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Proposed Rule

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2009; and Revisions to the Amendment of the E-Prescribing Exemption for Computer Generated Facsimile Transmissions; Proposed Rule

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Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would address proposed changes to Medicare Part B payment policy. We are proposing these changes to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. This proposed rule also discusses refinements to resource-based practice expense (PE) relative value units (RVUs); geographic practice cost indices (GPCI) changes; malpractice RVUs; requests for additions to the list of telehealth services; several coding issues; payment for covered outpatient drugs and biologicals; the competitive acquisition program (CAP); application of health professional shortage area (HPSA) bonus payments; payment for renal dialysis services; performance standards for mobile independent diagnostic testing facilities; and physician and nonphysician practitioners furnishing diagnostic testing services; a solicitation for comments regarding the use of the Federal Payment Levy Program to recover delinquent Federal tax debts; a proposed amendment to the exemption for computer-generated facsimile transmissions from the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard for transmitting prescription and certain prescription-related information for Part D covered drugs prescribed for Part D eligible individuals; conforming and clarifying changes for comprehensive outpatient rehabilitation facilities (CORFs); revisions for rehabilitation agencies; therapy-related technical corrections; the physician quality reporting initiative; physician self-referral issues and anti-markup; beneficiary signature for nonemergency ambulance transport; the chiropractic services demonstration; educational requirements for nurse practitioners and clinical nurse specialists; qualifications of portable x-ray supplier personnel; the expiration of provisions of the Medicare, Medicaid, and SCHIP Extension Act of 2007; bonus payments for long ambulance transports; the annual update for clinical laboratory fees under the clinical laboratory fee schedule; physician certification/recertification for home health services; a prohibition concerning providers of sleep tests; organ retrieval; a revision to the “Appeals of CMS or CMS contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges” final rule; and, potentially misvalued services under the physician fee schedule.

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, no later than August 29, 2008.

ADDRESSES:

In commenting, please refer to file code CMS-1403-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (no duplicates, please):

1. Electronically. You may submit electronic comments on this regulation to Follow the instructions for “Comment or Submission” and enter the filecode to find the document accepting comments.

2. By regular mail. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1403-P, P.O. Box 8013, Baltimore, MD 21244-8013.

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

3. By express or overnight mail. You may send written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1403-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

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

a. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.

(Because access to the interior of the HHH 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. 7500 Security Boulevard, Baltimore, MD 21244-1850.

(Because access to the interior of the HHH 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.)

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

Submission of comments on paperwork requirements. You may submit comments on this document's paperwork requirements by mailing your comments to the addresses provided at the end of the “Collection of Information Requirements” section in this document.

For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.

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FOR FURTHER INFORMATION CONTACT:

Pam West, (410) 786-2302, for issues related to practice expense.

Rick Ensor, (410) 786-5617, for issues related to practice expense methodology.

Stephanie Monroe, (410) 786-6864, for issues related to malpractice RVUs.

Esther Markowitz, (410) 786-4595, for issues related to telehealth services.

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

Ken Marsalek, (410) 786-4502, for issues related to the multiple procedure payment reduction for diagnostic imaging.

Catherine Jansto, (410) 786-7762, or Cheryl Gilbreath, (410) 786-5919, for issues related to payment for covered outpatient drugs and biologicals.

Edmund Kasaitis, (410) 786-0477, or Bonny Dahm (410) 786-4006, for issues related to the Competitive Acquisition Program (CAP) for Part B drugs.

Corrine Axelrod, (410) 786-5620, for issues related to Health Professional Shortage Area Bonus Payments.Start Printed Page 38503

Henry Richter, (410) 786-4562, for issues related to payments for end-stage renal disease facilities.

August Nemec, (410) 786-0612, for issues related to independent diagnostic testing facilities and enrollment issues; and the revision to the “Appeals of CMS or CMS contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges” final rule.

Lisa Ohrin, (410) 786-4565, for issues related to incentive payment and shared saving programs.

Don Romano, (410) 786-1401, for issues related to anti-markup provisions.

Diane Stern, (410) 786-1133, for issues related to the quality reporting system for physician payment for CY 2009.

Andrew Morgan, (410) 786-2543, for issues related to the e-prescribing exemption for computer generated fax transmissions.

Terri Harris, (410) 786-6830, for issues related to payment for comprehensive outpatient rehabilitation facilities (CORFs).

Lauren Oviatt, (410) 786-4683, for issues related to CORF conditions of coverage.

Trisha Brooks, (410) 786-4561, for issues related to personnel standards for portable x-ray suppliers.

David Walczak, (410) 786-4475, for issues related to beneficiary signature for non-emergency ambulance transport services.

Jean Stiller, (410) 786-0708, for issues related to the prohibition concerning providers of sleep tests

Mark Horney, (410) 786-4554, for issues related to the solicitation for comments and data pertaining to physician organ retrieval services.

Diane Milstead, (410) 786-3355, or Gaysha Brooks, (410) 786-9649, for all other issues.

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SUPPLEMENTARY INFORMATION:

Submitting Comments: We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code [CMS-1403-P] and the specific “issue identifier” that precedes the section on which you choose to comment.

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

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

Table of Contents

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

I. Background

A. Development of the Relative Value System

1. Work RVUs

2. Practice Expense Relative Value Units (PE RVUs)

3. Resource-Based Malpractice RVUs

4. Refinements to the RVUs

5. Adjustments to RVUs are Budget Neutral

B. Components of the Fee Schedule Payment Amounts

C. Most Recent Changes to the Fee Schedule

II. Provisions of the Proposed Regulation

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

1. Current Methodology

2. PE Proposals for CY 2009

B. Geographic Practice Cost Indices (GPCIs): Locality Discussion

C. Malpractice RVUs (TC/PC issue)

D. Medicare Telehealth Services

E. Specific Coding Issues related to Physician Fee Schedule

F. Part B Drug Payment

1. Average Sales Price (ASP) Issues

2. Competitive Acquisition Program (CAP) Issues

G. Application of the HPSA Bonus Payment

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

I. Independent Diagnostic Testing Facility (IDTF) Issues

J. Physician and Nonphysician Practitioner (NPP) Enrollment Issues

K. Proposed Amendment to the Exemption for Computer-Generated Facsimile Transmission from the National Council for Prescription Drug Programs (NCPDP) SCRIPT Standard for Transmitting Prescription and Certain Prescription-Related Information for Part D Eligible Individuals

L. Comprehensive Outpatient Rehabilitation Facilities (CORF) and Rehabilitation Agency Issues

M. Technical Corrections for Therapy-Related Issues

N. Physician Self-Referral and Anti-Markup Issues

O. Physician Quality Reporting Initiative

P. Discussion of Chiropractic Services Demonstration

Q. Educational Requirements for Nurse Practitioners and Clinical Nurse Specialists

R. Portable X-Ray Issue

S. Expiring Provisions and Related Discussions

T. Other Issues

1. Physician Certification (G0180) and Recertification (G0179) for Medicare-Covered Home Health Services under a Home Health Plan of Care (POC) in the Home Health Prospective Payment System (HH PPS)

2. Prohibition Concerning Providers of Sleep Tests

3. Beneficiary Signature for Nonemergency Ambulance Transport Services

4. Solicitation of Comments and Data Pertaining to Physician Organ Retrieval Services

5. Revision to the “Appeals of CMS or CMS contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges” Final Rule

III. Potentially Misvalued Services under Physician Fee Schedule

IV. Collection of Information Requirements

V. Response to Comments

VI. Regulatory Impact Analysis

Regulation Text

Addendum A—Explanation and Use of Addendum B

Addendum B—2009 Relative Value Units and Related Information Used in Determining Medicare Payments for 2008

Addendum C—[Reserved for Final Rule]

Addendum D—Proposed 2009 Geographic Adjustment Factors (GAFs)

Addendum E—Proposed 2009* Geographic Practice Cost Indices (GPCIs) by State and Medicare Locality

Addendum F—Multiple Procedure Reduction Code List

Addendum G—FY 2009 Wage Index for Urban Areas Based On CBSA Labor Market Areas (ESRD)

Addendum H—FY 2009 Wage Index based on CBSA Labor Market Areas for Rural Areas (ESRD)

Acronyms

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

ACC American College of Cardiology

ACR American College of Radiology

AFROC Association of Freestanding Radiation Oncology Centers

AHA American Heart AssociationStart Printed Page 38504

AHRQ [HHS'] Agency for Healthcare Research and Quality

AIDS Acquired immune deficiency syndrome

AMA American Medical Association

AMP Average manufacturer price

AOA American Osteopathic Association

ASC Ambulatory surgical center

ASP Average sales price

ASRT American Society of Radiologic Technologists

ASTRO American Society for Therapeutic Radiology and Oncology

ATA American Telemedicine Association

AWP Average wholesale price

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

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

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

BLS Bureau of Labor Statistics

BN Budget neutrality

CABG Coronary artery bypass graft

CAD Coronary artery disease

CAH Critical access hospital

CAHEA Committee on Allied Health Education and Accreditation

CAP Competitive acquisition program

CBSA Core-Based Statistical Area

CCHIT Certification Commission for Healthcare Information Technology

CEAMA Council on Education of the American Medical Association

CF Conversion factor

CfC Conditions for Coverage

CFR Code of Federal Regulations

CKD Chronic kidney disease

CLFS Clinical laboratory fee schedule

CMA California Medical Association

CMP Civil money penalty

CMS Centers for Medicare & Medicaid Services

CNS Clinical nurse specialist

CoP Condition of participation

CORF Comprehensive Outpatient Rehabilitation Facility

CPAP Continuous positive air pressure

CPEP Clinical Practice Expert Panel

CPI Consumer Price Index

CPI-U Consumer price index for urban customers

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

CRT Certified respiratory therapist

CY Calendar year

DHS Designated health services

DME Durable medical equipment

DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies

DNP Doctor of Nursing Practice

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

DSMT Diabetes self-management training

E/M Evaluation and management

EDI Electronic data interchange

EEG Electroencephalogram

EHR Electronic health record

EKG Electrocardiogram

EMG Electromyogram

EOG Electro-oculogram

EPO Erythopoeitin

ESRD End-stage renal disease

FAX Facsimile

FDA Food and Drug Administration (HHS)

FFS Fee-for-service

FMS [Department of the Treasury's] Financial Management Service

FPLP Federal Payment Levy Program

FR Federal Register

GAF Geographic adjustment factor

GAO General Accounting Office

GPO Group purchasing organization

GPCI Geographic practice cost index

HAC Hospital-acquired conditions

HCPAC Health Care Professional Advisory Committee

HCPCS Healthcare Common Procedure Coding System

HCRIS Healthcare Cost Report Information System

HH PPS Home Health Prospective Payment System

HHA Home health agency

HHRG Home health resource group

HHS [Department of] Health and Human Services

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

HIT Health information technology

HITSP Healthcare Information Technology Standards Panel

HIV Human immunodeficiency virus

HPSA Health Professional Shortage Area

HRSA Health Resources Services Administration (HHS)

ICF Intermediate care facilities

ICR Information collection requirement

IDTF Independent diagnostic testing facility

IFC Interim final rule with comment period

IPPS Inpatient prospective payment system

IRS Internal Revenue Service

IVIG Intravenous immune globulin

IWPUT Intra-service work per unit of time

JRCERT Joint Review Committee on Education in Radiologic Technology

MA Medicare Advantage

MA-PD Medicare Advantage-Prescription Drug Plans

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

MedPAC Medicare Payment Advisory Commission

MEI Medicare Economic Index

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

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

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

MNT Medical nutrition therapy

MP Malpractice

MPPR Multiple procedure payment reduction

MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)

MRA Magnetic resonance angiography

MRI Magnetic resonance imaging

MS-DRG Medicare Severity-Diagnosis related group

MSA Metropolitan statistical area

NCD National Coverage Determination

NCPDP National Council for Prescription Drug Programs

NDC National drug code

NISTA National Institute of Standards and Technology Act

NP Nurse practitioner

NPI National Provider Identifier

NPP Nonphysician practitioner

NQF National Quality Forum

NTTAA National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113)

OACT [CMS'] Office of the Actuary

OBRA Omnibus Budget Reconciliation Act

OIG Office of Inspector General

OMB Office of Management and Budget

ONC [HHS'] Office of the National Coordinator for Health Information Technology

OPPS Outpatient prospective payment system

OSA Obstructive Sleep Apnea

OSCAR Online Survey and Certification and Reporting

P4P Pay for performance

PA Physician assistant

PC Professional component

PCF Patient compensation fund

PDP Prescription drug plan

PE Practice expense

PE/HR Practice expense per hour

PEAC Practice Expense Advisory Committee

PECOS Provider Enrollment, Chain, and Ownership System

PERC Practice Expense Review Committee

PFS Physician Fee Schedule

PIM [Medicare] Program Integrity Manual

PLI Professional liability insurance

POC Plan of care

PPI Producer price index

PPS Prospective payment system

PQRI Physician Quality Reporting Initiative

PRA Paperwork Reduction Act

PSA Physician scarcity areas

PSG Polysomnography

PT Physical therapy

RFA Regulatory Flexibility Act

RIA Regulatory impact analysis

RN Registered nurse

RNAC Reasonable net acquisition cost

RRT Registered respiratory therapist

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

RVU Relative value unit

SBA Small Business Administration

SGR Sustainable growth rate

SLP Speech-language pathology

SMS [AMA's] Socioeconomic Monitoring System

SNF Skilled nursing facility

SOR System of record

TC Technical Component

TIN Tax identification number

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

UPMC University of Pittsburgh Medical Center

USDE United States Department of Education

VBP Value-based purchasing

WAMP Widely available market price

I. Background

[If you choose to comment on issues in this section, please include the Start Printed Page 38505caption “BACKGROUND” at the beginning of your comments.]

Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), “Payment for Physicians' Services.” The Act requires that payments under the physician fee schedule (PFS) be based on national uniform relative value units (RVUs) based on the relative resources used in furnishing a service. Section 1848(c) of the Act requires that national RVUs be established for physician work, practice expense (PE), and malpractice expense. Before the establishment of the resource-based relative value system, Medicare payment for physicians' services was based on reasonable charges.

A. Development of the Relative Value System

1. Work RVUs

The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L. 101-239), and OBRA 1990, (Pub. L. 101-508). The final rule, published on November 25, 1991 (56 FR 59502), set forth the fee schedule for payment for physicians' services beginning January 1, 1992. Initially, only the physician work RVUs were resource-based, and the PE and malpractice RVUs were based on average allowable charges.

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

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

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

2. Practice Expense Relative Value Units (PE RVUs)

Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act and required us to develop resource-based PE RVUs for each physician's service beginning in 1998. We were to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs.

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

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

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

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

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

In CY 2007 PFS final rule with comment period (71 FR 69624), we revised the methodology for calculating PE RVUs beginning in CY 2007 and provided for a 4-year transition for the new PE RVUs under this new methodology. We will continue to evaluate this policy and proposed necessary revisions through future rulemaking.

3. Resource-Based Malpractice (MP) RVUs

Section 4505(f) of the BBA amended section 1848(c) of the Act requiring us to implement resource-based malpractice (MP) RVUs for services furnished on or after 2000. The resource-based MP RVUs were implemented in the PFS final rule published November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice insurance premium data collected from commercial and physician-owned insurers from all the States, the District of Columbia, and Puerto Rico.

4. Refinements to the RVUs

Section 1848(c)(2)(B)(i) of the Act requires that we review all RVUs no less often than every 5 years. The first 5-Year Review of the physician work RVUs was published on November 22, 1996 (61 FR 59489) and was effective in 1997. The second 5-Year Review was published in the CY 2002 PFS final rule with comment period (66 FR 55246) and was effective in 2002. The third 5-Year Review of physician work RVUs was published in the CY 2007 PFS final rule with comment period (71 FR 69624) and was effective on January 1, 2007. (Note: Additional codes relating to the third 5-Start Printed Page 38506Year Review of physician work RVUs were addressed in the CY 2008 PFS final rule with comment period (72 FR 66360).)

In 1999, the AMA's RUC established the Practice Expense Advisory Committee (PEAC) for the purpose of refining the direct PE inputs. Through March 2004, the PEAC provided recommendations to CMS for over 7,600 codes (all but a few hundred of the codes currently listed in the AMA's Current Procedural Terminology (CPT) codes). As part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented a new methodology for determining resource-based PE RVUs and are transitioning this over a 4-year period.

In the CY 2005 PFS final rule with comment period (69 FR 66236), we implemented the first 5-Year Review of the MP RVUs (69 FR 66263).

5. Adjustments to RVUs are Budget Neutral

Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if adjustments to 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.

As explained in the CY 2007 PFS final rule with comment period (71 FR 69624), due to the increase in work RVUs resulting from the third 5-Year Review of physician work RVUs, we applied a separate budget neutrality (BN) adjustor to the work RVUs for services furnished during 2007. This approach is consistent with the method we use to make BN adjustments to the PE RVUs to reflect the changes in these PE RVUs.

B. Components of the Fee Schedule Payment Amounts

To calculate the payment for every physician's service, the components of the fee schedule (physician work, PE, and MP RVUs) are adjusted by a geographic practice cost index (GPCI). The GPCIs reflect the relative costs of physician work, PE, and malpractice insurance 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 × budget neutrality adjustor (round product to two decimal places) × GPCI work) + (RVU PE x GPCI PE) + (RVU malpractice × GPCI malpractice)] × CF.

C. Most Recent Changes to the Fee Schedule

The CY 2008 PFS final rule with comment period (72 FR 66222) addressed certain provisions of Division B of the Tax Relief and Health Care Act of 2006—Medicare Improvements and Extension Act of 2006 (Pub. L. 109-432) (MIEA-TRHCA), and made other changes to Medicare Part B payment policy to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. The CY 2008 PFS final rule with comment period also discussed refinements to resource-based PE RVUs; GPCI changes; malpractice RVUs; requests for additions to the list of telehealth services; several coding issues including additional codes from the 5-Year Review; payment for covered outpatient drugs and biologicals; the competitive acquisition program (CAP); clinical lab fee schedule issues; payment for end-stage renal dialysis (ESRD) services; performance standards facilities; expiration of the physician scarcity area (PSA) bonus payment; conforming and clarifying changes for comprehensive outpatient rehabilitation facilities (CORFs); a process for updating the drug compendia; physician self-referral issues; beneficiary signature for ambulance transport services; durable medical equipment (DME) update; the chiropractic services demonstration; a Medicare economic index (MEI) data change; technical corrections; standards and requirement related to therapy services under Medicare Parts A and B; revisions to the ambulance fee schedule; the ambulance inflation factor for CY 2008; and an amendment to the e-prescribing exemption for computer-generated facsimile transmissions

We also finalized the calendar year (CY) 2007 interim RVUs and issued interim RVUs for new and revised procedure codes for CY 2008.

In accordance with section 1848(d)(1)(E)(i) of the Act, we also announced that the PFS update for CY 2008 is −10.1 percent, the initial estimate for the sustainable growth rate (SGR) for CY 2008 is 2.2 percent and the CF for CY 2008 is $34.0682. However, subsequent to publication of the CY 2008 PFS final rule with comment period, section 101(a) of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173) (MMSEA) was enacted on December 29, 2007 and provided for a 0.5 percent update to the conversion factor for the period beginning January 1, 2008 and ending June 30, 2008. Therefore, for the first half of 2008 (that is, January through June), the Medicare PFS conversion factor was $38.0870. For the remaining portion of 2008 (July through December), the Medicare PFS conversion factor will be $34.0682 (as published in the 2008 PFS final rule with comment period).

II. Provisions of the Proposed Regulation

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

[If you choose to comment on issues in this section, please include the caption “RESOURCE-BASED PE RVUs” at the beginning of your comments.]

Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act.

Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required CMS to develop a methodology for a resource-based system for determining PE RVUs for each physician's service. Until that time, PE RVUs were based on historical allowed charges. This legislation stated that the revised PE methodology must consider the staff, equipment, and supplies used in the provision of various medical and surgical services in various settings beginning in 1998. The Secretary has interpreted this to mean that Medicare payments for each service would be based on the relative PE resources typically involved with furnishing the service.

The initial implementation of resource-based PE RVUs was delayed from January 1, 1998, until January 1, 1999, by section 4505(a) of the BBA. In addition, section 4505(b) of the BBA required that the new payment methodology be phased in over 4 years, effective for services furnished in CY 1999, and fully effective in CY 2002. The first step toward implementation of the statute was to adjust the PE values for certain services for CY 1998. Section 4505(d) of the BBA required that, in developing the resource-based PE RVUs, the Secretary must—Start Printed Page 38507

  • Use, to the maximum extent possible, generally-accepted cost accounting principles that recognize all staff, equipment, supplies, and expenses, not solely those that can be linked to specific procedures and actual data on equipment utilization.
  • Develop a refinement method to be used during the transition.
  • Consider, in the course of notice and comment rulemaking, impact projections that compare new proposed payment amounts to data on actual physician PE.

In CY 1999, we began the 4-year transition to resource-based PE RVUs utilizing a “top-down” methodology whereby we allocated aggregate specialty-specific practice costs to individual procedures. The specialty-specific PEs were derived from the American Medical Association's (AMA's) Socioeconomic Monitoring Survey (SMS). In addition, under section 212 of the BBRA, we established a process extending through March 2005 to supplement the SMS data with data submitted by a specialty. The aggregate PEs for a given specialty were then allocated to the services furnished by that specialty on the basis of the direct input data (that is, the staff time, equipment, and supplies) and work RVUs assigned to each CPT code.

For CY 2007, we implemented a new methodology for calculating PE RVUs. Under this new methodology, we use the same data sources for calculating PE, but instead of using the “top-down” approach to calculate the direct PE RVUs, under which the aggregate direct and indirect costs for each specialty are allocated to each individual service, we now utilize a “bottom-up” approach to calculate the direct costs. Under the “bottom up” approach, we determine the direct PE by adding the costs of the resources (that is, the clinical staff, equipment, and supplies) typically required to provide each service. The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review of recommendations received from the AMA's Relative Value Update Committee (RUC). For a more detailed explanation of the PE methodology see the June 29, 2006 proposed notice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).

1. Current Methodology

a. Data Sources for Calculating Practice Expense

The AMA's SMS survey data and supplemental survey data from the specialties of cardiothoracic surgery, vascular surgery, physical and occupational therapy, independent laboratories, allergy/immunology, cardiology, dermatology, gastroenterology, radiology, independent diagnostic testing facilities (IDTFs), radiation oncology, and urology are used to develop the PE per hour (PE/HR) for each specialty. For those specialties for which we do not have PE/HR, the appropriate PE/HR is obtained from a crosswalk to a similar specialty.

The AMA developed the SMS survey in 1981 and discontinued it in 1999. Beginning in 2002, we incorporated the 1999 SMS survey data into our calculation of the PE RVUs, using a 5-year average of SMS survey data. (See the CY 2002 PFS final rule with comment period (66 FR 55246).) The SMS PE survey data are adjusted to a common year, 2005. The SMS data provide the following six categories of PE costs:

  • Clinical payroll expenses, which are payroll expenses (including fringe benefits) for nonphysician clinical personnel.
  • Administrative payroll expenses, which are payroll expenses (including fringe benefits) for nonphysician personnel involved in administrative, secretarial, or clerical activities.
  • Office expenses, which include expenses for rent, mortgage interest, depreciation on medical buildings, utilities, and telephones.
  • Medical material and supply expenses, which include expenses for drugs, x-ray films, and disposable medical products.
  • Medical equipment expenses, which include depreciation, leases, and rent of medical equipment used in the diagnosis or treatment of patients.
  • All other expenses, which include expenses for legal services, accounting, office management, professional association memberships, and any professional expenses not previously mentioned in this section.

In accordance with section 212 of the BBRA, we established a process to supplement the SMS data for a specialty with data collected by entities and organizations other than the AMA (that is, those entities and organizations representing the specialty itself). (See the Criteria for Submitting Supplemental Practice Expense Survey Data interim final rule with comment period (65 FR 25664).) Originally, the deadline to submit supplementary survey data was through August 1, 2001. In the CY 2002 PFS final rule (66 FR 55246), the deadline was extended through August 1, 2003. To ensure maximum opportunity for specialties to submit supplementary survey data, we extended the deadline to submit surveys until March 1, 2005 in the Revisions to Payment Policies Under the Physician Fee Schedule for CY 2004 final rule with comment period (68 FR 63196) (hereinafter referred to as CY 2004 PFS final rule with comment period).

The direct cost data for individual services were originally developed by the Clinical Practice Expert Panels (CPEP). The CPEP data include the supplies, equipment, and staff times specific to each procedure. The CPEPs consisted of panels of physicians, practice administrators, and nonphysicians (for example, RNs) who were nominated by physician specialty societies and other groups. There were 15 CPEPs consisting of 180 members from more than 61 specialties and subspecialties. Approximately 50 percent of the panelists were physicians.

The CPEPs identified specific inputs involved in each physician's service provided in an office or facility setting. The inputs identified were the quantity and type of nonphysician labor, medical supplies, and medical equipment.

In 1999, the AMA's RUC established the Practice Expense Advisory Committee (PEAC). From 1999 to March 2004, the PEAC, a multi-specialty committee, reviewed the original CPEP inputs and provided us with recommendations for refining these direct PE inputs for existing CPT codes. Through its last meeting in March 2004, the PEAC provided recommendations for over 7,600 codes which we have reviewed and almost all of which we have accepted. As a result, the current PE inputs differ markedly from those originally recommended by the CPEPs. The PEAC has now been replaced by the Practice Expense Review Committee (PERC), which acts to assist the RUC in recommending PE inputs.

b. Allocation of PE to Services

The aggregate level specialty-specific PEs are derived from the AMA's SMS survey and supplementary survey data. To establish PE RVUs for specific services, it is necessary to establish the direct and indirect PE associated with each service.

(i) Direct costs. The direct costs are determined by adding the costs of the resources (that is, the clinical staff, equipment, and supplies) typically required to provide the service. The costs of these resources are calculated from the refined direct PE inputs in our PE database. These direct inputs are then scaled to the current aggregate pool of direct PE RVUs. The aggregate pool Start Printed Page 38508of direct PE RVUs can be derived using the following formula:

(PE RVUs × physician CF) × (average direct percentage from SMS / (Supplemental PE/HR data)).

(ii) Indirect costs. The SMS and supplementary survey data are the source for the specialty-specific aggregate indirect costs used in our PE calculations. Then, we allocate the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the maximum of either the clinical labor costs or the physician work RVUs. For calculation of the 2009 PE RVUs, we are proposing to use the 2007 procedure-specific utilization data crosswalked to 2008 services. To arrive at the indirect PE costs—

  • We apply a specialty-specific indirect percentage factor to the direct expenses to recognize the varying proportion that indirect costs represent of total costs by specialty. For a given service, the specific indirect percentage factor to apply to the direct costs for the purpose of the indirect allocation is calculated as the weighted average of the ratio of the indirect to direct costs (based on the survey data) for the specialties that furnish the service. For example, if a service is furnished by a single specialty with indirect PEs that were 75 percent of total PEs, the indirect percentage factor to apply to the direct costs for the purposes of the indirect allocation would be (0.75 / 0.25) = 3.0. The indirect percentage factor is then applied to the service level adjusted indirect PE allocators.
  • We use the specialty-specific PE/HR from the SMS survey data, as well as the supplemental surveys for cardiothoracic surgery, vascular surgery, physical and occupational therapy, independent laboratories, allergy/immunology, cardiology, dermatology, radiology, gastroenterology, IDTFs, radiation oncology, and urology. (Note: For radiation oncology, the data represent the combined survey data from the American Society for Therapeutic Radiology and Oncology (ASTRO) and the Association of Freestanding Radiation Oncology Centers (AFROC)). As discussed in the CY 2008 PFS final rule with comment period (72 FR 66233), the PE/HR survey data for radiology is weighted by practice size. We incorporate this PE/HR into the calculation of indirect costs using an index which reflects the relationship between each specialty's indirect scaling factor and the overall indirect scaling factor for the entire PFS. For example, if a specialty had an indirect practice cost index of 2.00, this specialty would have an indirect scaling factor that was twice the overall average indirect scaling factor. If a specialty had an indirect practice cost index of 0.50, this specialty would have an indirect scaling factor that was half the overall average indirect scaling factor.
  • When the clinical labor portion of the direct PE RVU is greater than the physician work RVU for a particular service, the indirect costs are allocated based upon the direct costs and the clinical labor costs. For example, if a service has no physician work and 1.10 direct PE RVUs, and the clinical labor portion of the direct PE RVUs is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65 clinical labor portions of the direct PE RVUs to allocate the indirect PE for that service.

c. Facility/Nonfacility Costs

Procedures that can be furnished in a physician's office, as well as in a hospital or facility setting, have two PE RVUs: Facility and nonfacility. The nonfacility setting includes physicians' offices, patients' homes, freestanding imaging centers, and independent pathology labs. Facility settings include hospitals, ambulatory surgical centers (ASCs), and skilled nursing facilities (SNFs). The methodology for calculating PE RVUs is the same for both facility and nonfacility RVUs, but is applied independently to yield two separate PE RVUs. Because the PEs for services provided in a facility setting are generally included in the payment to the facility (rather than the payment to the physician under the PFS), the PE RVUs are generally lower for services provided in the facility setting.

d. 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), both of which may be performed independently or by different providers. When services have TCs, PCs, and global 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.)

e. Transition Period

As discussed in the CY 2007 PFS final rule with comment period (71 FR 69674), we are implementing the change in the methodology for calculating PE RVUs over a 4-year period. During this transition period, the PE RVUs will be calculated on the basis of a blend of RVUs calculated using our methodology described previously in this section (weighted by 25 percent during CY 2007, 50 percent during CY 2008, 75 percent during CY 2009, and 100 percent thereafter), and the CY 2006 PE RVUs for each existing code. PE RVUs for codes that are new during this period will be calculated using only the current PE methodology and will be paid at the fully transitioned rate.

f. PE RVU Methodology

The following is a description of the PE RVU methodology.

(i) 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 survey PE per physician hour data.

(ii) 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. The direct costs consist of the costs of the direct inputs for clinical labor, medical supplies, and medical equipment. The clinical labor cost is the sum of the cost of all the staff types associated with the service; it is the product of the time for each staff type and the wage rate for that staff type. The medical supplies cost is the sum of the supplies associated with the service; it is the product of the quantity of each supply and the cost of the supply. The medical equipment cost is the sum of the cost of the equipment associated with the service; it is the product of the number of minutes each piece of equipment is used in the service and the equipment cost per minute. The equipment cost per minute is calculated as described at the end of this section.

Apply a BN adjustment to the direct inputs.

Step 2: Calculate the current aggregate pool of direct PE costs. To do this, multiply the current aggregate pool of total direct and indirect PE costs (that is, the current aggregate PE RVUs multiplied by the CF) by the average direct PE percentage from the SMS and supplementary specialty survey data.

Step 3: Calculate the aggregate pool of direct costs. To do this, for all PFS Start Printed Page 38509services, sum 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 BN adjustment so that the proposed 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 Medicare PFS CF.

(iii) Create the indirect PE RVUs

Create indirect allocators.

Step 6: Based on the SMS and supplementary specialty 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 we are calculating the direct and indirect percentages across the global components, PCs, and TCs. That is, the direct and indirect percentages for a given service (for example, echocardiogram) do not vary by the PC, TC and global component.

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 RVU, the clinical PE RVU, and the work RVU.

For most services the indirect allocator is: indirect percentage * (direct PE RVU/direct percentage) + work RVU.

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 RVU/direct percentage) + clinical PE RVU + work RVU.
  • If the clinical labor PE RVU exceeds the work RVU (and the service is not a global service), then the indirect allocator is: indirect percentage * (direct PE RVU/direct percentage) + clinical PE RVU.

Note:

For global services, the indirect allocator is based on both the work RVU and the clinical labor PE RVU. We do this to recognize that, for the professional service, indirect PEs will be allocated using the work RVUs, and for the TC service, indirect PEs will be allocated using the direct PE RVU and the clinical labor PE RVU. 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 RVU/direct percentage). The second part is either the work RVU, clinical PE RVU, or both depending on whether the service is a global service and whether the clinical PE RVU exceeds the work RVU (as described earlier in this step).

Apply a BN 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 physician specialty survey data. This is similar to the Step 2 calculation for the direct PE RVUs.

Step 10: Calculate an aggregate pool of proposed 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. This is similar to the Step 3 calculation for the direct PE RVUs.

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. This is similar to the Step 4 calculation for the direct PE RVUs.

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.

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

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 RVU.

(iv) Calculate the Final PE RVUs

Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17.

Step 19: Calculate and apply the final PE BN adjustment by comparing the results of Step 18 to the current pool of PE RVUs. This final BN adjustment is required primarily because certain specialties are excluded from the PE RVU calculation for rate-setting purposes, but all specialties are included for purposes of calculating the final BN adjustment. (See “Specialties excluded from rate-setting calculation” below in this section.)

(v) Setup File Information

  • Specialties excluded from rate-setting calculation: For the purposes of calculating the PE RVUs, we exclude certain specialties such as midlevel practitioners paid at a percentage of the PFS, audiology, and low volume specialties from the calculation. These specialties are included for the purposes of calculating the BN adjustment.
  • 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 RVU. For example, the professional service code 93010 is associated with the global code 93000.
  • Payment modifiers: Payment modifiers are accounted for in the creation of the file. For example, services billed with the assistant at surgery modifier are paid 16 percent of the PFS amount for that service; therefore, the utilization file is modified to only account for 16 percent of any service that contains the assistant at surgery modifier.Start Printed Page 38510
  • Work RVUs: The setup file contains the work RVUs from this proposed rule.

(vi) 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); 150,000 minutes.

usage = equipment utilization assumption; 0.5.

price = price of the particular piece of equipment.

interest rate = 0.11.

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

maintenance = factor for maintenance; 0.05.

Note:

To illustrate the PE calculation, in Table 1 we have used the conversion factor (CF) of $34.0682 which was published in the CY 2008 PFS final rule with comment period.

Start Printed Page 38511

Table 1.—Calculation of PE RVUs Under Methodology for Selected Codes

StepSourceFormula99213 Office visit, est Nonfacility33533 CABG, arterial, single Facility71020 Chest x-ray Nonfacility71020TC Chest x-ray Nonfacility7102026 Chest x-ray Nonfacility93000 ECG, complete Nonfacility93005 ECG, tracing Nonfacility93010 ECG, report Nonfacility
(1) Labor cost (Lab)Step 1AMA$13.32$77.52$5.74$5.74$—$6.12$6.12$—
(2) Supply cost (Sup)Step 1AMA$2.98$7.34$3.39$3.39$—$1.19$1.19$—
(3) Equipment cost (Eqp)Step 1AMA$0.19$0.65$8.17$8.17$—$0.12$0.12$—
(4) Direct cost (Dir)Step 1=(1)+(2)+(3)$16.50$85.51$17.31$17.31$—$7.43$7.43$—
(5) Direct adjustment (Dir Adj)Steps 2-4See footnote*0.5920.5920.5920.5920.5920.5920.5920.592
(6) Adjusted laborSteps 2-4=Lab*Dir Adj=(1)*(5)$7.88$45.88$3.40$3.40$—$3.62$3.62$—
(7) Adjusted suppliesSteps 2-4=Sup*Dir Adj=(2)*(5)$1.77$4.34$2.01$2.01$—$0.71$0.71$—
(8) Adjusted equipmentSteps 2-4=Eqp*Dir Adj=(3)*(5)$0.12$0.39$4.84$4.84$—$0.07$0.07$—
(9) Adjusted directSteps 2-4=(6)+(7)+(8)$9.76$50.61$10.24$10.24$—$4.40$4.40$—
(10) Conversion Factor (CF)Step 5MFS$34.0682$34.0682$34.0682$34.0682$34.0682$34.0682$34.0682$34.0682
(11) Adj. labor cost convertedStep 5=(Lab*Dir Adj)/CF=(6)/(10)$0.23$1.35$0.10$0.10$—$0.11$0.11$—
(12) Adj. supply cost convertedStep 5=(Sup*Dir Adj)/CF=(7)/(10)$0.05$0.13$0.06$0.06$—$0.02$0.02$—
(13) Adj. equip cost convertedStep 5=(Eqp*Dir Adj)/CF=(8)/(10)$0.00$0.01$0.14$0.14$—$0.00$0.00$—
(14) Adj. direct cost convertedStep 5=(11)+(12)+(13)$0.29$1.49$0.30$0.30$—$0.13$0.13$—
(15) Wrk RVU* Wrk ScalerSetup FileMFS$0.81$29.62$0.19$—$0.19$0.15$—$0.15
(16) Dir_pctSteps 6, 7Surveys33.8%32.6%40.7%40.7%40.7%37.7%37.7%37.7%
(17) Ind_pctSteps 6, 7Surveys66.2%67.4%59.3%59.3%59.3%62.3%62.3%62.3%
(18) Ind. Alloc. formula (1st part)Step 8See Step 8((14)/(16))*(17)((14)/(16))*(17)((14)/(16))*(17)((14)/(16))*(17)((14)/(16))*(17)((14)/(16))*(17)((14)/(16))*(17)((14)/(16))*(17)
(19) Ind. Alloc. (1st part)Step 8See (18)$0.56$3.07$0.44$0.44$—$0.21$0.21$—
(20) Ind. Alloc. formulas (2nd part)Step 8See Step 8(15)(15)(15)+(11)(11)(15)(15)+(11)(11)(15)
(21) Ind. Alloc. (2nd part)Step 8See (20)$0.81$29.62$0.29$0.10$0.19$0.25$0.11$0.15
(22) Indirect Allocator (1st+2nd)Step 8=(19)+(21)$1.37$32.69$0.73$0.53$0.19$0.47$0.32$0.15
(23) Indirect Adjustment (Ind Adj)Steps 9-11See footnote**0.3640.3640.3640.3640.3640.3640.3640.364
(24) Adjusted Indirect AllocatorSteps 9-11=Ind Alloc * Ind Adj$0.50$11.89$0.26$0.19$0.07$0.17$0.12$0.05
(25) Ind.Practice Cost Index (PCI)Steps 12-16See Steps 12-16$0.973$0.934$1.075$1.075$1.075$1.281$1.281$1.281
(26) Adjusted IndirectStep 17= Adj. Ind Alloc*PCI=(24)*(25)$0.49$11.11$0.28$0.21$0.07$0.22$0.15$0.07
(27) PE RVUSteps 18-19=(Adj Dir+Adj Ind) *budn=((14)+(26)) *budn$0.77$12.60$0.59$0.51$0.07$0.35$0.28$0.07
* The direct adj = [current pe rvus * CF * avg dir pct] / [sum direct inputs] = [Step 2] / [Step 3].
** The indirect adj = [current pe rvus * avg ind pct] / [sum of ind allocators] = [Step 9]/[Step 10.
Note: Final PE RVU in Table 1, row 27, may not match Addendum B due to rounding.
Start Printed Page 38512

2. PE Proposals for CY 2009

a. RUC Recommendations for Direct PE Inputs

The RUC provided recommendations for PE inputs for the codes listed in the Table 2.

Table 2.—Codes With RUC PE Recommendations

CPT 1 codeDescription
29805Shoulder arthroscopy, dx.
29830Elbow arthroscopy.
29840Wrist arthroscopy
29870Knee arthroscopy, dx.
29900Mcp joint arthroscopy, dx.
90465Immune admin 1 inj, <8 yrs.
90466Immune admin addl inj, <8 y.
90467Immune admin o/n, addl <8 yrs.
90468Immune admin o/n, addl <8 y.
90471Immunization admin.
90472Immunization admin, each admin
90473Immune admin oral/nasal
90474Immune admin oral/nasal addl.
93510Left heart catheterization.
96405Chemo intralesional, up to 7.
96406Chemo intralesional over 7.
96440Chemotherapy, intracavitary.
96445Chemotherapy, intracavitary.
96450Chemotherapy, into CNS.
96542Chemotherapy injection.
99174Ocular photoscreening.
99185Regional hypothermia.
99186Total body hypothermia.
1 CPT codes and descriptions are copyright 2008 American Medical Association.

We are in agreement with the RUC recommendations, (including the recommendation that no change be made to the direct inputs for CPT 93510, a cardiac catheterization code), except for inclusion of the clinical staff time related to quality activities for the following immunization codes: CPT codes 90465, 90466, 90467, 90468, 90471, 90472, 90473 and 90474. While we allow this time for mammography services due to the specific regulatory requirements required by the Mammography Quality Standards Act of 1992 (Pub. L. 102-539) (MQSA), such MQSA time is not a regulatory requirement for immunization services.

b. Equipment Time-in-Use

The formula for estimating the cost per minute for equipment is based upon a variety of factors, including the cost of the equipment, useful life, interest rate, maintenance cost, and utilization. The purpose of this formula is to identify an estimated cost per minute for the equipment that can be multiplied by the time the equipment is in use to obtain an estimated per use equipment cost to develop the resource-based PE RVU.

In calculating the estimated cost per minute for services that are in use 24 hours per day for 7 days per week, we have assumed that the maximum amount of time that the equipment can be in use is approximately 525,000 minutes (that is, 525,000 minutes = (24 hours per day) × (7 days per week) × (52 weeks per year) × (60 minutes per hour)).

For CY 2008, we used 525,000 minutes to calculate the per minute equipment cost for the equipment used in CPT code 93012, Telephonic transmission of post-symptom electrocardiogram rhythm strip(s), 24-hour attended monitoring, per 30 day period of time; tracing only and CPT code 93271, Patient demand single or multiple event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; monitoring, receipt of transmissions, and analysis. Based on information presented to us by a provider group suggesting that the equipment was in use continuously, we determined that this equipment is used 24 hours a day, 7 days a week. Thus, we assigned the equipment a 100 percent usage rate. However, in subsequent discussions with a provider group, we determined that, although there may be a 100 percent usage rate for a particular month, this does not correspond to a 100 percent usage rate for a year. Therefore, for CY 2009 we are proposing to apply our standard utilization rate of 50 percent to the 525,000 maximum minutes of use, consistent with our utilization rate assumption for other equipment. This results in 262,500 minutes (that is, 262,500 = 525,000 × 0.50) of average use over the course of the year.

In the CY 2008 PFS rule, we used 43,200 minutes (60 minutes per hour × 24 hours per day × 30 days per month) to estimate the per use cost of the equipment in these monthly services. We are continuing to use 43,200 minutes in determining the equipment cost per use for these codes. The PE RVUs would increase from 5.28 to 5.98 as a result of this change.

c. Change to PE Database Inputs for Certain Cardiac Stress Tests

The direct PE inputs for CPT code 93025, Microvolt T-wave alternans for assessment of ventricular arrhythmias, for clinical labor are not consistent with the other cardiac stress tests, CPT codes 93015, Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; with physician supervision, with interpretation and report, and 93017, Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; tracing only, without interpretation and report. These codes were refined by the PEAC in January 2002, the same year that CPT code 93025 was implemented. Because of this overlap in timing, the codes that the PEAC refined utilize registered nurses (RNs) while CPT 93025 uses a “blend” of RNs and physicians.

To provide consistency across the family, we are proposing to designate the RN as the labor type for CPT code 93025. In addition, we are proposing to add the specific Micro-volt T-wave testing equipment, priced at $40,000, to replace the two different cardiac stress testing treadmill devices that are currently assigned to this code and reflected in the PE database. We are also proposing to assign the service period time, 53 minutes, to the exam table and the Micro-volt T-wave testing treadmill because neither piece of equipment is available for use by others during the testing interval. The T-wave stress test must be done in quiet room. Using this rationale for the other two stress testing CPT codes (that is, 93015 and 93017), we are also proposing to revise the PE database for these services and allocate the 55-minute service period time to the exam table and the stress testing equipment rather than the 41 minutes currently assigned.

d. Revisions to § 414.22(b)(5)(i) Concerning Practice Expense

Current regulations at § 414.22(b)(5)(i) provide an explanation of the two levels of PE RVUs—facility and nonfacility—that are used in determining payment under the PFS. Section 414.22(b)(5)(i)(A) discusses facility PE RVUs and § 414.22 (b)(5)(i)(B) discusses nonfacility PE RVUs. Language in each of these sections incorrectly implies that the facility PE RVU is lower than or equal to the nonfacility PE RVUs. However, there are some instances where the facility PE RVUs may actually be greater than the nonfacility PE RVUs. In order to address this inaccuracy, we are proposing to revise § 414.22(b)(5)(i) (A) and (B) to remove this language.

B. Geographic Practice Cost Indices (GPCI): Locality Discussion

[If you choose to comment on issues in this section, please include the caption “GPCI: LOCALITY DISCUSSION” at the beginning of your comments.]

1. Update

Section 1848(e)(1)(A) of the Act requires us to develop separate Geographic Practice Cost Indices Start Printed Page 38513(GPCIs) to measure resource cost differences among localities compared to the national average for each of the three fee schedule components (work, PE and malpractice). While requiring that the PE and malpractice GPCIs reflect the full relative cost differences, section 1848(e)(1)(A)(iii) of the Act requires that the physician work GPCIs reflect only one-quarter of the relative cost differences compared to the national average.

Section 1848(e)(1)(C) of the Act requires us to review and, if necessary, adjust the GPCIs at least every 3 years. This section also specifies that if more than 1 year has elapsed since the last GPCI revision, we must phase in the adjustment over 2 years, applying only one-half of any adjustment in each year. As discussed in the CY 2008 PFS final rule with comment period (72 FR 66243), in CY 2008 we established new GPCIs for each Medicare locality and implemented them. The CY 2008 adjustment to the GPCIs reflected the first year of the 2-year phase-in.

We note that the proposed CY 2009 physician work GPCIs do not reflect the 1.000 floor that was in place during CY 2006 through June 30, 2008. As discussed in section II.S. of this preamble, “Expiring Provisions and Related Discussion”, the 1.000 work GPCI floor expired as of January 1, 2008 in accordance with section 102 of the MIEA-TRHCA. However, section 103 of the MMSEA extended application of 1.000 floor to the physician work GPCI through June 30, 2008. See Addenda D and E for the proposed CY 2009 GPCIs and summarized geographic adjustment factors (GAFs).

For a detailed explanation of how the GPCI update was developed, see the CY 2008 PFS final rule with comment period (72 FR 66244).

2. Payment Localities

a. Background

As stated above in this section, section 1848(e)(1)(A) of the Act requires us to develop separate GPCIs to measure resource cost differences among localities compared to the national average for each of the three fee schedule components (work, PE, and malpractice). Payments under the PFS are based on the relative resources required to provide services, and are adjusted for differences in resource costs among payment localities using the GPCIs. As a result, PFS payments vary between localities. Although the PFS payment for a particular service is actually adjusted by applying a GPCI to each fee schedule component, for purposes of discussion and comparison, we calculate a geographic adjustment factor (GAF) for each locality. These GAFs reflect a weighted average of the GPCIs within the locality and can be used as a general proxy for area practice costs. A GAF is calculated to reflect a summarization of the GPCIs, (which is used only to make comparisons across localities). The GAFs are not an absolute measure of actual costs, nor are they used to calculate PFS payments. Rather, they are a tool that can be used as a proxy for differences in the cost of operating a medical practice among various geographic areas (for example counties) for the purpose of assessing the potential impact of alternative locality configurations.

Prior to 1992, Medicare payments for physicians' services were made on the basis of reasonable charges. 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. A total of 210 localities were developed; including 22 “Statewide” localities where all areas within a State (whether urban or rural) received the same payment amount for a given service. These localities changed little between the inception of Medicare in 1966 and the beginning of the PFS. Following the inception of the PFS, we acknowledged that there was no consistent geographic basis for these localities and that they did not reflect the significant economic and demographic changes that had taken place since 1966. As a result, a study was begun in 1994 which culminated in a comprehensive locality revision which was implemented in 1997.

The 1997 payment locality revision was based and built upon the prior locality structure. The 22 previously existing Statewide localities remained Statewide localities. New localities were established in the remaining 28 States by comparing the area cost differences (using the GAFs as a proxy for costs) of the localities within these States. We ranked the existing localities within these States by GAFs in descending order. The GAF of the highest locality within a State was compared to the weighted average GAF of other localities. If the differences between these GAFs exceeded 5 percent, the highest locality remained a distinct locality. If the GAFs associated with all the localities in a State did not vary by at least 5 percent, the State became a Statewide locality. If the highest locality remained a distinct locality, the process was repeated for the second highest locality and so on until the variation among remaining localities fell below the 5 percent threshold. The rest of the localities within the State were combined into a single rest-of-State locality as their costs were relatively homogeneous. The revised locality structure (which is the one currently in use) reduced the number of localities from 210 to 89. The number of Statewide localities increased from 22 to 34. The development of the current locality structure is described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and the final rule (61 FR 59494).

Although there have been no changes to the locality structure since 1997, we have considered and proposed making changes in recent years. As we have frequently noted, any changes to the locality configuration must be made in a budget neutral manner. Therefore, changes in localities can lead to significant redistributions in payments. For many years, we have not considered making changes to localities without the support of a State Medical Association, which we believed would demonstrate consensus for the change among the professionals who would be affected. However, we recognize that over time changes in demographics or local economic conditions may lead us to conduct a more comprehensive examination of existing payment localities.

Payment Locality Approaches Discussed in the CY 2008 PFS Proposed Rule

For the past several years, we have been involved in discussions with California physicians and their representatives about recent shifts in relative demographics and economic conditions among a number of counties within the current California payment locality structure. In the CY 2008 proposed rule, we described three options for changing the payment localities in California. A detailed discussion of the options for changing the payment localities in California may be found in both the CY 2008 PFS proposed rule and final rule with comment period (72 FR 38139 and 72 FR 66245, respectively).

After evaluating the comments on these options, which included MedPAC's two suggestions for developing changes in payment localities for the entire country (not just California), other States expressing interest in having their payment localities reconfigured, and the California Medical Association's decision not to endorse any option, we decided not to proceed with any of the alternatives we presented. We explained in the CY 2008 final rule with comment period (72 FR 66248) that we intend to Start Printed Page 38514conduct a thorough analysis of potential approaches to reconfiguring localities and would address this issue again in future rulemaking. We also noted that some commenters wanted us to consider a national reconfiguration of localities rather than just making changes one State at a time.

b. Alternative Payment Locality Approaches

As a follow-up to the CY 2008 PFS final rule with comment period, we have contracted with Acumen, LLC to conduct a preliminary study of several options for revising the payment localities. To that end, we are currently reviewing several alternative approaches for reconfiguring payment localities on a nationwide basis. However, our study of possible alternative payment locality configurations is in the early stages of development. The discussion that follows provides a brief description of the alternative payment locality configurations currently under consideration. An interim report on the results of this research will be posted on the CMS Web site following the publication of this proposed rule.

At this time, we are not proposing to make any changes to our payment localities. When we are ready to propose a change to the locality configuration, we will provide extensive opportunities for public comment (for example, town hall meetings or open door forums, as well as soliciting public comments in a proposed rule) before implementing any change. If we would make changes to the locality structure, we anticipate applying any locality reconfiguration uniformly to all States.

Option 1: CMS Core Based Statistical Area (CBSA) Payment Locality Configuration

Option 1 would use the Office of Management and Budget (OMB's) Metropolitan Statistical Area (MSA) designations for the payment locality configuration. MSAs would be considered as urban core-based statistical areas (CBSAs). Micropolitan Areas (as defined by OMB) and rural areas would be considered as non-urban (rest of State) CBSAs. This approach would be consistent with the inpatient hospital prospective payment system (IPPS) pre-reclassification CBSA assignments and with the geographic payment adjustments used in other payment systems such as ESRD facilities, SNFs, ASCs, and home health agencies (HHAs). Under this method, GPCI payment localities would be defined by MSAs (urban CBSAs) and “rest of State” areas (non-urban CBSAs) and the number of localities would increase.

