrists before drawing any conclusions regarding the appropriateness of Medicare payment rates on this basis.

Response: We understand the commenter's objections, but as we explained in the proposal, we do not believe that there is a mechanism within the current methodology that allows us to develop appropriate payment rates for these services. We agree with the commenter that it may be appropriate to consider potential changes to the practice expense methodology to accommodate changing circumstances of medical practice. We do not agree with the commenter, however, that we have no means to pay appropriately for services when we recognize areas where the practice expense methodology is inadequate and that we must establish national RVUs based on that methodology, even when it does not accommodate the unique circumstances of particular services. Instead, we believe that in outlier cases, contractor pricing allows Medicare to pay more appropriately for particular services furnished to beneficiaries.

In our proposal, we pointed out that the direct costs incurred by psychiatrists reporting the codes far exceed the direct costs typical to any other service predominantly furnished by psychiatrists. The commenter objected to this assertion and claimed it was made without any empirical support. We made that assertion based on comparing the direct practice expense input costs for transcranial magnetic stimulation services and the current direct practice expense input costs in the direct PE database for services predominantly furnished by the specialty based on Medicare claims data. In our examination of 20 frequently billed psychiatry services (where greater than half of the Medicare allowed services were reported by psychiatrists), the total direct costs (clinical labor, disposable medical supplies, or medical equipment) in the direct PE input database summed to under $10 for all but 3 of these 20 services. Examples of these services include CPT codes 90807 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services), 90862 (Pharmacologic management, including prescription, use, and review of medication with no more than minimal medical psychotherapy), and 90845 (Psychoanalysis). For the three where the direct PE input costs summed to greater than $10, HCPCS code M0064 (Brief office visit for the sole purpose of monitoring or changing drug prescriptions used in the treatment of mental psychoneurotic and personality disorders), and CPT codes 90865 (Narcosynthesis for psychiatric diagnostic and therapeutic purposes (eg, sodium amobarbital (Amytal) interview)), and 90870 (Electroconvulsive therapy (includes necessary monitoring)), the service with the highest direct cost sum was $32.24. In contrast, the transcranial magnetic stimulation services treatment delivery (CPT code 90867) included direct PE inputs that summed to direct costs of $145.19. The disparity between the TMS direct costs and the direct costs in other frequent psychiatry codes was the basis for our assertion that the direct costs for this service far exceeded the direct costs typical to any other service predominantly furnished by psychiatrists. Thus, we continue to believe our decision to contractor price these codes is the proper one.

Comment: Another commenter requested that CMS use the existing methodology to price the codes or contractor price the codes. This commenter also urged CMS to consider alternate sources of data for resource costs as they become available, or to make appropriate future refinements to the practice expense methodology.

Response: We appreciate the commenter's support for our proposal as a suitable means of pricing the services. We will consider appropriate means to develop national prices for these services in the context of potential changes to the practice expense methodology and the availability of new data sources.

After consideration of these public comments, we are finalizing our proposal to contractor price CPT codes 90867, 90868, and 90869 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 believed that CPT code 63650 should be reviewed to establish appropriate nonfacility inputs. We proposed to review CPT code 63650 and requested 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 sought comment on establishing nonfacililty PE RVUs for CPT code 63650.

Comment: Several commenters expressed concerns regarding the possibility of establishing nonfacility PE RVUs for this service based on the assumption that the nonfacility PFS payment rate would be lower than the rate paid by the Medicare hospital outpatient prospective payment system (OPPS). These commenters stated that the supply, personnel, and administration costs are higher in the non-facility setting than in the facility setting and that current Medicare payment for L8680 under the DMEPOS fee schedule offsets the difference in costs between the facility and nonfacility setting. Many of these commenters also stated that it is more cost effective for the Medicare program for these services to be furnished in the nonfacility setting. These commenters also stated that it is more convenient for patients to receive this service in the nonfacility setting, so that Medicare should not implement nonfacility payment rates because doing so might discourage practitioners from furnishing the service in the nonfacility setting.

Response: We understand the commenters' interest in ensuring that Medicare beneficiaries retain access to the service in the nonfacility setting. We do not agree with the commenters' underlying assumption that developing accurate payment rates for the service in the nonfacility setting will necessarily deter practitioners from furnishing the service to Medicare beneficiaries outside the facility setting. Additionally, we do not know how to reconcile the contradictory contentions of many individual commenters that the costs of furnishing the services in the nonfacility setting are greater so that payment rates should be higher, but furnishing services there would still be more cost effective for Medicare.

Comment: One commenter supported the proposal to create nonfacility RVUs for this service since it would reduce overutilization of the service and lower the likelihood of fraud.

Response: We appreciate the support for the proposal, and we generally agree that developing accurate payment rates encourages appropriate utilization.

Comment: One commenter stated that CMS should continue to provide payment for HCPCS code L8680 until non-facility PE inputs for CPT code 63650 including the leads have been developed.

Response: We appreciate the commenter's concerns. We would continue a mechanism to provide payment for the disposable leads used in furnishing the service while we develop non-facility PE inputs. We also agree that once a practice expense payment reflects these disposable leads, that a separate payment mechanism would no longer be necessary.

Comment: The AMA RUC agreed that the direct practice expense inputs for the service should be reviewed to establish appropriate inputs in both the facility and nonfacility setting.

After consideration of the comments we received regarding our proposal to establish nonfacility PE RVUs for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural), we continue to believe that it would be appropriate to do so since these services are being furnished in the nonfacility setting. The AMA RUC expects to review the direct PE inputs for this service during CY 2013. We anticipate receiving recommendations from the AMA RUC for the CY 2014 PFS, and we request comments from other stakeholders regarding the appropriate direct PE inputs for this service

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 II.B.1.b. and II.B.1.c. of this final rule with comment period, the statute also defines the PE and malpractice components and provides specific guidance in the calculation of the RVUs for each of these components. Section 1848(c)(1)(B) of the Act defines the PE component as “the portion of the resources used in furnishing the service that reflects the general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising practice expenses.” Section 1848(c)(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.” Clause (ii) and clause (iii) of section 1848 (c)(2)(C) 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 1848(c)(2)(K) to the Act 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 1848(c)(2)(L) of the Act 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 final rule with comment period, 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 the recommendations of other public commenters, and 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 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 Relief and Job Creation Act of 2012 (MCTRJCA) (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 aligning incentives for hospitals, post-acute care providers, physicians, and other practitioners to partner closely across all specialties and settings that a patient may encounter to improve the patient's experience of care. The typical goals of developing an effective bundled payment system are to improve quality, reduce costs, and promote efficiency. Current work on bundling services paid under the PFS to date has been limited to targeting specific codes and sets of codes and repackaging those codes into “bundles.” 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. However, we believe that we now need to move beyond this “repackaging” of codes and examine the potential of a larger bundled payment within the PFS. In response to section 3003(b)(1) of the MCTRJCA, we have consulted with medical professional societies, private payers, healthcare system administrators, and other stakeholders; met with other CMS staff involved in other bundling initiatives; and performed an extensive literature review. Additionally, we have had representatives of specialty groups such as radiation oncologists volunteer to work with us to create a bundled payment for their services. If we were to engage in a bundling project for radiation therapy, we would want to do more than provide a single episode payment for the normal course of radiation therapy that aggregates the sum of the individual treatments. Radiation therapy has many common side effects that can vary based on the type of cancer the patient has and how it is being treated. Common side effects associated with radiation therapy include fatigue, skin problems, eating problems, blood count changes, emotional issues such as depression, etc* * * If we were to engage in a bundling project that includes radiation therapy, we would be interested in exploring whether it could also include treating and managing the side effects that result from radiation therapy in addition to the radiation therapy itself. Such an episode-based payment would allow Medicare to pay for the full course of the typical radiation therapy as well as the many medical services the patient may be receiving to treat side effects.

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. Following completion of this report, we will look forward with interest to the view of stakeholders that are interested in testing some of these concepts within the PFS.

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 processes, 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 the CY 2012 final rule with comment period, under the potentially misvalued codes category of “Other codes determined to be appropriate by the Secretary,” we finalized our proposal to review 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 also finalized policy to consolidate the periodic reviews 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 the CY 2013 PFS 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 1848(c)(2)(L) of the Act 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 also include validation of the pre-, post-, and intra-service time 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 (77 FR 73054 through 73055). In September 2012 we entered into two contracts to assist us in validating RVUs of potentially misvalued codes; the implementation details for these contracts are currently under development. Contractors will explore models for the validation of physician work under the PFS, both for new and existing services. We plan to discuss these models 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 services typically furnished 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 that reflect a wide range of E/M services 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 values of global surgical packages reviewed less recently 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.

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 the 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 detail the component 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 or CPT 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. This is an area of concern, and is discussed in more detail later in this section.

As noted above, section 1848(c)(2)(K) of the Act, which codified and expanded the potentially misvalued codes initiative that CMS had begun, 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 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 the CY 2013 PFS proposed rule, we proposed to review Harvard-valued services with annual allowed charges that totaled at least $10,000,000 (Harvard-valued—Allowed charges ≥$10,000,000), and requested recommendations from the AMA RUC and other public commenters on appropriate values for these services (77 FR 44741).

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. As we stated in the CY 2013 PFS proposed rule, 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 gather 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 detail in claims data and documentation restrict our ability to review and assess the appropriateness of their RVUs.

In the CY 2013 proposed rule, we requested comments on methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package. We stated that we were especially interested in and invited 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.

The following is summary of the comments we received regarding the methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package proposal.

Comment: Several commenters stated that the global payment methodology has restricted CMS' ability to audit the accuracy of the current value of services as well as the accuracy of the AMA RUC recommendations for services with a global period. Many commenters offered recommendations on how CMS could validate the current global surgical packages or obtain accurate and current data on E/M services furnished as a part of the global surgical package. Some commenters recommended that CMS establish auditable documentation requirements for inpatient and outpatient post-operative visits, and many believed that these auditable post-operative visit notes should follow E/M documentation guidelines. Other commenters suggested that CMS adjust all surgical services to a 0-day global period, require surgeons to bill post-operative E/M services separately for payment purposes, and subject those billings to the same coding and documentation standards and audits to which other practitioners are already subject. Several commenters noted that CMS could validate the global surgical packages with the hospital Diagnosis-Related Group (DRG) length of stay data, and that CMS could explore the use of surgical specialties' registries to collect data on services furnished within the global period. Commenters also suggested that CMS could draw upon the OIG's approach and review the medical record for a statistically valid sample of claims and then extrapolate those results to clinically similar families of codes. One commenter suggested that CMS could establish G-codes through which a large sample of surgeons might report the number and intensity of post-operative visits.

In response to our request for comments on methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package, some commenters stated that they believe post-operative work is appropriately surveyed, vetted and valued by the AMA RUC during its ongoing reviews of surgical procedures, and therefore, claims-based reporting is unnecessary in order to verify that the number of visits assigned to global surgical procedures is accurate. Some commenters stated that if CMS has concerns with a specific code, or group of codes, regarding the number of E/M visits valued within the physician work RVU, CMS should work with the AMA RUC to review these services. One commenter noted that there are 4,258 CPT codes on the PFS with a global period, but that only 271 of these CPT codes are billed more than 10,000 times annually, and most of the 271 CPT codes have been reviewed by CMS and the AMA RUC since 2005.

Response: We thank the commenters for their recommendations on this important issue. We will carefully weigh all comments received as we consider how best to measure the number and level of visits that occur during the global period.

In addition to the broader comments on measuring post-operative work, we also received a comment from the AMA RUC noting that the hospital and discharge management services included in the global period for many surgical procedures may have been inadvertently removed from the time file in 2007. With its comment letter, the AMA RUC sent us a revised time file with updated post-operative visits for the services that may be incorrectly displayed with zero visits. We are reviewing this file, and if appropriate, we intend to propose modifications to the physician time file in the CY 2014 PFS proposed rule. We note that should time have been removed from the physician time file inadvertently, it would not have affected the physician work RVUs or direct practice expense inputs for these services. It would have a small impact on the indirect allocation of practice expense at the specialty level, which we will review when we explore this potential time file change.

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 for PE and work, we invited the public to nominate potentially misvalued codes for review. To allow for public input and to preserve the public's ability to identify and nominate potentially misvalued codes for review under our annual potentially misvalued codes initiative, we 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.
  • Evidence of 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 evaluate the supporting documentation and assess whether the submitted codes appear to be potentially misvalued codes appropriate for review under the annual process. In the following year's PFS proposed rule, we publish the list of nominated codes, and propose -which nominated codes will be reviewed as potentially misvalued. We encourage the public to submit nominations for potentially misvalued codes in the 60-day comment period following the publication of this CY 2013 PFS final rule with comment period.

Table 4—CPT Codes Nominated as Potentially Misvalued for CY 2013 Rulemaking Back to Top
CPT Code Short descriptor CMS Action
33282 Implant pat-active ht record Establish nonfacility inputs, and review the work, facility and nonfacility inputs together. Not considered a potentially misvalued code.
33284 Remove pat-active ht record Establish nonfacility inputs, and review the work, facility and nonfacility inputs together. Not considered a potentially misvalued code.
36819 Av fuse uppr arm basilic Review as a potentially misvalued code.
36825 Artery-vein autograft Review as a potentially misvalued code.
53445 Insert uro/ves nck sphincter Interim Final in CY 2012, Final for CY 2013. Comments addressed in section II.M.2.a. of this CY 2013 PFS final rule with comment period.
77336 Radiation physics consult Review as a potentially misvalued code.
94762 Measure blood oxygen level Adopt direct PE revisions discussed below on an interim final basis for CY 2013.
28820 Amputation of toe Last reviewed for CY 2012. No further review required at this time.
28825 Partial amputation of toe Last reviewed for CY 2012. No further review required at this time.
35188 Repair blood vessel lesion Last reviewed for CY 2012. No further review required at this time.
35612 Artery bypass graft Last reviewed for CY 2012. No further review required at this time.
35800 Explore neck vessels Last reviewed for CY 2012. No further review required at this time.
35840 Explore abdominal vessels Last reviewed for CY 2012. No further review required at this time.
35860 Explore limb vessels Last reviewed for CY 2012. No further review required at this time.
43283 Lap esoph lengthening Last reviewed for CY 2012. No further review required at this time.
43327 Esoph fundoplasty lap Last reviewed for CY 2012. No further review required at this time.
43328 Esoph fundoplasty thor Last reviewed for CY 2012. No further review required at this time.
43332 Transab esoph hiat hern rpr Last reviewed for CY 2012. No further review required at this time.
43333 Transab esoph hiat hern rpr Last reviewed for CY 2012. No further review required at this time.
43334 Transthor diaphrag hern rpr Last reviewed for CY 2012. No further review required at this time.
43335 Transthor diaphrag hern rpr Last reviewed for CY 2012. No further review required at this time.
43336 Thorabd diaphr hern repair Last reviewed for CY 2012. No further review required at this time.
43337 Thorabd diaphr hern repair Last reviewed for CY 2012. No further review required at this time.
43338 Esoph lengthening Last reviewed for CY 2012. No further review required at this time.
47563 Laparo cholecystectomy/graph Last reviewed for CY 2012. No further review required at this time.
49507 Prp i/hern init block >5 yr Last reviewed for CY 2012. No further review required at this time.
49521 Rerepair ing hernia blocked Last reviewed for CY 2012. No further review required at this time.
49587 Rpr umbil hern block > 5 yr Last reviewed for CY 2012. No further review required at this time.
49652 Lap vent/abd hernia repair Last reviewed for CY 2012. No further review required at this time.
49653 Lap vent/abd hern proc comp Last reviewed for CY 2012. No further review required at this time.
49654 Lap inc hernia repair Last reviewed for CY 2012. No further review required at this time.
49655 Lap inc hern repair comp Last reviewed for CY 2012. No further review required at this time.
60220 Partial removal of thyroid Last reviewed for CY 2012. No further review required at this time.
60240 Removal of thyroid Last reviewed for CY 2012. No further review required at this time.
60500 Explore parathyroid glands Last reviewed for CY 2012. No further review required at this time.
95800 Slp stdy unattended Last reviewed for CY 2012. No further review required at this time.

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 above in Table 4. 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. In the CY 2013 proposed rule, we noted that under this annual public nomination process 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. We stated that, nonetheless, we would evaluate the supporting documentation for each nominated code to ascertain whether the submitted information demonstrated that the code is potentially misvalued.

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 requestor stated 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 furnish these services in the office setting. The requestor asked that we establish appropriate payment for the services when furnished in a physician's office. Specifically, the requestor asked that CMS establish nonfacility PE RVUs for these services. In the CY 2013 proposed rule, we stated that 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 noted, as did the requestor, 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 proposed to review CPT codes 33282 and 33284 and requested 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 requested that we establish appropriate payment for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural) when furnished in an office setting. In the CY 2013 proposed rule, we noted that this request was not submitted as a potentially misvalued code nomination. However, given that these services are now furnished in the nonfacility setting, we stated that we believed CPT code 63650 should be reviewed to establish appropriate nonfacility inputs. Please see section III.A.3 (Changes to Direct Inputs for Specific Services) for a discussion of spinal code stimulation trial procedures in the nonfacility setting.

The following is a summary of the comments we received in response to our proposal to review the physician work, facility, and nonfacility direct PE inputs for CPT codes 33282 and 33284.

Comment: Several commenters did not support our proposal to review CPT codes 33282 and 33284. Commenters stated that the very low utilization in the nonfacility setting does not justify a review of the codes for nonfacility PE inputs. One commenter noted that physicians are not interested in furnishing these services in the nonfacility setting due to concerns for patient safety. Commenters recommended that we not consider establishing nonfacility PE RVUs for these CPT codes until additional studies indicate a clinical need to furnish these services in the nonfacility setting. Additionally, commenters stated that they do not believe it is necessary to review physician work and PE in the facility setting, as that was not the concern that the stakeholder brought forward. The AMA RUC stated that it continues to support the current work RVUs and facility PE inputs for these services.

Another commenter recommended that CMS finalize the proposal to revalue CPT codes 33282 and 33284 in order to establish nonfacility PE RVUs. The commenter stated that the lack of nonfacility PE RVUs prevents physicians from furnishing these services in the office for select patients for whom this setting of care is safe and appropriate. This commenter recommended that CMS maintain the existing work RVUs, and focus the revaluation on the nonfacility PE inputs. The commenter requested that CMS remain flexible in its approach to nominated codes and allow for more expeditious review of codes by not requiring full provider surveys.

Response: After reviewing the comments received, we are finalizing our proposal to review the physician work, and facility and nonfacility direct PE inputs for CPT codes 33282 and 33284. We acknowledge that we received very few Medicare claims for these services in the nonfacility setting in CY 2011; nonetheless, we believe it is appropriate to consider the relative resources involved in furnishing this service in the nonfacility setting. We reiterate 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 acknowledge that commenters support the current work and facility RVUs, however, it is our policy generally to review the physician work, facility, and nonfacility direct PE inputs for each service together to ensure consistency in the inputs used to value the service. Based on information provided by the requestor and the 2011 nonfacility utilization for this code, we believe it is appropriate to review this service for nonfacility PE inputs. As explained above, we intend to review the work and facility inputs as well. Additionally, we note that the physician work and facility PE inputs for these two services have not been reviewed in over a decade, so we believe it is reasonable to assess whether the inputs on which the current payment rates are based accurately reflect the resources involved in furnishing these services today. Accordingly, we are finalizing our proposal to review the physician work, and facility and nonfacility direct practice expense inputs for CPT codes 33282 and 33284, and request comments on the appropriate physician work, and facility and nonfacility direct practice expense inputs for these services.

Traditionally, we have received recommendations from the AMA RUC on the appropriate physician work, PE, and malpractice inputs for services CMS plans to review and revalue. However, we understand that the AMA RUC may not issue recommendations for all codes under review by CMS. In addition to requesting recommendations from the AMA RUC on services we intend to review, we request and encourage recommendations on these services from other public commenters as well. We acknowledge the requestor's comment that CMS remain flexible in its approach to nominated codes and not require full practitioner surveys for CPT codes 33282 and 33284. We understand that practitioner surveys regarding work, malpractice, and PE are not always available, practical, or reliable. We encourage commenters to submit the best data available on the appropriate valuation and inputs for the services under review, including the information listed above under supporting documentation for the nomination of potentially misvalued codes.

In the CY 2013 proposed rule, we stated that we did not consider CPT codes 36819 (Arteriovenous anastomosis, open; by upper arm basilic vein transposition) and 36825 (Creation of arteriovenous fistula by other than direct arteriovenous anastomosis (separate procedure); autogenous graft) 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 following is a summary of the comments we received in response to our proposal not to review CPT codes 36819 and 36825 as potentially misvalued codes.

Comment: One commenter reiterated its belief that CPT codes 36819 and 36825 are potentially misvalued because the work RVUs finalized by CMS in CY 2012 place these services out of rank order with services that involve similar resources. To support this position, the commenter provided a list showing these services relative to all services with a similar global period, intra-service time, and work RVU. The commenter also restated the rationale previously submitted to CMS when it nominated these services as potentially misvalued. The commenter requested that CMS reconsider the work RVUs of these two services.

Response: After reviewing the comments received and conducting a clinical review of CPT codes 36819 and 36825 alongside similar services, we agree with the commenter that these services may be out of rank order and are potentially misvalued. Therefore, we are modifying our proposal to not review CPT codes 36819 and 36825 as potentially misvalued codes. We will review CPT codes 36819 and 36825 along with their code families, which include CPT codes 36818 through 36821 and CPT codes 36825 through 36830, as potentially misvalued. We thank commenters for the additional supporting documentation provided, and request additional comments on the appropriate physician work and direct PE inputs for these services.

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. We completed our review and established RVUs for this code on an interim basis for CY 2012 subject to public comment. In the CY 2013 proposed rule, we stated that we would consider the supporting documentation submitted under the potentially misvalued code nomination process for CPT code 53445 as comments on the CY 2012 interim final value, and would address the comments in the CY 2013 PFS final rule with comment period when we address the final value of the CPT code. A summary of the comments received on CPT code 53445 and our response to those comments is included in section II.M.2 of this final rule with comment period.

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 requestor stated that CPT code 77336 is misvalued because changes in the technique for furnishing 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 and other staff. Additionally the requestor stated 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. In the CY 2013 proposed rule, we stated that after evaluating the detailed supporting information that the commenter provided, we believed 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 proposed to review CPT code 77336 as potentially misvalued and requested recommendations from the AMA RUC and other public commenters on the direct PE inputs for this service and for the other services within this family of CPT codes.

The following is a summary of the comments we received in response to our proposal to review CPT code 77336 as potentially misvalued.

Comment: Commenters supported the CMS proposal to review CPT code 77336 and urged CMS to finalize it. The AMA RUC stated that it would review this service and provide recommendations to CMS on its valuation. Several commenters reiterated their rationale for why they believe CPT code 77336 is potentially misvalued and provided supporting documentation. Additionally, commenters indicated that the American Society for Physicists in Medicine (AAPM) would submit information on practice expense inputs and other data to support the revaluation of this CPT code, and expressed appreciation that CMS is willing to consider data and input from professional medical societies that do not participate in the AMA RUC process.

Response: After reviewing the comments received, we continue to believe that changes in technology may have altered the direct practice expense inputs associated with CPT code 77336 and are finalizing our proposal to review this service as potentially misvalued. We thank commenters for the supporting documentation provided, and request additional comments on the appropriate direct PE inputs for this service, as well as any other services that may be 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. Requestors stated that CPT code 94762 is misvalued because the time currently allocated to the various direct PE inputs does not accurately reflect current practice. Requestors also stated that independent diagnostic testing facilities are not appropriately accounted for in the current indirect PE methodology. In the CY 2013 proposed rule, we stated that, in response to these stakeholder concerns, we reviewed the PE inputs for CPT code 94762, which was last reviewed for CY 2010. We believed that CPT code 94762 is misvalued, and we proposed changes to the PE inputs for CY 2013. We stated that, following clinical review, we believed that the current time allocated to clinical labor and supplies appropriately reflects current practice. However, we believed 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 proposed this refinement to the direct PE inputs for CPT code 94762 for CY 2013. These proposed adjustments were reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

The following is a summary of the comments received regarding the proposed direct PE adjustments to CPT code 94762.

Comment: Many commenters agreed with CMS' proposal to refine the equipment minutes for this service to 480 minutes. One commenter suggested that CMS should increase the proposed allocation of minutes to account for the time that the equipment is unavailable for use because the patient has yet to return it to the office.

Response: We appreciate the support for the proposal. We believe that the appropriate allocation of minutes for the equipment is the sum of the times within the intra-service period when a clinician is using the piece of equipment, plus any additional time the piece of equipment is not available for use for another patient due to its use during the designated procedure. However, we also note that the equipment cost per minute calculation incorporates a utilization rate assumption that appropriately accounts for the time the equipment cannot be used because it is being transported to and from the office or between patients. Therefore, we are not revising our proposed adjustment to the equipment time.

Comment: Several commenters supported the proposed allocation of minutes to the equipment and also submitted invoices and other evidence for updating the direct PE inputs for the service. The AMA RUC and others submitted information to update the pulse oximeter and the recording software used in the service. The information submitted by the AMA RUC reflects a pulse oximeter priced at $1,418 and recording software priced at $990. Other commenters submitted various disposable supplies that might be used to furnish the service, including varying types of batteries, oximeter cables, and wristbands that might be used when furnishing this service.

Response: We appreciate the updated information furnished to us by stakeholders and other commenters. While we generally urge stakeholders to submit such price update requests through the process for updating supply and equipment prices we established for CY 2011, because we made a proposal specifically related to the equipment minutes allocated for this procedure, we believe it would be appropriate to consider the supplies and equipment price inputs associated with the service in conjunction with the proposal to change the equipment minutes. Based on the invoice information we received from commenters, we will update the price of the `pulse oximetry recording software (prolonged monitoring)' (EQ212) and include a new equipment item “Pulse Oximeter 920 M Plus” priced at $1,418 as equipment inputs for the code. In reviewing the requested supply items to include, we believe that it would be appropriate to include 6 AA batteries (SK095) as a disposable supply for the service as well as incorporate a new item, a disposable oximeter cable, priced at $11.08.

Based on these comments and our clinical review, we are adopting these direct PE inputs, including our adjusted allocation of equipment minutes, on an interim basis for CY 2013. These values are reflected in the CY 2013 PFS direct PE input database available under downloads for the CY 2013 PFS final rule with comment period on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage. We also note that the PE RVUs included in Addenda B and C reflect these interim direct PE inputs.

In the CY 2013 proposed rule, we stated that we did not consider the nominated codes that were last reviewed and valued for CY 2012 to be potentially misvalued because 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. Below is a summary of the comments we received in response to our proposal to not review the CPT codes listed above in Table 4 not discussed above.

Comment: We received a few limited comments on the nominated codes not previously discussed above, however, like the code nominations, the comments and supporting documentation for these services mirrored the public comments previously submitted, to which CMS has already responded.

Response: Having received no new information on the CPT codes listed in Table 4 not previously discussed, we are finalizing our proposal not to review those services as potentially misvalued.

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. In the CY 2013 PFS proposed rule, we proposed to review Harvard-valued services with annual Medicare allowed charges of $10 million or greater. 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. In the CY 2013 proposed rule, we noted that several of the CPT codes meeting these criteria have already been identified as potentially misvalued through other screens and were scheduled for review for CY 2013. We also recognized that other codes meeting these criteria had been referred by the AMA RUC to the CPT Editorial Panel. We stated that, in these cases, we were not proposing re-review of these already identified services, but for the sake of completeness, we included those codes as a part of this category of potentially misvalued services. In our proposal, we recognized that the relatively low Medicare utilization for these services may make gathering information on the appropriate physician work and direct PE inputs difficult. We requested recommendations from the AMA RUC and other public commenters, and stated that we 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 encouraged the use of valid and reliable alternative data sources and methodologies when developing recommended values. In sum, we proposed to review Harvard-valued CPT codes with annual allowed charges of $10 million or more as a part of the potentially misvalued codes initiative. In the CY 2013 proposed rule, we stated that the following codes met the criteria for this screen and proposed to review these CPT codes as potentially misvalued services.

Table 5—Proposed 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.

The following is summary of the comments we received in response to our proposal to review Harvard-valued CPT codes with annual allowed charges of $10 million or more as a part of the potentially misvalued codes initiative.

Comment: Comments on this proposal were specific to the CPT codes we proposed to review under this potentially misvalued code screen. A few commenters noted that CPT code 64590 (Insertion or replacement of peripheral or gastric neurostimulator pulse generator or receiver, direct or inductive coupling) does not have annual allowed charges that meet the threshold of $10 million and stated that the code should be removed from the list. These commenters requested that CMS reexamine this list to ensure all codes meet the specified criteria. Other commenters pointed out that certain codes on the list are already scheduled for review by the medical specialty societies and the AMA RUC, and that some codes are scheduled for deletion by the CPT Editorial Panel. The AMA RUC stated that it would discuss the list of codes that meet the criteria for this screen and would determine the next steps in the AMA RUC's review of these services.

Response: After reviewing the comments received, and reexamining the Medicare claims data, we agree with commenters that CPT code 64590 does not have annual Medicare allowed charges of $10 million or greater, nor do CPT codes 29823 (Arthroscopy, shoulder, surgical; debridement, extensive) and 95860 (Needle electromyography; 1 extremity with or without related paraspinal areas). In compiling the list, we inadvertently included allowed charges incurred in the ambulatory surgical center setting. We thank commenters for bringing this to our attention. Therefore, we have removed these three services from the proposed list of CPT codes that are Harvard-value with annual allowed charges of $10 million or greater.

In the CY 2013 proposed rule, we noted that several codes that met the criteria for this potentially misvalued code screen were currently under review for CY 2013 and others were scheduled for review by the CPT Editorial Panel. CPT codes 13152 (Repair, complex, eyelids, nose, ears and/or lips; 2.6 cm to 7.5 cm), 52353 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy; with lithotripsy (ureteral catheterization is included)), 64450 (Injection, anesthetic agent; other peripheral nerve or branch), 92286 (Special anterior segment photography with interpretation and report; with specular endothelial microscopy and cell count), and 95860 (Needle electromyography; 1 extremity with or without related paraspinal areas) were reviewed for CY 2013. A discussion of the interim final values for those services is in section III.M.3. of this final rule with comment period. CPT code 92982 (Percutaneous transluminal coronary balloon angioplasty; single vessel) has been deleted by the CPT Editorial Panel for CY 2013. We have updated the list of CPT codes meeting this potentially misvalued code screen to show the review status of the codes, and to remove the three CPT codes mentioned above that do not meet the parameters of the screen. We are finalizing the list of Harvard-valued CPT codes with annual allowed charges of $10 million or more in Table 6, and for CY 2014, we will review the services not already reviewed. We request public comments on the appropriate work RVUs and direct practice expense inputs for these services.

Table 6—Harvard-Valued CPT Codes With Annual Allowed Charges ≥$10,000,000 Back to Top
CPT code Short descriptor Review status
13152 Repair of wound or lesion Interim Final for CY 2013.
27446 Revision of knee joint Review for CY 2014.
36215 Place catheter in artery Review for CY 2014.
36245 Ins cath abd/l-ext art 1st Review for CY 2014.
43264 Endo cholangiopancreatograph Review for CY 2014.
50360 Transplantation of kidney Review for CY 2014.
52353 Cystouretero w/lithotripsy Interim Final for CY 2013.
64450 N block other peripheral Interim Final for CY 2013.
66180 Implant eye shunt Review for CY 2014.
67036 Removal of inner eye fluid Review for CY 2014.
67917 Repair eyelid defect Review for CY 2014.
92286 Internal eye photography Interim Final for CY 2013.
92982 Coronary artery dilation Deleted for CY 2013.

(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 certain 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 7. In consideration of the comments from the AMA RUC and other stakeholders, we proposed to include the seven equipment items omitted from the RUC recommendation for CPT code 77418. These proposed adjustments were 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 with comment period at http://www.cms.gov/PhysicianFeeSched/. We note that the proposed PE RVUs included in Addendum B reflected the proposed updates.

Table 7—Equipment Inputs Omitted From RUC Recommendation for CPT Code 77418 (IMRT Treatment Delivery) Back to Top
Equipment code Equipment description
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 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 available to Medicare beneficiaries and the general public 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 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 believe medical societies and practitioners strive to offer their cancer patients accurate information regarding the IMRT or SBRT treatment experience. 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 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 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 proposed to adjust the procedure time assumption for IMRT delivery (CPT code 77418) to 30 minutes. We proposed 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 also proposed 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 final rule with comment period at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs included in Addendum B reflect the proposed updates. We requested 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), which includes packaged payment for image guidance also used in treatment delivery. We believe that such high-volume services that are furnished in both nonfacility and facility settings are 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 physicians' offices or freestanding clinics. Given that the OPPS payment rates are based on auditable data on hospital costs, we believe the 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. However, 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.

We received many comments regarding our proposal to change the direct PE inputs for CPT codes 77418 and 77373 based on amended procedure time assumptions and consideration of the comments from the AMA RUC and other stakeholders to include the seven equipment items omitted from the previous AMA RUC recommendation for CPT code 77418. The following is summary of the comments we received and our responses to those comments.

Comment: Several commenters agreed with CMS' proposal to add the equipment items omitted from the AMA RUC recommendation for CPT code 77418 to the code.

Response: We appreciate the support for that aspect of the proposal.

Comment: Many commenters disagreed with CMS' proposal to adjust the procedure time assumptions for these services. Some of these commenters stated that 35 minutes was a more appropriate estimate, but none presented alternative sources of objective information for determining accurate procedure time assumptions. Many commenters objected to CMS' proposal on the basis that the agency used publicly available information to adjust procedure times assumptions instead of basing its proposal on information developed through the AMA RUC process. These commenters stated that CMS should not finalize its proposed procedure time assumptions for one of four reasons: publicly available procedure time information does not consider the time resources required prior to or following the procedure, that educational information for patients is an inappropriate data source because such material is not subject to the same degree of scrutiny by the medical community as the information presented to the AMA RUC, that CMS only has the authority to review or revalue PFS services through the AMA RUC process, or that time has been universally inflated by the AMA RUC so that using more accurate time assumptions in setting the RVUs for these services would distort their value relative to other PFS services.

Response: We appreciate the commenters' interest in CMS using the best available data to identify the time resources required to furnish services to Medicare beneficiaries. We address commenters' objections to using these patient education materials in the comment summaries and response paragraphs that follow.

Comment: Many commenters stated that patient education materials are not an appropriate source of data because the procedure times conveyed through such materials may not fully account for the time spent positioning the patient for treatment, performing safety checks or the work that occurs before and after treatment. Several commenters explicitly stated that it is highly likely that the patient education materials describe only the time the patient is on the treatment table.

Response: We understand that the procedure times cited in the patient education materials may not include the full time for preparing the equipment, positioning the patient or other necessary work required prior to or following the procedure. The procedure time assumptions used in developing direct PE inputs only account for a portion of the service period minutes allocated to the clinical labor or the equipment direct PE inputs. For example, in our proposal to reduce procedure time assumptions for CPT code 77418, we allocated an additional seven minutes to the equipment beyond the procedure time assumption for additional tasks. These minutes reflect the standard minutes usually recommended by the RUC for these tasks. For example, for CY 2013 the AMA RUC recommended these minutes for direct PE inputs for CPT code 31231 (Nasal endoscopy, diagnostic, unilateral or bilateral (separate procedure), CPT code 52287 (Cystourethroscopy with injection(s) for chemodenervation of the bladder), CPT code 65800 (Paracentesis of anterior chamber of eye (separate procedure); with diagnostic aspiration of aqueous), and CPT code 11311 (Shaving of epidermal or dermal lesion, single lesion, face ears, eyelid, nose, lips, mucous membrane; lesion diameter 0.6 to 1.0 cm).

We also note that the direct PE inputs for codes describing imaging guidance services that are typically reported at the same time-include minutes for the radiation therapist to prepare the room, position the patient, and clean the room. Similarly, the proposed direct PE inputs for CPT code 77373 incorporate clinical labor and equipment minutes that exceed the minutes assumed for the procedure itself: 24 minutes of additional nurse time, 24 minutes of additional time for the radiation therapist, and 15 additional minutes for the medical physicist for pre-service and post-service tasks. On the basis of these tasks, the equipment associated with the code has also been allocated 24 minutes beyond the procedure time assumption for pre-service and post-service work. Therefore, we do not agree with commenters who suggested that our proposed revisions are inappropriate because the procedure time reported in the patient education materials may underestimate the procedure time assumptions used in developing direct PE inputs. Instead, we believe that the typical procedure time described in the patient education material is generally equivalent to the minutes incorporated in the service period for performing the procedure. We already have incorporated additional minutes of clinical labor time into the direct PE inputs for both CPT codes 77418 and 77373 to account for tasks like preparing the equipment and cleaning the room in addition to the minutes allocated for the procedure time assumptions. This reflects the direct PE inputs used for most services, where we allocate minutes to clinical labor and medical equipment for preparatory or follow-up tasks in addition to the equipment time allocated based on the procedure time assumption. While many commenters stated that the procedure times reported in the publicly available information do not include necessary preparatory or follow-up tasks, we received no comments with specific objections to the number of minutes allocated for such tasks in conjunction with our proposal.

Comment: The AMA RUC and some medical specialty societies expressed opposition to CMS using patient education materials in the process of setting Medicare payment rates. These commenters claimed that such information is not evaluated by the same standards applied to the extant data used as part of the AMA RUC process, so that CMS' use of these materials is ill-conceived.

Response: As we stated previously, we believe medical societies and practitioners strive to offer their cancer patients accurate information regarding the IMRT or SBRT treatment experience. We believe that such information, especially for high-volume services, is more likely to reflect typical treatment times than information proffered solely for the purpose of developing payment rates. While many commenters objected in principle to the validity of the patient education materials, we do not believe that medical specialty societies and providers of care would broadly inform their patients that IMRT treatment would last between 10 and 30 minutes per session if the typical treatment session actually lasted for one hour or that SBRT treatment would last for no more than one hour if it typically takes 90 minutes.

Comment: Many commenters claimed that CMS has the responsibility to conduct a comprehensive, empirical review of those procedure time assumptions utilizing the AMA RUC if CMS has concerns with those assumptions.

Response: We agree that AMA RUC review and recommendations are one important component in constructing payment rates under the physician fee schedule. While we do not agree with the commenters' statement that CMS has a responsibility to conduct all reviews of potentially misvalued codes through the AMA RUC process exclusively, we note the AMA RUC reviewed both CPT codes 77418 and 77373 as recently as 2010. Both of these services had been identified under our potentially misvalued code initiative. As noted above, 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 AMA RUC recommended no significant changes to the direct PE inputs. We note that in response to this proposal, the AMA RUC has recently informed us that since there is no physician work associated with these codes, it has asked the relevant specialty society to conduct a survey for clinical staff time, in order to ensure accurate procedure times.

Comment: Some commenters stated that CMS should only consider the accuracy of these procedure time assumptions relative to the procedure time estimates for other services. Some of these commenters claimed that procedure time assumptions for services across the PFS are inflated so that CMS should not use procedure time assumptions for these services that are also exaggerated.

Response: We appreciate the commenters' concerns with maintaining the relativity of time used in developing relative value units. We understand that procedure times may be overestimated for some other PFS services. While we agree that maintaining the resource relativity of services within the payment system is very important, we also believe that there is no practical means for CMS or stakeholders to engage in a complete simultaneous review of time assumptions across all payable codes. As such, we must evaluate times (and other factors) and make adjustments in smaller increments when we find that adjustments are warranted. We strive to maintain relativity by reviewing all RVU components for a code or reviewing all codes within families where appropriate. Furthermore, we believe that our proposal to use more accurate procedure time assumptions for these services should be considered in the context of broader efforts to improve the accuracy of PFS relative values, where time is a significant component of developing relative values.

Since MedPAC's March 2006 Report to the Congress, CMS has implemented a potentially misvalued codes initiative and has taken significant steps to identify and address potentially misvalued codes, including establishing physician times that accurately reflect the resources involved in furnishing the service. For example, CMS has reduced the physician times for services that were originally valued in the inpatient setting but now are frequently performed in the outpatient setting, services that are frequently performed together or in multiple units, and services billed on the same day as an E/M service. Furthermore, in addition to our proposal to review services with stand-alone procedure time, in this CY 2013 PFS final rule with comment period, we also discuss recommendations on how best to accurately measure post-operative work in the global surgical period, and finalize several proposals to adjust times for services with anomalous times in the physician time file. Moreover, in September 2012, we entered into two contracts to assist us in validating RVUs of potentially misvalued codes, which may include the validation of physician time elements.

Additionally, we do not agree with the commenters' assertion that if time is distorted across the PFS, it is likely to be distorted with consistent proportionality. While the distortions may be relatively consistent for surveys taken at similar times or data gathered through similar methods, the procedure time assumptions used in developing practice expense inputs have not originated from consistent sources. The 60 minute procedure time assumption for IMRT treatment delivery, for example, was originally developed based on a specialty society survey for CY 2002.

Through our misvalued codes initiative and other efforts, we strive to prioritize and review values for codes each year and work toward achieving greater calibration of values across the PFS over time.

Comment: MedPAC commented that CMS should implement its proposal to reduce the time estimates for these codes based on the credible evidence presented in the proposed rule. The commission stated further that if stakeholders object to these changes, they should provide objective, valid evidence to CMS that the agency's proposed time estimates are too low. Furthermore, the commission expressed concerns about using physician surveys to develop time estimates since physician medical societies have a financial stake in the process. Therefore, MedPAC recommended that the AMA RUC should seek evidence other than the surveys conducted by specialty societies and that CMS may need to regularly collect data on service time and other variables to establish more accurate RVUs for practice expense and physician work.

Response: We appreciate MedPAC's support for the proposal. We agree that there are many means to measure time other than through survey methodology, and we are open to considering robust data on procedure time from many sources.

Comment: Many commenters objected to CMS' proposal to update the procedure time assumptions used in determining the direct PE inputs for these services since CMS did not propose corresponding updates to other direct PE inputs for the services.

Response: We appreciate the commenters' interest in CMS' use of the most accurate and up-to-date information in establishing practice expense RVUs for these services. We note that we recently received direct PE input recommendations from the AMA RUC for these services and used them to establish interim final direct PE inputs for CY 2012. We also note that in the CY 2011 PFS final rule (75 FR 73205 through 73207) we established a public process for updating prices for supplies and equipment used as direct PE inputs. Prior to making our CY 2013 proposal regarding procedure times for the IMRT and SBRT codes, we had received no requests to update prices for the inputs associated with these codes.

Comment: Several commenters submitted specific information regarding appropriate input revisions for CPT codes 77418 and 77373. Several commenters (including the AMA RUC) suggested that IMRT treatment requires two radiation therapists, working simultaneously, to furnish the service safely. Others suggested that the linear accelerator (ER010) and collimator (ER017) used as direct PE inputs for CPT code 77418 IMRT treatment are no longer typical. These commenters submitted evidence, consisting of a collection of paid invoices, that demonstrated that the typical accelerator used in IMRT includes the functionality of the collimator and should be priced at $ 2,641,783 and that the price of the “laser, diode, for patient positioning (Probe)” (ER040) should be $18,160. Several commenters also noted that two equipment items included in many other radiation treatment codes, the radiation treatment vault (ER056) and water chiller (ER065) ought to be included in the equipment inputs for IMRT and SBRT treatment delivery. Finally, several commenters suggested that the equipment items used in these treatment delivery services require practitioners to purchase maintenance and service contracts in addition to the price of the equipment itself.

Response: We appreciate all the submitted information to assist us in conducting a comprehensive update of the appropriate direct PE inputs for these services. We agree with the commenters that we should use the best information available in developing direct PE inputs for PFS services. Based on this information, we believe it would be appropriate to include two radiation therapists as direct PE inputs for CPT code 77418. We also believe it would be appropriate to update the current accelerator and collimator equipment inputs used in CPT code 77418 based on the invoices provided to us by commenters. While we generally urge stakeholders to submit such requests through the process we established for CY 2011, because we made a proposal specifically related to the equipment minutes allocated for these procedures, we believe it would be appropriate to consider the associated equipment and prices. We have observed that some other radiation treatment codes incorporate the water chiller and radiation treatment vault as direct PE inputs. We believe it would be appropriate to incorporate the water chiller as an equipment item into the IMRT and SBRT treatment delivery codes for the sake of consistency with the other radiation treatment codes. However, we question whether it is fully consistent with the principles underlying the PFS PE methodology to continue to classify the radiation treatment vault as medical equipment (a direct cost) since it is difficult to distinguish the cost of the construction of the vault from the cost of the construction of the building. The submitted architectural invoices for vault construction illustrate the difficulty in making that distinction. Furthermore, the typical circumstances of the vault's use are unclear, especially regarding whether or not the vault may be servicing multiple patients at the same time. However, we do not believe that it would be appropriate to remove the radiation treatment vault as a direct input for all PFS services for CY 2013. We expect to address the status of the radiation treatment vault as a direct PE input during CY 2014 rulemaking. For CY 2013, we believe that it would be appropriate to include the radiation treatment vault for CPT codes 77373 and 77418 to align the code with the similar radiation treatment delivery codes. In terms of the maintenance and service contract costs submitted to us by commenters, we remind stakeholders that we have generally not considered such costs as direct costs attributable to furnishing services to individual Medicare beneficiaries and that our standard equipment cost per minute calculation includes a maintenance factor that adequately incorporates such costs in amortizing the cost of the equipment itself.

Comment: A few commenters suggested that CMS should re-price the capital equipment associated with CPT code 77373. However, none of these commenters submitted invoices.

Response: We urge commenters to submit invoices and other evidence appropriate for pricing the capital equipment used in SBRT delivery as part of our public process for updating supply and equipment prices. We direct interested stakeholders to the CY 2011 PFS final rule (75 FR 73205-73207) for information regarding that process. We also note that as we explained in the CY 2012 PFS final rule with comment period (76 FR 73214), we could not accept the invoices accompanying the AMA RUC's recommendation for CPT Code 77373 to update the price of the “SRS system, SBRT, six systems, average” equipment (ER083). Each of these invoices included line items that we would not accept as part of the cost of the equipment, such as costs for training technologists to use the equipment, and the prices for these items were not separately identifiable. Therefore, we did not update the equipment price for ER083 in establishing interim final direct PE inputs for CY 2012. Were we to receive updated invoices through the process established during CY 2012 that did not include embedded costs that we would not accept as part of the cost of the equipment, we would consider those invoices in rulemaking for CY 2014.

Comment: Many commenters suggested that reductions in Medicare payment rates for these services would put serious financial strain on community radiation oncology practices, and result in significant negative impact on patient access to life-saving cancer treatment, particularly in rural communities. One commenter provided the results of an informal study that suggested that if the proposed RVUs become effective for CY 2013, many providers will stop providing charity care, lay off staff, limit hours of operation, refrain from purchasing new equipment, limit or stop accepting Medicare patients, or consolidate or close practice locations.

Response: We appreciate and share commenters' concerns regarding Medicare beneficiaries' access to care for radiation treatment services. While we share these concerns in general, we believe that accurately valuing services promotes Medicare beneficiaries' access to many different kinds of important services paid under the PFS, including radiation treatment. We continue to be interested in information related to beneficiaries' access to these kinds of services, and we will monitor for evidence of such problems. We would welcome being alerted to access problems, should they arise. At present, we do not have reason to believe that the proposed changes in procedure time assumptions, in conjunction with other corresponding updates in the direct PE inputs for these services, will jeopardize access to care for Medicare beneficiaries. We note that the final PE RVUs for these services, based on direct PE inputs updated with information provided by commenters, are significantly greater than those reflected in the proposed rule. We also note that the specialty-level impact of this final rule with comment period is significantly reduced relative to the policy as proposed. We direct interested readers to the section VIII.C. of this final rule with comment period regarding the specialty-level impacts of this and other finalized policies.

Comment: Many commenters objected to CMS' assumptions that the services would be more costly for facilities such as hospital outpatient departments that generally have Emergency Medical Treatment and Labor Act (EMTALA) obligations and standby capacity than for free-standing centers or offices. These commenters stated that the cost structure and the services furnished in freestanding and hospital outpatient settings are the same. These commenters stated that, while outpatient hospital departments may have to maintain standby capacity, they do not typically furnish IMRT 24 hours per day, seven days a week nor do the radiation oncology departments of hospitals generally furnish radiation treatment to higher acuity patients than the patients who receive services in physicians' offices or freestanding clinics.

Several other commenters suggested that the payment decrease expected to result from this proposal will force patients into the more expensive hospital setting and patients will be steered toward treatment options that result in greater financial returns. These commenters stated that this migration will increase costs both to the Medicare program and to patients through higher co-insurance payments. Others suggested that significant differences between nonfacility PFS and OPPS payment are likely to result in consolidation of free-standing cancer centers and hospitals that will reduce competition, inhibit access to care, and undermine focused care for cancer patients.

Response: As we stated in the proposal, we continue to believe that high-volume services, such as IMRT, 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. We agree with commenters that the direct costs of furnishing the service may be similar, but we continue to believe that hospitals are likely to incur additional indirect costs. For example, hospitals incur greater costs for maintaining the capacity to furnish services 7 days per week, 24 hours per day, even if IMRT delivery is not typically furnished during all of those hours. As we have already noted, the disparity between OPPS and PFS payment is even greater than a direct comparison of the payment rates would suggest. OPPS payment for CPT code 77148 includes packaged payment for image guidance, which is almost always furnished and billed with CPT code 77418. The PFS continues to make separate payment for several forms of image guidance.

We understand commenters' concerns regarding the inadvertent impact that financial incentives may make on the usual site of service for particular services. We believe that utilizing the most accurate cost inputs possible is a reasonable approach to mitigating the impact of such potential incentives.

As a result of the comments we received regarding our proposal to change the procedure time assumptions used in determining direct PE inputs for CPT codes 77418 and 77373, we are finalizing our proposals to adjust the procedure time assumption for IMRT delivery (CPT code 77418) to 30 minutes and to adjust the procedure time assumption for SBRT delivery (CPT code 77373) to 60 minutes. These codes continue to include clinical labor time for preparatory and follow-up tasks in addition to revisions to the procedure times. Based on comments received regarding additional updates to the direct PE inputs for these services, we are also adjusting other direct PE inputs for these services on an interim final basis for CY 2013. Based on comments received on our proposal, we are incorporating a second radiation therapist for CPT code 77418. The second therapist will be allocated 30 minutes of service period time, consistent with the first. Furthermore, we are incorporating a new equipment item called “IMRT accelerator” to replace the linear accelerator (ER010) and collimator (ER017) used as current direct PE inputs for CPT code 77418. Based on the evidence submitted by commenters, the new equipment item will be priced at $2,641,783 in the direct PE input database. Additionally, we are incorporating the radiation treatment vault (ER056) and water chiller (ER065) as direct PE inputs for both CPT codes 77418 and 77373. We are also updating the price of the “laser, diode, for patient positioning (Probe)” (ER040) from $7,678 to $18,160. We are adopting these direct PE inputs on an interim basis for CY 2013 and these values are reflected in the CY 2013 PFS direct PE input database. That database is available under downloads for the CY 2013 PFS final rule with comment period on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage. We also note that the PE RVUs included in Addenda B and C reflect these interim direct PE inputs.

These two IMRT and SBRT 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 may be 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 proposed 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 prioritized 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. We did not propose to include 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 8. We recognized 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 8, we requested 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 (with personally-identifiable information redacted) and other independent data sources. We note that many of the CPT codes in Table 8 have been identified through other potentially misvalued code screens and have been recently reviewed. Given our 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 8—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.

Comment: Several commenters objected to our proposal to review these codes. Some of these commenters objected to the premise that the procedure time assumptions for these services have not been subject to the same scrutiny as for services with procedure time assumptions tied directly to physician time. One of these commenters explained that the AMA RUC process of reviewing direct practice expense inputs involves three main levels of expert panel review: specialty society expert panel review and attestation of the data provided; RUC Practice Expense Subcommittee review; and full RUC member review. Other commenters suggested that many of the identified services have procedure time assumptions related to physician time and therefore should be removed from the list. Another commenter claimed that services with professional and technical components should be removed from the list since services with professional components ought not to be considered “stand-alone.” Another commenter suggested that CPT code CPT Code 77600 should be removed from the list since few -TC claims had been submitted. One commenter claimed that the AMA RUC had extensive discussions regarding the procedure time assumptions used in developing direct PE inputs for some of the codes, so that those codes should be removed from the list.

Response: As we stated in the proposal, we believe that the procedure time assumptions used in developing direct PE inputs for these services have not been subject to the same rigor as other recently-reviewed services. Procedure time assumptions developed and validated by a series of expert panels have not generally been subject to the same scrutiny as the times developed through survey data or data gathered through electronic health records, for example. We identified the services by calling the services “stand-alone PE procedure time,” because they are services that include significant amounts of time resources allocated outside of physician time. We understand that some of these codes may be “technical only” codes and that in other cases these codes are used in reporting both the professional and technical component using the -TC or -26 modifiers, but we do not believe the divergent reporting mechanisms would mean that any services should be removed from the list. For CPT code 77600, we note that while few services were reported with the -TC modifier, many more services were billed globally in the nonfacility setting, so we continue to believe that the procedure time assumption that determines the inputs used in valuing the technical component of the payment remains relevant for prioritization.

While we assume that the AMA RUC deliberated on the procedure time assumptions used in developing the direct PE input recommendations for these services, we do not believe that extensive committee discussions would mitigate the need for more extensive review of these services as potentially misvalued since the assumptions that were developed through discussion could benefit from the objective data of many kinds.

Comment: MedPAC supported CMS's proposal to review these services. However, it expressed concern that CMS exempted imaging services that are subject to the OPPS cap from this review. MedPAC pointed out that the procedure time assumptions used in several high-priced and high-expenditure imaging codes have not been reviewed by the AMA RUC since 2002 or 2003 and may be too high. MedPAC also noted that recent advances in CT and MRI machines have made it possible to scan patients faster and that even practitioners who are using older equipment could be performing studies in less time as they become more familiar with the procedures and equipment.

Response: We appreciate MedPAC's support for this proposal. We agree that the procedure time assumptions used in imaging codes subject to the OPPS cap may be inaccurate or outdated. We did not propose to prioritize review of these procedure time assumptions since the services are subject to the OPPS payment caps, but we will consider the appropriate means for reviewing the procedure time assumptions for those services in future rulemaking.

Based on the comments we received, we are finalizing our proposal to review and make adjustments to CPT codes with stand-alone procedure time assumptions used in developing nonfacility PE RVUs.

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 ratesetting. 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 the CY 2013 PFS final rule with comment period is available on the CMS Web site under the downloads for the CY 2013 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

As we stated in the CY 2013 PFS proposed rule, 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 time in the physician time file, and there should be no payable services with time in the physician time file and no physician work RVUs. For CY 2013 we proposed 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 for CY 2012 was 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 stated that 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 proposed 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.

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 was included in the CY 2012 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 proposed to assign HCPCS code G0117 physician times matching CPT code 99212, and HCPCS code G0118 physician times matching CPT code 99211. Specifically, we proposed 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.

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 was not listed in the CY 2012 physician time file. In the CY 2013 proposed rule we stated that, 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 proposed to remove the physician work RVU for HCPCS code G0128. HCPCS code G0128 continues 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 were not listed in the CY 2012 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 proposed 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 proposed 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 proposed 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 proposed 7 minutes of pre-service time, 10 minutes of intra-service time, and 7 minutes of immediate post-service time.

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 was not listed in the CY 2012 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 proposed to assign HCPCS code G0250 the same physician time as CPT code 99211. Specifically, for HCPCS code G0250 we proposed 5 minutes of intra-service time and 2 minutes of immediate post-service time.

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.

Below is a summary of the comments we received on our proposed changes for PFS services with physician work and no listed time in the physician time file.

Comment: Commenters agreed with our proposed time changes for these services. The AMA RUC noted that historically the AMA RUC has not provided work or time recommendations for HCPCS G-codes, but that they will update the AMA RUC database to reflect these new physician time components.

Response: We thank commenters for their input on the times associated with these services. We are finalizing our proposals without modification. These proposed adjustments are reflected in the physician time file associated with this CY 2013 final rule with comment period, available on the CMS Web site under the downloads for the CY 2013 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

(2) Review of Services With No Physician Work and Listed Time in the Physician Time File

There are a number of services that have no physician work RVUs, yet include 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 did not propose 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 9, that are payable under the PFS and have no physician work RVUs yet include time in the physician time file. We proposed to remove the physician time from the time file for these seven CPT codes.

Table 9—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 final rule with comment period, to create the IPCI used in the PE methodology, we calculated 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. As we stated in the CY 2013 PFS proposed rule, 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 will have a modest impact if any on the PE RVUs at the individual code level.

Below is a summary of the comments we received on our proposed changes for PFS services with no physician work and listed time in the physician time file.

Comment: Commenters agreed with our proposal to remove the time listed in the physician time file for CPT codes 22841 (Internal spinal fixation by wiring of spinous processes (List separately in addition to code for primary procedure)), 95990 (Refilling and maintenance of implantable pump or reservoir for drug delivery, spinal (intrathecal, epidural) or brain (intraventricular), includes electronic analysis of pump, when performed;), 96904 (Whole body integumentary photography, for monitoring of high risk patients with dysplastic nevus syndrome or a history of dysplastic nevi, or patients with a personal or familial history of melanoma), and 96913 (Photochemotherapy (Goeckerman and/or PUVA) for severe photoresponsive dermatoses requiring at least 4-8 hours of care under direct supervision of the physician (includes application of medication and dressings)). Commenters noted that CPT code 51798 (Measurement of post-voiding residual urine and/or bladder capacity by ultrasound, non-imaging) likely had time listed in the physician time file because the AMA RUC had recommended work RVUs for the service however CMS assigned only practice expense. Similarly, commenters noted that CPT code 97602 (Removal of devitalized tissue from wound(s), non-selective debridement, without anesthesia (eg, wet-to-moist dressings, enzymatic, abrasion), including topical application(s), wound assessment, and instruction(s) for ongoing care, per session) likely had time included in the physician time final because the AMA RUC HCPAC recommended work RVUs for the service, however CMS assigned CPT code 97602 a bundled procedure status. Commenters noted that CPT code 97545 (Work hardening/conditioning; initial 2 hours) has a restricted procedure status, but inherently involves 2 hours of work, and requested that CMS maintain the time entry in the physician time file for this service to assist other payers and stakeholder in making payment policy decisions.

Response: We thank commenters for their input on the times associated with these services. After reviewing the comments, we are finalizing our proposal to remove the time from the physician time file for CPT codes 22841, 51798, 95990, 96913, and 97602. We will maintain the time entry in the physician time file for CPT code 97545, as requested; while this CPT code has a restricted procedure status indicator, it is still payable in some circumstances. CPT code 96904 also has a restricted procedure status indicator and is payable in some circumstances. For consistent treatment of these two CPT codes, we will also maintain the time entry in the physician time file for CPT code 96904. These adjustments are reflected in the physician time file associated with this CY 2013 PFS final rule with comment period, available on the CMS Web site under the downloads for the CY 2013 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.

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 services that are 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, MPPRs address the fourth category of potentially misvalued codes identified in section 1848(c)(2)(K) of the Act which is “multiple codes that are frequently billed in conjunction with furnishing a single service” (see 75 FR 73216).

For CY 2013, we proposed to continue our work to recognize resource efficiencies when certain services are furnished together. We proposed to apply an MPPR to the technical component (TC) of certain cardiovascular and ophthalmology 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 beneficiary 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 policy 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, but 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 this new OPPS payment cap, we decided in the PFS final rule with comment period for CY 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 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 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 beneficiary 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 (noncontiguous 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 beneficiary 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 beneficiary 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 of the Act (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 beneficiary on the same day. The MPPR applies when multiple therapy services are billed on the same date of service for one beneficiary 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 beneficiaries 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 regarding potentially misvalued codes that result from “multiple codes that are frequently billed in conjunction with furnishing a single service,” 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 beneficiary 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 advanced imaging service, and payment is reduced by 25 percent for the PC for each additional advanced imaging service furnished to the same beneficiary 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, but with some 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 beneficiary on the same day. As noted in the CY 2013 proposed rule (77 FR 44748), 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. We received the following comment on this provision:

Comment: A commenter indicated that continuing to apply and extend the MPPR for nuclear medicine procedures is unwarranted and inconsistent with CMS' aim to improve payment accuracy. The commenter noted that decisions made in 1995 were based on qualitative assessments rather than on rigorous data analysis. The commenter believes that with the wealth of data now available, and improved techniques in data analysis, careful evaluation of the applicability of the MPPR for all six nuclear medicine procedures is merited.

Response: We acknowledge the commenter's concerns, but we neither proposed discontinuing the MPPR on nuclear medicine procedures, nor extending it to new codes. Rather, we noted that the MPPR under current policy was, for technical reasons, not being applied to CPT code 78306 (Bone imaging; whole body) when followed by CPT code 78320 (Bone imaging; SPECT), and provided notification that the MPPR would be applied effective January 1, 2013. Accordingly, we are finalizing this technical correction effective for services furnished on or after 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 beneficiary in the same session by a single physician or by multiple physicians in the same group practice. Due to operational limitations, we did not 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 commenters stated 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. As noted in the CY 2013 proposed rule (77 FR 44748), 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 beneficiary, in the same session, on the same day. This policy is consistent with other PFS MPPR policies for surgical and therapy procedures and, effective January 1, 2013, for diagnostic cardiovascular and ophthalmology 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 beneficiary in the same session. While we agree with commenters that most physicians would not change the way they practice in order to avoid application of the MPPR, we believe application of the imaging MPPR to physicians in the same group practice will ensure that there is no financial incentive for physicians in a group practice to change their behavior to split imaging interpretation services for a beneficiary among different physicians in the group. It is our intention to apply this and future MPPRs to services furnished by one or more physicians in the same group unless we determine for a specific MPPR that the efficiencies associated with an individual physician furnishing multiple procedures do not extend to multiple physicians in the same group practice. We received the following comments on this provision:

Comment: Most commenters opposed applying the MPPR on diagnostic imaging to physicians in the same group practice, specifically to the PC. While many commenters acknowledged minimal efficiencies in the PC of second and subsequent procedures when furnished by the same physician, they maintained that no such efficiencies exist when furnished by multiple physicians.

Commenters maintained that CMS assumes efficiencies exist, but has not presented any clinical evidence or comprehensive resource use analysis to justify claims of efficiency. Commenters do not believe that substantial economy of time or of effort exist. According to commenters, each physician who reviews a beneficiary's imaging results must review the beneficiary's medical history, examine the imaging results, make diagnoses, draft a report, and enter communications with other physicians in the beneficiary's medical chart. Commenters note that none of these actions would take less time or effort when performed by a second physician in the same practice. Commenters do not believe this proposal reflects the true costs incurred by a practice when multiple physicians furnish advanced imaging services to the same beneficiary on the same day. Another commenter noted that cognitive medicine, such as diagnostic imaging cannot have global efficiencies, as every observer needs to independently investigate, collect data, formulate an educated opinion, and furnish a professional assessment.

Commenters maintained that clinical best practice dictates that the images are read by subspecialized, fellowship-trained radiologists, trained to read specific body parts. For example, they stated, radiologists are trained to read either breast, musculoskeletal, body, neurology or oncology images. Commenters indicated that the proposal would penalize or disincentivize practices from having the most appropriate radiologist read the study, which may subject beneficiaries to undue risks.

Commenters also noted that beneficiaries suffering from life-threatening conditions such as trauma, heart attacks, and cancer often require multiple imaging scans to accurately and fully assess extent of injury and monitor disease progression and/or any improvements in condition. This is not uncommon in an urban hospital serving high acuity beneficiaries. Commenters maintained that as the complexity of the beneficiary case increases, the likelihood that multiple scans and/or series will be needed in a given day increases, and thus the number of physicians needed to review multiple scans and/or regions of the body in a series of scans increases, requiring a variety of sub-specialty-trained radiologists. Commenters concluded that the amount of work in the form of time, effort, and skill, does not diminish in this situation but rather has an additive effect, reflecting the clinical complexity of the beneficiary situation, not a duplication of efforts.

A commenter noted that multi-modality images on a beneficiary are not always interpreted at the same time or by the same physician. According to the commenter, the beneficiary encounter that includes multiple TCs is not directly related to the performance of the PCs by the interpreting physician(s). The commenter indicated that through the use of teleradiology, the interpretations often take place at separate locations and by separate physicians. Finally, the commenter noted that this process allows differently specialized radiologists to interpret different images.

A commenter maintained that CMS' reliance on both the July 2009 GAO report and the March 2010 MedPAC report to support its MPPR policies is fundamentally flawed because such sources do not appear to justify the proposals. The commenter noted that CMS also cites the June 2011 MedPAC report as further support for its MPPR application to the PC of diagnostic imaging services furnished by the same physician in the same session. The commenter indicated that the report's policy recommendation is for a multiple procedure payment reduction to the professional component of diagnostic imaging services furnished by the same practitioner in the same session. The commenter stated that it could be unfair to apply the MPPR to physicians who share a practice.

A commenter recommended that CMS focus on applying the results of the Medicare Imaging Demonstration, and pursuing options to encourage use of appropriateness criteria, as the best solution to any problems of under or overutilization of imaging.

Response: The policy of applying the imaging MPPR to physicians in the same group practice is consistent with other MPPR policies for surgical procedures and therapy services, and effective January 1, 2013, for diagnostic cardiovascular and diagnostic ophthalmology procedures under the PFS. 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 beneficiary. We believe that efficiencies exist in the parts of the service that deal directly with patients, such as gowning and obtaining consent, as well as in the interpretation, where the first completed interpretation is commonly available to the second interpreting physician at the point of interpretation. Although efficiencies may be less when one physician is remote, we still believe that efficiencies are within the ranges that will typically be seen across the many varied combinations of imaging services subject to the MPPR.

We disagree that radiologists are routinely trained to only read organ specific or technology specific images. Radiologists receive broad training that allows them to provide services across multiple technologies and organ systems. Some may choose to more narrowly focus their practice, but in the typical radiology practice across the country, many radiologists continue to provide a broad range of imaging interpretation services.

We agree with the commenter that higher complexity patients may require multiple scans. However, we disagree that this higher complexity negates the efficiencies that are seen with less complex patients. Duplication in technical component, such as greeting and gowning, would continue irrespective of patient complexity. Higher complexity patients, receiving multiple scans, provide greater support for the proposed MPPR policy changes. Since interpretation of an image builds on the clinical framework that the radiologist(s) develops for each patient as she reviews each scan, we believe that interpretation of multiple additional scans require diminishing marginal effort.

Finally, while we agree with commenters that most physicians would not change the way they practice in order to avoid application of the MPPR, we believe application of the imaging MPPR to physicians in the same group practice will ensure that there is no financial incentive for physicians in a group practice to change their behavior to split imaging interpretation services for a beneficiary among different physicians in the group.

It is our intention to apply this and future MPPR policies to services furnished by one or more physicians in the same group. Future modifications may be appropriate if we collect or are provided with data that indicates that the efficiencies associated with an individual physician furnishing multiple procedures do not extend to multiple physicians in the same group practice.

We disagree that we have misinterpreted GAO and MedPAC policy recommendations. MedPAC's June 2011 recommendation for an MPPR on the professional component of imaging services is silent on application to the group practice, but since then, MedPAC has not opposed our proposal to apply the MPPR on the PC and TC of diagnostic imaging to physicians in the same group practice. Finally, the Medicare Imaging Demonstration is designed to test whether the use of decision support systems can improve quality of care by diminishing patient exposure to potentially harmful radiation caused by unnecessary over-utilization of advanced imaging services. The 2-year demonstration has recently completed its first year. The demonstration is a separate initiative and does not specifically address MPPR policy.

Comment: Many commenters noted that administrative considerations prevented us from implementing this policy effective January 1, 2012. Commenters indicated that we have not provided a detailed explanation of how such administrative concerns were rectified.

Response: Our administrative delay in implementing the policy did not involve the merits of the policy but the practicality of implementation. Medicare contractors were unable to make the necessary changes to their systems to effectively operationalize the policy for CY 2012. The necessary system changes have now been made in order for this policy to be operational beginning on January 1, 2013.

Comment: Commenters expressed concern that using the NPI to define a group practice may be inaccurate. Commenters indicated that some diagnostic imaging practice members may belong to more than one NPI group; whereas other practitioners may be part of a smaller NPI group than their corporate structure would suggest. Commenters maintained that attempts to apply the MPPR to physicians in the same group practice using the NPI could lead to unfair application simply due to corporate governance issues. Additionally, commenters noted that radiologists in a group practice may also independently contract to furnish outside interpretations for other groups. Finally, commenters indicated that reliance on the NPI in these cases may lead to confusion and potential compliance concerns.

Response: We have traditionally relied on the group NPI to identify services furnished in the same group practice as a basis for group practice-level edits across the physician fee schedule. We plan to use the group NPI for applying the MPPR to advanced imaging services at the group practice level beginning in 2013. We appreciate commenter input on this issue and understand that physicians do not always furnish services within their group practice and that the group NPI may reflect several different organizational arrangements. Accordingly, we intend to further explore the issues the commenters raised regarding use of the group NPI to identify services furnished in the same group practice. For example, we could consider using a provider Tax Identification Number (TIN) as an alternative to the group NPI; however, we would need to determine whether this would create other operational problems. Medicare contractors would also require adequate time to make the necessary systems changes. We will consider these issues and make any changes in future rulemaking.

Comment: Various commenters had the following concerns about the definition of a “session” and the use of modifier 59:

  • Physicians use the 59 modifier appropriately to bypass the MPPR when multiple services are furnished to the same beneficiary in separate sessions on the same day. However, the 59 modifier is also used for the Correct Coding Initiative (CCI) edits, creating a conflict between the two different uses of the modifier. For example, if an MRA of the head and brain are furnished to the same beneficiary on the same day, it may be appropriate to report modifier 59 to bypass the CCI edit. However, the modifier 59 may also be interpreted to bypass the MPPR, which would not be appropriate if the services were furnished in the same session. They stated that this presents a quandary for both radiology practices and Medicare Administrative Contractors.
  • CMS has provided no guidance on what constitutes a separate session for professional interpretation, other than “scans interpreted at widely different times,” leaving radiology practices vulnerable to differing interpretations by Medicare contractors, including Recovery Audit Contractors.
  • Whether CMS' use of the word “encounter” is synonymous with “session.”
  • Multiple physicians furnishing the PC on different studies to the same beneficiary on the same day should constitute separate sessions by definition.
  • Software programs in use for medical billing do not adequately capture interpretation times, and therefore, do not track whether the PC was performed in the same or different sessions and when the 59 modifier is appropriate. Commenters expressed concern that they will not be able to routinely identify when a Medicare beneficiary has had multiple imaging scans on the same day, especially if reports are generated in different locations, by different physicians, at different times of day. Radiology workflow systems triage studies to subspecialty radiologists who each separately interpret the studies and generate reports. Billing systems submit separate claims for each study. If two physicians read studies on the same beneficiary, coders and billing systems will have significant difficulty attaching the 59 modifier to the appropriate study, even if they are able to recognize that the 59 modifier should be applied. Hospital-based radiologists rely on data feeds provided by their hospitals' information systems. These data-feeds typically include beneficiary demographic information but not image interpretation times. Because they are unable to track the time of interpretation, coders and billers will be required to re-create the timing of interpretative sessions to determine whether or not the interpretation occurred in the same session.
  • Radiologists in small practices, or rural hospitals and imaging facilities, are more likely to have only a few radiologists in the office. Frequently in small practices, there will be instances where beneficiaries have multiple advanced imaging services that are in clinically separate sessions, but interpreted by the individual members of the same small group of radiologists. It is not clear that there will be a way for coders, CMS contractors and auditors to understand and validate that these separate encounters constitute separate sessions.
  • Contrary to CMS' claim, commenters expect there would be frequent circumstances requiring the use of the 59 modifier, that is, a distinct procedural service.

Response: We are aware of the conflict between use of modifier 59 for CCI edits and for purposes of bypassing the MPPR when multiple procedures are furnished. We are considering creating a new modifier for the MPPR to resolve this problem. In creating a new MPPR modifier, we would refine the definition of what constitutes a session. We believe that radiology imaging systems currently capture the time of each image and that image time can be provided to the interpreting radiologist(s). We also believe that radiology medical record systems currently capture the time of each professional comment or interpretation, and that the interpretation of the radiologist should contain any clinical information necessary to identify when a separate session has occurred. We believe that where billing systems currently do not capture this information in a readily usable form, that they will adapt to this policy and make this necessary billing information readily accessible to coders. Thus, we believe that coders will be able to determine when a separate session has occurred and will be able to append a 59 modifier (or new MPPR modifier for different session) to the claim line when such a modifier is justified.