Option 2: Separate High Cost Counties From Existing Localities

This method for reconfiguring payment localities was suggested by MedPAC as part of its comments on the CY 2008 PFS proposed rule. Under this approach, we would begin with the existing 89 GPCI localities and create new localities based on an iterative comparison process using the GAF as a proxy for costs. (As discussed above, the GAF is used as a general proxy for area practice costs. The GAFs are used only to make comparisons across localities or other geographic subdivision and do not reflect an absolute measure of costs.) For example, the county with the highest GAF in a given locality is compared to the average GAF for all other counties in the locality. If the GAF for the highest county exceeds the average GAF for all other counties in the locality by more than 5 percent, the highest county is assigned its own locality. The GAF of the second highest county is then compared to the average GAF for all other remaining counties in the locality. If the GAF for the second highest county exceeds the average GAF for the other remaining counties by more than 5 percent, the second highest county is also assigned its own locality. The process is repeated for the next highest county(ies) until the difference between the GAF for the highest remaining county and the average GAF for the other remaining counties is less than 5 percent. This approach is similar to an option we presented last year for California except that under this option, the GAF of higher counties is compared to the average GAF of all other remaining lower GAF counties, rather than to the entire locality's GAF. As such, this approach would remove higher cost counties from their existing locality structure and they would each be placed into their own locality.

Option 3: Separate MSAs From Statewide Localities

Option 3 was also suggested by MedPAC. This alternative for payment locality configuration begins with Statewide localities (for every State) and creates separate localities for higher cost (higher GAF) MSAs. Under this approach, localities are determined within each State based on the same iterative process as described above in option 2. The GAF of the highest MSA in a given State is compared to the average GAF of all other areas within the State. For example, the highest cost MSA would be compared to an average GAF for all other MSAs in the State and the counties in the “rest of State” area. If the GAF of the highest MSA is more than 5 percent greater than the average GAF for all other areas in that State, then the highest MSA becomes a separate locality. This iterative process continues with the second highest MSA. The process stops when the GAF of the highest remaining MSA is not more than 5 percent greater than the average of the other remaining areas within the State. This option is similar to option 2; however, it removes higher cost MSAs from the “rest of State” locality rather than removing higher cost counties from their existing payment locality.

Option 4: Group Counties Within a State Into Locality Tiers Based on Costs

This approach combines counties within a State into tiers (or groupings) based on similar GAFs. (This alternative is similar to an option we considered for California last year). Under this approach, counties in each State are sorted in descending order by GAFs. The highest county GAF is compared to the second highest. If the difference is less than 5 percent, the counties are included in the same locality. The third highest county GAF is then compared to the highest county GAF. This process continues until a county has a GAF difference from the highest county GAF that is more than 5 percent. When this occurs, that county becomes the highest county in a new payment locality and the process is repeated for all counties in the State. This methodology creates tiers of counties (within each State) that may or may not be contiguous but share similar practice costs.

c. Solicitation of Comments

As noted earlier in this section, we will be posting an interim report of our locality study on the CMS Web site after publication of this proposed rule. Information on how to access the report will be made available through the PFS home page on the CMS Web site at http://www.cms.hhs.gov/​PhysicianFeeSched/​. Additionally, we plan to update our Web site periodically as our research progresses.

We encourage interested parties to submit comments on the options presented both here and in our interim report to the address for comments listed on our Web site. We are also interested in receiving comments and suggestions on other potential alternative locality configurations (in addition to the options described in this section). Additionally, we are requesting comments on the administrative and operational issues associated with the various options under consideration. As previously discussed, we are not Start Printed Page 38515proposing any changes to the payment locality configurations at this time. When we are ready to propose any changes to the locality configuration, we will provide extensive opportunities for public comment (for example, town hall meetings or open door forums) on specific proposals before implementing any change.

C. Malpractice RVUs (PC/TC Issue)

[If you choose to comment on issues in this section, please include the caption “MALPRACTICE RVUs” at the beginning of your comments.]

In the CY 1992 PFS final rule (56 FR 59527), we described in detail how malpractice (MP) RVUs are calculated for each physicians' service and, when professional liability insurance (PLI) premium data are not available, how we crosswalk or assign RVUs to services. Following the initial calculation of resource-based MP RVUs, the MP RVUs are then subject to review by CMS at 5-year intervals. Reviewing the MP RVUs every 5 years ensures that the MP relative values reflect any marketplace changes in the physician community's ability to acquire PLI. However, there are codes that define certain radiologic services that have never been part of the MP RVU review process. The MP RVUs initially assigned to these codes have not been revised because there is a lack of suitable data on the cost of PLI for technical staff or imaging centers (where most of these services are performed).

In the CY 2008 PFS proposed rule (72 FR 38143), we noted that the PLI workgroup, a subset of the Relative Value Update Committee (RUC) of the AMA, brought to our attention the fact that there are approximately 600 services that have technical component (TC) MP RVUs that are greater than the professional component (PC) MP RVUs. Suggesting that it is illogical for the MP RVUs for the TC of a service to be higher than the MP RVUs for the PC, the PLI workgroup requested that we make changes to these MP RVUs.

We responded that we would like to develop a resource-based methodology for the technical portion of these MP RVUs; but that we did not have data to support any such change. We asked for information about how, and if, technicians employed by facilities purchase PLI or how their professional liability is insured. We also asked for comments on what types of PLI are carried by facilities that perform these technical services.

In comments submitted in response to the proposed rule, the American College of Cardiology (ACC) suggested that we “flip” the MP RVUs between the PCs and TCs. This proposal would reduce the MP RVUs for the TC and increase the MP RVUs for the PC. We also received comments from the American College of Radiology (ACR) suggesting that we make the TC RVUs equal to the PC RVUs. The ACR stated that there was clearly some professional liability associated with these codes and using the resource-based MP RVUS of the PC maintains the resource-based methodology and eliminates the logical inequities of the TC having more RVUs than the PC.

The AMA's PLI workgroup recommended that we reduce the MP RVUs for the TC for these codes to zero. The workgroup suggested that there are no identifiable separate costs for professional liability for the TC. The workgroup also recommended that the MP RVUs removed from the TC for these codes be redistributed across all physicians' services.

In the CY 2008 PFS final rule with comment period (72 FR 66248), we stated, in response to the suggestions from the AMA, ACR, and ACC, that we that we did not believe it would be appropriate to “flip” the PC and TC MP RVU values because the professional part of the MP RVUs have undergone a resource-based review, are derived from actual data, and are consistent with the resource-based methodology for PFS payments. We also stated that we would not simply equalize the PC and TC RVU values because we had no data to demonstrate that the MP costs for the technical portion of these services are the same as the professional portion. In response to the suggestion of the PLI workgroup, we stated that we are not able to evaluate whether sufficient data exists or to make a judgment on the RUC's assertion that there are no such identifiable costs (and therefore, no data are available).

We also received several comments supporting our decision to examine the possibility of developing a resource-based methodology for the technical portion of the MP RVUs. The commenters supported the collection and analysis of appropriate MP premium data before making any changes to the MP RVU distribution. In response, in the CY 2008 PFS final rule with comment period, we stated that we would continue to solicit, collect, and analyze appropriate data on this subject and that when we had sufficient information we would be better able to make a determination as to what, if any, changes should be made, and that we would propose any changes in future rulemaking.

The issue of assigning MP RVUs for the TC of certain services continues to be a source of concern for several physician associations and for CMS. We did not receive a response to our request for additional data on this issue. This issue is one of importance to CMS because the lack of available PLI data affects our ability to make a resource-based evaluation of the TC MP RVUs for these codes. As part of our work to update the MP RVUs in CY 2010, we will instruct our contractor to research available data sources for the MP costs associated with the TC portion of these codes. We will also ask the contractor to look at what is included in general liability insurance versus PLI for physicians and other professional staff. If data sources are available, we will instruct the contractor to gather the data so we will be ready to implement revised MP RVUs for the TC of these codes in conjunction with the update of MP RVUs for the PCs in 2010.

D. Medicare Telehealth Services

[If you choose to comment on issues in this section, please include the caption “MEDICARE TELEHEALTH SERVICES” at the beginning of your comments.]

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

Section 1834(m)(4)(F) of the Act defines telehealth services as professional consultations, office visits, and office psychiatry services, and any additional service specified by the Secretary. In addition, the statute required us to establish a process for adding services to or deleting services from the list of telehealth services on an annual basis.

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 an ongoing opportunity to submit requests for adding services. We assign any request to make additions to the list of Medicare telehealth services to one of the following categories:

  • Category #1: Services that are similar to professional consultations, office visits, and office psychiatry services. In reviewing these requests, we look for similarities between the proposed 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.Start Printed Page 38516
  • Category #2: Services that are not similar to the current list of telehealth services. Our review of these requests includes an assessment of whether the use of a telecommunications system to deliver the service produces similar diagnostic findings or therapeutic interventions as compared with the face-to-face “hands on” delivery of the same service. Requestors should submit evidence showing that the use of a telecommunications system does not affect the diagnosis or treatment plan as compared to a face-to-face delivery of the requested service.

Since establishing the process, we have added the following to the list of Medicare telehealth services: psychiatric diagnostic interview examination; ESRD services with two to three visits per month and four or more visits per month (although we require at least one visit a month to be furnished in-person “hands on”, by a physician, clinical nurse specialist (CNS), nurse practitioner (NP), or physician assistant (PA) to examine the vascular access site); individual medical nutrition therapy; and the neurobehavioral status exam.

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 2007 are considered for the CY 2009 proposed rule. For more information on submitting a request for an addition to the list of Medicare telehealth services, visit our Web site at www.cms.hhs.gov/​telehealth/​.

2. Submitted Requests for Addition to the List of Telehealth Services

We received the following requests in CY 2007 for additional approved services to become effective for CY 2009: (1) Diabetes self-management training (DSMT); and (2) critical care services. In addition, in the CY 2008 PFS final rule with comment period (72 FR 66250), we committed to continuing to evaluate last year's request to add subsequent hospital care to the list of approved telehealth services. The following is a discussion of these requests.

a. Diabetes Self-Management Training (DSMT)

The American Telemedicine Association (ATA) and the Marshfield Clinic submitted a request to add diabetes self-management training (DSMT) (as represented by Healthcare Common Procedure Coding System (HCPCS) codes G0108 and G0109) to the list of approved telehealth services. In the CY 2006 PFS proposed rule (70 FR 45787) and final rule with comment period (70 FR 70157), we did not approve a previous request to add DSMT to the list of approved telehealth services. We approved a request to add individual medical nutrition therapy (MNT) to the list of approved telehealth services.

The current request asks us to evaluate and approve individual and group DSMT as Category 1 services because they are comparable to MNT. The requesters believe that MNT and DSMT are similar because both are designed to provide education in the primary care setting and to facilitate behavior modification on the part of the patient. The requesters asked us to examine the clinical outcomes of providing the service and evidence-based practice in determining whether the codes should be added to the list of approved telehealth services. The requesters also asked us to examine whether DSMT is appropriate care by those standards (clinical outcomes and evidence-based practice), and they provided evidence that DSMT has a direct effect on reducing HbA1c levels and improves outcomes for patients.

CMS Review

The requesters specifically asked us to evaluate DSMT as a Category 1 service based on clinical outcomes and evidence-based practice. This approach does not match the criteria we use to assign services to Category 1. To determine whether to assign a request to Category 1, we look for similarities between the service that is being considered for addition 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. Analysis of clinical outcomes and evidence-based practice alone are not sufficient to assign services to Category 1.

The requesters believe that DSMT services can be considered and approved for telehealth as Category 1 services because they are comparable to MNT services approved for telehealth. Section 414.65 provides for the payment of individual MNT furnished via telehealth. Group MNT is not an approved telehealth service, so it cannot be used as a point of comparison for group DSMT (as represented by HCPCS code G0109). Moreover, as noted in our previous review of DSMT, group counseling services have a different interactive dynamic between the physician or practitioner at the distant site and beneficiary at the originating site as compared to services on the current list of Medicare telehealth services (70 FR 45787 and 70 FR 70157). Since the interactive dynamic of group DSMT is not similar to individual MNT or any other service currently approved for telehealth, we believe that group DSMT must be evaluated as a category 2 service.

Section 1861(qq) of the Act provides that DSMT (which can be either a group or individual service) involves educational and training services to ensure therapy compliance or to provide necessary skills and knowledge to participate in managing the condition, including the skills necessary for the self-administration of injectable drugs. We believe individual DSMT is not analogous to individual MNT because of the element of skill-based training that is encompassed within individual DSMT, but is not an aspect of individual MNT (or any other services currently approved for telehealth). Due to the statutory requirement that DSMT services include teaching beneficiaries the skills necessary for the self-administration of injectable drugs, we believe that DSMT, whether provided to an individual or a group, must be evaluated as a category 2 service.

Because we consider individual and group DSMT to be category 2 services, we need to evaluate whether these are services for which telehealth can be an adequate substitute for a face-to-face encounter. Most of the studies cited by the requesters focused on the value of DSMT in helping individuals with diabetes achieve successful health-related outcomes. Some of these studies documented clinical outcomes and evidence-based practice of the appropriateness of DSMT in treating diabetes, but they did not provide comparative analysis demonstrating that DSMT provided via telehealth is equivalent to the face-to-face delivery of such services. As such, these studies were not relevant to this review.

One study cited by the requesters which analyzed diabetes care provided via telehealth defined telehealth technologies to consist of messaging and monitoring devices. The telehealth technologies utilized in this study do not correspond with our definitions of telehealth as specified in § 410.78.

Another study cited by the requesters as examining the effectiveness of diabetes management provided via telehealth was intended to help diabetic participants manage their care with the help of a home-based telehealth support system. The study's authors note some interesting correlations that were observed without any claim of reliability or validity, and the study's Start Printed Page 38517authors clearly state that no causal relationships can be referred from the data.

A third study cited by the requesters compared diabetes education provided through telemedicine technology to diabetes education provided in-person. The study design did not include training patients in the self-administration of injectable drugs, which is one of the elements of DSMT under section 1861(qq) of the Act. The success of one diabetes educator in teaching the self-administration of insulin to one of the participants was anecdotal; no conclusive evidence was provided that insulin administration can routinely be taught effectively as a telehealth service.

After reviewing these studies, we determined that we do not have sufficient comparative analysis or other compelling evidence that either individual or group DSMT delivered via telecommunications is equivalent to DSMT delivered face-to-face. We do not find evidence that providing DSMT via telehealth is an adequate substitute for the face-to-face encounter between the practitioner and the patient. Therefore, we are not proposing to add individual and group DSMT (as described by HCPCS codes G0108 and G0109) to the list of approved telehealth services.

b. Critical Care Services

The University of Pittsburgh Medical Center (UPMC) submitted a request to add critical care services (as defined by HCPCS codes 99291 and 99292) as a “Category 1” service. The requester draws similarities to the evaluation and management (E/M) consultation services currently approved for telehealth. The requester noted that the primary difference between critical care and other E/M services already approved for telehealth is that critical care is specific to patients with vital organ failure. Anecdotally, UPMC has found that the use of telecommunications systems and software gives critically injured or ill patients (specifically stroke patients) timely access to highly specialized physicians. According to the request, UPMC physicians are able to give “an equally effective examination, spend the same amount of time with the patient and develop the same course of treatment just as if they were bedside.”

CMS Review

The acuity of a critical care patient is significantly greater than the acuity generally associated with patients receiving the E/M services approved for telehealth. Because of the acuity of critically ill patients, we do not consider critical care services similar to any services on the current list of Medicare telehealth services. Therefore, we believe critical care must be evaluated as a Category 2 service.

Because we consider critical care services to be Category 2, we need to evaluate whether these are services for which telehealth can be an adequate substitute for a face-to-face encounter. We have no evidence suggesting that the use of telehealth could be a reasonable surrogate for the face-to-face delivery of this type of care. As such, we do not propose to add critical care services (as defined by HCPCS codes 99291 and 99292) to the list of approved telehealth services.

c. Subsequent hospital care

Prior to 2006, follow-up inpatient consultations (as described by CPT codes 99261 through 99263) were approved for telehealth. CPT 2006 deleted the follow-up inpatient consultation codes and advised practitioners instead to bill for these services using the codes for subsequent hospital care (as described by CPT codes 99231 through 99233). For CY 2006, we removed the deleted codes for follow-up inpatient consultations from the list of approved telehealth services.

In the CY 2008 PFS proposed rule (72 FR 38144) and final rule with comment period (72 FR 66250), we discussed a request we received from the ATA to add subsequent hospital care to the list of approved telehealth services. Because there is currently no method for practitioners to bill for follow-up inpatient consultations delivered via telehealth, the ATA requested that we approve use of the subsequent hospital care codes to bill follow-up inpatient consultations furnished via telehealth, as well as to bill for subsequent hospital care services furnished via telehealth that are related to the ongoing E/M of the hospital inpatient (72 FR 66250). Since the subsequent hospital care codes describe a broader range of services than follow-up inpatient consultation, including some services that may not be appropriate for addition to the list of telehealth services, we did not add subsequent hospital care to the list of approved telehealth services. Instead, we committed to continue to evaluate whether, and if so, by what mechanism subsequent hospital care could be approved for telehealth when used for follow-up inpatient consultations (72 FR 66249).

CMS Review

We considered the possibility of approving subsequent hospital care for telehealth with specific limitations, for example, approving subsequent hospital care for telehealth only when the codes are used for follow-up inpatient consultations. Given the potential acuity level of the patient in the hospital setting, we remain concerned that practitioners could misuse the codes and provide a broader range of subsequent hospital care services via telehealth than was formerly approved for telehealth with the follow-up inpatient consultation codes, including the on-going, day-to-day E/M of a hospital inpatient. (For a discussion of these issues, see 72 FR 38144 and 66249.) We were also concerned that it could be difficult to implement sufficient controls and monitoring to ensure that the telehealth use of the codes for subsequent hospital care is limited to the delivery of services that were formerly described as follow-up inpatient consultations.

We have considered this issue further, and for CY 2009, we are proposing to create a new series of HCPCS codes for follow-up inpatient telehealth consultations. Practitioners would use these codes to submit claims to their Medicare contractors for payment of follow-up inpatient consultations provided via telehealth. The new HCPCS codes will be limited to the range of services included in the scope of the previous CPT codes for follow-up inpatient consultations, and the descriptions will be modified to limit the use of such services for telehealth. The HCPCS codes will clearly designate these as follow-up inpatient consultations provided via telehealth, and not subsequent hospital care used for inpatient visits. Utilization of these codes would allow us to provide payment for these services, as well as enable us to monitor whether the codes are used appropriately. We also propose to establish the RVUs for these services at the same level as the RVUs established for subsequent hospital care (as described by CPT codes 99231 through 99233). We believe this is appropriate because a physician or practitioner furnishing a telehealth service is paid an amount equal to the amount that would have been paid if the service had been furnished without the use of a telecommunication system. Since physicians and practitioners furnishing follow-up inpatient consultations in a face-to-face encounter must continue to utilize subsequent hospital care codes (as described by CPT codes 99231 through 99233), we believe it is appropriate to set the RVUs for the new telehealth G codes at the same level as for the subsequent hospital care codes.

As defined below in this section, we are proposing to create HCPCS codes Start Printed Page 38518specific to the telehealth delivery of follow-up inpatient consultations solely to re-establish the ability for practitioners to provide and bill for follow-up inpatient consultations delivered via telehealth. These codes are intended for use by practitioners serving beneficiaries located at qualifying originating sites (as defined in § 410.78) requiring the consultative input of physicians who are not available for a face-to-face encounter. These codes are not intended to include the ongoing E/M of a hospital inpatient.

Claims for follow-up inpatient telehealth consultations will be submitted to the contractors that process claims for the service area where the physician or practitioner who furnishes the service is located. Physicians/practitioners must submit the appropriate HCPCS procedure code for follow-up inpatient telehealth consultations along with the “GT” modifier (“via interactive audio and video telecommunications system”). By coding and billing the “GT” modifier with the inpatient follow-up inpatient telehealth consultation codes, the distant site physician/practitioner certifies that the beneficiary was present at an eligible originating site when the telehealth service was furnished. (See the CMS Internet-Only Medicare Claims Processing Manual, Pub. 100-04, Chapter 15, Section 190.6.1 for instructions for submission of interactive telehealth claims.)

In the case of Federal telemedicine demonstration programs conducted in Alaska or Hawaii, store and forward technologies may be used as a substitute for an interactive telecommunications system. Covered store and forward telehealth services are billed with the “GQ” modifier, “via asynchronous telecommunications system.” By using the “GQ” modifier, the distant site physician/practitioner certifies that the asynchronous medical file was collected and transmitted to him or her at the distant site from a Federal telemedicine demonstration project conducted in Alaska or Hawaii. (See the CMS Internet-Only Medicare Claims Processing Manual, Pub. 100-04, Chapter 15, Section 190.6.2 for instructions for submission of telehealth store and forward claims.)

Follow-Up Inpatient Telehealth Consultations Defined

Follow-up inpatient telehealth consultations are consultative visits furnished via telehealth to complete an initial consultation or subsequent consultative visits requested by the attending physician. The initial inpatient consultation may have been provided in person or via telehealth. The conditions of payment for follow-up inpatient telehealth consultations, including qualifying originating sites and the types of telecommunications systems recognized by Medicare, are subject to the provisions of § 410.78. Payment for these services is subject to the provisions of § 414.65.

We are proposing to describe follow-up inpatient telehealth consultations to include monitoring progress, recommending management modifications, or advising on a new plan of care in response to changes in the patient's status. Counseling and coordination of care with other providers or agencies would be included as well, consistent with nature of the problem(s) and the patient's needs. The physician or practitioner who furnishes the inpatient follow-up consultation via telehealth may not be the physician of record or the attending physician, and the follow-up inpatient consultation would be distinct from the follow-up care provided by a physician of record or the attending physician. If a physician consultant has initiated treatment at an initial consultation and participates thereafter in the patient's ongoing care management, such care would not be included in the definition of a follow-up inpatient consultation and is not appropriate for delivery via telehealth.

Payment for follow-up telehealth inpatient consultations would include all consultation-related services furnished before, during, and after communicating with the patient via telehealth. Pre-service activities would include, but would not be limited to, reviewing patient data (for example, diagnostic and imaging studies, interim lab work) and communicating with other professionals or family members. Intra-service activities must include at least two of the three key elements described below for each procedure code. Post-service activities would include, but would not be limited to, completing medical records or other documentation and communicating results of the consultation and further care plans to other health care professionals. No additional E/M service could be billed for work related to a follow-up inpatient telehealth consultation.

Follow-up inpatient telehealth consultations could be provided at various levels of complexity. To reflect this, we propose to establish three codes.

Practitioners taking a problem-focused interval history, conducting a problem-focused examination, and engaging in medical decision-making that is straightforward or of low complexity, would bill a limited service, using HCPCS GXX14. At this level of service, practitioners would typically spend 15 minutes communicating with the patient via telehealth.

Practitioners taking an expanded focused interval history, conducting an expanded problem-focused examination, and engaging in medical decision-making that is of moderate complexity, would bill an intermediate service using HCPCS GXX15. At this level of service, practitioners would typically spend 25 minutes communicating with the patient via telehealth.

Practitioners taking a detailed interval history, conducting a detailed examination, and engaging in medical decision-making that is of high complexity, would bill a complex service, using HCPCS GXX16. At this level of service, practitioners would typically spend 35 minutes or more communicating with the patient via telehealth.

We are proposing to establish the following HCPCS codes to describe follow-up inpatient consultations approved for telehealth:

  • GXX14, Follow-up inpatient telehealth consultation, limited, typically 15 minutes communicating with the patient via telehealth.
  • GXX15, Follow-up inpatient telehealth consultation, intermediate, typically 25 minutes communicating with the patient via telehealth.
  • GXX16, Follow-up inpatient telehealth consultation, complex, typically 35 minutes or more communicating with the patient via telehealth.

E. Specific Coding Issues Related to the Physician Fee Schedule

[If you choose to comment on issues in this section, please include the caption “CODING ISSUES” at the beginning of your comments.]

1. Payment for Preadministration-Related Services for Intravenous Infusion of Immune Globulin

Immune globulin is a complicated biological product that is purified from human plasma obtained from human plasma donors. Its purification is a complex process that occurs along a very long timeline, and therefore, only a small number of manufacturers provide commercially available products. In past years, there have been issues reported with the supply of intravenous immune globulin (IVIG) due to numerous factors including decreased manufacturing capacity, increased usage, more sophisticated Start Printed Page 38519processing steps, and low demand for byproducts from IVIG fractionation.

The Medicare payment rates for IVIG products are established through the Part B average sales price (ASP) drug methodology. Payment for administration of the IVIG is made separately under the PFS. IVIG administration is billed using the CPT codes for the first hour and, as needed, additional hour CPT infusion codes for therapeutic, prophylactic, and diagnostic services.

In addition, a separate payment has been made under the PFS and the Hospital Outpatient Prospective Payment System (OPPS) for IVIG preadministration-related services since 2006. Separate payment for the preadministration-related services was implemented in 2006 largely because of reported instability in the IVIG marketplace due, in part, to the implementation of the new ASP payment methodology for IVIG drugs.

As discussed in the CY 2006 PFS final rule with comment period (70 FR 70219 through 70220), at that time the IVIG marketplace was one in which a significant portion of IVIG products previously available in CY 2005 were being discontinued and other products were expected to enter the market over the next year. For CY 2006, there were only 2 HCPCS codes describing all IVIG products based on either lyophilized (powdered) or liquid preparation.

To continue to ensure appropriate access to IVIG, in CY 2006 during this short-term period of market instability for IVIG, we temporarily initiated a separate payment to physicians to reflect the additional resources that may have been associated with locating and acquiring adequate IVIG product and preparing for an office infusion of IVIG.

In order to address what was considered to be an impermanent period of market instability, we created a separate G-code, G0332, IVIG preadministration-related services for intravenous infusion of immunoglobulin, per infusion encounter. As discussed in the CY 2006 PFS final rule with comment period, we expected the IVIG marketplace to stabilize through 2006 and that the atypical preadministration-related services relating to IVIG would be temporary and no longer necessary for physicians' offices that provided IVIG infusions to patients.

However, in the CY 2007 PFS final rule with comment period (71 FR 69678), we decided to continue the IVIG preadministration-related services payment for an additional year to help ensure patient access to IVIG. We stated in that rule that we were anticipating the results of the HHS Office of Inspector General (OIG) study on the availability and pricing of IVIG before changing this policy. In addition, we continued to receive comments from stakeholders that some beneficiaries were experiencing IVIG access issues such as delayed treatments and site of service shifts.

In the CY 2008 PFS proposed rule (72 FR 38146), we proposed to continue payment for G0332 through CY 2008 at the same level of PE RVUs as CY 2007. We referred to the OIG final report published in April 2007 titled, “Intravenous Immune Globulin: Medicare Payment and Availability” (OEI-03-05-00404). The OIG had conducted this study at the request of the Members of the Congressional subcommittees on Health within the House Energy and Commerce and Ways and Means Committees. The OIG examined the current state of IVIG which included analyzing the payment and supply. Specifically, the OIG determined whether hospitals and physicians could purchase IVIG at prices below the Medicare payment amounts in 2005 and 2006 and whether IVIG was readily available to physicians and distributors in 2005 and 2006.

The OIG found that for the third quarter of 2006, just over half of IVIG sales to hospitals and physicians were at prices below Medicare payment amounts. Relative to the previous three quarters, this represented a substantial increase of the percentage of sales with prices below Medicare amounts. During the third quarter of 2006, 56 percent of IVIG sales to hospitals and over 59 percent of IVIG sales to physicians by the largest three distributors occurred at prices below the Medicare payment amounts. The findings of the OIG report suggest that stability in the IVIG market had improved in late 2006. No other comprehensive studies have been presented to show continued instability in market conditions or systematic problems with patient access.

Recent IVIG drug coding revisions and reporting have contributed to increased payments for IVIG products and, we believe, improved market stability. Beginning on July 1, 2007, six new HCPCS codes for specific IVIG products were adopted to implement separate payment for these products. From July 2007 to April 2008, the weighted average increase in payment, based on allowed charges by IVIG product code, was 2.9 percent for all liquid IVIG products and 3.4 percent for all IVIG products, both liquid and powder.

IVIG utilization continues to increase. National claims history data show allowed utilization in physicians' offices (that is, units of IVIG paid) increased from slightly over 3,000,000 units in 2006 to slightly over 3,600,000 units in 2007.

We continue to meet with representatives of the IVIG industry to discuss their concerns regarding the pricing of IVIG and Medicare beneficiary access to this important therapy. No additional studies have been published since the OIG report of April 2007 on IVIG pricing, supply or patient access issues with IVIG. We have reviewed national claims data for IVIG drug utilization, as well as utilization of the preadministration-related service codes. This data show modest increases in the utilization of IVIG drugs and the preadministration-related service code which suggests that pricing and access may be improving.

The G-code payment for IVIG preadministration-related services was intended to be a temporary stopgap policy. We continued these temporary payments for 3 years because we had received reports of market disruptions and were concerned about ensuring beneficiary access to these drugs. However, we now believe that the transient market conditions that led us to adopt the payment for IVIG preadministration-related services have improved. Therefore, we are proposing to discontinue separate payment for IVIG preadministration-related services by means of code G0332 furnished on or after January 1, 2009. The treatment of these services under the OPPS will be addressed separately in the OPPS proposed rule.

2. Multiple Procedure Payment Reduction for Diagnostic Imaging

In general, we price diagnostic imaging procedures in the following three ways:

  • The professional component (PC) represents the physician's interpretation (PC-only services are billed with the 26 modifier).
  • The technical component (TC) represents PE and includes clinical staff, supplies, and equipment (TC-only services are billed with the TC modifier).
  • The global service represents both PC and TC.

Effective January 1, 2006, we implemented a multiple procedure payment reduction (MPPR) on certain diagnostic imaging procedures (71 FR 48982 through 49252 and 71 FR 69624 through 70251). When two or more procedures within one of 11 imaging code families are furnished on the same patient in a single session, the TC of the highest priced procedure is paid at 100 Start Printed Page 38520percent and the TC of each subsequent procedure is paid at 75 percent (a 25 percent reduction). The reduction does not apply to the PC.

It is necessary to periodically update the list of codes subject to the MPPR to reflect new and deleted codes. We are proposing to subject several additional procedures to the MPPR. Six procedures represent codes newly created since the MPPR list was established. Four additional procedures have been identified as similar to procedures currently subject to the MPPR. We are also removing CPT 76778, a deleted code, from the list. Table 3 contains the proposed additions to the list. After we adopted the MPPR, section 5102 of the Deficit Reduction Act of 2005 (Pub. L. 109-171) (DRA) exempted the expenditure reductions resulting from this policy from the statutory budget neutrality requirement; therefore, we are proposing that expenditure reductions resulting from these changes be exempt from budget neutrality. (See section VI., Regulatory Impact Analysis, for a discussion of budget neutrality.) The complete list of procedures subject to the MPPR is in Addendum F of this proposed rule.

Table 3.—Procedures Proposed for Multiple Procedure Payment Reduction

CodeShort descriptorCode family
70336mri, temporomandibular joint(s)Family 5 MRI and MRA (Head/Brain/Neck).
70554Fmri brain by techFamily 5 MRI and MRA (Head/Brain/Neck).
75557Cardiac mri for morphFamily 4 MRI and MRA (Chest/Abd/Pelvis).
75559Cardiac mri w/stress imgFamily 4 MRI and MRA (Chest/Abd/Pelvis).
75561Cardiac mri for morph w/dyeFamily 4 MRI and MRA (Chest/Abd/Pelvis).
75563Cardiac mri w/stress img & dyeFamily 4 MRI and MRA (Chest/Abd/Pelvis).
76776Us exam k transpl w/dopplerFamily 1 Ultrasound (Chest/Abdomen/Pelvis—Non-Obstetrical).
76870Us exam, scrotumFamily 1 Ultrasound (Chest/Abdomen/Pelvis—Non-Obstetrical).
77058Mri, one breastFamily 4 MRI and MRA (Chest/Abd/Pelvis).
77059Mri, both breastsFamily 4 MRI and MRA (Chest/Abd/Pelvis).

3. Proposed HCPCS Code for Prostate Saturation Biopsies

Prostate Saturation Biopsy is a technique currently described by Category III CPT code 0137T, Biopsy, prostate, needle, saturation sampling for prostate mapping. Typically, this service entails 40 to 80 core samples taken from the prostate under general anesthesia. Currently, the biopsies are reviewed by a pathologist and this service is captured under CPT code 88305, Surgical pathology, gross and microscopic examination, which is separately billed by the physician for each core sample taken. CPT Code 88305 has a physician work value of 0.75 and a total nonfacility payment rate of $102.83. We believe that paying individually for review of each core sample submitted grossly overpays for the pathological interpretation and report for this service.

We are proposing the following four G codes to more accurately represent the pathologic evaluation, interpretation, and report for this service:

  • GXXX1, Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 1-20 specimens
  • GXXX2, Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 21-40 specimens.
  • GXXX3, Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 41-60 specimens.
  • GXXX4, Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, greater than 60 specimens.

We are proposing to carrier price these codes. We will gather information regarding the laboratory and clinical staff resources required to value these services.

F. Part B Drug Payment

1. Average Sales Price (ASP) Issues

[If you choose to comment on issues in this section, please include the caption “ASP ISSUES” at the beginning of your comments.]

Medicare Part B covers a limited number of prescription drugs and biologicals. For the purposes of this proposed rule, the term “drugs” will hereafter refer to both drugs and biologicals, unless otherwise specified. Medicare Part B covered drugs not paid on a cost or prospective payment basis generally fall into the following three categories:

  • Drugs furnished incident to a physician's service.
  • DME drugs.
  • Drugs specifically covered by statute (certain immunosuppressive drugs, for example).

Beginning in CY 2005, the vast majority of Medicare Part B drugs not paid on a cost or prospective payment basis are paid under the ASP methodology. The ASP methodology is based on data submitted to us quarterly by manufacturers. In addition to the payment for the drug, Medicare currently pays a furnishing fee for blood clotting factors, a dispensing fee for inhalation drugs, and a supplying fee to pharmacies for certain Part B drugs.

In this section, we discuss recent statutory changes to the ASP methodology and other drug payment issues.

a. Determining the Payment Amount Based on ASP Data

The methodology for developing Medicare drug payment allowances based on the manufacturers' submitted ASP data is specified in 42 CFR, part 414, subpart K. We initially established this regulatory text in the CY 2005 PFS Start Printed Page 38521final rule with comment period (69 FR 66424). We further described the formula we use to calculate the payment amount for each Billing code in the CY 2006 PFS proposed rule (70 FR 45844) and final rule with comment period (70 FR 70217) With the enactment of the MMSEA, the formula we use changed beginning April 1, 2008. Section 112(a) of the MMSEA requires us to calculate payment amounts using a specified volume-weighting methodology. In addition, section 112(b) of the MMSEA sets forth a special rule for determining the payment amount for certain inhalation drugs.

For each billing code, we calculate a volume-weighted, ASP-based payment amount using the ASP data submitted by manufacturers. Manufacturers submit ASP data to us at the 11-digit National Drug Code (NDC) level, including the number of units of the 11-digit NDC sold and the ASP for those units. We determine the number of billing units in an NDC based on the amount of drug in the package. For example: A manufacturer sells a box of 4 vials of a drug. Each vial contains 20 milligrams (mg). The billing code is per 10 MG. The number of billing units in this NDC for this billing code is (4 vials × 20 mg)/10 mg = 8 billable units.

Prior to April 1, 2008, we used the following three-step formula to calculate the payment amount for each billing code. First, we converted the manufacturer's ASP for each NDC into the ASP per billing unit by dividing the manufacturer's ASP for that NDC by the number of billing units in that NDC. Then, we summed the product of the ASP per billing unit and the number of units of the 11-digit NDC sold for each NDC assigned to the billing code. Then, we divided this total by the sum of the number of units of the 11-digit NDC sold for each NDC assigned to the billing code.

Beginning April 1, 2008, we use a two-step formula to calculate the payment amount for each billing code. We sum the product of the manufacturer's ASP and the number of units of the 11-digit NDC sold for each NDC assigned to the billing and payment code, and then divide this total by the sum of the product of the number of units of the 11-digit NDC sold and the number of billing units in that NDC for each NDC assigned to the billing and payment code.

Prior to April 1, 2008, manufacturers' ASP data for smaller and larger package sizes were given the same weight in our calculation of the payment amounts; that is, the ASP for one vial was weighted the same as the ASP for a box of 10 vials. For payment amounts in effect on or after April 1, 2008, manufacturers' ASPs for larger package sizes have greater impact on the payment amounts and their ASPs for smaller package sizes have less; that is, the ASP for a box of 10 vials is given 10 times the weight of a package containing a single vial. The payment allowance limits published on our Web site for dates of service on or after April 1, 2008 are determined using the new volume-weighting methodology and include application of the special payment rule described in the following paragraph. (See our Web site at http://www.cms.hhs.gov/​McrPartBDrugAvgSalesPrice/​01a_​2008aspfiles.asp#TopOfPage.)

In addition to the formula change, the MMSEA established a special payment rule for certain inhalation drugs furnished through an item of durable medical equipment (DME). The “grandfathering” provision in section 1847A(c)(6)(C)(ii) of the Act requires that certain drugs be treated as multiple source drugs for purposes of calculating the payment allowance limits. Section 112(b) of the MMSEA requires that, effective April 1, 2008, the payment amount for inhalation drugs furnished through an item of DME is the lesser of the amount determined by applying the grandfathering provision or by not applying that provision. We reviewed our payment determinations effective January 1, 2008 to identify the drugs subject to this special rule, and implemented this new requirement in accordance with the statutory implementation date of April 1, 2008. We identified that albuterol and levalbuterol, in both the unit dose and concentrated forms, are subject to the special payment rule. At this time, we have not identified other inhalation drugs furnished through an item of DME to which section 112(b) of the MMSEA applies.

The provisions in section 112 of the MMSEA are self-implementing for services on and after April 1, 2008. Because of the limited time between enactment and the implementation date, it was not practical to undertake and complete rulemaking on this issue prior to implementing the required changes. Inclusion of this topic in this proposed rule, is our first opportunity to propose conforming changes to the regulatory text at § 414.904. We propose to revise paragraphs (a) and (e) to codify the changes to the determination of payment amounts as required by section 112 of the MMSEA. We are soliciting comments on the proposed regulatory text that appears elsewhere in this proposed rule.

b. Average Manufacturer Price (AMP)/ Widely Available Market Prices (WAMP)

Section 1847A(d)(1) of the Act states that “the Inspector General of HHS shall conduct studies, which may include surveys to determine the widely available market prices (WAMP) of drugs and biologicals to which this section applies, as the Inspector General, in consultation with the Secretary, determines to be appropriate.” Section 1847A(d)(2) of the Act states that, “Based upon such studies and other data for drugs and biologicals, the Inspector General shall compare the ASP under this section for drugs and biologicals with—

  • The WAMP for such drugs and biologicals (if any); and
  • The average manufacturer price (AMP) (as determined under section 1927(k)(1) of the Act for such drugs and biologicals.”

Section 1847A(d)(3)(A) of the Act states that, “The Secretary may disregard the average sales price (ASP) for a drug or biological that exceeds the WAMP or the AMP for such drug or biological by the applicable threshold percentage (as defined in subparagraph (B)).” The applicable threshold percentage is specified in section 1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and subsequent years, section 1847A(d)(3)(B)(ii) of the Act establishes that the applicable threshold percentage is “the percentage applied under this subparagraph subject to such adjustment as the Secretary may specify for the WAMP or the AMP, or both.” In CY 2006 through CY 2008, we specified an applicable threshold percentage of 5 percent for both the WAMP and AMP. We based this decision on the limited data available to support a change in the current threshold percentage.

For CY 2009, we propose to specify an applicable threshold percentage of 5 percent for the WAMP and the AMP. At present, the OIG is continuing its ongoing comparison of both the WAMP and the AMP. Furthermore, information on how recent changes to the ASP weighting methodology may affect the comparison of WAMP/AMP to ASP is not available at this time. Since we do not have data suggesting a more appropriate level at this time, we believe that continuing the 5 percent applicable threshold percentage for both the WAMP and AMP is appropriate for CY 2009.

As we noted in the CY 2008 PFS final rule with comment period (72 FR 66259), we understand that there are complicated operational issues Start Printed Page 38522associated with potential payment substitutions. We will continue to proceed cautiously in this area and provide stakeholders, particularly manufacturers of drugs impacted by potential price substitutions, with adequate notice of our intentions regarding such, including the opportunity to provide input with regard to the processes for substituting the WAMP or the AMP for the ASP. As part of our approach, we intend to develop a better understanding of the issues that may be related to certain drugs for which the WAMP and AMP may be lower than the ASP over time.

We welcome comments on our proposal to continue the applicable threshold at 5 percent for both the WAMP and AMP for CY 2009.

2. Competitive Acquisition Program (CAP) Issues

[If you choose to comment on issues in this section, please include the caption “CAP ISSUES” at the beginning of your comments.]

Section 303(d) of the MMA requires the implementation of a competitive acquisition program for certain Medicare Part B drugs not paid on a cost or prospective payment system basis. The provisions for acquiring and billing drugs under the CAP were described in the Competitive Acquisition of Outpatient Drugs and Biologicals Under Part B proposed rule (March 4, 2005, 70 FR 10746) and the interim final rule (July 6, 2005, 70 FR 39022), and certain provisions were finalized in the CY 2006 PFS final rule with comment period (70 FR 70236). The CY 2007 PFS final rule with comment period (70 FR 66260) then finalized portions of the July 6, 2005 IFC that had not already been finalized.

The CAP is an alternative to the ASP (buy and bill) methodology of obtaining certain Part B drugs used incident to physicians' services. Physicians who choose to participate in the CAP obtain drugs from vendors selected through a competitive bidding process and approved by CMS. Under the CAP, physicians agree to obtain all of the approximately 190 drugs on the CAP drug list from an approved CAP vendor. A vendor retains title to the drug until it is administered, bills Medicare for the drug, and bills the beneficiary for cost sharing amount once the drug has been administered. The physician bills Medicare only for administering the drug to the beneficiary. The CAP currently operates with a single CAP drug category. CAP claims processing began on July 1, 2006.

After the CAP was implemented, section 108 of the MIEA-TRHCA made changes to the CAP payment methodology. Section 108(a)(2) of the MIEA-TRHCA requires the Secretary to establish (by program instruction or otherwise) a post-payment review process (which may include the use of statistical sampling) to assure that payment is made for a drug or biological only if the drug or biological has been administered to a beneficiary. The Secretary is required to recoup, offset, or collect any overpayments. This statutory change took effect on April 1, 2007. Conforming changes were proposed in the CY 2008 PFS proposed rule (72 FR 38153) and finalized in the CY 2008 PFS final rule with comment period (72 FR 66260).

In this section, we are proposing several refinements to the CAP regarding the annual CAP payment amount update mechanism, the definition of a CAP physician, the restriction on physician transportation of CAP drugs, and the dispute resolution process. Our proposed refinements are based on the operational experience we have gained since the implementation of the program and we believe that they will improve this relatively new and growing program. Although we are currently evaluating bids for CY 2009 through CY 2011 approved CAP vendor contracts, we do not believe that the proposals in this rule will conflict with the evaluation of bids or the performance of the CAP vendor contracts because we do not expect these proposals to change the way payment is made under the CAP, to significantly change how prospective vendors are expected to furnish drugs under the CAP, or to significantly affect the number of participating CAP physicians.

a. Annual CAP Payment Amount Update Mechanism

Payment amounts for drugs furnished during the first year of an approved CAP vendor's contract are set through a competitive process using bidders' prices and limited by the ASP based payment amount. This process was described in detail in the July 6, 2005 IFC (70 FR 39069 through 39078). Section 414.906(c) provides for updates to an approved CAP vendor's payment amounts based on the vendor's reasonable net acquisition costs (RNAC).

In the July 6, 2005 IFC, we described a two-step process to recompute the single price for each drug in the single drug category if there is a change in the costs reported by a particular vendor. We stated that “we would adjust the bid price that the vendor originally submitted by the percentage change indicated in the cost information that the vendor disclosed. Next, we would recompute the single price for the drug as the median of all of these adjusted bid prices” (70 FR 39076). The two-step process contemplated that there would be more than one approved CAP vendor at the time prices were to be adjusted and that no successful bidders would choose not to participate in the CAP.

However, during the first round of CAP contracting after offering more than one contract, we entered a contract with only one bidder. Thus, during the 2008 price update calculation process, we developed an approach to account for the lack of RNAC data for bidders who chose not to participate in the CAP. We believe that the approach we used to adjust prices for the 2008 contract year is consistent with § 414.906(c) and with the July 6, 2005 IFC because it retains a two step calculation based on the approved CAP vendors' RNAC, as well as the calculation of a median of adjusted bid prices.

This approach was posted on the Approved CAP Vendor page of the CMS Web site at http://www.cms.hhs.gov/​CompetitiveAcquisforBios/​15_​Approved_​Vendor.asp . The percent change in RNAC for 2008 was calculated based on data supplied by the approved CAP vendor. This percent change in RNAC was used as a proxy for the percent change in RNAC for successful bidders that chose not to become approved CAP vendors.

We are proposing to continue using this approach for future CAP payment amount updates where the number of approved CAP vendors is less than the number of successful bidders. We would continue to use the average of the approved CAP vendor-supplied RNAC data as a proxy for data from vendors who bid successfully but are not participating in the CAP. For example, if the payment amounts for the first year of a CAP contract are based on five successful bidders, but only four have signed contracts to supply drugs under the CAP (that is, there are four approved CAP vendors), only RNAC data collected from the four approved CAP vendors would be used to calculate the percent change in the RNAC. The average of the four approved CAP vendors' adjusted payment amounts would be used as a proxy for the RNAC of the successful bidder that is not participating in the CAP. The updated CAP payment amount would then be calculated as the median of the five data points (one data point for each approved CAP vendor's updated payment amount, and one data point calculated using the average of the approved CAP vendor's RNAC). Similarly, if there were five successful bidders but only three chose Start Printed Page 38523to become approved CAP vendors, the average of the three approved CAP vendors' RNAC would be the proxy for the RNAC of the two bidders who did not participate. The median of those five data points would become the updated CAP payment amount.

We believe this approach would provide us with a flexible method for updating CAP prices that is consistent with our original policy as stated in the July 6, 2005 IFC, but that accounts for bidders or approved CAP vendors who are not participating in the program at the time the price updates are calculated. This would include bidders who choose not to participate at the beginning of a contract and those who drop out later. Our proposal clarifies the approach used to calculate the RNAC and does not seek to alter the general approach to the payment calculation update described in the July 6, 2005 IFC and existing regulation text. We welcome comments on this approach.

b. Definition of a CAP Physician

In the July 6, 2005 IFC, we stated that section 1847B of the Act most closely describes a system for the provision of and the payment for drugs provided incident to a physician's service (70 FR 39026). In the CY 2006 PFS final rule with comment period (70 FR 70258), we stated that for the purposes of the CAP, a physician includes all practitioners that meet the definition of a “physician” in section 1861(r) of the Act. This definition includes doctors of medicine, osteopathy, dental surgery, dental medicine, podiatry, and optometry, as well as chiropractors. However, this definition does not include other health care professionals, such as NPs, CNSs, and other professions such as PAs who may be able to legally prescribe medications and enroll in Medicare. Our 2005 CAP definition was not intended to exclude these practitioners who are appropriately billing Medicare for legally prescribed medications administered in a capacity that would be classified as incident to a physician's services if the medications were administered by a physician. We are concerned that the existing CAP definition of a physician is unnecessarily restrictive and could potentially affect access to the CAP for a small segment of providers that should be eligible for participation in the CAP in situations where they currently bill Medicare separately and appropriately.

Therefore, we are proposing to further clarify that, for the purposes of the CAP, the definition of a physician includes all practitioners that meet the definition of a “physician” in section 1861(r) of the Act, as well as practitioners (such as NPs, CNSs and PAs) described in section 1861(s)(2)(K) of the Act and other practitioners who legally prescribe drugs associated with services under section 1861(s) of the Act if those services and the associated drugs are covered when furnished incident to a physician's service. While we believe that most practitioners described in section 1861(s)(2)(K) of the Act would bill under specific physician provider numbers, it is not our intent to exclude practitioners who are able to bill independently for drugs associated with services that are covered when provided by a physician and legally authorized to be performed.

Our proposal is specific to the Part B Drug CAP and does not affect the definition of physician in section 1861(r) of the Act, or the definition of Medical and Other Health Services described in section 1861(s) of the Act. This proposal also does not seek to expand the scope of the CAP beyond what has been described in previous rules, other than to clarify that a small number of providers who are enrolled in Medicare, and who legally prescribe drugs associated with services under section 1861(s) of the Act and can be paid by Medicare may elect to participate in the CAP if billing independently. In short, the CAP remains at this time a program that provides Part B drugs furnished incident to a physician's services.

We anticipate that a small number of NPs, CNSs, and PAs would be affected by the implementation of this proposal. We seek comment on how this clarification would affect the various professions that bill Medicare for drugs furnished incident to services that are typically provided by a physician. If this provision is implemented, we believe that the total number of CAP participants would not increase by more than 1 percent, and we seek comment on level of interest associated with the implementation of this proposal.

c. Easing the Restriction on Physician Transport of CAP Drugs Between Practice Locations

Although section 1847B(b)(4)(E) of the Act provides for the shipment of CAP drugs to settings other than a participating CAP physician's office under certain conditions, in initially implementing the CAP, we did not propose to implement the CAP in alternative settings. In the July 6, 2005 IFC (70 FR 39047), we described both comments that supported the idea of allowing participating CAP physicians to transport drugs to multiple office locations, and comments that raised concerns about the risk of damaging a drug that has not been kept under appropriate conditions while being transported. Specifically, one commenter pointed out that a physician may have several practice locations. If the beneficiary should change his or her site of treatment from the one to which the vendor originally shipped the drug, the physician would need an appropriate way of transporting the drugs from one location to another. Some potential vendors stated that, while drugs were being transported to an alternate location, spoilage and breakage could occur. They expressed concern that because the vendor retains ownership of the drug until it is administered to the beneficiary, they could be held liable if the drug deteriorates and is administered to the beneficiary in substandard condition.

Ultimately, we implemented the CAP with a restriction that CAP drugs be shipped directly to the participating CAP physician, as stated in § 414.906(a)(4), and that participating CAP physicians may not transport CAP drugs from one location to another, as stated in § 414.908(a)(3)(xii).

However, we were aware that physicians may desire to administer drugs in alternative settings. Therefore, in the July 6, 2005 IFC, we sought comment on how this could be accommodated under the CAP in a way that addresses the potential vendors' concerns about product integrity and damage to the approved CAP vendors' property (70 FR 39048). We discussed comments submitted in response to the July 6, 2005 IFC in the CY 2008 PFS proposed rule (72 FR 38158). Several comments suggested either easing or removing the restriction on transporting drugs to other locations. Commenters believed that physicians, particularly those who specialize in oncology, and their staff are knowledgeable about drug stability and handling, and therefore, were capable of assuming this responsibility. Other commenters indicated that transporting the drug to another office location may allow for flexibility in scheduling patient visits.

We also received several comments discussing the impact of CAP delivery times on rural clinics and offices with satellite locations. Many of these responses discussed how easing the restriction on transporting CAP drugs between locations would be welcome in rural areas and for satellite offices with limited hours where personnel may not always be available to receive CAP drug shipments.

We also requested comments in the CY 2008 PFS proposed rule (72 FR 38157) on the potential feasibility of easing the restriction on transporting Start Printed Page 38524CAP drugs where this is permitted by State law and other applicable laws and regulations. We asked commenters to consider how such a policy could be constructed so that the approved CAP vendor could retain control over how the drugs that it owns are handled. We also requested comments on other issues that we should take into account concerning transportation of CAP drugs between the practice locations listed on a physician's CAP election agreement form. Additionally, we also solicited comments on the following areas for consideration in the possible development of future proposals:

  • How to structure requirements so that drugs are not subjected to conditions that will jeopardize their integrity, stability or sterility while being transported, and steps to keep transportation activities consistent with all applicable laws and regulations;
  • Whether any agreement allowing participating CAP physicians to transport CAP drugs to alternate practice locations should be voluntary. This means that approved CAP vendors would not be required to offer such an agreement and physicians who participate in the CAP would not be required to accept such an offer; and
  • Whether such an agreement should be documented in writing, and whether it is necessary to create any restrictions on which CAP drugs could be transported.

We responded to submitted comments in the CY 2008 PFS final rule with comment period (72 FR 66268). Several comments supported the concept of easing the restriction on transporting CAP drugs if this could be done safely, and if changes were consistent with applicable rules, regulations, and within the limitations of product stability and integrity. The restriction on transporting CAP drugs was perceived as a barrier to physician participation in the program. One commenter stated that elimination of the restriction would result in the same flexibility as the ASP (buy and bill) method of acquiring drugs. Another commenter expressed a strong desire to implement these changes promptly.

A few commenters also cautioned us to implement appropriate safeguards if we chose to ease the transportation restriction. One commenter asked that the safeguards be available for public scrutiny before they are implemented. Conversely, other commenters stated that the risk of damage to CAP drugs would be minimal since a physician and his or her staff are knowledgeable about a given drug's stability, handling, and transportation requirements.

We are mindful of the concerns expressed by the commenters and are now proposing to permit transport of CAP drug between a participating CAP physician's practice locations subject to voluntary agreements between the approved CAP vendor and the participating CAP physician. We propose that such agreements must comply with all applicable State and Federal laws and regulations and product liability requirements, and be documented in writing.

We would like to reiterate the voluntary nature of these proposed agreements. Approved CAP vendors would not be required to offer and participating CAP physicians would not be required to accept such agreements when selecting an approved CAP vendor. An approved CAP vendor may not refuse to do business with a participating CAP physician because the participating CAP physician has declined to enter into such an agreement with the approved CAP vendor. Furthermore, we are not seeking to define which CAP drugs may be subject to the proposed voluntary agreements. In other words, each approved CAP vendor could specify which CAP drug(s) could be transported.

However, our proposal contains certain limitations. In previous rulemaking, we have described requirements for voluntary agreements between approved CAP vendors and participating CAP physicians. In the July 6, 2005 IFC (70 FR 39050) and the CY 2006 PFS final rule (70 FR 70251 through 70252), we stated that we will not dictate the breadth of use or the specific obligations contained in voluntary arrangements between approved CAP vendors and physicians, other than to note that they must comply with applicable law and to prohibit approved CAP vendors from coercing participating CAP physicians into entering any of these arrangements. Parties to such arrangements must also ensure that the arrangements do not violate the physician self-referral (“Stark”) prohibition (section 1877 of the Act), the Federal anti-kickback statute (section 1128B(b) of the Act), or any other Federal or State law or regulation governing billing or claims submission. We propose to apply these standards to any agreement for the transport of CAP drugs.

We are also particularly concerned about opportunities for disruption in the drug's chain of custody and appropriate storage and handling conditions that may ultimately affect patient care or increase the risk of drug theft or diversion. Therefore, in order to maintain safety and drug integrity in the CAP and to protect against the fraudulent diversion of CAP drugs, we propose that any voluntary agreements between an approved CAP vendor and a participating CAP physician regarding the transportation of CAP drug must include requirements that drugs are not subjected to conditions that will jeopardize their integrity, stability, and/or sterility while being transported. We welcome comments on these issues, including the identification who may transport the drugs, how documentation of transportation activities could be accomplished, and how the oversight of such agreements will be carried out.

In conclusion, we believe that this proposal to ease the restriction on transporting CAP drugs between a participating CAP physician's practice locations—when agreed upon by the participating CAP physician and the approved CAP vendor—will make the CAP more flexible and ultimately more appealing to participating CAP physicians. Additionally, we believe that this proposal will facilitate the participation of CAP physicians who have office locations in rural areas and/or have satellite offices with limited hours. Moreover, we believe that this proposal will promote beneficiary care, particularly for beneficiaries who live in rural locations. Since physicians would be able to transport CAP drugs to another office location in accordance with a voluntary agreement with their approved CAP vendor, beneficiaries would have more flexibility in scheduling the location of their appointments. We invite comments about this proposal.

d. Dispute Resolution Process

Section 1847B of the Act is generally silent with regard to the treatment of disputes surrounding the delivery of drugs and the denial of drug claims. However, section 1847B(b)(2)(A)(ii)(II) of the Act does contain a reference to a grievance process that is included among the quality and service requirements that must be met by approved CAP vendors. In the July 6, 2005 IFC (70 FR 39054 through 39058), we described the process for the resolution of participating CAP physicians' drug quality and service complaints and vendors' complaints regarding noncompliant participating CAP physicians. We encouraged participating CAP physicians, beneficiaries, and vendors to use informal communication as a first step to resolve service-related administration issues. However, we recognized that certain disputes would require a more structured approach, and therefore, we established processes under § 414.916 and § 414.917.Start Printed Page 38525

1. Termination of CAP Drug Shipments to Suspended CAP Physicians

Section 414.916 provides a mechanism for approved CAP vendors to address noncompliance problems with CAP physicians. As stated at § 414.916(a), “Cases of an approved CAP vendor's dissatisfaction with denied drug claims are resolved through a voluntary alternative dispute resolution process delivered by the designated carrier, and a reconsideration process provided by CMS.” Once the decision is made to suspend a participating CAP physician's CAP election agreement, the participating CAP physician will be suspended from the CAP as described in § 414.916(b)(3).

Physicians whose participation in the CAP has been suspended are not eligible to receive CAP drugs. This is implied in § 414.906(a)(4), which speaks of approved CAP vendors providing CAP drugs directly to “[a] participating CAP physician.” However, we believe that the clarity of our dispute resolution regulations would be improved if this drug delivery issue were stated explicitly. Therefore, we are proposing to revise § 414.916 to specify that approved CAP vendors shall not deliver CAP drugs to participating CAP physicians whose participation in the CAP has suspended after an initial determination by CMS. This suspension in drug shipment would also apply to physicians engaged in the reconsideration process outlined in § 414.916(c). We are also making a conforming change in the regulation text in § 414.914(f)(12). These changes are in accord with the underlying intent of § 414.916, namely to provide a mechanism for vendors to address noncompliance problems with CAP physicians, and we believe that these changes will increase the clarity of our regulations. We note that the participating CAP physicians who are suspended from participation in the CAP will be able to obtain drugs and bill for them under the ASP payment system provided they have not been excluded from participation in Medicare and/or their billing privileges have not been revoked. We welcome comments about this proposal.

2. Approved CAP Vendor's Status During the Reconsideration Process

Section 414.917 pertains to the dispute resolution process for participating CAP physicians. As discussed in the July 6, 2005 IFC (70 FR 39057 through 39058), if a physician finds an approved CAP vendor's service or the quality of a CAP drug supplied by the approved CAP vendor to be unsatisfactory, then the physician may address the issues first through the approved CAP vendor's grievance process, and second through an alternative dispute resolution process administered by the designated carrier and CMS. In turn, the designated carrier would gather information about the issue as outlined in § 414.917(b)(2) and make a recommendation to CMS on whether the approved CAP vendor has been meeting the service and quality obligations of its CAP contract. We would then review and act on that recommendation after gathering any necessary, additional information from the participating CAP physician and approved CAP vendor. If we suspend an approved CAP vendor's CAP contract for noncompliance or terminate the CAP contract in accordance with § 414.914(a), the approved CAP vendor may request a reconsideration in accordance with § 414.917(c).

In the July 6, 2005 IFC (70 FR 39058), we indicated that the approved CAP vendor's participation in the CAP would be suspended while the approved CAP vendor's appeal of our decision is pending. This suspended status is also implied in § 414.917(c)(9), which states that the “approved CAP vendor may resume participation in CAP” if the final reconsideration determination is favorable to the approved CAP vendor. In order to improve the clarity of our regulations, we propose to indicate that the approved CAP vendor's contract will remain suspended during the reconsideration period in § 414.917. We believe this proposed technical change is consistent with basic contracting concepts and with our current practices for the CAP. We invite comments regarding this proposed clarification.

G. Application of the HPSA Bonus Payment

[If you choose to comment on issues in this section, please include the caption “HPSA BONUS PAYMENT” at the beginning of your comments.]

Section 1833(m) of the Act provides for an additional 10 percent bonus payment for physicians' services furnished in a year to a covered individual in an area that is designated as a geographic Health Professional Shortage Area (HPSA) as identified by the Secretary prior to the beginning of such year. The statute indicates that the HPSA bonus payment will be made for services furnished during a year in areas that have been designated as HPSAs prior to the beginning of that year. As a result, the HPSA bonus payment is made for physicians' services furnished in an area designated as of December 31 of the prior year, even if the area's HPSA designation is removed during the current year. However, for physicians' services furnished in areas that are designated as geographic HPSAs after the beginning of a year, the HPSA bonus payment is not made until the following year, if the area is still designated as of December 31 of that year.

In the CY 2005 PFS final rule with comment period (69 FR 66297), we stated that determination of zip codes for automatic HPSA bonus payment will be made on an annual basis and that there would be no updates to the zip code file during the year. We also stated that physicians furnishing covered services in “newly designated” HPSAs may add a modifier to their Medicare claims to collect the HPSA bonus payment until our next annual posting of zip codes for which automatic payment of the bonus will be made.

In § 414.67, we are proposing to revise our regulations to clarify that physicians who furnish services in areas that are designated as geographic HPSAs as of December 31 of the prior year but not included on the list of zip codes for automated HPSA bonus payments should use the AQ modifier to receive the HPSA bonus payment.

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

[If you choose to comment on issues in this section, please include the caption “ESRD PROVISIONS” at the beginning of your comments.]

Since August 1, 1983, payment for dialysis services furnished by end-stage renal disease (ESRD) facilities has been based on a composite rate payment system that provides a fixed, prospectively determined amount per dialysis treatment, adjusted for geographic differences in area wage levels. In accordance with section 1881(b)(7) of the Act, separate composite rates have been established for hospital-based and independent ESRD facilities. The composite rate is designed to cover a package of goods and services needed to furnish dialysis treatments that include, but not be limited to, certain routinely provided drugs, laboratory tests, supplies, and equipment. Unless specifically included in the composite rate, other injectable drugs and laboratory tests medically necessary for the care of the dialysis patient are separately billable. Effective on August 1, 1983, the base composite rates per treatment were $123 for independent ESRD facilities and $127 for hospital-based ESRD facilities. The Congress has enacted a number of Start Printed Page 38526adjustments to the composite rate since that time. The current 2008 base composite rates are $132.49 for independent ESRD facilities and $136.68 for hospital-based ESRD facilities.

Section 623 of the MMA amended section 1881 of the Act to require changes to the composite rate payment methodology, as well as to the pricing methodology for separately billable drugs and biologicals furnished by ESRD facilities.

Section 1881(b)(12) of the Act, as added by the MMA, requires the establishment of a basic case-mix adjusted prospective payment system (PPS) that include services comprising the composite rate and an add-on to the composite rate component for the difference between current payments for separately billed drugs and the revised drug pricing specified in the statute. In addition, section 1881(b)(12) of the Act requires that the composite rate be adjusted for a number of patient characteristics (case-mix) and section 1881(b)(12)(D) of the Act gives the Secretary discretion to revise the wage indices and the urban and rural definitions used to develop them. Finally, section 1881(b)(12)(E) of the Act imposes a budget neutrality (BN) adjustment, so that aggregate payments under the basic case-mix adjusted composite payment system for CY 2005 equals the aggregate payments for the same period if section 1881(b)(12) of the Act does not apply.

Before January 1, 2005, payment to both independent and hospital-based facilities for the anti-anemia drug, erythropoietin (EPO) was established under section 1881(b)(11) of the Act at $10.00 per 1,000 units. For independent ESRD facilities, payment for all other separately billable drugs and biologicals are based on the lower of actual charges or 95 percent of the average wholesale price (AWP). Hospital-based ESRD facilities were paid based on the reasonable cost methodology for separately billed drugs and biologicals (other than EPO) furnished to dialysis patients. Changes to the payment methodology for separately billed ESRD drugs and biologicals that were established by the MMA effective January 1, 2005, are described in sections II.H.1. and II.H.2. These changes affected payments in both CY 2005 and CY 2006.

In addition, section 623(f)(1) of the MMA directs the Secretary to submit a Report to Congress detailing the elements and features for the design and implementation of a bundled PPS for services furnished by ESRD facilities to Medicare beneficiaries. This bundled PPS is a different way of payment for ESRD services since it includes not only composite rate services, but could also include separately billable drugs (including EPO), laboratory tests, and other separately billable items into one PPS payment rate. The Report to Congress was released February 20, 2008.

1. CY 2005 Revisions

In the CY 2005 PFS final rule with comment period (69 FR 66319 through 66334), we implemented section 1881(b) of the Act, as amended by section 623 of the MMA, and revised payments to ESRD facilities. These revisions were effective January 1, 2005, and included implementation of a case-mix adjusted payment system that incorporated services that comprise the composite rate; an update of 1.6 percent to the composite rate component of the payment system; and a drug add-on adjustment of 8.7 percent to the composite rate to account for the difference between pre-MMA payments for separately billable drugs and payments based on revised drug pricing for 2005 which used acquisition costs. Effective April 1, 2005, the CY 2005 PFS final rule with comment period also implemented case-mix adjustments to the composite rate for certain patient characteristics (that is, age, low body mass index, and body surface area).

In addition, to implement section 1881(b)(13) of the Act, we revised payments for drugs billed separately by independent ESRD facilities, paying for the top 10 ESRD drugs based on acquisition costs (as determined by the OIG) and for other separately billed drugs at the average sales price +6 percent (hereafter referred to as ASP+6 percent). Hospital-based ESRD facilities continued to receive cost-based payments for all separately billable drugs and biologicals except for EPO which was paid based on average acquisition costs.

2. CY 2006 Revisions

In the CY 2006 PFS final rule with comment period (70 FR 70161), we implemented additional revisions to payments to ESRD facilities under section 623 of the MMA. For CY 2006, we further revised the drug payment methodology applicable to drugs furnished by ESRD facilities. All separately billed drugs and biologicals furnished by both hospital-based and independent ESRD facilities are now paid based on ASP+6 percent.

We recalculated the 2005 drug add-on adjustment to reflect the difference in payments between the pre-MMA AWP pricing and the revised pricing based on ASP+6 percent. The recalculation did not affect the actual add-on adjustment applied to payments in 2005, but provided an estimate of what the adjustment would have been had the 2006 payment methodology been in effect in CY 2005. The drug add-on adjustment was then updated to reflect the expected growth in expenditures for separately billable drugs in CY 2006.

As of January 1, 2006, we also implemented a revised geographic adjustment authorized by section 1881(b)(12) of the Act. As part of that change, we—

  • Revised the labor market areas to incorporate the Core-Based Statistical Area (CBSA) designations established by the Office of Management and Budget (OMB);
  • Eliminated the wage index ceiling and reduced the floor to 0.8500; and
  • Revised the labor portion of the composite rate to which the geographic adjustment is applied.

We also provided a 4-year transition from the previous wage-adjusted composite rates to the current wage-adjusted rates. For CY 2006, 25 percent of the payment is based on the revised geographic adjustments, and the remaining 75 percent of payment is based on the old metropolitan statistical area-based (MSA-based) payments.

In addition, section 5106 of the DRA provided for a 1.6 percent update to the composite rate component of the basic case-mix adjusted payment system, effective January 1, 2006. As a result, the base composite rate was increased to $130.40 for independent ESRD facilities and $134.53 for hospital-based facilities. For 2006, the drug add-on adjustment (including the growth update) was 14.5 percent.

3. CY 2007 Updates

In the CY 2007 PFS final rule with comment period (71 FR 69681), we implemented the following updates to the basic case-mix adjusted payment system:

  • An update to the wage index adjustments to reflect the latest hospital wage data, including a BN adjustment of 1.052818 to the wage index for CY 2007.
  • A method to annually calculate the growth update to the drug add-on adjustment required by section 1881(b)(12) of the Act, as well as a growth update to the drug add-on adjustment of 0.5 percent for CY 2007. Therefore, effective January 1, 2007 the drug add-on adjustment was increased to 15.1 percent.

In addition, section 103 of the MIEA-TRHCA established a 1.6 percent update to the composite rate portion of the payment system, effective April 1, 2007. Start Printed Page 38527Therefore, the current base composite rate is $132.49 for independent facilities and $136.68 for hospital-based facilities. Also, the effect of this increase in the composite rate portion of the payment system was a reduction in the drug add-on adjustment to 14.9 percent, effective April 1, 2007. Since the statutory increase only applied to the composite rate, this adjustment to the drug add-on percent was needed to maintain the drug add-on amount constant.

4. CY 2008 Updates

In the CY 2008 PFS final rule with comment period (72 FR 66280), we implemented the following updates to the basic case-mix adjusted payment system:

  • A growth update to the drug add-on adjustment of 0.5 percent. As a result, the drug add-on adjustment to the composite payment rate increased from 14.9 percent to 15.5 percent.
  • An update to the wage index adjustments to reflect the latest hospital wage data, including a BN adjustment of 1.055473 to the wage index for CY 2008.

For CY 2008, consistent with the transition blends announced in the CY 2006 PFS final rule with comment period (70 FR 70170), we implemented the third year of the transition to the CBSA-based wage index. In addition, the wage index floor was reduced from 0.8000 to 0.7500. After applying a BN adjustment of 1.055473, the wage index floor was 0.7916.

5. Provisions of This Proposed Rule

For CY 2009, we are proposing the following updates to the composite rate payment system:

  • A growth update to the drug add-on adjustment to the composite rates;
  • An update to the wage index adjustment to reflect the latest available wage data, including a revised BN adjustment;
  • The completion of the 4-year transition from the previous wage-adjusted composite rates to the CBSA wage-adjusted rates, where payment will be based on 100 percent of the revised geographic adjustments; and
  • A reduction of the wage index floor from 0.7500 to 0.7000.

a. Proposed Growth Update to the Drug Add-on Adjustment to the Composite Rates

Section 623(d) of the MMA added section 1881(b)(12)(B)(ii) of the Act which requires establishing an add-on to the composite rate to account for changes in the drug payment methodology stemming from enactment of the MMA. Section 1881(b)(12)(c) of the Act provides that the drug add-on must reflect the difference in aggregate payments between the revised drug payment methodology for separately billable ESRD drugs and the AWP payment methodology. In 2005, we generally paid for ESRD drugs based on average acquisition costs. Thus the difference from AWP pricing was calculated using acquisition costs. However, in 2006 when we moved to ASP pricing for ESRD drugs, we recalculated the difference from AWP pricing using ASP prices.

In addition, section 1881(b)(12)(F) of the Act requires that, beginning in CY 2006, we establish an annual update to the drug add-on to reflect estimated growth in expenditures for separately billable drugs and biologicals furnished by ESRD facilities. This growth update applies only to the drug add-on portion of the case-mix adjusted payment system.

The CY 2008 drug add-on adjustment to the composite rate is 15.5 percent. The drug add-on adjustment for CY 2008 incorporates an inflation adjustment of 0.5 percent. This computation is explained in detail in the CY 2008 PFS final rule with comment period (72 FR 66280 through 66282).

(i) Estimating Growth in Expenditures for Drugs and Biologicals for CY 2009

Section 1881(b)(12)(F) of the Act specifies that the drug add-on update must reflect “the estimated growth in expenditures for drugs and biologicals (including erythropoietin) that are separately billable * * *” By referring to “expenditures”, we stated previously that we believe the statute contemplates that the update would account for both increases in drug prices, as well as increases in utilization of those drugs.

In the CY 2007 PFS final rule with comment period (71 FR 69682), we established an interim methodology for annually estimating the growth in ESRD drugs and biological expenditures that uses the Producer Price Index (PPI) for pharmaceuticals as a proxy for pricing growth in conjunction with 2 years of ESRD drug data to estimate per patient utilization growth. We indicated that this methodology would be used to update the drug add-on to the composite rate until such time that we had sufficient ESRD drug expenditure data to project the growth in ESRD drug expenditure beginning in CY 2010.

However, upon further contemplation, we believe that a better interpretation of the statutory reference to growth in expenditures contemplates that we would consider any change in drug pricing or utilization, not only increases, as we develop the update to the drug add-on adjustment. We have completed an analysis of ASP prices for ESRD drugs from 2006 through 2008, which shows a declining trend in ASP pricing for ESRD drugs. Accordingly, we are concerned that the use of the PPI as a proxy for ESRD drug pricing growth may no longer be appropriate. This is because the PPI is a general measure for all drugs and does not reflect price changes specific to ESRD drugs. We continue to lack sufficient expenditure data for trend analysis purposes. Given that we do have sufficient ASP pricing information on ESRD drug prices to establish a price forecast specific to ESRD drugs, and since this forecast is based on actual ESRD drug pricing data, we believe it is a more accurate measure of the price component changes for purposes of estimating the growth in total expenditures for ESRD drugs for 2009. Accordingly, for CY 2009, we propose revising the interim methodology for estimating the growth in ESRD drug expenditures by using ASP pricing to estimate the price component of the update calculation.

As detailed below in this section, we are proposing for CY 2009 to estimate price growth using historical ASP pricing data for ESRD drugs for CY 2006 through CY 2008 and to estimate growth in per patient utilization of drugs by using ESRD facility historical drug expenditure data for CY 2006 and CY 2007.

(ii) Estimating Growth in ESRD Drug Prices

To estimate price growth we used ASP pricing data for the four quarters of 2006 and 2007, and the two available quarters of 2008. We anticipate having at least three quarters of 2008 data available in time for the final rule. We calculated the weighted price change, for the original top ten ESRD drugs for which we had acquisition pricing, plus Aranesp. Tables 4 and 5 show the average ASP drug prices and the 2007 weights used. In CY 2006 and CY 2007 we calculated a weighted average price reduction of 1.8 percent. We also calculated a weighted average price reduction of 2.1 percent between CY 2007 and CY 2008. The overall average price reduction is 1.9 percent over the 3-year period, thus, the proposed weighted average ESRD drug pricing change projected for CY 2009 is a reduction of 1.9 percent.Start Printed Page 38528

Table 4.—CY 2006, 2007 and 2008 ESRD Drug ASP Prices

Independent drugs200620072008
EPO9.469.179.02
Paricalcitol3.813.793.86
Sodium-ferric-glut4.884.764.82
Iron-sucrose0.360.370.36
Levocarnitine9.448.075.81
Doxercalciferol2.972.682.60
Calcitriol0.550.540.38
Iron-dextran11.9411.6911.61
Vancomycin3.233.433.29
Alteplase31.6333.2133.28
Aranesp3.013.292.83

Table 5.—CY 2007 Drug Weights for ESRD Facilities

Independent drugs2007 weights (percent)
EPO69.5
Paricalcitol11.7
Sodium-ferric-glut2.5
Iron-sucrose6.1
Levocarnitine0.2
Doxercalciferol2.8
Calcitriol0.1
Iron-dextran0.0
Vancomycin0.1
Alteplase1.0
Aranesp6.0

(iii) Estimating Growth in Per Patient Drug Utilization

To isolate and project the growth in per patient utilization of ESRD drugs for CY 2009, we must remove the enrollment and price growth components from the historical drug expenditure data and consider the residual utilization growth. As discussed previously in this section, we propose to use ESRD facility drug expenditure data from CY 2006 and CY 2007 to estimate per patient utilization growth for CY 2009.

First we had to estimate the total drug expenditures for all ESRD facilities. For this proposed rule, we used the final CY 2006 ESRD claims data and the latest available CY 2007 ESRD facility claims, updated through December 31, 2007 (that is, claims with dates of service from January 1 through December 31, 2007, that were received, processed, paid, and passed to the National Claims History File as of December 31, 2007). For the CY 2009 PFS final rule, we plan to use additional updated CY 2007 claims with dates of service for the same time period. This updated CY 2007 data file will include claims received, processed, paid, and passed to the National Claims History File as of June 30, 2008.

While the December 2007 update of CY 2007 claims used in this proposed rule is the most current available claims data, we recognize that it does not reflect a complete year, as claims with dates of service towards the end of the year have not all been processed. To more accurately estimate the update to the drug add-on, aggregate drug expenditures are required. Based on an analysis of the 2006 claims data, we inflated the CY 2007 drug expenditures to estimate the June 30, 2008 update of the 2007 claims file. We used the relationship between the December 2006 and the June 2007 versions of 2006 claims to estimate the more complete 2007 claims available in June 2008 and applied that ratio to the 2007 claims data from the December 2007 claims file. We did this separately for EPO, the other top 10 separately billable drugs, and the remaining separately billable drugs for independent and hospital-based ESRD facilities. We are using the top 11 drugs since they represent 99.7 percent of total expenditures in CY 2007 for separately billable drugs furnished to ESRD patients. All components were then combined to estimate aggregate CY 2007 ESRD drug expenditures. The net adjustment to the CY 2007 claims data was an increase of 12.6 percent to the 2007 expenditure data. This adjustment allows us to more accurately compare the 2006 and 2007 data to estimate utilization growth.

The next step is to remove the enrollment and price growth components from that total. As discussed previously in this section, in developing the per patient utilization growth for this proposed rule, we limited our analysis to the latest 2 years of available ESRD facility drug data (that is, 2006 and 2007). We believe that per patient utilization growth between these years would be a better proxy for future growth, as it best represents current utilization trends.

To calculate the per patient utilization growth, we removed the enrollment component by using the growth in enrollment data between CY 2006 and CY 2007. This was approximately 3 percent. To remove the price effect we used the calculated weighted change between CY 2006 and CY 2007 ASP pricing for the top eleven ESRD drugs. We weighted the differences using 2007 ESRD facility drug expenditure data. Table 4 shows the CY 2007 weights for each of the top eleven ESRD drugs billed by ESRD facilities.

This process led to an overall 1.8 percent reduction in price between CY 2006 and CY 2007.

After removing the enrollment and price effects from the expenditure data, the residual growth would reflect the per patient utilization growth. To do this, we divided the product of the enrollment growth of 3 percent (1.03) and the price reduction of 1.8 percent (1.00 − 0.018 = 0.982) into the total drug expenditure change between 2006 and 2007 of 0 percent (1.00 − 0.00 = 1.00). The result is a utilization factor equal to 0.99 (1.00/(1.03 * 0.982) = 0.99).

Since we observed a 1 percent drop in per patient utilization of drugs between 2006 and 2007, we are projecting a 1 percent drop in per patient utilization for ESRD facilities in CY 2009.

b. Applying the Proposed Growth Update to the Drug Add-on Adjustment

In CY 2006, we applied the projected growth update percentage to the total amount of drug add-on dollars established for CY 2005 to establish a dollar amount for the CY 2006 growth update. In addition, we projected the growth in dialysis treatments for CY 2006 based on the projected growth in ESRD enrollment. We divided the projected total dialysis treatments for CY 2006 into the projected dollar amount of the CY 2006 growth to develop the per treatment growth update amount. This growth update amount, combined with the CY 2005 per treatment drug add-on amount, resulted in an average drug add-on amount per treatment of $18.88 (or a 14.5 percent adjustment to the composite rate) for CY 2006.

In the CY 2007 PFS final rule with comment period (71 FR 69684), we Start Printed Page 38529revised our update methodology by applying the growth update to the per treatment drug add-on amount. That is, for CY 2007, we applied the growth update factor of 4.03 percent to the $18.88 per treatment drug add-on amount for an updated amount of $19.64 per treatment (71 FR 69684). For CY 2008, the per treatment drug add-on amount was updated to $20.33.

As discussed in detail below, for CY 2009, we are proposing no update to the per treatment drug add-on amount of $20.33 established in CY 2008.

c. Proposed Update to the Drug Add-on Adjustment

As discussed previously in this section, we estimate a 1 percent reduction in per patient utilization of ESRD drugs for CY 2009. Also, using historical ESRD drug pricing data specific to ESRD drugs, we project a 1.9 percent reduction in ESRD drug prices for CY 2009. To compute this estimate, we used ASP pricing data for the four quarters of 2006 and 2007, and the two available quarters of 2008. We calculated the weighted price change for the top ten ESRD drugs plus Aranesp over the period. Tables 4 and 5 show the average ASP drug prices and the 2007 weights used. As shown in Table 4, to the extent there were price changes during the trending period, increases as well as decreases have been reflected in the overall weighted average price reduction of 1.9 percent over the 3-year period. Had we continued to use the PPI for prescription drugs in our computation of the drug add-on update, the price component would have been a projected increase of 3.8 percent. Given the observed decline in ASP pricing for ESRD drugs, we believe the continued use of the PPI as a price proxy would have significantly overstated the price component of our computation of the projected change in per patient ESRD drug expenditures for CY 2009. This is because the PPI is a more general measure of price change for all drugs and does not reflect price changes specific to the drugs provided by ESRD facilities.

Therefore, we are projecting that the combined growth in per patient utilization and pricing for CY 2009 would result in a negative update equal to −2.9 percent. (0.99 * 0.981 = 0.971). However, as indicated above, we are proposing no update to the drug add-on adjustment.

We believe this approach is consistent with the language under section 1881(b)(12)(F) of the Act which states in part that “the Secretary shall annually increase” the drug add-on amount based on the growth in expenditures for separately billed ESRD drugs. Our understanding of the statute contemplates “annually increase” to mean a positive or zero update to the drug add-on. Therefore, we propose to apply a zero update and to maintain the $20.33 per treatment drug add-on amount for CY 2009 that reflects a proposed 15.5 percent drug add-on adjustment to the composite rate for CY 2009.

However, we also believe that an alternative reading of the statute is possible. We believe that the Congress may not have intended to provide an increase in the drug add-on adjustment in a year where the projected growth in expenditures for separately billable ESRD drugs is declining. There is potentially a gap in the statute, which specifies an “increase” to the drug add-on adjustment based upon the “estimated growth in expenditures for drugs and biologicals” that are separately billed ESRD drugs. However, an “increase” cannot be implemented when estimated “growth” is negative.

To resolve this seeming contradiction, another approach to the zero percent update that we are proposing would be to apply an adjustment of less than 1.0 to the drug add-on adjustment. Under this approach, for CY 2009, we would “increase” the drug add-on adjustment by 0.971. Applying the 0.971 increase to the $20.33 per treatment adjustment would yield a drug add-on amount of $19.74 per treatment, which represents a 0.4 percent decrease in the CY 2008 drug add-on percentage of 15.5 percent. As such, the proposed drug add-on adjustment to the composite rate for CY 2009 would be 15.0 percent.

We are seeking public comment on our proposal of a zero update, as well as the alternative approach presented above, so that we can make an informed decision with respect to the final update to the CY 2009 drug add-on adjustment to the composite rate.

Had we selected the other option of continuing to use the PPI for prescription drugs as a proxy for ESRD drug prices instead of using ASP pricing data, the resulting update factor would have been a 2.6 percent increase to the CY 2008 average per treatment drug add-on amount of $20.33, resulting in a weighted average increase to the composite rate of $0.57 or a 0.4 percent increase in the CY 2008 drug add-on percentage of 15.5 percent. As discussed above, however, we believe the PPI overstates the changes in ESRD drug prices given the observed trend in declining prices for those drugs over the past several years.

We note that for the CY 2010 update to the drug add-on adjustment we expect to estimate the growth in ESRD drug expenditures using 3 years' worth of ASP-based historical ESRD drug expenditure data that will be available at that time. This data will be used to conduct a trend analysis to estimate the growth in ESRD drug expenditures for CY 2010. As we discussed earlier with respect to computing the 2009 estimated growth in drug prices, to the extent there are price changes during the trending period, past increases as well as decreases would be reflected in future trend analyses and in future updates to the drug add-on adjustment.

d. Proposed Update to the Geographic Adjustments to the Composite Rates

Section 1881(b)(12)(D) of the Act, as amended by section 623(d) of the MMA, gives the Secretary the authority to revise the wage indexes previously applied to the ESRD composite rates. The purpose of the wage index is to adjust the composite rates for differing wage levels covering the areas in which ESRD facilities are located. The wage indexes are calculated for each urban and rural area. In the CY 2006 PFS final rule with comment period (70 FR 70167), we announced our adoption of the OMB CBSA-based geographic area designations to develop revised urban/rural definitions and corresponding wage index values for purposes of calculating ESRD composite rates. In addition, we generally have followed wage index policies related to these definitions as used under the inpatient hospital prospective payment system (IPPS), but without regard to any approved geographic reclassification authorized under sections 1886(d)(8) and (d)(10) of the Act or other provisions that only apply to hospitals paid under the IPPS (70 FR 70167). For purposes of the ESRD wage index methodology, the hospital wage data we use is pre-classified, pre-floor hospital data and unadjusted for occupational mix.

i. Updates to Core-Based Statistical Area (CBSA) Definitions

In the CY 2006 PFS final rule with comment period (70 FR 70167), we announced our adoption of the OMB's CBSA-based geographic area designations to develop revised urban/rural definitions and corresponding wage index values for purposes of calculating ESRD composite rates. OMB's CBSA-based geographic area designations are described in OMB Bulletin 03-04, originally issued June 6, 2003, and is available online at http://www.whitehouse.gov/​omb/​bulletins/​b03-04.html. In addition, OMB has published subsequent bulletins Start Printed Page 38530regarding CBSA changes, including changes in CBSA numbers and titles. We wish to point out that this and all subsequent ESRD rules and notices are considered to incorporate the CBSA changes published in the most recent OMB bulletin that applies to the hospital wage index used to determine the current ESRD wage index. The OMB bulletins may be accessed online at http://www.whitehouse.gov/​omb/​bulletins/​index.html.

ii. Updated Wage Index Values

In the CY 2007 PFS final rule with comment period (71 FR 69685), we stated that we intended to update the ESRD wage index values annually. The current ESRD wage index values for CY 2008 were developed from FY 2004 wage and employment data obtained from the Medicare hospital cost reports. As we indicated, the ESRD wage index values are calculated without regard to geographic classifications authorized under sections 1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data that is unadjusted for occupational mix. To calculate the ESRD wage index, hospital wage index data for FY 2004 for all providers in each urban/rural geographic area are combined. The sum of the wages for all providers in each geographic area was divided by the total hours for all providers in each area. The result is the average hourly hospital wage for that geographic locale. The ESRD wage index was computed by dividing the average hourly hospital wage for each geographic area by the national average hourly hospital wage. The final step was to multiply each wage index value by the ESRD wage index budget neutrality factor.

We propose to use the same methodology for CY 2009, with the exception that FY 2005 hospital data will be used to develop the CY 2009 wage index values. The CY 2009 ESRD wage index budget neutrality factor is 1.056672. (See section H.5.d.iii. of this proposed rule for details about this adjustment.) For a detailed description of the development of the proposed CY 2009 wage index values based on FY 2005 hospital data, see the FY 2009 “Proposed Changes to the Hospital Inpatient Prospective Payment Systems (IPPS) and Fiscal Year 2009 Rates” proposed rule (73 FR 23630). Section III G. (Computation of the Proposed FY 2009 Unadjusted Wage Index) of the preamble to that proposed rule describes the cost report schedules, line items, data elements, adjustments, and wage index computations. The wage index data affecting ESRD composite rates for each urban and rural locale may also be accessed on the CMS Web site at http://www.cms.hhs.gov/​AcuteInpatientPPS/​WIFN/​list.asp. The wage data are located in the section entitled, “FY 2009 Proposed Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and Pre-reclassified Wage Index by CBSA.”

(A) Fourth Year of the Transition

In the CY 2006 PFS final rule with comment period (70 FR 70169), we indicated that we would apply a 4-year transition period to mitigate the impact on the composite rates resulting from our adoption of CBSA-based geographic designations. Beginning January 1, 2006, during each year of the transition, an ESRD facility's wage-adjusted composite rate (that is, without regard to any case-mix adjustments) is a blend of its old MSA-based wage-adjusted payment rate and its new CBSA-based wage adjusted payment rate for the transition year involved. For each transition year, the share of the blended wage-adjusted base payment rate that is derived from the MSA-based and CBSA-based wage index values is shown in Table 6. In CY 2006, the first year of the transition, we implemented a 75/25 blend. In CY 2007, the second year of the transition, we implemented a 50/50 blend. In CY 2008, the third year of the transition, we implemented a 25/75 blend. Consistent with the transition blends announced in the CY 2006 PFS final rule with comment period (70 FR 70170), in CY 2009, we are proposing that each ESRD facility's composite payment rate will be based entirely on the CBSA-based wage index.

In CY 2006, we eliminated the wage index cap of 1.30 and stated that we would implement a gradual reduction in the wage index floor of 0.90. Prior to January 1, 2006, the wage indexes were restricted to values no less than 0.90 and no greater than 1.30, meaning that payments to facilities in areas where labor costs fell below 90 percent of the national average, or exceeded 130 percent of that average, were not adjusted beyond the 90 percent or 130 percent level. Although we stated that the ESRD wage index values should not be constrained by the application of floors and ceilings, we also expressed concern that the immediate elimination of the floor could adversely affect ESRD beneficiary access to care. Therefore, we reduced the floor to 0.85 in CY 2006, to 0.80 in CY 2007, and to 0.75 in CY 2008.

For CY 2009, we are proposing to reduce the wage index floor to 0.70. For this final year of the transition (CY 2009), we believe that a reduction to 0.70 is appropriate as we continue to reassess the need for a wage index floor in future years. We believe that a gradual reduction in the floor is still needed to ensure patient access to dialysis in areas that have low wage index values, especially Puerto Rico, and to prevent sudden adverse effects to the payment system. However, we note that our goal is the eventual elimination of all wage index floors.

The wage index floors, caps, and blended shares of the composite rates applicable to all ESRD facilities for CY 2006 through CY 2008, and the proposed floor and blended share applicable for CY 2009, are shown in Table 6. They are identical to the values shown in Table 10 of the CY 2007 PFS final rule with comment period (71 FR 69686) for the applicable years.

Table 6.—Wage Index Transition Blend

CY paymentFloorCeilingOld MSA (percent)New CBSA (percent)
20060.85None7525
20070.80None5050
20080.75None2575
2009* 0.70None0100
* Each wage index floor is multiplied by a BN adjustment factor. For CY 2009 the BN adjustment is 1.056672 resulting in an actual wage index floor of 0.7397.
Start Printed Page 38531

Because CY 2009 is the final year of the 4-year transition period, each ESRD facility's composite payment rate will be based entirely on its applicable new CBSA-based wage index value.

(B) Wage Index Values for Areas With No Hospital Data

In CY 2006, while adopting the CBSA designations, we identified a small number of ESRD facilities in both urban and rural geographic areas where there are no hospital wage data from which to calculate ESRD wage index values. The affected areas were rural Massachusetts, rural Puerto Rico, and the urban area of Hinesville, GA (CBSA 25980). For CY 2006, CY 2007, and CY 2008, we calculated the ESRD wage index values for those areas as follows:

  • For rural Massachusetts, because we had not determined a reasonable wage proxy, we used the FY 2005 wage index value in CY 2006 and CY 2007.
  • For rural Puerto Rico, the situation was similar to rural Massachusetts. However, because all geographic areas in Puerto Rico were subject to the wage index floor in CY 2006, CY 2007, and CY 2008, we applied the ESRD wage index floor to rural Puerto Rico as well.
  • For the urban area of Hinesville, GA, we calculated the CY 2006, CY 2007, and CY 2008 wage index value based on the average wage index value for all urban areas within the State of Georgia.

For CY 2008, we adopted an alternative methodology for establishing a wage index value for rural Massachusetts. Because we used the same wage index value for 2 years with no update, we believed it was appropriate to establish a methodology which employed reasonable proxy data for rural areas (including rural Massachusetts) and also permitted annual updates to the wage index based on that proxy data. For rural areas without hospital wage data, we used the average wage index values from all contiguous CBSAs as a reasonable proxy for that rural area.

In determining the imputed rural wage index, we interpreted the term “contiguous” to mean sharing a border. In the case of Massachusetts, the entire rural area consists of Dukes and Nantucket Counties. We determined that the borders of Dukes and Nantucket counties are contiguous with Barnstable and Bristol counties. We are proposing to use the same methodology for CY 2009. Under this methodology, the CY 2009 proposed wage index values for the counties of Barnstable (CBSA 12700, Barnstable Town, MA-1.2624) and Bristol (CBSA 39300, Providence-New Bedford-Fall River, RI-MA-1.0573) were averaged resulting in an imputed proposed wage index value of 1.1599 for rural Massachusetts in CY 2009.

For rural Puerto Rico, we continued to apply the wage index floor in CY 2008. Because all areas in Puerto Rico that have a wage index were eligible for the ESRD wage index floor of 0.75, we applied that floor to ESRD facilities located in rural Puerto Rico. For CY 2009, all areas in Puerto Rico that have a wage index are eligible for the proposed ESRD wage index floor of 0.70. Therefore, we propose to continue applying the proposed ESRD wage index floor of 0.70 to facilities that are located in rural Puerto Rico.

For Hinesville, GA (CBSA 25980), which is an urban area without specific hospital wage data, we propose to apply the same methodology used to impute a wage index value that we used in CY 2006, CY 2007, and CY 2008. Specifically, we utilize the average wage index value for all urban areas within the State of Georgia. That results in a proposed CY 2009 wage index value of 0.9123 for the Hinesville-Fort Stewart GA CBSA.

In the CY 2008 PFS final rule with comment period (72 FR 66283), we stated that we would continue to evaluate existing hospital wage data and possibly wage data from other sources such as the Bureau of Labor Statistics, to determine if other methodologies might be appropriate for imputing wage index values for areas without hospital wage data for CY 2009 and subsequent years. To date, no data from other sources, superior to that currently used in connection with the IPPS wage index has emerged. Therefore, for ESRD purposes, we continue to believe this is an appropriate policy.

(C) Evaluation of Wage Index Policies Adopted in the FY 2008 IPPS Final Rule

We also stated that we planned to evaluate any policies adopted in the FY 2008 IPPS final rule (72 FR 47130, 47337 through 47338) that affect the wage index, including how we treat certain New England hospitals under section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-21). This is relevant for the ESRD composite payment system, because the ESRD wage index is calculated using the same urban/rural classification system and computation methodology applicable under the IPPS, except that it is not adjusted for occupational mix and does not reflect geographic classifications authorized under sections 1886(d)(8) and (d)(12) of the Act. We use the hospital wage index with this modification because it is the best available measure effective of urban and rural differences in labor costs among dialysis facilities. Accordingly, in the following sections, we summarize the wage index changes implemented in connection with the IPPS, as they affect the ESRD wage index used under the composite payment system.

(1) CY 2009 Classification of Certain New England Counties

We are addressing the change in the treatment of “New England deemed counties” (that is, those counties in New England listed in § 412.64(b)(1)(ii)(B) that were deemed to be part of urban areas under section 601(g) of the Social Security Amendments of 1983), that were made in the FY 2008 IPPS final rule with comment period (72 FR 47337 through 47338). These counties include the following: Litchfield County, Connecticut; York County, Maine; Sagadahoc County, Maine; Merrimack County, New Hampshire; and Newport County, Rhode Island. Of these five “New England deemed counties”, three (York County, Sagadahoc County, and Newport County) are also included in the MSAs defined by OMB, and therefore, used in the calculations of the urban hospital wage index values reflected in the ESRD composite payment rates. The remaining two, Litchfield County and Merrimack County, are geographically located in areas that are considered “rural” under the current IPPS and ESRD composite payment system labor market definitions, but have been previously deemed urban under the IPPS in certain circumstances, as discussed below.

In the FY 2008 IPPS final rule with comment period, for purposes of IPPS, § 412.64(b)(1)(ii)(B) was revised such that the two “New England deemed counties” that are still considered rural under the OMB definitions (Litchfield County, CT and Merrimack County, NH) are no longer considered urban effective for discharges occurring on or after October 1, 2007, and therefore, are considered rural in accordance with § 412.64(b)(1)(ii)(C). However, for purposes of payment under the IPPS, acute-care hospitals located within those areas are treated as being reclassified to their deemed urban areas effective for discharges occurring on or after October 1, 2007 (see 72 FR 473337 through 47338). We note that the ESRD composite payment system does not provide for such geographic reclassification. Also, in the FY 2008 IPPS final rule with comment period (72 FR 47338), we explained that we have limited this policy change for the “New England deemed counties” only to IPPS hospitals, and any change to non-IPPS provider wage indexes would be Start Printed Page 38532addressed in the respective payment system rules. Accordingly, we are taking this opportunity to clarify the treatment of “New England deemed counties” under the ESRD composite payment system in this proposed rule.

As discussed above, for purposes of the ESRD wage index, we have recognized the OMB's CBSA designations, as well as generally following the policies under IPPS with regard to the definitions for “urban” and “rural” for the wage index. Historical changes to the labor market area/geographic classifications and annual updates to the wage index values under the composite payment system are made effective January 1 each year. When we established the most recent composite payment system update, effective for dialysis services provided on or after January 1, 2008, we considered the “New England deemed counties” (including Litchfield County, CT and Merrimack County, NH) as urban for CY 2008, as evidenced by the inclusion of Litchfield County as one of the constituent counties of urban CBSA 25540 (Hartford-West Hartford-East Hartford, CT), and the inclusion of Merrimack County as one of the constituent counties of urban CBSA 31700 (Manchester-Nashua, NH).

Litchfield County, CT and Merrimack County, NH are not considered “urban” under § 412.64(b)(1)(ii)(A) through (B) as revised under the FY 2008 IPPS final rule and, therefore, are considered “rural” under § 412.64(b)(1)(ii)(C). Accordingly, to reflect our general policy for ESRD wage index, these two counties will be considered “rural” under the ESRD composite payment system effective with the next update of the payment rates on January 1, 2009, and will no longer be included in urban CBSA 25540 (Hartford-West Hartford-East Hartford, CT) and urban CBSA 31700 (Manchester-Nashua, NH), respectively. We note that this policy is consistent with our other policy of not taking into account IPPS geographic reclassifications in determining payments under the composite payment system.

(2) Multi-Campus Hospital Wage Index Data

In the CY 2008 ESRD composite payment system final rule (72 FR 66280), we established ESRD wage index values for CY 2008 calculated from the same data (collected from cost reports submitted by hospitals for cost reporting periods beginning during FY 2004) used to compute the FY 2008 acute care hospital inpatient wage index, without taking into account geographic reclassification under sections 1886(d)(8) and (d)(10) of the Act. However, the IPPS policy that apportions the wage data for multi-campus hospitals was not finalized before the ESRD composite payment system final rule. Therefore the CY 2008 ESRD wage index values reflected the IPPS wage data are based on a hospital's actual location without regard to the urban or rural designation of any related or affiliated provider. Accordingly, all wage data from different campuses of a multi-campus hospital were included in the calculation of the CBSA wage index of the main hospital. The ESRD wage index values applicable for services provided on or after January 1, 2008 through December 31, 2008 are shown in Addendum G for urban areas and Addendum H for rural areas (72 FR 66552 through 66574) of the CY 2008 PFS final rule with comment period.

We are continuing to use IPPS data for CY 2009 because we believe that in the absence of dialysis facility specific wage data, using the hospital inpatient wage data is appropriate and reasonable for the ESRD composite payment system. We note that the IPPS wage data used to determine the proposed CY 2009 ESRD wage index values were computed from wage data submitted by hospitals for cost reporting periods beginning in FY 2005 and reflect our policy adopted under the IPPS beginning in FY 2008, which apportions the wage data for multi-campus hospitals located in different labor market areas, CBSAs, to each CBSA where the campuses are located (see the FY 2008 IPPS final rule with comment period (72 FR 47317 through 47320)). Specifically, for the proposed CY 2009 ESRD composite payment system, the wage index was computed using IPPS wage data (published by hospitals for cost reporting periods beginning in 2005, as with the FY 2009 IPPS wage index), which allocated salaries and hours to the campuses of two multi-campus hospitals with campuses that are located in different labor areas; one in Massachusetts and the other is Illinois. The ESRD wage index values proposed for CY 2009 in the following CBSAs are affected by this policy: Boston-Quincy, MA (CBSA 14484), Providence-New Bedford-Falls River, RI-MA (CBSA 39300), Chicago-Naperville-Joliet, IL (CBSA 16974), and Lake County-Kenosha County, IL-WI (CBSA 29404). Please refer to Addendums G and H of this proposed rule.

In summary, for CY 2009, we propose to use the FY 2009 wage index data (collected from cost reports submitted by hospitals for cost reporting periods beginning during FY 2005) to compute the ESRD composite payment rates effective beginning January 1, 2009. These data reflect the multi-campus and New England deemed counties policies discussed above.

iii. Budget Neutrality Adjustment

Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d) of the MMA, requires any revisions to the ESRD composite rate payment system as a result of the MMA provision (including the geographic adjustment) be made in a budget neutral manner. This means that aggregate payments to ESRD facilities in CY 2008 should be the same as aggregate payments that would have been made if we had not made any changes to the geographic adjusters. We note that this BN adjustment only addresses the impact of changes in the geographic adjustments. A separate BN adjustment was developed for the case-mix adjustments currently in effect. As we are not proposing any changes to the case-mix measures for CY 2009, the current case-mix BN adjustment will remain in effect for CY 2009. As in CY 2008, for CY 2009, we again propose to apply a BN adjustment factor (1.056672) directly to the ESRD wage index values. As explained in the CY 2007 PFS final rule with comment period (71 FR 69687 through 69688), we believe this is the simplest approach because it allows us to maintain our base composite rates during the transition from the current wage adjustments to the revised wage adjustments described previously in this section. Because the ESRD wage index is only applied to the labor-related portion of the composite rate, we computed the BN adjustment factor based on that proportion (53.711 percent).

To compute the proposed CY 2009 wage index BN adjustment factor (1.056672), we used the FY 2005 pre-floor, pre-reclassified, non-occupational mix-adjusted hospital data to compute the wage index values, 2007 outpatient claims (paid and processed as of December 31, 2007), and geographic location information for each facility which may be found through the Dialysis Facility Compare Web page on the CMS Web site at http://www.cms.hhs.gov/​DialysisFacilityCompare/​. The FY 2005 hospital wage index data for each urban and rural locale by CBSA may also be accessed on the CMS Web site at http://www.cms.hhs.gov/​AcuteInpatientPPS/​WIFN/​list.asp. The wage index data are located in the section entitled, “FY 2009 Proposed Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by CBSA.”Start Printed Page 38533

Using treatment counts from the 2007 claims and facility-specific CY 2008 composite rates, we computed the estimated total dollar amount each ESRD provider would have received in the CY 2008 (the 3rd year of the 4-year transition). The total of these payments became the target amount of expenditures for all ESRD facilities for CY 2009. Next, we computed the estimated dollar amount that would have been paid to the same ESRD facilities using the proposed ESRD wage index for CY 2009 (the 4th year of the 4-year transition). The total of these payments became the fourth year new amount of wage-adjusted composite rate expenditures for all ESRD facilities.

After comparing these two dollar amounts (target amount divided by the 4th year new amount), we calculated an adjustment factor that, when multiplied by the applicable CY 2009 ESRD proposed wage index value, would result in aggregate payments to ESRD facilities that will remain within the target amount of composite rate expenditures. When making this calculation, the ESRD wage index floor value of 0.7000 is used whenever appropriate. The proposed BN adjustment factor for the CY 2009 wage index is 1.056672.

To ensure BN, we also must apply the BN adjustment factor to the proposed wage index floor of 0.7000 which results in a proposed adjusted wage index floor of 0.7397 (0.7500 × 1.056672) for CY 2009.

iv. ESRD Wage Index Tables

The proposed 2009 wage index tables are located in Addenda G and H of this proposed rule.

v. Application of the Hospital-Acquired Conditions Payment Policy for IPPS Hospitals to Other Settings

Value-based purchasing (VBP) ties payment to performance through the use of incentives based on measures of quality and cost of care. The implementation of VBP is rapidly transforming CMS from being a passive payer of claims to an active purchaser of higher quality, more efficient health care for Medicare beneficiaries. Our VBP initiatives include hospital pay for reporting (the Reporting Hospital Quality Date for the Annual Payment Update Program), physician pay for reporting (the Physician Quality Reporting Initiative), home health pay for reporting, the Hospital VBP Plan Report to Congress, and various VBP demonstration programs across payment settings, including the Premier Hospital Quality Incentive Demonstration and the Physician Group Practice Demonstration.

The preventable hospital-acquired conditions (HAC) payment provision for IPPS hospitals is another of our value-based purchasing initiatives. The principal behind the HAC payment provision (Medicare not paying more for healthcare-associated conditions) could be applied to the Medicare payment systems for other settings of care. Section 1886(d)(4)(D) of the Act requires the Secretary to select for the HAC IPPS payment provision conditions that are: (1) High cost, high volume, or both; (2) assigned to a higher paying MS-DRG when present as a secondary diagnosis; and (3) could reasonably have been prevented through the application of evidence-based guidelines. Beginning October 1, 2008, Medicare can no longer assign an inpatient hospital discharge to a higher paying MS-DRG if a selected HAC condition was not present on admission. That is, the case will be paid as though the secondary diagnosis was not present. Medicare will continue to assign a discharge to a higher paying Medicare Severity-Diagnosis Related Group (MS-DRG) if a selected condition was present on admission.