Alternatively, we may consider modifying the MPPR policy to apply to procedures furnished on the same day, rather than in the same session. This would resolve some of the operational difficulties with the use of “session” and conform to the policy for all other MPPRs. If we were to modify this MPPR to apply to procedures furnished on the same day rather than in the same session, we would do so through future rulemaking and subject to public comment.

Comment: Commenters indicated that applying the MPPR for the PC of advanced imaging procedures to physicians in the same group practice would result in a payment reduction that would adversely affect both the quality of care and access to care.

Response: We have no evidence to suggest any adverse impacts on either the quality of care or the access to care have resulted from the implementation of the MPPR to the TC of imaging in 2006 or the PC of imaging in 2012. We have no evidence that beneficiaries have been unable to obtain needed imaging, and we will continue to monitor access to care. MedPAC's analysis in its June 2011 report indicates there has been continued high annual growth in the use of imaging through 2009. Further, in the absence of any evidence of inadequate access or safety and quality concerns, declining growth in imaging services could be interpreted as a return to a more appropriate level of imaging utilization. Based on our experience with the MPPR on both the TC and PC of advanced diagnostic imaging services, we have no reason to believe that extending the imaging MPPR to physicians in the same group practice will have a negative impact on quality or access to care.

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 diagnostic services other than advanced imaging 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 multiple 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 the CPT code ranges of 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 the CPT code ranges of 76510 through 76529 and 92002 through 92371. The cardiovascular and ophthalmology diagnostic code combinations identified as most frequently billed together 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 beneficiary 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.
  • Quality Assurance documentation.
  • Making phone calls.
  • Reviewing prior X-rays, lab and echocardiograms.

We analyzed the CY 2011 claims data for the most frequently billed cardiovascular and ophthalmology diagnostic code combinations to determine the level of duplication present when multiple services are furnished to the same beneficiary 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. For example, if code A and B had 6 and 3 minutes, respectively, of clinical labor for preparing and positioning the beneficiary, we removed 3 minutes. If code A and B had 2 and 4 minutes, respectively, of clinical labor for preparing room, equipment and supplies, we removed 2 minutes. The lower number of minutes was removed, regardless of the code. If one code had no minutes for a particular clinical labor activity, then no minutes were removed for that activity. 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 reductions by code pair, we believed 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. In the CY 2013 proposed rule (77 FR 44748-44752), we proposed 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 proposed 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 beneficiary on the same day. We did not propose to apply an MPPR to the PC for cardiovascular and ophthalmology services at this time.

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 policies on surgical, nuclear medicine diagnostic procedures, and advanced imaging procedures, which apply 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, we proposed that for services furnished on or after January 1, 2013, we will apply the MPPR to nuclear medicine procedures to CPT code 78306 (Bone imaging; whole body) when followed by CPT code 78320 (Bone imaging; SPECT). We will apply the MPPR to the PC and the TC of advanced imaging procedures when furnished by 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 beneficiary, in the same session, on the same day. Finally, we proposed 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 proposed 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 beneficiary on the same day.

The following is a summary of the comments we received on this proposal to apply the MPPR to diagnostic cardiovascular and ophthalmology procedures:

Comment: MedPAC supported the proposal to expand the MPPR to cardiovascular and ophthalmology diagnostic services. Furthermore, MedPAC encouraged CMS to examine whether there are efficiencies in physician work that occur when multiple tests are furnished in the same session that would justify applying the MPPR to the PC of these services. For example, when multiple tests are performed together, certain physician activities (such as reviewing the beneficiary's medical records and discussing the findings with the referring physician) are likely to occur only once.

In the PFS proposed rule for CY 2012 (76 FR 42812-42813), CMS solicited comments on whether the MPPR should be applied to the TC of all diagnostic tests, rather than just imaging procedures. In response, MedPAC examined Part B claims data from 2010 to look for diagnostic tests that are frequently furnished more than once on the same day by the same physician for the same beneficiary. MedPAC found that several surgical pathology codes are frequently billed with more than one unit of service on the same date. For example, one-third of the claims for CPT code 88305 (Level IV, surgical pathology, gross and microscopic examination) contained more than one unit of service for that code. In addition, 57 percent of the claims for CPT code 88342 (immunohistochemistry, each antibody) contained more than one unit of service for that code. In these cases, it appears that multiple specimens from the same beneficiary were examined at the same time by the same pathologist. MedPAC indicated that CMS should analyze whether there are efficiencies in practice expense or physician work that occur when multiple units of the same test are performed at the same time. If so, MedPAC suggested that CMS should consider applying the MPPR policy to these services or creating bundled codes that include multiple units of the same test. MedPAC noted that these services account for a substantial and growing amount of Medicare spending. In 2010, Medicare spent $1.3 billion on CPT code 88305 and $241 million on CPT code 88342.

MedPAC noted that it has recommended expanding the MPPR to both the TC and PC of all imaging services to account for efficiencies in practice expense and physician work that occur when multiple studies are furnished in the same session.

A few additional commenters either agreed with the principle of applying the MPPR to cardiovascular and ophthalmology services or concurred with our findings that efficiencies exist when multiple diagnostic services are furnished on the same beneficiary on the same day. Those commenters agreed that the application of the MPPR to the additional cardiovascular and ophthalmic diagnostic procedures is an appropriate way to recognize such efficiencies.

Response: We appreciate the support of MedPAC and other commenters for our proposal to apply the MPPR to cardiovascular and ophthalmology services. We agree that the MPPR is an appropriate mechanism to account for efficiencies when multiple procedures are furnished to the same beneficiary on the same day in order to ensure more accurate payments.

Comment: Most commenters opposed applying the MPPR to the TC of diagnostic cardiovascular and ophthalmology services. Commenters maintained that the assumption that there is major duplication in clinical labor activities is false when two studies are done in the same session, and especially when these services are done in separate sessions on the same day. Commenters stated that CMS' methodology of eliminating the smaller number of minutes assigned to one code in the frequently performed together code pairs for clinical staff and equipment is not appropriate for pairs of services that are: (1) Furnished by different types of clinical staff, with different expertise and training (for example, radiology technologists and sonographers); (2) furnished in different types of rooms (for example, angiography suites and vascular ultrasound lab rooms); and (3) stocked with unique equipment. According to commenters, many of the clinical labor activities considered redundant are performed multiple times, at different times of day, and in different rooms.

As examples, commenters referenced the sample payment reduction calculations in the proposed rule for cardiovascular and ophthalmology services. Concerning CPT code 93306 (transthoracic echocardiography) and CPT code 78452 (myocardial perfusion single-photon emission computed tomography (SPECT)), commenters noted that different physicians, each supported by separately specialized clinical staff perform the service in different rooms on two different types of equipment.

Commenters indicated that clinical teams for each test independently greet and gown the patient, provide education, obtain consent, review previous exam results and studies and position the patient for the test. Commenters noted that the patient is positioned multiple times on different exam tables. According to commenters, two different clinical staff will independently review prior x-ray, laboratory, echocardiography studies, and other studies. Also, separate notes are made in the patient's records, different diagnostic forms are completed, and different quality assurance regulatory compliance information must be documented for each test. Commenters noted that two different rooms with different specialized equipment in two different parts of the facility are prepared and cleaned for the two unique and different services. Finally, two different machines are utilized by two differently credentialed support staff to acquire independent and unrelated clinical testing data.

Concerning CPT code 92235 (Fluorescein Angiography) and CPT code 92250 (Fundus Photography), commenters maintained that the proposal was based on an erroneous understanding of how services vary. Commenters noted that ophthalmic diagnostic tests are not equivalent to x-ray or fluoroscopic imaging, where the technician simply repositions the same device over a nearby area of the patient's body. Commenters noted that ophthalmic diagnostic tests range from imaging to psychophysical tests using a number of different technologies and instruments that require patient participation by responding to various stimuli to achieve an objective functional measurement of the anatomical structures within the eye. For such tests the patient must be taken to a second instrument and positioned, substantially reducing any redundancy in direct practice expenses.

Another commenter indicated that visual field testing equipment, and other eye diagnostic equipment, do not share interfaces, space or patient information. The commenter noted that each machine requires independent input from the testing technician; including patient name, date, birth date, verification of the eye being tested, and there is no shared registration of data between the two services.

According to the commenter, visual field testing requires a dedicated space and is typically not performed at the same time as other diagnostic tests. Patients need a quiet area away from other testing and patients to complete the test. Both eyes are tested, each with their own input and varying lenses that must be inserted into the equipment. The commenter maintained that these tests require substantial clinical staff time, patient instruction and interaction. Ophthalmology patients are typically elderly, often visually impaired and in need of mobility and positioning assistance in order to perform diagnostic eye testing. Finally, the commenter highlighted that the AMA RUC recently removed clinical staff time from some of the codes reviewed in our analysis.

Commenters disagreed that diagnostic test resource utilization for multiple diagnostic tests is comparable to those required for multiple surgeries. Commenters noted that surgical procedures generally have a 90-day global period where more than 50 percent of the payment is related to postoperative care. Commenters also noted that in large multi-specialty practice, technical resources are located in different physical locations.

Commenters recommended that CMS conduct its study with a new methodology that takes into account both the frequency and the different types of clinical staff, and the different types of rooms involved in the services that are performed together on the same day.

Finally, commenters noted that CMS' own analysis reveals payment reductions as low as 8 percent, indicating that a payment reduction of 25 percent would be excessive for some of these services. A commenter expressed concern that taking this “average” approach would have the effect of discouraging cardiologists and ophthalmologists from performing certain low overhead diagnostic procedures as the payment will be far less than the practice costs. The commenter suggested that in previous cases the identified savings were closer to the mean on average and would not result in such dramatic effects. Other commenters recommended that the MPPR reduction percentage should be code-specific up to a maximum reduction of 25 percent.

Response: We appreciate the many comments submitted on this proposal. However, we disagree with commenters' statements that there are minimal or no efficiencies in the TC of diagnostic cardiovascular and ophthalmology services.

Concerning CPT code 93306 (transthoracic echocardiography) and CPT code 78452 (myocardial perfusion single-photon emission computed tomography (SPECT)) referenced by commenters, we agree that some cardiovascular centers might choose to employ two differently specialized technicians; that is, nuclear medicine and echocardiography; to allow two different clinical staff to independently perform the studies; and to locate the different specialized equipment in two different parts of the practice. However, we continue to believe that is not the typical cardiovascular center or practice. We believe that the typical cardiovascular center performing these diagnostic tests commonly cross-train technicians to perform both procedures and that a single cardiologist often performs both tests for a single patient. In addition, we continue to believe that much of the pre-service work such as greeting and gowning the patient and reviewing medical records and previous images is redundant. We believe that some of the equipment used in the top code pairs is portable and can be used in the treatment room or other diagnostic room. We also do not believe that multiple rooms dedicated to individual testing equipment is typical such that room preparation, greeting and gowning, and cleaning the room are never duplicated. Overall, commenters provided general descriptions of practices using multiple rooms and technicians to furnish these services, without sufficient information supporting a multiple room, dedicated clinical labor model as typical outside the facility setting. We would review generalizable, robust data demonstrating that an extensive practice model of multiple rooms dedicated to individual tests and distinct dedicated technicians trained is typical practice.

Concerning CPT code 92235 (Fluorescein Angiography) and CPT code 92250 (Fundus Photography), we acknowledge that these tests are not equivalent to other imaging procedures. However, we believe there are still efficiencies when furnished to the same patient due to some duplication of clinical labor. Concerning visual field testing, we agree that this is an interactive test, requiring the technician to teach the patient how to perform the test; however, the most intense instruction only occurs the first time a patient has visual field testing. Although not considered in our analysis, we also note that once a patient is diagnosed with glaucoma the patient usually undergo visual field testing for the rest of their life, and their familiarity with the test reduces the clinical labor associated with providing this service overtime. As for the other ophthalmology tests, we understand them to be mostly passive with minimal patient instruction.

Commenters expressed concerns that there is wide variation in the potential efficiencies among different code pairs; that such variability precludes broad application of a single percentage reduction; and, that establishing new combined codes is the only mechanism for capturing accurate payment for multiple imaging services. In general, we believe that MPPR policies capture efficiencies when several services of the same type are furnished in the same session and that it is appropriate to apply a single percentage reduction to second and subsequent procedures to capture those efficiencies. Because of the myriad potential combinations of diagnostic services, establishing new combined codes for each combination of advanced imaging scans is unwieldy and impractical. An MPPR policy reflects efficiencies in the aggregate, such as common patient history, application of multiple tests to the same anatomical structures by the same clinical labor, frequently with the same modality, for the same patient.

As previously noted, 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). Based on this analysis, and because we found a relatively wide range of reductions by code pair, we believed 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. Based on subsequent public comments, we have conducted additional analysis on ophthalmology code pairs discussed below. In response to comment that this MPPR application to ophthalmic and cardiovascular diagnostic testing is not the same as the MPPR for global surgery, we agree. We have provided our analysis for why we proposed a 25 percent reduction on second and subsequent diagnostic tests rather than a 50 percent reduction. We note that, as with many of our policies, we will continue to review this MPPR policy and refine it as needed in future years to ensure that we continue to provide accurate payments under the PFS.

Comment: A commenter noted that several ophthalmology codes included in our analysis have been reviewed by the AMA RUC within the last year, which resulted in the recommended removal of several minutes of clinical staff time for activities that the AMA RUC determined are also included within an accompanying office visit code. The commenter indicated that CMS' acceptance of the AMA RUC recommendation, as well as applying the MPPR, would effectively double the practice expense reductions. The codes reviewed by the AMA RUC for CY 2013 were: CPT codes 92081-92083 (Visual field examinations), CPT code 92235 (Fluorescein angiography) and CPT code 92286 (Internal eye photography). As discussed above, commenters noted that visual field testing equipment and other eye diagnostic equipment do not share interfaces, space or patient information, that there is no shared information with other tests, that the tests required separate staff time and clinical instruction, and that visual field testing happens in a dedicated space away from other testing.

The commenter requested that any ophthalmic tests that had their time reduced because of duplication with an office visit should be removed from the list of codes subject to the MPPR. Specifically, the commenter requested that the three visual field tests CPT codes 92081, 92082 and 92083 and CPT code 92235 (Fluorescein angiography) and CPT code 92286 (Internal eye photography) for which minutes were reduced that were not reflected in the CMS analysis should be removed from the list. Additionally, the commenter indicated that CPT codes 92133, 92134 and 92285 all had their clinical staff labor times previously reduced during the AMA RUC consideration and should not be included in the MPPR.

Commenters also expressed concern about CPT codes that have recently been reviewed or are in the process of being reviewed under the various misvalued services screens. Commenters noted that these codes have already been subjected to a process where duplicative minutes have been reduced. Therefore, they requested that any codes for procedures where the AMA RUC has reviewed the PE inputs in the last 2 years be removed from this proposed list of services.

Response: Our original proposed rule analysis for the subject ophthalmology codes was based on the latest AMA RUC PE worksheets available at that time. The PE worksheets are the basis for the direct practice expense inputs used in the PE methodology. They delineate minutes of the clinical staff time, equipment, and supplies for each clinical labor activity, for each CPT code. We subsequently reviewed the CY 2013 PE worksheets for the subject codes, which appeared in many of the ophthalmology code combinations reviewed. The AMA RUC did not reduce clinical labor minutes for CY 2013 for two of the reviewed code pairs (76514 with 92286 and 92081 with 92285). The most significant change in clinical labor activities for the other reviewed code pairs was the reduction of time for preparing and positioning the patient from either 7 or 10 minutes to 2 minutes. Because we never reduced this activity by more than 2 minutes, the AMA RUC changes to this clinical labor activity had no effect on our calculation. In all cases, the subject codes are the highest paid codes in the code combination. The payment reductions range from 9 to 62 percent for second and subsequent ophthalmology procedures, noted in the proposed rule, remains unchanged. However, the volume-adjusted average reduction across all code pairs, originally calculated at 32 percent is revised to 22 percent.

We disagree that recently reviewed codes should be exempt from the MPPR. However, we agree that the analysis establishing an MPPR should be based on the most current practice expense data available, and that the recent clinical labor reductions made to the subject codes should be taken into account. Therefore, based on our revised analysis, we are reducing the final MPPR on ophthalmology services from 25 percent to 20 percent to more accurately reflect the new data.

Comment: Commenters expressed concern about the lack of transparency in the methodology and data sets used to develop the proposed MPPR. Commenters noted that CMS did not post basic data files on its Web site until August 10, 2012, less than 30 calendar days from the comment deadline. Commenters also indicated that the posted data did not enable them to understand the cuts or replicate the data used to form the basis of the proposed MPPR. Commenters believed that this unfairly hampered their ability to fully analyze the proposal. Commenters urged us not to implement this proposed policy until full access to the data used to develop the policy is provided.

Response: We have provided full access to the data that we used to develop the policy. We have listed every code pair reviewed and every clinical labor activity considered for duplication. In addition, we provided a description of how the analysis was conducted, the range of reductions found and the adjusted average reduction determined for cardiovascular and ophthalmology services. We acknowledge that the PE worksheets were not made available simultaneously with the publication of the proposed rule. Upon receiving requests from various specialty groups to supplement the information we provided in the proposed rule, we posted the PE worksheets used in the analysis on our Web site. We posted these data in August 2012, approximately one month before the comment period ended. We believe the information provided in the proposed rule would have been sufficient to permit full consideration of our proposed policy, but agreed to provide greater detail to assist commenters in further evaluating the proposal.

Comment: Commenters indicated that we stated in the proposed rule that the code pairs published the MPPR analysis are frequently billed together. However, the AMA RUC determined that only four of the cardiology pairs (CPT codes 93320-93325, 93320-93351, 93965-93970 and 78452TC-93017), and only one ophthalmology code pair (CPT codes 92235 and 92250), are typically reported together on the same date of service. Commenters stated that the computerized ophthalmic diagnostic imaging codes (92133 and 923134) were created in 2011 and were not included in this analysis.

Commenters further noted that every other code pair is reported together at or below 40 percent of the time, with over half below 20 percent. They stated that not only are these services not commonly billed together, they are not performed on contiguous body parts and are not always performed on the same type of equipment or even in the same room. Further, the services would sometimes be performed by different physicians in the same group practice.

In addition, commenters indicated that a broader analysis of the claims data for all the analyzed codes pairs for cardiovascular and ophthalmology suggest that only roughly four percent of the code combinations are typically performed together on the same date of service. Given that these services are rarely performed on the same day together, it is unreasonable to assume there would be efficiencies gained when these services are performed together.

Commenters maintained that efficiencies in practice expense are potentially created only when the two services are similar, use the same instrument, and are commonly performed together. Commenters indicated, however, that for more low-volume code pairs, the practice will not have the same level of familiarity, including the office equipment set up, to conduct these services. Commenters further noted that the differences between these services are such that even if all these services were commonly billed together, physician staff could not provide noticeable efficiencies.

Response: In the CY 2013 proposed rule (77 FR 44748), we indicated that we analyzed the CY 2011 claims data for the most frequently billed cardiovascular and ophthalmology diagnostic code combinations to determine the level of duplication present when multiple services are furnished to the same patient on the same day. 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 frequency of code combinations reviewed for cardiovascular services ranged from 260 to 207,573 and for ophthalmology services from 4,193 to 553,502. Although utilization was low for some code combinations reviewed, we examined the top highest frequency code combinations for each of the five code groups examined (three for cardiovascular and two for ophthalmology). The frequency with which a code combination is furnished does not diminish the potential efficiencies in clinical labor activities that will occur when that code combination is furnished. All MPPR policies (surgery, diagnostic imaging and therapy) apply to all code combinations of procedures subject to the policy, regardless of the frequency that the code combination was furnished. Therefore, we believe it is appropriate to apply the MPPR regardless of the frequency which the code combination is billed. Applying the MPPR to code combinations furnished infrequently will have a minimal effect on overall payments for imaging services. Finally, we based our final recommended percent reduction on the volume-adjusted average reduction observed in our code pair analysis, which ensures that when the MPPR is applied, the reduction adjustment is more likely to reflect the actual reduction for the code pair. MPPR policies have been consistently applied to all multiple procedures and are not restricted to those with the highest frequency of billings.

Comment: Commenters noted that the MPPR is partly designed to address the growth in imaging and diagnostic services, as noted by MedPAC. Commenters further noted that in recent years the rate of imaging growth for both Medicare and private payor patients has slowed considerably, and concluded that additional payment reductions are unwarranted and unnecessary. Commenters cited an article in the August 2012 issue of Health Affairs further confirming this trend, noting that the growth rate of advanced diagnostic imaging slowed to single digits beginning in 2006. The study concluded that the use of MRI in Medicare slowed to an average 2.6 percent annual growth rate from 2006-2009. In addition, commenters maintained that 2008 and 2009 data from MedPAC and the AMA demonstrate that the rate of volume growth for diagnostic imaging services overall is now generally lower than the rate of growth for all other physicians' services. Commenters further maintained that the volume of all physicians' services grew by 3.6 percent in 2008 and 2009 while the volume of diagnostic imaging services rose by 3.3 percent in 2008 and 2.2 percent in 2009.

Another commenter noted that ultrasound services have never experienced rapid growth, but rather, have experienced only moderate growth. The commenter cited GAO's September 2008 report to Congress that found that after the implementation of DRA cap, which for vascular ultrasound services resulted in reductions of greater than 40 percent, the disparity in utilization between ultrasound and expensive, advanced imaging modalities continued to grow. The commenter noted that this is reflected by the Congressional Budget Office's (CBO) December 2008 recommendations to Congress in which it excluded ultrasound and other inexpensive imaging modalities from its policy recommendations on advanced imaging services. Commenters concluded that imaging has absorbed numerous payment reductions and that it is illogical to target procedures for reduction that do not demonstrate a pattern of rapid growth.

Response: MedPAC's analysis in its June 2011 report indicates there has been continued annual growth in the use of imaging. While overall growth may be lower than it was in the last decade, declining growth in imaging services could be interpreted as a return to a more appropriate level of imaging utilization without any accompanying evidence of inadequate access or safety and quality concerns. As indicated previously, MedPAC has expressed support for the MPPR on diagnostic cardiovascular and ophthalmology services.

Comment: A commenter noted that many of the code pair combinations identified by CMS for the MPPR on cardiovascular services are not cardiovascular services, specifically, CPT 75600-75893, 78414-78496, and 93000-93990. The commenter further noted that it is highly unlikely that these codes would be furnished to the same patient on the same day by the same physician. For example, the AMA RUC database indicates CPT code 93980 for penile vascular study was provided by cardiologists less than 1 percent of the time to Medicare patients in 2011. The commenter did not recommend removing the codes from the MPPR list because their presence produces no impact. However, the commenter indicated that the inclusion of codes unrelated to cardiovascular creates doubts about the thoroughness and validity of the analysis underlying the proposal.

Response: In reviewing the group of codes that we refer to as cardiovascular services, we looked at services involving the heart and vessels, regardless of the specialty that furnishes them. For example, penile vascular services are vascular services. Whereas we would not expect a urologist to perform trans-esophageal echoes, nor would we expect a cardiologist to perform penile studies, we would not be surprised to find some generalists, or even general vascular surgeons, evaluating the penile vasculature along with, for example, the vasculature of the lower extremities. And even if, as the commenter suggested, it would be unlikely for certain codes to be billed by the same physician on the same day, then the MPPR simply would not apply.

Comment: Commenters questioned how the MPPR on cardiovascular services would apply to remote monitoring CPT codes 93279-93296. Specifically, they indicated that it is unclear whether the date of service is: (1) The day the patient transmits their data; (2) the day the data is received in the physician's office for technician review, technical support and distribution of results; or (3) the day the physician reviews the data; all of which may represent different dates of service. The commenters indicated that because there is no specific identification of the date of service within the CPT description, applying the MPPR is likely to create confusion among physicians. Commenters recommended that we either remove these codes from the list subject to the MPPR or issue instructions that specifically indicate how dates of service within the 90-day monitoring period should be addressed.

Another commenter noted that CPT codes 93293 (Transtelephonic rhythm strip pacemaker evaluation(s) single, dual, or multiple lead pacemaker system, includes recording with and without magnet application with analysis, review and report(s) by a physician or other qualified health care professional, up to 90 days), 93296 (Interrogation device evaluation(s) (remote), up to 90 days; single, dual, or multiple lead pacemaker system or implantable cardioverter-defibrillator system, remote data acquisition(s), receipt of transmissions and technician review, technical support and distribution of results), and 93299 (Interrogation device evaluation(s), (remote) up to 30 days; implantable cardiovascular monitor system or implantable loop recorder system, remote data acquisition(s), receipt of transmissions and technician review, technical support and distribution of results) describe the TC for remote interrogation of the devices, meaning that the patient is not physically present when the service is furnished. The commenter questioned how it is possible for efficiencies to exist in the rare circumstance these services were furnished on the same date as a cardiovascular diagnostic service. The commenter indicated that the inclusion of these codes demonstrates a lack of understanding of how diagnostic services are furnished to beneficiaries.

Response: The appropriate date of service used to bill codes subject to the MPPR is the same as required by Medicare billing instructions. We note that codes in the range of CPT codes 92293 through 92299 should be consistently treated regarding application of the MPPR. Since we did not propose to include all codes in this range for the MPPR, we have removed remote monitoring codes CPT codes 93293 and 93296 from the list of procedures subject to the MPPR. We note that CPT code 93299 was not on the proposed list.

Comment: A commenter noted that diagnostic ultrasound offers a number of important advantages compared to CT and MRI, in terms of safety and effectiveness. For example, ultrasound is non-invasive and offers real-time imaging, allowing for examinations of structures at rest and in motion and does not use ionizing radiation. Although not always a good substitute for other advanced imaging modalities, ultrasound is an effective diagnostic tool in many cases.

The commenter further noted that, due to the relatively low payment rates for ultrasound procedures, they are one of the most cost-effective diagnostic imaging modalities. The commenter indicated that analyses performed by GAO in 2008 and others have shown that lower cost imaging modalities such as ultrasound have declined in use relative to more expensive imaging modalities, negatively impacting the quality and cost of their health care.

The commenter concluded that payment reductions to ultrasound services have threatened the ability to furnish such services. Therefore, the commenter requested removal of all ultrasound procedures from the list of procedures subject to the MPPR on cardiovascular services.

Another commenter noted that the June 2011 MedPAC report focused on advanced diagnostic imaging services and supported increasing, rather than decreasing, the payments for ultrasound services. The commenter indicated that the report suggests reforming the Medicare fee-for-service system to encourage the use of high-value services and discourage the use of low-value services. In describing what is meant by low-valued services, MedPAC points to situations where two services may be equally safe and effective, yet one is more expensive than the other. The commenter indicates that this is the situation with ultrasound as compared to other, more expensive imaging services. Finally, the commenter noted that the report suggested that services that can potentially harm patients, for example, overexposure to radiation, should be considered low-value. The commenter indicates that ultrasound, which is non-ionizing, poses less risk to patients than other modalities.

Response: The MPPR on diagnostic imaging procedures has included CT, MRI and ultrasound since 2006. MedPAC, as noted in its comment above, has supported our previous MPPR proposals and has not recommended excluding ultrasound from MPPR on diagnostic cardiovascular and ophthalmology services. MPPR policies are resource-based. MPPR policies for the TC reduce payment in situations where there is overlap in resources employed in the delivery of multiple services, with comparable practice expense inputs, when those resources are only employed once. We do not apply the MPPR to ultrasound used in place of other modalities, only when it is used in addition to, other modalities in the same session. We do not expect the MPPR to encourage radiologists to forego ultrasound imaging in favor of advanced imaging modalities.

Comment: Commenters noted that the AMA RUC and the CPT Editorial Panels have been working to combine services frequently billed together into comprehensive codes and to remove overlapping physicians' services from the payment rates. Commenters indicated that the effort to combine codes and reduce payment for duplicate services has been accelerated by CMS after the threshold for analyzing services billed together was reduced from 95 percent to 75 percent overlap.

Commenters urged CMS to be mindful of this work and to fully take into account the AMA RUC review of the code pairs. Commenters found it contradictory for CMS to utilize the AMA RUC process and accept the PE payment principle, only to disregard the methodology in applying an MPPR; and suggested that duplication of work in services performed on the same date of service should be addressed at the individual code level rather than through an MPPR.

Another commenter recommended that CMS ask the AMA RUC to review the codes and make code-specific recommendations and claimed that implementing payment reductions that are not specific does a disservice to the entire AMA RUC process and all of the physicians who are paid under the PFS.

Commenters disputed the assumption that an MPPR is a valid and accurate mechanism to value services when performed on the same date of service. Commenters indicated that, historically, the AMA RUC has recognized that efficiencies can be gained when services are commonly performed by the same physician on the same date of service, but only when explicit criteria are met. The commenters indicated that the proposal fails to meet these criteria because the services are not commonly billed together, are not analogous services performed on contiguous body parts, and applies to both individual physicians and physicians in the same group practice.

Commenters maintained that the vague justification for selecting particular codes in the CY 2013 rule stands in stark contrast to the AMA RUC. According to commenters, the AMA RUC process set a clear and distinct threshold for analyzing codes billed together, that is, 75 percent of the time. In contrast, according to commenters, the proposal fails to define “frequently billed” thus creating a substantial barrier to a clear comprehension of the MPPR expansion.

Response: As we have indicated previously (76 FR 73077-73078), the MPPR is not intended to supersede the AMA RUC process of developing recommended values for services described by CPT codes. We continue to appreciate the work done by the AMA RUC and encourage the AMA RUC to continue examining code pairs for duplication based upon the typical case, and appropriately valuing new comprehensive codes for bundled services that are established by the CPT Editorial Panel. We view the AMA RUC process and the MPPR policy as complimentary and equally reasonable means to the appropriate valuation and payment for services under the PFS. We note that as more code combinations are bundled into a single complete service reported by one CPT code, the MPPR policy would no longer apply to the combined services. At the same time, the adoption of the MPPR for the TC of diagnostic cardiovascular and ophthalmology services will address duplications in the PE to ensure that Medicare payment for multiple diagnostic services better reflects the resources involved in providing those services.

As noted previously, although less precise than creating new comprehensive codes to capture each unique combination of diagnostic services that could be performed together, we believe that an MPPR policy appropriately addresses efficiencies present when multiple diagnostic services are furnished together. Moreover, we believe it would be unwieldy and impractical to develop unique codes and values for the myriad of procedure combinations that could be furnished together. In addition, we believe that the expansion of the MPPR policy to the TC of diagnostic cardiovascular and ophthalmology services is consistent with both the GAO and MedPAC recommendations. Finally, we already have discussed information on the determination of frequently billed services in response to comments on this rule concerning the most frequently billed cardiovascular and ophthalmology diagnostic code combinations used in our analysis.

Comment: A commenter indicated that the statutory authority cited by CMS for the proposed MPPR expansion and new MPPR policy only grants CMS the authority to modify the reimbursement for “codes” and does not provide CMS with the authority to implement multiple service reductions. The commenter maintains that Congress bestowed CMS with specific and limited authority to implement multiple service reductions in another part of the Act and that this confirms that Congress did not intend to provide the authority that CMS claims under the “misevaluation” clause. The commenter stated that the misvalued codes section of the Act that addresses multiple services frequently billed together as potentially misvalued does not give CMS the authority to implement either of its proposed MPPR policies. The commenter did not believe that the codes are “misvalued” within the meaning of the statutory provision CMS cites, and maintains that CMS has effectively conceded this point, as it continues to use the existing relative value units (RVUs) for single services. The commenter maintains that CMS is not contending that the activities and items described in the RVUs are not, in fact, part of the service; but rather, CMS is attempting to effectively reset the conversion factor based on its assumption that costs can be saved in multiple procedure scenarios, but the statute does not permit CMS to institute multiple conversion factors. Another commenter merely suggested that there was inadequate legal basis for the proposal.

Another commenter noted that payment rates for x-rays under the OPPS are significantly higher than payment rates under the PFS. The commenter indicated that application of the MPPR in a non-hospital setting will cause procedures to shift to the hospital setting. The commenter recommended paying the lower of (1) full payment under the OPPS rate for procedure with the higher fee, and 50 percent of the OPPS rate for the second procedure, or (2) full payment for both procedures under the PFS.

Response: We believe that the application of the MPPR to the PC of second and subsequent advanced imaging services furnished in the same session to the same patient is fully consistent with section 1848(c)(2)(K) of the Act, especially given our authority to adopt ancillary policies under section 1848(c)(4). We also note that we have had several MPPR policies in place for many years before the enactment of section 1848(c)(2)(K) of the Act.

As explained previously, section 1848(c)(2)(K)(i) of the Act requires the Secretary to identify services within several specific categories as being potentially misvalued and to make appropriate adjustments to their relative values. One of the specific categories listed under section 1834(c)(2)(K)(ii) of the Act is “multiple codes that are frequently billed in conjunction with furnishing a single service.” Although some code pair combinations will occur infrequently, the codes subject to the MPPR are frequently found in groups of multiple codes that are billed in conjunction with furnishing a single service. Section 1848(c)(2)(K)(ii) of the Act specifies that we should examine not only individual codes, but also families of codes. We believe the MPPR policy contributes to fulfilling our statutory obligations under section 1848(c) of the Act by more appropriately valuing combinations of imaging services furnished to patients and paid under the PFS.

As previously noted, Medicare has a long-standing policy of applying an MPPR to surgical procedures. While the various MPPRs have been adopted through notice and comment rulemaking as administrative actions, the Congress has acknowledged our authority to adopt MPPRs by directly modifying several of them, and by exempting the payment changes relating to several others from budget neutrality adjustment under the PFS. For example, section 5102(a) of the DRA exempted from the PFS budget neutrality adjustment the changes in expenditures resulting from the MPPR on the TC of diagnostic imaging. Section 3135(b) of the Affordable Care Act increased the MPPR reduction percentage on the TC of diagnostic imaging from 25 to 50 percent. Sections 3 and 4 of the PPATRA decreased the MPPR reduction percentage on the PE of therapy services from 25 to 20 percent for therapy services furnished in office settings, and exempted from budget neutrality the change in expenditures resulting from the MPPR on therapy services from budget neutrality.

We appreciate the commenter's suggestions concerning alternate payment methodologies, that is, payments based on the OPPS rate, and we will consider them further for possible rulemaking in the future.

Comment: A commenter noted that the proposed list of cardiovascular procedures subject to the MPPR did not include the global services that have different procedure codes than the corresponding technical services, which are on the list. The commenter specifically mentioned CPT codes 93005, 93016, 93040, and 93224, representing global services for electrocardiograms, cardiac stress tests, rhythm electrocardiograms, and Holter monitors, respectively. Lastly, the commenter noted that, because such codes were not proposed for inclusion in the MPPR, it would violate the Administrative Procedure Act to subject them to the MPPR through this final rule.

Response: The commenter is correct that we had not specifically identified global services that have different CPT codes than the corresponding TC on the proposed cardiovascular MPPR code list. However, we indicated in the proposed rule (77 FR 44749) that the MPPR applies to TC services and the TC of global services. As such, it is consistent with the proposed policy (which we are finalizing in this final rule with comment period as described here), and not inconsistent with the Administrative Procedure Act, to include these codes on the list of codes to which the MPPR will apply. In response to the comment, we have added the following global services to the cardiovascular MPPR list: CPT code 93000 (Electrocardiogram complete); CPT code 93015 (Cardiovascular stress test); CPT code 93040 (Rhythm ECG with report); CPT code 93224 (Ecg monit/reprt up to 48 hrs); CPT code 93268 (ECG record/review); and CPT code 93784 (Ambulatory BP monitoring). The technical portion(s) of such codes will be subject to the MPPR. We note that CPT code 93005 (Electrocardiogram tracing) is a TC service already on the list, and CPT code 93016 (Cardiovascular stress test) is a PC service not subject to the MPPR.

Comment: Several commenters noted that the following add-on codes were included on the list of procedures subject to the MPPR on cardiovascular procedures: CPT code 75774 (Artery x-ray each vessel); CPT code 78496 (Heart first pass add-on); CPT code 93320 (Doppler echo exam heart); CPT code 93321 (Doppler echo exam heart); and CPT code 93325 (Doppler color flow add-on). Commenters indicated that such codes have already been valued to reflect efficiencies.

Response: We agree that these codes should not be subject to the MMPR and have removed them from the list. While three of these codes were included in our analysis, their inclusion had no effect on the results. For example, CPT codes 93320 and 93325 contain none of the clinical labor activities that might be duplicated. While duplicated clinical labor was noted in the code combinations including CPT code 77774, it affected neither the payment reduction range of 8 to 57 percent for second and subsequent procedures, nor, due to the extremely low utilization, the volume-adjusted average reduction across all code pairs of 25 percent.

Comment: Commenters noted that it was unclear exactly how we adjusted the equipment minutes in calculating the MPPR reduction and requested additional details.

Response: In general, the minutes allocated to particular direct PE equipment items are based on the amount of time clinical labor would use the equipment for a typical service. When the clinical labor minutes were reduced in our analysis, and those minutes had been used to allocate minutes to the equipment, we made corresponding reductions to the equipment minutes so that the equipment minutes matched the adjusted clinical labor times.

Comment: One commenter expressed concern that because pediatric cardiologists assess multiple aspects of a patient's cardiovascular status, the MPPR on cardiovascular services has an unjust impact on pediatric cardiology practices in the diagnosis and treatment of congenital heart diseases. The commenter noted that the functional and structural assessment of these multiple aspects requires the pediatric cardiologist to perform multiple procedures on the pediatric patient. It also requires special training and more time than a non-congenital adult assessment. According to the commenter, an echocardiogram performed to evaluate for congenital heart disease includes multiple types of different procedures/assessments which require a unique level of skill, training, and time when compared to the adult non-congenital assessment.

The commenter urged us to exclude the following codes from the MPPR on cardiovascular services: CPT codes 93303 and 93304 (Congenital transthoracic echocardiography); CPT code 93308 (Limited non-congenital code used for follow-up studies); and CPT codes 93320, 93321 and 93325 (Spectral and Color Doppler). The commenter maintained that excluding these codes would have no demonstrable effect on Medicare utilization of cardiology services since cardiologists treating adult patients rarely bill the congenital echocardiography codes to Medicare. The commenter noted that because most adult non-congenital transthoracic echocardiography studies that are billed to Medicare have been bundled into CPT code 93306 (including non-congenital echocardiography CPT codes 93307, 93320 and 93325), the significant decrease in payment for the subject codes would disproportionately impact pediatric cardiologists.

The commenter further noted that state Medicaid agencies and private sector health insurance payors use Medicare guidelines and RVU valuations to establish their own payment protocols. Therefore, the repercussions of these reductions will extend across all payor sources for pediatric cardiology practices and have a materially significant impact on the financial viability of many practices. Finally, the commenter indicated that the inclusion of the subject codes in the proposed MPPR would exacerbate the current shortage of available fellowship positions that recruit medical residents into pediatric cardiology, and will impair their ability to provide patient access to this life-saving specialty care, especially to medically underserved areas.

Response: We appreciate the commenter's concerns as to the impact of this policy on pediatricians. While we recognize that echocardiography training for congenital cardiovascular abnormalities may be different from that for adults, we are not convinced that the MPPR does is not equally applicable to pediatric and adult cardiologists. The purpose of the MPPR policy is to account for the efficiencies inherent when multiple procedures are furnished together. We do not believe that those efficiencies differ significantly from diagnostic testing on adults versus pediatric patients for these code pairs.

We considered the specific scenarios presented by the commenter's in the context of MPPR methodology and identified the same or similar efficiencies regardless of whether the multiple diagnostic procedures were targeted at abnormal flow in response to congenital structural abnormalities or were targeted at functional abnormalities in response to primary vascular disease. We also noted that, whereas practitioners who perform more services that are reported separately will be impacted more by the MPPR, practitioners who report more services that have recently been bundled together will have a similar impact due to the efficiencies that were considered by CMS in the valuation of those new bundled codes. Finally, we note that the codes are not specific to pediatric patients so it is not possible to exclude them for pediatric cardiologists alone.

In response to the commenters concerns that other insurers may adopt our policies, we do not modify Medicare payment policy based on the fact that Medicaid and other payors may adopt such policies. We understand that other payors have their own unique payment systems and consider the appropriateness of CMS valuations in their decisions to accept, modify or ignore our payments. We continue to believe that the MPPR policy that we are adopting in this final rule with comment period is appropriate for Medicare. Therefore, we are not excluding these codes from the MPPR.

Comment: Several commenters maintained that the policy could result in the following unintended consequences:

  • Create a disincentive for specialists to provide efficient, high quality and continuous care to their patients. Penalize the use of the appropriate sub-specialist, resulting in generalist physicians conducting multiple reads, leading to a degradation of diagnostic interpretation quality.
  • Have a negative impact on investment in new advanced imaging technology and stifle innovation. New equipment offers more precise images and the addition of highly-trained personnel to a medical practice is integral to high quality patient care. Inhibit staff training and the addition of staff in a state of uncertainty.
  • Lead to a forced reduction in necessary services, compromising patient access to life-saving diagnostic imaging services in all settings, including independent practices, community hospitals, and large academic medical centers.
  • Drive more services out of physicians' offices and into more expensive hospital settings, fragment care, and increase patient costs.
  • Reduce the efficiency of patient care and inconvenience patients because many would be scheduled for multiple procedures over multiple days instead of just one day. This would particularly disadvantage patients with serious medical conditions, such as multiple traumas, heart attacks, strokes, and cancer, who require frequent and multiple imaging.
  • Disproportionally affect radiologists in academic medical centers who are often part of large group practices and who furnish care to a more complex patient population. These patients are often suffering from acute trauma or undergoing treatment for cancer and are more likely to have multiple examinations on the same day.
  • Contradict the goal to focus more on preventive care, as diagnostic tests enable the early detection of potentially serious conditions.

Response: We have no reason to believe that appropriately valuing services for payment under the PFS by revising payment to reflect duplication in the TC of diagnostic cardiovascular and ophthalmology multiple services would negatively impact quality of care, be counter-productive to the goal of promoting preventive care, or limit patients' access to medically reasonable and necessary imaging services, or disproportionally affect certain groups. We have no evidence to suggest any of the adverse impacts identified by the commenters have resulted from the implementation of the MPPR on the TC of imaging in 2006. In fact, to the contrary, the analysis in MedPAC's June 2011 report indicates there has been continued high annual growth in the use of imaging. Further, it is worth noting that, without any accompanying evidence of inadequate access or safety and quality concerns, declining growth in imaging services could be interpreted as a return to a more appropriate level of imaging utilization.

For the ordering and scheduling of cardiovascular or ophthalmology services for Medicare beneficiaries, we require that Medicare-covered services be appropriate to beneficiary needs. We would not expect the adoption of an MPPR for the TC of diagnostic cardiovascular and ophthalmology services to result in services being furnished on separate days by one physician merely so that the physician may garner increased payment. We agree with the commenters who noted that such an unprofessional response on the part of practitioners would be inefficient and inappropriate care for the beneficiary. We will monitor access to care and patterns of delivery for cardiovascular and ophthalmology services to beneficiaries, with particular attention focused on identifying any clinically inappropriate changes in timing of the delivery of such services.

In summary, after consideration of the public comments received, we are adopting our CY 2013 proposal to apply an MPPR to the TC of diagnostic cardiovascular and ophthalmology services, with a modification to apply a 20 percent reduction for diagnostic ophthalmology services rather than the 25 percent reduction we had proposed. The reduction percentage for diagnostic cardiovascular services remains at 25 percent, as proposed. We continue to believe that efficiencies exist in the TC of multiple diagnostic cardiovascular and ophthalmology services and we will continue to monitor code combinations for possible future adjustments to the reduction percentage applied through this MPPR policy.

Specifically, beginning in CY 2013 we are adopting an MPPR that applies a 25 percent reduction to the TC of second and subsequent diagnostic cardiovascular, and a 20 percent reduction to the TC of second and subsequent diagnostic ophthalmology services, furnished by the same physician (or physicians in the same group practice) to the same beneficiary, on the same day. In Table 10, we provide examples illustrating the current and CY 2013 payment amounts:

Table 10—Illustration of Current and CY 2013 Payments Back to Top
Code 78452 Code 93306 Total current payment Total CY 2013 payment Payment calculation
* Dollar amounts are for illustrative purposes and do not reflect actual payment amounts.
Sample Cardiovascular Payment Reduction *          
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).
Code 92235 Code 92250 Total current payment Total CY 2013 payment Payment calculation
Sample Ophthalmology Payment Reduction *          
PC $46.00 $23.00 $69.00 $69.00 no reduction.
TC 92.00 53.00 145.00 134.40 $92 + (.80 × $53).
Global 138.00 76.00 214.00 203.40 $69 + $92 + (.80 × $53).

No changes have been made to the proposed list for diagnostic ophthalmology services. We have revised the proposed list for diagnostic cardiovascular services by removing codes deleted for CY 2013, add-on codes, and remote monitoring codes, and adding global codes corresponding to technical-only codes already on the list:

Table 11—Changes to the Proposed List of Procedures Subject to the MPPR on Diagnostic Cardiovascular Services Back to Top
Code Descriptor Added/deleted Reason
75650 Artery x-rays head & neck Deleted Deleted for CY 2013.
75660 Artery x-rays head & neck Deleted Deleted for CY 2013.
75662 Artery x-rays head & neck Deleted Deleted for CY 2013.
75665 Artery x-rays head & neck Deleted Deleted for CY 2013.
75671 Artery x-rays head & neck Deleted Deleted for CY 2013.
75676 Artery x-rays neck Deleted Deleted for CY 2013.
75680 Artery x-rays neck Deleted Deleted for CY 2013.
75685 Artery x-rays spine Deleted Deleted for CY 2013.
75774 Artery x-ray each vessel Deleted Add-on Code.
78496 Heart first pass add-on Deleted Add-on Code.
93000 Electrocardiogram complete Added Global Code.
93015 Cardiovascular stress test Added Global Code.
93040 Rhythm ECG with report Added Global Code.
93224 Ecg monit/reprt up to 48 hrs Added Global Code.
93268 ECG record/review Added Global Code.
93293 Pm phone r-strip device eval Deleted Remote monitoring code.
93296 Pm/icd remote tech serv Deleted Remote monitoring code.
93320 Doppler echo exam heart Deleted Add-on Code.
93321 Doppler echo exam heart Deleted Add-on Code.
93325 Doppler color flow add-on Deleted Add-on Code.
93784 Ambulatory BP monitoring Added Global Code.

The complete list of services subject to the MPPR for the TC of diagnostic cardiovascular and ophthalmology services is shown in Addendum X. The PFS budget neutrality provision is applicable to the new MPPR for the TC of diagnostic cardiovascular and ophthalmology services. Therefore, the estimated reduced expenditures for such services have been redistributed to increase payment for other PFS services. We refer readers to section VIII.C. of this final rule with comment period for further discussion of the impact of this policy.

Table 12—Diagnostic Cardiovascular Services Subject to the Multiple Procedure Payment Reduction Back to Top
Code Short 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.
75658 Artery x-rays arm.
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.
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.
93000 Electrocardiogram complete.
93005 Electrocardiogram tracing.
93015 Cardiovascular stress test.
93017 Cardiovascular stress test.
93024 Cardiac drug stress test.
93025 Microvolt t-wave assess.
93040 Rhythm ECG with report.
93041 Rhythm ecg tracing.
93224 Ecg monit/reprt up to 48 hrs.
93225 Ecg monit/reprt up to 48 hrs.
93226 Ecg monit/reprt up to 48 hrs.
93229 Remote 30 day ecg tech supp.
93268 ECG record/review.
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.
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.
93350 Stress tte only.
93351 Stress tte complete.
93701 Bioimpedance cv analysis.
93724 Analyze pacemaker system.
93784 Ambulatory BP monitoring.
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.
Table 14—Frequently Billed Diagnostic Cardiovascular Combinations Back to Top
Code Descriptor Code Descriptor Code Descriptor Code Descriptor
Code Range 75600-75893              
75710 Artery x-rays arm/leg 75791 Av dialysis shunt imaging        
75625 Contrast x-ray exam of aorta 75716 Artery x-rays arms/legs        
75625 Contrast x-ray exam of aorta 75716 Artery x-rays arms/legs 75774 Artery x-ray each vessel    
75820 Vein x-ray arm/leg 75827 Vein x-ray chest        
75625 Contrast x-ray exam of aorta 75710 Artery x-rays arm/leg        
75791 Av dialysis shunt imaging 75827 Vein x-ray chest        
75658 Artery x-rays arm 75791 Av dialysis shunt imaging 75820 Vein x-ray arm/leg 75827 Vein x-ray chest.
75710 Artery x-rays arm/leg 75774 Artery x-ray each vessel        
75820 Vein x-ray arm/leg 93931 Upper extremity study        
75791 Av dialysis shunt imaging 75820 Vein x-ray arm/leg        
Code Range 78414-78496              
78452 Ht muscle image spect mult 93306 Tte w/doppler complete        
78452 Ht muscle image spect mult 93017 Cardiovascular stress test        
78452 Ht muscle image spect mult 93306 Tte w/doppler complete 93880 Extracranial study    
78452TC Ht muscle image spect mult 93017 Cardiovascular stress test        
78452 Ht muscle image spect mult 93880 Extracranial study        
78452TC Ht muscle image spect mult 93306 Tte w/doppler complete        
78452 Ht muscle image spect mult 93017 Cardiovascular stress test 93306 Tte w/doppler complete    
78451 Ht muscle image spect sing 93306 Tte w/doppler complete        
78452TC Ht muscle image spect mult 93306TC Tte w/doppler complete        
78452 Ht muscle image spect mult 93306 Tte w/doppler complete 93880 Extracranial study 93978 Vascular study.
Code Range 93000-93990              
93306 Tte w/doppler complete 93880 Extracranial study        
93320 Doppler echo exam heart 93325 Lower extremity study 93351 Stress tte complete    
93922 Upr/l xtremity art 2 levels 93925 Lower extremity study        
93923 Upr/lxtr art stdy 3+ lvls 93925 Lower extremity study        
93306TC Tte w/doppler complete 93880TC Extracranial study        
93880 Extracranial study 93978 Vascular study        
93284 Icd device progr eval mult 93290 Icm device eval        
93922 Upr/l xtremity art 2 levels 93926 Lower extremity study        
93965 Extremity study 93970 Extremity study        
93925 Lower extremity study 93970 Extremity study        
Table 15—Frequently Billed Diagnostic Ophthalmology Combinations Back to Top
Code Descriptor Code Descriptor Code Descriptor
Code Range 76510-76529          
76514 Echo exam of eye thickness 92133 Cmptr ophth img optic nerve    
76514 Echo exam of eye thickness 92083 Visual field examination(s) 92133 Cmptr ophth img optic nerve.
76514 Echo exam of eye thickness 92083 Visual field examination(s)    
76514 Echo exam of eye thickness 92250 Eye exam with photos    
76514 Echo exam of eye thickness 92083 Visual field examination(s) 92250 Eye exam with photos.
76512 Ophth us b w/non-quant a 92134 Cptr ophth dx img post segmt    
76512 Ophth us b w/non-quant a 92250 Eye exam with photos    
76514 Echo exam of eye thickness 92286 Internal eye photography    
76514 Echo exam of eye thickness 92134 Cptr ophth dx img post segmt    
76512 Ophth us b w/non-quant a 92235 Eye exam with photos 92250 Eye exam with photos.
Code Range 92002-92371          
92083 Visual field examination(s) 92133 Cmptr ophth img optic nerve    
92235 Eye exam with photos 92250 Eye exam with photos    
92083 Visual field examination(s) 92250 Eye exam with photos    
92083 Visual field examination(s) 92134 Cptr ophth dx img post segmt    
92134 Cptr ophth dx img post segmt 92235 Eye exam with photos    
92134 Cptr ophth dx img post segmt 92250 Eye exam with photos    
92134 Cptr ophth dx img post segmt 92235 Eye exam with photos 92250 Eye exam with photos.
92250 Eye exam with photos 92285 Eye photography    
92082 Visual field examination(s) 92250 Eye exam with photos    
92081 Visual field examination(s) 92285 Eye photography    

d. Procedures Subject to the OPPS Cap

We are proposing to add the new codes in Table 16 to the list of procedures subject to the OPPS cap, effective January 1, 2013. Some of these codes are replacement codes for codes deleted for CY 2013. These procedures meet the definition of imaging under section 5102(b) of the DRA. These codes are being added on an interim final basis and their addition as procedures subject to the OPPS cap is open to public comment in this final rule with comment period.

Table 16—Additions and Deletions to the List of Procedure Subject to the OPPS CAP on Imaging Services Back to Top
Additions Deletions
Code Descriptor Code Descriptor
31620 Endobronchial us add-on 71040 Contrast x-ray of bronchi.
36221 Place cath thoracic aorta 71060 Contrast x-ray of bronchi.
36222 Place cath carotd/inom art 75650 Artery x-rays head & neck.
36223 Place cath carotd/inom art 75660 Artery x-rays head & neck.
36224 Place cath carotd art 75662 Artery x-rays head & neck.
36225 Place cath subclavian art 75665 Artery x-rays head & neck.
36226 Place cath vertebral art 75671 Artery x-rays head & neck.
36227 Place cath xtrnl carotid 75676 Artery x-rays neck.
36228 Place cath intracranial art 75680 Artery x-rays neck.
43206 Esoph optical endomicroscopy 75685 Artery x-rays spine.
43252 Upper GI optical endomicroscopy 75900 Intravascular cath exchange.
77080 DXA bone density axial 75961 Retrieval broken catheter.
77082 DXA bone density vert fx 77424 Intraoperative radiation delivery.
78013 Thyroid imaging w/blood flow 78006 Thyroid imaging with uptake.
78014 Thyroid imaging w/blood flow 78007 Thyroid image mult uptakes.
78070 Parathyroid planar imaging 78010 Thyroid imaging.
78071 Parathyroid planar imaging w/o subtrj 78011 Thyroid imaging with flow.
78072 Parathyroid imaging w/spect & ct    
88375 Optical endomicroscopy interp    
91110 GI tract capsule endoscopy    
91111 Esophageal capsule endoscopy    
92287 Internal eye photography    

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

Section 1848(c) of the Act requires that each service paid under the PFS be comprised of three components: work, PE, and malpractice. From 1992 to 1999, malpractice RVUs were charge-based, using weighted specialty-specific malpractice expense percentages and 1991 average allowed charges. Malpractice RVUs for new codes after 1991 were extrapolated from similar existing codes or as a percentage of the corresponding work RVU. Section 4505(f) of the BBA, 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.

As we indicated in the CY 2013 PFS proposed rule, we will continue our current approach for determining malpractice RVUs for new/revised codes. In section II.M.2. of this final rule with comment period, we have published a list of new/revised codes and the malpractice crosswalk(s) used for determining their malpractice RVUs. These malpractice RVUs for new/revised codes will be implemented for CY 2013 on an interim final basis and the malpractice crosswalks are subject to public comment. We will respond to comments and finalize the malpractice crosswalks for the majority of these codes 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). 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 by section 303 of the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) (Pub. L. 112-78) to extend the 1.0 floor for the work GPCIs through February 29, 2012. The statute was again amended by section 3004 of the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA) (P.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. Following the enactment of the legislation, appropriate changes to the CY 2012 GPCIs 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 updates to the 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 section1848 (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 and are reflected in addendums D and E.

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 changed 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 changed from 12.806 percent 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 malpractice GPCI was revised from 3.865 percent to 4.295 percent. Table 17 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 17—Cost Share Weights Finalized in CY 2012 GPCI Update Back to Top
Expense category Cost share weights %
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 in the CY 2012 final rule with comment period 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 use 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 GAFs 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 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 included a discussion in the CY 2013 proposed rule (77 FR 44756) about the recommendations that were not implemented or discussed in the CY 2012 final rule with comment period.

As we anticipated in the CY 2013 proposed rule, the Institute of Medicine's second report, entitled “Geographic Adjustment in Medicare Payment—Phase II: Implications for Access, Quality, and Efficiency,” was released July 17, 2012. The Phase II report evaluates the effects of GAFs (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. Once we have had an opportunity to fully evaluate the report and its recommendations we will respond to its recommendations in subsequent rulemaking.

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 did not include any proposals related to the GPCIs for the CY 2013 PFS. In response to public inquiries about exceptions to the calculated GPCIs, we provided 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 discussed recommendations from the first Institute of Medicine report that were not addressed during CY 2012 rulemaking in the CY 2013 proposed rule. We have included this discussion below.

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. The following states met the statutory criteria to be considered frontier states for CY 2012: Montana, North Dakota, Nevada, South Dakota, and Wyoming. There are no changes to those states identified as frontier states for CY 2013.

b. GPCI Assignments for the Puerto Rico Payment Locality

As noted in the CY 2013 proposed rule, 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 did not make any proposals related to the GPCIs for Puerto Rico, in response to those inquiries, we provided the following discussion regarding the GPCIs assigned to the Puerto Rico payment locality. We anticipate recalculating all the GPCIs in the seventh GPCI update, currently anticipated to be implemented for 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 malpractice 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 malpractice 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.

To calculate the malpractice 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 page. 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 malpractice GPCI value of 0.249 from previous GPCI updates when malpractice premium data were last available. It is important to note 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.

For a detailed discussion regarding the methodology used to calculate the various components of the Puerto Rico GPCIs, we referred 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 www.cms.gov/PhysicianFeeSched/downloads/GPCI_Report.pdf.

In the CY 2013 proposed rule, we also encouraged comments from stakeholders regarding potential data sources that may be available for calculating the Puerto Rico malpractice GPCI.

Comment: In response to our inquiry regarding potential sources for data that could be used in calculating a malpractice GPCI for Puerto Rico, we received numerous comments about the costs of practicing medicine in Puerto Rico. The commenters primarily expressed concern about the PE GPCI (with emphases on the rent component) and the malpractice GPCI. The commenters stated that the current GPCI values for Puerto Rico are low in comparison to other PFS localities and that this disparity may create incentives for doctors to move their practices to the continental United States. As a result, the commenters explained that access to both primary and specialty care for Medicare beneficiaries residing in Puerto Rico could be compromised. Several stakeholders provided a report on a comprehensive study entitled “Cost of Medical Services in Puerto Rico.” The report included results from a physician survey on the costs of operating a medical practice in Puerto Rico, including the cost for obtaining malpractice insurance. For example, the report included information about the leading malpractice insurers in Puerto Rico, the amount of malpractice insurance coverage typically purchased by physicians, and the cost of malpractice insurance by primary and specialty care providers. In addition to malpractice insurance costs, the report also included information on the cost of employees, contracted services, rent and utilities, medical equipment and supplies in Puerto Rico as well as information on the major concerns, demographics, and work patterns of the doctors currently practicing medicine in Puerto Rico and the doctors that have moved from Puerto Rico now practicing in the United States.

Response: As noted in the proposed rule, we will be adjusting the GPCIs for CY 2014. Given that we did not make any proposals to modify the malpractice GPCI calculation methodology or values for CY 2013, it would not be appropriate to make changes to the GPCIs in this final rule. We appreciate the physician survey information on the cost of malpractice insurance. We will review the information submitted on the cost of obtaining malpractice insurance in Puerto Rico as we prepare for the seventh GPCI update. We would note that the GPCIs are based upon changes in the relative costs of obtaining malpractice insurance so any changes in the GPCI for Puerto Rico will be based not only on data reflecting the costs on Puerto Rico, but also those in other localities.

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 that 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 GPCIs reflect 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 did not propose 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 which as noted above, is set to expire on December 31, 2012 in accordance with section 1848 (e)(1)(E) of the Act.

Comment: A few commenters requested an extension of the 1.0 work GPCI floor stating that the statutorily-mandated work GPCI floor will expire on December 31, 2012.

Response: As discussed above (and noted by the commenters) the 1.0 work GPCI floor is set to expire on December 31, 2012 and we do not have authority to extend the 1.0 work GPCI floor beyond December 31, 2012.

4. Institute of Medicine Phase I Report

a. Background

At our request, the Institute of Medicine conducted 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) (hospital wage index) of the Act. These adjustments are designed to ensure Medicare payments reflect differences in input costs across geographic areas. The factors the Institute of Medicine evaluated 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 also evaluated and considered 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 the physician geographic adjustment factor should come from all health care employers.
  • Recommendation 5-1: The GPCI cost share weights for adjusting fee-for-service payments to practitioners should continue to be national, including the three GPCIs (work, 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 CMS.
  • 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 www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.

As previously noted in this section, the Institute of Medicine also considered 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 July 17, 2012. We were not able to evaluate the recommendations contained in the Institute of Medicine's Phase II report, in time for discussion in the proposed rule. The Phase II report can be accessed on the Institute of Medicine's Web site at www.iom.edu/Reports/2012/Geographic-Adjustment-in-Medicare-Payment-Phase-II.aspx.

b. Institute of Medicine Recommendations Implemented in CY 2012

In the CY 2012 PFS final rule with comment period, we addressed three of the recommendations offered by the Institute of Medicine in its Phase I report. Specifically, the final CY 2012 GPCIs utilized the full range of nonphysician 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 nonclinical 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 Phase I recommendations, we provided a summary analysis of these recommendations in the CY 2013 proposed rule, which has also been included in this final rule with comment period below. We provided our technical analyses of the remaining Institute of Medicine Phase I recommendations in a report released on the PFS Web site at 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 report.

c. Discussion of Remaining Institute of Medicine's Phase I 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 used in furnishing 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 in 1992. As a result, a study was begun in 1994 that 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 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 (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,” may be accessed directly from the CMS Web site at www.cms.gov/PhysicianFeeSched/downloads/Alt_GPCI_Payment_Locality_Structures_Review.pdf.

(ii) Institute of Medicine Recommendations on PFS Locality Structure 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's 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's 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 asa 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 and the purchased services index of the PE GPCI, 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 page 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 would 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, released July 17, 2012, contains 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 make any statements about potential changes we would consider making to the PFS localities at this time. Any changes to PFS fee schedule areas would be made through future notice and comment rulemaking.

In the event that we develop 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 did not propose to change the current locality configuration for CY 2013, we requested public comments regarding the Institute of Medicine's recommended three-tiered PFS payment locality definition. In addition, as stated above we, made our technical analyses of the Institute of Medicine locality recommendations, specific to the Phase I report, available on the CMS Web site at www.cms.gov/PhysicianFeeSched/.

The following is a summary of the comments we received regarding the Institute of Medicine's recommended three-tiered PFS payment locality definition.

Comment: We received several comments on the Institute of Medicine's recommendation for a three-tiered PFS payment locality definition. Commenters from rural areas opposed increasing the number of payment localities, as would happen under an MSA-based PFS locality structure, because it would redistribute payments from rural to urban areas. Additionally, commenters who opposed the Institute of Medicine's three-tiered locality approach argued that increasing the number of PFS payment localities would reduce their payment amounts and exacerbate problems of attracting physicians and other practitioners to rural areas.

A few commenters supported the Institute of Medicine's recommendation to move toward an MSA-based locality configuration and urged us to make updating the PFS locality configuration a priority in CY 2013. Commenters supporting an MSA-based locality configuration contend that significant economic and demographic shifts have occurred since the last reconfiguration, making the current locality assignments outdated. One state medical association expressed disappointment that we did not propose an MSA-based locality structure for CY 2013. The commenter urged us “to adopt a transition plan to update the PFS localities” and stressed that the “transition plan must take into account the negative impact on physicians practicing in rural areas and work to mitigate the reductions in these regions.”

Response: We appreciate the comments received on the Institute of Medicine's recommendation to adopt an MSA-based approach for defining PFS localities. We will continue to evaluate the comments received on the Institute of Medicine's recommendations for revising the PFS locality structure, along with the impacts of such recommendations as discussed in the Phase II report.

(B) Institute of Medicine Recommendation 2-2: Employee Wage Index of the PE GPCI. 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 page 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 would require the use of confidential BLS OES data. While CMS could potentially secure access to the confidential BLS OES data, the general public may not be able to. 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.

In the CY 2013 proposed rule we requested comments on the use of confidential employee wage index data rather than the publicly available all-industry wage data. However, we did not receive specific comments as to whether we should pursue the acquisition of confidential employee wage index data (as a replacement for the publically available all-industry wage data) for purposes of determining the employee wage index component of the PE GPCI.

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: Work GPCI Methodology

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 page 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 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 requested comments on the Institute of Medicine's recommendations to revise the work GPCI methodology.

The following is a summary of the comments we received regarding the Institute of Medicine's recommendations to revise the work GPCI methodology.

Comment: A few commenters stated that the physician work GPCI should not be adjusted at all for geographic cost differences. However, the same commenters stated that if geographic payments adjustments must be applied under the PFS, the current proxy occupations used for calculating the work GPCI should be replaced with actual physician salary survey data to determine the true cost (market price) of physician labor. To that end, the commenters suggested that third parties who hire physicians, for example hospitals, would be a good source for obtaining “market based” physician salary data. Additionally, one commenter encouraged us to work with the AMA and the Medical Group Management Association (MGMA) to evaluate the validity of the current proxy occupational data sources and to determine methods for gathering reliable physician cost data.

Response: We appreciate the comments received on the Institute of Medicine's recommendations to revise the work GPCI methodology. We will continue to evaluate the comments received on the methodology used for determining the physician work GPCI in preparation for the seventh update to the GPCIs, which is scheduled to be implemented in CY 2014. We also look forward to the MedPAC study on this issue, which is 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: Office Rent Component of PE GPCI. 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, MGMA (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. To that end, we encouraged 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. However, we did not receive comments on specific data sources for commercial rent for purposes of determining the office rent component of the PE GPCI.

Comment: We received several comments that were not within the scope of the CY 2013 proposed rule. For example, a few commenters expressed concerns about the methodology used for determining the CY 2012 GPCI values and the impact of the current PFS locality configuration on specific PFS localities.

Response: We appreciate the comments regarding the methodology used for determining the CY 2012 GPCI values and the impact they have on specific PFS localities. As discussed above, we did not make any proposed changes to the GPCI calculation methodology or values for CY 2013. Therefore, it would not be appropriate to consider making new adjustments to the GPCI values for a specific locality without providing the public an opportunity to comment. We will consider the commenters' suggestions as we implement the seventh GPCI update anticipated in CY 2014.

Result of Evaluation of Comments

We appreciate the comments received on the Institute of Medicine's recommendations regarding the PFS locality structure and the data sources and methodology used to calculate GPCI values. We will consider the commenters' suggestions as we continue to evaluate options for reconfiguring the PFS locality structure and as we implement the seventh update to the GPCIs scheduled for CY 2014. We also look forward to conducting a full review and assessment of the Institute of Medicine's additional PFS locality recommendations (as discussed in their Phase II report), as well as the MedPAC study on the physician work GPCI under the PFS that is required by section 3004 of the MCTRJCA.

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 did not propose adding 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 believed 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 proposed 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 also proposed 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 proposed 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 also proposed to revise our regulations at § 410.78(b) and § 414.65(a)(1) to include these preventive services as Medicare telehealth services.

Comment: All commenters expressed support for CMS' proposals to add alcohol and/or substance abuse structured assessment and brief intervention services and the several preventive services established through the national coverage determination (NCD) process to the list of Medicare telehealth services for CY 2013. One commenter stated particular support for CMS' approach to ensure that coverage guidelines continue to apply when these services are furnished via telehealth and expressed the intention to support CMS' efforts to help educate practitioners about these preventive telehealth services newly available in 2013. Another commenter stated that the proposal to add these services to this list was an integral step forward for telehealth, but that the current breadth and level of services covered under the telehealth benefit is inadequate to support more robust telehealth capabilities sought by some practitioners.

Response: We appreciate the broad support for the proposed additions to the list of Medicare telehealth services and the efforts of stakeholders to ensure that practitioners are educated about the addition of these services to the list of Medicare telehealth services. We believe that the delivery of services via telehealth can help reduce barriers to health care access faced by some beneficiaries, and we remind all interested stakeholders that we are currently soliciting public requests to add services to the list of Medicare telehealth services. To be considered during PFS rulemaking for CY 2014, these requests must be submitted and received by December 31, 2012 or the close of the comment period for this final rule with comment period. Each request to add 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. 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/.

After consideration of the public comments received, we are finalizing our CY 2013 proposal to add HCPCS codes G0396, G0397, 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 will 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 telehealth originating site must also qualify as a primary care setting under the terms of the national coverage determination. Similarly, when the national coverage determination requires that the service be furnished by a primary care practitioner, the distant site practitioner who furnishes the telehealth service must also qualify as primary care practitioner under the terms of the national coverage determination. 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 www.cms.gov/manuals/downloads/ncd103c1_Part4.pdf. Consistent with this proposal, we are also revising our regulations at § 410.78(b) and § 414.65(a)(1) to include alcohol and/or substance abuse structured assessment and intervention services and the 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 proposed 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.

We received no comments regarding our proposal to make this technical revision. Therefore, we are finalizing our proposal 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.

5. Telehealth Originating Site Facility Fee Payment Amount Update

Section 1834(m)(2)(B) of the Act establishes the payment amount for the Medicare telehealth originating site facility fee for telehealth services provided from October 1, 2001, through December 31, 2002, at $20. For telehealth services provided on or after January 1 of each subsequent calendar year, the telehealth originating site facility fee is increased by the percentage increase in the MEI as defined in section 1842(i)(3) of the Act. The MEI increase for 2013 is 0.8 percent. Therefore, for CY 2013, the payment amount for HCPCS code Q3014 (Telehealth originating site facility fee) is 80 percent of the lesser of the actual charge or $24.43. The Medicare telehealth originating site facility fee and MEI increase by the applicable time period is shown in Table 18.

Table 18—The Medicare Telehealth Originating Site Facility Fee and MEI Increase by the Applicable Time Period Back to Top
Facility fee MEI increase Period
$20.00 N/A 10/01/2001-12/31/2002
$20.60 3.0% 01/01/2003-12/31/2003
$21.20 2.9% 01/01/2004-12/31/2004
$21.86 3.1% 01/01/2005-12/31/2005
$22.47 2.8% 01/01/2006-12/31/2006
$22.94 2.1% 01/01/2007-12/31/2007
$23.35 1.8% 01/01/2008-12/31/2008
$23.72 1.6% 01/01/2009-12/31/2009
$24.00 1.2% 01/01/2010-12/31/2010
$24.10 0.4% 01/01/2011-12/31/2011
$24.24 0.6% 01/01/2012-12/31/2012
$24.43 0.8% 01/01/2013-12/31/2013

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 was subsequently 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 the 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 that 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 was superseded by statute for 6 months. To be consistent with the statutory changes and our current policy, we proposed conforming changes to § 415.130(d) such that we continued 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 (77 FR 44763). 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. We received no public comments on the proposed conforming changes so we are finalizing the revisions to § 415.130(d) without modification.

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 considered incurred for outpatient therapy services under Medicare Part B. There is one therapy cap for outpatient occupational therapy (OT) services and another separate therapy cap for physical therapy (PT) and speech-language pathology (SLP) services combined. 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 include therapy services furnished in an outpatient hospital setting in the therapy caps. This provision is in effect from October 1, 2012 through December 31, 2012.

The therapy cap amounts are updated each year based on the Medicare Economic Index (MEI). The annual change in the therapy cap amount for CY 2013 is computed by multiplying the cap amount for CY 2012 by the MEI for CY 2013 and rounding to the nearest $10. This amount is added to the CY 2012 cap, which is $1,880, to obtain the CY 2013 cap amount. The MEI for CY 2013 is 0.8 percent, resulting in a therapy cap amount for CY 2013 of $1,900.

An exceptions process to the therapy caps has been in effect since January 1, 2006. Since originally authorized by section 5107 of the Deficit Reduction Act (DRA), which amended section 1833(g)(5) of the Act, 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 after the beneficiary's services for the year have exceeded the therapy cap. 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 required two additional changes to Medicare policies for outpatient therapy services. Effective for services furnished from October 1 through December 31, 2012, after a beneficiary's incurred expenses for PT and SLP services combined exceed the threshold of $3,700 during the calendar year, section 1833(g)(5)(C) of the Act, as amended by 3005(a)(5) of the MCTRJCA, requires that we apply a manual medical review process as part of the therapy caps exceptions process. Similar to the therapy caps, there is a separate $3,700 threshold for OT services. All requests for exceptions to the therapy caps for services after the $3,700 threshold is reached are subject to manual medical review. The manual medical review process is being phased in over a 3-month period. Unlike the therapy caps, exceptions are not automatically granted for therapy services above the $3,700 threshold based upon the therapist's determination that they services are reasonable and necessary. To request an exception to the therapy caps for services after the threshold is reached, the provider sends a request for an exception to the Medicare contractor. The contractor then uses the coverage and payment requirements contained within Pub. 100-02, Medicare Benefit Policy Manual, section 220 and applicable medical review guidelines, and any relevant local coverage determinations to make decisions as to whether an exception is approved for the services. For more information on the manual medical review process, go to www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/TherapyCap.html.