The broad principle articulated in the HAC payment provision for IPPS hospitals—Medicare not paying for healthcare-associated conditions—could potentially be applied to other Medicare payment systems for conditions that occur in settings other than IPPS hospitals. Other possible settings of care include, but are not limited to: Hospital outpatient departments; SNFs; HHAs; ESRD facilities; and physician practices. The implementation would be different for each setting, as each payment system is different and the reasonable preventability through the application of evidence-based guidelines would vary for candidate conditions over the different settings. However, alignment of incentives across settings of care is an important goal for all of our VBP initiatives, including the HAC provision.

A related application of the broad principle behind the HAC payment provision for IPPS hospitals could be considered through Medicare secondary payer policy by requiring the provider that failed to prevent the occurrence of a preventable condition in one setting to pay for all or part of the necessary follow up care in a second setting. This would help shield the Medicare program from inappropriately paying for the downstream effects of a preventable condition acquired in the first setting but treated in the second setting.

We note that we are not proposing new Medicare policy in this discussion of the possible application of HACs payment policy for IPPS hospitals to other settings, as some of these approaches may require new statutory authority. We are seeking public comment on the application of the preventable HACs payment provision for IPPS hospitals to other Medicare payment systems. We look forward to working with stakeholders in the fight against healthcare-associated conditions.

I. Independent Diagnostic Testing Facility (IDTF) Issues

[If you choose to comment on issues in this section, please include the caption “INDEPENDENT DIAGNOSTIC TESTING FACILITIES” at the beginning of your comments.]

In the CY 2007 and 2008 PFS final rules with comment period, we established performance standards for suppliers enrolled in the Medicare program as an IDTF (71 FR 69695 and 72 FR 66285). These standards were established to improve the quality of care for diagnostic testing furnished to Medicare beneficiaries by a Medicare enrolled IDTF and to improve our ability to verify that these suppliers meet minimum enrollment criteria to enroll or maintain enrollment in the Medicare program. These performance standards were established at § 410.33. In this proposed rule, we are again proposing to expand on the quality and program safeguard activities that we implemented previously.

1. Improving Quality of Diagnostic Testing Services Furnished by Physician and Nonphysician Practitioner Organizations

During the CY 2008 PFS proposed rule comment period, we received comments requesting that we require that the IDTF performance standards adopted in § 410.33, including prohibitions regarding the sharing of space and leasing/sharing arrangements, apply to physicians and nonphysician practitioners (NPPs) who are performing diagnostic testing services for Medicare beneficiaries, and who have enrolled in the Medicare program as a clinic, group practice, or physician office. The commenters stated that standards for imaging services were not applied consistently for all imaging centers and that two distinct compliance and regulatory standards would emerge depending on how the similarly situated imaging centers were enrolled. In addition, one commenter stated that we should not prohibit space sharing when done with an adjoining physician practice or radiology group that is an owner of an IDTF.Start Printed Page 38534

In response to the public comments, we are concerned that—

  • Certain physician entities, including physician group practices, and clinics, can enroll as a group practice or clinic and provide diagnostic testing services without the benefit of qualified nonphysician personnel, as defined in § 410.33(c), to conduct diagnostic testing.
  • Some physician entities expect to furnish diagnostic testing services for their own patients and the general public and are making the decision to enroll as a group or clinic thereby circumventing the performance standards found in the IDTF requirements in § 410.33.
  • Some physician organizations are furnishing diagnostic tests using mobile equipment provided by an entity that furnishes mobile diagnostic services.

We are proposing certain exceptions to the established performance standards found in § 410.33(g) because we believe that physician organizations already meet or exceed some of these standards. For example, their liability insurance coverage usually far exceeds the $300,000 per incident threshold, and there are a host of ways in which patient may issue clinical complaints concerning their physicians. In addition, we believe that compliance with some of the performance standards would be costly and burdensome and possibly limit beneficiary access, particularly in rural or medically underserved areas. For these reasons, we propose not to require physician entities to comply with the following standards:

  • Maintaining additional comprehensive liability insurance for each practice location as required under § 410.33(g)(6).
  • Maintaining a formal clinical complaint process as required under § 410.33(g)(8).
  • Posting IDTF standards as required under § 410.33(g)(9).
  • Maintaining a visible sign posting business hours as required under § 410.33(g)(14)(ii).
  • Separately enrolling each practice location as required under § 410.33(g)(15)(i).

Accordingly, we are proposing to add § 410.33(j) which states that, “A physician or NPP organization (as defined in § 424.502) furnishing diagnostic testing services, except diagnostic mammography services: (1) Must enroll as an independent diagnostic testing facility for each practice location furnishing these services; and (2) is subject to the provisions found in § 410.33, except for § 410.33(g)(6), § 410.33(g)(8), § 410.33(g)(9), § 410.33(g)(14)(ii), and § 410.33(g)(15)(i). As discussed in section II.J. of this preamble, we propose to define a “physician or nonphysician practitioner organization” as any physician or NPP entity that enrolls in the Medicare program as a sole proprietorship or organizational entity such as a clinic or group practice.

We maintain that this enrollment requirement is necessary to ensure that beneficiaries are receiving the quality of care that can only be administered by appropriately licensed or credentialed nonphysician personnel as described in § 410.33(c). Moreover, we propose that physician or NPP organizations that do not enroll as an IDTF and meet the provisions at § 410.33 may be subject to claims denial for diagnostic testing services or a revocation of their billing privileges.

We are soliciting comments on whether we should consider establishing additional exceptions to the established performance standards in § 410.33(g) for physician and NPP organizations furnishing diagnostic testing services.

While we believe that most physician and NPP organizations utilize nonphysician personnel described in § 410.33(c) to furnish diagnostic testing services, we are also soliciting comments on whether physician or NPPs conduct diagnostic tests without benefit of qualified nonphysician personnel and under what circumstances the testing occurs.

While we are proposing to apply the IDTF requirement to all diagnostic testing services furnished in physicians' offices, we are considering whether to limit this enrollment requirement to less than the full range of diagnostic testing services, such as to procedures that generally involve more costly testing and equipment. We seek comment about whether the policy should apply only to imaging services or whether it should also include other diagnostic testing services such as electrocardiograms or other diagnostic testing services frequently furnished by primary care physicians. Within the scope of imaging services, we seek comment about whether the policy should be limited to advanced diagnostic testing procedures which could include diagnostic magnetic resonance imaging, computed tomography, and nuclear medicine (including positron emission tomography), and other such diagnostic testing procedures described in section 1848(b)(4)(B) of the Act (excluding X-ray, ultrasound, and fluoroscopy). We are also soliciting comments on what would be appropriate criteria to limit this provision.

Finally, since this change, if adopted, would take time to implement for suppliers that have enrolled in the Medicare program, we are proposing an effective date of September 30, 2009, rather than the effective date of the final rule. For newly enrolling suppliers, the effective date of this rule would be January 1, 2009.

2. Mobile Entity Billing Requirements

To ensure that entities furnishing mobile services are providing quality services and are billing for the diagnostic testing services they furnish to Medicare beneficiaries, we are proposing a new performance standard for mobile entities at § 410.33(g)(16), which would require that entities furnishing mobile diagnostic services enroll in Medicare and bill directly for the mobile diagnostic services that they furnish, regardless of where the services are performed. We believe that entities furnishing mobile diagnostic services to Medicare beneficiaries must be enrolled in the Medicare program, comply with the IDTF performance standards, and directly bill Medicare for the services they render.

While we understand that a mobile entity can furnish diagnostic testing services in various types of locations, we believe that it is essential that mobile entities use qualified physicians or nonphysician personnel to perform diagnostic testing procedures and that the enrolled mobile supplier bill for the services rendered. We maintain that it is essential to our program integrity and quality improvement efforts that an entity furnishing mobile diagnostic testing services comply with the performance standards for IDTFs and bill the Medicare program directly for the services provided to Medicare beneficiaries.

Since we believe that most mobile entities are already billing for the services they furnish, whether the service was provided in a fixed-based location or in a mobile facility, this proposed provision, if adopted, would be effective with the effective date of the final rule.

3. Revocation of Enrollment and Billing Privileges of IDTFs in the Medicare Program

Historically, we have allowed IDTFs whose Medicare billing numbers have been revoked to continue billing for services furnished prior to revocation for up to 27 months after the effective date of the revocation. Since we believe that permitting this extensive billing period poses a significant risk to the Medicare program, we are proposing to limit the claims submission timeframe Start Printed Page 38535after revocation. In § 424.535(g), we are proposing that a revoked IDTF must submit all outstanding claims for not previously submitted items and services furnished within 30 calendar days of the revocation effective date. We maintain that this change is necessary to limit the Medicare program exposure to future vulnerabilities from physician and NPP organizations and individual practitioners that have had their billing privileges revoked. Accordingly, this proposed change would allow a Medicare contractor to conduct focused medical review on the claims submitted during the claims filing period to ensure that each claim is supported by medical documentation that the contractor can verify. We maintain that focused medical review of these claims will ensure that Medicare only pays for services furnished by a physician or NPP organization or individual practitioner and that these entities and individuals receive payment in a timely manner. In addition, we are also proposing to amend § 424.44(a)(3) to account for this provision related to the requirements for the timely filing of claims. The timely filing requirements in § 424.44(a)(1) and (a)(2) will no longer apply to physician and NPP organizations, physicians, NPPs and IDTFs whose billing privileges have been revoked by CMS.

J. Physician and Nonphysician Practitioner (NPP) Enrollment Issues

[If you choose to comment on issues in this section, please include the caption “PHYSICIAN AND NONPHYSICIAN PRACTITIONER ENROLLMENT ISSUES” at the beginning of your comments.]

1. Effective Date of Medicare Billing Privileges

In accordance with § 424.510, physician and NPP organizations (that is, groups, clinics, and sole owners) and individual practitioners including physicians and NPPs, operating as sole proprietorships or reassigning their benefits to a physician and nonphysician organization may submit claims as specified in § 424.44 after they are enrolled in the Medicare program. This provision permits newly enrolled physician and NPP organizations and individual practitioners, as well as existing physicians and nonphysician organizations and individual practitioners to submit claims for services for services that were rendered prior to the date of filing or the date the applicant received billing privileges to participate in the Medicare program.

For the purposes of this proposed rule, we believe that a NPP includes, but is not limited to, the following individuals: Anesthesiology assistants, audiologists, certified nurse midwifes, certified registered nurse anesthetists, clinical social workers, NPs, occupational therapists in private practice, physical therapists in private practice, PAs, clinical psychologists, psychologists billing independently, and registered dieticians or nutrition professionals.

Once enrolled, physician and NPP organizations and individual physicians and NPPs, depending on their effective date of enrollment, may retroactively bill the Medicare program for services that were rendered up to 27 months prior to being enrolled to participate in the Medicare program. For example, if a supplier is enrolled in the Medicare program in December 2008 with an approval date back to October 2006, that supplier could retrospectively bill for services furnished to Medicare beneficiaries as early as October 1, 2006.

Currently, physician and NPP organizations and individual practitioners, including physicians and NPPs, are not prohibited from billing Medicare prior to their enrollment date. Therefore, it is possible that the physician and NPP organizations and individual practitioners who meet our program requirements on the date of enrollment may not have met those same requirements prior to the date of enrollment, even though that supplier could bill Medicare and receive payments for services rendered up to 27 months prior to their enrolling in the Medicare program. We are concerned that some physician and NPP organizations and individual practitioners may bill Medicare for services when they are not meeting our other program requirements, including those related to providing beneficiary protections, such as Advance Beneficiary Notices.

We are seeking public comment on two approaches for establishing an effective date for Medicare billing privileges for physician and NPP organizations and for individual practitioners.

The first approach would establish the initial enrollment date for physician and NPP organizations and for individual practitioners, including physician and NPPs, as the date of approval by a Medicare contractor. This approach would prohibit physician and NPP organizations and individual practitioners from billing for services rendered to a Medicare beneficiary before they are approved and enrolled by a designated Medicare contractor to participate in the Medicare program and Medicare billing privileges are conveyed to their National Provider Identifier (NPI). The date of approval is the date that a designated Medicare contractor determines that the physician or NPP organizations or individual practitioner meets all Federal and State requirements for their supplier type.

Given this first approach, in § 424.520, we may implement regulations text that reads similar to “the effective date of billing privileges for physician and NPP organizations and individual practitioners, including physicians and NPPs, is the date a Medicare contractor conveys billing privileges to an NPI.”

We believe that this approach—

  • Prohibits physician and NPP organizations and individual practitioners from receiving payments before a Medicare contractor conveys Medicare billing privileges to an NPI (69 FR 3434);
  • Is consistent with our requirements in § 489.13 for those providers and certain suppliers that require a State survey prior to being enrolled and the requirements for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers in § 424.57(b)(2);
  • Is consistent with our requirements for providers identified in § 400.202 and surveyed suppliers are allowed to bill for service only after they are approved to participate in the Medicare program. Surveyed suppliers are suppliers who have been certified by either CMS or a State certification agency and are in compliance with Medicare requirements. Surveyed suppliers may include ASCs or portable x-ray suppliers; and
  • Ensures that we are able to verify a supplier's qualifications, including meeting any performance standards before payment for services can occur.

The second approach would establish the initial enrollment date for physician and NPP organizations and individual practitioners, including physician and NPPs, as the later of: (1) The date of filing of a Medicare enrollment application that was subsequently approved by a fee-for-service (FFS) contractor; or (2) the date an enrolled supplier first started rendering services at a new practice location. The date of filing the enrollment application is the date that the Medicare FFS contractor receives a signed Medicare enrollment application that the Medicare FFS contractor is able to process to approval. This option would allow a supplier that is already seeing non-Medicare patients to start billing for Medicare patients beginning on the day they submit an enrollment application that can be fully processed. In contrast to the first option, Start Printed Page 38536a newly enrolling physician and NPP organizations and individual practitioners or physician and NPP organizations and individual practitioners that are establishing or changing a practice location would be allowed to bill the Medicare program for services furnished to Medicare beneficiaries on or after the date of filing if a Medicare contractor approves Medicare billing privileges and conveys billing privileges to an NPI. It is also important to note that if a Medicare contractor rejects or denies an enrollment application, then the physician or NPP organization or individual practitioner is at risk of not receiving payment for any services furnished after the date of filing.

Given this second approach, in § 424.520, we may implement regulations text that reads similar to “the effective date of billing privileges for physician and NPP organizations and for individual practitioners, physicians and NPPs, is the later of—(1) The filing date of the Medicare enrollment application that was subsequently approved by an FFS contractor; or (2) The date that the physician or NPP organization or individual practitioner first furnished services at a new practice location.”

We believe that this approach—

  • Prohibits physician and NPP organizations and individual practitioners, including physician and NPPs, from receiving payments before a Medicare contractor conveys Medicare billing privileges to an NPI (69 FR 3434);
  • Is consistent with our requirements found at § 410.33(i) that limit the retrospective billing for IDTFs and ensures that Medicare billing privileges are conveyed to physician and NPP organizations and to individual physician and NPPs in a similar manner similar to IDTFs; and
  • Addresses the public's concern regarding contractor processing timeliness while appropriately ensuring that Medicare payments are made to physician and NPP organizations and to individual physician and NPPs who have enrolled in a timely manner.

We maintain that it is not possible to verify that a supplier has met all of Medicare's enrollment requirements prior to submitting an enrollment application. Therefore, the Medicare program should not be billed for services before the later of the two dates that a physician or NPP organization, physician or NPP has submitted an enrollment application that can be fully processed or when the enrolled supplier is open for business.

To assist physician and NPP organizations and individual practitioners in enrolling and updating their existing enrollment record, we established Internet-based enrollment process known as Internet-based Provider Enrollment, Chain and Ownership System (PECOS). Internet-based PECOS is available to physician and NPP organizations and individual practitioners in all States, except California, Missouri, and New York, in early CY 2009. We expect that Internet-based PECOS will be available to physician and NPP organizations and individual practitioners in California, Missouri, and New York by September 30, 2009.

By using Internet-based PECOS, we expect that physician and NPP organizations and individual practitioners will be able reduce the time necessary to enroll in the Medicare program or make a change in their Medicare enrollment record by reducing common errors in the application submission process. We expect that Medicare contractors will fully process most complete Internet-based PECOS enrollment applications within 30 to 45 calendar days compared to 60 to 90 calendar days in the current paper-based enrollment process. Thus, if physician and NPP organizations and individual practitioners enroll in the Medicare program or make a change in their existing Medicare enrollment using Internet-based PECOS and submit required supporting documentation, including a signed certification statement, licensing and education documentation, and, if necessary, the electronic funds transfer authorization agreement (CMS-588) 45 days before their effective date, a Medicare contractor should be able to process the enrollment application without a delay in payment.

The date of filing for Internet-based PECOS will be the date the Medicare FFS contractor receives all of the following: (1) A signed certification statement; (2) an electronic version of the enrollment application; and (3) a signature page that the Medicare FFS contractor processes to approval.

In § 424.502, we are also proposing to define a physician and NPP organization to mean any physician or NPP entity that enrolls in the Medicare program as a sole proprietorship or organizational entity such as clinic or group practice. In addition to establishing organizational structure as a sole proprietorship, physicians and NPPs are able to establish various organizational relationships including corporations, professional associations, partnerships, limited liability corporations and subchapter S corporations. We believe that proposed definition above would include sole proprietorships that receive a type 1 NPI and any organizational entity that is required to obtain a type 2 NPI.

2. Medicare Billing Privileges and Existing Tax Delinquency

The Government Accountability Office (GAO) found that over 21,000 of the physicians, health professionals, and suppliers paid under Medicare Part B during the first 9 months of calendar year 2005 had tax debts totaling over $1 billion. The GAO report titled, “Medicare, Thousands of Medicare Part B Providers Abuse the Federal Tax System (GAO-07-587T)” found abusive and potentially criminal activity, including failure to remit to IRS individual income taxes or payroll taxes or both withheld from their employees.

While we do not currently consider whether an individual physician, NPP currently enrolled in the Medicare program has delinquent tax debts with the Internal Revenue Service (IRS), we do consider whether a physician or NPP was convicted of a Federal or State felony offense, including income tax evasion, that we have determined to be detrimental to the best interest of the Medicare program. Moreover, if a physician or NPP was convicted of Federal or State felony offense within the 10 years preceding enrollment or revalidation of enrollment that we determined to be detrimental to the best interest of the Medicare program, we could deny or revoke the Medicare billing privileges of the physician or NPP.

The Financial Management Service (FMS), a bureau of the Department of Treasury, initiated the Federal Payment Levy Program (FPLP) portion of the Continuous Levy Program in July 2000 to recover delinquent Federal tax debts. The FPLP is a program whereby delinquent Federal income tax debts are collected by levying non-tax payments, as authorized by the Taxpayer Relief Act of 1997 (Pub. L. 105-34). The FPLP includes vendor and Social Security benefit payments, and Medicare payments. It is accomplished through a process of matching delinquent debtor data with payment record data. This automated collection of debt at the time of payment occurs after the delinquent taxpayer has been afforded due process, in accordance with the Internal Revenue Code.

In July 2000, the IRS in conjunction with the Department of Treasury's FMS started the FPLP which is authorized by section 6331(h) of the Internal Revenue Code as prescribed by section 1024 of Start Printed Page 38537the Taxpayer Relief Act of 1997. Through this program, the IRS can collect overdue taxes through a continuous levy on certain Federal payments disbursed by FMS; it generally allows Medicare to match a claim to a delinquent taxpayer, offset the payment, and recover a percentage of the amount due.

The FPLP is a collection and enforcement tool used by the IRS for individuals that have received all requisite notification of tax delinquency and who have either exhausted or neglected to use their respective appeal rights; therefore, the FPLP is only applied after all previous IRS collections efforts have failed. Accordingly, the FPLP is an automated levy program where certain delinquent taxpayers are systematically matched and levied on their Federal payments disbursed by Treasury's FMS.

In 2001, we implemented the FPLP process for Medicare Part C and vendor payments, and in FY 2009, we will implement the FPLP process for payments made to providers and suppliers reimbursed under Part A and Part B of the Medicare program. However, the FPLP does not allow CMS to offset a payment when an individual reassigns his or her benefits to a third-party, such as a group practice where an existing Federal tax delinquency exists.

Consistent with statutory authority found under sections 1866(j)(1)(A) and 1871 of the Act, we believe that we have the authority to establish and make changes to the enrollment process for providers and suppliers of service. Accordingly, to ensure that the Federal government is able to recoup delinquent Federal tax debts from physicians and NPPs who are enrolled in the Medicare program and are receiving payments, we are considering revoking the billing privileges for those individuals for which a tax delinquency exists and we are unable to directly levy future payments through the FPLP. While we are not proposing this change in this year's PFS, we will consider proposing this type of change in a future rulemaking effort after we have implemented the FPLP process, monitored and evaluated the implementation of FPLP process, and analyzed the potential impact of this change on physician and NPPs who are subject to the FPLP but that we are unable to directly levy future payments through the FPLP. In addition, we expect to conduct outreach regarding our implementation in advance of implementing the FPLP in FY 2009.

We believe that this change, if proposed and adopted, would prohibit an individual with a tax delinquency from shielding their future payments through reassignment of benefits to a third party. Finally, since the tax delinquency is incurred by an individual who has reassigned his or her benefits to a third party, we do not believe that it is appropriate to take action against the third-party. We believe that this is consistent with the protections already afforded to an individual by the IRS but ensures that Medicare does not enroll or allow continued enrollment to an individual with serious tax delinquency.

We maintain that it is essential that a physician or NPP resolve any existing Federal tax delinquency before entering the Medicare program. This will ensure that the Medicare program is not making payment to an individual who has not met his or her obligation to pay their tax debts.

Finally, we are soliciting comments on whether we should consider revoking a physician billing privileges or taking some other type of administrative action when a physician or NPP has a Federal tax delinquency that can not be levied through the FPLP process. We are also soliciting comments on whether we should consider revoking the billing privileges of an organizational entity or taking some other type of administrative action against organizational entities when the owners of an organizational entity have a Federal tax delinquency that can not be levied through the FPLP process.

3. Denial of Enrollment in the Medicare Program (proposed § 424.530(a)(6) and (a)(7))

Currently, owners, authorized officials, and delegated officials of a physician and NPP organizations and individual practitioners, including physicians and NPPs, can obtain additional billing privileges by establishing a new tax identification number (TIN), reassigning benefits to another entity, or by submitting an enrollment application as another provider or supplier type even though the entity for which the provider or supplier rendered services and has had its billing privileges revoked, suspended, or has an outstanding Medicare overpayment. Absent a reason to reject or deny a Medicare enrollment application, the Medicare FFS contractor is required to approve the enrollment application for a provider or supplier who meets all other Federal and State enrollment requirements for their provider or supplier type.

By submitting and having an enrollment application (for example, an initial application or a change of ownership) with a new TIN, some physician and NPP organizations and individual practitioners are able to circumvent existing Medicare revocation, payment suspension, overpayment recovery, and medical review processes by obtaining additional Medicare billing privileges. By obtaining additional billing privileges for multiple locations, these providers and suppliers are able to discontinue the use of the NPI that has an administrative action against it and bill and receive payment under another NPI.

Consistent with § 405.371, we will impose a payment suspension when we possesses reliable information that an overpayment or fraud, or willful misrepresentation exist, or that payments to be made may not be correct. While providers and suppliers do not have formal appeal rights to a payment suspension determination, providers and suppliers can submit a rebuttal to CMS' payment suspension determination. We believe that it is essential that we resolve the payment suspension determination before we grant additional billing privileges to these providers or suppliers. In concert with § 405.372(c), once a payment suspension has been terminated, providers and suppliers may then apply for billing privileges.

Moreover, we are obligated to recover Medicare overpayments as expeditiously as possible. Providers and suppliers can pay the debt or Medicare can reduce present or future Medicare payments and applying the amount withheld to the indebtedness. When we identify an overpayment and provide notice of the overpayment, physician and NPP organizations and individual practitioners are given an opportunity to appeal the determination. Under certain conditions the overpayment collection process is suspended during the appeals process. However, if the physician and NPP organization or individual practitioner does not appeal the overpayment determination, the overpayment determination is upheld on appeal, we will initiate a recovery action. However, in some cases, physician and NPP organizations or individual practitioners will try to circumvent the recovery process by seeking additional billing privileges and billing under the new billing number.

Accordingly, we propose to add a new § 424.530(a)(6) and (a)(7) to deny enrollment applications for additional Medicare billing privileges if the physician or NPP organization or individual practitioner has an active payment suspension or has an existing overpayment that has not been repaid. We are proposing that a Medicare FFS Start Printed Page 38538contractor be allowed to deny enrollment applications from those authorized officials, delegated officials, owners, and individual practitioners that own a supplier or provider at the time of filing until such time as the administrative action is terminated or the Medicare overpayment has been repaid in full. Specifically, we are proposing to deny enrollment to any current owner (as defined in § 424.502), physician, or NPP, who is participating in the Medicare program and is under a current Medicare payment suspension.

We believe that the change to our denial policy would help protect the Medicare program from unscrupulous or problematic physician and NPP organizations and individual practitioners. Moreover, this change would allow—(1) Medicare FFS contractors to improve customer service to all providers and suppliers that are already enrolled in the Medicare program; (2) facilitate the enrollment of all providers and suppliers seeking to enroll in the Medicare program for the first time; and (3) expand on existing efforts to process changes in a timely manner and provide better customer service.

4. Reporting Requirements for Providers and Suppliers (proposed § 424.516 and § 424.535(a)(10))

Currently, § 424.520(b) requires that providers and suppliers, except DMEPOS and IDTF suppliers, report to CMS most changes to the information furnished on the enrollment application and furnish supporting documentation within 90 calendar days of the change (changes in ownership must be reported within 30 days). As specified in § 424.57(c)(2), DMEPOS suppliers, have only 30 calendar days to submit changes of information to CMS. As specified in § 410.33(g)(2), IDTFs, must report changes in ownership, changes in location, changes in general supervision, and adverse legal actions within 30 calendar days. All other changes to the enrollment application must be reported within 90 days.

While physician and NPP organizations and individual practitioners are required to report changes within 90 days of the reportable event, in many cases, there is little or no incentive for them to report a change that may adversely affect their ability to continue to receive Medicare payments. For example, physician and NPP organizations and individual practitioners purposely may fail to report a felony conviction or other adverse legal action, such as a revocation or suspension of a license to a provider of health care by any State licensing authority, or a revocation or suspension of accreditation, because reporting this action may result in the revocation of their Medicare billing privileges. Thus, unless CMS or our designated contractor becomes aware of the conviction or adverse legal action through other means, the change may never be reported by a physician and NPP organization or individual practitioner. Alternatively, if CMS or our designated contractor becomes aware of the conviction or adverse legal action after the fact, we lack the regulatory authority to collect overpayments for the period in which the physician and NPP organizations and individual practitioners should have had their billing privileges revoked.

Since we believe that physician and NPP organizations and individual practitioners must furnish updates to their Medicare enrollment information in a timely manner, we are proposing a new § 424.516(d) which would establish more stringent reporting requirements for physician NPP organizations and individual practitioners. (We are proposing to redesignate § 424.520 as § 424.516 and amend the provisions in new § 424.516.) In addition to a change of ownership (as currently specified in redesignated § 424.516(d)(1)(i)), we are proposing to add § 424.516(d)(1)(ii) that requires all physician and NPP organizations and individual practitioners to notify CMS' designated contractor of any adverse legal action within 30 days. Adverse legal actions include, but are not limited to, felonies, license suspensions, and the Office of the Inspector General (OIG) exclusion or debarment. We believe that a physician and NPP organizations and individual practitioner's failure to comply with the reporting requirements within the time frames described above may result in the revocation of Medicare billing privileges and a Medicare overpayment from the date of the reportable change. Specifically, we believe that an adverse legal action may preclude payment, and thus, establish an overpayment from the date of the adverse action. As such, we believe that physician and NPP organizations and individual practitioners should not be allowed to retain any reimbursement they receive after the adverse legal action.

We believe that it is essential that this type of change be reported in a timely manner (that is within 30 days). For example, if CMS or our designated contractor determines in February 2008 that a physician failed to notify Medicare about an adverse legal action that occurred on June 30, 2007, that physician may be subject to an overpayment for all Medicare payments beginning June 30, 2007 and have its Medicare billing privileges revoked effective retroactively back to June 30, 2007 as well.

Additionally, we are proposing to add a requirement for change in location at § 424.516(d)(1)(iii). Since a change in location may impact the amount of payment for services rendered by placing the physician and NPP organizations and individual practitioners into a new CBSA. We believe that it is essential that physician and NPP organizations and individual practitioners report changes in practice location including those that impact the amount of payments they receive within a timely period (that is, 30 days). However, unlike an adverse legal action, which may preclude all payments if reported, failure to report a change in practice location may impact the amount of payment, not whether a physician and NPP organizations and individual practitioners may be eligible to receive payments. Accordingly, we believe that failing to report changes in practice location would result in an overpayment for the difference in payment rates retroactive to the date the change in practice location occurred and may result in the revocation of Medicare billing privileges. For example, if a physician and NPP organization moves its practice location in New York, from urban Herkimer County to Hamilton County or Lewis County, which are both rural, but fails to update its provider enrollment information; then it would no longer be able to receive the higher payment rate associated with Herkimer County. We believe that reporting these types of changes is essential for making correct and appropriate payments.

We are proposing to add § 424.535(a)(9) which would specify that failure to comply with the reporting requirements specified in § 424.516(d) would be a basis for revocation. Additionally, we are proposing in § 424.565(a), “Failure to comply with the reporting requirements specified in § 424.516(d) would result in a Medicare overpayment from the date of an adverse legal action or a change in practice location.” In this situation, an overpayment for failure to timely report these changes would be calculated back to the date of the adverse legal action or the date of the change in practice location. Once an overpayment has been assessed, we will follow the overpayment regulations established at 42 CFR Part 405 subpart C. We previously addressed these procedures in Chapter 4 of the Medicare Financial Management Manual (IOM Manual 100-Start Printed Page 3853906). Lastly, collection of overpayments related to § 424.516(d)(1)(iii) would not begin until after the effective date of the final rule.

Since it is essential that physician and NPP organizations and individual practitioners notify their designated contractor of these types of reportable events in a timely manner and to ensure that the provider or supplier continues to be eligible for payment, we believe that it is essential that we establish an overpayment from the time of the reportable event. We believe that establishing an overpayment and revocation of billing privileges for noncompliance from the time of the reportable event would provide the supplier with a compelling incentive to report reportable changes in the 30-day reporting period.

In addition, if CMS or our designated contractor determines that a physician and NPP organization or an individual practitioner has moved and has not reported the reportable event within the 30-day reporting period, CMS or our designated contractor would impose an overpayment, if applicable, and revoke billing privileges for a period of not less than one year.

5. Maintaining Ordering and Referring Documentation

We are proposing to add a new § 424.516(f) that would specify, “A provider or supplier is required to maintain ordering and referring documentation, including the NPI, received from a physician or eligible NPP. Physicians and NPPs are required to maintain written ordering and referring documentation for 10 years from the date of service.” We believe that it is essential that providers and suppliers maintain documentation regarding the specific service ordered or referred to a Medicare beneficiary by a physician or NPP as defined in section 1842(b)(18)(c) of the Act (which includes but is not limited to nurse practitioners, and physician assistants). We believe that ordering and referring documentation maintained by a provider or supplier must match the information on the Medicare claims form. Additionally, we are proposing to add § 424.535(a)(10) that would state that failure to comply with the documentation requirements specified in § 424.516(f) as a reason for revocation. For example, a lab submits a claim with Dr. Smith's NPI (1234512345) in the ordering and referring section of the claim form. The number submitted on the claim form should match the documentation in the provider or supplier's records. In addition, we are codifying the requirement to maintain ordering and referring documentation as required in the Medicare Program Integrity Manual (PIM) Publication 100-08, Chapter 5. While the PIM currently requires that providers and suppliers maintain ordering and referring documentation for 7 years from the date of payment, we believe that the industry generally maintains documentation from the date of service. Accordingly, since there may be a delay in claims payment for up to 27 months from the date of service, we believe that it would be administratively less burdensome for providers and suppliers to maintain ordering and referring documentation for 10 years from the date of service, rather than requiring providers and suppliers to maintain ordering and referring documentation associated with the date of payment.

We maintain that a provider or supplier should retain the necessary ordering and referring documentation received from physicians and NPPs as defined in section 1842(b)(18)(c) of the Act to assure themselves that coverage criterion for an item has been met. If the information in the patient's medical record does not adequately support the medical necessity for the item, the supplier would be liable for the dollar amount involved unless a properly executed Advance Beneficiary Notice of possible denial has been obtained.

6. Revocation of Enrollment and Billing Privileges in the Medicare Program (proposed § 424.535(g))

Historically, we have allowed providers and suppliers whose Medicare billing numbers have been revoked to continue billing for services furnished prior to revocation for up to 27 months after the effective date of the revocation. Since we believe this extensive billing period poses significant risk to Medicare program, we are proposing to limit the claims submission timeframe after revocation. In § 424.535(g), we are proposing that revoked physician and NPP organizations and individual practitioners, including physicians and NPPs, must submit all outstanding claims not previously submitted within 30 calendar days of the revocation effective date. We maintain that this change is necessary to limit the Medicare program exposure to future vulnerabilities from physician and NPP organizations and individual practitioners that have had their billing privileges revoked. We know that some physician and NPP organizations and individual practitioners are able to create false documentation to support claims payment. Accordingly, this proposed change would allow a Medicare contractor to conduct focused medical review on the claims submitted during the claims filing period to ensure that each claim is supported by medical documentation that the contractor can verify. We maintain that focused medical review of these claims will ensure that Medicare only pays for furnished services by a physician organization or individual practitioner and that these entities and individuals receive payment in a timely manner. Since a physician organization or individual practitioner generally submit claims on a nexus to the date of service, we believe that this proposed change will not impose a significant burden on physician organizations or individual practitioners. In addition, we are also proposing to add § 424.44(a)(3) to account for this provision related to the requirements for the timely filing of claims.

7. Technical Changes to Regulations Text

We propose to make the following technical changes:

  • Existing § 424.510(d)(8) would be redesignated as § 424.517. This proposed revision would separate our ability to conduct onsite reviews from the provider and supplier enrollment requirements.
  • Existing § 424.520 would be revised and redesignated as § 424.516. This proposed redesignation would move the additional provider and supplier enrollment requirements so that these requirements immediately follow the provider and supplier enrollment requirements.
  • In new § 424.520, we would specify the effective dates for Medicare billing privileges for the following entities: Surveyed, certified, or accredited providers and suppliers; IDTFs; and DMEPOS suppliers.
  • In § 424.530, the phrase “in the Medicare program” would be added to the section heading to remain consistent with other headings in the subpart.

K. Proposed Amendment to the Exemption for Computer-Generated Facsimile Transmission From the National Council for Prescription Drug Programs (NCPDP) SCRIPT Standard for Transmitting Prescription and Certain Prescription-Related Information for Part D Eligible Individuals

[If you choose to comment on issues in this section, please include the caption “COMPUTER-GENERATED FAX TRANSMISSIONS” at the beginning of your comments.]Start Printed Page 38540

1. Legislative History

Section 101 of the MMA amended title XVIII of the Act to establish a voluntary prescription drug benefit program. Prescription Drug Plan (PDP) sponsors and Medicare Advantage (MA) organizations offering Medicare Advantage-Prescription Drug Plans (MA-PDs) and other Medicare Part D sponsors are required to establish electronic prescription drug programs to provide for electronic transmittal of certain information to the prescribing provider and dispensing pharmacy and dispenser. This includes information about eligibility, benefits (including drugs included in the applicable formulary, any tiered formulary structure and any requirements for prior authorization), the drug being prescribed or dispensed and other drugs listed in the medication history, as well as the availability of lower cost, therapeutically appropriate alternatives (if any) for the drug prescribed. Section 101 of the MMA established section 1860D-4(e)(4)(D) of the Act, which directed the Secretary to issue uniform standards for the electronic transmission of such data.

There is no requirement that prescribers or dispensers implement e-prescribing. However, prescribers and dispensers who electronically transmit prescription and certain other prescription-related information for covered drugs prescribed for Medicare Part D eligible individuals, directly or through an intermediary, are required to comply with any applicable final standards that are in effect. For a complete discussion of the statutory basis for the e-prescribing portions of this proposed rule and the statutory requirements at section 1860D-4(e) of the Act, please refer to the “Background” section of the E-Prescribing and the Prescription Drug Program proposed rule published in the February 4, 2005 Federal Register (70 FR 6256)

2. Regulatory History

a. Foundation Standards and Exemption for Computer-Generated Facsimiles (Faxes)

In the E-Prescribing and the Prescription Drug Program final rule (70 FR 67568, November 7, 2005), we adopted the National Council for Prescription Drug Programs (NCPDP) SCRIPT standard, Implementation Guide, Version 5, Release 0 (Version 5.0), May 12, 2004, excluding the Prescription Fill Status Notification Transaction (and its three business cases which include the following: Prescription Fill Status Notification Transaction-Filled; Prescription Fill Status Notification Transaction-Not Filled; and Prescription Fill Status Notification Transaction-Partial Fill) hereafter referred to as “NCPDP SCRIPT 5.0,” as the standard for communicating prescriptions and prescription-related information between prescribers and dispensers. Subsequently, in the June 23, 2006 Federal Register (71 FR 36020), we published an interim final rule with comment period (IFC) that maintained NCPDP SCRIPT 5.0 as the adopted standard, but allowed for the voluntary use of a subsequent backward compatible version of the standard, NCPDP SCRIPT 8.1. In the April 7, 2008 Federal Register , we published a final rule (73 FR 18918) that finalized the June 23, 2006 IFC; effective April 1, 2009, we will retire the NCPDP SCRIPT 5.0 and adopt NCPDP SCRIPT 8.1 as the standard. Hereafter we refer to these standards as “NCPDP SCRIPT.”

The November 7, 2005 final rule also established an exemption to the requirement to utilize the NCPDP SCRIPT standard for entities that transmit prescriptions or prescription-related information for Part D covered drugs prescribed for Part D eligible individuals by means of computer-generated facsimiles (faxes generated by one computer and electronically transmitted to another computer or fax machine which prints out or displays an image of the prescription or prescription-related information). Providers and dispensers who use this technology are not compliant with the NCPDP SCRIPT standard. The exemption was intended to allow such providers and dispensers time to upgrade to software that utilizes the NCPDP SCRIPT standard, rather than forcing them to revert to paper prescribing.

b. Amendment of Exemption

In the CY 2008 PFS proposed rule (72 FR 38194), we proposed to revise § 423.160(a)(3)(i) to eliminate the computer-generated fax exemption to the NCPDP SCRIPT standard for the communication of prescription or certain prescription-related information between prescribers and dispensers for the transactions specified in § 423.160(b)(1)(i) through (xii).

Since computer-generated faxing retains some of the disadvantages of paper prescribing (for example, the administrative cost of keying the prescription into the pharmacy system and the related potential for data entry errors that may impact patient safety), we believed it was important to take steps to encourage prescribers and dispensers to move toward use of NCPDP SCRIPT. We believed the elimination of the computer-generated fax exemption would encourage prescribers and dispensers using this computer-generated fax technology to, where available, utilize true e-prescribing (electronic data interchange using the NCPDP SCRIPT standard) capabilities.

We also believed that it might encourage those without such capabilities to upgrade their current software products, or, where upgrades are not available, to switch to new products that would enable true e-prescribing. In addition, because the elimination of the computer-generated facsimile exemption would encourage those prescribers that are already using e-prescribing software that is capable of true e-prescribing to utilize those capabilities, we believed that the elimination of the computer-generated fax exemption would increase the number of NCPDP SCRIPT transactions fairly significantly in a relatively short time period, and that this could, in turn, create a “tipping point” that could create economic incentives for independent pharmacies to adopt NCPDP SCRIPT capable software to begin to exchange true e-prescribing transactions with their prescriber partners.

We proposed to eliminate the computer-generated fax exemption effective 1 year after the effective date of the CY 2008 PFS final rule (that is, January 1, 2009). We believed that this would provide sufficient notice to prescribers and dispensers who would need to implement or upgrade e-prescribing software to look for products and upgrades that are capable of generating and receiving transactions that utilize NCPDP SCRIPT. It would also afford current e-prescribers time to work with their trading partners to eventually eliminate computer-to-fax transactions. We also believed the elimination of the exemption for computer-generated faxing would encourage e-prescribers and dispensers to move as quickly as possible to use of the NCPDP SCRIPT standard with what we perceived to be minimal impact.

We solicited comments on the impact of the proposed elimination of this exemption. Several commenters concurred with our proposal to eliminate the exemption for computer-generated faxes. The commenters indicated that lifting the exemption for computer-generated faxes would act as an incentive to move prescribers and dispensers toward true e-prescribing (electronic data interchange using the NCPDP SCRIPT standard). Less than half of the commenters disagreed with Start Printed Page 38541our proposal to eliminate the exemptions for computer-generated faxes, citing concerns about increased hardware/software costs, transaction fees, certification and other activation costs. Some commenters agreed that many prescribers who are already e-prescribing likely already possessed the ability to generate NCPDP SCRIPT compliant transactions using their software or could comply by obtaining a version upgrade under their maintenance agreements. Many commenters suggested that we continue to allow for the use of computer-generated faxes in the case of transmission failure and network outages.

During the CY 2008 PFS proposed rule comment period, we received several comments that indicated that the elimination of the exemption could be problematic in certain e-prescribing transactions, namely prescription refill requests, but only one of those commenters offered substantiation to support this assertion. Absent receipt of substantial industry feedback on the impact of the elimination of computer-generated facsimiles on prescription refill requests, and not considering these comments about prescription refill requests to constitute widespread concern regarding the prescription refill request function, in the CY 2008 PFS final rule with comment period (72 FR 66396), we amended the exemption to permit the use of computer-generated facsimiles only in cases of temporary or transient network transmission failures. Taken in the aggregate, we determined that the 1-year time period was adequate time during which providers and dispensers would have the opportunity to convert to conducting true e-prescribing and that costs would be mitigated due to the growing volume of e-prescriptions and practice of e-prescribing, with a commensurate reduction in transmission, software and other costs during that 1-year time period. These changes were to become effective in January 2009.

3. Proposal

Following the publication of the CY 2008 PFS final rule with comment period, we received additional information regarding how the elimination of the exemption for computer-generated faxes would adversely impact the electronic transmission of prescription refill requests. These commenters relayed that the elimination of the exemption would force dispensers who e-prescribe and use these transactions to revert to paper prescribing. These commenters substantiated their assertions by providing us with more specific information regarding the economic and workflow impacts associated with the elimination of computer-generated faxes that was not forthcoming in the prior public comment period for the proposed rule. We also received unsolicited comments on this issue during the comment period for the November 16, 2007 proposed rule (72 FR 64900). In light of this new information, we are now re-examining this issue in this proposed rule.

Dispensers have indicated that they use computer-generated facsimiles for the majority of prescription refill requests, in particular when communicating with prescribers that have not adopted e-prescribing. Currently, regardless of how the initial prescription was received by the pharmacy (that is, orally, via e-prescribing, telephone, paper, or fax) nearly all prescription refill requests from chain pharmacies to prescribers are sent electronically, either via an e-prescribing application or via computer-generated facsimile. When a prescription is received by a dispenser electronically, the prescription refill request is sent to the prescriber via the same technology. However, where the dispenser knows that the prescriber lacks e-prescribing capability or has not activated it, or where the prescriber does not respond to the request sent to his or her prescribing device, the prescription refill request is sent or re-sent via computer-generated facsimile. Commenters stated that the vast majority of computer-generated facsimiles sent today from prescribers to pharmacies are not electronic data interchange (EDI) transmissions, but usually prescription refill requests sent from pharmacies to prescribers who do not conduct true e-prescribing and, in many cases, do not engage in any electronic transactions at all. One national drug store chain estimates that it produces approximately 150,000 computer-generated facsimile prescription refill requests every day.

The workflow and process for filling prescription would be significantly disrupted if these computer-generated facsimile transmissions were prohibited. Dispensers and other staff would be forced to revert back to making phone calls or using a stand-alone facsimile machine to contact prescribers each time a refill is requested. Commenters indicated that not only is this counterproductive to the advances and efficiencies made in pharmacy practice, it would impose an undue administrative burden on dispensing pharmacies and pharmacists.

In light of this additional information regarding the larger than anticipated impact of the elimination of computer—generated facsimiles for the prescription refill request transaction, we propose to further amend the computer-generated facsimile exemption to also allow for an exemption from the NCPDP SCRIPT standards for electronic prescription refill request transactions that are conducted by computer-generated facsimiles when the prescriber is incapable of receiving electronic transmissions using the NCPDP SCRIPT standard. We propose to retain the current exemption in instances of temporary network transmission failures. We propose that this change will be effective January 1, 2009. We will periodically revisit the exemption for the purpose of ultimately eliminating it for the prescription refill request transaction as described in § 423.160(b)(1)(vii), and solicit comments regarding what constitutes an adequate time to allow the industry to transition to the use of the NCPDP SCRIPT standard.

We are also soliciting comments on the impact of the proposed exclusion of the prescription refill request transaction from this exemption. Specifically, we are soliciting information on any other e-prescribing transaction that may be similarly adversely impacted by the elimination of computer-generated facsimiles. As the use of e-prescribing increases, the need for computer-generated facsimiles in Part D e-prescribing would decrease, except in cases of temporary or transient network transmission failures. We believe that this proposal to allow computer-generated facsimiles for the prescription refill request transaction, and in cases of network transmission failures, would not slow the ongoing adoption of e-prescribing using NCPDP SCRIPT enabled transactions, and that the industry should continue to move as quickly as possible to use of the NCPDP SCRIPT standard.

L. Comprehensive Outpatient Rehabilitation Facilities (CORF) and Rehabilitation Agency Issues

[If you choose to comment on issues in this section, please include the caption “CORF AND REHABILITATION ISSUES” at the beginning of your comments.]

Comprehensive outpatient rehabilitation facilities (CORFs) and rehabilitation agencies are Medicare providers that are certified to provide certain rehabilitation services. Currently covered CORF clinical services and rehabilitation agency services are paid through the PFS.Start Printed Page 38542

In the CY 2008 PFS final rule with comment period (72 FR 66222 and 66399), we revised the CORF regulations at 42 CFR parts 410 and 413 to ensure that the regulations reflected the statutory requirements applicable to CORFs under sections 1834(k) and 1861(cc) of the Act. Many of these changes were technical in nature. Specifically, the regulatory changes: (1) Revised the definitions of physicians' services, respiratory therapy services, social services and psychological services, nursing services, drugs and biologicals, and supplies and durable medical equipment and home environment evaluation; (2) amended the payment provisions for CORF services; and (3) made other clarifications and changes to the conditions for coverage for CORF services.

In this CY 2009 PFS proposed rule, we address the comments received in response to the CY 2008 final rule with comment (72 FR 66222), as well as add new provisions and revise some provisions. We welcome your comments on all of these proposed changes.

1. Personnel Qualifications

We stated in the CY 2008 PFS final rule with comment period that we would propose updated qualifications for respiratory therapists in future rulemaking (72 FR 66297). It has been our policy that only the respiratory therapist (and not the respiratory therapy technician), who possesses the educational qualifications necessary to provide the level of respiratory therapy services required, is permitted to provide respiratory therapy in a CORF setting.

In the CY 2008 PFS final rule with comment period, we received a comment indicating that our regulations were outdated and did not conform to current respiratory therapy professional standards. The American Association for Respiratory Care (AARC) believes that the terms “certified respiratory therapist (CRT)” and the “registered respiratory therapist (RRT)” have replaced the terms “respiratory therapy technician” and “respiratory therapist,” respectively. In addition, the qualifications for CRTs and RRTs differ from those applicable to respiratory therapy technicians and respiratory therapists. The CRT designation is awarded after an individual successfully passes the entry-level respiratory therapy examination. In order to be eligible for the RRT examination, an individual must be a graduate of an advanced level respiratory therapy educational program and have obtained the RRT credential.

For CY 2009, we are proposing to revise § 485.70(j)—setting forth the personnel qualifications for respiratory therapists in CORFs— to be consistent with current qualification requirements for RRTs, as recommended by the AARC.

We are also proposing to delete § 485.70(k), which sets forth personnel qualifications for CRTs (previously referred to as respiratory therapy technicians) in CORFs. In the past, we have not reimbursed CORFs for respiratory therapy services provided by respiratory therapy technicians or CRTs, and we believe that removing the technician definition would clarify our position. We believe that current medical standards continue to require that the provision of skilled respiratory therapy services to patients in the CORF setting be furnished by RRTs. While CRTs furnish general respiratory care procedures and may assume some clinical responsibility for specified respiratory care modalities involving the application of therapeutic techniques under the supervision of an RRT or a physician, the educational qualifications that a RRT possesses allow him or her to evaluate, treat, and manage patients of all ages with respiratory illnesses. RRTs participate in patient education, implement respiratory care plans, apply patient-driven protocols, follow evidence-based clinical practice guidelines, and participate in health promotion, disease prevention, and disease management. RRTs also may be required to exercise considerable independent judgment.

This was implemented in the CY 2002 PFS final rule with comment period (66 FR 55246 and 55311) and the CY 2003 PFS final rule with comment period (67 FR 79966 and 79999) when we developed and discussed G codes, CORF respiratory therapy services, and specifically recognized the RRT as the appropriate level of personnel to provide these CORF services. Finally, the CORF regulations at § 485.58(d)(4) state that as a condition of participation for CORFs, CORF personnel must meet the qualifications described at § 485.70.

For CY 2009, to maintain consistency in the conditions of participation for both CORFs, home health agencies (HHAs), and other outpatient service providers, we are proposing to amend the material addressing personnel qualifications in § 485.70. Specifically, we are amending paragraphs § 485.70(c) and § 485.70(e) by referencing the personnel qualifications for HHAs at § 484.4. This change would align CORF personnel requirements not only with HHA requirements, but also with other regulations in Part 485 addressing provision of physical therapy, speech-language pathology, and occupational therapy services. We welcome your comments on these proposed changes.

Also, at 485.58(a)(1)(i), we propose to amend the duties of a CORF physician to include medical supervision of nonphysician staff. This change conforms to changes made to the CORF conditions for coverage in the CY 2008 PFS final rule with comment period. We believe that adding medical supervision of nonphysician staff to the duties of CORF physicians more accurately reflects the duties and responsibilities of the CORF physician. We also believe that this change could increase the quality of care provided to patients of CORFs. We welcome your comments on this proposed change.

2. Social and Psychological Services

In the CY 2008 PFS final rule with comment period (72 FR 66297), we clarified that all CORF services, including social and psychological services, must directly relate to or further the rehabilitation goals established in the physical therapy, occupational therapy, speech-language pathology, or respiratory therapy plan of treatment. We believe that using a full range of clinical social and psychological CPT codes to describe CORF social and psychological services is inappropriate because social and psychological CORF services do not include independent clinical treatment of mental, psychoneurotic, and personality disorders. CPT codes 96150 through 96154 and CPT code range 90801 through 90899 are inappropriate for CORF use because all of these CPT codes represent full-scale clinical treatment for these disorders. As we stated last year, we believe that for purposes of providing care in a CORF, social and psychological services should represent only case management and patient assessment components as they relate to the rehabilitation treatment plan (72 FR 66297 through 66298). Consequently, after notice and comment, we changed our policy and payment for CORF social and psychological services; these services may no longer address a CORF patient's mental health diagnoses except insofar as they relate directly to other services provided by the CORF.

We specified in the CY 2008 final rule with comment period (72 FR 66298) that only the CPT code 96152 for health and behavior intervention (with the patient) could be used to bill for CORF social and psychological services. This code is part of a series of codes that was created by CPT in 2002 to address health and behavior assessment issues. These Start Printed Page 38543services are offered to patients who present with established illnesses or symptoms, who are not diagnosed with mental illness, and may benefit from evaluations that focus on the biopsychosocial factors related to the patient's physical health status, such as patient adherence to medical treatment, symptom management and expression, health-promoting behaviors, health-related risk-taking behaviors, and overall adjustment to medical illness. We also adopted the more limited definition of CORF social and psychological services, in our revised regulations at § 410.100(h) (72 FR 66399). The regulations state that, social and psychological services include the assessment and treatment of an individual's mental and emotional functioning and the response to and rate of progress as it relates to the individual's rehabilitation plan of treatment, including physical therapy services, occupational therapy services, speech-language pathology services and respiratory therapy services.