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 2011, more than 8 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 $5.8 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 policy 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 hospital outpatient departments. 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 a moratorium or an exceptions process for less than 2 years. (See the discussion about the therapy cap exceptions process above.) Almost from the inception of the therapy caps, 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 furnished to a beneficiary when more than one of these services is furnished in a single session. This reduction applies to nearly 40 therapy service codes. (For a list of therapy service codes to which this policy applies, see Addendum H.) The Physician Payment and Therapy Relief Act of 2010 (PPATRA) subsequently revised the reduction to 20 percent for the second and subsequent therapy services furnished to a beneficiary in an office setting, leaving the 25 percent reduction in place for therapy services furnished to a beneficiary 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.B.4. of this final rule with comment period.

(3) Studies Performed

The therapy cap is a uniform dollar amount that sets a limit on the total value of services furnished unrelated to the specific services furnished or the beneficiary's condition or needs. A 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.” This 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 www.cms.gov/TherapyServices/.

Since 2004, we have periodically updated the utilization analyses and posted other reports on the CMS Web site. These 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 types of outpatient therapy services that are billed to Medicare, the demographics of the beneficiaries who utilize these services, the HCPCS codes used to bill the services, the allowed and paid amounts of the services, the providers of these services, the therapy utilization patterns among 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 uniformly does not exist. Currently diagnosis information is available from Medicare claims. However, we believe that the diagnosis on the claim is a poor predictor for the type and duration of therapy services required. Additional work is needed to develop an appropriate system for classifying clinical cohorts to determine therapy needs.

A 5-year CMS project titled “Development of Outpatient Therapy Payment Alternatives” (DOTPA) is expected to provide some of this information. The purpose of the DOTPA project is to identify a set of measures that we could collect routinely and reliably to support the development of payment alternatives to the therapy caps. Specifically, the measures being collected are assessed for administrative feasibility and usefulness in identifying beneficiary need for outpatient therapy services and the outcomes of those services. The data collection processes have just been completed and a final DOTPA report is expected in late 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, the 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, 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) System Description and Requirements

(1) Overview

Section 3005(g) of MCTRJCA requires CMS to implement a claims-based data collection strategy on January 1, 2013 to gather information on beneficiary function and condition, therapy services furnished, and outcomes achieved. This information will be used in assisting us 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 who uses therapy services, how their functional limitations change as a result of therapy services, and the relationship between beneficiary functional limitations and furnished therapy.

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 that have 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 outcomes from therapy services from which to develop an improved system does not exist. This data collection effort is 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 identify gaps in information and determine what additional data would be 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 is only the first step in a long-term effort, it is an essential step.

In the CY 2013 proposed rule, we proposed to implement section 3005(g) of MCTRJCA by requiring that claims for therapy services include nonpayable G-codes and modifiers. Through the use of these codes and modifiers, we proposed to 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, as proposed, G-codes would be used to identify what type of functional limitation is being reported and whether the report is on the current status, projected goal status or discharge status. Modifiers would indicate the severity/complexity of the functional limitation being tracked. The difference between the reported functional status at the start of therapy and projected goal status represents any progress the therapist anticipates the beneficiary would make during the course of treatment/episode of care. We proposed that these reporting requirements would apply to all therapy claims, including those for services above the therapy caps and those that include the KX modifier (described above).

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

We proposed that these claims-based data collection requirements would apply to services furnished under the Medicare Part B outpatient therapy benefit and PT, OT, and SLP services under the Comprehensive Outpatient Rehabilitation Facilities (CORF) benefit. We also proposed to include therapy services furnished personally and “incident to” the services of physicians or nonphysician practitioners (NPPs). As we explained in the proposed rule, this broad applicability would include therapy services furnished in hospitals, critical access hospitals (CAHs), skilled nursing facilities (SNFs), CORFs, rehabilitation agencies, home health agencies (when the beneficiary is not under a home health plan of care), and in private offices of therapists, physicians and NPPs.

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.) 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 www.who.int/classifications/icf/en/ and for specific ICF nomenclature (including activity limitations and participation restrictions), see http://apps.who.int/classifications/icfbrowser/.

The CY 2013 proposal was based upon an option for claims-based data collection that was developed as part of the Short Term Alternatives for Therapy Services (STATS) project under a contract with CMS, which provided three options for alternatives 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 to reduce overutilization; and
  • Adopting a per-session bundled payment, the amount of which would vary based on beneficiary characteristics and the complexity of evaluation and treatment services furnished in a therapy session.

Although we did not propose to adopt any of these alternatives at that time, we discussed and solicited public comments on all aspects of these options during the CY 2011 rulemaking. (See 75 FR 40096 through 40100 and 73284 through 73293.) In developing the CY 2013 claims-based data collection proposal, we used the feedback received from the CY 2011 rulemaking.

We noted in the proposal that 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 for every beneficiary receiving outpatient therapy services. This POC must include: the type, amount, frequency, and duration of 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 functional terms and require that goals be based on measureable assessments or objective data and relate to identified functional impairments. See Pub 100-02, Chapter 15, Section 220.1.2. We also noted that the evaluation and the goals developed as part of the POC would be the foundation for the initial reporting under the proposed system.

The following is a summary of the comments we received regarding the general approach proposed in the CY 2013 PFS proposed rule to require nonpayable G-codes and modifiers on therapy claims to implement the new statutory requirement.

Comment: Most commenters supported a new payment system for therapy services and recognized that data would be a critical factor in the development of such a system. Others recognized that the statute required CMS to implement a claims-based data collection system and therefore addressed comments to the specific elements rather than the overall requirement. Many commenters expressed concerns that the data we would be collecting under the proposed system would not provide adequate data for us to develop a new payment system. Many commenters also expressed concern that the system would not provide the means for therapists to adequately convey why some beneficiaries needed more treatment. Toward this end, commenters suggested that we include a way to risk adjust the data or collect more beneficiary information. Some commenters suggested that we establish additional G-codes to report the beneficiary's complexity, such as whether their condition is of low, moderate, or high complexity. These G-codes would represent the multiple variables that affect a beneficiary's condition and response to therapy, such as age, comorbidities, prognosis, patient safety considerations, and current clinical presentation. One association indicated that it is working on an alternative payment system that will define and use three levels of complexity. Many commenters pointed out that the data we proposed to collect could only provide information on the progress an individual beneficiary made and was not valid for analyzing payment alternatives.

Response: We agree with commenters that the data collected under this system will not alone provide all the information that CMS needs to develop, analyze and implement an alternative payment system. We agree with the commenters that factors such as the patient's overall condition, including age, comorbidities, etc. are likely to affect the response to therapy; and we further agree that being able to analyze the data collected on such variables would enhance the usefulness of our data. Although we agree with the commenters' that it could be beneficial to include additional data elements to reflect the patient's condition and the complexity of the case, a meaningful system to use in classifying a beneficiary's complexity does not currently exist. As experience is gained with this new system, we expect that through future notice and comment rulemaking we will be able to enhance the system.

Comment: Many commenters commented on the administrative burden that therapists would incur if the proposed system was implemented. Some commented that the administrative burden would be particularly significant for physical therapists in private practice who often submit claims after each therapy visit. Commenters labeled the proposal “improper,” “unreasonable,” and “overly burdensome.” Other commenters indicated that the proposed process would not be burdensome stating that the functional assessment tools they use were “perfectly suited to comply with CMS rule for data collection points, so we anticipate little or no burden in complying with the collection of function at intake, predicting discharge function at intake, during care and at discharge from care.” In addition to the many commenters who noted the additional work that would be required to comply with this system, one commenter suggested that we also add a billable G-code to pay therapists for the additional work that this proposal would require.

Response: While we recognize that complying with these new reporting requirements will impose an additional burden on therapists, we believe that having available additional data on the therapy services furnished and the beneficiaries who receive them is critical to development of an alternative payment system for therapy services. Although we acknowledge that there would be work and some additional effort in complying with these reporting requirements, we believe that the additional burden is minimal. We designed our proposal to mesh closely with information that therapists already include in the medical record. The proposal would merely require that the information be translated into the new G-codes and modifiers, and included in additional lines on the same claims that would otherwise be submitted. We do not believe this reporting requirement would significantly increase the resources required to furnish therapy services.

Comment: A couple of commenters suggested that we abandon our G-code/modifier proposal and use diagnosis codes in its place. One recognized that CMS's assertion that diagnosis codes on the claims do not provide the data that we need was valid when only the principal diagnosis is used, but stated that if we relied upon principal and secondary diagnosis we could obtain the additional information regarding the patient's clinical condition and functional limitations. The commenter provided the example of when hemiparesis was coded as the secondary diagnosis. Some suggested that when the ICD-10 system is implemented the diagnosis codes would provide better information.

Response: We continue to believe that diagnosis codes, even when secondary diagnoses are included, do not provide the information on functional limitations that the statute requires us to collect. In the example the commenter provided, use of the diagnosis code “hemiparesis,” would only tell us that the beneficiary needs therapy due to a paralysis or weakness on one side of his or her body caused by a stroke or other brain trauma, but not the extent of the beneficiary's functional limitation. With regard to use of ICD-10, the statute requires us to implement a functional reporting system by January 1, 2013 so we cannot wait for ICD-10 system to implement the reporting requirements.

Comment: One commenter requested to be exempted from these reporting requirements because the organization furnishes such a small amount of Part B outpatient therapy services. Another noted that “Given that this policy may affect HOPDs only for 3 months, CMS should consider ways to impose minimal administrative burden on HOPDs to implement this policy.” One commenter sought assurance that CAHs were included in this data collection effort.

Response: As we indicated in the proposed rule, our goal is to have data on the complete range of therapy services for which payment is made based on the PFS for use in assessing and developing potential alternative payment systems for those services. This is important since any new payment system would likely apply to all those therapy services that are currently paid at rates under the PFS. To meet this goal, we proposed that the reporting requirements apply to all providers and suppliers of outpatient therapy services and CORFs. We note that the proposed policy would apply to hospital outpatient department services, even if such services are not subject to the therapy caps after December 31, 2012, and to services furnished in CAHs. We are finalizing without change the proposed policy to apply the reporting requirements to hospitals, SNFs, rehabilitation agencies, CORFs, home health agencies (when the beneficiary is not under a home health plan of care) and private offices.

Comment: Several commenters raised concerns about a new payment system based upon the data collected without a standardized tool, stating that such data would not provide reliable information on which to develop an alternative payment system. Additionally, some commenters believed the invalid data would be used to create a payment system based upon functional limitations.

Response: At this time we are not making any changes in the existing payment methodology for therapy services, except that therapists will have to comply with the reporting requirements to receive payment for furnished therapy services. Therapists will continue to be paid in CY 2013 under the existing payment methodology, which includes the therapy caps. We will closely monitor and implement any enacted legislation that would amend the current statutory provisions, including any amendment to extend the therapy cap exceptions process. At this time we are broadly considering options for a revised payment system for therapy services and do not have any preconceived ideas as to what such a system would like or what it would be based upon. The purpose of the data collection proposal described in the CY 2013 PFS proposed rule is to meet the statutory requirement and begin to gather data that will be used, along with other data and information that we have, to develop and analyze potential alternative payment systems. It is likely that changes will be made in the data collected as we gain experience with this system. Therapists and others concerned with Medicare payment for therapy services should not draw conclusions about any future payment system for therapy services based upon the claims-based data that we proposed to collect. The claims-based data is only one set of information that will be used and it is only a beginning step in gathering the information that we would need to consider in developing a revised payment system for therapy services.

Comment: Some commenters suggested that the “preamble language implies that improvement is a requirement for ongoing Medicare coverage.” One commenter suggested that the preamble language “implies that a measurable improvement in a beneficiary's functional limitation is required during an episode of therapy services.” Others expressed concern that some beneficiaries, such as those with spinal cord injuries, will be denied coverage because they improve too slowly.

Response: We did not intend for the preamble language to raise concern about changing coverage conditions for beneficiaries who need therapy services. As noted above, the purpose of the claims-based data collection system is simply to gather data, and we did not propose, nor are we implementing, any changes to coverage or payment policy for therapy services other than to require that therapists comply with the reporting requirements to receive payment for therapy services they furnish. Under existing IOM requirements, therapists have to establish a long-term goal for beneficiaries receiving therapy. What is new under this system is that at the outset of treatment, the therapist will need to report on the claim the projected goal for treatment using modifiers that describe the percentage of impairment. For beneficiaries who are not expected to improve, such as those receiving maintenance therapy, the same modifier would be used for current status and for projected goal status. It is possible for some beneficiaries that while improvement is expected, it is expected to be limited, and thus it will also be reported using the same modifiers. To emphasize, the collection of these data elements will not affect a beneficiary's coverage of therapy services.

Comment: Some commenters expressed concerns about how this proposal would affect individuals suffering from lymphedema. Commenters stated that some clients experience both pain and swelling while others seem to have only swelling of a limb. Successful management of a beneficiary with lymphedema involves bandaging, compression and skin care instruction, manual lymph drainage, decongestive therapy, manual lymph drainage instruction, and exercise. These services take lots of valuable practitioner time to perform correctly as does instructing caregivers. While lymphedema impacts function to a point of mild to severe disability, many commenters told us that lymphedema severity/complexity is very difficult to quantify and show significant functional improvements in the lymphatic system when many of these improvements are in skin integrity, cellular health and lymphatic flow. Other commenters stated that the patient's functional limitations due to lymphedema (restricted motion and/or mobility) can range from profound to minimal. But all lymphedema patients, including those proficient in self-care who have minimal functional limitations, are at great risk for developing cellulitis or other major medical complications from sustained tissue congestion of the lymphatic system. With ongoing or periodic management, as appropriate, therapy services can successfully prevent these medical crises. Many commenters expressed concern that coverage for therapy services relating to lymphedema would be denied as a result of this proposal. Others questioned which functional limitation to use for lymphedema patients.

Response: As noted earlier, we did not propose to change coverage policy or to use the claims-based data reporting system to determine which beneficiaries are entitled to therapy services. Instead, our proposal would require those furnishing care to provide certain information about the beneficiary and his or her expected response to therapy. We are reiterating in this final rule with comment period that the proposed claims-based data collection system makes no changes in our therapy coverage policies.

With regard to how those treating beneficiaries should comply with the data collection system, we expect therapists to report the G-code for the functional limitation that most closely relates to the functional limitation being treated. As a result of comments on the proposed rule, we are clarifying in this final rule with comment period that if the therapy services being furnished are not intended to treat a functional limitation, the therapist should use the G-code for “other” and the modifier representing zero.

Comment: Several commenters suggested that significant education will be required for therapists to comply with this required reporting.

Response: We are publishing in this final rule with comment period the claims-based reporting requirements that must be met in order to receive payment for therapy services. We will also use our usual methods for providing additional information, including revising relevant sections of the IOM, publishing Medicare Learning Network (MLN) Matters articles; presentations on Open Door Forums, and conducting National Provider Calls on the new requirements. We urge therapist to use these tools to assure that they have the information they need to comply with these new requirements.

(2) Nonpayable G-Codes on Beneficiary Functional Status

We proposed that therapists would report G-codes and modifiers on Medicare claims for outpatient therapy services. We discussed and sought comment on two types of G-codes in the proposed rule—generic and categorical. Table 19 shows the proposed generic G-codes and Table 20 shows the categorical codes discussed in the proposed rule.

Table 19—Proposed Nonpayable G-Codes for Reporting Functional Limitations Back to Top
Functional limitation for primary functional limitation:  
Primary Functional limitation, Current status at initial treatment/episode outset and at reporting intervals GXXX1
Primary Functional limitation, Projected goal status GXXX2
Primary Functional limitation, Status at therapy discharge or end of reporting GXXX3
Functional limitation for a secondary functional limitation if one exists:  
Secondary Functional limitation, Current status at initial treatment/outset of therapy and at reporting intervals GXXX4
Secondary Functional limitation, Projected goal status GXXX5
Secondary Functional limitation, Status at therapy discharge or end of reporting GXXX6
Provider attestation that functional reporting not required:  
Provider confirms functional reporting not required GXXX7

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. Each claim would have required all three sets of G-codes. Like the G-codes we proposed for CY 2013, the G-codes discussed in the CY 2011 PFS rulemaking would have been used with modifiers to reflect the severity/complexity of each element.

In the CY 2013 PFS proposed rule, we indicated that we were not proposing to use these specific G-codes because we found them to be potentially redundant and confusing. Instead we chose to use G-codes to define “functional limitations” synonymously with the ICF terminology “activity limitations and participation restrictions.” We noted that requiring separate reporting on three elements would have imposed a greater burden on therapists without providing a meaningful benefit in the value of the data provided. We added that because environmental barriers as discussed in CY 2011 are contextual, we did not believe collecting information on them would contribute to developing an improved payment system.

To create the select categories of G-codes discussed in the proposed rule (See Table 20) we used the two most frequently reported functional limitations in the DOTPA project by each of the three therapy disciplines. We noted that 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. We explained that if one of the select categories of functional limitations 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. When reporting a functional limitation not described by one of categorical G-codes, one of the generic G-codes previously described would be used.

Table 20—Select Categories of G-Codes Discussed in Proposed Rule Back to Top
Walking & Moving Around  
Walking & moving around functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals GXXX8
Walking & moving around functional limitation, projected goal status, at initial therapy treatment/outset and at discharge from therapy GXXX9
Walking & moving around functional limitation, discharge status, at discharge from therapy/end of reporting on limitation GXX10
Changing & Maintaining Body Position  
Changing & maintaining body position functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals GXX11
Changing & maintaining body position functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy GXX12
Changing & maintaining body position functional limitation, discharge status at discharge from therapy/end of reporting on limitation GXX13
Carrying, Moving & Handling Objects  
Carrying, moving & handling objects functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals GXX14
Carrying, moving & handling objects functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy GXX15
Carrying, moving & handling objects functional limitation, discharge status at discharge from therapy/end of reporting on limitation GXX16
Self Care (washing oneself, toileting, dressing, eating, drinking)  
Self care functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals GXX17
Self care functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy GXX18
Self care functional limitation, discharge status at discharge from therapy/end of reporting on limitation GXX19
Communication: Reception (spoken, nonverbal, sign language, written)  
Communication: Reception functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals GXX20
Communication: Reception functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy GXX21
Communication: Reception functional limitation, discharge status at discharge from therapy/end of reporting on limitation GXX22
Communication: Expression (speaking, nonverbal, sign language, writing)  
Communication: Expression functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals GXX23
Communication: Expression functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy GXX24
Communication: Expression functional limitation, discharge status at discharge from therapy/end of reporting on limitation GXX25

We sought input from therapists on categories of functional limitations, such as those described in this section. We specifically requested 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? We sought public comment on whether these proposed G-codes allow adequate reporting on beneficiary's functional limitations. We also noted that we would particularly appreciate receiving specific suggestions for any missing elements.

The following is a summary of the comments we received on the G-codes, generic and categorical, whether these proposed G-codes allow adequate reporting on beneficiary's functional limitations, and specific suggestions for any missing elements.

Comment: Two commenters disagreed with our proposal to develop new G-codes and instead encouraged us to use the three pairs of G-codes (activities and participation restrictions, impairments to body functions/structures and environmental barriers) from the STATs project to report functional limitations. These commenters agreed that adding these domains might be more burdensome, but one commenter suggested that without these data elements we would likely miss integral beneficiary data in relation to health and wellness benefits, such as increased muscle function, improved quality of life, decreased depression, improved bowel/bladder function, improved respiratory function, improved autonomic function and improved circulation. Another commenter specifically agreed with our decision to use only the one ICF-defined G-code from the STATS for activity impairments and participation restrictions. They noted that it would be potentially redundant and confusing to adopt the two additional G-codes for body functions/structures and environmental barriers and noted that these other two categories would “provide the agency with little meaningful data.” One commenter suggested that if we adopted this additional reporting we could minimize the additional burden by eliminating goal reporting.

Response: We appreciate the views of these commenters about which ICF categories to capture in our G-code data collection. We continue to believe that the reporting of functional limitations will be less confusing and more defined with the G-codes as described in our proposal for activity impairments/participation restrictions. As we move forward with functional reporting in following years, we may revisit the addition of other categories.

Comment: Commenters had divergent views on the categorical and generic G-codes. Many found the proposed system complicated, burdensome and stated that it would not provide the data we sought. Some criticized the categorical codes as being too broadly defined and stated that this will lead to confusion as to what areas of impairment are being reported. For example, one commenter stated, “The suggested categories are very broad and, in our view, will lead to confusion regarding which areas of impairment would be reported for certain therapy activities.” One commenter opposed the use of generic G-codes saying that data from these codes would be “useless.” On the other hand, we received much support for the proposed G-codes. Many commenters supported the use of categorical G-codes codes saying their use will provide more useful information than the generic ones. One commenter stated, “We believe having therapists report on these categories will provide CMS with more useful information than generic reporting on a functional limitation.” Many favored use of the categorical G-codes in addition to using “generic” or “other” codes only for functional limitations that did not fit in one of the categorical ones. Several commenters gave us specific guidance, recommending that instead of the generic G-codes, we add an “other” G-code to the categorical codes for functional limitations that don't fit into one of the defined categories.

Response: Based upon the comments we received suggesting that we use the categorical codes, but include an “other” category to use when one of the categorical codes does not apply, we are modifying our proposal to adopt categorical G-codes to define functional limitations and including within the categorical G-codes “other” G-codes to use when one of the more specific categorical codes does not apply. In addition to this change, as discussed below, we are replacing the two SLP categorical codes with eight new ones to better reflect the diversity of services furnished. Table 21 provides a complete list of the codes that will be available for reporting functional limitations. With regard to the commenters' concern that the categories are too broad and this will lead to confusion as to what is being reported, we acknowledge that the categories are broad, but disagree that the use of broad categories will result in confusion. Instead, we believe that the result will be the collection of data that includes information on broadly defined functional limitations. Without more specific input and greater support from the commenters, we do not believe we should create these in this final rule with comment period. Moreover, we believe it is important to gain experience with a limited number of codes in this new reporting system before we vastly expand the number of codes that are used. We sought comment on ways to better define the categories and where we received specific suggestions for additional G-codes that were sufficiently developed, such as those for SLP (explained below), we included them in our final set of G-codes. We anticipate that we will continue to refine the categories through future notice and comment rulemaking as we get more information and experience with this system.

Comment: Several commenters pointed out that there were many functional limitations for which there was not a categorical G-code. The American Speech-Language and Hearing Association pointed out the lack of appropriate SLP categories and suggested that we take advantage of the experience that has been gained through the use of its system for collecting data on functional limitations in this area. Specifically, they urged us to assign G-codes to the top seven reported functional communication measures used in National Outcomes Measurement System (NOMS). This commenter stated that, using this system, we would be able to collect “consistent” and “meaningful” ratings across all settings nationally.

Others told us that there were many conditions and situations that our system did not address and that some of these beneficiaries did not exhibit functional limitations that could be easily measured or reported. They cited, as examples, beneficiaries seen for lymphedema management, wound care, wheelchair assessment/fitting, cognitive impairments, and incontinence training.

Response: We agree with commenters that the G-codes discussed in the proposed rule did not go far enough in addressing SLP functional limitations. After consideration of the comments, we also agree that adoption of the most frequently used NOMS measures would be the best way to address this issue and would significantly improve our system in several ways. By using a system familiar to many speech-language pathologists, the quality of our data collection will be enhanced and the burden on those reporting will be less. We agree that it is reasonable to incorporate categories that are more specific, when appropriate, and note that this is an opportunity to align with existing measurement systems.

Accordingly, we are replacing the two of the categorical codes relating to SLP with seven categorical codes and one “other” code for SLP. (See Table 21.) The seven categorical codes mirror the seven most frequently reported NOMS categories and should be used when appropriate. For all other SLP treatments, the “SLP Other” category should be used.

For functional limitations not defined by the specific categorical codes and for therapy services that are not addressing a particular functional limitation; the “other” G-codes should be used. As we begin collecting data in this initial year, we will continue to assess the need for additional G-codes, refinement of existing ones, and examine ways to address those situations for which beneficiaries do not have functional limitations.

We have addressed in this final rule with comment period those areas for which we have adequate information to do so at this time and for which an additional burden will not be created. We will continue to refine this system through further notice and comment rulemaking in future years.

Comment: We received mixed feedback in response to our request for comment regarding the use of the ICF subcategories. Some commenters noted that adding more subcategories would result in too many codes and only add to the confusion. At least one other commenter supported subcategory reporting, but did not suggest which subcategories we should use.

Response: Given the comments received, we will not be implementing reporting by subcategories at this time. Once the system is operational, we will reassess whether subcategory reporting is necessary to provide the data that we need.

Comment: Some commenters interpreted our proposal to limit each therapy discipline to using only the two codes that represented the top two reported functional limitations for that discipline and suggested that we allow therapists to use any appropriate functional limitation.

Response: We agree with commenters that therapists should be able to use any appropriate functional limitation. In the proposed rule, we indicated that we developed the 6 categorical codes to correspond with the two most commonly reported functional limitations for each of the three therapy disciplines. However, this was only a way of identifying the functional limitations for which we needed codes. To be clear, therapists are to use the most appropriate categorical G-code that describes the functional limitation that is the primary reason for treatment without restriction by discipline.

Comment: A few commenters urged us to clarify that therapists using Patient Inquiry by Focus on Therapeutic Outcomes, Inc (FOTO), or another measurement system that provides a composite functional status score, did not need to report on secondary limitations.

Response: In assessing this comment, we recognized the need to clarify how composite functional scores should be reported. We are clarifying that a composite score should be reported using G8990 (Other physical or occupational primary functional limitation, current status, at therapy episode outset and at reporting intervals), G8991(Other physical or occupational primary functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting) and G8992 (Other physical or occupational primary functional limitation, discharge status, at discharge from therapy or to end reporting). Should there be the occasion to report on a second condition after the reporting on the first had ended, the therapist would use the G-code set for “other subsequent” functional limitation, G8993-G8896.

(3) Number of Functional Limitations on Which Reporting Occurs

We proposed that, using a set of G-codes with appropriate modifiers, the therapist would report the beneficiary's primary functional limitation defined as the most clinically relevant functional limitation at the time of the initial therapy evaluation and the establishment of the POC. The projected goal would also be reported at this time. At specified intervals during treatment, claims would also include the current functional status and the goal functional status, which would not typically change during therapy, except as described below. On the final claim for an episode of care, the therapist would report the status at this time for this functional limitation and the goal status.

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 finding 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/or 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.

We sought comment on specific issues regarding reporting data on a secondary limitation. Specifically, we requested comments regarding whether reporting on secondary functional limitations should be required or optional.

The following is a summary of the comments we received on the percentage of Medicare therapy beneficiaries with more than one functional limitation at the outset of therapy and whether reporting on secondary functional limitations should be required or optional.

Comment: The responses on the number of functional limitations being treated showed a wide variation. One commenter treating beneficiaries with spinal cord injuries indicated that 100 percent had more than one functional limitation, with an average of 10 functional limitations. Another respondent told us that 50 percent of SLP patients have two or more functional limitations. Another respondent indicated that nearly 98 percent of patients seen by therapists using FOTO were surveyed for only one condition. Most commenters recommended that therapists be required to report only one functional limitation, especially as we are just beginning to require functional reporting. The commenters stated that it would be burdensome and would pose clinical challenges to require reporting both a primary and secondary functional limitation. Others suggested that it would be costly, time intensive and burdensome to report numerous secondary functional limitations. Some stated that reporting on only one functional limitation would not capture sufficient information since treatment of multiple functional limitations is interrelated and treatment for these occurs simultaneously, not sequentially. Some commenters suggested allowing the optional reporting of a second or third functional limitation. Some commenters questioned how functional reporting would be handled when the beneficiary was being treated by more than one discipline or when a substitute therapist treats a beneficiary.

Response: In response to comments, we have decided to limit reporting to one functional limitation at this time. Recognizing that therapists treat the patient as a whole and work on more than one functional limitation at a time, we believe that limiting reporting in this way will make it less burdensome in the situations involving more than one functional limitation. Although many commenters favored the option of reporting on additional functional limitations when appropriate, we believe that allowing additional optional reporting would not produce consistent or useful data on beneficiaries who have more than one functional limitation that is being treated, and could potentially complicate the use of the data we collect for the development of future therapy payment policy. As we seek to improve reporting in future years, we may reconsider whether to permit or require reporting on additional functional limitations. We note that this is a new reporting system designed to gather data on the changes in beneficiary function throughout an episode of care. We are not expecting therapists to change the way they treat patients because of our reporting requirements.

We also explained that in situations where treatment continues after the treatment goal is achieved and reporting ended on the primary functional limitation, reporting will be required for another functional limitation. Thus, reporting on more than one functional limitation may be required for some patients, but not simultaneously. Instead, once reporting on the primary functional limitation is complete, the therapist will begin reporting on a subsequent functional limitation using another set of G-codes. If this additional functional limitation is not described by one of the specific categorical codes, one of the three “other” codes should be used depending on the circumstances.

In response to the comments, we are making several modifications in the G-codes that we proposed, as noted in the responses to comments above. To summarize, the G-codes, and their long descriptors, that will be used for reporting functional limitations of beneficiaries are listed in Table 21. There are 11 G-codes that describe categorical functional limitation, including seven for SLP services, and three more general G-codes for functional limitations that do not fit within one of the 11 categories. The general categorical codes would be used when none of the specific categories apply or when an assessment tool is used that yields a composite score that combines several or many functional measures, such as is done with the FOTO Patient Inquiry tool, for example. Two of these general G-code sets are to be used for “other” PT and OT services and one for “other” SLP services. In addition, we deleted the requirement to report a G-code to signal that no reporting was required and thus deleted the G-code that would have been used for this. (For discussion about the comments on this G-code and our decision to remove this reporting requirement, see section II.F.2.(b).(6).) Therapists would use the code that best describes the functional limitation that is primary to the therapy plan of care.

Table 21—G-Codes for Claims-Based Functional Reporting for CY 2013 Back to Top
Mobility: Walking & Moving Around  
G8978 Mobility: walking & moving around functional limitation, current status, at therapy episode outset and at reporting intervals.
G8979 Mobility: walking & moving around functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting.
G8980 Mobility: walking & moving around functional limitation, discharge status, at discharge from therapy or to end reporting.
Changing & Maintaining Body Position  
G8981 Changing & maintaining body position functional limitation, current status, at therapy episode outset and at reporting intervals.
G8982 Changing & maintaining body position functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting.
G8983 Changing & maintaining body position functional limitation, discharge status, at discharge from therapy or to end reporting.
Carrying, Moving & Handling Objects  
G8984 Carrying, moving & handling objects functional limitation, current status, at therapy episode outset and at reporting intervals.
G8985 Carrying, moving & handling objects functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting.
G8986 Carrying, moving & handling objects functional limitation, discharge status, at discharge from therapy or to end reporting.
Self Care  
G8987 Self care functional limitation, current status, at therapy episode outset and at reporting intervals.
G8988 Self care functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting.
G8989 Self care functional limitation, discharge status, at discharge from therapy or to end reporting.
Other PT/OT Primary Functional Limitation  
G8990 Other physical or occupational primary functional limitation, current status, at therapy episode outset and at reporting intervals.
G8991 Other physical or occupational primary functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting.
G8992 Other physical or occupational primary functional limitation, discharge status, at discharge from therapy or to end reporting.
Other PT/OT Subsequent Functional Limitation  
G8993 Other physical or occupational subsequent functional limitation, current status, at therapy episode outset and at reporting intervals.
G8994 Other physical or occupational subsequent functional limitation, projected goal status, at therapy episode outset, at reporting intervals, and at discharge or to end reporting.
G8995 Other physical or occupational subsequent functional limitation, discharge status, at discharge from therapy or to end reporting.
Swallowing  
G8996 Swallowing functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G8997 Swallowing functional limitation, projected goal status, at initial therapy treatment/outset and at discharge from therapy.
G8998 Swallowing functional limitation, discharge status, at discharge from therapy/end of reporting on limitation.
Motor Speech  
G8999 Motor speech functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9157 Motor speech functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9158 Motor speech functional limitation, discharge status at discharge from therapy/end of reporting on limitation.
Spoken Language Comprehension  
G9159 Spoken language comprehension functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9160 Spoken language comprehension functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9161 Spoken language comprehension functional limitation, discharge status at discharge from therapy/end of reporting on limitation.
Spoken Language Expression  
G9162 Spoken language expression functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9163 Spoken language expression functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9164 Spoken language expression functional limitation, discharge status at discharge from therapy/end of reporting on limitation.
Attention  
G9165 Attention functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9166 Attention functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9167 Attention functional limitation, discharge status at discharge from therapy/end of reporting on limitation.
Memory  
G9168 Memory functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9169 Memory functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9170 Memory functional limitation, discharge status at discharge from therapy/end of reporting on limitation.
Voice  
G9171 Voice functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9172 Voice functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9173 Voice functional limitation, discharge status at discharge from therapy/end of reporting on limitation.
Other SLP Functional Limitation  
G9174 Other speech language pathology functional limitation, current status at time of initial therapy treatment/episode outset and reporting intervals.
G9175 Other speech language pathology functional limitation, projected goal status at initial therapy treatment/outset and at discharge from therapy.
G9176 Other speech language pathology functional limitation, discharge status at discharge from therapy/end of reporting on limitation.

(4) Severity/Complexity Modifiers

We proposed that for each functional G-code used on a claim, a modifier would be required to report the severity/complexity for that functional limitation. We proposed to adopt a 12-point scale to report the severity or complexity of the functional limitation involved. The proposed modifiers are listed in Table 22.

Table 22—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%.

We noted that there are many valid and reliable measurement and assessment tools that therapists use to inform their clinical decision-making and to quantify functional limitations, including the four assessment tools we discussed in CY 2011 PFS rulemaking that produce functional scores—namely, the Activity Measure—Post Acute Care (AM-PAC) tool, the FOTO Patient Inquiry, OPTIMAL, and NOMS. We list these four 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.” We suggested that the scores from these and other measurement tools already in use by therapists that produce numerical or percentage scores be mapped or crosswalked to the proposed 12-point severity modifier scale.

In assessing the ability of therapists to provide the required severity information regardless of what assessment tool or combination of tools they use, if any, we considered the comments received on the CY 2011 PFS proposed rule discussion. These indicated that we needed greater granularity in our severity scale so that the changes in functional limitation over the course of therapy could be more accurately reflected. Specifically, most commenters on the CY 2011 proposed rule favored the 7-point scale over the 5-point ICF-based scale. They indicated that they preferred a scale with more severity levels and equal increments since it would allow the therapist to document smaller changes that many therapy beneficiaries make towards their goals.

Believing that neither the 5- or 7-point scales would be adequate for this reporting system, we developed and proposed a 12-point scale that we believed was an enhancement over the 7-point scale. We thought it addressed concerns that those commenting on the CY 2011 options had raised regarding the 7-point scale. We thought that a more sensitive rating scale (one with more increments) had the advantage of demonstrating the progress of beneficiaries with conditions that improve slowly, such as those recovering from strokes or with spinal cord injuries. In addition, we believed that the proposed scale's 10-percentage point increments would make it easier for therapists to convert composite and overall scores from assessment instruments or other measurement tools to this scale.

The following is a summary of the comments we received regarding our proposal for a 12-point scale to capture the severity/complexity of beneficiaries' functional limitations.

Comment: Several commenters stated that not all tests and measurement tools that therapists use could be easily crosswalked to any single numerical scale, stating that, for example, some tests and measures of functional limitations use ordinal scales. Further, the scores from some tests that are not linear or proportional to each other are not easily translatable to the 12-point scale. Some commenters pointed out the problems of developing a single score when more than one tool is used. Some commenters noted that there are a wide variety of therapy measurement tools that are used to inform clinical decision making and these are not measures that typically produce a functional assessment. Further, these commenters told us that combining the results of multiple measures make it extremely difficult to quantify beneficiary function and, as such, said it will be very difficult to crosswalk this type of information to a severity scale. And, many of these commenters expressed concerns about how therapist will implement the use of our severity/complexity modifier scale; they noted that much education is needed for therapists to understand the selection of a severity modifier. One commenter questioned whether aggregated subjective and objective data would be valid or usable by CMS.