We also noted that a HCPCS G-code could more accurately describe these unique CORF services, but believed that it was inappropriate to create such a G-code in the final rule with comment period without first proposing to do so in proposed rulemaking.

Therefore, for CY 2009, we are proposing to create a CORF specific G-code, GXXX5, Social work and psychological services, directly relating to and/or furthering the patient's rehabilitation goals, each 15 minutes, face-to face; individual (services provided by a CORF-qualified social worker or psychologist in a CORF), to accurately describe the unique social and psychological services provided by CORF staff and to establish appropriate payment for these services. We propose to use salary and wage data from the Bureau of Labor and Statistics to institute a blended social worker/psychologist clinical labor category using a price per minute rate of $0.45 for the practice expense component of GXXX5. We would assign a malpractice RVU of 0.01. Because the services described by GXXX5 are solely furnished by a CORF social worker or clinical psychologist, and not by a physician, we would not allocate a work RVU for these services.

We also propose to revise § 410.100(h) to delete the reference to “and treatment.” As discussed above and in the CY 2008 PFS final rule with comment period (72 FR 66297), we believe all CORF services, including social and psychological services, must directly relate to or further the rehabilitation goals established in the physical therapy, occupational therapy, speech-language pathology, or respiratory therapy plan of treatment. Accordingly, social and psychological CORF services do not include clinical treatment of mental, psychoneurotic, and personality disorders. We are concerned that the phrase “and treatment” currently included in the definition of CORF social and psychological services may be misconstrued to include social and psychological services for the independent clinical treatment of mental illness. Therefore, we propose to delete this language in order to clarify that only those social and psychological services that relate directly to a rehabilitation plan of treatment and the associated rehabilitation goals are considered CORF social and psychological services.

We also propose to remove § 410.155(b)(1)(ii) regarding the application of mental health limitations to CORF social and psychological services. As stated, CORF services, including social and psychological services, must directly relate to or further the rehabilitation goals established in the physical therapy, occupational therapy, speech-language pathology, or respiratory therapy plan of treatment. In the CY 2008 PFS final rule with comment period (72 FR 66400), we stated that CORF services must be furnished under a written plan of treatment that indicates the diagnosis and rehabilitation goals, and prescribes the type, amount, frequency, and duration of the skilled rehabilitation services, including physical therapy, occupational therapy, speech-language pathology and respiratory therapy services. Section 410.155(b) specifies that the mental health payment limitation applies when there is a diagnosis of mental, psychoneurotic, and personality disorders (mental disorders identified by a diagnosis code within the range of 290 through 319) prior to beginning services. Under our revised definition, CORF social and psychological services must directly relate to the physical therapy or other rehabilitation plan of treatment and its associated goals. Since these patients are receiving CORF services because they have a need for skilled rehabilitation services, any social and psychological services provided in a CORF under § 410.100(h) must include an assessment of the individual's mental and emotional functioning exclusively as such functioning relates to their rehabilitation plan of treatment. In our view, such services provided in a CORF are not “treatment of mental, psychoneurotic, and personality disorders of an individual” as set out in section 1833(c) of the Act, so that the statutory mental health payment limitations do not apply. We are proposing changes to § 410.155(b) to reflect our view regarding the limited nature of these services.

3. CORF Conditions of Participation

In the CY 2008 final rule with comment period (72 FR 66400), we finalized changes to the CORF coverage and payment rules. However, all conforming regulations in the CORF Conditions of Participation (CoPs) were not updated at that time.

We are proposing to revise § 485.58(e)(2). Section 485.58(e) currently provides that as a CoP, a CORF facility must provide all CORF services on its premises with the exception of— (1) physical therapy, occupational therapy, and speech-language pathology services furnished away from the premises of the CORF, if Medicare payment is not otherwise made for these services; and (2) a single home visit for the purpose of evaluating the potential impact of the patient's home environment on the rehabilitation goals. We are proposing to clarify that the alternate premises for provision of physical therapy, occupational therapy, and speech-language pathology services may be the patient's home.

4. Extension Location

We are proposing to add a definition for an “extension location” of a rehabilitation agency to the definitions at § 485.703. While there are currently no provisions that allow rehabilitation agencies to offer services in an extension location, there are currently 2,875 rehabilitation agency primary locations and 2,486 rehabilitation agency offsite practice locations. While our State Operations manual recognizes that these rehabilitation agency extension locations exist, it also includes language stating that the extension locations must meet applicable rehabilitation agency CoPs. However, it is difficult to apply CoP requirements to a location that currently is not identified in the CoPs. Creating a definition in the CoPs that applies to the extension locations will allow us to survey and monitor the care provided in these extension locations on a consistent basis.

Therefore, we propose to define an extension location as: (1) A location or site from which a rehabilitation agency provides services within a portion of the total geographic area served by the primary site; (2) is part of the rehabilitation agency; and (3) is located Start Printed Page 38544sufficiently close to share administration, supervision, and services in a manner that renders it unnecessary for the extension location to independently meet the conditions of participation as a rehabilitation agency. We welcome your comments on this proposed definition.

5. Emergency Care

We are proposing to revise § 485.711(c), Standard: Emergency care, to reflect current medical practice. We propose to remove the requirement that the rehabilitation agency provide for one or more doctors of medicine or osteopathy to be available on call to furnish necessary medical care in case of an emergency. We do not believe that the patients serviced by rehabilitation agencies regularly experience medical emergencies that necessitate the retention of an on-call physician.

Therefore, we are proposing the revised standard to require each rehabilitation agency to establish procedures to be followed by personnel in an emergency to cover immediate care of the patient, persons to be notified, and reports to be prepared. We are soliciting comments on this proposal.

6. Technical Changes for Rehabilitation Agencies

Under section 1861(p) of the Act, rehabilitation agencies are tasked with furnishing outpatient physical therapy and speech-language pathology services. Unlike CORFs, which provide comprehensive outpatient rehabilitation services, rehabilitation agencies primarily provide physical therapy services. Some of the other services offered by CORF, such as respiratory therapy and social services are outside the scope of rehabilitation agency practice.

The current definition of rehabilitation agency at § 485.703 (paragraph (2)(ii) of the definition) requires that rehabilitation agencies provide social or vocational adjustment services. This requirement is outside of the rehabilitation agency's scope of practice and has caused confusion for these providers because we do not reimburse rehabilitation agencies for furnishing social or vocational services. Accordingly, in § 485.703, we are proposing to delete the requirement in paragraph (2)(ii) of the rehabilitation agency definition requiring a rehabilitation agency to provide social or vocational services. We are also proposing to make a conforming change at § 485.717.

At § 485.711(b)(3), we are proposing to remove the reference to § 410.61(e), since § 410.61(e) no longer exists in regulation.

M. Technical Corrections for Therapy-Related Issues

[If you choose to comment on issues in this section, please include the caption “THERAPY-RELATED ISSUES” at the beginning of your comments.]

We are proposing the following technical changes to the regulations concerning therapy services:

  • In § 409.17(a), we are proposing to delete the reference to paragraph (a)(1)(ii) which no longer exists.
  • In § 409.23, we are proposing to revise the title of this section from “Physical, occupational and speech therapy” to “Physical therapy, occupational therapy and speech-language pathology services.”

N. Physician Self-Referral and Anti-Markup Issues

[If you choose to comment on issues in this section, please include the caption “PHYSICIAN SELF-REFERRAL AND ANTI-MARKUP ISSUES” at the beginning of your comments.]

1. Changes to Reassignment Rules Related to Diagnostic Tests (Anti-Markup Provision)

a. CY 2008 PFS Final Rule With Comment Period

The CY 2008 PFS final rule with comment period (72 FR 66222) amended the anti-markup provision in § 414.50 for certain diagnostic tests. We revised the anti-markup provision to apply to the technical component (TC) of diagnostic tests that are ordered by the billing physician or other supplier (or ordered by a party related by common ownership or control to such physician or other supplier), when the TC is outright purchased or when the TC is not performed in the office of the billing physician or other supplier. We also imposed an anti-markup provision on the professional component (PC) of diagnostic tests that are ordered by the billing physician or other supplier (or ordered by a party related by common ownership or control to such physician or other supplier group), if the PC is outright purchased or if the PC is not performed in the office of the billing physician or other supplier. The anti-markup provision in § 414.50 applies to the TCs and PCs of diagnostic tests covered under section 1861(s)(3) of the Act and paid for under 42 CFR part 414 (other than clinical diagnostic laboratory tests paid under section 1833(a)(2)(D) of the Act, which are subject to the special billing rules set forth in section 1833(h)(5)(A) of the Act). If a physician or other supplier bills for the TC or PC of a diagnostic test that was ordered by the physician or other supplier (or ordered by a party related to such physician or other supplier through common ownership or control) and the diagnostic test is either purchased from an outside supplier or performed at a site other than the office of the billing physician or other supplier, the payment to the billing physician or other supplier (less the applicable deductibles and coinsurance paid by the beneficiary or on behalf of the beneficiary) for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts:

  • The performing supplier's net charge to the billing physician or other supplier.
  • The billing physician or other supplier's actual charge, or
  • The fee schedule amount for the test that would be allowed if the performing supplier billed directly.

In revised § 414.50(a)(2)(iii), we defined the “office of the billing physician or other supplier” as medical office space where the physician or other supplier regularly furnishes patient care. For a billing physician or other supplier that is a physician organization (as defined at § 411.351 of this chapter), the “office of the billing physician or other supplier” is space in which the physician organization provides substantially the full range of patient care services that the physician organization provides generally. (For purposes of the anti-markup provision, the office of a billing physician or other supplier has its common meaning—that is, it is space in which the physician or other supplier regularly furnishes patient care services, and does not include a “centralized building” as defined at § 411.351).

We effectuated our changes primarily by modifying § 414.50, although we also modified § 424.80 by adding paragraph (d)(3) to alert the reader that, in a case of the reassignment of the TC and/or PC of a diagnostic test, the reader should consult § 414.50 to investigate whether the anti-markup provision applies to the TC and/or PC. We also amended the definition of “entity” at § 411.351 to exclude a physician's practice when it bills Medicare for the PC of a diagnostic test in accordance with § 414.50. (Prior to the CY 2008 PFS final rule with comment period, the definition of “entity” at § 411.351 excluded a physician's practice when it bills Medicare for the TC of a diagnostic test in accordance with § 414.50.)Start Printed Page 38545

b. Revisions to Payment Policies Under the Physician Fee Schedule, and Other Part B Payment Policies for CY 2008; Delay of the Date of Applicability of the Revised Anti-Markup Provision for Certain Services Furnished in Certain Locations (§ 414.50) Final Rule (73 FR 404)

Subsequent to the publication of the CY 2008 PFS final rule with comment period (72 FR 66222), we received informal comments from various stakeholders that stated that the application of the rule was unclear with respect to whether certain types of space arrangements meet the definition of the “office of the billing physician or other supplier.” Further, some of these stakeholders stated that patient access may be significantly disrupted due to the alleged inability of physician groups to render services in a cost-effective manner if medical office space that satisfies the “same building” test in § 411.355(b)(2)(i) of this chapter for purposes of the physician self-referral rules in Part 411, Subpart J of this chapter, and other medical office space in which patients are seen and that complies with the physician self-referral rules, are subject to the anti-markup provision in revised § 414.50. That is, physician groups stated that, in situations in which they are subject to the anti-markup provision and are limited to billing Medicare the net charge imposed by the performing supplier, they will not be able to continue to provide diagnostic testing services to the same extent that they are currently providing such services, because they will not be able to recoup their overhead costs.

We were concerned that the definition of “office of the billing physician or other supplier” may not have been entirely clear and that it could have unintended consequences. Accordingly, in order for us to study the issues further, we issued a final rule entitled “Revisions to Payment Policies Under the Physician Fee Schedule, and Other Part B Payment Policies for CY 2008; Delay of the Date of Applicability of the Revised Anti-Markup Provisions for Certain Services Furnished in Certain Locations (§ 414.50)” (the “Delay Rule”), which delayed, until January 1, 2009, the applicability of the revised anti-markup provision in § 414.50, except for anatomic pathology diagnostic testing services furnished in space that: (1) Is utilized by a physician group practice as a “centralized building” for purposes of complying with the physician self-referral rules; and (2) does not qualify as a “same building” under § 411.355(b)(2)(i) (73 FR 404). We stated that, during this period, we planned to issue clarifying guidance as to what constitutes the “office of the billing physician or other supplier” or propose additional rulemaking, or both. Because anatomic pathology diagnostic testing arrangements precipitated our proposal for revision of the anti-markup provision and remained our core concern, we did not delay the date of applicability with respect to anatomic pathology diagnostic testing services furnished in certain space (as described above). In addition, we did not delay the applicability of the revised anti-markup rule for the TC of any purchased diagnostic test. The anti-markup prohibition for the TC of purchased diagnostic tests is longstanding and was incorporated into the expanded and revised provisions of § 414.50. Accordingly, the regulation remained applicable to the TC of any purchased diagnostic test.

c. Challenge to the CY 2008 PFS Final Rule With Comment Period and the Subsequent Delay of the Date of Applicability Final Rule

On January 25, 2008, a group of plaintiffs filed suit against the Secretary (Atlantic Urological Associates PA v. Leavitt, Civil Action No. 08-141-(RMC) (D.D.C.), challenging the validity of the CY 2008 PFS final rule with comment period and the subsequent Delay Rule, and asking the Court to enjoin the application of the CY 2008 PFS final rule with comment period as to them. The plaintiffs included the following: (1) Three urology physician group practices that own pathology laboratories; (2) a self-employed pathologist who performs testing services for other physician groups; (3) Uropath, LLC, a limited liability company that manages various pathology laboratories; and (4) Uropath's Director of Clinical Operations. The Secretary moved to dismiss the complaint for lack of standing and lack of jurisdiction. The Secretary agreed to withhold implementation of the anti-markup rule, as amended by the Delay Rule, for claims submitted between February 1, 2008 and April 1, 2008, so that the parties could fully brief the issues. Subsequently, a preliminary injunction was granted by the Court until the date of its final order.

On May 5, 2008, the Court vacated the preliminary injunction order and granted the Secretary's motion to dismiss the suit. The Court found that the plaintiffs did not have standing to challenge the delay of the applicability of the anti-markup provisions for some arrangements. The Court further found that Uropath and its Director of Clinical Operations lacked standing to challenge either the CY 2008 PFS final rule with comment period or the subsequent Delay Rule due to the fact that they are not Medicare providers or suppliers and, thus, had no legally protected interest at stake. Finally, the Court found that, even if the plaintiffs had standing, the physician groups and the self-employed pathologist must exhaust the administrative claims process before the matter could be heard in Federal court.

d. Specific Proposals

As finalized in the CY 2008 PFS final rule with comment period, the anti-markup provision applies to the TCs or PCs of diagnostic tests that are either purchased from an outside supplier or are performed outside of the “office of the billing physician or other supplier.”

Here, we are proposing two alternative approaches for revising the anti-markup provision in § 414.50. In addition, we are seeking comments regarding any other possible approaches that would address our concerns regarding overutilization motivated by the ability of a physician or physician organization to profit from diagnostic testing services not actually performed by or supervised by a physician who should be considered to “share a practice” with the billing physician or other supplier.

Under our first proposal, the anti-markup provision in § 414.50 would apply in all cases where the PC or TC of a diagnostic testing service is either: (i) Purchased from an outside supplier or (ii) performed or supervised by a physician who does not share a practice with the billing physician or physician organization (as defined at § 411.351). We would specify that a physician who is employed by or contracts with a single physician or physician organization shares a practice with that physician or physician organization. We believe that when a physician provides his or her efforts for a single physician organization (whether those efforts are full-time or part-time), he or she has a sufficient nexus with that practice to justify not applying the anti-markup provision as contemplated under section 1842(n)(1) of the Act. Under this proposal, a physician who is an employee of, or independent contractor with, more than one billing physician or physician organization would not “share a practice” for purposes of § 414.50 with any of the physicians or physician organizations with which he or she is affiliated.Start Printed Page 38546

We believe that this proposal offers a simpler, more bright-line approach preventing potentially abusive arrangements while preserving the viability of nonabusive arrangements involving diagnostic testing facilities that might not be considered to be in the “office of the billing physician or other supplier,” as defined under the current regulation (for example, a centralized laboratory staffed with full-time employees that is used by a physician practice with multiple office locations, sometimes referred to as a “hub and spoke” arrangement). We are not proposing regulation text for this proposal.

We recognize that circumstances may exist under which it is beneficial, if not necessary, for a physician to provide diagnostic testing services to more than one physician practice. For example, a physician in one practice may contract to provide physician services on a locum tenens basis to another practice while a physician in that practice is on vacation or maternity leave. We are interested in comments regarding whether and, if so, how we could permit a physician to provide occasional services outside of his or her physician organization without the secondary arrangement precluding the physician from “sharing a practice” with his or her physician organization for purposes of applying the anti-markup provision. We note that we do not consider providing services at a free clinic or moonlighting in a hospital emergency department or as a hospitalist to be “sharing a practice.” Such activity would not require the application of the anti-markup provisions with respect to the services the physician provides for his or her physician organization.

Alternatively, we propose to maintain much of the current regulation text and its “site-of-service” approach to determine whether a physician “shares a practice” with the billing physician or other supplier. In other words, we are re-proposing to apply the anti-markup provision to TCs and PCs of non-purchased tests that are performed outside the “office of the billing physician or other supplier”. We are soliciting comments on whether this is the best approach or whether we should employ a different approach. As discussed in more detail below in this section, we are also proposing to amend § 414.50 to: (1) Clarify that the “office of the billing physician or other supplier” includes space in which diagnostic testing is performed that is located in the same building in which the billing physician or other supplier regularly furnishes patient care (and to make two other revisions to the definition); (2) clarify that, with respect to TCs, the anti-markup provision applies if the TC is either conducted or supervised outside of the office of the billing physician or other supplier; (3) clarify that a TC of a diagnostic test is not purchased from an outside supplier if the TC is supervised by a physician located in the office of the billing physician or other supplier; (4) clarify that, for purposes of applying the payment limitation in § 414.50(a)(1)(i) only, the “performing supplier” with respect to the TC is the physician who supervised the TC and, with respect to the PC, the “performing supplier” is the physician who performed the PC; (5) propose an exception for diagnostic tests ordered by a physician in a physician organization (as defined at § 411.351) that does not have any owners who have the right to receive profit distributions; and (6) solicit comments on how to define “net charge” and on whether we should delay beyond January 1, 2009 the application of the revisions made by the CY 2008 PFS final rule with comment period, or the proposed revisions (to the extent they are finalized), or both.

i. Definition of the “Office of the Billing Physician or Other Supplier”

We received informal comments from various stakeholders who alleged that the application of the CY 2008 PFS final rule with comment period was unclear with respect to whether certain types of space arrangements meet the definition of the “office of the billing physician or other supplier.” In addition, some of these stakeholders stated that patient access may be significantly disrupted due to the alleged inability of physician groups to render services in a cost-effective manner if the anti-markup provision applies to arrangements in which diagnostic testing services are performed in the same building as, but in space separate from, where patients are seen. Stakeholders pointed to arrangements in which the office where a physician group sees patients is located on, for example, the third floor of a medical arts building, but the diagnostic imaging services are housed, for example, in the basement of the building. Stakeholders also cited arrangements in which two or more group practices in the same building may share a lab or other diagnostic testing facility in that building.

After further review, we are proposing to clarify the definition of “the office of the billing physician or supplier” in § 414.50(a)(2)(iv) to include space, in which diagnostic testing services are performed, that is in the “same building,” (as defined at § 411.351), as where the ordering physician or other ordering supplier regularly furnishes patient care (and more specifically, for physician organizations, in the same building as where the ordering physician provides substantially the full range of patient care services that the ordering physician provides generally). Note that the definition of “same building” at § 411.351 specifically excludes a “mobile vehicle, van, or trailer”. Therefore, diagnostic services provided in the parking lot of a building in which a physician group sees patients would be subject to the anti-markup provisions.

We are soliciting comments that describe current business arrangements (such as those that take place on a “campus”) and that suggest any additional or alternative criteria that would permit such arrangements to avoid application of the anti-markup provision while addressing our concerns for the potential for overutilization.

We have received questions as to whether, for purposes of the definition of the “office of the billing physician or other supplier” a physician or other supplier may have more than one location at which it regularly furnishes patient care. We propose to clarify in § 414.50(a)(2)(iv) that it may. In addition, some stakeholders responded to the requirement that, with respect to a billing physician or other supplier that is a “physician organization”, the “office of the billing physician or other supplier” is space in which the physician organization provides substantially the full range of patient care services that the physician organization provides generally. According to the stakeholders, a physician organization, such as a multi-specialty physician group, may not provide substantially its full range of services at any one location, but rather may provide substantially the full range of services for a certain specialty in one location, substantially the full range of services for a second specialty in a second location, and so forth. In order to address this difficulty for physician organizations, we are proposing to revise § 414.50(a)(2)(iv) to read “with respect to a billing physician or other supplier that is a physician organization (as defined at § 411.351 of this chapter), the “office of the billing physician or other supplier” is medical office space where the ordering physician provides substantially the full range of patient care services that the ordering physician provides generally.

Examples of Application of Our Proposed Definition of the “Office of the Billing Physician or Other Supplier”. Start Printed Page 38547

We are providing the following examples in order to illustrate the effect of our proposals. For purposes of the following examples, assume that neither the TC nor the PC is purchased from an outside supplier.

Example 1.

A physician group practice treats patients in space located on one floor of a building, and, in that space, provides substantially the full range of services that it provides generally. The group practice conducts diagnostic testing on another floor of the same building. The anti-markup would not apply because the office of the billing physician or other supplier includes the space on both floors.

Example 2.

One or more physician group practices share space that is used for diagnostic testing and is located in the same building in which the group practices have their respective offices for seeing patients (and within those offices each group practice provides substantially the full range of patient care services that it provides generally). Again, the anti-markup provision would not apply because the office of the billing physician or other supplier (with respect to each group practice) includes the space on both floors.

Example 3.

A group practice treats patients in Buildings A, B and C. In each of its offices in Buildings A and B, the group practice provides substantially the full range of patient care services that it provides generally, but that is not true for space located in Building C. The group practice provides diagnostic testing services in Buildings B and C. If we finalize the definition of the “office of the billing physician or other supplier” to include space in which diagnostic testing is performed that is located in the same building as where the ordering physician or other ordering supplier regularly furnishes patient care, the anti-markup provision would not apply to the diagnostic testing performed in Building B but would apply to the diagnostic testing performed in Building C.

We recognize that, unlike the first alternative proposal described above, our second alternative proposal may adversely affect certain “hub and spoke” and similar diagnostic testing services arrangements (see description above) in which a physician providing services in a centralized diagnostic testing facility owned by and serving a multi-site group practice has a significant nexus to the physician organization that employs or contracts with the physician. Therefore, we are proposing to provide an exception in § 414.50(b) to the anti-markup provision that would be applicable to diagnostic tests ordered by a physician in a physician organization that does not have any owners who have the right to receive profit distributions. The exception would not apply to TCs purchased from an outside supplier, in recognition of the statutory command in section 1842(n)(1) of the Act and our longstanding rule. We are seeking comments as to whether the exception is sufficient to address any potential impediments to nonabusive “hub and spoke” arrangements caused by this second alternative approach, whether the exception is too narrow or too broad, and whether an exception to the application of the anti-markup rule under this second alternative approach is necessary at all.

ii. Performed at a Site Other Than the Office of the Billing Physician or Other Supplier

Section 414.50(a) provides that the anti-markup provision applies to the TC of a diagnostic test if the TC is performed outside of the office of the billing physician or other supplier. We propose to clarify that, if the TC is conducted outside of the office of the billing physician or other supplier, the anti-markup provision applies irrespective of whether the supervision takes place in the office of the billing physician or other supplier. We also propose to clarify that the anti-mark-up provision applies if the supervision of the TC takes place outside the office of the billing physician or other supplier, even if the TC is conducted in the office of the billing physician or other supplier. In other words, we would take the position that “performance” of the TC includes both the technician's work in conducting the test and the physician's supervision of the technician. Therefore, if either the conducting of the TC or the supervising of the TC takes place outside the office of the billing physician or other supplier, the anti-markup provision would apply.

iii. Outside Supplier

In the CY 2008 PFS final rule with comment period, we defined an outside supplier as “someone who is not an employee of the billing physician or other supplier and who does not furnish the test or interpretation to the billing physician under a reassignment that meets the requirements of § 424.80” (72 FR 66401). Subsequent to publication of the final rule with comment period, we received questions as to whether the TC of a diagnostic test would be purchased from an outside supplier if the technician conducting the TC is not an employee of the billing group but the physician supervising the technician is an employee or contractor of the billing group. We are proposing to provide in new § 414.50(a)(2)(iii) that the TC of a diagnostic test is not purchased from an outside supplier if the TC is both conducted and supervised within the office of the billing physician or other supplier, and the supervising physician is an employee or independent contractor of the billing physician or other supplier. We believe that the presence of the technician and the supervising physician in the office of the billing physician or other supplier, and the fact that the supervising physician is an employee or independent contractor of the billing physician or other supplier may establish a sufficient nexus between the supervising physician and the billing physician or other supplier so as to constitute “sharing a practice” within the meaning of section 1842(n)1) of the Act. We are providing proposed regulatory text in new § 414.50(a)(2)(iii) for this proposal. We are also making two alternative proposals (each without proposed regulatory text). We propose, in the first alternative, that if the TC is conducted by a technician who is not an employee of the billing supplier, the TC is considered to be purchased from an outside supplier, regardless of where the technician conducts the TC and notwithstanding the employment status of the supervising physician and the fact that the test is supervised in the office of the billing physician or other supplier. As a second alternative, we propose that, where the TC is conducted by a non-employee of the billing physician or other supplier and outside the office of the billing physician or other supplier, the TC nevertheless will not be a purchased test if the supervising physician is an employee or independent contractor of the billing physician or other supplier and performs the supervision in the office of the billing physician or other supplier. We note that, if we were to adopt this second alternative, the TC would still be subject to the anti-markup provision under our proposal that the anti-markup provision applies if either the conducting of the TC or the supervising of the TC takes place outside the office of the billing physician or other supplier, unless an exception applies (see section II.N.1.d.i. of this proposed rule).

iv. The Performing Supplier's Net Charge

Section 414.50(a)(1) provides that, where the anti-markup provision applies, Medicare payment to the billing physician or other supplier is limited to the lowest of three specified amounts, one of which, in § 414.50(a)(1)(i), is “the performing supplier's net charge to the billing physician or other supplier.” We have received comments concerning what the performing supplier's net charge would be in the situation in which a physician in a group practice Start Printed Page 38548supervises the performance of a TC but the group practice bills for the TC directly, that is, without a reassignment from the supervising physician. Stakeholders have questioned whether there are two suppliers, that is, the physician supervising the TC and the group practice billing for it, or whether there is only one supplier, that is, the group practice, given that the supervising physician is not effecting a reassignment.

We propose to clarify that for purposes of § 414.50(a)(1)(i) only, the “performing supplier” of the TC is the physician who supervised the TC, and the “performing supplier” of the PC is the physician who performed the PC. Therefore, where the anti-markup provision applies, the billing physician or other supplier would need to determine what it paid the physician for supervising the TC or for performing the PC.

v. Specific Solicitation of Comments

We are interested in receiving comments concerning the calculation of net charge for the PC when the anti-markup rules apply. In the CY 2008 PFS final rule with comment period, commenters objected that it would be difficult to calculate the net charge of the performing supplier. We stated that we did not believe that most suppliers would experience significant difficulty in calculating the net charge, despite the fact that some physicians are paid an aggregate monthly or annual amount for their services. In addition, we stated that suppliers could also choose to restructure their arrangements so that the anti-markup provision does not apply (72 FR 66318). Despite these responses in the final rule, we have received comments and questions concerning how to calculate the net charge. We are soliciting comments as to whether and how we should provide specific regulatory guidance for calculating the net charge.

Commenters specifically stated that our decision to exclude the overhead costs of the billing supplier in the net charge would have a detrimental financial impact upon their practice and, ultimately, patient access to care. We are also soliciting comments on whether we should allow some overhead costs to be recovered by billing suppliers for services to which the anti-markup provision applies, and how our concerns about the potential for overutilization would be addressed if we were to allow some recovery of overhead.

We note that several States have enacted direct billing laws, under which physicians (primarily pathologists) are required to directly bill payors for their services and are prohibited from reassigning their right to payment to the ordering supplier. We are soliciting comments on whether, in addition to or in lieu of, the anti-markup provision, we should prohibit reassignment in certain situations and require the physician supervising the TC or performing the PC to bill Medicare directly.

Finally, we are soliciting comments on whether the revisions made by the CY 2008 PFS final rule with comment period should go into effect on January 1, 2009, as planned, and whether any proposals contained herein that may be finalized should go into effect on that date, or whether some or all of the revisions should be delayed past January 1, 2009.

2. Exception for Incentive Payment and Shared Savings Programs (Proposed § 411.357(x))

a. Background

The Medicare program and private industry stakeholders are increasingly exploring the benefits of various types of gainsharing, pay-for-performance (“P4P”), value-based purchasing, and similarly-styled programs that use economic incentives to foster high quality, cost-effective care. Many of these programs involve payments from hospitals to physicians. These payments potentially implicate the fraud and abuse laws, including the physician self-referral statute. Existing exceptions to the physician self-referral statute, while useful, may not be sufficiently flexible to encourage a variety of nonabusive and beneficial gainsharing, P4P, and similar programs.

For this reason, as described in greater detail below, we are proposing a new, targeted exception to the physician self-referral statute for such programs. The design of the new exception presents a particular challenge: Crafting an exception that offers broad flexibility for innovative, effective programs, while at the same time protecting the Medicare program and beneficiaries from abuses. In reviewing various programs and industry suggestions, we have been struck by the considerable variety and complexity of existing arrangements, and the likelihood of continued future innovation in the structure and method of these programs. This variety and complexity make it difficult to craft a “one-size-fits-all” set of conditions that are sufficiently “bright line” to facilitate compliance and enforceability, yet sufficiently flexible to permit innovation without undue risk of program or patient abuse.

The variety and complexity of these programs make them potential vehicles for the unscrupulous to disguise payments for referrals or compromise quality of care for patients in the interest of maximizing revenues. Therefore, our approach to drafting a proposed exception is a cautious one. Our proposal is relatively narrow, and we acknowledge at the outset that it is unlikely to cover as many arrangements as interested stakeholders would like. As described below, we are considering various ways that we might expand the proposed exception, if we can do so without a risk to the programs and their beneficiaries. We are interested in public comments specifically addressing areas of possible expansion, the potential abuses that could occur, and the conditions necessary to ensure that such expansion does not pose a risk of program or patient abuse. It is our goal to promulgate an exception that is as broad as possible consistent with the statutory requirement that any arrangement excepted under an exception issued using our authority in section 1877(b)(4) of the Act pose no risk of program or patient abuse. We note that section 1877 of the Act is not implicated by quality or cost savings programs that do not involve remuneration to physicians. Hospitals are free to implement quality protocols, cost savings measures, and the like without regard to section 1877 of the Act, provided that the arrangements do not involve financial relationships with referring physicians.

Although “gainsharing” is commonly used to describe certain programs that seek to align physician behavior with the goals of a hospital by rewarding physicians for reaching predetermined performance outcomes, several types of programs exist for the purpose of achieving quality standards, generating cost savings, and reducing waste. In this proposed rule, we refer to these programs as “incentive payment and shared savings programs.” We describe below in more detail the characteristics of programs we consider to fall within these categories. Successful programs often result in improved quality outcomes or cost savings (or both) for the hospital sponsoring the program. To achieve these goals, hospitals make financial payments to the physicians whose efforts contribute to the success of the program. As noted above, these payments may implicate the physician self-referral statute.

Section 1877(a)(1) of the Act states that, except as provided in section 1877(b) of the Act, if a physician (or an immediate family member of such physician) has a financial relationship Start Printed Page 38549with an entity, the physician may not make a referral to the entity for the furnishing of designated health services (DHS) for which payment otherwise may be made under title XVIII of the Act. The provision of monetary or nonmonetary remuneration by a hospital to a physician through a gainsharing arrangement or other incentive payment or shared savings program would constitute a financial relationship with an entity for purposes of the physician self-referral statute.

Incentive payment and shared savings programs also potentially implicate two additional specific fraud and abuse statutes. First, sections 1128A(b)(1) and (b)(2) of the Act, commonly referred to as the Civil Monetary Penalty (CMP) statute, prohibit a hospital from knowingly making a payment directly or indirectly to a physician as an inducement to reduce or limit items or services furnished to Medicare or Medicaid beneficiaries under the physician's direct care, and a physician from knowingly accepting such payment. Second, these arrangements potentially implicate section 1128B(b) of the Act (the anti-kickback statute) if one purpose of the quality improvement or cost savings payment is to influence referrals of Federal health care program business.

i. Incentive Payment Programs

“Pay for performance” (P4P), also known as quality-based purchasing, is a quality improvement and reimbursement methodology aimed at moving towards payments that create stronger financial support for patient focused, high value care. There are many models for financial and non-financial incentives used in P4P and other quality-focused programs. We refer to these types of programs, which may be payer-based or provider-based, as “incentive payment programs.” Through collaborative efforts with a wide range of other public agencies and private organizations that have a common goal of improving quality and avoiding unnecessary health care costs, including the National Quality Forum (NQF), The Joint Commission, the National Committee for Quality Assurance (NCQA), the Agency for Healthcare Research and Quality (AHRQ), and the American Medical Association (AMA), we are developing and implementing a set of P4P initiatives to support quality improvement in the care of Medicare beneficiaries. The objective measures used in incentive payment programs to determine whether providers are offering high quality care are commonly referred to as “quality standards.” This term is also used in many provider-based incentive payment programs. We use the term “quality standards” in this proposed rule as well.

When payer-based, P4P attempts to use reimbursement to promote quality, efficiency in providing access to needed services, and successful outcomes. In many payer-based models, payers make available to hospitals financial incentives tied to achieving certain quality or performance goals (for example, adopting health information technology, furnishing preventive care services, achieving patient satisfaction targets, or measurably improving patient health indicators). Hospitals often need physician collaboration to meet performance goals. In order to align incentives, hospitals may want to share with physicians a portion of the P4P payments they receive from the payers. In the absence of or in addition to a payer-based incentive payment program, hospitals may also sponsor quality-focused programs in which objective improvements in quality or individual patient care outcomes are rewarded with payments to physicians responsible for the improvements.

In both circumstances, payments made by a hospital to the physicians whose efforts promoted the achievement of targets (or benchmarks) for one or more performance measures create a financial relationship between the hospital and the physician that implicates the physician self-referral statute. These payments also potentially implicate the anti-kickback statute and the CMP statute. (We note that, depending on the nature of the performance measure, incentive payment programs might not implicate the CMP statute because they might not involve any reduction or limitation in patient care services.)

Although properly structured incentive payment programs can enhance health care quality and efficiency, improperly structured programs pose significant risks of program or patient abuse, including adversely affecting patient care. Moreover, such programs could be vehicles to disguise payments for referrals, including incentives to steer healthier patients to the hospital offering the incentive payment program. Programs that cannot be adequately and accurately measured for quality would also pose a high risk of program or patient abuse. We observe that payer-based programs in which the performance measures are set by a wholly independent, arms-length party with a clear financial incentive to make P4P payments prudently may pose somewhat less risk than non-payer based programs, where there is no third-party payer that sets the performance measures and monitors compliance. We note further that payments made directly from a payer to a physician, at the payer's sole discretion, may not implicate the physician self-referral statute or other fraud and abuse statutes.

ii. Shared Savings Programs

Many programs, such as “gainsharing” and other cost savings and waste reduction programs, seek to align physician economic incentives with those of hospitals by offering physicians a share of the hospitals' variable cost savings attributable to the physicians' efforts in controlling the costs of providing patient care. For purposes of this proposed rulemaking, we refer to these types of programs as “shared savings programs.” When a participating physician receives a portion of the cost savings attributable to his or her efforts in reducing waste and achieving the goals of a shared savings program, a financial relationship is created between the hospital sponsoring the shared savings program and the participating physician, and the physician self-referral statute is implicated.

The Medicare Part A DRG system of hospital reimbursement, under which a hospital receives a prospectively determined, fixed payment that covers all hospital items and services provided to a Medicare beneficiary during his or her inpatient stay or outpatient service, provides a significant incentive for hospitals to control costs. Hospitals are also motivated to reduce costs because of the growth of managed care. However, because physicians are paid separately under Medicare Part B (and by many managed care and other payers), they do not share necessarily the hospital's motivation to control patient care costs. Physicians who perform their professional services at a hospital use the hospital's equipment, supplies and services, and prescribe drugs, devices and other items and services which the hospital must provide. In short, physicians are not financially at risk for the items and services that they use and prescribe, and therefore, do not have a financial stake in controlling the hospital's patient care costs.

As part of many shared savings programs, physicians study how colleagues perform their procedures and then determine the best processes to adopt, in order to increase efficiency while ensuring quality. In other situations, outside experts are hired to analyze hospital and regional or national data to determine appropriate Start Printed Page 38550opportunities for cost savings that do not jeopardize patient care. Shared savings programs are sometimes described as collaborations between physicians and hospitals to determine the best approach to providing quality patient care services. Shared savings programs have been recognized by stakeholders as an effective means of controlling costs, improving efficiency, and promoting quality in the delivery of health care services. Government stakeholders have recognized similar potential benefits when shared savings programs are properly structured to ensure compliance with Federal health care program requirements.

Empirical evidence suggests that the goal of patient care quality maintenance or improvement can be achieved through a properly-designed shared savings program. An independent study of data from 13 separate, 1-year gainsharing programs [1] designed and administered by the organization responsible for the design of all of the gainsharing programs that, to date, have received favorable advisory opinions from OIG (see discussion below and in the FY 2009 Hospital IPPS proposed rule (73 FR 23692 through 23693)), found that the incentives for cost reduction in the gainsharing models studied did not result in reductions in quality and, for certain quality measures, resulted in improved quality of patient care. (See Jonathan D. Ketcham and Michael F. Furukawa “Hospital-Physician Gainsharing in Cardiology.” Health Affairs, Vol. 27, No. 3 (May/June 2008), 808.) Specifically, according to the study, gainsharing slowed the growth of average in-lab cost per coronary stent patient, reducing costs relative to non-gainsharing hospitals; yet, in-lab complications did not increase during gainsharing, and three complications significantly decreased. (Id. at 808.) With respect to gainsharing's positive impact on patient care quality, the authors of the study asserted that the economic incentive for physicians participating in gainsharing programs to collaborate in defining and adopting best practices might improve the physicians' incorporation of clinical evidence into patient care decisionmaking. This is, at least in part, because the gainsharing programs studied provided participating physicians and physician organizations with information about other physicians' practice patterns. (Id. at 809.)

Although properly structured shared savings programs may increase efficiency and reduce waste, thereby potentially increasing a hospital's profitability and contributing to quality of care, improperly designed or implemented programs pose the same risks of program or patient abuse described above in connection with incentive payment programs. Additional risk is posed by shared savings programs that reward physicians based on overall cost savings (for example, the amount by which the total costs attributable to a particular hospital department decreased from one year to the next) without accountability for specific cost reduction measures.

We are concerned about physicians responding to a shared savings program by limiting their use of quality-improving but more costly devices, tests or treatments (“stinting”), by treating only healthier patients (“cherry picking”), by avoiding sicker patients (“steering”) at the hospital, or by discharging patients earlier than clinically indicated either to home or to post acute care settings (“quicker-sicker” discharge). We are concerned also about arrangements which provide for payments in exchange for patient referrals or result in unfair competition among hospitals offering shared savings programs to foster physician loyalty and to attract more referrals. We are concerned that, because of pressures from competition or physicians, hospitals may increase the percentage of savings shared with the physicians, manipulate hospital accounts to generate phantom savings, or otherwise game the arrangement to generate income for referring physicians in order to retain them for or attract them to the hospital. (These same concerns may be present with incentive payment programs.) We are incorporating safeguards into the proposed exception that are intended to address these risks.

iii. DHHS Initiatives: Incentive Payment and Shared Savings Programs

Patient care quality improvement is a laudable goal and a priority of the Department of Health and Human Services (the Department or DHHS). Patient care should be safe, effective, efficient, patient-centered, timely and equitable. Establishing partnerships is a critical step towards achieving our goals of improving patient care quality and avoiding unnecessary costs. Incentive payment and shared savings programs, when properly structured, by design establish such partnerships.

Since 1991, we have sponsored a variety of demonstration projects and other initiatives to explore the connection between payments and the quality of care. These initiatives include the evaluation of both gainsharing (in various forms) and P4P programs affecting providers of health care to beneficiaries in diverse care settings. Although we decline to provide detailed descriptions of individual initiatives here, gainsharing demonstrations include: (1) The Medicare Participating Heart Bypass Center Demonstration which was conducted to assess the feasibility and cost effectiveness of a negotiated all-inclusive bundled payment arrangement for coronary artery bypass graft (CABG) surgery while maintaining high quality care; (2) a 3-year demonstration under section 1866C of the Act, which has been established, but not yet implemented, to test gainsharing models involving physicians, and collaborations between hospitals working with physicians, in a single geographic area to improve the quality of inpatient hospital care; and (3) a demonstration project under section 5007 of the DRA that would involve arrangements between a hospital and physicians and practitioners under which the hospital provides remuneration (to certain physicians and to certain practitioners (as defined in 1842(b)(18)(C) of the Act)) that represents solely a share of the savings incurred directly as a result of collaborative efforts between the hospital and a particular physician (or practitioner) to improve overall quality and efficiency. In addition, we recently announced a new demonstration, the Acute Care Episode Demonstration, for hospitals to test the use of a bundled payment for both hospital and physician services for a select set of episodes of care (orthopedic and cardiac) to improve the quality of care delivered through Medicare FFS. We note that some of the demonstration programs are proceeding under a statutory provision that waived application of section 1877 of the Act, the anti-kickback statute, and the CMP statute.

In addition to these gainsharing demonstrations, we have developed a number of P4P and other value-based purchasing initiatives across patient care settings, including: The Premier Hospital Quality Incentive Demonstration; the Medicare Care Management Performance Demonstration; the Home Health Pay-for-Performance Demonstration; and the Better Quality Information Pilots.Start Printed Page 38551

iv. Potential Statutory and Regulatory Applications to Incentive Payment and Shared Savings Programs

Section 1877 of the Act, also known as the physician self-referral statute: (1) Prohibits a physician from making referrals for certain DHS payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment or compensation), unless an exception applies; and (2) prohibits the entity from filing claims with Medicare (or billing another individual, entity or third party payer) for those referred services. The statute establishes a number of specific exceptions and grants the Secretary the authority to create regulatory exceptions for financial relationships that pose no risk of program or patient abuse.

A financial relationship is created where an incentive payment or shared savings program results in a direct or indirect payment from the hospital to a physician. Unless the arrangement satisfies the requirements of an applicable exception, the incentive payment or shared savings payment would violate the physician self-referral prohibition if the physician receiving the payment makes referrals for DHS to the hospital making the incentive payment or shared savings payment. In many cases, incentive payment and shared savings programs can be structured to satisfy the requirements of existing exceptions (for example, the exceptions for bona fide employment relationships, personal service arrangements, fair market value compensation, or indirect compensation arrangements). In some cases, no exception may be necessary (for example, incentive payments paid directly from a payer at the payer's sole discretion to a physician for the physician's efforts in improving quality). However, in other circumstances, the existing exceptions to the physician self-referral prohibition may not be sufficiently flexible to protect payments to physicians under incentive payment and shared savings programs.

As noted above, incentive payment and shared savings programs also implicate two additional specific fraud and abuse statutes—the CMP statute and the anti-kickback statute. An incentive payment or shared savings program could run afoul of the anti-kickback statute if one purpose of the payment from the hospital to the physician is to influence referrals of Federal health care program business. In contrast, the intent of the parties does not dictate compliance with the physician self-referral statute. If an arrangement fails to satisfy all of the requirements of an exception, it would violate section 1877 of the Act.

v. Solicitation of Comments in the FY 2009 Hospital Inpatient Prospective Payment System Proposed Rule

In the FY 2009 IPPS proposed rule, we solicited comments as to whether we should issue an exception specific to gainsharing arrangements, which we stated “typically refer[] to an arrangement under which a hospital gives physicians a share of the reduction in the hospital's costs (that is, the hospital's cost savings) attributable in part to the physicians' efforts” (73 FR 23692). Although we noted general concerns with arrangements that involve the use of a percentage-based compensation formula (as many gainsharing arrangements involve), we solicited comments regarding a potential exception to the physician self-referral prohibition for gainsharing arrangements in recognition of “the value to the Medicare program and its beneficiaries where the alignment of hospital and physician incentives results in improvements in quality of care” (73 FR 23694). Specifically, we solicited comments on the following: (1) What types of requirements and safeguards should be included in any exception for gainsharing arrangements; and (2) whether certain services, clinical protocols, or other arrangements should not qualify for the exception (73 FR 23694).

b. Public Response to Solicitation of Comments

The following discussion describes comments received in response to the solicitation of comments on gainsharing arrangements that we have reviewed to date. In addition, we have reviewed comments received in connection with our proposal in the CY 2008 PFS proposed rule to revise § 411.354(d) to permit the use of percentage-based compensation formulae (such as the type often used for making cost sharing payments) for personally performed physician services only (72 FR 38184). In that proposal, we specifically noted that the revisions, if finalized, could potentially affect payment methodologies used in gainsharing programs. Generally, commenters strongly supported the establishment of an exception for gainsharing and other programs that compensate physicians and physician organizations for improving patient care quality and decreasing the cost of providing patient care when those achievements can be tied to the physician's or physician organization's participation in the program. Commenters urged that an exception contain safeguards to ensure patient access to necessary items and services, improve patient care quality, and avoid improper influencing of physician referral patterns due to the constraints or incentives of the program's design. One commenter suggested that the availability of the exception be contingent upon the parties obtaining a favorable advisory opinion from OIG prior to the implementation of the gainsharing program. In addition, commenters requested that an exception provide flexibility to allow an entity to design an incentive payment or shared savings program that is specific to the entity's goals and needs, as well as to modify the program as necessary. One commenter also provided recommendations regarding the types of cost savings measures (in addition to supply cost reduction measures) that should be addressed by the exception, as well as particular services, clinical protocols, and other arrangements that we should exclude from the protection of an exception for incentive payment and shared savings programs. The commenter suggested that an exception to the physician self-referral prohibition should permit more types of arrangements (and within additional medical specialties) than thus far have been explicitly approved in OIG advisory opinions. Specifically, the commenter urged that an exception for incentive payment and shared savings programs allow a program covered by the exception to reward: (1) Decreasing delays in patient care; (2) reconsidering ordering patterns for all types of testing and services (in order to reduce medically unnecessary services and reduce cost); (3) reducing consultation of other physicians when value is not added to the patient's care through the consultation; (4) establishing long-term management of chronic patient conditions; and (5) using alternative care (for example, outpatient care instead of inpatient care).

Specific recommendations for safeguards to be included in an exception for incentive payments and shared savings programs included: (1) Permitting the duration of the program to exceed 1 year (the term of the arrangements approved under the OIG advisory opinions to date); (2) requiring mechanisms to ensure that the program will not affect patient care in an adverse manner; (3) limitations on the amount of payments to participating physicians; (4) requiring periodic review of the impact of the program on clinical care; Start Printed Page 38552(5) a written agreement that clearly identifies the services or actions for which payment may be made to the participating physicians; (6) permitting payments only for documented and verified quality improvement and waste or cost reduction; (7) determining compensation to participating physicians (or a formula for such compensation) prior to the implementation of the program or the physician's participation in the program, and prohibiting modification to the compensation during the term of the arrangement; (8) requiring written disclosure regarding the program to all patients affected by the program to promote transparency and accountability; and (9) prohibiting payment to a physician or physician organization that is determined in any way based on a reduction in the length of stay for hospital patients.

c. Proposal

Although we solicited comments in the FY 2009 IPPS proposed rule regarding an exception to the physician self-referral prohibition for gainsharing arrangements (73 FR 23692), we believe that a broader exception that includes incentive payment programs is needed to facilitate the full array of nonabusive, beneficial incentive payment and shared savings programs that we consider important for promoting the highest quality of care for our beneficiaries while achieving cost savings for the program. Section 1877(b)(4) of the Act authorizes the Secretary to create regulatory exceptions for financial relationships that he determines do not pose a risk of program or patient abuse. Therefore, using our authority under section 1877(b)(4) of the Act, we are proposing here an exception in new § 411.357(x) for payments provided to a physician participant in an incentive payment or shared savings program that includes certain safeguards and satisfies certain conditions.

i. General Considerations With Respect to the Proposed Exception

As we described above in greater detail, we have concerns about physicians responding to incentive payment and shared savings programs by stinting, cherry picking, steering, and making quicker-sicker discharges. The criteria included in the proposed exception are focused on three aspects that we consider critical to a properly structured, nonabusive incentive payment or shared savings program: transparency, quality controls (for example, controls to prevent reductions in resource utilization that lead to a diminution in quality), and safeguards against payments for referrals (or influencing referrals). We are proposing requirements with respect to the structure of the incentive payment and shared savings program itself, limitations and conditions regarding the payments provided to the physicians participating in the program, and requirements for the arrangement between the hospital and the physicians participating in the program. We are seeking comments on each requirement in the exception, as well as comments regarding the exception in its entirety. With respect to the latter, we are interested in comments regarding the effect of incentive payment and shared savings programs on marketplace competition, specifically with regard to whether shared savings programs that include product standardization measures disadvantage small manufacturers of items, supplies and devices due to the selection and preferred utilization of a limited number of items, supplies and devices included in the shared savings program, the ordering of which qualifies for program payments. (We note that, although we expect that the initial selection of the preferred products would be based on clinical efficacy, safety and medical appropriateness, we recognize that the final selection of products in a product standardization program is likely to be based on price when quality and utility are comparable). We are interested in comments on how product standardization can be achieved without limiting patient access to items, supplies and devices considered beneficial to improved patient care. We are also concerned about the potential for fraud and abuse if manufacturers attempt to influence the design or implementation of hospital incentive payment or shared savings programs.

We note that, for most of the requirements and safeguards discussed in this proposal, we have proposed regulation text. However, we have not provided proposed regulation text for a limited number of the proposed requirements and safeguards described, but rather have solicited comments regarding how best to incorporate them into the regulatory text of the exception.

We are proposing a single set of requirements that would apply equally to incentive payment and shared savings programs. In many cases, programs may include both patient care quality measures and cost savings measures, or a particular performance measure may be both a quality measure and cost savings measure. We believe that one set of requirements would ease administration and assist with hospitals' and physicians' compliance efforts. Further, similar risks of program or patient abuse exist regardless of whether a hospital pays a physician a share of its internal cost savings, a share of external funds earned by meeting quality goals (in a payer-sponsored program), or a share of its general revenues to promote quality. We are interested in comments with respect to whether separate exceptions for incentive payment programs and shared savings programs would be preferable and, if so, how they should be structured, and which requirements should appear in each.

The requirements of the proposed exception include a number of program integrity safeguards, consistent with our longstanding concern, first noted in the Phase I final rule with comment period, that a patient's choice can be affected when physicians steer patients to less convenient or lower quality items or services because the physicians are sharing profits with, or receiving remuneration from, the provider (63 FR 1659 and 1662). We are also concerned about systems that incentivize the delivery of less expensive care at the cost of patient care quality and systems that limit patient access to beneficial new technology. The proposed exception prohibits payment to physicians based in whole or in part on a reduction in the length of stay for a particular patient or in the aggregate for the hospital operating the program. However, we recognize that reduced length of stay may occur as an incidental effect of quality improvement efforts.

ii. Scope of the Proposed Exception

As noted above, we used the term “incentive payment and shared savings program” to encompass a wide variety of gainsharing and P4P programs. We do not propose to limit the exception to traditional gainsharing programs or supply cost/waste reduction programs. We are seeking comments regarding whether this approach is too limited or expansive, and whether different terminology would better describe the range of nonabusive programs we intend to cover under the proposed exception.