Response: It is essential that the data reported on functional limitations be grouped using the same numeric scale. Moreover, we believe that is easier for those reporting data on functional limitations to use ranges of percentages rather than the absolute values. We acknowledge that therapists will incur some challenges when initially adopting our system as they learn how to translate the information obtained through various tests and measures to a particular modifier scale. However, as therapists gain experience in doing so, we anticipate that these translations will become easier and a normal part of their evaluative and treatment processes. Moreover, we are hopeful that forthcoming modifications from tool sponsors or others will make it easier for therapists to report the functional limitations measured by these tools, such as modifying the tool so the results match the Medicare severity/complexity scale or issuing instructions or guidance on translating the results to the Medicare severity/complexity scale. We also expect that some translation tools are likely to become available. We are hopeful that forthcoming guidance and translation tools from tool sponsors and others will clarify some of translation questions therapists have regarding the Medicare severity scale. Given that it is essential for our purposes to have a severity/complexity scale, we are adopting one in this final rule. With regard to education, CMS will make information about the severity/complexity scale, as well as other aspects of our new system, widely available to therapists. It will be incumbent upon individual therapists to learn how to translate the score from a singular assessment tool or the combined results from multiple tests/measures along with other information regarding their patient's functional limitation to the Medicare scale. Finally, we acknowledge that a system that combines objective and subjective data is not ideal. However, at this time it appears that there is not an alternative. We will continue to refine and improve this system.

Comment: Some commenters offered alternative suggestions to the use of a severity/complexity scale. Several commenters suggested that we use the secondary diagnoses on claims instead. Others suggested capturing the medical complexity of a beneficiary using other indicators, such as E/M codes or co-morbidities.

Response: We appreciate these suggestions. While we are able to collect secondary diagnosis data from claims, we know from prior studies that diagnoses alone cannot predict the amount of therapy services needed. We do not believe that diagnoses and comorbidities measure functional limitations, which the statute requires us to collect. Nor do we believe using existing or therapy-specific E/M codes would provide the data on functional limitations that we are seeking to collect. We do, however, believe that these elements may provide additional data that could contribute to our analysis of payment alternatives. As we consider refinements to the claims-based data collection system in future years we will consider these additional data elements.

Comment: Commenters had differing views on the use of the proposed 12-point scale to convey the severity of the beneficiary's functional limitations. Those supporting the use of the proposed 12-point scale stated that it was more sensitive and so better reflected change in a beneficiary's functional limitation. For example, commenters using FOTO said that they would not have problems adopting our proposed 12-point scale because they receive a composite score from FOTO, based on the patient's functional survey results, which can be easily mapped as a percentage of overall beneficiary function. Other commenters suggested that the 12-point scale we proposed was too complicated and had too many levels. Some of these commenters also stated that therapists were not familiar with such a scale. Several commenters believed that we should modify the 12-point scale to a 10-point one by eliminating the separate modifiers for zero and 100 percent because they believed it would be more recognizable and easier for therapists to use. Many suggested that we use the 7-point scale discussed in the CY 2011 rulemaking. A couple of these commenters thought that this 7-point scale was a valid and reliable one. Another commenter added that a 7-point scale is used by many outcome tools, such as NOMS, although no other examples of a tool using a 7-point scale were provided. One commenter was opposed to a severity/complexity scale but suggested that if one was used, it should be a 5- or 7-point scale.

Response: After reviewing the comments, it is clear to us that, given the diversity of views among therapy professionals, the range in functional limitations being measured, the variability of beneficiary conditions being treated and the plethora of assessment tools and instruments being used, the translation of functional information to any scale used is likely to require adjustments by some therapists. Although we proposed a 12-point scale as we thought it would be easier to use and provided more sensitivity, a majority of commenters favored the 7-point scale over the 12-point scale. After consideration of the many comments on the use of a 12-point scale, we have determined that a 7-point scale as preferred by commenters will provide appropriate data for our analysis. Accordingly, are finalizing the 7-point scale in Table 23.

Comment: Some commenters read our proposal to require that therapists use one of the IOM-recommended assessment tools, and thought that we should allow therapists to assign a severity/complexity modifier using their clinical judgment when a functional assessment tool is not used. Other commenters noted that physical and occupational therapists typically use multiple measurement tools during the evaluative process to inform clinical decision making; and, that clinical judgment is needed to combine these results to determine a functional limitation percentage. One commenter pointed out that the IOM outpatient coverage guidelines recommend, but do not mandate, the use of standardized measurement instruments and sought guidance as to how the modifier scale would apply to a therapist who satisfies documentation guidelines but does not use a standardized measurement instrument that produces a global functional score.

Response: We appreciate commenters' concerns that our proposed policy would require therapists to use a functional assessment tool to determine the overall degree of functional impairment. This was not our intent. However, when one of the four functional assessment instruments is not utilized, we require as part of our IOM Documentation Guidelines, that the therapist documents using objective measures the beneficiary's physical functioning. We are also aware that use of one of the four functional instruments is not widespread; and that physical and occupational therapists typically use multiple objective tests and measures to establish and compare a beneficiary's physical function and progress throughout the therapy episode. As such, we recognize that a therapist's judgment is critical in determining how to best measure their patient's functional impairment and how to assimilate the various necessary objective findings to ascertain a certain percentage of function that can be translated to the Medicare severity scale. Our requirements for documenting the beneficiary's functional status were established prior to this data collection effort, and the primary purpose for measuring functional impairment continues to aid the therapist in furnishing therapy services. Our data collection system is designed to collect data that is developed in the evaluative process and assessed throughout the course of treatment, not to prescribe how or what measures therapists use to assess functional impairment or deliver services. Accordingly, it is acceptable for therapists to use their professional judgment in the selection of the appropriate modifier. Our IOM provisions already assert that when assessing the level of functional impairment, the therapist uses his/her professional judgments in addition to the objective measures and accepted methodologies that are recognized in the therapy community and in professional practice guidelines.

Because there will be many cases for which one single functional measurement tool is not available or clinically inappropriate, therapists can use their clinical judgment in the assignment of the appropriate modifier. Therapists will need to document in the medical record how they made the modifier selection so that the same process can be followed at succeeding assessment intervals.

Comment: Many commenters evaluated our proposed 12-point scale as if it was itself to be used as an assessment tool, rather than simply a scale to report results of assessments. Some of these commenters also warned us that the 12-point scale could not give us valid and reliable data to use as an alternative payment system for therapy services unless a single assessment tool were used.

Response: We appreciate the views expressed by the many commenters. However, the 12-point scale was not intended to be used as an assessment tool. Rather, it was intended to be used to express the beneficiary's functional limitation in terms of a percentage of 100 total points so that there is a uniform scale for the degree of functional limitation. In other words, the scale that is used to report the degree of impairment would not affect the validity of the data. The reported data are as valid and reliable as the assessment tool or instrument (at times in combination with the therapist's judgment) that was used to develop the score. We also realize that there are limitations to the data that we will collect, in part because it is not all derived from one consistent, assessment tool.

Comment: Commenters noted that pain is a clinical complexity that is factored in when the beneficiary and therapist plan the course of treatment, but is not factored in to the proposed scale.

Response: We believe that the commenter meant that pain is a definite limiter of function and is difficult to measure and hard to quantify. However, we believe that pain and the functional limitations that it engenders can be captured by our severity scale. There are many valid and reliable measures that a therapist can use to quantify the functional limitations of painful conditions.

In response to the comments, we are adopting the following 7-point severity/complexity scale to report the severity of the beneficiary's functional impairment, which is based upon the scale developed as part of the STATs project.

Table 23—Severity/Complexity Modifiers for CY 2013 Back to Top
Modifier Impairment limitation restriction
CH 0 percent impaired, limited or restricted.
CI At least 1 percent but less than 20 percent impaired, limited or restricted.
CJ At least 20 percent but less than 40 percent impaired, limited or restricted.
CK At least 40 percent but less than 60 percent impaired, limited or restricted.
CL At least 60 percent but less than 80 percent impaired, limited or restricted.
CM At least 80 percent but less than 100 percent impaired, limited or restricted.
CN 100 percent impaired, limited or restricted.

(4) Assessment Tools

In the proposed rule we noted that therapists frequently use assessment tools to quantify beneficiary function. FOTO and NOMS are two such assessment tools in the public domain that can be used to determine a score for an assessment of beneficiary function. Therapists could use the score produced by such instruments to select the appropriate modifier for reporting the beneficiary's functional status. Although we recommend the use of four of these functional assessment instruments to determine beneficiary functional limitation in the IOM, we did not propose to require the use of a particular functional assessment tool to determine the severity/complexity modifier. We explained our reasons for not doing so in the proposed rule saying “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 noted that we might reconsider this decision once we have more experience with claims-based data collection on beneficiary function associated with furnished therapy services. We sought public comment on the use of assessment tools. In particular, we were interested in feedback regarding the benefits and burdens associated with use of a specific tool to assess beneficiary functional limitations. We requested that those favoring a requirement to use a specific tool provide information on the preferred tool and describe why the tool is preferred.

The following is a summary of the comments we received regarding the use of assessment tools and the benefits and burdens associated with use of a specific tool to assess beneficiary functional limitations.

Comment: Many commenters appreciated that we recognized the need to use consistent and objective measurement tools to quantify beneficiary function. All commenters who addressed assessment tools agreed that there is not currently a single assessment tool that would meet the diverse needs of beneficiaries receiving therapy services, and most did not recommend requiring the use of a single tool. However, many commenters stated we would be ineffective in reaching our data collection goals without prescribing some rules about assessing function; and thus suggested alternatives due to concerns of consistency and validity of the data. MedPAC noted that collecting data without a tool “would generate large amounts of data, and not provide clear information on the patients' limitations or functional status.” MedPAC elaborated that variations among the assessment methods used by therapists “would potentially impede the utility of such data for policymakers.”

Commenters found the following potential drawbacks to our proposal to allow therapists to choose the assessment tool(s) (or use their professional judgment) to determine the complexity/severity modifier. Commenters stated that the current proposal would collect individual level data that is not comparable among groups of beneficiaries or providers. Commenters also stated that gathering data on beneficiary condition, functional limitation, and progression necessitates the use of one standardized collection tool by all therapists. One commenter revealed that the same beneficiary could obtain widely distinct modifier scores depending on the tool used. Further, a commenter acknowledged that there are over 400 different measurement tools used by physical therapists, many of which only measure one domain of function. Additionally, another commenter urged us to provide more instruction on how each tool interfaces with the complexity/severity scale and provide crosswalks and guidance for each tool to promote consistency in the data collected.

Commenters suggested the following alternatives to our proposal to address the potential drawbacks they identified. Commenters supported endorsing a small number of standardized tools with proven validity, reliability, and responsiveness that would be distinct for each therapy discipline. The American Speech-Language and Hearing Association (ASHA) urged we adopt NOMS and a 7-point severity scale specifically for SLP to recognize the distinctiveness of the discipline and record meaningful outcomes for SLP beneficiaries. Many commenters supported the use of FOTO stating that it measures a broad scope of conditions reliably, results in a composite score, and creates little undue burden to report. Those commenters also stated that FOTO is already the tool of choice for their respective providers.

Two commenters suggested developing a list of approved tools for specific beneficiary populations and settings. Another commenter suggested assigning G-codes to specific assessment tools so that the data could be compared. As a future alternative, a few commenters proposed developing core items that could be used in any tool to standardize data collection. MedPAC suggested that “CMS consider developing an instrument that collects the necessary information that would allow Medicare to categorize beneficiaries by condition and severity in order to pay appropriately” and pointed to the “Reason for Therapy” form used in the DOTPA study as a starting point, noting that it is “concise, easy to assess and document for clinicians, and collects information on function and limitations across three therapy disciplines.”

Response: We continue to recommend the use of four functional assessment tools to determine beneficiaries' functional limitations. In addition, when these tools are not used, we require the use of objective measures to document the functional status of beneficiaries. We continue to believe that no one tool currently meets the needs of all three therapy disciplines; and, therefore, we are not requiring the use of any one specific assessment tool, or even the use of any assessment tool. We acknowledge that because of the use of the variety and kinds of assessment tools and other measurement instruments, including the use of a therapist's professional judgment, the value of the data we collect under this system will have limitations. However, we believe that the data we gather will assist us in taking a first step towards an improved payment system.

We appreciate the comments providing information on the benefits of using specific tools, such as NOMS and FOTO. However, at this time we do not believe that they are sufficiently widely used to require the use of one of these tools. In this final rule with comment period, we are not requiring the use of a specific assessment tool. We are continuing to encourage, but not require, the use of assessment tools in the IOM.

We did, however, adopt G-codes and a modifier scale for SLP that are consistent with NOMS so it is possible to move to a standardized tool for SLP in the future. We will consider the possibility using coding to identify the specific functional assessment tool used in subsequent refinements. As noted above, therapists can also use their professional judgment in determining the percentage of functional limitations in conjunction with objective data from evaluations and assessments and the subjective reports from beneficiaries.

(5) Reporting Projected Goal Status

We proposed that the therapist's projected goal for the beneficiary's functional status at the end of treatment would be reported on the first claim for services, periodically throughout an episode of care, and at discharge from therapy.

The following is a summary of the comments regarding goal reporting.

Comment: Of those commenting on goal status, most objected to the collection of goal data, particularly during the first year of data collection. Commenters noted that reporting on goals was not specified as part of the claims-based data collection effort required by MCTRJCA. Some stated that it would be a significant practice change to report goal data, involving changes to medical documentation, electronic health records, and billing processes. Commenters stated the identification and reporting of goals raised several clinical issues, such as the variability in goals among therapists, the need to change goals over the course of treatment, and the fact that therapists often set several goals (for example, short and long-term goals) for each beneficiary. Others noted that using goal data to classify a group of beneficiaries would be flawed because therapists create goals specific to the individual. One commenter noted that if goals influence payment, therapists could set the goal low or high to induce ongoing therapy and therefore the data would not be useful. As a result of these factors, many commenters believed data reporting on therapy goals would not provide reliable and useful information. In addition, a number of commenters stated that the proposal did not clearly express the intent of collecting goal data and many commenters expressed concerns about how we would use this data. Some commenters suggested that we clarify that the functional status data would be used only to track a beneficiary's progression rather than for any other purposes, such as making comparisons across beneficiaries, therapists, or settings. Several commenters expressed concern that the reporting of goals implied an improvement standard and that care would be denied to beneficiaries who improved slowly or not at all. Alternatively, one commenter supported our proposal for reporting of a projected goal, as well as periodic updates of the beneficiary status in the context of that goal.

Response: We understand the commenters' concerns about the complexity and intricacies of goal reporting. However, we currently require in the Benefit Policy Manual (Chapter 15, section 220.1.2) that long-term treatment goals be developed for the entire episode of care. Further, we specify that the projected goals should be measurable and pertain to identified functional limitations, and that these goals also need to be documented in the medical record. Since many of these goal requirements already exist, the additional work imposed by this requirement would be for the therapist to establish the percentage of functional limitation for projected for this goal at the end of the therapy episode and translate the goal to the G-code/modifier scale. We understand that the claims-based reporting is a change for therapists; however, these adjustments in operations will yield meaningful information on beneficiary functional status. We appreciate the recommendation to delay goal reporting for a year, but we believe that it is important to include goal data to gather a complete description of a beneficiary's functional status.

At this time, we intend to use the projected goal to have an understanding of therapists' ability to project the likely progress a beneficiary will make. We ultimately may employ these data to help us develop proposals to improve payment for therapy services, but do not anticipate using the goal data for purposes of payment or coverage decisions. In cases where the therapist does not expect improvement, such as for those individuals receiving maintenance therapy, the reported projected goal status will be the same as current status. We appreciate that commenters raised concerns about potential ambiguity of the description of the proposal on progress and outcomes but, given as we have clarified in this final rule with comment period, goal reporting does not establish an improvement standard. In fact, it allows the therapist to state at the outset the expectations. We understand there will be wide variability in goals. Since these goals are used in beneficiary treatment, as well as for reporting, we do not expect therapists to establish goals purely to make themselves look better. Recognizing the limitations of the collected goal data, we still believe it will be useful to us. Therefore, we are finalizing our requirement for reporting of goal G-codes on the claims form along with the related severity modifier for that goal.

(6) Reporting Frequency

We proposed to require claims-based reporting in conjunction with the initial service at the outset of a therapy episode, at established intervals during treatment, and at discharge. As proposed, the number of G-codes required on a particular claim would have varied from one to four, depending on the circumstances. We provided the following (Table 24) graphic example of which codes would have been used for periodic reporting. This example represents a therapy episode of care occurring over an extended period, such as 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. As proposed, 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 (POC) 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. We indicated in the proposal that if a secondary functional limitation would need to be reported, the same information would be reported using G-codes and associated modifiers for the secondary functional limitation.

The following is a summary of comments on the frequency of reporting at the outset.

Comment: All commenters that addressed frequency of reporting agreed that reporting should occur at the outset of the therapy episode of care. Although commenters agreed with reporting at the outset, many recommended removing the requirement to report the projected goal status. (Comments on reporting projected goal status are discussed above.)

Response: We are finalizing the requirement to report current status and projected goal status at the outset of therapy.

  • Every 10 Treatment Days or 30 Calendar Days, Whichever Is Less. We proposed to require reporting once every 10 treatment days or at least once during each 30 calendar days, whichever time period is shorter. As we explained in the proposed rule, 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 on this day, would be considered treatment day one, effectively beginning the count of treatment days or calendar days for the first reporting period.

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. For example, a beneficiary might receive certain services twice a day, although this is a rare clinical scenario, these two different sessions (or visits) on the same day by the same discipline are counted as one treatment day.

We explained that the proposal would require that on the claim for service on or before the 10th treatment day or the 30th calendar day after treatment day one, the therapist would only report the G-code and the appropriate modifier to show the beneficiary's current functional status at the end of this reporting period under the proposal. We added that the next reporting period begins on the next treatment day and that 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.

Further, we proposed that on a claim for a service that does not require specific reporting of a G-code with modifier (that is, on a claim for therapy services within the time period for which reporting is not required), GXXX7 would be used. By using this code, the therapist would be confirming that the claim does not require specific functional reporting. This is the only G-code that we proposed to be reported without a severity modifier.

As we noted in the proposed rule, we proposed the 10/30 frequency of reporting to be consistent with our existing 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. In addition to reflecting the Medicare required documentation for progress reports, we believe that this simplifies the process and minimizes the new burden on therapists since many therapy episodes would be completed by the 10th treatment day. In 2008, the average number of days in a therapy episode was 9 treatment days for SLP, 11 treatment days for PT, and 12 treatment days for OT. Under the proposal, 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 as proposed, two G-codes would be reported to show current functional status—one for the primary (GXXX1) and one for the secondary (GXXX4) limitation. Similarly as proposed, 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.

We noted that the proposal required that the same reporting periods be used for both the primary and secondary functional limitation. We added that 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 proposed 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, and at discharge.

We noted that we believed it was 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. We sought comment on whether it would be appropriate to modify the periodicity of the progress report requirement in the IOM to one based solely on the number of treatment days, such as six or ten. We noted that if a timing modification was made for progress reporting, a corresponding change would be made in the functional reporting interval.

The following is a summary of the comments we received on our proposal to require reporting every 10 treatment days or 30 calendar days, whichever is less, and whether it would be appropriate to modify the progress report requirement in the IOM to one based solely on the number of treatment days, such as six or ten, and the clinical impact of such a change.

Comment: Although many commenters appreciated our effort to align the claims-based reporting with existing requirements for a progress report, several commenters requested that we recognize the significant time burden of the new reporting frequency and that we ameliorate some of the burden with a simplification of the existing manual requirement. Commenters in favor of reporting every 10 treatment days explained that using treatment days as compared to calendar days is more easily programmed into software systems and in accord with certain therapist's billing practices. A couple of other commenters supported reporting every 30 calendar days as this accommodates therapists working in settings where claims are required to be submitted on a monthly basis, such as hospitals, rehabilitation agencies and SNFs. Several commenters objected to the periodic reporting and suggested that reporting only at the outset and at discharge of therapy would be sufficient to capture a beneficiary's functional progression. A few of those commenters were okay with the proposed 10 treatment day or 30 calendar day reporting timeframe, if periodic claims reporting is necessary.

A few commenters urged us to eliminate the requirement for functional status reporting at the visit subsequent to the progress report because a beneficiary's status probably would remain the same unless there is a significant gap between visits.

We received many comments concerning the reporting of GXXX7; which we proposed to be used to indicate that the therapist confirms functional reporting not required. These commenters stated that the reporting of GXXX7, which is required for claims with dates of services when a functional status measure is not collected, would be unnecessary and burdensome, especially for daily billers. They urged us to require reporting only when a functional status is required to be reported. Further commenters stated that there was no purpose for this G-code.

Response: Based on the public comments, we are making several changes. We believe that reporting every 10 treatment days would be less burdensome for therapists than the proposed 10 treatment days/30 calendar days. We believe a 10 [-] treatment day reporting period is straightforward for therapists to track, allows for better monitoring of changes in functional status, and is more easily adopted within our current claims processing systems. Therefore, we are finalizing the requirement that G-codes and associated modifiers are reported at least once every 10 treatment days and we will modify the IOM to establish the same timing requirement for progress reports. By making this change, we no longer need the therapist to report functional status at the visit subsequent to the end of a reporting period to signal the beginning of a new reporting period. So in response to comments, we have eliminated the requirement to report data at the start of a new reporting period.

After assessing the comments, we agree that reporting a G-code (GXXX7) to tell us that no reporting is required would not provide meaningful data and would pose an additional burden for therapists and therapy providers. When proposed, we believed it would be convenient for therapists to use the code to indicate that this was a claim for therapy services that did not require the functional reporting because it would assist them in complying with the reporting requirements and would assist us in enforcing them. When we reassessed the issue based on feedback from commenters, it was clear that the “no report due” code would not aid us in enforcing the requirements as we would still have to verify that claims with the proposed GXXX7 were in fact claims that did not require reporting. Since commenters pointed out that not only would it not assist them, but would in fact burden them, we have decided not to include this code. Accordingly, we are also modifying our proposal to remove the requirement to report a “no report due” code on claims when functional reporting is not due, such as between the first and the tenth day of service. We expect these changes will significantly reduce the frequency of required reporting during a therapy episode and believe they will appropriately simplify the claims-based reporting system.

  • Discharge. In addition, we proposed to require reporting of the G-code/modifier functional data for the current status and for the goal 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, information on the beneficiary's functional status at the time of discharge shows whether the beneficiary made progress towards or met the projected therapy goal. As we noted in the proposed rule, 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 sometimes 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 life, work, or social schedules; a physician told them further therapy was not necessary; or their transportation is unavailable. Whatever the reason, there would be situations where the therapy ends without the planned discharge visit taking place. In these situations, we said that we would not require the reporting at discharge. However, we encourage therapists to include discharge reporting whenever possible on the final therapy claim for services.

Since the therapist is typically reassessing the beneficiary during the therapy episode, 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 when the final claim for therapy services has not already been submitted.

We sought feedback on 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.

The following is a summary of the comments we received regarding the proposal 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.

Comment: In addition to outset reporting, a majority of commenters supported claims-based reporting at discharge of the therapy episode of care. With regard to the number of beneficiaries who stop therapy services without notice, the responses varied from about 12 percent for beneficiaries being treated for a spinal cord injury to 26 percent of patients with orthopedic conditions in a large system of outpatient therapy clinics. Many commenters who supported discharge reporting recommended that if the beneficiary misses his or her last visit, the therapist should be exempt from reporting the functional status at discharge. Another commenter believed, however, that having a separate G-code in each set to report discharge status is unnecessary; the commenter further stated that the last reported current status and goal status G-codes could be used to represent the end of treatment.

Response: Although we recognize that there may be some challenges with discharge reporting, this information is important for our purposes to complete the data set for each therapy episode; and, thus, we are maintaining the requirement. We do not agree with the commenter who suggested that we could simply use the last reported current status to represent the status at discharge since this may not be an accurate representation of the beneficiary's status at the time of discharge. However, in those cases where this functional status is derived from a patient survey, for example, FOTO, Am-PAC or OPTIMAL, and the survey is routinely sent to the patient who misses his/her final treatment, the therapist should report this data once subsequently gained, on the final bill for services unless the bill for the last treatment day has already been submitted. There are instances where not reporting the discharge status would make it impossible for us to distinguish the start of the reporting for a new or subsequently-reported functional limitation or the treatment for a new therapy episode in the data. We are finalizing our proposal to require discharge reporting (except in cases where therapy services are discontinued by the beneficiary prior to the planned discharge visit) using the discharge G-code, along with the goal status G-code, to indicate the end of a therapy episode or to signal the end of reporting on one functional limitation, while further therapy is necessary for another one.

  • Significant Change in Beneficiary Condition. We proposed 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. We noted that 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. Under the proposal, 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. This functional reporting of G-codes, along with the associated modifiers, could be used to show an increase in the severity of functional limitations; or, they could be used to reflect the severity of newly identified functional limitations as delineated in the revised plan of care.

The following is a summary of the comments we received regarding the proposal that in addition to reporting at the intervals discussed above, the G-code and related modifier 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.

Comment: One commenter recommended that instead of requiring periodic reporting throughout a therapy episode that we require it only at the time of a re-evaluation. This commenter believed that capturing the functional information using G-codes within the treatment episode is burdensome and reporting at the time of the progress report would put unnecessary emphasis on a therapist capturing a change in a beneficiary's assessment.

Response: We did not receive comments objecting to claims-based reporting at the time that a re-evaluation code is billed for PT or OT or a subsequent or second evaluation code is billed for SLP. Therefore, we are finalizing the requirement for functional reporting when a formal and medically necessary re-evaluation, for PT or OT, or a second or repeat SLP evaluation of the beneficiary is furnished. We are requiring claims-based reporting in conjunction with the evaluation at the outset of therapy, on or before each 10th treatment day throughout therapy, and at therapy discharge (except in cases where therapy services are unexpectedly discontinued by the beneficiary prior to the planned discharge visit and the necessary information is not available) or to signal the end of reporting on one functional limitation. On a claim, two G-codes would be required depending on the reporting interval. Table 25 shows a revised example of which codes are used for specified reporting under our final policy. We should note that this example utilizes the mobility functional limitation G-codes, G8978-G8980 for “walking and moving around” and the “Other or Primary” G-codes, G8990-G8992 and is for illustrative purposes only. This table not only shows how the final reporting works but by comparing it to the table showing the same details for reporting under the proposed policy one can see how much less reporting is required. Any of the other functional limitation G-code sets listed in Table 21 would also be applicable here.

In summary, we maintain that claims-based reporting should occur at the outset of therapy episode, on or before every 10 treatment days throughout the course of therapy, and at the time of discharge from therapy. Additionally, functional reporting is also required at the time the beneficiary's condition changes significantly enough to clinically warrant a re-evaluation such that a HCPCS/CPT code for a re-evaluation or a repeat evaluation is billed.

(7) Documentation

We proposed to require that documentation of the information used for reporting under this system must be included in the beneficiary's medical record. As proposed, 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 time reporting was required. Including G-codes and related modifiers in the medical record creates an auditable record, assists in improving the quality of data CMS collects, and allows therapists to track assessment and functional information. In the proposed rule, we provided the example of a situation where the therapist selects the mobility functional limitation of “walking and moving” as the primary functional 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. We noted that the therapist uses GXXX1-XH to report the current status of the functional impairment and GXXX2-XB to report the goal. Additionally, we said that 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.

The following is a summary of comments we received concerning our documentation requirements.

Comment: Some commenters suggested that the proposal would impose significant additional documentation and claims reporting requirements. Further, one commenter objected to the requirement to include information in the medical record on the G-codes and modifiers used for billing as it would be highly unusual and time intensive to do so. Another commenter supported our proposal, agreeing that documentation of the information used for reporting under this system must be included in the beneficiary's medical record.

Response: We disagree with the commenters' statements that the required documentation is overly burdensome. In fact, by maintaining the G-code descriptor and related modifier in the medical record, therapists may find it easier to link treatment and reporting. Additionally, to enforce the reporting requirements on the claims, documentation in the medical record is required. In cases where the therapist uses other information in addition to certain measurement tools in order to assess functional impairment, he or she would also want to document the relevant information used to determine the overall percentage of functional limitation to select the severity modifier. In instances where it becomes necessary for a different therapist to furnish the therapy services, the substitute therapist can look in the beneficiary's medical record to note previous G-codes and related modifiers reported. We are finalizing the proposed requirement that the G-codes and related modifiers must be documented in the beneficiary's medical record.

(8) Claims Requirements

In the proposed rule, we noted that except for the addition of the proposed G-codes and the associated modifiers, nothing in this proposal would modify other existing requirements for submission of therapy claims. We noted in the proposed rule that, in addition to the new G-codes and modifiers used for the claims-based data collection system, the therapy modifiers—GO, GP, and GN, would still be required on claims to indicate that the therapy services are furnished under an OT, PT, or SLP plan of care, respectively; and, therefore, we are designating these nonpayable G-codes as “always therapy.” We noted in the proposed rule that institutional claims for therapy services would require that a charge be included on the service line for each one of these G-codes used in the required functional reporting. We also noted that this charge would not be used for payment purposes and would not affect processing. Further, we noted claims for professional services do not require that a charge be included for these nonpayable G-codes, but that reporting a charge for the nonpayable G-codes would not affect claims processing. To illustrate this policy, for each nonpayable G-code on the claim, that line of service would also need to contain one of the severity modifiers, the corresponding GO, GP, or GN therapy modifier to indicate the respective OT, PT, or SLP therapy discipline and related POC; and the date of service it references. For each line on the institutional claim submitted by hospitals, SNFs, rehabilitation agencies, CORFs and HHAs, a charge of one penny, $0.01, can be added. For each line on the professional claim submitted by private practice therapists and physician/NPPs, a charge of $0.00 can be added. We believe that many therapists submitting professional claims are already submitting nonpayable G-code quality measures under the PQRS and will be familiar with the parameters of nonpayable G-codes on claims for Medicare services.

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

We did not receive any comments specifically on the claims requirements so we are finalizing these as proposed.

(9) Implementation Date

In accordance with section 3005(g) of the MCTRJCA, we proposed to implement these data reporting requirements on January 1, 2013. We recognized that with electronic health records and electronic claims submission, therapists might 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 proposed a testing period from January 1, 2013 until July 1, 2013. We noted that we would expect that all those billing for outpatient therapy services would take advantage of this testing period and would begin attempting to report the new G-codes and modifiers as close to January 1, 2013, as possible, 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.

The following is a summary of comments we received concerning our implementation of the new system on January 1, 2013 with enforcement beginning after July 1, 2013.

Comment: Given the statutory deadline, most commenters acknowledged that the new program needed to be implemented on January 1, 2013. Many commenters supported the proposed testing period. They indicated that a testing period was needed to train therapists, change documentation practices, modify electronic health records systems, educate billing contractors, and adjust billing systems. However, numerous commenters expressed concern that 6 months is an insufficient and unrealistic amount of time to transition to the new data reporting requirements. Commenters requested that we recognize the significant time and financial burden of the new reporting requirement and that we alleviate these concerns with delayed enforcement. Commenters requested a longer period to make software adjustments and educate therapists on the new reporting and frequency of documentation requirements. Further, commenters believed that we, in the limited time period, did not recognize the potential capital changes that would be necessary or allow for the typical process for acquiring funds. Commenters proposed various alternatives, which included extending the testing period to 9 or 12 months. A few suggested that we delay implementation of the mandate until the completion of the DOTPA study. As an alternative to nationwide data reporting, a few commenters suggested we consider testing the requirement under a pilot program in a small sample of the country, allowing us to analyze preliminary data and draw conclusions regarding the effectiveness of reporting through non-payable G-codes and modifiers before it is implemented nationwide.

Response: We are required by law to implement the claims-based data collection strategy on January 1, 2013. Our contractors and systems will be able to accept and process claims for therapy services with functional information at this time. We recognize that therapists may need time to adjust their claims processing to accommodate these additional codes but, we believe the necessary changes can be accomplished well within the 8 months between the time this final rule with comment period is issued and the end of the testing period. We do not believe a small pilot as suggested by some commenters would meet the statutory requirement to implement as of January 1, 2013 a claims-based data collection strategy to assist in reforming outpatient therapy services. Nor would it meet our needs to gather data to assist in developing potential alternative payment systems for therapy services. We are finalizing an implementation date of January 1, 2013 with a 6-month testing period such that claims that do not comply with the data reporting requirements will be returned beginning July 1, 2013.

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

To implement the claims-based data collection system required by MCTRJCA and described above, we proposed to amend the regulations establishing the conditions for payment governing outpatient and CORF PT, OT, and SLP services to add a requirement that the claims include information on beneficiary functional limitations. In addition, we proposed to amend the POC 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's functional limitations and goals reported on claims for services.

Specifically, we proposed 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 services furnished contain the required information on beneficiary functional limitations.

We also proposed to amend the POC 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 therapy benefits, we proposed to amend § 410.105 to include the same requirements for these services furnished in CORFs. These proposed revisions would require that the goals specified in the treatment plan be consistent with the beneficiary functional limitations and goals reported on claims for services and that claims submitted for services furnished contain specified information on beneficiary functional limitations, respectively. The requirements do not apply to respiratory therapy services.

We did not receive any comments on the proposed regulatory changes and are finalizing the changes as proposed.

(11) 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. In the CY 2013 PFS proposed rule, we indicated that we are meeting this requirement through the publication of this proposal and specifically by soliciting public comment on the various aspects of our proposal. In addition, we noted that we would meet with key stakeholders and discuss this issue in Open Door Forums over the course of the summer.

During the CY 2013 proposed rule comment period, we met with the various therapy professional associations and provider groups in order to solicit their comments on the various aspects of this proposal. At the CMS Physicians, Nurses & Allied Health Professionals Open Door Forum on July 17, 2012, we discussed the provisions of the proposed rule, including these requirements. We also discussed this proposed rule at the CMS Hospital & Hospital Quality Open Door Forum on July 18, 2012. In developing the final rule, we took into consideration many of the critical issues that were raised by the various stakeholders in these meetings and Forums. Accordingly, we believe we have met our obligation to consult with relevant stakeholders in proposing and implementing the required claims-based data collection strategy, and in developing our final policies, we have taken into consideration the various needs of stakeholders affected by this effort.

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 improve 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 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 the Innovation Center's Web site at innovations.cms.gov/initiatives/ACO/Advance-Payment/index.html).

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.

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 conditions. 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 conditions management and care coordination as key reason for undertaking this review. In the CY 2012 PFS final rule with comment period (76 FR 73062 through 73065), 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 at the time, 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 www.aafp.org/online/en/home/publications/news/news-now/inside-aafp/20120314cmsrecommendations.html.) The AMA workgroup, Chronic Care Coordination Workgroup (C3W), has and continues to develop codes to describe care transition and care coordination activities. (Several workgroup meeting minutes and other related items are available at www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/care-coordination.page.) Since the publication of the proposed rule, the C3W has completed development of two new transitional care management (TCM) codes. These new codes are:

  • 99495Transitional Care Management Services with the following required elements:

++ Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.

++ Medical decision making of at least moderate complexity during the service period.

++ Face-to-face visit, within 14 calendar days of discharge.

  • 99496Transitional Care Management Services with the following required elements:

++ Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.

++ Medical decision making of high complexity during the service period.

++ Face-to-face visit, within 7 calendar days of discharge.

We discuss these codes in greater detail below.

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 furnishing 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 furnishing care coordination, communication, and other necessary management related to the hospitalization in the post-service work.

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, the physician community continues to tell us 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. As part of our multi-year strategy to recognize and support primary care and care management, we proposed in the CY 2013 PFS proposed rule (77 FR 44776-44780) 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 also solicited comment on how care furnished in these settings might be incorporated into the current fee-for-service structure of the PFS.

Specifically, this HCPCS G code would describe all non-face-to-face services related to the TCM 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 TCM 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 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 beneficiaries under care of home health agencies or hospices. These beneficiaries 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 furnishing these services bill HCPCS codes G0181 or G0182 (See the Medicare benefit manual, 100-02, Chapter 15, Section 30 for detailed description of these services.)

For CY 2013, we proposed to create a new code to describe post-discharge TCM services. This service was proposed to 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 was also proposed to 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 proposed post-discharge transitional care HCPCS G code was described as follows:

GXXX1Post-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.

The post-discharge transitional care services HCPCS G code we proposed 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.

We proposed 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 requires 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. The Evaluation and Management Guidelines define decision-making of moderate and high medical complexity. 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 proposed 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 TCM services. The service would be billable only at 30 days post discharge or thereafter. The post-discharge TCM 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 proposed 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 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 stated our belief that it would be 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 TCM services listed above. Therefore, we did not believe it necessary to take further steps to identify a beneficiary's community physician or qualified nonphysician practitioner who furnished the post-discharge TCM services. We proposed 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 TCM services 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.