Our proposed exception protects only incentive payment and shared savings programs offered by hospitals. It is our understanding that these arrangements are the most common, and, as described above, are the type with which we have the most experience. We are concerned that, unlike hospitals that are reimbursed on a prospective payment basis, other types of providers and suppliers that are reimbursed on a fee schedule or other FFS basis might have an incentive to create quality measures that mandate the furnishing of more Start Printed Page 38553items and services, without regard to costs to the Medicare program or its beneficiaries. In many cases, it might be relatively easy to characterize a program that offers beneficiaries more items and services as a “quality” incentive program, even in the absence of actual quality improvement. However, we are soliciting comments on whether incentive payment or shared savings programs (or similar programs) offered by other DHS entities should be protected and under what circumstances. In particular, we are interested in comments regarding the structure and design of non-hospital arrangements and the safeguards that we could include in an exception to meet the statutory standard of no risk of program or patient abuse.

We are proposing to protect remuneration only in the form of cash (or cash equivalent) payments made by a hospital. Nonmonetary remuneration, such as additional staff members or new equipment, offered to reward achievement of quality or cost savings goals would not be protected. In addition, the proposed exception would be limited to payments to physicians who actually participate (“participating physicians”) in the achievement of the patient care quality measures or cost savings measures (collectively referred to in this proposal as the “performance measures”) that are the subject of the particular program. We note that the physician self-referral statute applies only to physicians. Nothing in this proposal is intended to limit or prohibit the participation of NPPs in incentive payment and shared savings programs. Moreover, the participation of NPPs in an incentive payment or shared savings program would not require the protection of an exception to the physician self-referral prohibition unless the practitioner's referrals are directed by, controlled by, or attributed to a physician with whom or for whom the practitioner works.

We are proposing that protected payments could be made to participating physicians individually or to physician organizations composed entirely of participating physicians (referred to in this proposal as “qualified physician organizations”) (for example, a group practice composed entirely of cardiac surgeons participating in a cardiac surgery shared savings program could be a qualified physician organization). With respect to qualified physician organizations, we are considering whether such organizations could include physicians who are eligible to participate in the program, even if the individual physicians elect not to participate in the program (for example, a group practice composed entirely of cardiac surgeons could be a qualified physician organization in a cardiac surgery shared savings program, even if some surgeons elect not to participate in the program). As discussed further below, qualified physician organizations would need to distribute incentive or shared savings payments received from the hospital on a per capita basis to the physicians in the physician organization who participated in the incentive payment or shared savings program. In any case, payments made to physicians who refer patients to the hospital but do not otherwise participate in the program would not be protected. For example, payments to cardiac surgeons for changing their operating room procedures would be protected (provided that all of the other requirements of the exception were satisfied), whereas payments to the cardiologists who referred the patients for cardiac surgery but did not perform the surgery or contribute to the achievement of the performance measures through their personal efforts would not be protected.

iii. Requirements Related to the Design of an Incentive Payment or Shared Savings Program

To be protected, the incentive payment or shared savings program must be a documented program that seeks to achieve the improvement of quality of hospital patient care services through changes in physician clinical or administrative practices or actual cost savings for the hospital resulting from the reduction of waste or changes in physician clinical or administrative practices, without an adverse affect on or diminution in the quality of hospital patient care services.

We are proposing to require that, in order for payments made as part of an incentive payment or shared savings program to qualify for the protection of the exception, the program must include patient care quality or cost savings measures (or both) supported by objective, independent medical evidence indicating that the measures would not adversely affect patient care. Specifically, all performance measures must use an objective methodology, be verifiable, be supported by credible medical evidence, and be individually tracked. The measures must reasonably relate to the hospital's practices and patient population. In the interest of creating clear, bright-line rules, we are proposing specifically that patient care quality measures be listed in CMS' Specifications Manual for National Hospital Quality Measures. In the alternative, rather than require programs to include the patient care quality measures listed in CMS' Specifications Manual for National Hospital Quality Measures, we would deem such measures to satisfy that requirement.

With respect to cost savings measures, we are proposing to require that cost savings measures included in the incentive payment or shared savings program use an objective methodology, be verifiable, be supported by credible medical evidence indicating that the measures would not adversely affect patient care, be individually tracked, and reasonably relate to the services provided. We are seeking comment regarding this approach and the described alternative for patient care quality measures in general, and we are interested specifically in comments regarding other appropriate performance measures (or lists of performance measures, particularly with respect to cost savings measures to the extent such a list might exist) that might be deemed to satisfy such a requirement if we finalize this alternative proposal, as well as whether parties could satisfy this requirement by including criteria deemed by the Secretary in an advisory opinion to meet the requirement. We are including this requirement to safeguard against programs that incorporate sham standards that are designed to reward physicians for referrals rather than the achievement of legitimate benchmarks for quality maintenance or improvement or cost savings. We believe that appropriate performance measures should derive from broad, objective, widely-recognized criteria and not merely result from the subjective views of the parties to the arrangement. We also are proposing a specific requirement that the program ensure that the quality of patient care services is not impacted adversely as a result of the program.

We are proposing that an incentive payment or shared savings program must be reviewed prior to implementation of the program and at least annually thereafter to ascertain the program's impact on the quality of patient care services provided by the hospital. We believe that such vigilance is critical to ensure that quality of hospital patient care is not impacted adversely. Under this proposal, the reviews must be conducted by a person or organization with relevant clinical expertise, and they must be independent medical reviews. By “independent medical reviews,” we mean reviews by an individual or organization that is not: (1) Affiliated with the hospital operating the program under review; (2) not affiliated with any Start Printed Page 38554participating physician or with any physician organization with which a participating physician is affiliated; and (3) at the time of the review, not participating in any incentive payment or shared savings program operated by the hospital. We are seeking comments specifically regarding the appropriate frequency for review of incentive payment and shared savings programs to ensure that quality of hospital patient care is not impacted adversely and to protect against program or patient abuse. We are also seeking comments addressing the circumstances, if any, under which the periodic review could be conducted by an individual or organization that does not fall within the definition of “independent medical review” outlined above.

Any reviews would need to be objective, accurate and complete and result in written findings. We are proposing that the initial and periodic reviews should be contemporaneously documented, and that all documentation related to the incentive payment or shared savings program and the reviews thereof be made available to the Secretary upon request. We are further proposing that incentive payment and shared savings programs must provide for immediate and appropriate corrective action in the event a periodic review reveals an adverse impact on quality. Corrective actions could include termination of the program, removal of the relevant measure from the program, removal of the relevant measure from the calculation of physician payments, or termination of the physician from the program. We are considering whether corrective actions could also include modification of a performance measure and, if so, under what conditions. However, we would prohibit the discontinuation of a performance measure for the purpose of increasing the payment to the participating physicians in the next period. Also, although we do not want to encourage practice patterns that result in reduced or poor quality patient care, we do not believe it is appropriate to permit the discontinuation of a performance measure because the participating physicians are unable to earn a shared savings payment related to that measure. We are interested in comments addressing the appropriate corrective actions and how best to incorporate a corrective action requirement into the regulatory text of the exception.

We are proposing to require that participation in the program be limited to those physicians who are members of the hospital's medical staff at the commencement of the program. We believe that this would protect against abusive programs that serve as inducements to attract physicians from competing hospitals. However, we are soliciting comments on whether and, if so, how a physician who joins the medical staff at the hospital as part of the normal cycle of workforce demands for care delivery could be permitted to participate in an incentive payment or shared savings program (either individually or as part of a qualified physician organization, as described below) that began before he or she joined the medical staff of the hospital. We are also proposing that physicians participating in an incentive payment or shared savings program, or in a particular performance measure or measures within an incentive payment or shared savings program, must do so in “pools” of five or more participating physicians among whom the aggregate incentive payment available for, or cost savings that result from, the efforts of the physicians in the “pool” with respect to a particular measure would be shared on a per capita basis. A qualified physician organization could itself constitute an eligible pool, provided that it is comprised of at least five participating physicians. Otherwise, participating physicians in the qualified physician organization would need to be grouped by the hospital into pools of at least five participating physicians.

The distribution of incentive payment and shared savings program payments must be supported by written documentation. As an additional safeguard, we are proposing to require that physician “pools” be formed at the commencement of the program. We are interested in comments about our proposal to require hospitals to create pools for purposes of physician participation in incentive payment and shared savings programs and the minimum number of physicians needed to comprise a “pool” that adequately reduces the risk of program or patient abuse. Specifically, we are interested in comments on whether and, if so, how we should address the “pooling” of funds for payment purposes in an incentive payment or shared savings program targeted at a specific medical specialty or hospital department in which the physicians on the medical staff in that specialty or department or in the physician organization total fewer than five physicians.

We are proposing also that a hospital may not determine eligibility for physician participation in a program based on the volume or value of referrals or other business generated between the parties. We are also considering, and soliciting comments about, conditioning protection under the exception on the hospital offering the opportunity to participate in the incentive payment or shared savings to all physicians on the medical staff who belong to the department or practice in the specialty relevant to the program (for example, the opportunity to participate in a shared savings program for cardiac surgery would have to be offered to all cardiac surgeons on the hospital's medical staff).

To qualify for protection under the proposed exception, an incentive payment or shared savings program may not limit the discretion of physicians to make medically appropriate decisions for their patients, including, but not limited to, decisions about tests, treatments, procedures, services, supplies or discharge. Although incentive payment and shared savings programs may condition program payments on particular physician choices, to be protected under the proposed exception, such programs could not limit other choices for which physicians would not receive program payments. In particular, a hospital must not limit the availability of any specific item, supply or device, including new technology that is linked through objective evidence to improved outcomes and is clinically appropriate for a particular patient, and must permit individual physicians access to the same selection of items, supplies and devices that was available to them prior to the physician's participation in the program. We are not requiring physician access to items, supplies and devices that were not available prior to the commencement of the incentive payment or shared savings program. Rather, a hospital must make available to a participating physician at least the same selection available to the physician prior to his or her participation in the incentive payment or shared savings program, which already may have been restricted by hospital policy, but without payment to physicians based on such situations.

We recognize that some shared savings programs are designed to channel the physician's selection of physician preference items toward a limited number of choices; however, we believe that, to safeguard the program and its beneficiaries against abuse, physicians participating in a shared savings program must have access to items or supplies that they deem medically necessary for an individual patient's care. This would include new technology, provided that it meets the same Federal regulatory standards (for example, approval by the Food and Drug Administration (FDA) and Start Printed Page 38555Medicare or Medicaid coverage decisions) as the items or supplies included in the program. By including this requirement, we intend that programs would ensure access to clinically appropriate new technology while, at the same time, protect patient safety. For example, if a program includes three alternative, FDA-approved devices for a particular procedure, the hospital sponsoring the program could limit access to new technology that is experimental (that is, not FDA-approved), but could not limit access to FDA-approved alternative devices/technology. We note also that items, supplies and devices in a product standardization program (that is a cost savings action under a shared savings program) should not be selected on the basis of a participating physician's ownership or investment interest in, or compensation arrangement with, the manufacturer or distributor of the item, supply or device, or his or her interest in a group purchasing organization (GPO) that arranges for the purchase of the item, supply or device. In this regard, we would strongly recommend, and may require, that such physicians be barred from participating in any manner in the design or implementation of an incentive payment or shared savings program that involves items, supplies or devices in which the physician has a financial interest. We are proposing that a physician (or qualified physician organization) could not receive a payment under an incentive payment or shared savings program for the use of an item, supply or device if he or she (or the qualified physician organization) has an ownership or investment interest in, or a compensation arrangement with, a manufacturer or distributor of the item, supply or device, or GPO that arranges for the purchase of the item, supply or device.

iv. Requirements Related to Payments Made Under an Incentive Payment or Shared Savings Program

To reduce the risk that incentive or shared savings program payments might be used to encourage or reward referrals to the hospital or provide incentives to engage in other abusive practices, such as stinting or cherry picking, we are proposing that payments made to physicians participating in the incentive payment or shared savings program be distributed on a per capita basis. We are interested in public comments that may outline alternate approaches to the per capita payment model for the distribution of incentive payments or shared savings payments, such as paying a physician more or less according to whether he or she contributed more or less to the achievement of the performance measures included in the incentive payment or shared savings program.

We believe that safeguards are necessary to ensure that incentive payment and shared savings programs do not result in altered referral patterns and to reduce the risk that programs will become vehicles used to reward referring physicians. To address this, we are proposing that remuneration paid to a participating physician or a qualified physician organization may not include any amount that takes into account the provision a greater volume of Federal health care patient procedures or services than the volume provided by the participating physician or qualified physician organization during the period of the same length immediately preceding the commencement of the program as that covered by the payment. We are interested in comments regarding whether and, if so, how to account for volume changes due to market forces and physician practice growth.

We are also proposing that the amount of the remuneration paid to the physician or qualified physician organization be limited in duration and amount. With respect to duration, we are proposing that protected programs be no shorter than 1 year and no longer than 3 years. With respect to a limit on the amount of payments, we are proposing two types of limits, which we might adopt separately or together.

First, we are proposing a limit on payments expressed as a set percentage of the savings available to the hospital as a result of the changes in clinical or administrative practices of the participating physicians. Although not incorporated into the proposed regulation text, we are specifically considering a flat 50 percent limit on the sharing of cost savings (regardless of the length of the program), and are considering whether to require “re-basing,” depending on the length of the program. We are interested in comments regarding whether this “cap” on payments is appropriate, too high, or too low. We are interested also in comments regarding whether and, if so, how we should limit payments under a multi-year incentive payment or shared savings program to an amount that would be actuarially equivalent to the amount of the payments made under a 1-year program. We are considering also “scaled” limits for programs longer than 1 year. Under the scaled limits approach, we would not require re-basing (as further described below), but would require that payments to physicians decrease over the course of the performance measure. For purposes of calculating the actual payments to the physician, we are proposing that cost savings be measured by comparing the hospital's actual acquisition costs for the items and supplies or costs of delivering the specified services that are subject to the incentive payment or shared savings program to the hospital's baseline costs for the same items, supplies or services during the 1-year period immediately preceding the commencement of the program.

Second, we are proposing a limit on payments to address the risk that physicians will continue to receive financial rewards for already implemented changes in clinical or administrative practices. This second limit would require that payments made under an incentive payment or shared savings program must take into account any payments that have already been made for performance measures already achieved (“re-basing”). We are considering a re-basing approach under which, at the end of year one, the hospital would re-base performance measures such that available payment would be based on the difference between the hospital's then-current level for a particular performance measure and the goal established for that performance measure. This approach would apply similarly to incentive payments made exclusively for improvements in patient care quality that are unrelated to the achievement of cost savings. We are soliciting comments specifically as to whether requiring the re-basing of “quality-only” payments is a necessary safeguard against program or patient abuse, or whether a different approach for limiting such payments could be implemented that would safeguard against risk to the Medicare program or its beneficiaries. We are also soliciting comments on whether we should require re-basing at all and, if so, under what parameters and whether parties should be free to choose the frequency of the payment and re-basing periods under the incentive payment or shared savings program. In no event would a hospital be permitted to increase the incentive payment or shared savings payment potentially available to physicians as a result of the re-basing.

By way of illustration, assume that one objective cost saving measure in the program is to decrease from 80 percent utilization of a specified item during a particular surgical procedure (the hospital's historical utilization rate for the item) to 20 percent utilization (the national average for utilization of the item). Under an approach that requires re-basing, if, after completion of the first Start Printed Page 38556year of the program, the hospital's utilization of the specified item decreased to 60 percent of surgical procedures, for year 2 of the arrangement, the participating physicians could receive payment only for any reduction below 60 percent utilization of the specified item, that is, the new “historical” baseline utilization rate would be 60 percent and all cost savings and waste reduction for the upcoming year would be measured against the new baseline utilization rate. If, after completion of year one, the hospital's utilization of the specified item increased to 90 percent, the hospital would be prohibited from re-basing the utilization rate higher than the initial 80 percent utilization rate determined at the commencement of the incentive payment or shared savings program. The participating physicians would, in the aggregate, be eligible to receive as a shared savings payment the same percentage of cost savings throughout the term of the program.

Using the same figures, under an approach that requires scaling of the payments over the course of the arrangement, the physicians participating in the program would be eligible for a decreasing percentage of cost savings over the course of the arrangement. Assume, for example, we adopted an approach that permitted shared savings payments of up to 50 percent for year one, up to 35 percent for year two, and up to 20 percent for year three. If a particular cost savings measure generated savings of $100,000 the first year, $150,000 the second year, and $200,000 the third year (all relative to the historical baseline utilization rate established at commencement of the program), the participating physicians would be eligible for a total of 50 percent of $100,000 (or $50,000) the first year, a total of 35 percent of $150,000 (or $52,500) the second year, and 20 percent of $200,000 (or $40,000) the third year. We are also considering protecting programs in which dollar limits are expressed as fixed dollar amounts rather than percentages.

Each of the approaches described above could be adopted to the exclusion of or in concert with each other. We are interested in comments regarding whether the exception should include one or more of the payment limit alternatives, as well as comments regarding other appropriate limitations for the amount and nature of the payments made under an incentive payment or shared savings program. Regardless of which approach we adopt, we are proposing to require that payments based on cost savings be calculated on the hospital's actual acquisition costs for the items at issue, as well as the costs involved in providing the specified services and that they be calculated on the basis of all patients, regardless of insurance coverage (subject to the cap on payment for Federal health care program beneficiaries described above). We are seeking comments regarding whether these conditions are appropriate and whether we should permit modification under other or different circumstances.

We do not intend to protect arrangements in which physicians receive payments for actions taken that result in a reduction below a predetermined target. For example, in the first hypothetical (under the required re-basing approach), no payments could be made for reductions below 20 percent utilization. We intend to require that the target thresholds use objective historical and clinical measures that are reasonably related to the practices and the patient population at the hospital. We are mindful that some performance measures may not be amendable to such utilization “floors” or “ceilings.” We are considering including comparable safeguards for measures that may not be readily amenable to percentage “floors” and “ceilings”, such as measures related to product substitution and product standardization. For example, the fact that the substitution of one product for another would not adversely impact quality might need to be supported by substantial objective medical evidence. We are soliciting comments on what kinds of quality controls are appropriate for performance measures that are not amendable to utilization “floors” and “ceilings.” We are considering whether and, if so, how this concern can be addressed by requiring that the parties obtain a fully independent clinical review by a qualified party of the program measures prior to implementing the program. We are soliciting comments on appropriate quality safeguards in such situations.

We recognize that parties might want to structure arrangements so that payments are made by the hospital to a physician organization that would not meet our proposed definition of a qualified physician organization. This might be the case if incentive payment or shared savings payments are made by a hospital to a multi-specialty physician practice composed of participating and non-participating physicians (for example, a group composed of cardiac surgeons and cardiologists, in the case of a cardiac surgery shared savings program). We are considering whether to extend the proposed exception to cover payments from a hospital to such physician organizations and, if so, under what conditions we could do so that would pose no risk of program or patient abuse. We are concerned that payments made to such physician organizations may become conduits to reward non-participating physicians for referrals. On the other hand, we recognize that programs structured so that hospitals make payments to physician organizations rather than to individual physicians may be administratively easier for hospitals to operate. (We note that, in some cases, payments from hospitals to physician organizations that are not qualified physician organizations might fit in the existing exception for indirect compensation arrangements, depending on the circumstances.)

We are considering several options to address this issue. First, we are considering an approach that would allow hospitals to make incentive payment or shared savings payments to individual physicians indirectly by passing the payment through the physician's physician organization. Under this approach, the total amount of the payment earned by the physician under the incentive payment or shared savings program would need to be passed through to the physician, except amounts required for income tax and other regular withholding. Under this approach, the physician organization would simply operate as a pass-through entity. The physician organization would be prohibited from retaining any portion of the incentive payment or shared savings payment (except, potentially, for required withholdings to be paid on behalf of the participating physician). We are soliciting comments about this approach and what types of payments the physician organization could withhold (for example, whether the physician organization should be permitted to withhold required contributions to a qualified retirement plan).

We are concerned about the difficulty hospitals might encounter in ensuring that the physician organization accurately and fully passes through the full payment to the participating physician, and we are concerned about the risk of fraud and abuse if the payment mechanism were manipulated so that the physician organization retains a portion of the payments for its own benefit. Such gaming of the payment structure could result in improper remuneration from the hospital to the physician organization for referrals (and would not fit in the proposed or any other exception to section 1877 of the Act). We are interested in comments about how to Start Printed Page 38557craft safeguards for the exception to prevent this type of potential abuse. In this regard, we are considering requiring that the physician organization document all amounts received and distributed to participating physicians, as well as any income tax or regular withholding payments made on behalf of the participating physician. In addition, we would require that the physician organization's obligations with respect to “pass through” payments be included in the written agreement between the parties and that the physician organization be a signatory (in addition to the hospital and the participating physician) to the agreement. We are soliciting comment on these and any other safeguards necessary to ensure that payments are appropriately passed through to participating physicians.

Second, we are considering whether, without posing a risk of program or patient abuse, we could expand the definition of a “qualified physician organization” to which protected payments can be made to include physician organizations comprised of some physicians who are not participating physicians. This approach, if implemented, would have the effect of protecting payments made directly to such physician organizations (rather than directly to individual physicians or “passed through” the physician organization), provided that all other requirements of the exception were satisfied. We would adopt this approach only if we could do so in a manner that would not result in payments to physicians whose only contributions to the hospital's incentive payment or shared savings program are potential referrals. If we expand the definition of a qualified physician organization, we envision a requirement that would permit only participating physicians to share in the incentive or shared savings payments. Our concerns described above about the difficulty hospitals would experience in monitoring the payments and the risk of manipulation to benefit referral source physicians or the physician organization as a whole are heightened with this approach. If we were to adopt this approach, we would include the proposed safeguards described above in connection with the pass-through payments proposal. In any event, we do not intend to protect arrangements that reward passive physicians who receive payments but do not participate in the achievement of the patient care quality or cost savings measure goals.

One benefit of protecting programs that are structured so that payments are made from the hospital to a physician organization would be to avoid potential confusion that might be caused by the physician “stand in the shoes” provisions in § 411.354(c)(2) (under which a physician is considered to have the same compensation arrangements with the same parties and on the same terms as his or her physician organization with respect to whether remuneration is permissible under an exception). We are interested in comments on the relationship of the proposed exception to the “stand in the shoes” provisions. We are also interested in comments regarding whether the new exception, if adopted, should be included in § 411.357, or whether it would be preferable to include it in § 411.355 or elsewhere in the physician self-referral regulatory scheme.

v. Requirements Related to the Arrangement Between a Hospital and the Participating Physician or Qualified Physician Organization

We are proposing to include in the exception certain criteria that are common to most of the exceptions to the physician self-referral prohibition for compensation arrangements, namely, that the arrangement be set out in writing, signed by the parties, have a minimum term of 1 year and a maximum term of 3 years, and specify compensation that is set in advance, does not vary during the term of the arrangement, and is not determined in a manner that takes into account the volume or value of referrals or other business generated between the parties. We are proposing to require that the written agreement between the hospital offering the program and the physicians participating in the program document the performance measures against which the performance of the participating physicians will be measured. In addition, we are proposing that each performance measure (including, for example, specific cost savings measures) and the payments resulting from the achievement of established targets must be delineated separately and clearly. We believe transparency is crucial to ensure that the incentive payment or shared savings program does not pose a risk of program or patient abuse. However, we are interested in comments regarding whether and, if so, how total (or “global”) savings for a particular department or service line can be included in the program and sufficiently monitored, accounted for, and distributed so as not to pose a risk of program or patient abuse and to permit transparency of the program.

As in all exceptions issued using our authority under section 1877(b)(4) of the Act, we are proposing to include a requirement that the arrangement does not violate the anti-kickback statute or any Federal or State law or regulation governing billing or claims submission. This is necessary to ensure that the arrangement does not pose a risk of program or patient abuse, the standard for all exceptions issued using this authority.

In order to promote transparency and foster accountability, we are proposing to require that the arrangement between the parties require written disclosure to patients affected by the program regarding the nature of the program and the physician's or qualified physician organization's participation in the program prior to admission to the hospital, or, if pre-admission disclosure is not feasible, prior to the procedure or other treatment to which the program is applicable. Affected patients include those patients whose patient care at the hospital relates to any of the measures that are part of the program. For example, a patient being admitted to a hospital for cardiac surgery should receive a disclosure if the hospital operates an incentive payment or shared savings program related to cardiac surgery and his or her physician participates in that program. We are considering whether patients should be permitted to opt out of a measure that might otherwise apply to their care and are seeking comments regarding whether and how this would work in practice.

Finally, we are proposing the following additional safeguards. We are interested in comments regarding how to incorporate these requirements into the regulation text. First, to guard against cherry picking or other abuse, the case severity, and the ages and payers of the patient population treated by the participating physician under the arrangement must be monitored using generally-accepted standards. The monitoring could be conducted by an independent outside party or by a committee composed of representatives of the hospital and participating physicians. If there are significant changes from the hospital's historical measures, the physician at issue must be terminated from participation in the arrangement. The monitor should also assess these characteristics in the aggregate across all participating physicians; if there are significant changes, the program should be terminated. Second, physicians are only eligible for payments that are related to their own efforts, combined with the efforts of the other physicians in their Start Printed Page 38558pool, at meeting cost savings measures or achieving patient care quality measures; that is, a physician is eligible to receive only a per capita share of that portion of an available incentive payment or shared savings payment attributable to the efforts of his or her pool. Third, all measures should be uniformly applied to all patients including Medicare beneficiaries (that is, the measures should not be applied disproportionately to Medicare beneficiaries). Procedures or treatments subject to the incentive payment or shared savings program should not be performed disproportionally on Federal health care program beneficiaries. We are also considering and interested in comments regarding a requirement that the hospital offering an incentive payment or shared savings program audit the calculation of cost savings and payments made under the program. To this end, we are interested in comments regarding the formality of such an audit; that is, should we permit the hospital to complete the audit internally, or should we require an independent financial audit of the books and records related to the incentive payment or shared savings program.

We would also require that incentive payment and shared savings programs must not involve the counseling or promotion of a business arrangement or other activity that violates any Federal or State law. In addition, we are proposing that the full range of documentation developed and maintained in connection with compliance with the new exception be retained and made available to the Secretary upon request.

O. Physician Quality Reporting Initiative (PQRI)

[If you choose to comment on issues in this section, please include the caption “PQRI” at the beginning of your comments.]

1. Program Background and Statutory Authority

a. Division B of the Tax Relief and Health Care Act of 2006—Medicare Improvements and Extension Act of 2006 (MIEA-TRHCA): Requirements for the PQRI Program

Section 101(b) of the MIEA-TRHCA amended section 1848 of the Act by adding subsection (k). Section 1848(k)(1) of the Act requires the Secretary to implement a system for the reporting by eligible professionals of data on quality measures as described in section 1848(k)(2) of the Act. Section 101(b) authorizes the Secretary to specify the form and manner for data submission by program instruction or otherwise which may include submission of such data on Part B claims. Section 1848(k)(3)(B) of the Act specifies that for the purpose of the quality reporting system, eligible professionals include physicians, other practitioners as described in section 1842(b)(18)(C) of the Act, physical and occupational therapists, and qualified speech-language pathologists. Section 101(c) of the MIEA-TRHCA, as amended by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173) (MMSEA), authorizes “Transitional Bonus Incentive Payments for Quality Reporting” in 2007 and 2008, for satisfactory reporting of quality data, as defined by section 101(c)(2) of the MIEA-TRHCA. We have named this quality reporting system, the “Physician Quality Reporting Initiative (PQRI)” for ease of reference.

b. PQRI for 2007

For 2007, the Secretary is authorized to pay an incentive payment equal to 1.5 percent of the estimated total allowed charges for all covered professional services furnished during the reporting period. The reporting period for the PQRI for 2007 is defined by MIEA-TRHCA as the period beginning on July 1, 2007, and ending on December 31, 2007. For 2007, PQRI data submission was limited to claims-based submission based upon specifications and instructions posted on the CMS Web site for 74 PQRI measures.

Preliminary PQRI participation information through November 2007 indicates that approximately 100,000 professionals, or about 16 percent, of eligible professionals who could have reported quality data on one or more of the 74 2007 PQRI quality measures submitted PQRI quality data at least once during the 2007 reporting period. This number includes professionals from all 50 States, the District of Columbia, Puerto Rico, and the Virgin Islands. In our regions with the highest participation, reporting rates are approaching 20 percent, with some States achieving reporting rates of around 30 percent. Nationally, there were above average rates of participation by eligible professionals furnishing services relevant to the following three types of care: anesthesia services; eye care; and emergency care. Participation rates have trended upwards during the 2007 reporting period. Based on expanded measures, new reporting options and other factors, we anticipate that trend will continue for 2008. Further details of the PQRI for 2007 are provided on the PQRI section of the CMS Web site at: http://www.cms.hhs.gov/​PQRI/​33_​2007_​General_​Info.asp#TopOfPage. Incentive payments and access to confidential reports on measures reporting rates and measures performance rates for 2007 are scheduled to begin in mid-July 2008.

c. PQRI for 2008

Section 1848(k)(2)(B)(ii) of the Act, as added by the MIEA-TRHCA, required the Secretary to publish a proposed set of quality measures for 2008 by August 15, 2007 and provide for a period of public comment. Section 1848(k)(2)(B)(i) of the Act, as added by the MIEA-TRHCA provides that for purposes of reporting data on quality measures for covered professional services furnished in 2008, such measures shall be measures that have been endorsed or adopted by a consensus organization, such as the National Quality Forum (NQF) or the AQA Alliance (AQA), that include measures that have been submitted by a physician specialty, and that the Secretary identifies as having used a consensus-based process for developing such measures. In addition, the measures shall include structural measures, such as the use of electronic health records (EHRs) and electronic prescribing technology.

In the CY 2008 PFS proposed rule (72 FR 38196 through 38199), we provided a detailed discussion of the MIEA-TRHCA requirements and the PQRI. We explained our interpretation of applicable statutory and government-wide policies relevant to defining a consensus-based measure development process, as well as our policy for determining which measures meet requirements for inclusion in PQRI for 2008.

To meet the MIEA-TRHCA requirement to publish proposed 2008 PQRI measures by August 15, 2007, we published 148 proposed 2008 PQRI quality measures in the CY 2008 PFS proposed rule (72 FR 38199 through 38202). We invited comments on the proposed measures and on our plans to explore mechanisms for submission of electronic clinical performance measurement information and summary measure results information extracted from EHRs and clinical data registries.

In the CY 2008 PFS final rule with comment period (72 FR 66336 through 66359), we responded to public comments received on the PQRI section of the CY 2008 PFS proposed rule (72 FR 38196 through 38204) and we finalized 119 measures that we determined under the MIEA-TRHCA and other applicable statutory requirements to be appropriate for Start Printed Page 38559eligible professionals to use to submit such data under the 2008 PQRI. In addition, we described our plans to test quality measures data submission mechanisms, other than claims, based on clinical data registries and EHRs in 2008.

The 2008 measures specifications are available on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​PQRI/​15_​MeasuresCodes.asp#TopOfPage. These detailed specifications include instructions for reporting and identify the circumstances in which each measure is applicable.

d. Extension of and Enhancements to the PQRI Program Authorized by the MMSEA

The MMSEA, which was enacted on December 29, 2007, authorizes us to make incentive payments for satisfactorily reporting quality measures data on covered professional services furnished in 2008 equal to 1.5 percent of the estimated total allowed charges for all covered professional services furnished during the reporting period. For 2008, the reporting period is defined to mean the entire calendar year. In addition, while MIEA-TRHCA established a cap on incentive payments for the 2007 PQRI, based on an average per measure payment amount, there is no cap on incentive payments under MMSEA for the 2008 PQRI.

MMSEA also introduced enhancements that result in more opportunities for eligible professionals to participate in the PQRI for 2008. For 2008 and 2009, section 101(c)(5)(F) of the MIEA-TRHCA, as added by the MMSEA, requires the Secretary to establish alternative reporting periods and alternative criteria for satisfactorily submitting data on quality measures through medical registries and for reporting groups of measures. For 2008, these alternative reporting periods and reporting criteria were posted on April 16, 2008 in “2008 PQRI: Establishment of Alternative Reporting Periods and Reporting Criteria” document found on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​PQRI/​Downloads/​2008PQRIalterrptperiods.pdf. They supplement the single reporting period and the reporting criteria previously set forth in the CY 2008 PFS final rule with comment period (72 FR 66357 through 66359) which were limited to claims-based submission of individual 2008 PQRI measures.

For 2008, each eligible professional who satisfactorily reports under any of the options set forth in the “2008 PQRI: Establishment of Alternative Reporting Periods and Reporting Criteria” document or for the reporting period and under the reporting criteria set forth in the CY 2008 PFS final rule with comment period will be eligible for a 1.5 percent incentive payment for services furnished during the applicable reporting period. An eligible professional may potentially qualify as satisfactorily reporting under more than one of the reporting criteria and for more than one reporting period. However, this will result in only one incentive payment for 2008, which will be equivalent to 1.5 percent of allowed charges for PFS covered professional services furnished during the longest reporting period for which the eligible professional satisfactorily reports.

e. PQRI for 2009

Section 1848(k)(2)(B)(ii) of the Act, as amended by the MMSEA, requires the Secretary to publish a proposed set of quality measures that would be appropriate for eligible professionals to use to submit data in 2009 in the Federal Register by August 15, 2008. Such measures shall be measures that have been endorsed or adopted by a consensus organization, such as the NQF or the AQA, that include measures that have been submitted by a physician specialty, and that the Secretary identifies as having used a consensus-based process for developing such measures. In addition, the measures shall include structural measures, such as the use of EHRs and electronic prescribing technology.

The measures proposed for the 2009 PQRI are outlined in section II.O.4. of this proposed rule, “Proposed 2009 PQRI Quality Measures.” Section 1848(k)(2)(B)(iii) of the Act, as amended by the MMSEA, requires the Secretary to publish the final set of measures in the Federal Register no later than November 15, 2008. The final set of 2009 PQRI quality measures will be identified in the CY 2009 PFS final rule with comment period.

The MIEA-TRHCA does not statutorily define a specific reporting period for 2009. However, as for 2008, the Secretary is required to establish alternative reporting periods and alternative reporting criteria for reporting measures groups and for registry-based reporting for 2009. For the 2009 PQRI, we propose to define the reporting period for PQRI to mean the entire 2009 calendar year but also propose additional reporting options for satisfactorily reporting quality measures data based on alternative reporting criteria and reporting periods authorized by MMSEA for measures groups and registry-based reporting, which are described in section II.O.2. of this proposed rule, “Satisfactory Reporting Criteria and Reporting Periods—Reporting Options in the 2009 PQRI.”

Unlike 2007 and 2008, MIEA-TRHCA does not authorize an incentive payment for PQRI for 2009. Currently, no legislation exists that authorizes us to make incentive payments for satisfactorily reporting data on quality measures for services furnished in 2009 or beyond. Given that currently there is no specific authorization for an incentive payment for the 2009 PQRI, meeting the satisfactory reporting criteria of this proposed rule will not result in an incentive payment for satisfactorily reporting data for covered professional services furnished in 2009.

2. Satisfactory Reporting Criteria and Reporting Periods—Reporting Options in the 2009 PQRI

For the 2009 PQRI, we propose to define the reporting period to mean the entire year (January 1, 2009—December 31, 2009.) We also propose to establish two alternative reporting periods: (1) January 1, 2009 through December 31, 2009; and (2) July 1, 2009 through December 31, 2009 for reporting measures groups and for registry-based reporting. As proposed, this results in several reporting options available to eligible professionals that vary by the reporting mechanism selected. We believe that the availability of several reporting options will increase opportunities for eligible professionals to satisfactorily report quality data for the PQRI and will augment the amount of information submitted about the quality of care provided by eligible professionals to Medicare beneficiaries. The reporting mechanisms and reporting options proposed for the 2009 PQRI are described in the following section.

a. Claims-Based Submission of Data for Reporting Individual Measures

Under Section 101(c)(2) of the MIEA-TRHCA the criteria for satisfactorily submitting data on quality measures require the reporting of at least three applicable measures in at least 80 percent of the cases in which the measure is reportable. If fewer than three measures are applicable to the services of the professional, only data on applicable measures are required to be submitted.

For the 2009 PQRI, we propose to retain these criteria for claims-based reporting of individual measures for the January 1, 2009—December 31, 2009 reporting period. As summarized in Table 7, an eligible professional could Start Printed Page 38560meet the criteria for satisfactorily reporting quality data by reporting at least three applicable measures (or one to two measures if fewer than three measures apply) for at least 80 percent of the cases in which each measure is reportable, during January 1, 2009 through December 31, 2009.

Table 7:—Proposed 2009 PQRI Claims-Based Reporting Options for Individual Measures

Reporting mechanismReporting criteriaReporting period
Claims-based reportingAt least 3 PQRI measures, or 1-2 measures if fewer than 3 apply to the eligible professional, for 80% of applicable Medicare Part B FFS patients of each eligible professionalJanuary 1, 2009-December 31, 2009

b. Satisfactory Reporting of Data on Quality Measures and Reporting Periods for Measures Groups, Through Claims-Based Reporting and Registry-Based Reporting

Section 101(c)(5)(F) of the MIEA-TRHCA, as added by the MMSEA, requires that for the 2008 and 2009 PQRI the Secretary establish alternative reporting periods and alternative criteria for satisfactorily reporting groups of measures. In establishing these alternatives, CMS has labeled these groups of measures “measures groups.” We define “measures groups” as a subset of PQRI measures that have a particular clinical condition or focus in common. The denominator definition and coding of the measures group identifies the condition or focus that is shared across the measures within a particular measures group.

We believe that reporting measures groups is an important step to advance the PQRI program toward a more holistic and comprehensive assessment of patient care. By addressing several aspects of care for a particular clinical condition or clinical focus, measures groups results can help assure that patients are receiving a range of care appropriate for a given clinical condition or clinical focus. Because of this, we believe that groups of measures may often provide more meaningful information about the care being furnished to Medicare beneficiaries than can individual measures in isolation. Measures groups also allow physicians and other eligible professionals to more broadly demonstrate their clinical performance for particular services and thereby provide a better basis for comparison among professionals. Measures groups can also decrease complexity of reporting by identifying related measures applicable to the same services furnished to the same beneficiaries by the same professional and highlighting a common set of denominator codes across all the measures of a group that help identify those patients.

As described in the “2008 PQRI: Establishment of Alternative Reporting Periods and Reporting Criteria” document (http://www.cms.hhs.gov/​PQRI/​Downloads/​2008PQRIalterrptperiods.pdf ), there are four measures groups for the 2008 PQRI: (1) Diabetes Mellitus, (2) End-Stage Renal Disease (ESRD), (3) Chronic Kidney Disease (CKD), and (4) Preventive Care. For the 2009 PQRI, we propose to expand the available measures groups to a total of nine, as well as propose a variety of reporting options for reporting on measures groups. In addition to carrying forward three of the four 2008 measures groups, we propose to add six new measures groups for the 2009 PQRI. The ESRD Measures Group for the 2008 PQRI is not being proposed for 2009 because one of the measures in the group is no longer NQF-endorsed and there are no other ESRD measures proposed for the 2009 PQRI that could be added to this group. We propose to retain the remaining three measures in the 2008 ESRD measures group to be available to be reported individually in the 2009 PQRI.

Similar to the 2008 measures groups, we propose that the measures that make up five of these new measures groups could be reported either individually or as part of a measures group. These five new measures groups address the following:

(1) Coronary artery bypass graft (CABG) surgery;

(2) Coronary artery disease (CAD);

(3) Rheumatoid arthritis;

(4) Human immunodeficiency virus (HIV)/acquired immune deficiency syndrome (AIDS); and

(5) Perioperative care.

We also propose one new measures group for the 2009 PQRI in which the measures would be reportable only as a measures group, not as individual measures. This measures group addresses quality of services furnished to treat back pain. The measures proposed for inclusion in each of the proposed 2009 measures groups are listed in section II.O.4. of this proposed rule, “Proposed 2009 PQRI Quality Measures.”

We welcome comments on these proposed new measures groups, including suggestions for other measures groups based on individual measures included in the proposed 2009 PQRI measure set. For the 2009 PQRI, measures groups must contain at least 4 measures. All measures in each measures group suggested by commenters must be included in the proposed measures cited in section II.O.4. of this proposed rule, “Proposed 2009 PQRI Quality Measures.” The individual measures included in the final measures groups for the 2009 PQRI will be limited to those which are included in the final set of measures for PQRI 2009, as identified in the CY 2009 PFS final rule with comment period.

As in the 2008 PQRI, we are proposing for the 2009 PQRI that measures groups be reported through claims-based or registry-based submission for the 2009 PQRI. The form and manner of quality data submission for 2009 measures groups will be posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​pqri no later than December 31, 2008, and will detail specifications and specific instructions for reporting measures groups via claims and registry-based reporting. Please note that detailed measure specifications and instructions for submitting data on those 2009 measures groups that were also included as 2008 PQRI measures groups may be updated or modified prior to 2009. Therefore, the 2009 PQRI measure specifications for any given measures group may be different from specifications and submission instructions for the same measures group used for 2008. Additionally, the specifications for measures groups will not necessarily contain all the specification elements of each individual measure making up the measures group. This is based on the need for a common set of denominator specifications for all the measures Start Printed Page 38561making up a measures group in order to define the applicability of the measures group. Therefore, the specifications and instructions for measures groups will be provided separately from the specifications and instructions for the individual 2009 PQRI measures.

For the 2009 PQRI, we are proposing three options for satisfactorily reporting measures groups using claims-based reporting and three options for satisfactorily reporting measures groups using registry-based submission. The proposed options for satisfactorily reporting on measures groups are described in Table 8. The details of the requirements for registries are contained in section II.O.2.c., “Registry-Based Submission for Reporting Individual Measures.”

Table 8.—Proposed 2009 PQRI Reporting Options for Measures Groups

Reporting mechanismReporting criteriaReporting period
Claims-based reportingOne Measures Group for 30 Consecutive Medicare Part B FFS PatientsJanuary 1, 2009-December 31, 2009.
Claims-based reportingOne Measures Group for 80% of applicable Medicare Part B FFS patients of each eligible professional (with a minimum of 30 patients during the reporting period)January 1, 2009-December 31, 2009.
Claims-based reportingOne Measures Group for 80% of applicable Medicare Part B FFS patients of each eligible professional (with a minimum of 15 patients during the reporting period)July 1, 2009-December 31, 2009.
Registry-based reportingOne Measures Group for 30 Consecutive Patients. Patients may include, but may not be exclusively, non-Medicare patientsJanuary 1, 2009-December 31, 2009.
Registry-based reportingOne Measures Group for 80% of applicable Medicare Part B FFS patients of each eligible professional (with a minimum of 30 patients during the reporting period)January 1, 2009-December 31, 2009.
Registry-based reportingOne Measures Group for 80% of applicable Medicare Part B FFS patients of each eligible professional (with a minimum of 15 patients during the reporting period)July 1, 2009-December 31, 2009.

There are two basic criteria for satisfactory reporting of measures groups. For claims-based reporting, the two criteria are: (1) The reporting of quality data for 30 consecutive Medicare Part B FFS patients for one measures group for which the measures group is applicable during a full-year reporting period; or (2) the reporting of quality data for at least 80 percent of Medicare Part B FFS patients for whom the measures group is applicable (with a minimum number of patients commensurate with the reporting period duration). For registry-based submission, the two criteria are: (1) The reporting of quality measures results and numerator and denominator data for 30 consecutive patients for one measures group for which the measures group is applicable during a full-year reporting period; or (2) the reporting of quality measures results and numerator and denominator data for at least 80 percent of patients for whom the measures group is applicable (with a minimum number of patients commensurate with the reporting period duration).

The 30 consecutive patients reporting criteria apply only to the entire year (January 1, 2009 through December 31, 2009) reporting period, but apply to both claims-based submission and registry-based submission mechanisms. While claims are submitted to CMS on Medicare patients only (for claims-based reporting), consecutive patients for registry-based submission for the January 1, 2009 through December 31, 2009 reporting period may include some, but may not be exclusively, non-Medicare patients. We include this limited option to report quality measures results and numerator and denominator data on quality measures that includes non-Medicare patients for registry-based submission because of the desirability of assessing the overall care provided by a professional rather than just that provided to a certain subset of patients, and the benefit of having a larger number of patients on which to assess quality.

We propose that the alternative criteria for measures groups based on reporting on 80 percent of patients for which one measures group be applicable for the January 1, 2009 through December 31, 2009 reporting period (with a minimum of 30 patients) and to the July 1, 2009 through December 31, 2009 reporting periods (with a minimum of 15 patients) and for either claims-based or registry-based reporting of measures groups.

We have included the reporting option for 30 consecutive patients (for claims-based reporting, the consecutive patients must all be Medicare FFS patients) as a means to achieve a reasonably valid sample of patients for performance rate calculation yet place an upper limit on the number of patients on which reporting would be required, compared to the 80 percent of patients criteria. However, unlike 2008, we do not propose an option for 15 consecutive patients for the 6-month reporting period. While we do not have the results of the 2008 reporting, we are concerned that samples of fewer than 30 consecutive patients may be insufficient to calculate comparable performance rates across eligible professionals furnishing comparable services. We expect additional experience with PQRI reporting to clarify optimal sample sizes and reporting criteria for use in future reporting periods. We invite comments on our proposed use of the consecutive patient reporting criteria and on the use of 30 consecutive patients (for claims-based reporting, the consecutive patients must all be Medicare FFS patients) as the required sample under these criteria during the full-year 2009 reporting period.

c. Registry-Based Submission for Reporting Individual Measures

Under section 1848(k)(4) of the Act, “as part of the publication of proposed and final quality measures for 2008 under clauses (i) and (iii) of paragraph (2)(B), the Secretary shall address a Start Printed Page 38562mechanism whereby an eligible professional may provide data on quality measures through an appropriate medical registry.” In the CY 2008 PFS final rule with comment period, we described using different options to test the receipt of data from registries in 2008 (72 FR 66350 through 66352). The two options being tested in 2008 are data submission options 2 and 3 as described in the CY 2008 PFS final rule with comment period (72 FR 66352). This testing process is ongoing, but submissions for the testing process are expected to conclude by September 1, 2008. Information regarding the registry submission testing process is available on the CMS Web site at http://www/​cms.hhs.gov/​PQRI/​20_​Reporting.asp#TopOfPage.

As we indicated previously, section 101(c)(5)(F) of the MIEA-TRHCA, as added by MMSEA, authorizes us to establish alternative criteria for satisfactorily reporting PQRI quality data through medical registries for 2008 and 2009. For 2008, we have established the requirements a registry must meet to qualify to submit data on quality measures on behalf of eligible professionals seeking incentive payments in 2008. The data to be submitted includes the reporting and performance rates on PQRI measures or PQRI measures groups; and, numerators and denominators for the reporting rates and performance rates. The requirements that we established for 2008 include a registry self-nomination process. The document “2008 PQRI Registry Requirements for Submission Under New Options” describes the requirements for a registry to qualify to submit under the registry-based reporting alternatives for 2008. This document is available on the PQRI section of the CMS Web site at http://www/​cms.hhs.gov/​PQRI/​20_​Reporting.asp#TopOfPage. On or before August 31, 2008, we will announce the names of self-nominated registries that are determined by CMS to meet necessary technical and other requirements to submit quality measures results and numerator and denominator data on quality measures on behalf of eligible professionals seeking an incentive under the alternative reporting periods and criteria applicable to registry-based submission for reporting quality measures on services furnished during 2008.

For 2009, we propose that eligible professionals would be able to report 2009 PQRI quality measures data through a qualified clinical registry by authorizing or instructing the registry to submit quality measures results and numerator and denominator data on quality measures to CMS on their behalf. As for 2008, the data to be submitted for 2009 includes the reporting and performance rates on PQRI measures or PQRI measures groups; and, numerators and denominators for the reporting rates and performance rates. To do so, eligible professionals would need to enter into and maintain an appropriate legal arrangement with an eligible clinical registry. Such arrangements would provide for the registry's receipt of patient-specific data from the eligible professional and the registry's disclosure of quality measures results and numerator and denominator data on behalf of the eligible professional to CMS for the PQRI. Thus, the registry would act as a HIPAA Business Associate and agent of the eligible professional. Such agents are referred to as “data submission vendors.” Such “data submission vendors” would have the requisite legal authority to provide clinical registry data on behalf of the eligible professional to the Quality Reporting System developed in accordance with the statute. The registry, acting as such a data submission vendor, would submit registry-derived measures information to the CMS designated database within the Quality Reporting System, using a CMS-specified record layout. The record layout will be posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​pqri as soon as practical, and no later than April 1, 2009.

To maintain compliance with applicable statutes and regulations, including but not limited to the Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191) (HIPAA), our program and its data system must maintain compliance with HIPAA requirements for requesting, processing, storing, and transmitting data. Eligible professionals that conduct HIPAA covered transactions also must maintain compliance with the HIPAA requirements.

For the 2009 PQRI, we propose to continue the PQRI reporting criteria for satisfactorily reporting through registry-based submission of 3 or more individual PQRI quality measures data that are described in the “2008 PQRI: Establishment of Alternative Reporting Periods and Reporting Criteria” document (http://www.cms.hhs.gov/​PQRI/​Downloads/​2008PQRIalterrptperiods.pdf). That is, we propose to accept quality measures results and numerator and denominator data on quality measures from registries that qualify as data submission vendors. We propose these criteria would be available for each of the two alternative reporting periods. Thus, the proposed reporting options for registry-based submission of at least three individual PQRI measures are listed in Table 9.

Table 9.—Proposed 2009 PQRI Registry-Based Submission Reporting Options for Individual Measures

Reporting mechanismReporting criteriaReporting period
Registry-based reportingAt least 3 PQRI measures for 80% of applicable Medicare Part B FFS patients of each eligible professionalJanuary 1, 2009-December 31, 2009.
Registry-based reportingAt least 3 PQRI measures for 80% of applicable Medicare Part B FFS patients of each eligible professionalJuly 1, 2009-December 31, 2009.

As discussed in section II.O.2.b. of this proposed rule, “Satisfactory Reporting of Data on Quality Measures and Reporting Periods for Measures Groups, Through Claims-Based Reporting and Registry-Based Reporting,” we also propose the three reporting options for registry-based submission of quality measures results and numerator and denominator data on PQRI measures groups summarized in Table 8.

To submit on behalf of eligible professionals pursuing incentive payment for reporting clinical quality information on services furnished during 2008 for reporting both on individual measures and measures groups, we required registries to complete a self-nomination process and to meet certain technical and other requirements in order to be considered “qualified” to submit on behalf of eligible professionals pursuing the 2008 PQRI incentive payment. These 2008 requirements are detailed in section (g) of the document titled: “2008 Physician Start Printed Page 38563Quality Reporting Initiative: Establishment of Alternative Reporting Periods and Reporting Criteria,” which is posted at http://www.cms.hhs.gov/​PQRI/​Downloads/​2008PQRIalterrptperiods.pdf, and in a further document titled “Registry Requirements to Qualify as an Acceptable Registry for Submission of PQRI Data On Behalf of Eligible Professionals Seeking Payment in 2008,” which is posted at http://www.cms.hhs.gov/​PQRI/​Downloads/​2008PQRIRegistryRequirements.pdf).