Comment: We received many comments on the proposed new code. The vast majority supported the concept in whole or in part. Only a handful of comments were generally opposed to the proposal to recognize and pay for TCM services. One commenter, while acknowledging that our proposal was “well intentioned,” expressed concern about adopting such an important proposal without explicit statutory direction. In particular, the commenter recommended that we should be more judicious in using the PFS rulemaking process to adopt far-reaching new policies requiring sizable BN adjustments. The commenter suggested that, if the proposed policies had been mandated by the Congress, the BN adjustment would presumably not be required. Another commenter suggested that the proposed new code was duplicative, because pre- and post-encounter non-face-to-face care management work is included in the total work for the typical E/M services, and the total work for subsequent post-operative visits that accompany surgical procedures.

Response: We thank the commenters who wrote in support of this proposal. For the reasons that we stated in the proposed rule, we do not believe that all the pre- and post- encounter non-face-to-face care management work that typically occurs when a beneficiary is discharged from a hospital, SNF or CMHC stay is included in the total work for the typical E/M services. This is because the E/M codes represent the typical outpatient visit and do not capture or reflect the significant care coordination that needs to occur when a beneficiary transitions from institutional to community-based care. (77 FR 44776) Therefore, we continue to believe that separate payment for TCM services does not duplicate payment for typical E/M services. We also believe that adoption of new codes such as our proposed TCM code is consistent with our statutory directive to maintain the physician fee schedule by recognizing changes in practice patterns and by adjusting codes, relative values, and payment accordingly. We have routinely added new codes created by AMA CPT to the fee schedule. As we indicated in the proposed rule, our proposal was, in part, a response to work by the AMAs C3W to develop new codes for TCM services. Below we discuss the AMA's recommendation that we adopt the TCM codes developed by that workgroup in place of our proposed TCM G-code.

Comment: Most comments were generally supportive of the proposal to recognize and pay for TCM services. A few commenters merely expressed general support for the proposal. However, the great majority of these generally positive comments also recommended adopting the proposed TCM G code with revisions to the code description, or adopting the AMA's new CPT TCM codes in place of our proposed TCM G-code.

Response: We appreciate the widespread support for our initiative to recognize and pay for TCM services. As we discuss below, we are proceeding with our proposal in a modified form, adopting some of the commenters' specific recommendations for revision. Most importantly, we are accepting the recommendation of many commenters that we adopt the AMA's CPT TCM codes in place of our proposed TCM G-code. As discussed below, we will therefore pay for new CPT TCM codes 99495 and 99496 with some small modifications to the code descriptions developed by the AMA's C3W. The new TCM codes developed by the AMA C3W are:

  • 99495Transitional Care Management Services with the following required elements:

++ Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.

++ Medical decision making of at least moderate complexity during the service period.

++ Face-to-face visit, within 14 calendar days of discharge.

  • 99496Transitional Care Management Services with the following required elements:

++ Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.

++ Medical decision making of high complexity during the service period.

++ Face-to-face visit, within 7 calendar days of discharge.

We discuss these codes in greater detail and respond to these specific recommendations below.

Comment: Many commenters, including the AMA and other specialty societies, expressed appreciation for our initiative to propose a new G-code and language to describe TCM, but urged us instead to implement the new CPT TCM codes. Commenters emphasized that these codes represented the consensus of the physician community as represented by the AMA's C3W. Commenters also emphasized that the CPT TCM codes are very similar to our proposal, with a few key differences. We summarize the key differences between our proposed TCM G-code and the CPT TCM codes in Table 26.

Table 26—Key Differences Between Proposed Transitional Care Management (TCM) G-Code and the CPT Codes Back to Top
CMS Proposed TCM G-code CPT TCM codes
Code(s) GXXX1—Post-discharge transitional care management (medical decision making of moderate to high complexity) 99490X—Transitional care management services (medical decision making of moderate complexity), and 99491X—Transitional care management services (decision making of high complexity).
Face-to-face visit Separately billed face-to-face E/M visit within 30 days prior to the hospital discharge or within the first 14 days of the 30-day period of TCM services Face-to-face visit within 14 calendar days of discharge (99490X), or within 7 calendar days (99491X). The first face-to-face visit is part of the TCM service and not reported separately. E/M services after the first face-to-face visit may be reported separately.
Relationship with patient The patient may be new to the physician's practice (provided the face-to-face visit requirements above are met) The reporting physician or NPP must have an established relationship with the patient. Established patient means a visit in the past 3 years.
Discharge management The physician or NPP who bills for discharge management services during the time period covered by TCM services may not also bill for GXXX1 A physician or NPP may report both the discharge code and appropriate TCM code.
Global services The physician who reports a service with a global period of 010 or 090 days may not also report the TCM service The physician who reports a service with a global period of 010 or 090 days may not also report the TCM service. However, the AMA recommends that specialties work on a CPT proposal for a new code to describe extensive post-discharge TCM services.

A few commenters from the medical community did not specifically recommend adopting the CPT TCM codes. For example, one major medical society supported our proposal on the grounds, among other considerations, that it was consistent with the “general direction of organized medicine, as evidenced by the fact that the AMA's CPT Editorial Panel has created two new codes for transitional care management.” This commenter then expressed support for several of the several elements in our proposed G code which differ from the CPT TCM codes, such as our “proposal to keep the required post-discharge face-to-face E/M separately reportable.” (We discuss this issue in further detail later in this section.)

Response: We agree with those commenters who recommended that we should acknowledge the physician community's work on primary care by adopting the CPT TCM codes in place of our proposed G-code. With regard to the differences noted above, we agree with the AMA's CPT construction that uses two separate codes to distinguish moderate and high complexity services in place of our single proposed G-code, which allowed for reporting services of either moderate or high complexity. We discuss the issues connected with the other differences between our proposed TCM G-code and the AMA's CPT TCM codes in responses to more specific comments of the AMA and others below.

We explicitly constructed this proposal as a payment for non-face-to-face post-discharge TCM 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 TCM services either already have or establish, soon after discharge, a relationship with the beneficiary. As such, we proposed that the community physician or qualified nonphysician practitioner reporting post-discharge TCM GXXX1 should already have a relationship with the beneficiary, or establish one soon after discharge, prior to furnishing TCM and billing this code. Therefore, we specifically proposed that the community physician or qualified nonphysician practitioner reporting a TCM G-code must have billed an E/M visit for that beneficiary within 30 days prior to the hospital discharge (the start of post-discharge TCM 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 TCM services. In either case, the E/M visit would be separately billed under our G-code proposal. While we proposed that the post-discharge TCM 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 sought comments about whether we should require a face-to-face visit when billing for the post-discharge TCM service: That is, whether we should bundle a required visit into the reporting and payment for the TCM codes. We were also concerned about 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.

Comment: The AMA and many other commenters recommended that we should require a face-to-face visit within 7 to 14 days after discharge when billing for the post-discharge TCM service. Under the CPT TCM codes, the first face-to-face visit is part of the TCM service and not reported separately. Additional E/M services required for managing the beneficiary's clinical issues in addition to the required face-to-face visit may be reported separately. These commenters emphasized that requiring a face-to-face visit within 7 to 14 days of discharge will provide for a more successful transition from facility to community. Other commenters maintained that we should retain the requirement for a separately billable face-to-face E/M either within 30 days before or 14 days after discharge. These commenters emphasized that such a requirement acknowledges that an established relationship with the patient is needed to bill the new code, and the level of E/M service will not be the same for every patient. A few commenters specifically recommended that it was not necessary to adopt any such requirement for a face-to-face visit (whether separately billable or not) in the context of a service that is essentially non-face-to-face. Some emphasized that it could be inefficient to require a visit that may not always be clinically necessary, and that the clinical decision about whether a visit is necessary should be left to the physician or qualified nonphysician practitioner. Other commenters emphasized that an office visit could be impractical in cases where patients may have limited mobility or otherwise have difficulty travelling to a physician office. Some of these commenters urged that we not adopt such a requirement, while others recommended that we expand the list of acceptable face-to-face visits to include other outpatient visit codes, such as home visits (99341-99350) and domiciliary/rest home visits (99324-99337). Still others stated that the window in which the post discharge visit must occur should be extended to 30 days post-discharge, not 14 days.

Response: The primary driver in creating these new CPT TCM codes has been to improve care coordination and to provide better incentives to ensure that these patients are seen in a physician's office, rather than be at risk for readmission. Therefore, we agree that care coordination beginning immediately upon discharge and the face-to-face visit within 7 or 14 days of discharge (as appropriate) will provide for a more successful transition from a facility to the community. However, as we indicated in the proposed rule, our adoption of codes for TCM services is part of the broader HHS and CMS multi-year strategy to recognize and support primary care and care management, and we are committed to considering new options and developing future proposals for payment of primary care services under the MPFS. Therefore, we consider the requirement for a face-to-face visit in association with the non-face-to-face tasks of TCM to be a short-term, transitional strategy while we continue to explore our interest in further improvements to advanced primary care payment.

We also share the commenters' concerns about beneficiaries who may have limited mobility or otherwise have difficulty travelling to a physician office in the period following a discharge. We note that the final CPT TCM codes, 99495 and 99496, which we are adopting in this final rule with comment period, requires a face-to-face visit, but does not specify the location/setting for that portion of the service. The AMA RUC states in its recommendation that, “each code includes a timely face-to-face visit which typically occurs in the office, but can also occur at home or other location where the patient resides.” Finally, we agree with those commenters who stated that beneficiaries would understand their coinsurance liability better if the TCM services included a required E/M visit as part of the service.

We also sought comments regarding whether we should 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 as the date of discharge. 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. On the other hand, we contemplated several scenarios where it is not possible for a beneficiary to get to the physician's or qualified nonphysician practitioner's office and welcomed 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 TCM code.

Comment: Commenters were almost uniformly opposed to a requirement for a same day visit. The commenters believed that a same day visit is unrealistic and should not be required because hospital discharge records are not always immediately available to the physician who would be assuming responsibility for transitional care. Some commenters, including several who favor a face-to-face requirement other than a same day requirement, also favored an exception for beneficiaries too feeble to travel to an office. Other commenters maintained that a requirement for a face-to-face encounter with an exception process could prove confusing and administratively challenging as it would require communication of exceptions criteria and audit/appeals processes.

Response: In conjunction with adopting the AMA's recommendation to require a face-to-face visit within 7 or 14 days of discharge for reporting the CPT TCM codes, we have also decided not to proceed with a requirement for a same day face-to-face visit. We agree with commenters who stated that such a requirement would be unrealistic in many situations, and would require the adoption of an exceptions process that could, unto itself, prove administratively difficult and confusing. At the same time, we emphasize that we believe physicians should seek to make an assessment and conduct the face-to-face visit as quickly as medically necessary after discharge in order to address patient care needs.

Comment: As we noted above, we proposed to require communication (direct contact, telephone, electronic) with the patient or caregiver within 2 business days of discharge. Some commenters stated that the specific requirement for the physician to communicate with the patient within 2 business days of discharge to begin the coordination of care is unrealistic. Some contended that hospital discharge records are not always available that quickly. Several other commenters expressed concern about the references to “business days” in this requirement. (Other requirements, for length of TCM service and the timing of the required E/M visit are established in terms of calendar days for purposes of the TCM codes.) The commenters noted that, traditionally, business days are Monday through Friday, except for holidays. However, many primary care practices are also open on weekends, making those “business days” for those practices. Most importantly, beneficiaries' need for medical care and care coordination is not limited to “business days,” nor are their discharges. Thus, the commenters recommended that CMS change “business days” to “calendar days” in this context, which, they asserted, would be consistent with CMS's proposal to define the code as a 30 calendar day service. The AMA CPT TCM codes incorporate a requirement for an interactive contact with the patient or caregiver, as appropriate, within 2 business days of discharge. This contact may be direct (face-to-face), telephonic, or by electronic means. The AMA CPT TCM codes also specify that, for purposes of this requirement, business days are Monday through Friday, except holidays, without respect to normal practice hours or date of notification of discharge. If two or more separate attempts are made in a timely manner, but are unsuccessful and other TCM criteria are met, the service may be reported. We emphasize, however, that we expect attempts to communicate to continue until they are successful.

Response: Our proposed TCM G-code contained a requirement for communication with the patient or caretaker within 2 business days of discharge. We also agree with the AMA's assessment concerning the importance of such a requirement to meeting the goals of successful TCM. We also agree with the AMA's provision to allow for billing of the TCM service if two or more separate, unsuccessful attempts at communication are made within a timely fashion. We believe that this provision should substantially reduce the concerns of some commenters about the tight timeline for making this initial contact. We also believe that concerns about the availability of hospital discharge records should decline dramatically as both hospitals and physicians respond to the current incentive payments (and the payment reductions beginning in 2015) to encourage adoption of electronic health records systems. We cannot agree with those commenters who suggested that we should substitute “calendar days” for “business days” in this requirement. We do not believe that the timeframe for this requirement needs to be expressed in calendar days to be consistent with the 30 calendar day timeframe for the service. More importantly, establishing a timeframe of 2 calendar days for this initial contact would severely disadvantage those practices which do not have regular business hours on the weekends.

Comment: In our proposed G-code, we required that physicians or qualified nonphysician practitioners must have had a face-to-face E/M visit with the beneficiary in the 30 days prior to the transition in care or within 14 business days following the transition in care. However, we allowed that, if the physician or qualified nonphysician practitioner met this requirement, the patient could otherwise be new to the practice. The AMA recommended that the physician reporting the CPT TCM codes must have an established relationship with the patient, as required for the those codes, rather than allowing physicians to bill for TCM services furnished to patients who are new to their practices. Under CPT TCM definitions, an established relationship with a patient exists when a physician has billed a visit with the patient within the last three years. Many commenters maintained that a visit within 30 days prior to the discharge was largely irrelevant to the actual provision of TCM services. Other commenters maintained that defining a pre-existing relationship as a visit within 30 days prior to the discharge is far too restrictive. A patient with established disease may only be seen by a physician every 3 to 6 months. We should therefore allow an E/M service to be furnished any time in the 12 months prior to the discharge to be considered evidence of an established relationship.

Response: We agree with commenters that a visit within 30 days before the hospital discharge might be too restrictive for purposes of establishing an existing relationship with a patient. We are therefore accepting the AMA's recommendation not to include such a requirement in the CPT TCM codes and note that the CPT TCM codes also do not require a visit within 30 days before discharge. Rather, as the AMA has recommended, we will include a requirement for a face-to-face visit with the beneficiary within 14 days (in the case of CPT code 99495) or 7 days (in the case of CPT code 99495. This required visit is bundled into the payment for the codes and is not separately payable. We do not entirely agree with the AMA's recommendation that the physician must have an established relationship prior to the discharge with the patient to report the CPT TCM codes. We are concerned that such a requirement would make it impossible for an especially vulnerable group of patients, specifically, those who do not have an established a relationship with a primary care or other community physician, to receive the benefit of post-discharge TCM services. These patients may well be among those who would benefit most from these services, particularly because receiving TCM services could provide the opportunity for them to establish a continuing relationship with a physician who is able to assume overall management of their care. Therefore,, in conjunction with our adoption of the CPT TCM codes, we will develop additional Medicare-specific guidance for the use of these codes that modifies this element of the CPT TCM prefatory instructions, to allow a physician to bill these codes for new patients (provided that the physician meets visit requirement and all other requirements for the CPT TCM codes). It is important to note, however, that the payment amount for the CPT TCM codes will be the same whether the codes are billed under Medicare for treating new or established patients under the TCM codes. For Medicare purposes we are modifying the prefatory instructions for the CPT TCM codes because we wish to encourage the provision of TCM services to those beneficiaries who can benefit from the services—whether the beneficiary is a new or established patient. However, we believe that the typical case will involve provision of TCM services to an established patient, and relative values for codes are established on the basis of the typical case. Physicians may choose to bill other appropriate codes (for example, new patient E/M codes) that better describe the services furnished.

Comment: We proposed that a physician or qualified nonphysician practitioner who bills for discharge day management during the time period covered by the TCM services code may not also bill for HCPCS code GXXX1. The CPT discharge day management codes are 99217, 99234-99236, 99238-99239, 99281-99285, or 99315-99316. The AMA/RUC and many other commenters recommended that a physician reporting the discharge management should also be able to report the new TCM service. The AMA/RUC and other commenters noted an AMA data analysis that nearly 25 percent of those visits reported within 14 days of discharge were from the physician who also furnished the discharge services. The commenters emphasized that discharge management services reflect the work done at the time of discharge. The TCM service describes the work following discharge. Therefore, the commenters contended that there should be minimal or no overlap in the actual work performed in providing these two services. Other commenters emphasized that the physician or group practice billing for discharge day management could also be the physician or group practice regularly responsible for the patient's primary care and would therefore be the appropriate physician to take responsibility for the patient's transition to the community.

Response: We accept the AMA/RUC's recommendation (as supported by a number of commenters) to allow a physician to report both the discharge management code and a CPT TCM code. We agree with those commenters who emphasized that the physician billing discharge day management could also be the physician who is regularly responsible for the beneficiary's primary care (this may be especially the case in rural communities), and who would therefore be the appropriate physician to take responsibility for the patient's transition to the community. However, we continue to be concerned that there could be some overlap in the actual work involved in providing these two services and, that payment to one physician for both of these services might be excessive as a result. Therefore, we will monitor claims data to ascertain the extent to which the same physician bills for both the discharge day management and TCM services and analyze whether it may be appropriate to develop a payment adjustment that recognizes overlap in resources in the future.

In addition, we note that the CPT TCM code prefatory language provides that the TCM service period “commences upon the date of discharge and continues for the next 29 days.” Subsequent CPT TCM language indicates that the first visit must occur within 7 or 14 calendar days of the date of discharge depending on the level of decision-making. We are unclear as to whether the CPT TCM prefatory language intends to allow the first visit to occur on the same date as discharge. We note that there is a distinction between the discharge day management and TCM services, and we wish to avoid any implication that the E/M services furnished on the day of discharge as part of the discharge management service could be considered to meet the requirement for the TCM service that the physician or nonphysician practitioner must conduct an E/M service within 7 or 14 days of discharge. Therefore, we will specify that the E/M service required for the CPT TCM codes cannot be furnished by the same physician or nonphysician practitioner on the same day as the discharge management service.

Comment: A number of commenters suggested that payment for the E/M hospital discharge management codes (CPT 99238 or 99239) is inadequate to reflect the discharging duties of the physician. While most of these commenters supported enhanced payment for community physicians to furnish care coordination services on the receiving end, they stated that a corresponding increase in payment to those physicians who are discharging patients is also warranted.

Response: We continue to 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.

We certainly recognize that the services of physicians and other practitioners providing discharge management services are crucial to the overall success of TCM services. These codes have been valued by the AMA/RUC in the past, and these valuations have been reviewed and accepted by us. At this time, we are not aware of any substantive evidence that these codes are systematically undervalued.

Comment: We proposed that a physician or qualified nonphysician practitioner who bills for emergency department visits (99281-99285), home health care plan oversight services (HCPCS code G0181), or hospice care plan oversight services (HCPCS code G0182) during the time period covered by the TCM services code may not also bill for HCPCS code GXXX1. We indicated that we believed 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 TCM service. The AMA noted that for the proposed TCM G-code we would not allow TCM services to be reported with emergency department visits, home health care oversight (G0181), hospice care plan oversight (G0182). The AMA CPT TCM codes allow for reporting of emergency department visits. The AMA also indicated that a physician or other qualified health care professional who reports a TCM code may not report the CPT codes for care plan oversight services (99339, 99340, 99374-99380). At the same time, the CPT TCM codes also specify that many other codes may not be reported with TCM (for example, non-face-to-face services such as telephone calls).

Response: In conjunction with adopting the AMA CPT TCM, we accept the recommendation to allow reporting of emergency department visits when also billing the CPT TCM codes. We also agree with the recommendation not to allow reporting of care plan oversight services when also billing the CPT TCM codes. We had proposed to prohibit billing of the G-codes that we employ for home health care oversight (G0181), and hospice care plan oversight (G0182) with our proposed TCM G-code, on the grounds that such care management services duplicate the services provide in TCM. We are including these G-codes in the list of codes for such services that are precluded from billing with the CPT TCM codes, because we continue to believe that they are duplicative of the CPT care plan management aspects of the CPT TCM codes. We will also accept the AMA recommendation specifying many additional codes that may not be reported with CPT TCM codes (for example, non-face-to-face services such as telephone calls), as specified in the descriptions of CPT TCM codes 99495 or 99496 below. We are accepting these recommendations because they similarly avoid duplicate payment for the same services.

Further, we proposed that a physician or qualified nonphysician practitioner billing for a procedure with a 10- or 90-day global period would not also be permitted to 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.

Comment: Many commenters expressed concerns with prohibiting physicians who bill services with a global period from billing the TCM code as well. One commenter stated that “permitting a surgeon to receive payment under these circumstances would not result in duplicate payment for the same service * * * [I]f follow-up care management included in the post-operative portion of a global period can be reimbursed separately from the proposed transitional care management code when performed by two different physicians, they should remain separately reimbursable when these functions are all performed by the same physician.” One commenter specifically agreed with our proposal to prohibit the billing of TCM by a physician providing the original care within a 010 or 090 day global period code. The AMA CPT TCM codes do not allow physicians billing services with global periods of 010 and 090 days to bill for TCM services. However, the AMA RUC recommends that specialties work with the CPT Editorial Panel to develop a new code for those cases in which comprehensive TCM services are furnished along with the services already bundled into the global codes. However, the AMA RUC also indicates that it would not be typical for a surgeon to furnish TCM services.

Response: We agree with the commenters that the physician who reports a global procedure should not be permitted to also report the TCM service, and we are adopting that policy in this final rule. The AMA RUC specifically states in its comment letter that it would not be typical for surgeons billing global procedures to also provide TCM services. Our goal is that the physician billing for TCM services should have an ongoing relationship with the beneficiary. We do not believe surgeons typically would be in a position to coordinate all aspects of a patient's care, because their relationship with a beneficiary frequently ends after the end of the global period (unless or until additional surgery is required).

We proposed that the TCM code 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 TCM. We expressed our belief that, given the elements of the TCM service and the short time period during which they must be furnished, it would be unlikely that two or more physicians would meet the requirements for billing the TCM code.

Comment: Many commenters requested clarification concerning whether the TCM codes could be billed again if another hospital admission and discharge occur within the initial 30 day period following a discharge. The commenters recommended that we allow the clock to start over with each admission, that is, allow for payment of TCM even when readmission occurs within the original 30 day period after a discharge. A few commenters recommended that CMS develop a mechanism to monitor readmissions for patients receiving TCM services to determine if this effort positively impacts beneficiary outcomes and decreases the burden on the healthcare system. The mechanism would require physician reporting at the beginning and end of the care period, and may require a “start” and a “stop” modifier to the new G-code. A few commenters specifically supported the “only once within 30 days of discharge” policy. The AMA's C3W stipulated that the CPT TCM codes may be reported “* * * only once per patient within 30 days of discharge. Another CPT TCM code may not be reported by the same individual or group for any subsequent discharge(s) within the 30 days.”

Response: In adopting the CPT TCM codes, we believe it is appropriate to maintain the limitation that the codes can be billed only once per patient within 30 days of discharge, which is consistent with the policy we proposed for our TCM G-code. Preventing unnecessary hospital readmissions in the period shortly after a discharge is an important goal and part of the reason we proposed improved recognition and payment of TCM services (as well as other initiatives within the Medicare program). We believe that it would be at least inconsistent with this goal, and perhaps even counterproductive to it, to allow for another TCM code to be billed when a hospital discharge occurs within 30 days after the original discharge for which a TCM code has been billed. We appreciate the comments recommending that we monitor readmissions for patients receiving TCM services to determine if this effort positively impacts beneficiary outcomes and decreases the burden on the healthcare system. We will consider how to incorporate this into our existing initiatives that address these issues.

Comment: We proposed that the TCM G-code would be payable to a single community physician or nonphysician practitioner (or group practice) who assumes responsibility for the patient's post-discharge TCM. Many commenters recommended allowing more than one physician to bill a TCM code during the same 30-day period on the grounds that: “Complex patients often have to follow-up with more than one provider after a discharge. Each of these providers could be performing care coordination and should be compensated accordingly.” The CPT TCM codes allow for only one individual to report these services and only once per patient within 30 days of discharge.

Response: We disagree that more than one physician should be allowed to bill the TCM codes during a single 30 day period after a discharge. Coordination of care intrinsically involves developing and implementing a single plan of care for a patient. Allowing multiple physicians to furnish this service simultaneously would introduce the danger that an individual patient might be subjected to inconsistent or even contradictory plans of care. In other words, allowing more than one physician to bill TCM codes simultaneously could lead to uncoordinated rather than coordinated post-discharge care. We will therefore follow the CPT TCM code rule that these services may be billed by only one individual during the 30 day period after discharge.

Comment: Other commenters recommended further restricting and/or raising the bar for billing TCM codes. Many objected to our proposal to pay the first physician or qualified nonphysician practitioner who submitted a claim because, they asserted, it would lead to an uncoordinated, sub-optimal “race to bill.” One of these commenters expressed concern that practitioners' offices would have to compete with each other to submit the bill first. In addition, this commenter was concerned that practitioners' offices would not be able to track whether or not they are the first to submit a claim and could get paid for the service. MedPAC noted that the first physician or nonphysician practitioner to submit a claim may not be providing the bulk of the TCM services, and recommended raising the bar to ensure payment goes to physicians actually providing comprehensive primary care to the beneficiary by requiring that the billing provider must have billed for an E&M visit (that is, a face-to-face visit) that took place within the 30 days prior to admission and within the 14 days following discharge. Another commenter recommended that we adopt a multi-stage process of screening claims to identify the beneficiary's primary care physician, who then would be the only physician permitted to bill a TCM code. The commenter noted that we referred to the community-based physician as the one who would manage and coordinate a beneficiary's care in the post-discharge period, and we anticipated that most community physicians will be primary care physicians and practitioners. The commenter also stated: “It is thus perplexing that CMS did not propose to restrict the use of this code to actual primary care physicians.” Others recommended employing a “plurality of services” determination in case more than one physician and/or nonphysician practitioner bills TCM after the same discharge. One commenter recommended that we should require beneficiaries to prospectively identify their primary care provider.

Response Any physician who is appropriately enrolled in Medicare and furnishes the service may bill for that service. We continue to expect that most community physicians who are furnishing TCM services will be primary care physicians and practitioners. However, we also believe that there will be circumstances in which cardiologists, oncologists, or other specialists will be in the best position to furnish transitional care coordination after a hospital discharge. Furthermore, we believe that the requirements for physicians or qualified nonphysician practitioners to furnish multiple specific services for the beneficiary within a restricted period of time will limit the circumstances under which more than one practitioner might be able to bill the TCM codes. We appreciate MedPAC's suggestion that we require that the billing provider must have billed for an E/M visit (that is, a face-to-face visit) that took place within the 30 days prior to admission and within the 14 days following discharge. However we are concerned that adopting such a policy would actually have the unintended consequence of prohibiting many physicians with well-established relationships and a history of providing comprehensive care for their beneficiaries from reporting the TCM service for these same patients, simply because an office visit may not have occurred within 30 days prior to a, possibly even unanticipated, hospitalization. After considering all these comments, we continue to believe that it is not necessary to develop any further restrictions or complex operational mechanisms to identify one and only one physician or nonphysician practitioner who may bill the codes for a specific beneficiary. We have used such a “first claim” policy in other areas, such as a radiology interpretation and the Annual Wellness Visit. However, we would expect the discharging physician to support TCM services by discussing post-discharge services with the beneficiary (which is an element in the discharge day management vignette), and to identify a community physician for follow-up whenever possible. Specifically, we expect discharging physicians and other physicians seeing beneficiaries in a facility to inform the beneficiaries that they should receive TCM services from their doctor or other practitioner after their discharge, and that Medicare will pay for those services. As a part of this disclosure to patients, we also expect that the discharging physician would ask the beneficiary to identify the physician or nonphysician practitioner whom he or she wishes to furnish these transitional care management services. If the beneficiary does not have a preference for the physician who would furnish these services, the discharging physician may suggest a specific physician who might be in the best position to furnish the TCM services. The recording of this information could also help in the transitional care coordination activities. We believe that it could be helpful for the physician providing discharge day management services to record the community physician who would be providing TCM services in the discharge medical record and the discharge instructions for patients. We note that recent literature highlights the importance of these patient-centered communication activities for effective transitional care management. [1] As we further consider how Advanced Primary Care practices can fit with a fee-for-service model, we also will actively consider methodologies that could allow Medicare to identify the beneficiary's community/primary care physician.

Comment: Many commenters endorsed our proposal not to restrict billing of this proposed TCM code to primary care physicians. Other commenters requested that we confirm that specialists can bill the new code if they meet the service requirements of comprehensive TCM services. Other commenters similarly requested confirmation that they can bill the TCM code if they meet the requirements. Some commenters from health care professions other than physicians, NPs, PAs, CNSs, and CNMs similarly requested that they be permitted to bill the CPT TCM codes and receive payment for these services.

Response: We appreciate these comments and take this opportunity to confirm that, while we expect the TCM codes to be billed most frequently by primary care physicians, specialists who furnish the requisite services in the code descriptions may also bill the new TCM codes. As for nonphysician qualified health care professionals, we believe only NPs, PAs, CNSs, and certified nurse midwives (CNMs) can furnish the full range of E/M services and complete medical management of a patient under their Medicare benefit to the limit of their state scope of practice. Other nonphysician practitioners (such as registered dieticians, nutrition professionals or clinical social workers) or limited-license practitioners, (such as optometrists, podiatrists, doctors of dental surgery or dental medicine), are limited by the scope of their state licensing or their statutory Medicare benefit to furnish comprehensive medical evaluation and management services, and there is no Medicare benefit category that allows explicit payment to some of the other health professionals (such as pharmacists and care coordinators) seeking to bill TCM services. Accordingly, we will not adopt the requests of other health care professionals to bill the CPT TCM codes because these services go beyond the statutory benefit and state scope of practice for the requesting practitioners. As already discussed, we consider the separate coding and payment for these TCM services to be a short-term initiative as we further consider alternatives to ensure that any payment for primary care services would constitute a minimum level of care coordination, such as payments in a FFS setting.

Comment: Several commenters requested that we extend recognition of care coordination to RHC physicians and providers as well or at least clarify whether providers practicing in rural health clinics may utilize the new HCPCS G-code.

Response: While we recognize that RHCs have an important role in furnishing care in their communities, RHCs are paid an all-inclusive rate per visit. Since RHCs are not paid under the PFS, physicians and other RHC providers whose services are paid within the RHC all-inclusive rate cannot bill using the CPT TCM codes for services furnished in the RHC. However, an RHC physician or other qualified provider who has a separate fee-for-service practice when not working at the RHC may bill the CPT TCM codes, subject to the other existing requirements for billing under the MPFS.

Comment: We also proposed that the TCM G-code would be “billable only at 30 days post discharge or thereafter.” Although we proposed that the billing for TCM services would occur, as it does for most services, after the conclusion of the service that is, only at 30 days post discharge or thereafter), we welcomed 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. Many commenters recommended that billing of TCM services should occur (as proposed) at the end of the 30-day TCM period. A smaller number of commenters recommended that it should be allowed to occur at the time the plan of care is established. One commenter observed that billing for the post-transitional service at the time the plan of care is established may help prevent a “race to the billing office” by various providers, as the appropriate provider coordinating the post-transitional care would be well-established among the various medical providers involved in the patient's care. The CPT TCM code prefatory language provides: “Only one individual may report these services and only once per patient within 30 days of discharge.” (Emphasis supplied.)

Response: We continue to believe that the billing for TCM services under the PFS should occur, as it does for most fee schedule services, after the conclusion of the service (that is, only at 30 days post discharge or thereafter). Allowing for billing at the time the plan of care is established, or at any other time prior to the end of the 30-day period, would pose serious administrative problems. For example, adopting any policy other than billing at the end of the 30-day service period would make it difficult to monitor the CPT TCM requirement that the code be billed only once in the 30-day period beginning with the discharge. It would also be very challenging to monitor our policy that subsequent hospital admissions during that period will not begin a new 30-day period and allow reporting of another TCM service. We will provide guidance to physicians and qualified NPPs regarding the billing of the CPT TCM codes, which will occur at the conclusion of the period for providing TCM services, 30 days post discharge. We appreciate the concern about preventing a situation where two physicians may rush to bill for TCM services. However, as we have previously discussed, we believe it would be quite unlikely that more than one physician or nonphysician practitioner will be able simultaneously to satisfy the numerous and complex requirements for billing the CPT TCM codes.

Comment: Some commenters were concerned about the large number of activities that are required to furnish the TCM service. The commenters emphasized that many of the activities listed could require a lengthy discussion or actions that need to be undertaken with the patient that would far exceed that allowable time. Some commenters stated that the specific requirement that the physician communicate with the patient within 2 business days of discharge to begin the coordination of care is unrealistic because hospital discharge records are not always available that quickly. Other commenters pointed to the requirement for an assessment of the patient's psychosocial needs as potentially an excessively burdensome requirement. One commenter asked us to reconsider the requirement that these codes only cover patients of moderate to high complexity on the grounds that most admissions are relatively straightforward and patients do not require moderate to complex decision making but that these less complex patients still require TCM services. On the other hand, some commenters recommended additions to the services already listed, such as the addition of communication between the accepting primary care/community physician and the discharging inpatient physician.

Response: We agree with the commenters that a large number of activities are required to report the TCM codes. However, we believe that these requirements are entirely appropriate. As we have noted before, TCM services require management and coordination of all relevant aspects of a beneficiary's health status in the post-discharge period. And as a number of commenters maintained, physicians should not undertake TCM services unless they are capable and willing to assume comprehensive responsibility for a patient's care during the period of the service. In the light of these considerations, we believe the lengthy list of services required by our proposed G-code, and largely paralleled in the AMA's CPT TCM codes that we are adopting in this final rule, is quite appropriate to the nature of the service. With regard to the specific requirement for assessment of psychosocial needs, we note again for example that depression in older adults occurs in a complex psychosocial and medical context and opportunities are often missed to improve behavioral health and general medical outcomes when mental disorders are under-recognized and undertreated in primary care settings. We believe that it is therefore important to emphasize the equal importance of the beneficiary's mental health and his or her physical condition to successful discharge into the community. We believe that AMA has confirmed our assessment by requiring those reporting the CPT TCM codes to oversee the “management and coordination of services, as needed, for all medical conditions, psychosocial needs and activity of daily living supports * * *” The AMA has also confirmed our assessment that patients typically require complex and multidisciplinary care modalities in the post-discharge period by establishing a requirement of moderate to high complexity for reporting the CPT TCM codes. We do not believe that it is necessary to add a formal requirement for communication between the accepting primary care/community physician and the discharging inpatient physician. The accepting community physician is responsible for reviewing the discharge summary, and the community physician can decide whether standard clinical practice indicates the need for further communication with the discharging physician. However, as indicated above, we note our expectation that the discharging physician will communicate with the community physician as necessary as part of billing for discharge day management services.

Comment: Some commenters recommended that we create disease specific TCM codes for major chronic conditions (for example, Alzheimer's, diabetes, HIV, cancer survivors planning services, etc.) or for special services (for example, comprehensive medication management services). The commenters were concerned that, otherwise, many cognitive specialists and other practitioners would not be able to bill the proposed TCM G-code.

Response: With regard to treatment of the chronic conditions mentioned by commenters, both our proposed TCM G-code and the CPT TCM codes we are adopting in this final rule are defined broadly enough to incorporate the TCM activities involved in the treatment of patients with such diseases in the period after discharge. In addition, as we discuss below, we will be considering adoption of the complex care coordination codes developed by the AMA as we continue to explore payment for primary care services in future rulemaking. With regard to the TCM codes, we indicated in the proposed rule that we proposed the TCM G-code to recognize the services related to TCM by a community physician or qualified nonphysician practitioner. We used the term community physician and practitioner to refer to the community-based physician managing and coordinating a beneficiary's care in the post-discharge period. We also indicated that we anticipated that most community physicians would be primary care physicians and practitioners. This is because the nature of the services involved in TCM (for example, communication with patient and family education to support self-management, independent living, and activities of daily living, assessment and support for treatment regimen adherence and medication management, etc.) are characteristic of primary care services as such services are usually understood. At the same time, neither the TCM G-code we proposed, nor the CPT TCM codes we are adopting in this final rule, preclude cognitive or other specialists from reporting these codes when they are appropriately furnishing the required primary care services of TCM. We certainly want to encourage cognitive and other specialists to assume responsibility for the comprehensive care of patients contemplated in the requirements of the CPT TCM codes when they are in the position to do so during the post-discharge period.