For 2009, we propose to again require a self-nomination process based on meeting specific technical and other requirements in order to qualify to submit data on 2009 PQRI quality measures or measures groups on behalf of eligible professionals for services furnished in 2009. This self-nomination will be required regardless of whether or not the registry participated in any way in PQRI in 2008. As in 2008, we will make every effort to ensure that registries that are “qualified” will be able to successfully submit quality measures results and numerator and denominator data on PQRI quality measures or measures groups on behalf of their professionals. By listing a registry as “qualified,” however, we cannot guarantee or assume responsibility for the successful submission of data on PQRI quality measures or measures groups. We propose that the 2009 registry technical requirements will be substantially the same as for 2008. In general, to be considered qualified to submit individual quality measures on behalf of professionals wishing to report under the 2009 PQRI, a registry must:

  • Have been in existence as of January 1, 2009.
  • Be able to collect all needed data elements and calculate results for at least three measures in the 2009 PQRI program (according to the posted 2009 PQRI Measure Specifications).
  • Be able to calculate and submit measure-level reporting rates by National Provider Identifier (NPI)/ Taxpayer Identification Number (TIN).
  • Be able to calculate and submit measure-level performance rates by NPI/TIN.
  • Be able to separate out and report on Medicare Fee For Service (Part B) patients only.
  • Provide the Registry name.
  • Provide the Reporting period start date (covers dates of services from).
  • Provide the Reporting period end date (covers dates of services through).
  • Provide the PQRI Measure Numbers.
  • Provide the measure titles.
  • Report the number of eligible instances (reporting denominator).
  • Report the number of instances of quality service performed (numerator).
  • Report the number of performance exclusions.
  • Report the number of reported instances, performance not met (eligible professional receives credit for reporting, not for performance).
  • Be able to transmit this data in a CMS-approved XML format.
  • Comply with a secure method for data submission.
  • Submit a “validation strategy” to CMS by May 31, 2009. A validation strategy ascertains whether eligible professionals have submitted accurately and on at least the minimum number (80 percent) of their eligible patients, visits, procedures, or episodes for a given measure. Acceptable validation strategies often include such provisions as the registry being able to conduct random sampling of their participants' data, but may also be based on other credible means verifying the accuracy of data content and completeness of reporting or adherence to a required sampling method.
  • Be able to include in its overall submission whether the results for each NPI are validated by the registry.
  • Enter into and maintain with its participating professionals an appropriate legal arrangement that provides for the registry's receipt of patient-specific data from the eligible professionals, as well as the registry's disclosure of quality measure results and numerator and denominator data on behalf of eligible professionals who wish to participate in the PQRI program.
  • Obtain and keep on file signed documentation that each NPI whose data is submitted to the registry has authorized the registry to submit quality measures results and numerator and denominator data to CMS for the purpose of PQRI participation. This documentation must meet the standards of applicable law, regulations, and contractual business associate agreements.
  • Provide CMS access (if requested) to review the Medicare beneficiary data on which 2009 PQRI registry-based submissions are founded.
  • Provide the reporting option (reporting period and reporting criteria) that the eligible professional has satisfied or chosen.
  • Registries must provide CMS an “attestation statement” which states that the quality measure results and numerator and denominator data provided to CMS are accurate and complete.

In addition to the above, registries that wish to submit 2009 quality measures information on behalf of their participating eligible professionals seeking to participate in the 2009 PQRI based on satisfying the criteria applicable to reporting of measures groups must be able to:

  • Indicate whether each eligible professional within the registry who wishes to submit PQRI using the measure groups will be doing so for the 6- or 12-month period.
  • Include only patients who were cared for during the twelve-month measurement period (reporting period) of January through December 2009 or the 6-month measurement period (reporting period) of July 2009 through December 2009.
  • Agree that the registry's data may be inspected by CMS under our health oversight authority if non-Medicare patients are included in the consecutive patient group.
  • Be able to report data on all of the measures in a given measures group and on either 30 consecutive patients from January 1 through December 31, 2009 (note this consecutive patient count must include some Medicare beneficiaries) or on 80 percent of applicable Medicare Part B FFS patients for each eligible professional (with a minimum of 30 patients during the January 1, 2009 through December 31, 2009 reporting period or a minimum of 15 patients during the July 1, 2009 through December 31, 2009 reporting period).
  • If reporting consecutive patients, provide the beginning date of service that initiates the count of 30 consecutive patients.
  • Be able to report the number of Medicare Fee for Service patients and the number of Medicare Advantage patients that are included in the consecutive patients reported for a given measures group.

However, for 2009, we may modify certain aspects of the registry technical requirements listed above, which are based on the 2008 registry requirements that are described in the “Registry Requirements to Qualify as an Acceptable Registry for Submission of PQRI Data On Behalf of Eligible Professionals Seeking Payment in 2008” document available on the CMS Web site at http://www.cms.hhs.gov/​PQRI/​Downloads/​2008PQRIRegistryRequirements.pdf) based on our experience during the 2008 registry testing process and any comments received on the 2009 registry technical requirements proposed above. We will post the final 2009 registry technical requirements, including the Start Printed Page 38564exact date by which registries that wish to qualify for 2009 must submit a self-nomination letter, on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​pqri by November 15, 2008. We anticipate that registries that wish to self-nominate for 2009 will be required to do so by the end of the first quarter of 2009, but not later than the end of the second quarter of 2009.

We invite comments on the proposed options for registry-based PQRI reporting of data on measures and measures groups for services furnished in 2009.

d. EHR-Based Submission for Reporting Individual Measures

In addition to the testing of registry-based submission, we are currently preparing for testing the submission of clinical quality data extracted from EHRs for five 2008 PQRI measures. We anticipate this testing will begin July 1, 2008 and conclude by December 31, 2008. For the 2009 PQRI, we propose to accept PQRI data from EHRs for a limited subset of the proposed 2009 PQRI quality measures identified in Tables 11 and 13 (section II.O.4., “Proposed 2009 PQRI Quality Measures”), contingent upon the successful completion of our 2008 EHR data submission testing process and a determination that accepting data from EHRs on quality measures for the 2009 PQRI is practical and feasible. Provided our 2008 EHR data submission testing process is successful, we propose to begin accepting submission of clinical quality data extracted from EHRs on January 1, 2009 or as soon thereafter as is technically feasible. The date on which we would begin to accept quality data submission on services furnished in 2009 is contingent upon when we can have the necessary information technology infrastructure components and capacity in place and ready to accept data on a scale sufficient for national implementation of PQRI submission through this mechanism. (Because EHR-based data submission need not be accomplished concurrently with the dates services are furnished or billed, there is some latitude to begin accepting EHR-extracted data later than January 1, 2009, without precluding accepting data for the proposed 2009 PQRI reporting periods.)

The electronic specifications for the proposed 2009 PQRI measures identified in Tables 11 and 13 that are under consideration for EHR-based submission in 2009 will be posted on a public Web site when available. We will broadly announce the availability and exact location of these specifications through familiar CMS communications channels including the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​pqri. The posting of the electronic specifications for any particular measure prior to publication of the final rule does not signify that the measure will be necessarily selected for the 2009 PQRI measure set, nor that EHR-based data submission will be accepted for that measure even if it may otherwise be included in the 2009 PQRI. However, by posting the specifications, we seek to allow sufficient time for EHR vendors to adapt their products to support EHR-based capture and submission of data for these measures prior to the start of any 2009 PQRI reporting periods.

EHR vendors that would like to enable their customers to submit data on PQRI that is extracted from their customers' EHRs to the CMS-designated clinical warehouse should update or otherwise assure that their EHR products capture and can submit the necessary data elements identified for measure specifications and technical specifications for EHR-based submission. We will use Certification Commission for Healthcare Information Technology (CCHIT) criteria and Secretarially-recognized Healthcare Information Technology Standards Panel (HITSP) interoperability standards where possible and we encourage vendors to do so also. These are the specifications that will be available on a publicly accessible Web site to be identified by CMS.

Prior to the beginning of EHR-based quality measures data submission for any 2009 PQRI reporting period, we will publish (through familiar mechanisms such as CMS e-mail lists and the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​pqri) information on the process eligible professionals will need to use to actually submit to the CMS-designated clinical data warehouse the 2009 PQRI quality measures data extracted from their practices' EHRs. The process will comply with applicable laws, regulations, and policies for privacy, data security, and interoperability—including but not limited to HIPAA requirements. The data submission process will also require that the persons (eligible professionals, other practice staff, or vendors acting on the professionals' behalf) who actually exchange data with the clinical warehouse system obtain and use an account (user identification and password) on a CMS-designated user authentication and identity management system. We will not charge 2008 or 2009 PQRI participants any processing or licensing fees to obtain or maintain the required user account. More details on the required account and how to obtain it will be published prior to January 1, 2009.

We cannot assume responsibility for the successful submission of data from eligible professionals' EHRs. Any eligible professional wishing to submit PQRI data extracted from an EHR should contact the EHR product's vendor to determine if the product has been updated to facilitate PQRI quality measures data submission. Such professionals should also begin attempting submission promptly after CMS announces in early 2009 that the clinical data warehouse is ready to accept 2009 PQRI quality measures data through the EHR mechanism in order to assure the professional has a reasonable period of time to work with his or her EHR and/or its vendor to correct any problems that may complicate or preclude successful quality measures data submission through that EHR.

To maintain compliance with applicable statutes and regulations, including but not limited to HIPAA, our program and its data system must comply with applicable requirements for requesting, processing, storing, and transmitting data. Eligible professionals that conduct HIPAA covered transactions also must maintain compliance with the HIPAA requirements.

We encourage the use of EHRs that have been certified by the CCHIT for data submission. CCHIT certified EHRs must meet specific standards for functionality, privacy, security and interoperability. More information about CCHIT certified EHRs can be found at http://www.cchit.org. However, we do recognize that there will be some eligible professionals who are using systems in specialties for which there are no appropriate CCHIT certified EHR systems, or who purchased and implemented their EHR prior to the availability of CCHIT certification. These programs must be capable of generating a medication list, generating a problem list and entering laboratory results as discrete searchable data elements to be able to be used for data submission under this reporting mechanism option.

We propose to utilize as criteria for satisfactory submission of data for quality measures for covered professional services by EHR-based submission for the 2009 PQRI the same criteria for successful reporting and the same reporting period that we propose for claims-based submission of data for individual 2009 PQRI measures. The reporting criteria for EHR-based submission of individual PQRI measures are summarized in Table 10.Start Printed Page 38565

Table 10.—Proposed 2009 PQRI EHR-Based Submission Reporting Options for Individual Measures

Reporting mechanismReporting criteriaReporting period
EHR-based reportingAt least 3 PQRI measures, or 1-2 measures if less than 3 apply to the eligible professional, for 80% of applicable Medicare Part B FFS patients of each eligible professionalJanuary 1, 2009-December 31, 2009.

We do not propose any option to report measures groups through EHR-based data submission on services furnished during 2009. Because EHR submission to CMS of data on quality measures is new to PQRI, for 2009 we propose to make available only the criteria applicable to reporting of individual PQRI measures. We invite comments on the proposed use of EHR-based data submission for PQRI.

3. Statutory Requirements for Measures Included in the 2009 PQRI

a. Overview of Requirements for the 2009 PQRI Quality Measures

Section 1848(k)(2)(B)(ii) of the Act, as added by the MMSEA, requires CMS to publish in the Federal Register no later than August 15, 2008, a proposed set of quality measures that would be appropriate for eligible professionals to use to submit data in 2009. In examining the statutory requirements of section 1848(k)(2)(B)(i) of the Act, as amended by the MMSEA, we believe that the requirement that measures be endorsed or adopted by a consensus organization applies to each measure that would be included in the measure set for submitting quality data and/or quality measures results and numerator and denominator data on the quality measures on covered professional services furnished during 2009. Likewise, the requirement for measures to have been developed using a consensus-based process (as identified by the Secretary) applies to each measure. By contrast, we do not interpret the provision requiring inclusion of measures submitted by a specialty to apply to each measure. Rather, we believe this requirement means that in endorsing or adopting measures, a consensus organization must include in its consideration process at least some measures submitted by one physician or organization representing a particular specialty.

We also believe that under sections 1848(k)(2)(B)(ii) through (iii) of the Act, as amended by the MMSEA, the Secretary is given broad discretion to determine which quality measures meet the statutory requirements and are appropriate for inclusion in the final set of measures for 2009. We do not interpret sections 1848(k)(2)(B) of the Act to require that all measures that meet the basic requirements of section 1848(k)(2)(B)(i) of the Act must be included in the 2009 set of quality measures.

We discuss in the following section the statutory requirements for consensus organizations and the use of a consensus-based process for developing quality measures as they relate to the requirements for the set of measures for 2009 in the context of other applicable Federal law and policy. More information on the measure development process in general is available on the CMS Web site at http://www.cms.hhs.gov/​QualityInitiativesGenInfo. The next section also discusses the policies used in proposing the initial set of quality measures for eligible professionals for use in 2009 and the policies we are proposing to apply in publishing the final set.

b. Consensus Organizations and Consensus-Based Process for Developing Measures

Consistent with the principle that measures used for 2009 be endorsed or adopted by a consensus organization and developed through the use of a consensus-based process, but without proposing that 2009 PQRI measures be limited to those meeting the definition of a voluntary consensus standard under the National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113) (NTTAA), we interpret “consensus-based process for developing measures” as used in section 1848(k) of the Act and amended by MMSEA to encompass not only the basic development work of the formal measure developer, but also to include the achievement of consensus among stakeholders in the health care system. Consensus should be achieved based on at least a level of openness, balance of interest, and consensus reflected in the structures and processes of the NQF and AQA as of the date of enactment of MIEA-TRHCA, MMSEA, and the date of this proposed rule. More information on the structures and processes of the NQF and AQA can be found on the organizations' respective Web sites at http://www.qualityforum.org and http://www.ambulatoryqualityalliance.org.

Based on the considerations discussed in the CY 2008 PFS proposed rule (72 FR 38196 through 38204), we are proposing to apply the following policies in identifying measures that meet the requirements for having used a consensus-based process for development and the requirement for having been endorsed or adopted by a consensus organization such as the NQF or AQA, and that are appropriate for inclusion as 2009 measures:

(1) We continue to interpret “a consensus-based development process” as meaning that in addition to the measure development, the measure has achieved adoption or endorsement by a consensus organization having at least the basic characteristics of the AQA as a consensus organization as of December 2006, when the MIEA-TRHCA incorporating reference to AQA was passed and signed into law. Those basic characteristics include a comparable level of openness, balance of interest, and consensus-based on voting participation. As discussed above in this section and further clarified in points (3) and (5), we do not interpret “consensus-based development process” per section 1848(k)(2)(B) of the Act to require that the consensus organization or process meet all of the criteria of the NTTAA and Office of Management and Budget Circular No. A-119 (OMB A-119) definition of a voluntary consensus standards body.

(2) “Voluntary consensus standard” is interpreted to mean a voluntary consensus standard that has been endorsed as such by a consensus organization that meets the requirements of the NTTAA, as implemented by OMB A-119, for a voluntary consensus standards body.

(3) Where there are available quality measures, and some of these measures meet the definition of “voluntary consensus standards” while others do not, those measures that meet the definition of “voluntary consensus standards” are preferred to other measures not meeting the requirements of the NTTAA.

(4) In view of the preference for voluntary consensus standards, if a measure has been specifically Start Printed Page 38566considered by NQF for possible endorsement, but NQF has declined to endorse it as of August 31, 2008, we are proposing not to include it in the final set of 2009 PQRI Quality Measures.

(5) Although the AQA, as organized in December 2006, does not meet the requirements of the NTTAA for a voluntary consensus standards body, it is a consensus organization per section 1848(k)(2)(B) of the Act. In circumstances where no voluntary consensus standard (NQF-endorsed) measure is available, a quality measure that has been adopted by the AQA (or another consensus organization with comparable consensus-organization characteristics) would meet the requirements under the Act and we propose that it would be appropriate for eligible professionals to use the measure to submit quality measures data and/or quality measures results and numerator and denominator data on quality measures, as appropriate.

(6) We are unaware of other consensus organizations that are comparable to the NQF in terms of meeting the formal requirements of the NTTAA or of organizations other than AQA that do not strictly meet the requirements of the National Institute of Standards and Technology Act (NISTA) as amended by the NTTAA but that feature the breadth of stakeholder involvement in the consensus process necessary to meet the intent of the Act. However, the Act does not limit consensus organizations to the NQF or the AQA, nor restrict the field of potential consensus organizations. The Act, thereby, maintains flexibility in potential sources of measure consensus review, which is, like having multiple sources of measure development, key to maintaining a robust marketplace for development and review of quality measures.

(7) The basic steps for developing measures applicable to physicians and other eligible professionals at the individual level may be carried out by a variety of different organizations. We do not interpret section 1848(k)(2)(B) of the Act to place special restrictions on the type or make up of the organizations carrying out this basic development of physician measures, such as restricting the initial development to physician-controlled organizations. Any such restriction would unduly limit the basic development of quality measures and the scope and utility of measures that may be considered for endorsement as voluntary consensus standards.

(8) The policies we are proposing are based on the preference as articulated in NTTAA and OMB A-119 for “voluntary consensus standards” to government standards, and a preference for quality measures that have achieved broad consensus among stakeholders in the health care system. However, the Act does not require that quality measures meet the NTTAA or OMB A-119 definition of “voluntary consensus standards” to be used for PQRI.

4. Proposed 2009 PQRI Quality Measures

The measures identified for use in PQRI in 2009 will be selected from those we propose in this rule and will be finalized as of the date the CY 2009 PFS final rule with comment period goes on display at the Office of the Federal Register. No changes (that is, additions or deletions of measures) will be made after publication of the CY 2009 PFS final rule with comment period. However, as was the case for 2008, we may make modifications or refinements, such as revisions to measures titles and code additions, corrections, or revisions to the detailed specifications for the 2009 measures until the beginning of the reporting period. Such specification modifications may be made through the last day preceding the beginning of the reporting period. The 2009 measures specifications will be available on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/​pqri when they are sufficiently developed or finalized. We are targeting finalization and publication of the detailed specifications for all 2009 PQRI measures on the PQRI section of the CMS Web site by November 15, 2008, and will in no event publish these specifications later than December 31, 2008. The detailed specifications will include instructions for reporting and identify the circumstances in which each measure is applicable.

For 2009, we are proposing that final PQRI quality measures will be selected from the 175 measures listed in Tables 11 through 14, which fall into 4 broad categories as set forth below in this section. The four categories are the following:

(1) 2008 PQRI Measures Proposed for 2009;

(2) Additional Proposed NQF-endorsed Measures;

(3) Additional Proposed AQA-adopted Measures; and

(4) Measures Proposed for 2009 Contingent Upon NQF Endorsement or AQA Adoption by August 31, 2008. Given that no legislation currently exists that authorizes us to make incentive payments for satisfactorily reporting data on quality measures on services furnished in 2009 or beyond, we invite comments on the advisability of expanding the number of PQRI quality measures beyond the 119 measures in the 2008 PQRI quality measure set.

In addition, we propose to carry forward three of the four measures groups we implemented in 2008. The measures proposed in eight of the nine total proposed measures groups are proposed to be available for reporting as individual measures or within measures groups and the measures in the ninth measures group (Back Pain) are proposed to be available for use in the 2009 PQRI solely within this proposed measures group. The measures proposed for inclusion in each of the proposed 2009 measures groups are listed in Tables 15 through 23.

a. Considerations for Identifying Proposed 2009 PQRI Quality Measures

We have applied several considerations in selecting measures to propose for the 2009 PQRI. We considered the following with respect to selecting the proposed measures for the 2009 PQRI:

(1) Measures that satisfy statutory criteria for selection. For purposes of selecting the proposed 2009 PQRI measures, we considered those measures that met the requirements of section 1848(k)(2) of the Act and other requirements discussed in section II.O.3.b. of this proposed rule, “Consensus Organizations and Consensus-Based Process for Developing Measures.”

(2) Measures that are functional, which is to say measures that can be technically implemented within the capacity of the CMS infrastructure for data collection, analysis, and calculation of reporting and performance rates. This leads to preference for measures that reflect readiness for implementation, such as those that are currently in the 2008 PQRI program or have been through testing. The purpose of measure testing is to reveal the measure's strengths and weaknesses so that the limitations can be addressed and the measure refined and strengthened prior to implementation. For new measures, preference is given to those which can be most efficiently implemented for data collection and submission. For some measures that are useful, but where data submission is not feasible through all otherwise available PQRI reporting mechanisms, a measure may be included for reporting solely through specific reporting mechanism(s) in which its submission is feasible.

(3) Measures that increase the scope of applicability of measures to services rendered to Medicare beneficiaries and expand opportunities for eligible Start Printed Page 38567professionals to participate in PQRI (for example, clinical topics such as skin care, where there are no 2008 PQRI measures). We seek to achieve broad ability to assess the quality of care furnished to Medicare beneficiaries, and ultimately to compare performance among professionals. We seek to increase the circumstances where eligible professionals have at least three measures applicable to their practice and measures that help expand the number of measures groups with at least 4 measures in a group.

(4) Measures that support CMS and HHS priorities for improved quality and efficiency of care for Medicare beneficiaries. These current and long term priority topics include: Prevention; chronic conditions; high cost and high volume conditions; elimination of health disparities; healthcare-associated infection and other conditions; improved care coordination; improved efficiency; improved patient and family experience of care; improved end-of-life/palliative care; effective management of acute and chronic episodes of care; reduced unwarranted geographic variation in quality and efficiency; and adoption and use of interoperable Health Information Technology (HIT).

(5) Measures that are in, or facilitate, alignment with other Medicare, Medicaid, and SCHIP programs in furtherance of overarching healthcare goals.

(6) Measures of various aspects of clinical quality including outcome measures, where appropriate and feasible, process measures, structural measures, efficiency measures and patient experience of care.

In developing the list of proposed 2009 PQRI quality measures, we also have reviewed and considered measure suggestions including comments received in response to the CY 2008 PFS proposed rule and final rule with comment period, and inquiries and suggestions received through less formal venues, such as an invitation for measures suggestions posted on the CMS Web site in March 2008.

We welcome comments on the implication of including or excluding any given measure or measures proposed herein in the final 2009 PQRI quality measure set and to our approach in selecting measures. We recognize that some commenters may also wish to recommend additional measures for inclusion in the 2009 PQRI measures that we have not herein proposed. While we welcome all constructive comments and suggestions, and may consider such recommended measures for inclusion in future measure sets for PQRI and/or other programs to which such measures may be relevant, we will not be able to consider such additional measures for inclusion in the 2009 measure set.

As discussed above, section 1848(k)(2)(B)(ii) of the Act requires that the measures proposed for use in the 2009 PQRI be published in the Federal Register not later than August 15, 2008. We also are required by other applicable statutes to provide opportunity for public comment on provisions of policy or regulation that are established via notice and comment rulemaking. Measures that were not included in this proposed rule for inclusion in the 2009 PQRI that are recommended to CMS via comments on this proposed rule have not been placed before the public with opportunity for the public to comment on them within the rulemaking process. Even when measures have been published in the Federal Register , but in other contexts and not specifically proposed as PQRI measures, such publication does not provide true opportunity for public comment on those measures' potential inclusion in PQRI. Thus, such additional measures recommended via comments on this proposed rule cannot be included in the 2009 measure set. Section 1848(k)(2)(B)(iii) of the Act requires that the measures be finalized via publication in the Federal Register not later than November 15, 2008. However, as discussed above, we will consider comments and recommendations for measures, which may not be applicable to the final set of 2009 PQRI measures, for purposes of identifying measures for possible use in future years' PQRI or other initiatives to which those measures may be pertinent.

b. Proposed Measures Selected From the 2008 PQRI Quality Measures Set

We are proposing to include in the 2009 PQRI quality measure set the 2008 PQRI measures identified in Table 11 contingent on NQF endorsement of each such included measure by August 31, 2008. All 2008 PQRI measures have been adopted by the AQA and have been considered or are currently under consideration for endorsement by the NQF. Those 2008 PQRI measures that have been specifically considered and declined for endorsement are not included in the list of proposed measures for 2009. The six 2008 PQRI measures not included in the proposed measures for 2009 for this reason are: Measure #74, Radiation Therapy Recommended for Invasive Breast Cancer Patients who have Undergone Breast Conserving Surgery; Measure #75, Prevention of Ventilator-Associated Pneumonia—Head Elevation; Measure #80, Plan of Care for ESRD Patients with Anemia; Measure #103, Review of Treatment Options in Patients with Clinically Localized Prostate Cancer; Measure #129, Universal Influenza Vaccine Screening and Counseling; and Measure #133 Screening for Cognitive Impairment. Also, in some instances, those 2008 PQRI measures intended or requested by the measure developer to be retired from PQRI and replaced by new AQA-adopted or NQF-endorsed measures are not included in the list of proposed measures for 2009. The two 2008 PQRI measures not proposed for this reason are: Measure #4, Screening for Future Fall Risk; and Measure #88, Hepatitis A and B Vaccination in Patients with HCV.

Table 11.—2008 PQRI Measures Proposed for 2009

Measure number and titleMeasure source
1. Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus*National Committee for Quality Assurance (NCQA).
2. Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus*NCQA.
3. Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus*NCQA.
5. Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD)*American Medical Association-Physician Consortium for Performance Improvement (AMA-PCPI).
6. Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD*AMA-PCPI.
7. Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI)*AMA-PCPI.
8. Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD)*AMA-PCPI.
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9. Major Depressive Disorder (MDD): Antidepressant Medication During Acute Phase for Patients with MDDNCQA.
10. Stroke and Stroke Rehabilitation: Computed Tomography (CT) or Magnetic Resonance Imaging (MRI) ReportsAMA-PCPI/NCQA.
11. Stroke and Stroke Rehabilitation: Carotid Imaging ReportsAMA-PCPI/NCQA.
12. Primary Open Angle Glaucoma (POAG): Optic Nerve EvaluationAMA-PCPI/NCQA.
14. Age-Related Macular Degeneration (AMD): Dilated Macular ExaminationAMA-PCPI/NCQA.
18. Diabetic Retinopathy: Documentation of Presence or Absence of Macular Edema and Level of Severity of RetinopathyAMA-PCPI/NCQA.
19. Diabetic Retinopathy: Communication with the Physician Managing Ongoing Diabetes CareAMA-PCPI/NCQA.
20. Perioperative Care: Timing of Antibiotic Prophylaxis—Ordering PhysicianAMA-PCPI/NCQA.
21. Perioperative Care: Selection of Prophylactic Antibiotic—First OR Second Generation CephalosporinAMA-PCPI/NCQA.
22. Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures)AMA-PCPI/NCQA.
23. Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis (When Indicated in ALL Patients)AMA-PCPI/NCQA.
24. Osteoporosis: Communication With the Physician Managing Ongoing Care Post-FractureAMA-PCPI/NCQA.
28. Aspirin at Arrival for Acute Myocardial Infarction (AMI)AMA-PCPI/NCQA.
30. Perioperative Care: Timing of Prophylactic Antibiotics—Administering PhysicianAMA-PCPI/NCQA.
31. Stroke and Stroke Rehabilitation: Deep Vein Thrombosis Prophylaxis (DVT) for Ischemic Stroke or Intracranial HemorrhageAMA-PCPI/NCQA.
32. Stroke and Stroke Rehabilitation: Discharged on Antiplatelet TherapyAMA-PCPI/NCQA.
33. Stroke and Stroke Rehabilitation: Anticoagulant Therapy Prescribed for Atrial Fibrillation at DischargeAMA-PCPI/NCQA.
34. Stroke and Stroke Rehabilitation: Tissue Plasminogen Activator (t-PA) ConsideredAMA-PCPI/NCQA.
35. Stroke and Stroke Rehabilitation: Screening for DysphagiaAMA-PCPI/NCQA.
36. Stroke and Stroke Rehabilitation: Consideration of Rehabilitation ServicesAMA-PCPI/NCQA.
39. Screening or Therapy for Osteoporosis for Women Aged 65 Years and OlderAMA-PCPI/NCQA.
40. Osteoporosis: Management Following FractureAMA-PCPI/NCQA.
41. Osteoporosis: Pharmacologic TherapyAMA-PCPI/NCQA.
43. Coronary Artery Bypass Graft (CABG): Use of Internal Mammary Artery (IMA) in Isolated CABG SurgeryThe Society of Thoracic Surgeons (STS).
44. Coronary Artery Bypass Graft (CABG): Preoperative Beta-Blocker in Patients with Isolated CABG SurgerySTS.
45. Perioperative Care: Discontinuation of Prophylactic Antibiotics (Cardiac Procedures)AMA-PCPI/NCQA.
46. Medication Reconciliation: Reconciliation After Discharge from an Inpatient FacilityAMA-PCPI/NCQA.
47. Advance Care PlanAMA-PCPI/NCQA.
48. Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and OlderAMA-PCPI/NCQA.
49. Urinary Incontinence: Characterization of Urinary Incontinence in Women Aged 65 Years and OlderAMA-PCPI/NCQA.
50. Urinary Incontinence: Plan of Care for Urinary Incontinence in Women Aged 65 Years and OlderAMA-PCPI/NCQA.
51. Chronic Obstructive Pulmonary Disease (COPD): Spirometry EvaluationAMA-PCPI.
52. Chronic Obstructive Pulmonary Disease (COPD): Bronchodilator TherapyAMA-PCPI.
53. Asthma: Pharmacologic TherapyAMA-PCPI.
54. 12-Lead Electrocardiogram (ECG) Performed for Non-Traumatic Chest PainAMA-PCPI/NCQA.
55. 12-Lead Electrocardiogram (ECG) Performed for SyncopeAMA-PCPI/NCQA.
56. Community-Acquired Pneumonia (CAP): Vital SignsAMA-PCPI/NCQA.
57. Community-Acquired Pneumonia (CAP): Assessment of Oxygen SaturationAMA-PCPI/NCQA.
58. Community-Acquired Pneumonia (CAP): Assessment of Mental StatusAMA-PCPI/NCQA.
59. Community-Acquired Pneumonia (CAP): Empiric AntibioticAMA-PCPI/NCQA.
64. Asthma: Asthma AssessmentAMA-PCPI.
65. Treatment for Children with Upper Respiratory Infection (URI)—Avoidance of Inappropriate UseNCQA.
66. Appropriate Testing for Children with PharyngitisNCQA.
67. Myelodysplastic Syndrome (MDS) and Acute Leukemias: Baseline Cytogenetic Testing Performed on Bone MarrowAMA-PCPI/American Society of Hematology (ASH).
68. Myelodysplastic Syndrome (MDS): Documentation of Iron Stores in Patients Receiving Erythropoietin TherapyAMA-PCPI/ASH.
69. Multiple Myeloma: Treatment With BisphosphonatesAMA-PCPI/ASH.
70. Chronic Lymphocytic Leukemia (CLL): Baseline Flow CytometryAMA-PCPI/ASH.
71. Breast Cancer: Hormonal Therapy for Stage IC-III estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast CancerAMAPCPI/American Society of Clinical Oncology (ASCO)/National Comprehensive Cancer Network (NCCN).
72. Colon Cancer: Chemotherapy for Stage III Colon Cancer PatientsAMA-PCPI/ASCO/NCCN.
73. Cancer: Plan for Chemotherapy DocumentedAMA-PCPI/ASCO.
76. Prevention of Catheter-Related Bloodstream Infections (CRBSI)—Central Venous Catheter Insertion ProtocolAMA-PCPI.
77. Gastroesophageal Reflux Disease (GERD): Assessment of GERD Symptoms in Patients Receiving Chronic Medication for GERDAMA-PCPI/NCQA.
78. End-Stage Renal Disease (ESRD): Vascular Access for Patients Undergoing HemodialysisAMA-PCPI.
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79. End-Stage Renal Disease (ESRD): Influenza Vaccination in Patients with ESRDAMA-PCPI.
81. End-Stage Renal Disease (ESRD): Plan of Care for Inadequate Hemodialysis in ESRD PatientsAMA-PCPI.
82. End-Stage Renal Disease (ESRD): Plan of Care for Inadequate Peritoneal DialysisAMA-PCPI.
83. Hepatitis C: Testing for Chronic Hepatitis C—Confirmation of Hepatitis C ViremiaAMA-PCPI.
84. Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating TreatmentAMA-PCPI.
85. Hepatitis C: HCV Genotype Testing Prior to TherapyAMA-PCPI.
86. Hepatitis C: Consideration for Antiviral Therapy in HCV PatientsAMA-PCPI.
87. Hepatitis C: HCV Ribonucleic Acid (RNA) Testing at Week 12 of TreatmentAMA-PCPI.
89. Hepatitis C: Counseling Regarding Risk of Alcohol ConsumptionAMA-PCPI.
90. Hepatitis C: Counseling of Patients Regarding Use of Contraception Prior to Starting Antiviral TherapyAMA-PCPI.
91. Acute Otitis Externa (AOE): Topical TherapyAMA-PCPI.
92. Acute Otitis Externa (AOE): Pain AssessmentAMA-PCPI.
93. Acute Otitis Externa (AOE): Systemic Antimicrobial Therapy—Avoidance of Inappropriate UseAMA-PCPI.
94. Otitis Media with Effusion (OME): Diagnostic Evaluation—Assessment of Tympanic Membrane MobilityAMA-PCPI.
95. Otitis Media with Effusion (OME): Hearing TestingAMA-PCPI.
96. Otitis Media with Effusion (OME): Antihistamines or Decongestants—Avoidance of Inappropriate UseAMA-PCPI.
97. Otitis Media with Effusion (OME): Systemic Antimicrobials—Avoidance of Inappropriate UseAMA-PCPI.
98. Otitis Media with Effusion (OME): Systemic Corticosteroids—Avoidance of Inappropriate UseAMA-PCPI.
99. Breast Cancer Resection Pathology Reporting: pT Category (Primary Tumor) and pN Category (Regional Lymph Nodes) with Histologic GradeAMA-PCPI/College of American Pathologists (CAP).
100. Colorectal Cancer Resection Pathology Reporting: pT Category (Primary Tumor) and pN Category (Regional Lymph Nodes) with Histologic GradeAMA-PCPI/CAP.
101. Prostate Cancer: Appropriate Initial EvaluationAMA-PCPI.
102. Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Prostate Cancer PatientsAMA-PCPI.
104. Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk Prostate Cancer PatientsAMA-PCPI.
105. Prostate Cancer: Three-Dimensional (3D) RadiotherapyAMA-PCPI.
106. Major Depressive Disorder (MDD): Diagnostic EvaluationAMA-PCPI.
107. Major Depressive Disorder (MDD): Suicide Risk AssessmentAMA-PCPI.
108. Rheumatoid Arthritis: Disease Modifying Anti-Rheumatic Drug TherapyNCQA.
109. Osteoarthritis (OA): Function and Pain AssessmentAMA-PCPI.
110. Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years OldAMA-PCPI.
111. Preventive Care and Screening: Pneumonia Vaccination for Patients 65 years and OlderNCQA.
112. Preventive Care and Screening: Screening Mammography*NCQA.
113. Preventive Care and Screening: Colorectal Cancer Screening*NCQA.
114. Preventive Care and Screening: Inquiry Regarding Tobacco UseAMA-PCPI.
115. Preventive Care and Screening: Advising Smokers to QuitNCQA.
116. Inappropriate Antibiotic Treatment for Adults with Acute Bronchitis—Avoidance of Inappropriate UseNCQA.
117. Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient*NCQA.
118. Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular Systolic Dysfunction (LSVD)*AMA-PCPI.
119. Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients*NCQA.
120. Chronic Kidney Disease (CKD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) TherapyAMA-PCPI.
121. Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile)AMA-PCPI.
122. Chronic Kidney Disease (CKD): Blood Pressure ManagementAMA-PCPI.
123. Chronic Kidney Disease (CKD): Plan of Care: Elevated Hemoglobin for Patients Receiving Erythropoiesis—Stimulating Agents (ESA)AMA-PCPI.
124. Health Information Technology (HIT): Adoption/Use of Electronic Medical Records (EMR)*Quality Insights of Pennsylvania (QIP)/CMS.
125. Health Information Technology (HIT): Adoption/Use of Medication e-Prescribing*QIP/CMS.
126. Diabetes Mellitus: Diabetic Foot and Ankle Care, Peripheral Neuropathy: Neurological EvaluationAmerican Podiatric Medical Association APMA.
127. Diabetes Mellitus: Diabetic Foot and Ankle Care, Ulcer Prevention: Evaluation of FootwearAPMA.
128. Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-UpQIP/CMS.
130. Documentation and Verification of Current Medications in the Medical RecordQIP/CMS.
131. Pain Assessment Prior to Initiation of Patient TreatmentQIP/CMS.
132. Patient Co-Development of Treatment Plan/Plan of CareQIP/CMS.
134. Screening for Clinical DepressionQIP/CMS.
* This measure is one fifteen measures for which data may potentially be accepted through the EHR mechanism in 2009.
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Please note that detailed measure specifications for 2008 PQRI measures may be updated or modified during the NQF endorsement process or for other reasons prior to 2009. The 2009 PQRI measure specifications for any given measure may, therefore, be different from specifications for the same measure used for 2008. Specifications for all 2009 measures, whether or not included in the 2008 PQRI program, must be obtained from the specifications document for 2009 measures, which will be available on the PQRI section of the CMS Web site on or before December 31, 2008.

c. Additional Proposed NQF-Endorsed Measures

We propose to include in the 2009 PQRI quality measure set a number of measures endorsed by the NQF that were not included in the 2008 PQRI quality measures, which are identified in Table 12, provided that the measure retains NQF endorsement as of August 31, 2008 and its detailed specifications are completed and ready for implementation in PQRI by October 15, 2008. Besides having NQF endorsement, the development of a measure is considered complete for the purposes of the 2009 PQRI if by October 15, 2008—(1) the final, detailed specifications for use in data collection for PQRI have been completed and are ready for implementation, and (2) all of the Category II Current Procedural Terminology (CPT II) codes required for the measure have been established and will be effective for CMS claims data submission on or before January 1, 2009.

Measures designated as T### in Table 12 indicate that the measure was included in the 2008 Measure Testing Process. For 2008, we implemented a measures testing process for eleven measures that had completed consensus adoption or endorsement but which were not included in the final measures for use in satisfying reporting criteria to earn an incentive under the 2008 PQRI. These 2008 test measures have completed measures and specification development, have, as of the publication of this proposed rule, been adopted by the AQA and/or endorsed by the NQF, and have available CPT II codes that permit claims-based data submission. For the 2008 Measure Testing Process, eligible professionals may report any of these test measures by submitting the quality data codes identified, and as directed, in the test measure specifications on Part B claims for dates of services from July 1, 2008 through September 30, 2008. No financial incentive is associated with the reporting of these test measures for 2008.

We plan to analyze the number of quality data codes submitted for each specific test measure and engage in other summary analysis for the measures. No feedback reports regarding reporting and performance rates will be provided to eligible professionals who report on these test measures in 2008. Information from the analysis of the data submitted on the 2008 measure testing process will be utilized in a preliminary evaluation of the measures for data submission. This information can be used to inform us of a measure's readiness for implementation in future CMS programs.

Table 12.—Additional Proposed NQF-Endorsed Measures

Measure titleMeasure source
T142 Osteoarthritis (OA): Assessment for Use of Anti-Inflammatory or Analgesic Over-the-Counter (OTC) MedicationsAMA-PCPI.
Use of Imaging Studies in Low Back PainNCQA.
Back Pain: Initial VisitNCQA.
Back Pain: Physical ExamNCQA.
Back Pain: Advice for Normal ActivitiesNCQA.
Back Pain: Advice Against Bed RestNCQA.
Foot ExamNCQA.
Selection of Antibiotic Administration for Cardiac Surgery PatientsSTS.
Prolonged IntubationSTS.
Deep Sternal Wound Infection RateSTS.
Stroke/Cerebrovascular AccidentSTS.
Post-operative Renal InsufficiencySTS.
Surgical Re-explorationSTS.
Anti-platelet Medications at DischargeSTS.
Beta Blockade at DischargeSTS.
Anti-lipid Treatment at DischargeSTS.
Hemodialysis Vascular Access Decision-making by Surgeons to Maximize Placement of Autogenous Arterial Venous FistulaSociety for Vascular Surgeons (SVS).

d. Additional Proposed AQA-Adopted Measures

As discussed in section II.O.3.b. of this proposed rule, Consensus Organizations and Consensus-Based Process for Developing Measures, in circumstances where no NQF-endorsed measure is available, a quality measure that has been adopted by the AQA would also meet the requirements of section 1848(k)(2)(B)(i) of the Act. As such, we propose to include in the final 2009 PQRI quality measure set measures adopted by AQA that have not yet been reviewed or endorsed by the NQF and that were not included in the final set of 2008 PQRI quality measures.

We propose to include in the 2009 PQRI quality measures each of the AQA-adopted measures identified in Table 13, provided that, as of August 31, 2008, the measure retains AQA adoption, has not been reviewed and declined for endorsement by NQF, and its detailed specifications are completed and ready for implementation in PQRI by October 15, 2008. Besides being adopted by the AQA, a measure is considered ready for implementation for the purposes of the 2009 PQRI if by October 15, 2008—(1) the final, detailed specifications for use of the measure in data collection for PQRI have been completed and are ready for implementation, and (2) all of the CPT II codes required for the measure have been established and will be effective for CMS claims data submission on or before January 1, 2009. As explained above in section II.O.4.c., “Additional Proposed NQF-Endorsed Measures,” measures designated as T### in Table 13 indicate that the measure is one of eleven measures included in the 2008 Measure Testing Process. As also explained above in Start Printed Page 38571section II.O.4.c., “Additional Proposed NQF-Endorsed Measures,” measures in the table below that are not designated as T### are not part of the 2008 PQRI measures testing activity. Such measures may have CPT II codes identified or specified, but those codes may or may not be recognized as active, valid codes in the Medicare claims-processing system.

Table 13.—Additional Proposed AQA-Adopted Measures

Measure titleMeasure source
T135 Chronic Kidney Disease (CKD): Influenza Immunization*AMA-PCPI.
T136 Melanoma: Follow-Up Aspects of CareAMA-PCPI/NCQA.
T137 Melanoma: Continuity of Care—Recall SystemAMA-PCPI/NCQA.
T138 Melanoma: Coordination of CareAMA-PCPI/NCQA.
T139 Cataracts: Comprehensive Preoperative Assessment for Cataract Surgery with Intraocular Lens (IOL) PlacementAMA-PCPI/NCQA.
T140 Age-Related Macular Degeneration (AMD): Counseling on Antioxidant SupplementAMA-PCPI/NCQA.
T141 Primary Open-Angle Glaucoma (POAG) : Reduction of Intraocular Pressure (IOP) by 15% OR Documentation of a Plan of CareAMA-PCPI/NCQA.
T143 Cancer Care: Medical and Radiation—Plan of Care for PainAMA-PCPI.
T144 Radiology: Computed Tomography (CT) Radiation Dose ReductionAMA-PCPI/NCQA.
T145 Radiology: Exposure Time Reported for Procedures Using FluoroscopyAMA-PCPI/NCQA.
Cancer Care: Pain Intensity QuantifiedAMA-PCPI.
Radiology: Inappropriate Use of “Probably Benign” Assessment Category in Mammography ScreeningAMA-PCPI.
Coronary Artery Disease (CAD): Lipid Profile in Patients with CADAMA-PCPI.
Chronic Kidney Disease (CKD): Referral for Arteriovenous (AV) FistulaAMA-PCPI.
Osteoporosis: Counseling for Vitamin D, Calcium Intake, and ExerciseAMA-PCPI.
Falls: Plan of CareAMA-PCPI.
Falls: Risk AssessmentAMA-PCPI.
Cancer Care: Radiation Dose Limits to Normal TissuesAMA-PCPI.
Hepatitis C: Hepatitis A VaccinationAMA-PCPI.
Hepatitis C: Hepatitis B VaccinationAMA-PCPI.
Cancer Care: Recording of Clinical Stage for Lung Cancer and Esophageal CancerSTS.
*This measure is one fifteen measures for which data may potentially be accepted through the EHR mechanism in 2009.

e. Additional Proposed Measures Contingent Upon NQF Endorsement or AQA Adoption by August 31, 2008

We are proposing to include in the 2009 PQRI measure set certain measures that are not yet NQF-endorsed or AQA-adopted, provided that the measure will be so endorsed or adopted as of August 31, 2008, and its detailed specifications are completed and ready for implementation in PQRI by October 15, 2008.

The measures we propose to include in the 2009 PQRI quality measure set are identified in Table 14. Besides being NQF-endorsed or AQA-adopted, a measure is considered ready for implementation for the purposes of the 2009 PQRI if by October 15, 2008—(1) the final, detailed specifications for use of the measure in data collection for PQRI have been completed and are ready for implementation, and (2) all of the CPT II codes required for the measure have been established and will be effective for CMS claims based submission on or before January 1, 2009.

Table 14.—Measures Proposed for 2009 Contingent Upon NQF Endorsement or AQA Adoption by August 31, 2008

Measure titleMeasure source
Nuclear Medicine: Correlation with Existing Imaging Studies for all Patients Undergoing Bone ScintigraphyAMA-PCPI.
Unhealthy Alcohol Use: Screening & Brief counselingAMA-PCPI.
Lipid ScreeningAMA-PCPI.
Pediatric ESRD: Adequacy of HemodialysisAMA-PCPI.
Pediatric ESRD: Influenza ImmunizationAMA-PCPI.
Rheumatoid Arthritis: Tuberculosis ScreeningAMA-PCPI.
Rheumatoid Arthritis: Appropriate Use of Biologic Disease Modifying Anti-Rheumatic Drugs (DMARDs)AMA-PCPI.
Rheumatoid Arthritis: Periodic Assessment of Disease ActivityAMA-PCPI.
Rheumatoid Arthritis: Functional Limitation AssessmentAMA-PCPI.
Rheumatoid Arthritis: Assessment and Classification of Disease PrognosisAMA-PCPI.
Rheumatoid Arthritis: Glucocorticoid ManagementAMA-PCPI
Endoscopy & Polyp Surveillance: Surveillance Colonoscopy Interval in Patients with History of Adenomatous PolypsAMA-PCPI.
Chronic Wound Care: Use of Compression System in Patients with Venous UlcersAMA-PCPI.
Chronic Wound Care: Offloading of Diabetic Foot UlcersAMA-PCPI.
HIV/AIDS: CD4+ Cell Count or CD4+ PercentageAMA-PCPI/NCQA.
HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP) ProphylaxisAMA-PCPI/NCQA.
HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS who are Prescribed Potent Antiretroviral TherapyAMA-PCPI/NCQA.
HIV/AIDS: HIV RNA Control After Six Months of Potent Antiretroviral TherapyAMA-PCPI/NCQA.
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Diabetes Mellitus: Diabetic Foot and Ankle Care, Peripheral Arterial Disease—Ankle Brachial IndexAPMA
Participation by Physician or Other Clinician in a Systematic Clinical Database Registry that includes Consensus Endorsed Quality MeasuresCMS
Elder Maltreatment Screen and Follow-up PlanQIP/CMS.
Chiropractic CareQIP/CMS.
Palliative Care: Dyspnea Screening and ManagementNCQA
Endarterectomy: Peri-operative Anti-platelet Therapy for Patients Undergoing Carotid Endarterectomy (CEA)SVS.
Endarterectomy: Postoperative Stroke or Death in Asymptomatic Patient Undergoing Carotid Endarterectomy (CEA)SVS
Endarterectomy: Use of Patch During Conventional EndarterectomySVS

f. Measures Proposed for Inclusion in 2009 Measures Groups

As discussed previously in this section, we propose to retain three of the four 2008 PQRI measures groups for the 2009 PQRI—(1) Diabetes Mellitus, (2) CKD, and (3) Preventive Care. We also are not proposing to retain all of the measures contained in those groups as 2009 PQRI measures. In some cases, we may propose different or additional measures for inclusion in a particular measures group for use in 2009, compared to 2008. Therefore, the composition of the Diabetes Mellitus, CKD, and Preventive Care measures groups may be different for the 2009 PQRI than for the 2008 PQRI. The measures proposed for inclusion in the 2009 Diabetes Mellitus, CKD, and Preventive Care measures groups are listed in Tables 15 through 17.

Some measures proposed for inclusion in a 2009 measures group are current 2008 PQRI measures. The title of each such measure is preceded with its PQRI Measure Number in Tables 15 through 23. The PQRI Measure Number is a unique identifier assigned by CMS to all measures in the PQRI measure set. Once a PQRI Measure Number is assigned to a measure, it will not be used again, even if the measure is subsequently retired from the PQRI measure set. Measures that are not preceded by a number have never been part of a PQRI measure set. As with measures group reporting in the 2008 PQRI, each eligible professional electing to report a group of measures for 2009 must report all measures in the group that are applicable to each patient or encounter to which the measures group applies at least up to the minimum number of patients required by applicable reporting criteria (described above in section II.O.2.b., Satisfactory Reporting of Data on Quality Measures and Reporting Periods for Measures Groups, Through Claims-Based Reporting and Registry-Based Reporting”).

Table 15.—Measures Proposed for 2009 Diabetes Mellitus Measures Group

Measure titleMeasure source
1. Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes MellitusNCQA.
2. Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes MellitusNCQA.
3. Diabetes Mellitus: High Blood Pressure Control in Diabetes MellitusNCQA.
117. Diabetes Mellitus: Dilated Eye Exam in Diabetic PatientNCQA.
119. Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic PatientsNCQA.
Foot ExamNCQA.

Table 16.—Measures Proposed for 2009 CKD Measures Group

Measure titleMeasure source
120. Chronic Kidney Disease (CKD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) TherapyAMA-PCPI.
121. Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile)AMA-PCPI.
122. Chronic Kidney Disease (CKD): Blood Pressure ManagementAMA-PCPI.
123. Chronic Kidney Disease (CKD): Plan of Care: Elevated Hemoglobin for Patients Receiving Erythropoiesis—Stimulating Agents (ESA)AMA-PCPI.

Table 17.—Measures Proposed for 2009 Preventive Care Measures Group

Measure titleMeasure source
39. Screening or Therapy for Osteoporosis for Women Aged 65 Years and OlderAMA-PCPI/NCQA.
48. Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and OlderAMA-PCPI/NCQA.
110. Preventive Care and Screening: Influenza Immunization for Patients = 50 Years OldAMA-PCPI.
111. Preventive Care and Screening: Pneumonia Vaccination for Patients 65 years and OlderNCQA.
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112. Preventive Care and Screening: Screening MammographyNCQA.
113. Preventive Care and Screening: Colorectal Cancer ScreeningNCQA.
114. Preventive Care and Screening: Inquiry Regarding Tobacco UseAMA-PCPI.
115. Preventive Care and Screening: Advising Smokers to QuitNCQA.
128. Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-UpQIP/CMS.

In addition to these three measures groups retained from 2008 with applicable modifications, there are six new measures groups proposed for the 2009 PQRI: (1) CABG Surgery; (2) CAD; (3) Rheumatoid Arthritis; (4) HIV/AIDS; (5) Perioperative Care; and (6) Back Pain. Each of the proposed measures groups contains at least four PQRI measures. Except for the Back Pain measures group, all measures included in a measures group can be reported individually or as part of a group. Measures in the Back Pain measures group will be reportable only as a part of this measures group.

Tables 18 through 23 list the measures proposed for inclusion in each of these new measures groups. The final composition of measures groups for the 2009 PQRI will be contingent upon the final measures for the 2009 PQRI and will be finalized in the CY 2009 PFS final rule with comment period. We invite comments on the measures proposed for inclusion in the measures groups proposed for 2009.

Table 18.—Measures Proposed for 2009 CABG Measures Group

Measure titleMeasure source
43. Coronary Artery Bypass Graft (CABG): Use of Internal Mammary Artery (IMA) in Isolated CABG SurgerySTS.
44. Coronary Artery Bypass Graft (CABG): Preoperative Beta-Blocker in Patients with Isolated CABG SurgerySTS.
Selection of Antibiotic Administration for Cardiac Surgery PatientsSTS.
Prolonged IntubationSTS.
Deep Sternal Wound Infection RateSTS.
Stroke/Cerebrovascular AccidentSTS.
Post-operative Renal InsufficiencySTS.
Surgical Re-explorationSTS.
Anti-platelet Medications at DischargeSTS.
Beta Blockade at DischargeSTS.
Anti-lipid Treatment at DischargeSTS.

Table 19.—Measures Proposed for 2009 CAD Measures Group

Measure titleMeasure source
6. Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CADAMA-PCPI.
7. Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI)AMA-PCPI.
18. Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular Systolic Dysfunction (LSVD)AMA-PCPI.
Lipid ScreeningAMA-PCPI.

Table 20.—Measures Proposed for 2009 Rheumatoid Arthritis Measures Group

Measure titleMeasure source
108. Rheumatoid Arthritis: Disease Modifying Anti-Rheumatic Drug TherapyAMA-PCPI.
Rheumatoid Arthritis: Tuberculosis ScreeningAMA-PCPI.
Rheumatoid Arthritis: Appropriate Use of Biologic Disease Modifying Anti-Rheumatic Drugs (DMARDs)AMA-PCPI.
Rheumatoid Arthritis: Periodic Assessment of Disease ActivityAMA-PCPI.
Rheumatoid Arthritis: Functional Limitation AssessmentAMA-PCPI.
Rheumatoid Arthritis: Assessment and Classification of Disease PrognosisAMA-PCPI.
Rheumatoid Arthritis: Glucocorticoid ManagementAMA-PCPI.