Comment: A few commenters recommended that there should be special TCM G-codes for psychologists and others who are not permitted to bill E/M codes.

Response: The TCM service includes “the management and/or coordination of services, as needed, for all medical conditions, psychosocial needs and activities of daily living.” For reasons we have discussed at length above, the services described in the CPT E/M codes are intrinsic to furnishing the TCM service. It was for this reason that the AMA decided to include a post-discharge, face to face E/M service as a requirement for reporting the CPT TCM codes. We have had a longstanding restriction on the use of E/M codes by clinical psychologists. As we have explained in previous rulemaking (62 FR 59057), the evaluation and management services included in the codes that psychologists cannot bill are services involving medical evaluation and management. Psychologists are not licensed to perform these types of services. Therefore, we do not believe it would be appropriate to provide a special TCM G-code for these practitioners. However, we would expect the community physicians and qualified nonphysician practitioners to refer patients to psychologists and other mental health professionals as part of the TCM service when doing so is warranted by evaluation of patients' psychosocial needs in the period after discharge. As indicated above, we believe the only nonphysician practitioners who may furnish the full range of E/M services and complete medical management of a patient under their Medicare benefit are NPs, PAs, CNSs, and CNMs, unless they are otherwise limited by their state scope of practice. Other nonphysician practitioners or limited-license practitioners, (such as optometrists, podiatrists, doctors of dental surgery or dental medicine), are limited by the scope of their state licensing or their Medicare benefit from furnishing comprehensive medical evaluation and management services. As already discussed, we consider these TCM services to be a short-term initiative as we further consider alternatives to target payment for primary care services.

Comment: Some commenters cited our statement that the proposed TCM G-code may be used “[d]uring transitions in care from hospital (inpatient stay, outpatient observation, and partial hospitalization), SNF stay, or CMHC settings to community-based care.” The commenters stated that this statement seems to avoid the reality that in many instances the transition from a hospital to a facility such as a SNF is, for all intents and purposes, the transition back to the community for many patients.

Response: Individuals in SNFs are considered inpatients, and therefore the TCM codes may not be billed when patients are discharged to a SNF. For patients in SNFs there are E/M codes for initial, subsequent, discharge care, and the visit for the annual facility assessment, specifically CPT codes 99304-99318. These codes may be billed for SNF beneficiaries for the care management services they receive in the period after discharge from an acute care hospital. And then when SNF patients are discharged from the SNF to the community or to a nursing facility (even when the SNF and nursing facility are part of the same entity or located in the same building), the physician or practitioner who furnishes transitional care management services can use the CPT TCM codes to bill for those services. As such, we believe there will be appropriate payment for transitional care management services furnished following each transition of care from acute inpatient, to SNF, to the community or nursing facility setting.

After considering all these comments, and for the reasons stated above we are adopting the CPT TCM codes subject to the modifications described in our responses to comments on the issues discussed above. In summary, these specific modifications are: Our decision not to restrict the billing of the CPT TCM codes to established patients, our clarification of the post-discharge service period, and our prohibition against billing a discharge day management service on the same day that a required E/M visit is furnished under the CPT TCM codes for the same patient. We will provide guidance to contractors and revise the relevant manual provisions in order to implement these policies.

Below are the requirements of the CPT TCM codes as modified for Medicare purposes in this final rule.

  • 99495 Transitional Care Management Services with the following required elements:

++ Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.

++ Medical decision making of at least moderate complexity during the service period.

++ Face-to-face visit, within 14 calendar days of discharge.

  • 99496 Transitional Care Management Services with the following required elements:

++ Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.

++ Medical decision making of high complexity during the service period.

++ Face-to-face visit, within 7 calendar days of discharge.

CPT codes 99495 and 99496 are used to report transitional care management services. These services are for a patient whose medical and/or psychosocial problems require moderate or high complexity medical decision making during transitions in care from an inpatient hospital setting (including acute hospital, rehabilitation hospital, long-term acute care hospital), partial hospital, observation status in a hospital, or skilled nursing facility/nursing facility, to the patient's community setting (home, domiciliary, rest home, or assisted living). Transitional care management commences upon the date of discharge and continues for the next 29 days.

Transitional care management is comprised of one face-to-face visit within the specified time frames, in combination with non-face-to-face services that may be performed by the physician or other qualified health care professional and/or licensed clinical staff under his or her direction. It is our expectation that the services in the two lists of non-face-to-face services below will be routinely provided as part of transitional care management service unless the practitioner's reasonable assessment of the patient indicates that a particular service is not medically indicated or needed.

Non-face-to-face services provided by clinical staff, under the direction of the physician or other qualified health care professional, may include:

  • Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge.
  • Communication with home health agencies and other community services utilized by the patient.
  • Patient and/or family/caretaker education to support self-management, independent living, and activities of daily living.
  • Assessment and support for treatment regimen adherence and medication management.
  • Identification of available community and health resources.
  • Facilitating access to care and services needed by the patient and/or family.

Non-face-to-face services provided by the physician or other qualified health care provider may include:

  • Obtaining and reviewing the discharge information (for example, discharge summary, as available, or continuity of care documents).
  • Reviewing need for or follow-up on pending diagnostic tests and treatments.
  • Interaction with other qualified health care professionals who will assume or reassume care of the patient's system-specific problems.
  • Education of patient, family, guardian, and/or caregiver.
  • Establishment or reestablishment of referrals and arranging for needed community resources.
  • Assistance in scheduling any required follow-up with community providers and services.

Transitional care management requires a face-to-face visit, initial patient contact, and medication reconciliation within specified time frames. The first face-to-face visit is part of the transitional care management service and not reported separately. Additional E/M services after the first face-to-face visit may be reported separately. Transitional care management requires an interactive contact with the patient or caregiver, as appropriate, within 2 business days of discharge. The contact may be direct (face-to-face), telephonic, or by electronic means. telephonic, or by electronic means. Medication reconciliation and management must occur no later than the date of the face-to-face visit.

Medical decision making and the date of the first face-to-face visit are used to select and report the appropriate transitional care management code. For 99496, the face-to-face visit must occur within 7 calendar days of the date discharge and medical decision making must be of high complexity. For 99495, the face-to-face visit must occur within 14 calendar days of the date of discharge and medical decision making must be of at least moderate complexity.

Medical decision making is defined by the E/M Services Guidelines. The medical decision making over the service period reported is used to define the medical decision making of transitional care management. Documentation includes the timing of the initial post discharge communication with the patient or caregivers, date of the face-to-face visit, and the complexity of medical decision making.

(The E/M Services Guidelines define levels of medical decision making on the basis of the following factors:

  • The number of possible diagnoses and/or the number of management options that must be considered;
  • The amount and/or complexity of medical records, diagnostic tests, and/or other information that must be obtained, reviewed, and analyzed; and
  • The risk of significant complications, morbidity, and/or mortality as well as comorbidities associated with the patient's presenting problem(s), the diagnostic procedure(s), and/or the possible management options.

Medical decision making of moderate complexity requires multiple possible diagnoses and/or the management options, moderate complexity of the medical data (tests, etc.) to be reviewed, and moderate risk of significant complications, morbidity, and/or mortality as well as comorbidities. Medical decision making of high complexity requires an extensive number of possible diagnoses and/or the management options, extensive complexity of the medical data (tests, etc.) to be reviewed, and a high risk of significant complications, morbidity, and/or mortality as well as comorbidities)

Only one individual may report these services and only once per patient within 30 days of discharge. Another transitional care management service may not be reported by the same individual or group for any subsequent discharge(s) within the 30 days. The same individual may report hospital or observation discharge services and transitional care management. The same individual should not report transitional care management services provided in the post-operative period for a service with a global period.

A physician or other qualified health care professional who reports codes 99495, 99496 may not report care plan oversight services (99339, 99340, 99374-99380), prolonged services without direct patient contact (99358, 99359), anticoagulant management (99363, 99364), medical team conferences (99366-99368), education and training (98960-98962, 99071, 99078), telephone services (98966-98968, 99441-99443), end stage renal disease services (90951-90970), online medical evaluation services (98969, 99444), preparation of special reports (99080), analysis of data (99090, 99091), complex chronic care coordination services (99481X-99483X), medication therapy management services (99605-99607), during the time period covered by the transitional care management services codes.

It is very important to emphasize that we consider the non-face-to-face services to be furnished by physicians, qualified health care professionals, and clinical staff to be intrinsic, indeed essential, components of the TCM codes. To support the non-face-to-face services, the TCM service requires a face-to-face visit, initial patient contact, and medication reconciliation within specified time frames. The first face-to-face visit is part of the TCM service and may not be reported separately. Additional reasonable and necessary E/M services required for managing the beneficiary's clinical issues in addition to the face-to-face visit may be reported separately.

Despite the importance of the face-to-face service that is a required element of the CPT TCM codes, the non-face-to-face services such as communication, referrals, education, identification of community resources, and medication management constitute the truly essential features that distinguish TCM from those services that are predominantly or exclusively face-to-face in nature.

We are adopting these new CPT TCM codes to provide a separate reporting mechanism for the community physician for these services in the context of the broader CMS multi-year strategy to recognize and support primary care and care management. Therefore, we plan to monitor the use of the transitional care management billing codes. We wish to emphasize again that the policies we are finalizing in this final rule may be short-term payment strategies that may be modified and/or revised over time to be consistent with broader primary care and care management initiatives. Because CPT TCM codes 99495 and 99496 are new codes, they will be valued and designated as interim final in this final rule with comment period and subject to public comment.

We would also note that this proposal coincides with our discussion under section III.J. of this final rule with comment period 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 TCM, HCPCS code GXXX1, we compared GXXX1 with CPT code 99238 (Hospital discharge day management; 30 minutes or less) (work RVU = 1.28). We recognized that, unlike CPT code 99238, HCPCS code GXXX1 is not a face-to-face visit. However, we believed 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 proposed a work RVU of 1.28 for HCPCS code GXXX1 for CY 2013. We also proposed the following physician times: 8 minutes pre-evaluation; 20 minutes intra-service; and 10 minutes immediate post-service. In addition, we proposed to crosswalk the clinical labor inputs from CPT code 99214 (Level 4 established patient office or other outpatient visit) to proposed HCPCS code GXXX1. For malpractice expense, we proposed 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. In our proposal, we noted that, as with other services paid under the PFS, the 20 percent beneficiary coinsurance would apply to the post-discharge TCM service as would the Part B deductible.

Comment: Several commenters recommended that we await the recommendations of the RUC and accept the RUC RVU values, so that we can fully take into account feedback from practicing physicians of all specialties before finalizing values for these non-face-to-face, care management services. With regard to the proposed RVU for physician work, a few commenters noted that our source code for GXXX1 included only 30 minutes of work for the discharging physician for whom most of the information is more readily available and that that time understates the effort required of the receiving physician. The commenters urged us to consider the significant potential variability in time and effort for the receiving physician. Another commenter urged CMS to utilize the work RVUs used for care plan oversight HCPCS codes G0181 and G0182 in valuing the new code.

With regard to PE, another commenter recommended that we assign clinical staff type RN/LPN only for the clinical staff work for the TCM codes because those are the only two clinical staff types who furnish clinical staff TCM activities. A commenter noted that this proposal largely ignores equipment costs (for example, computer, electronic health record, and telephone) that are essential to furnishing this service, and urged us to reconsider whether 1.41 is an appropriate practice expense RVU amount. Another commenter noted that our source code for practice expense, CPT code 99214, is for moderate complexity decision-making and that we should consider the greater costs associated with a patient of high complexity. One commenter agreed with our proposed malpractice value.

Response: We agree with commenters that any valuation under the PFS should benefit from as much public review and input as possible, including review by the AMA RUC. The AMA RUC conducted a multi-specialty survey of 110 physicians and recommended an RVU for each of the new CPT TCM codes. For CPT code 99495, the AMA RUC recommended the median survey work RVU of 2.11 with 40 minutes of intra-service time, and for CPT code 99496, the AMA RUC recommended the median work RVU of 3.05 with 60 minutes of intra-service time. For CPT code 99496, we disagree with the observed median intra-service time of 60 minutes. We believe that 50 minutes of intra-service time is a more appropriate intra-service time for CPT code 99496. We observe that the primary reference code for CPT code 99495, CPT code 99214, has 25 minutes of intra-service time. We conclude that the typical physician time engaging in additional non-face-to-face activities and overseeing clinical staff care management activities is the difference between the intra-service time for CPT code 99214 and median intra-service time for CPT code 99495, 15 minutes. We believe that 50 minutes of intra-service time is more appropriate for CPT codes 99496 because it adds the additional non-face-to-face care management time of 15 minutes, to the intra-service time for the primary reference CPT code 99496, which is CPT code 99215 with an intra-service time of 35 minutes.

We appreciate comments suggesting that we value our proposed G-code, GXXX1, comparable to CPT codes G0180 and G0181. However, because we not finalizing the proposed G-codes and instead are adopting the CPT TCM codes on an interim final basis in this final rule with comment period, we believe that the AMA RUC recommendation, which reflects the services we included in the proposed G-code as well as a face-to-face visit, is a more basis for appropriate valuation. In response to comments noting that the discharge day management source code, CPT code 99238, for GXXX1, does not contain sufficient time for the receiving physician and that the time does not reflect differences in the complexity of decision-making, we note that we are adopting AMA RUC recommended times as modified in the preceding paragraph on an interim final basis, with refinement, which include a longer time than the proposed time of 30 minutes, and those times are specific to the level of complexity. We also note that there is a significant amount of clinical labor time incorporated in the practice expense calculation for these codes. In summary, we are assigning a work RVU of 2.11 to CPT TCM code 99495 with intra-service time of 40 minutes, and a work RVU of 3.05 with intra-service time of 50 minutes. The work RVUs included in Addendum B to this final rule with comment period reflect these interim final values. The physician time file associated with this PFS final rule with comment period is available on the CMS Web site in the Downloads section for the CY 2013 PFS final rule with comment period at www.cms.gov/PhysicianFeeSched/.

Consistent with our policy discussed in section II.C.1. of this final rule with comment period for assigning malpractice RVUs, we developed malpractice RVUs for the new CPT TCM codes. For CPT code 99495, the AMA RUC recommended a malpractice risk factor crosswalk to CPT code 99214, resulting in a malpractice RVU of 0.14 for CPT code 99495. For CPT code 99496, the AMA RUC recommended a malpractice risk factor crosswalk to CPT code 99215, resulting in a malpractice RVU of 0.20 for CPT code 99496. We are accepting the AMA RUC's recommended malpractice crosswalks for CPT codes 99495 and 99496 on an interim final basis. We appreciate comments in support of our proposed malpractice value for our non-face-to-face G-code, GXXX1, of 0.09. We believe that the interim final malpractice crosswalks recommended by the AMA RUC provide appropriate malpractice values for the CPT TCM codes, which include a face-to-face visit.

For practice expense, we are accepting the AMA RUC-recommended practice expense inputs for these codes with one refinement to clinical labor time for CPT code 99496. We are refining the 60 minutes of recommended clinical labor time for a RN/LPN nurse blend dedicated to non-face-to-face care management activities from 60 minutes to 70 minutes. We believe that the total clinical labor staff time and physician intra-service work time that the AMA RUC-recommended for non-face-to-face care management activities was accurate, but that the proportionality between physician work and clinical staff time should be refined to reflect greater clinical staff time. In response to the comment on appropriate clinical staff type for non-face-to-face care management services, we note that we are accepting the AMA RUC recommended clinical labor staff type of an RN/LPN for conducting non-face-to-face care coordination activities. The AMA RUC did not include additional costs for computer, EHR, and telephone in their recommendations. We believe accounting for the infrastructure required to furnish advanced primary care services is an issue we will consider as we pursue the broader HHS and CMS multi-year strategy to recognize and support primary care and care management under the MPFS.

The CY 2013 final rule with comment period 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 final rule with comment period at www.cms.gov/PhysicianFeeSched/. The PE RVUs included in Addendum B to this final rule with comment period reflect the RVUs that resulted from adopting these interim final values.

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

Comment: Some commenters indicated that our estimate of the number of claims we would receive for the transitional care services was overstated. Using a different set of assumptions, the AMA RUC commented that the number of billings would be closer to 2 million per year. The AMA RUC provided us with detailed utilization assumptions for the CPT TCM codes. These detailed utilization assumptions indicated physicians would bill 2,166,719 claims in CY 2013 for the CPT TCM codes, with 60 percent of those claims for CPT TCM code99495 and 40 percent for CPT TCM code99496. Commenters also indicated that we should offset the cost of the TCM codes in our BN calculation with savings from reduced readmissions to hospitals and other facilities.

Response: The estimate of the number of billings we will receive in CY 2013 for TCM services is sensitive to the utilization assumptions used and cannot be easily derived from existing codes. The number of discharge day management visits that are billed to Medicare is approximately 10 million. As reflected in the RUC recommendations, we agree with commenters that this is a reasonable starting point in the development of the estimate for the number of billings for the TCM services.

The next step is to determine how many of these discharges will be readmissions in CY 2013. Since the patient would only be eligible for one TCM service associated with a hospital discharge and the later readmission, we are not counting the readmission in our utilization estimate. The AMA RUC used an estimate of 19.6 percent. We disagree with this estimate. More recent work by MedPAC indicates that the all cause readmission rate was closer to 15 percent in CY 2011. [2] Accordingly, we adopted a 15 percent readmission rate.

The AMA RUC also cited a variety of factors that it believes will reduce the number of billings from the universe of discharges, including the number of patients requiring moderate or high complexity decision-making based on the percentage of high cost Medicare patients in the Medicare population, the number of patients currently seen within 14 days of discharge, discharges where the primary care physician didn't know patient was in the hospital, cases where the patient couldn't be contacted or seen, cases where the patient died, cases where the patient changed doctors or didn't see the primary care doctor, and cases for which physicians will not furnish the TCM service as rapidly as we have assumed. The AMA RUC provided assumptions about the number of discharges it believes will not result in the billing of a TCM service. We have posted the AMA RUC calculation on our Web site at www.cms.gov/PhysicianFeeSched/. While we generally agree that some of these factors will impact the billings for the TCM code, we believe that the construct of the RUC estimate with assumed exact values for each and every one of these factors understates the likely TCM billings.

In considering this and similar comments, we examined the current distribution of the inpatient, observation, and nursing facility evaluation and management codes. Within each of these families, we also examined the severity of the presenting problems and the level of complexity of the medical decision-making to help differentiate the codes. We found that 85 percent of Hospital Observation and Initial and Subsequent Hospital Care services (CPT codes 99218-99233) were at Level 2 or Level 3, generally indicating moderate to high severity and complexity. We note that over 90 percent of place of service designations for the discharge codes are inpatient or outpatient hospital. We found that 43 percent of Nursing Facility Care services (CPT codes 99304-99310) were at Level 2 or Level 3, generally indicating moderate to high severity and complexity. Although less relevant for the TCM policy, we also examined the Office or Other Outpatient visits (CPT codes 99201-99213) as a point of comparison and found that 41 percent of services were at Level 4 or Level 5, generally indicating moderate to high severity and complexity.

In light of the data on the current severity and complexity levels of the evaluation and management services, and after consideration of the factors included in the AMA RUC estimate and removing 15 percent for readmissions, we believe that two-thirds of the discharges reflected in the discharge day management codes, are likely to result in TCM claims. This represents approximately 5.7 million claims [=10 million discharges * (1−.15) for readmissions * (2/3) for severity and other factors)].

We disagree with the RUC that 60 percent of those claims will be for 99495 and 40 percent for 99496. In looking at the relationship between the moderate and high Hospital Observation and Initial and Subsequent Hospital Care services (CPT codes 99218-99233) and the relationship between the moderate and high Nursing Facility Care services (99304-99310), we believe a more reasonable estimate is that 75 percent of the TCM claims will be for 99495 and 25 percent for 99496.

Because the practice expense RVUs for the transitional care codes will vary depending on whether or not the service is billed in a facility or non-facility setting, we also need to further refine the estimate to determine the proportion of TCM services that will be paid at the facility rate versus the non-facility rate. After examining the facility and non-facility distribution of the 99214 and 99215 visit codes billed by primary care specialties, we believe that 92 percent of the TCM services will be billed in the non-facility setting.

Lastly, we agree with the RUC that 26 percent of patients had at least one visit within 7 calendar days of discharge and 44 percent had one within 14 days of discharge. Because these are existing visits that will potentially now be billed as part of the TCM service, we partially offset the cost of the TCM services with the cost of the existing visits assumed to be billed as part of the CPT TCM code.

For the comments requesting that we also offset the cost of the CPT TCM codes in our BN calculation with savings from reduced readmissions, there are currently many efforts underway to reduce hospital readmissions. We do not believe that it would be possible to isolate the effect of payment for TCM services on the readmission rate. Furthermore, the statute does not permit costs or savings from outside of the physician fee schedule to be used in the physician fee schedule BN calculation.

For purposes of the Primary Care Incentive Payment Program (PCIP), we proposed to exclude the post discharge TCM 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 Act, 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, 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.

In the proposed rule, we also proposed that the TCM code should be treated in the same manner as those services for the purposes of PCIP because post-discharge TCM 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 expressed concern that inclusion of the TCM 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 TCM services 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 TCM services 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.

Comment: Some commenters recommended that the proposed TCM G-codes should be eligible for the PCIP. The commenters acknowledged that, to add our proposed G-code to the codes eligible for PCIP, we would have to revise our previous interpretation concerning the extent of the Secretary's discretion to modify the list of primary care E/M services eligible for PCIP. However, the commenters stated that our previous interpretation of the statutory language was incorrect, or at least not the only reasonable interpretation of the statutory language. A few commenters opposed excluding the allowed charges for TCM services from the denominator of the ratio used to determine qualification for the PCIP.

Response: We continue to believe that the statute does not permit us to add codes (additional services) to the statutory definition of primary care services, which is a range of E/M services including office visits. The new CPT TCM codes fall outside the designated range of codes that qualify for the PCIP. Therefore, we cannot agree with those commenters who contended that it is permissible to add the new TCM codes to the list of codes eligible for PCIP. However, to avoid disadvantaging physicians who furnish post-discharge TCM services to their patients, we are finalizing our proposal to exclude the allowed charges for TCM services from the denominator when calculating a physician's or practitioner's percent of allowed charges that were primary care services for purposes of the PCIP.

Comment: Many commenters urged us not to apply the 20 percent beneficiary coinsurance to TCM services. Some commenters stated a belief that we should categorize TCM as a preventive service and that we should therefore waive the coinsurance for the service. Other commenters expressed concern that beneficiaries will not understand their coinsurance liability for this service, since our proposed new post-discharge TCM G-code would not include a face-to-face visit. Some commenters were also concerned that this confusion would lead to increased bad debt for physicians and qualified NPPs billing the CPT TCM codes. Others urged us to work with the Congress to enact legislation to waive the beneficiary coinsurance for post-discharge care management services. On the other hand, some commenters noted that requiring a face-to-face E/M visit when billing the TCM code would reduce potential beneficiary confusion about the coinsurance for the TCM service.

Response: We appreciate the reasons commenters have offered for waiving the beneficiary coinsurance for TCM as a preventive service. However, we do not believe we have authority to do so through the rulemaking process. This is because section 1861(ddd)(1)(B) of the Act requires, among other criteria, that “additional preventive services” can be added only if such services are recommended with a grade of A or B by the United States Preventive Services Task Force. We lack such a recommendation regarding the services described by the new CPT TCM codes. As we have discussed above, we agree with those commenters who observed that requiring a face-to-face E/M visit when billing the TCM code would reduce potential beneficiary confusion about the coinsurance for the TCM service. Now that we have modified our proposal for a TCM service to include a face-to-face service, beneficiaries will experience a face-to-face encounter to which they can relate their copayments for the service. We therefore believe that our adoption of the CPT TCM codes that include a required face-to-face visit as a component of the service will greatly reduce the potential for beneficiary confusion over the coinsurance for the service and the possibility of increased bad debt for physicians.

2. Primary Care Services Furnished in Advanced Primary Care Practices

a. Background

As we 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 potential 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 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 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. In the proposed rule (77 FR 44780), we discussed these five “comprehensive primary care functions” as 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. These five functions are: Risk-stratified care management, access and continuity, planned care for chronic conditions and preventive care, patient and caregiver engagement, and coordination of care across the medical neighborhood. (See our detailed discussion of these functions at the citation noted above.)

In the proposed rule, we also discussed the 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) 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. (77 FR 44781-44782) Specifically, we discussed two possible approaches to determining whether a practice has implemented all the necessary functions to be considered an advanced primary care practice or medical home. One approach would be to recognize 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.” We 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). 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 processes for review or could include using existing accrediting bodies to measure compliance against advanced primary care criteria determined by CMS.

We also discussed another potential issue surrounding comprehensive primary care services delivered in an advanced primary care practice, specifically attribution of a beneficiary to an advanced primary care practice. (77 FR 44782) 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 to ensure appropriate payment. One method of attribution could be that each beneficiary prospectively chooses an advanced primary care practice. Other attribution methodologies might examine the quantity and type of E/M or other designated services furnished to that beneficiary by the practice. We welcomed 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 emphasized that we would not consider proposals that would restrict a beneficiary's free choice of practitioners.

In summary, we stated our belief that targeting primary care management payments to advanced primary care practices could 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 invited broad public comment on the accreditation and attribution issues discussed above and any other aspect, including payment, of integrating an advanced primary care model into the PFS.

We received many helpful and informative comments on the issues we discussed in relation to recognizing advanced primary care practices, especially on the criteria and processes that should be used to identify such practices. We welcome these comments because we are actively considering such an advanced primary care practice model in the near future after a complete assessment of the results of ongoing demonstrations and policy and operational considerations.

We also received many comments recommending that we adopt the complex care coordination codes developed by the AMA's C3W for CY 2013. As discussed in section III.M.3.a. of this final rule with comment period, on an interim final basis for CY 2013, we are assigning CPT codes 99487, 99488, and 99489 a PFS procedure status indicator of B (Payments for covered services are always bundled into payment for other services, which are not specified. If RVUs are shown, they are not used for Medicare payment. If these services are covered, payment for them is subsumed by the payment for the services to which they are bundled (for example, a telephone call from a hospital nurse regarding care of a patient). We will consider these codes, as well as other payment approaches as we continue our multi-year strategy to recognize and support primary care and care management.

I. Payment for Molecular Pathology Services

The AMA CPT Editorial Panel has created new CPT codes to replace the codes used to bill for molecular pathology services that will be deleted at the end of CY 2012. The new codes describe distinct molecular pathology tests and test methods. CPT divided these molecular pathology codes into Tiers. Tier 1 codes describe common gene-specific and genomic procedures. Tier 2 codes capture reporting for less common tests. Each Tier 2 code represents a group of tests that the CPT Editorial Panel believes involve similar technical resources and interpretive work. The CPT Editorial Panel created 101 new molecular pathology CPT codes for CY 2012 and another 14 new molecular pathology codes for CY 2013.

We stated in our notice for the Clinical Laboratory Fee Schedule (CLFS) Annual Public Meeting held on July 16, 2012 (77 FR 31620) that we were following our regular process to determine the appropriate basis and payment amounts for new clinical diagnostic laboratory tests, including 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 believed 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 solicited public comment on this issue in the CY 2013 PFS proposed rule (77 FR 44782 and 44783), as well as public comment on pricing policies for these tests under the CLFS during the CLFS Annual Public Meeting process.

In the PFS proposed rule, we first discussed and requested public comment on whether these molecular pathology CPT codes describe services that ordinarily require physician work, and then we discussed our proposal to address payment for these CPT codes on the PFS, pending public comment and resolution of the first question. The PFS proposal paralleled the CLFS Annual Public Meeting process during which we receive comments and recommendations on 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 final rule with comment period, Medicare establishes payment under the PFS by setting RVUs for 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/Specialty Society Relative Value Scale Update Committee (AMA RUC) and others. The AMA RUC-recommended work RVUs for a service typically are based in part on results of a survey conducted by the relevant specialty society. CMS establishes PE RVUs 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 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 most commonly furnished (71 FR 69629). CMS establishes resource-based malpractice expense RVUs using weighted specialty-specific malpractice insurance premium data collected from commercial and physician-owned insurers, last updated for the CY 2010 final rule (74 FR 61758). For most services paid under the PFS, beneficiary cost-sharing is 20 percent of the fee schedule 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 a test is gap-filled, contractor-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 account for any physician work, although tests paid under the CLFS can involve assessment by a laboratory technician/technologist, a chemist, molecular biologist, or a geneticist—none of which are health care professional occupations that meet the statutory definition of a physician. Although 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 are they adjusted once rates are determined (apart from inflation updates as required by statute). 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 a payment is initially established through crosswalking, and in certain circumstances, up to 2 years for Medicare and stakeholders to review pricing for new tests after a payment is initially established through gap-filling (72 FR 66275 through 66279, 66401 through 66402). Finally, in almost all circumstances, there is no 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 a clinical consultation service as defined in § 415.130(c). 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(b), 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; and 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 modifier 26) of CPT code 83912 (83912-26). Payment for the interpretation and report of a molecular pathology test when furnished by nonphysician laboratory professional is bundled into payment made under the CLFS using CPT code 83912.

As we stated in the CY 2013 PFS proposed rule (77 FR 44783), since the creation of new molecular pathology CPT codes, there has been significant debate in the stakeholder community regarding whether these new molecular pathology CPT 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. In the CY 2013 PFS proposed rule (77 FR 44783), we stated that there is little agreement on whether the technical component and/or professional component (interpretation and report) of these services are ordinarily furnished by a physician or a nonphysician laboratory professional. Additionally, we stated that some stakeholders have suggested that interpretation and report by any health care professional is generally not necessary for these services, as the laboratory result reporting is becoming more automated.

In the CY 2012 PFS final rule with comment period (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 tests, and that the new molecular pathology 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 the new molecular pathology CPT codes describe clinical diagnostic laboratory tests or services that ordinarily require physician work. In the PFS proposed rule, we stated that, 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. We requested comment on whether the new molecular pathology CPT codes describe physicians' services that should be paid under the PFS, or whether they describe clinical diagnostic laboratory tests that should be paid under the CLFS. We also requested comment on the following more specific 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 written report?
  • What is the nature of that interpretation and does it typically require physician work?
  • Who furnishes interpretation services and how frequently?

In the CY 2013 PFS proposed rule, we also proposed to price all of the new molecular pathology CPT codes through a single fee schedule, either the CLFS or the PFS. We stated that after meeting with stakeholders and reviewing each CPT code, we believed that there are a discrete number of laboratory methods used to generate results across molecular pathology tests. For example, two different tests (represented by different CPT codes) may be run using the same testing methodologies, but using different genes. 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 we do not adjust the payment amount further (apart from inflation updates as required by statute). 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 stated that we were 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 stated that we were also concerned that the differences in prices would become more pronounced over time, as we continue to review the values for physician work and PE inputs on the PFS relative to established CLFS prices. Therefore, largely because of the homogeneity of the laboratory methodologies behind these procedure test codes, we stated that we believe that it is appropriate for all new molecular pathology CPT codes to be priced on the same fee schedule using the same methodology. We invited public comment on that proposal.

As we considered public comment on whether these molecular pathology CPT codes describe services that ordinarily require physician work, we wanted to ensure that there was a payment mechanism in place to pay for these CPT codes for CY 2013, either on the PFS or the CLFS. We stated that, because we believe that these molecular pathology CPT 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 would be discussed and received through the CY 2013 CLFS Annual Public Meeting process. More information on these tests is available on the CMS Web site at www.cms.hhs.gov/ClinicalLabFeeSched.

As a parallel to determining the appropriate basis and payment amounts for the molecular pathology CPT codes as clinical diagnostic laboratory tests through the CLFS Annual Public Meeting process, we also proposed payment for these codes under the PFS for CY 2013. In the CY 2013 PFS proposed rule, we stated that the AMA RUC and the College of American Pathologists (CAP) provided CMS with recommendations for physician work RVUs and PE inputs for most of the molecular pathology CPT codes. We did not have recommendations on physician work RVUs or direct PE inputs for a small number of codes, which represent tests that are patented, and therefore the methodology used to furnish the test is proprietary and was unavailable to the AMA RUC or CMS to support developing appropriate work and direct PE inputs. As we stated in the PFS proposed rule, 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 noted 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 27 lists AMA RUC-recommended physician work RVUs and times, as well as the AMA RUC-estimated CY 2013 utilization for these codes. This table contains the AMA RUC's estimated CY 2013 utilization for all 115 molecular pathology codes effective for CY 2013 and recommended physician work RVUs and times only for those codes that CAP believes are ordinarily performed by a physician. These values are listed for reference only and were not used for PFS rate-setting.

As we stated in the PFS proposed rule, molecular pathology tests can be furnished in laboratories of different types and sizes (for example, a large commercial laboratory, academic or research laboratory, typically hospital-based, or potentially, a pathology group practice), and tests may be furnished in small or large batches. Also, although there are largely homogenous methods across the different tests considered here, we recognize that for a specific test, the combination of methods may vary across different laboratories. 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, it was challenging for CAP and the AMA RUC to provide recommendations on the typical inputs for many services, and not possible for other services. We posted the AMA RUC- and CAP-recommended direct PE inputs on the CMS Web site in the files supporting the CY 2013 PFS proposed rule at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. We stated in the CY 2013 PFS proposed rule (77 FR 44784) that 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 approach for the specific number and combination of methods involved in executing many of these tests and that the potential pathways for a laboratory or pathology group practice to execute these tests can vary considerably.

As we discussed in the CY 2013 PFS proposed rule, in addition to recommendations on physician work and direct PE inputs, the AMA RUC provided CMS with recommended utilization crosswalks for most of the molecular pathology tests. 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 Part B claims data. We use utilization crosswalk assumptions to ensure PFS budget neutrality and to create PE RVUs through the PE methodology. The AMA RUC's recommended crosswalk utilization is presented in Table 27 for reference, however, we note that because these services are not payable under the PFS, these values were not used for rate-setting. In the CY 2013 PFS proposed rule, we stated that we believe that the utilization assumptions for the technical component of the new CPT codes should be based on the utilization of the corresponding CPT codes currently billed on the CLFS, and not on the utilization of CPT code 83912-26. As we discussed in the CY 2013 PFS proposed rule, 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 unless the billing entity billed both the new molecular pathology CPT code and the stacking codes. 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 relate to each test. 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 specific molecular pathology tests described by the new CPT codes. We stated that, given these factors, it is difficult to estimate the utilization of the new molecular pathology CPT codes based on the Medicare billing of the current stacking and NOC codes.

We stated that if we were to finalize payment for molecular pathology tests under the PFS, we did not believe that we could propose national payment rates, because the following questions remained:

  • 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?

In the CY 2013 PFS proposed rule, we stated that, 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 would propose to allow the Medicare contractors to price these codes because we do not believe that we have sufficient information to engage in accurate national pricing and because the price of tests can vary locally. As previously discussed, this proposal was parallel to the CLFS Annual Public Meeting process through which we received comments and recommendations on the appropriate basis for establishing a payment amount for these molecular pathology tests as clinical diagnostic laboratory tests under the CLFS. We stated that if we decided 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 tests.

Finally, we stated that, after reviewing comments received on the proposals contained within the CY 2013 PFS proposed rule (77 FR 44782 through 44787), and after hearing the discussion at the CLFS Annual Public Meeting and reviewing comments and recommendations during the public meeting process, we would determine the appropriate basis for establishing payment amounts for the new molecular pathology CPT codes. We stated that we would publish our final decision in the CY 2013 PFS final rule with comment period and, at the same time the final rule is published, post final payment determinations for any molecular pathology tests that will be paid under the CLFS.

A summary of the comments received on the questions and proposals discussed in the CY 2013 PFS proposed rule, followed by our responses and conclusions are below.

We received the following comments in response to our questions on whether these molecular pathology CPT codes describe services that are ordinarily furnished by a physician; whether the services require interpretation and written report and, if so, who ordinarily furnishes that interpretation and how frequently; what is the nature of that interpretation and does it typically require physician work; and the broader question of whether these 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 well as our proposal to price all molecular pathology CPT codes through a single fee schedule:

Comment: Many commenters stated that these molecular pathology tests are not ordinarily furnished by a physician. These commenters stated that the services described by the new molecular pathology CPT codes do not