Table 21.—Measures Proposed for 2009 HIV/AIDS Measures Group

Measure titleMeasure source
HIV/AIDS: CD4+ Cell Count or CD4+ PercentageAMA-PCPI/NCQA.
HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP) ProphylaxisAMA-PCPI/NCQA.
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HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS who are Prescribed Potent Antiretroviral TherapyAMA-PCPI/NCQA.
HIV/AIDS: HIV RNA Control After Six Months of Potent Antiretroviral TherapyAMA-PCPI/NCQA.

Table 22.—Measures Proposed for 2009 Perioperative Care Measures Group

Measure titleMeasure source
20. Perioperative Care: Timing of Antibiotic Prophylaxis—Ordering PhysicianAMA-PCPI/NCQA.
21. Perioperative Care: Selection of Prophylactic Antibiotic—First OR Second Generation CephalosporinAMA-PCPI/NCQA.
22. Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures)AMA-PCPI/NCQA.
23. Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis (When Indicated in ALL Patients)AMA-PCPI/NCQA.

Table 23.—Measures Proposed for 2009 Back Pain Measures Group

Measure titleMeasure source
Use of Imaging Studies in Low Back PainNCQA.
Back Pain: Initial VisitNCQA.
Back Pain: Physical ExamNCQA.
Back Pain: Advice for Normal ActivitiesNCQA.
Back Pain: Advice Against Bed RestNCQA.

g. Quality Measures Reviewed and Not Proposed for 2009 PQRI

In developing the list of proposed 2009 PQRI quality measures, we have reviewed both formal and informal measure suggestions ranging from comments received in response to the CY 2008 PFS proposed rule and final rule with comment period to inquiries and suggestions received through less formal venues, including but not limited to an invitation posted on the CMS Web site in March 2008 for suggestions of measures for consideration for potential inclusion in PQRI. For those quality measures reviewed but not included in the list of proposed 2009 PQRI quality measures, we may consider including such measures in a 2009 Measure Testing Process similar to the 2008 Measure Testing Process described above.

Measures selected for inclusion in the 2009 Measure Testing Process will be limited to measures that have completed development, including having achieved consensus endorsement or adoption, and for which CPT II codes are available by January 1, 2009. The 2009 Measure Testing Process is planned for April 1, 2009 through June 30, 2009. We plan to analyze the number of quality data codes submitted for the specific test measures and engage in other summary analysis for the measures. No calculations will be made at the individual or physician level.

As discussed previously, no legislation exists that authorizes us to make incentive payments for satisfactorily reporting data on quality measures on services furnished in 2009. No financial incentive payment will be associated with the reporting of these test measures for 2009. Information from this analysis of the data submitted on measures identified for the 2009 Measure Testing Process will be utilized in a preliminary evaluation of the measures. This information can be used to inform us of a measure's readiness for implementation in future CMS programs.

5. Summary of Program Considerations for the PQRI in 2009 and Beyond

In summary, we have invited public comment on the following areas for the 2009 PQRI through this proposed rule:

  • Implications of including or excluding any given measure from the set of proposed 2009 quality measures as listed in Tables 11, 12, 13, and 14. Suggestions to include measures for the 2009 PQRI other than those we have proposed for inclusion will not be considered for 2009. However, any such suggestions may be considered in future years for use in PQRI or for other initiatives to which those measures may be pertinent.
  • The new measures groups proposed for 2009 including suggestions for other measures groups based on individual measures included in the proposed 2009 PQRI measures set.
  • The proposed use of the consecutive patient reporting criteria for measures groups.
  • The proposed use of 30 consecutive patients as the required sample under the consecutive patient reporting criteria during the full-year 2009 reporting period.
  • The proposed options and planned use of registries for registry-based quality measures results and numerator and denominator data on quality measures data reporting to PQRI in 2009.
  • The advisability of expanding the number of PQRI quality measures beyond the 119 measures in the 2008 PQRI quality measures set given that there is no specific authorization for an incentive payment for the 2009 PQRI and beyond.

6. Uses of PQRI Information

On August 22, 2006, President Bush issued an Executive Order, “Promoting Quality and Efficient Health Care in Federal Government Administered or Sponsored Health Care Programs,” which requires the Federal Government, to the extent permitted by law, to—

  • Ensure that Federal health care programs promote quality and efficient delivery of health care using interoperable health information technology, transparency regarding health care quality and price, and better incentives for program beneficiaries, enrollees, and providers.Start Printed Page 38575
  • Make relevant information available to these beneficiaries, enrollees, and providers in a readily useable manner and in collaboration with similar initiatives in the private sector and non-Federal public sector.

To support this mandate, the Secretary has embraced “four cornerstones” for building a value-driven health care system:

(1) Connecting the health system through the use of interoperable health information technology;

(2) Measuring and publishing information about quality;

(3) Measuring and publishing information about price; and

(4) Using incentives to promote high-quality and cost-effective care (see http://www.hss.gov/​valuedriven).

Building on these four cornerstones, we have articulated a vision for health care—the right care, for every person, every time. To achieve this vision, we seek to implement policies that will promote the delivery of care that is safe, effective, timely, patient-centered, efficient, and equitable. In working to achieve this vision, and in support of the four cornerstones, we have launched an initiative, of which PQRI is a part, directed toward measuring the quality of care for services provided to Medicare beneficiaries and to make such information publicly available. We currently have Web pages at http://www.medicare.gov for the public reporting of quality data for hospitals (Hospital Compare), dialysis facilities (Dialysis Facility Compare), nursing homes (Nursing Home Compare) and home health facilities (Home Health Compare). On these Web pages, we make performance results on standardized quality measures for the various facilities publicly available. This information is used by the facilities for their own quality improvement purposes, by the public to make informed healthcare decisions, and, in some cases, for our payment incentive programs that are designed to promote the delivery of high quality services and to ensure high value for Medicare beneficiaries. To date, we have not made information on the quality of care for services provided by physicians to Medicare beneficiaries publicly available. However, we are contemplating a similar “Physician Compare” Web site that would enhance the information found on the Physician Directory (see http://www.medicare.gov/​Physician/​Home.asp?​bhcp=​1) to include information about the quality of care and value for services provided by professionals to Medicare beneficiaries in the future. There are a variety of data sources that could provide quality of care, value, and other information for services provided by professionals to Medicare beneficiaries that could be used to develop a Physician Compare Web site.

With respect to the PQRI, the data on PQRI quality measures is submitted at the individual (that is, NPI) level by physicians and other eligible professionals. Such data could be the basis for public reporting of quality measurement performance results at either the individual or group (that is, TIN) level. Our plans with respect to public reporting of PQRI data have been a subject of public interest. In response to public comments received on the issue of public reporting of PQRI data, we stated in the CY 2008 PFS final rule with comment period (72 FR 66337) that “[w]e do not at this time plan to make results publicly available in a format or with content that would enable identification of individual professionals or specific practices' specific reporting or performance results. We have not made a determination as to the most appropriate venue(s) for making PQRI evaluation information available to the public.”

Nevertheless, in 2007, we published a notice of a new system of records (SOR) under the Privacy Act entitled, “Performance Measurement and Reporting System,” System No. 09-70-0584 (72 FR 52133 through 52140) for the public release of PQRI data. Under the SOR we established a routine use that would enable us to make individual physician-level performance measurement results information available to Medicare beneficiaries, by posting it on a public Web site and by various other methods of data dissemination, which may include performance information that is reported by physicians pursuant to PQRI.

Although not required by the statute authorizing PQRI we have, from the beginning, regarded providing physicians and other eligible professionals an opportunity to review their data on reporting rates and performance rates on PQRI quality measures as an important aspect of the program. This derives from the fundamental interest in quality improvement that underlies the program. Thus, we included a confidential feedback mechanism for physicians as part of the Physician Voluntary Reporting Program which preceded PQRI. We extended and expanded the confidential feedback mechanism for the 2007 PQRI. These feedback reports are scheduled to be available starting in mid-July 2008 at the time the incentive payments for 2007 PQRI are made. The feedback reports will not only assist eligible professionals in quality improvement but will also provide us with an important source of input for evaluation of PQRI measures, the performance calculation methods, and the PQRI program. For the 2008 PQRI data that is currently being submitted, we will continue to provide a confidential feedback process. For the 2008 PQRI data, consistent with information that we have previously provided, we do not intend to publicly report performance results at the individual or group level; but we may publicly report the names of eligible professionals who report and/or satisfactorily report quality data under the 2008 PQRI.

As part of our broader goal to measure and make the quality of care for services provided to Medicare beneficiaries publicly available and in support of the four cornerstones, we anticipate making information on the quality of care for services provided by professionals to Medicare beneficiaries publicly available in the future. In future years, we will also explore using information collected from the PQRI, including performance results, for this purpose. To assist us in determining the most appropriate uses of PQRI data, we invite comments on the following issues:

  • Ways to effectively engage eligible professionals, consumers, and other stakeholders in the development and evaluation of a valid and reliable public reporting system related to professional services provided to Medicare beneficiaries.
  • The venue and format for how PQRI information should be made publicly available.
  • Types of data that would be most useful and meaningful to consumers (for example, reporting results and/or performance results).
  • Types of data that would be most useful and meaningful for professionals.
  • Level at which PQRI information should be publicly reported (that is, at the individual professional, or NPI, level or the group, or TIN, level).
  • Types of PQRI measures and/or measures groups that would be most useful and meaningful to consumers.
  • Types of PQRI measures and/or measures groups that would be most useful and meaningful to professionals.
  • Review of the data to be publicly reported by eligible professionals.

P. Discussion of Chiropractic Services Demonstration

[If you choose to comment on issues in this section, please include the caption “CHIROPRACTIC SERVICES Start Printed Page 38576DEMONSTRATION” at the beginning of your comments.]

In the CY 2006, CY 2007, and CY 2008 PFS final rules with comment period (70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we included a discussion of the 2-year chiropractic services demonstration that ended on March 31, 2007. This demonstration was required by section 651 of the MMA to evaluate the feasibility and advisability of covering chiropractic services under Medicare. These services extended beyond the current coverage for manipulation to care for neuromusculoskeletal conditions typical among eligible beneficiaries, and covered diagnostic and other services that a chiropractor was legally authorized to perform by the State or jurisdiction in which the treatment was provided. The demonstration was conducted in four sites, two rural and two urban. The demonstration was required to be budget neutral as the statute requires the Secretary to ensure that the aggregate payment made under the Medicare program does not exceed the amount which would be paid in the absence of the demonstration.

Ensuring budget neutrality requires that the Secretary develop a strategy for recouping funds should the demonstration result in costs higher than those that would occur in the absence of the demonstration. As we stated in the CY 2006 and CY 2007 PFS final rules with comment period, we would make adjustments to the chiropractor fees under the Medicare PFS to recover aggregate payments under the demonstration in excess of the amount estimated to yield budget neutrality. We will assess budget neutrality by determining the change in costs based on a pre- and post-comparison of aggregate payments and the rate of change for specific diagnoses that were treated by chiropractors and physicians in the demonstration sites and control sites. Because the aggregate payments under the expanded chiropractor services may have an impact on other Medicare expenditures, we will not limit our analysis to reviewing only chiropractor claims.

Any needed reduction to chiropractor fees under the PFS would be made in the CY 2010 and CY 2011 physician fee schedules as it will take approximately 2 years after the demonstration ends to complete the claims analysis. If we determine that the adjustment for BN is greater than 2 percent of spending for the chiropractor fee schedule codes (comprised of the 3 currently covered CPT codes 98940, 98941, and 98942), we would implement the adjustment over a 2-year period. However, if the adjustment is less than 2 percent of spending under the chiropractor fee schedule codes, we would implement the adjustment over a 1-year period. We intend to provide a detailed analysis of budget neutrality and the proposed offset during the CY 2010 PFS rulemaking process.

Q. Educational Requirements for Nurse Practitioners and Clinical Nurse Specialists

[If you choose to comment on issues in this section, please include the caption “EDUCATIONAL REQUIREMENTS FOR NURSE PRACTITIONERS AND CLINICAL NURSE SPECIALISTS” at the beginning of your comments.]

We are proposing a technical correction to the nurse practitioner (NP) qualifications at § 410.75(b) to require that, in order for NP services furnished by an individual to be covered by Medicare, a NP who obtains Medicare billing privileges as a NP for the first time ever on or after January 1, 2003, must be a registered professional nurse who is authorized by State law to practice as a NP, must be nationally certified as a NP, and must have a master's degree in nursing. The current NP qualification standards under these Federal regulations include progressive requirements, but not entirely date specific. The absence of a date specification for each of the qualification standards could allow nurses who have never been enrolled under Medicare and obtained Medicare billing privileges as a NP an opportunity to enroll as a NP after January 1, 2003 without a master's degree in nursing. Such an enrollment would be contrary to our policy, as explained further below.

We discussed the NP qualifications and our intent to move progressively toward requiring a master's degree in nursing as the standard for all new NPs enrolling and participating under the Medicare Part B benefit for NPs in our July 22, 1999 proposed rule (64 FR 39625) and the subsequent final rule (64 FR 59411). We stated under this final rule that, “the requirement that a NP applying for a Medicare billing number for the first time must have a master's degree in nursing as of January 1, 2003, will provide NPs without a master's degree with enough time to earn such a degree. We believe it is reasonable to require ultimately, a master's degree as the minimum educational level for new practitioners independently treating beneficiaries and directly billing the Medicare program.”

We are also proposing to amend the requirement in our regulations at § 410.75(b)(4) that NPs must have a master's degree in nursing in order to also recognize a Doctor of Nursing Practice (DNP) doctoral degree (which can be obtained without a master's degree in nursing). In addition, we are proposing to amend a similar qualification standard for clinical nurse specialists (CNSs) at § 410.76(b)(2) that requires advanced practice nurses (APNs) to have a master's degree in a defined clinical area of nursing from an accredited educational institution in order to allow CNSs, alternatively, to meet these requirements with a DNP doctoral degree.

We are aware that some educational institutions are offering programs to prospective NPs and CNSs that allow students who complete these nursing education programs to move from a baccalaureate degree in nursing directly to the doctoral degree in nursing where they earn a terminal clinical doctoral degree titled the DNP. Therefore, some APNs who earn the DNP degree do not receive a master's degree in nursing even though they will have met all of the educational requirements for a master's degree in nursing, in addition to the preparation that merits them the DNP degree. We note that an April 2, 2008 article in the Wall Street Journal stated that by the year 2015, the American Association of Colleges of Nursing aims to make the doctoral degree the standard for all new APNs. We believe that it is logical for Medicare Part B to recognize APNs with more extensive education and training. Therefore, we propose to permit qualified APNs with the DNP degree to enroll and receive Medicare Part B payment as NPs and CNSs.

R. Portable X-Ray Issue

[If you choose to comment on issues in this section, please include the caption “PORTABLE X-RAY ISSUE” at the beginning of your comments.]

The Conditions for Coverage (CfC) for Portable X-Ray services are authorized by section 1861(s)(3) of the Act and were adopted January 1969. These requirements have, for the most part, been subjected to minimal modification over the years.

The current requirements in our regulations at § 486.104 (Qualifications, orientation, and health of technical personnel) are inconsistent with existing professional standards of practice and training requirements. Specifically, the current qualification requirements for x-ray personnel in § 486.104(a)(1), (a)(2), and (a)(3) rely on credentialing activities from the Council on Education of the American Medical Association (CEAMA) and the American Start Printed Page 38577Osteopathic Association (AOA) which no longer approve formal training programs for x-ray technology and have not done so since 1992.

Beginning in 1976, the Joint Review Committee on Education in Radiologic Technology (JRCERT) worked in collaboration with the Committee on Allied Health Education and Accreditation (CAHEA) of the American Medical Association (AMA) to accredit programs. However, the CAHEA was dissolved by the AMA in 1992 and JRCERT subsequently sought approval from the United States Department of Education (USDE) to approve and accredit x-ray technology programs. Approval was granted to JRCERT by the USDE in 1992. JRCERT is now the only accrediting entity that approves these programs; however, JCERT is not a recognized accrediting body under the current regulation at § 486.104.

Before an x-ray technology program can be approved by JRCERT, the American Society of Radiologic Technologists (ASRT) must approve the program's curriculum. Prior to 1992, the curriculum for x-ray technology programs was based on 24 months, which is reflected in the current regulations at § 486.104. ASRT no longer bases its evaluation on program duration, but rather on program requirements. Thus, a program could be less than 24 months in duration and still be eligible for JRCERT approval and accreditation if its curriculum was ASRT approved. Because § 486.104(a)(1) reflects the outdated 24-month standard, some x-ray technicians who actually meet community standards for education and training do not meet Medicare standards as they stand.

Since the current Medicare requirements in § 486.104(a)(1) are outdated, referring organizations that no longer perform the stated function and requiring a specific duration of training that is no longer the community standard, we are proposing to revise the regulation to reflect the current requirements. References to schools approved by the CEAMA or the AOA will be deleted, and approval by JRCERT will be added. In addition, we propose that the requirement for formal training of not less than 24 months in duration be deleted, since this criterion is not part of the criteria established by entities that evaluate and approve x-ray technology programs since 1993.

We propose to retain the 24 month criterion in § 486.104(a)(2) and (a)(3) (affecting persons obtaining training prior to July 1, 1966) as program duration was one determinant of program quality at that time. To address those who completed their training after July 1, 1966 but before January 1, 1993, the time period during which CEAMA and the AOA were approving training programs, we propose the addition of a new paragraph § 486.104(a)(4) to this section. This addition will reflect the standards for credentialing activities during this time frame.

S. Expiring Provisions and Related Discussions

[If you choose to comment on issues in this section, please include the caption “EXPIRING PROVISIONS” at the beginning of your comments.]

1. Physician Fee Schedule Update

As discussed in the CY 2008 PFS final rule with comment period, the update formula for payment for services under the PFS resulted in a reduction of 10.1 percent in the conversion factor (CF) for CY 2008. Section 101 of the MMSEA provides for a 0.5 percent increase in the CF for the period beginning on January 1, 2008 and ending on June 30, 2008, resulting in a CF of $38.0870. For the remaining portion of 2008 (July 1 through December 31, 2008), under current law the CF will reflect the −10.1 percent update, and the CF will be $34.0682, as published in the CY 2008 PFS final rule with comment period (72 FR 66222). This represents a 10.6 percent reduction from the payments in the first half of 2008. Section 101 of the MMSEA also modifies the Physician Quality Reporting System for CY 2008 and 2009.

2. Medicare Incentive Payment for Physician Scarcity Areas

Section 1833(u) of the Act provides for a 5 percent incentive payment to physicians furnishing services in physician scarcity areas (PSAs) for physicians' services furnished on or after January 1, 2005, and before January 1, 2008. In the CY 2008 PFS final rule with comment period (72 FR 66293), we provided notification that these incentive payments authorized by section 1833(u) of the Act would no longer be made for services furnished on or after January 1, 2008. Section 102 of the MMSEA provides for an extension of these bonus payments through June 30, 2008. During this 6-month extension period, the MMSEA required that we use the primary care scarcity counties and specialty care scarcity counties that we were using for purposed of these incentive payments on December 31, 2007.

Because under current law the provisions of section 1833(u) of the Act do not apply to services furnished after June 30, 2008, we are providing notice that these 5 percent incentive payments will no longer be made for services furnished on or after July 1, 2008.

3. Extension of Floor for Work GPCI

As discussed in the CY 2008 PFS final rule with comment period (72 FR 66243), section 102 of the MIEA-TRHCA requires application of a 1.000 floor on the work GPCI in fee schedule areas where the work GPCI is less than 1.000. This provision concerning the work GPCI was set to expire on December 31, 2007. Section 103 of the MMSEA provides for an extension of this 1.000 floor on the work GPCI through June 30, 2008. Under current law, the 1.000 floor on the work GPCI will no longer be used to calculate payment for services furnished on after July 1, 2008.

4. Extension of Treatment of Certain Physician Pathology Services Under Medicare

The technical component (TC) of physician pathology services refers to the preparation of the slide involving tissue or cells that a pathologist will interpret. In contrast, the pathologist's interpretation of the slide is the professional component (PC) service. If the PC service is furnished by the hospital pathologist for a hospital patient, it is separately billable. If the independent laboratory's pathologist furnishes the PC service, it is usually billed with the TC service as a combined service.

Section 542 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA) established the billing exception that allowed certain qualified independent laboratories to continue to bill the carrier under the PFS for the TC of physician pathology services furnished to a hospital patient. In order to bill in this manner, an independent laboratory must have had an arrangement with a hospital in effect as of July 22, 1999 under which the laboratory furnished the TC physician pathology service to a hospital patient and submitted claims to the carrier for payment. Through subsequent legislation (that is, section 732 of the MMA and section 104 of the MIEA-TRHCA), this provision had been extended through 2007. If the independent laboratory did not qualify under this provision, then it must continue to bill the hospital and receive payment from that hospital. As a result of this provision, the TC of physician pathology services could be reimbursed differently depending on the status of the laboratory.

In the CY 2008 PFS final rule with comment period (72 FR 66355), Start Printed Page 38578consistent with section 104 of the MIEA-TRHCA, we amended § 415.130(d) to reflect that for services furnished after December 31, 2007, an independent laboratory may not bill the carrier for the technical component of physician pathology services furnished to a hospital inpatient or outpatient. Section 104 of the MMSEA allows independent laboratories to continue to bill the carrier for the TC of physician pathology services for hospital inpatients or outpatients through June 30, 2008. We are amending § 415.130(d) to reflect this change.

5. Therapy Cap and Extension of Exceptions Process

Section 1833(g)(1) of the Act applies an annual per beneficiary combined cap beginning January 1, 1999, on outpatient physical therapy and speech-language pathology services, and a similar separate cap on outpatient occupational therapy services. These caps apply to expenses incurred for the respective therapy services under Medicare Part B, with the exception of therapy services furnished as outpatient hospital services.

As discussed in the CY 2008 PFS final rule with comment period (72 FR 66356), an exceptions process for the therapy caps, which was authorized by section 5107 of the DRA, was extended through December 31, 2007 by section 201 of the MIEA-TRHCA. Section 105 of the MMSEA provides for a further extension of this exceptions process through the first 6 months of CY 2008 (that is, on or before June 30, 2008).

In accordance with the statute, we will continue to implement therapy caps, but the exceptions process will no longer be applicable, for services furnished beginning on July 1, 2008. The dollar amount of the therapy caps in CY 2009 will be the CY 2008 rate ($1,810) increased by the percentage increase in the MEI as required by section 1833(g)(2) of the Act.

6. Bonus Payment for Long Ambulance Transports

Section 414 of the MMA added section 1834(l)(11) of the Act which requires that, “[i]n the case of ground ambulance services furnished on or after July 1, 2004, and before January 1, 2009, regardless of where the transportation originates, the fee schedule established under this subsection shall provide that, with respect to the payment rate for mileage for a trip above 50 miles the per mile rate otherwise established shall be increased by 1/4 of the payment per mile otherwise applicable to miles in excess of 50 miles in such trip.” Section 1834(l)(11) of the Act was implemented in § 414.610(c)(7), which states that for services furnished during the period July 1, 2004 through December 31, 2008, each loaded ambulance mile greater than 50 miles (that is, 51 miles and greater) for ambulance transports originating in either urban areas or in rural areas is paid at a rate that is 25 percent higher than otherwise would be applicable under § 414.610.

Because the provisions of section 1834(l)(11) of the Act do not apply to services furnished on or after January 1, 2009, we are providing a reminder that the 25 percent bonus payments provided under section 1834(l)(11) of the Act, and under § 414.610(c)(7), will no longer be paid for services furnished on or after January 1, 2009.

7. Clinical Laboratory Fee Schedule (CLFS) Update Factor

Outpatient clinical laboratory services are paid under the clinical laboratory fee schedule (CLFS) in accordance with section 1833(h) of the Act. Under section 1833 (a)(1)(D) of the Act, payment is the lesser of the following: The amount billed; the local fee for a geographic area; or a national limit. In accordance with the statute, the national limits are set at a percent of the median for all local fee schedule amounts for each laboratory test code. While section 1833(h)(2)(A)(i) of the Act specifies that the fees are to be updated for inflation based on the Consumer Price Index for All Urban Consumers (CPI-U), the Congress modified the update to zero percent for CY 2004 through CY 2008. Beginning January 1, 2009, this freeze expires. As a result, for CY 2009, the CLFS will be updated by the percentage increase in the CPI-U using the 12-month period ending with June of the previous year.

At this time, the CPI-U for the 12-month period ending June 30, 2008 is not available. We do not undertake notice and comment rulemaking to announce the CLFS update factor because the statute specifies the methods of computation of annual inflation updates, and we have no discretion in that matter. Thus, we merely apply the update methods specified in the statute. We will announce the CLFS update factor via CMS instructions by including a section in our annual CLFS Change Request instruction and by including the information on the CMS Clinical Laboratory Fee Schedule Web site in approximately November of each year so that the industry can remain aware of future CLFS update factors.

T. Other Issues

1. Physician Certification (G0180) and Recertification (G0179) for Medicare-Covered Home Health Services Under a Home Health Plan of Care (POC) in the Home Health Prospective Payment System (HH PPS)

[If you choose to comment on issues in this section, please include the caption “OTHER ISSUES—PHYSICIAN CERTIFICATION/RECERTIFICATION” at the beginning of your comments.]

a. Background

Under the home health benefit, the statute requires that the physician review the plan of care (POC) for the home health eligible beneficiary. Sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act require that a plan for furnishing home health services to such individuals has been established and that plan is periodically reviewed by a physician for Medicare payment to be made. Section 409.43(e) more specifically states that a home health POC must be reviewed, signed, and dated by the physician who reviews the POC (as specified in § 409.42(b)) in consultation with agency clinical staff at least every 60 days (or more frequently as specified in § 409.43(e)(i) through (iii)). Additionally, § 424.22(b) states that a recertification is required at least every 60 days, preferably at the time the plan is reviewed, and must be signed by the physician who reviews the home health POC. These schedules, for the review of the POC and the recertification, coordinate well with the 60-day episode payment unit under the home health prospective payment system (HH PPS). In implementing the statutory requirement as well as these regulations, we believed that these requirements would encourage enhanced physician involvement in the home health POC and patient management, and would include more direct “in-person” patient encounters (as logistically feasible).

Currently, physicians are paid for both the certification and recertification of the home health POC under HCPCS codes G0180 and G0179, respectively. The basis for the payment amounts of these physicians' services is the relative resources in RVUs required to furnish these services. We believe physician involvement is key to maintaining quality of care under the HH PPS and payment for the required physician certification and recertification of home health POCs reflects this.

In the HH PPS proposed rule published in the October 28, 1999 Federal Register (64 FR 58196), we had also proposed to require the physician Start Printed Page 38579to certify the appropriate case-mix weight/home health resource group (HHRG) as part of the required physician certification of the plan of care. This reflected our belief that the physician should be more involved in the decentralized delivery of home health services. However, in the final rule published in the July 3, 2000 Federal Register (65 FR 41163), we did not finalize that proposal and decided to focus our attention on physician certification and education in order to better involve the physician in the delivery of home health services.

b. Solicitation of Comments

It has come to our attention that there exists a vast array of differing levels of physician involvement in the certification and recertification of home health POCs. Although some physicians do have direct contact with their patients in the delivery of these services, we believe a significant number of physicians provide only a brief, albeit thorough, review of the home health POC, without any direct contact with the patient. Still, other physicians are involved to an even lesser degree in their review of the home health POC and/or direct contact with the patient in the delivery of these services. We continue to believe that the active involvement of the physician including “in-person” contact with the patient in the certification, recertification, and review of the home health POC is essential for delivery of high quality home health services to Medicare beneficiaries.

To that end, we are exploring a couple of different options. First, we are considering a review of the RVUs associated with the certification (G0180) and recertification (G0179) of the home health POC. As a result of that review, the payment amounts to physicians could be reduced based on a more accurate determination of the actual RVUs required to provide these services. Because we continue to believe that the active involvement of the physician is important in delivering these home health services, reducing the payment for these services may not encourage physicians to spend additional time reviewing and modifying beneficiaries' home health plans of care to assure that the plan addresses all of the beneficiaries' needs. We are also considering proposing new requirements to ensure more active physician involvement in the certification and recertification of the home health patient's POC, for example, a requirement for “direct” patient contact with the physician. We are specifically soliciting comments on these policy options in an effort to gather more information on this issue, and any other possible underlying issues that may exist.

2. Prohibition Concerning Providers of Sleep Tests

[If you choose to comment on issues in this section, please include the caption “OTHER ISSUES-SLEEP TESTS” at the beginning of your comments.]

a. Background

Obstructive Sleep Apnea Hypopnea Syndrome, also known as Obstructive Sleep Apnea (OSA), is the most common of the three different forms of sleep apnea (obstructive, central, or mixed). OSA is associated with significant morbidity and mortality, including excessive daytime sleepiness, concentration difficulty, cardiovascular disease, and stroke. Untreated OSA is associated with a ten-fold increase in the risk of motor vehicle accidents.

Diagnostic tests for OSA are based on detection of abnormal sleep patterns using sleep test devices that record a variety of cardiorespiratory and neurophysiologic signals during sleep time called polysomnography (PSG). Historically, such sleep tests have been furnished in a sleep laboratory attended by a sleep technologist. More recently, portable sleep test devices have been developed for the diagnosis of OSA in the home (either attended or unattended). Sleep test devices are classified into four types based primarily on the extent of sleep pattern data recorded. The most comprehensive is designated Type I: attended in-facility PSG. The remaining three types concern portable sleep test devices developed for the diagnosis of OSA and used both in attended and unattended settings, often in the home. Type II devices have a minimum of 7 monitored channels; for example, electroencephalogram (EEG), electro-oculogram (EOG), electromyogram (EMG), electrocardiogram (EKG)-heart rate, airflow, respiratory effort, and oxygen saturation. Type III devices have a minimum of 4 monitored channels including ventilation or airflow, at least two channels of respiratory movement or respiratory movement and airflow, heart rate or EKG, and oxygen saturation. Type IV devices do not meet the technical criteria defining the other types, and many measure only one or two parameters, for example, oxygen saturation or airflow, but some Type IV devices measure three or more parameters. There are other technologies that do not readily fall into the classification above.

Sleep testing, like other diagnostic tests, is subject to the provisions in § 410.32. Thus, it must be ordered by the physician who is treating the beneficiary for a specific medical problem and who uses the results in the management of the beneficiary's specific medical problem. Sleep testing must be furnished under the required level of supervision by a physician. If the sleep testing is furnished by an independent diagnostic testing facility (IDTF) the provisions of § 410.33 also apply.

A number of treatment approaches have been recommended for persons diagnosed with OSA, depending on severity of the disorder and other clinical factors. Patients with moderate to severe OSA are usually treated at first with continuous positive air pressure (CPAP) devices. The regular use of a CPAP device in these cases has been shown to improve excessive sleepiness, cognitive performance, and quality of life.

A CPAP device is an item of durable medical equipment (DME) used in the home that typically uses air pressure to maintain an open airway and improve airflow to the lungs.

Medicare currently provides national coverage of CPAP only for beneficiaries whose diagnosis of OSA meets the criteria described in the national coverage determination at 240.4 of the National Coverage Determinations (NCD) Manual. We recently published a revised NCD that expands coverage of CPAP devices to beneficiaries when OSA has been diagnosed by specified home sleep testing. Prior Medicare policy had covered CPAP devices only for beneficiaries whose OSA had been diagnosed by facility-based attended PSG. During the process leading to the revised policy, we received many public comments expressing concern that financial incentives would lead to abusive practices that would harm Medicare beneficiaries and threaten the integrity of the Medicare program. These concerns were expressed not only with respect to home sleep tests, but also those performed in sleep laboratories and other facilities. Therefore, we are proposing to implement a provision that would limit potential abusive practices by removing a significant financial incentive for those practices.

b. Regulatory proposal

Based on public comment and prior agency experience, we believe that the interests of beneficiaries and the Medicare program can be harmed if the provider of a diagnostic test has a vested interest in the outcome of the test itself. In the specific context of this proposed Start Printed Page 38580rule, we believe that the individual or entity that directly or indirectly administers the sleep test and/or provides the sleep test device used to administer the sleep test (referred to hereinafter as the ‘provider of the sleep test’) has a self-interest in the result of that test if that provider, or its affiliate, is also the supplier of the CPAP device.”

This provides incentive to test more frequently or less frequently than is medically necessary and to interpret a test result with a bias that favors self-interest.

Current medical evidence persuasively demonstrates that treatment with a CPAP device is safe for patients who have OSA. Similar evidence is lacking for treatment with a CPAP device of persons who do not in fact have obstructive sleep apnea. A test interpreted with bias or reported falsely may mislead the beneficiary's treating physician and divert the beneficiary from medically appropriate treatment. Moreover, supplying a medically unnecessary CPAP device is a waste of Medicare trust funds.

Based on section 1871(a)(1) of the Act, which provides the Secretary with the authority to “prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this title,” and due to our concerns with respect to the potential for unnecessary utilization of sleep tests, we are proposing to prohibit payment to the supplier of the CPAP device when such supplier, or its affiliate, is directly or indirectly the provider of the sleep test that is used to diagnose a Medicare beneficiary with OSA.

As alternatives we had considered requiring pre-authorization for sleep tests or modifying payments for the services when they are furnished by the same entity but believe these options would either generate undue burden on both the Medicare beneficiary and the claims processing systems or be administratively burdensome.

Therefore, we are proposing to revise the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier enrollment safeguards set forth at § 424.57 to protect the Medicare program and its beneficiaries from fraudulent or abusive practices that may be related to CPAP devices. We are proposing to add new definitions to paragraph (a) to define “sleep test” and “CPAP device” and to add a new paragraph (f), which would establish a specific payment prohibition that would not allow the supplier to receive Medicare payment for a CPAP device if that supplier, or its affiliate, is directly or indirectly the provider of the sleep test used to diagnose a beneficiary with OSA.

3. Beneficiary Signature for Nonemergency Ambulance Transport Services

[If you choose to comment on issues in this section, please include the caption “OTHER ISSUES-BENEFICIARY SIGNATURE” at the beginning of your comments.]

In the CY 2008 PFS final rule with comment period, we created an additional exception to the beneficiary signature requirements, in § 424.36(b)(6), for emergency ambulance transports (72 FR 66406). The exception allows ambulance providers and suppliers to sign on behalf of the beneficiary, at the time of transport, provided that certain documentation requirements are met. To take advantage of the new exception, an ambulance provider or supplier must maintain in its files: (1) A contemporaneous statement, signed by an ambulance employee who is present during the trip, that the beneficiary was mentally or physically incapable of signing (and that no other authorized person was available or willing to sign); (2) documentation as to the date, time and place of transport; and (3) either a signed contemporaneous statement from the receiving facility that documents the name of the beneficiary and the date and time the beneficiary was received by that facility, or a secondary form of verification from the facility that is received at a later date.

In the CY 2008 PFS final rule with comment period, we clarified that, apart from the new exception in § 424.36(b)(6), where a beneficiary is unable to sign a claim at the time the service is rendered, ambulance providers and suppliers are required to use reasonable efforts to follow-up with the beneficiary and obtain his or her signature before submitting the claim with a signature from one of the individuals or entities specified in § 424.36(b)(1) through (b)(5) (72 FR 66324). We further clarified that only providers of services, and not ambulance suppliers, can take advantage of § 424.36(b)(5), which states that a representative of the provider or of the nonparticipating hospital may sign on behalf of the beneficiary if the provider or nonparticipating hospital was unable to have a claim signed in accordance with § 424.36(b)(1) through (b)(4) (72 FR 66322).

Subsequent to publication of the CY 2008 PFS final rule with comment period, ambulance provider and supplier stakeholders requested that we extend the exception in § 424.36(b)(6) to nonemergency ambulance transports in instances where the beneficiary is physically or mentally incapable of signing. These stakeholders stated that there are many nonemergency transports for which a beneficiary is physically or mentally incapable of signing a claim form. For example, stakeholders asserted that beneficiaries residing in long term care facilities often need to be transported for nonemergency medical treatment, yet may be incapable of signing the claim due to physical or mental ailments, such as Alzheimer's disease or other forms of dementia. In these instances, there may be no other individual who is immediately available and authorized to sign the claim as specified in § 424.36(b).

Because we anticipate that there would be little or no increased risk of fraud or program abuse in extending the exception in § 424.36(b)(6) to include nonemergency transports, we are proposing to do so through a revision of the language in § 424.36(b)(6) to refer specifically to nonemergency transports. We are also proposing to add language to § 424.36(a) to clarify that, apart from the use of the exception in § 424.36(b)(6), providers and suppliers must make reasonable efforts to obtain the beneficiary's signature before relying on one of the exceptions in § 424.36(b). We note that § 424.36(b)(5) specifies that a provider may not invoke the exception to sign a claim on behalf of a beneficiary unless it is unable to have one of the persons specified in § 424.36(b)(1) through (b)(4) sign the claim. Finally, given that most claims are submitted electronically, we are proposing to amend § 424.36(a) to define “claim” for purposes of the beneficiary signature requirements as the claim form itself or a form that contains adequate notice to the beneficiary or other authorized individual that the purpose of the signature is to authorize a provider or supplier to submit a claim to Medicare for specified services furnished to the beneficiary.

4. Solicitation of Comments and Data Pertaining to Physician Organ Retrieval Services

[If you choose to comment on issues in this section, please include the caption “OTHER ISSUES—ORGAN RETRIEVAL” at the beginning of your comments.]

Since 1987, we have limited the amount an OPO may reimburse a physician for cadaveric kidney donor retrieval services. Chapter 27 of the Provider Reimbursement Manual (CMS-Pub. 15-1) limits the payment to a physician for cadaveric kidney retrieval Start Printed Page 38581to $1,250 per donor (one or two kidneys). Although the payments made to physicians for organ retrieval services associated with other types of organ transplants have increased, kidney retrieval rates have remained at $1,250. We have received several requests to change the amount we pay for kidney retrievals. To date, we do not have data upon which to base a change in payment.

In order to determine fair and reasonable payment for cadaveric organ retrieval services, we are soliciting public comments and data that are reflective of organ retrieval service costs. We are not limiting our solicitation to costs associated with kidney retrieval services, but are interested in receiving comments and data pertaining to retrieval services for all types of organs. We may use this information to determine the extent to which a recalculation of the payment for cadaveric organ retrieval services performed by a physician is warranted and to inform any future rulemaking on this subject. Any future rulemaking would provide for notice and public comment.

5. Revision to the “Appeals of CMS or CMS Contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges” Final Rule

[If you choose to comment on issues in this section, please include the caption “OTHER ISSUES—REVISIONS TO APPEALS FINAL RULE” at the beginning of your comments.]

In the June 27, 2008 Federal Register, we published the “Appeals of CMS or CMS Contractor Determinations When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing Privileges” final rule. In § 405.874(b)(2), we stated, “The revocation of a provider's or supplier's billing privileges is effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier. A revocation based on Federal exclusion or debarment is effective with the date of the exclusion or debarment.”

During the 30 days after CMS or our contractor mails a revocation notice to a provider or supplier, the provider or supplier is afforded the opportunity to submit a corrective action plan. A corrective action plan gives a provider or supplier an opportunity to provide evidence that demonstrates that the provider or supplier is in compliance with Medicare requirements. Moreover, a provider or supplier can use a corrective action plan to correct the deficiency without filing an appeal under 42 CFR part 498, and remain in the Medicare program when the provider demonstrates that the provider or supplier is in compliance with Medicare requirements and the Medicare contractor accepts the corrective action plan. In those situations where a provider or supplier submits an acceptable corrective action plan, the provider or supplier maintains their billing privileges and the revocation determination is not implemented.

We maintain that providers or suppliers are able to provide sufficient evidence through a corrective action plan that demonstrates that they are in compliance with Medicare requirements when CMS or our contractor imposes a revocation based on certain types of adverse actions such as a Federal exclusion or debarment. Accordingly, consistent with revoking billing privileges with the date of exclusion or debarment, we believe that similarly situated revocations such as felony convictions and license suspension or revocation do not lend themselves to a corrective action plan and that the revocation should be effective with the date of the felony conviction or the license suspension or revocation. Moreover, we maintain that when CMS or our contractor determines that a provider or supplier, including a DMEPOS supplier, is no longer operating at the practice location provided to Medicare on a paper or electronic Medicare enrollment application that the revocation should be effective with the date that CMS or our contractor determines that the provider or supplier is no longer operating at the practice location.

Further, while we do not believe that revocations based on felony convictions, license suspension or revocation, or a revocation based on a provider or a supplier no longer being operational at a specific practice location, lend themselves to a corrective action plan, we believe that these providers and suppliers should be afforded appeal rights in 42 CFR part 498. We believe that the appeals process will permit a provider or supplier who believes that CMS or our contractor has made an incorrect decision regarding revocation based on Federal exclusion or debarment, felony conviction, license suspension or revocation, or when we have determined that the provider or supplier is no longer operating at the practice location, the opportunity to have CMS or our contractor reconsider its initial revocation determination.

Accordingly, we are proposing to revise § 405.874(b)(2) from “The revocation of provider's or supplier's billing privileges is effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier. A revocation based on Federal exclusion or debarment is effective with the date of the exclusion or debarment.” to “The revocation of a provider's or supplier's billing privileges is effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier, except if the revocation is based on Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational. When a revocation is based on an exclusion or debarment, Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational, the revocation is effective with the date of exclusion or debarment, felony conviction, license suspension or revocation or the date that CMS or its contractor determined that the provider or supplier was no longer operational.”

In addition, to ensure consistency, we are proposing to revise § 424.535(f) from “Revocation becomes effective within 30 days of the initial revocation notification.” to “Revocation becomes effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier, except if the revocation is based on Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational. When a revocation is based on an exclusion or debarment, Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational, the revocation is effective with the date of exclusion or debarment, felony conviction, license suspension or revocation or the date that CMS or its contractor determined that the provider or supplier was no longer operational.”

We believe that these changes will ensure that providers and suppliers are afforded due process rights under 42 CFR part 498, but also ensure that Medicare is not making or continuing to make payments to providers and suppliers who are no longer eligible to receive payments.

We are soliciting comments on whether we should establish an expedited reconsideration process for providers and suppliers for when we issue a revocation for the following reasons: (1) Federal debarment or exclusion, (2) felony conviction, (3) Start Printed Page 38582license suspension or revocation, or (4) when CMS or our contractor determines that the provider is not operational at the practice location provided to Medicare and the provider or supplier furnishes sufficient evidence to demonstrate that CMS or our contractor made a factual error when issuing the initial revocation determination.

We believe that establishing an expedited reconsideration process will afford providers and suppliers with an administrative remedy similar to a corrective action plan, but allow CMS or our contractor to establish an effective date of revocation on the date of notification. In addition, we are soliciting comments on whether CMS or our contractors should consider processing expedited reconsiderations within a specified time period such as 30 days of the date the provider or supplier furnishes sufficient evidence to make a reconsideration determination.

III. Potentially Misvalued Services Under the Physician Fee Schedule

[If you choose to comment on issues in this section, please include the caption “POTENTIALLY MISVALUED SERVICES UNDER THE PFS” at the beginning of your comments.]

A.Valuing Services Under the Physician Fee Schedule

The American Medical Association's Relative Value System Update Committee (RUC) provides recommendations to CMS for the valuation of new and revised codes, as well as codes identified as misvalued under the Five-Year Review of Work. On an ongoing basis, the RUC's Practice Expense (PE) Subcommittee reviews direct PE (clinical staff, medical supplies, medical equipment) for individual services and examines the many broad and methodological issues relating to the development of PE RVUs.

There has been considerable concern expressed by the Medicare Payment Advisory Commission (MedPAC), the Congress, and other stakeholders in accurate pricing under the PFS. Despite the large increase in work RVUs for many medical visits during the last Five-Year Review of physician work, there continues to be concern that the presence of many overvalued procedures within the physician fee schedule disadvantages primary care services and creates distortion in the PFS. Critics have stated the relative imbalance in the number of codes for which the work RVUs are increased rather than decreased in the three Five-Year Reviews of work RVUs.

The RUC has created the Five-Year Review Identification Workgroup to respond to these concerns regarding the valuation of codes. The workgroup has identified some potentially misvalued codes through several vehicles, namely, identifying codes with site of service anomalies, high intra-service work per unit time (IWPUT), and services with high volume growth. We plan to address the RUC's recommendations from the February and April 2008 meetings for codes with site of service anomalies in the CY 2009 PFS final rule in a manner consistent with the way we address other RUC recommendations. Each year in the PFS final rule with comment period, we describe the RUC's recommendations, state whether or not we accept them, and provide a rationale for our decision. The values for these services will be published as interim values for 2009.

We believe that there are certain steps we can take to help address the issue of potentially misvalued services. The following is a summary of these approaches:

1. Updating High Cost Supplies

We are proposing to create a process to update the prices for high cost supply items that are paid under the PE methodology.

The RUC and MedPAC have recommended that we establish an update process, at least every 5 years, to ensure the accuracy and completeness of the direct PE inputs. Both organizations have suggested that an update process for the new, higher-priced supply items should occur more frequently because prices for these items may decrease over time as competition increases. The RUC specifically requested the review of higher-price supply items (over $200) and that the re-pricing be carried out on an annual basis. In the CY 2006 and CY 2007 PFS proposed rule and final rule with comment period, we expressed concern that submitting more recent and reliable documentation for supply prices may be burdensome to the physician specialties involved.

Upon further review of this issue and examination of the PE database, we believe that the burden would be minimal and the result would be to better ensure that we are paying properly for these supplies. Therefore, we are proposing a process to update high cost supplies every 2 years. We would specifically focus on the supplies that cost $150 or more of which there are currently 65 supplies which are listed in Table 24. Every other year we would identify supply items in the PE database costing over $150 and list these supplies in the proposed rule. We would request that the specialty societies or other relevant organizations provide acceptable documentation supporting the pricing for the supply item during the 60-day comment period. Since it may not be necessary to require an annual price update for each supply item over $150, we are proposing to revalue the list of high cost supply items on a biennial basis, but are interested in receiving comments concerning this proposed timeframe.

Pricing for these higher-priced supplies would need to be supported by valid, reliable documentation that reflects the typical price in the marketplace. For the past several years in the proposed rule and final rule with comment period, we have outlined examples of acceptable documentation which include a detailed description (including system components), sources, and current pricing information, such as copies of catalog pages, hard copies from specific web pages, invoices, and quotes from manufacturer, vendors or distributors. Documentation that does not include specific pricing information such as phone numbers and addresses of manufacturer, vendors or distributors; Web site links without pricing information would not be acceptable.

If such acceptable documentation was not received within the 60-day comment period for the proposed rule, we would apply prices that we were able to obtain through the use of searches for retail pricing on the internet, supply catalogs or other sources available to determine the appropriate cost. We would use the lowest price identified by these sources.

In future years, we may consider initiating additional reviews of supplies that cost less than this amount.

We would also be interested in receiving comments on alternatives that could be used to update pricing information in the absence of information provided by the specialty societies and organizations.Start Printed Page 38583

Table 24.—Top 65 High Cost Supplies Over $150—Supplies Needing Specialty Input for Price Update

CMS supply codeSupply descriptionUnitUnit priceQuantity per procedureCost per procedureCPT 1 codeMedical specialties
SA087tray, RTS applicator (MammoSite)item$2,5501$2,55019296General Surgery.
SL209array kit, GenoSensoritem2,1210.16339.3688386Independent Labs.
SD109probe, radiofrequency, 3 array (StarBurstSDE)item1,99511,99550592, 32998, 20982Diagnostic Radiology, Urology, Interventional Radiology.
catheter, CVA, system, tunneled w-port, dual (LifeSite)item1,75023,50036566General Surgery, Thoracic Surgery.
stent, vascular, deployment system, Cordis SMARTkit1,6451.52467.5037205, 32506Cardiology, Diagnostic Radiology, Vascular Surgery.
probe, cryoablation (Visica ICE 30 or 40)item1,58911,58919105General Surgery.
SA092kit, gene, MLL fusionkit1,3950.25348.7588385Independent Labs.
catheter, intradiscal (spineCATH)item1,38011,38022526, 22527Orthopedic Surgery, Neurosurgery, Diagnostic Radiology, Interventional Radiology.
SD186plasma LDL adsorption column (Liposorber)item1,30011,30036516Internal Medicine, Cardiology.
SD215probe, endometrial cryoablation (Her Option)item1,25011,25058356OBGYN.
SA075kit, hysteroscopic tubal implant for sterilizationkit1,24511,24558565OBGYN.
probe, cryoablation, renalitem1,1752.52937.5050593Urology, Diagnostic Radiology.
SD185plasma antibody adsorption column (Prosorba)item1,15011,15036515Rheumatology, Internal Medicine, Nephrology.
SA036kit, transurethral microwave thermotherapykit1,14911,14953850Urology.
SD177hysteroscope, ablation deviceitem1,14611,14658563OBGYN.
SA037kit, transurethral needle ablation (TUNA)kit1,05011,05053852Urology.
SA024kit, photopheresis procedurekit858185836522Dermatology and Pathology.
SF030laser tip, diffuser fiberitem850185052647, 52648Urology.
SA091tray, scoop, fast track systemtray750175031730General Surgery, Pulmonology.
SD018catheter, balloon, thermal ablation (Thermachoice)tray727172758353OBGYN.
SD155catheter, RF endovenous occlusionitem725172536475General Surgery, Vascular Surgery.
SD191plate, surgical, reconstruction, left, 5 x 16 holeitem719171921125, 21127, 21215Maxillofacial Surgery, Otolaryngology, Oncology Surgery.
SA039kit, vertebroplasty (LP2, CDO)kit6961.51,04422520, 22521Diagnostic Radiology, Interventional Radiology, Orthopedics.
SA038kit, transurethral water-induced thermotherapykit650165053853Urology.
SA025kit, PICC with subcut portkit586158636570, 36571, 36585General Surgery, Diagnostic Radiology.
SD073fiducial screws (set of 4 uou)item558155877011, 77301Diagnostic Radiology, Otolaryngology, IDTF.
SA074kit, endovascular laser treatmentkit519151936478General Surgery, Vascular Surgery, Diagnostic Radiology.
SA011kit, CVA catheter, tunneled, with subcut portkit495149536560, 36561, 36563, 36582, 36583General Surgery, Vascular Surgery, Diagnostic Radiology, Pediatric Medicine.
Start Printed Page 38584
SA015kit, for percutaneous thrombolytic device (Trerotola)kit487.501487.5036870, 37184, 37186, 37187, 37188Diagnostic Radiology, Vascular Surgery, Cardiology, Interventional Radiology.
SD058electrode, griditem475147595829General Practice.
SA093kit, priming, randomkit4630.1674.0888385, 88386Independent Labs, Pediatric Medicine.
SA005kit, capsule endoscopy w-application supplies (M2A)kit450145091110Gastroenterology.
kit, capsule, ESO, endoscopy w-application supplies (ESO)kit450145091111Gastroenterology.
SD151catheter, balloon, low profile PTAitem431.50286335470, 35471, 35474Cardiology, Vascular Surgery.
SD193plate, surgical, rigid comminuted fractureitem389138921461, 21462Oral Surgery, Maxillofacial Surgery.
SD020catheter, CVA, tunneled, dual (Tesio)item355135536565General Surgery, Vascular Surgery.
SD154catheter, microcatheter (selective 3rd order)item337.881337.8836217, 36247, 37210Diagnostic Radiology, Vascular Surgery, Cardiology.
SA077kit, pleural catheter insertionkit329132932550Thoracic Surgery, Diagnostic Radiology.
SH079collagen, dermal implant (2.5ml uou) (Contigen)item317131752330Urology.
SA010kit, CVA catheter, tunneled, without port-pumpkit308130836557, 36558, 36581General Surgery, Interventional Radiology, Diagnostic Radiology, Pediatric Medicine, Nephrology.
catheter, balloon, lacrimalitem306130668816?
SA022kit, percutaneous neuro test stimulationkit305130563610, 64561Urology, OBGYN, Anesthesiology.
SF028laser tip (single use)item290129030117, 52214, 52224, 52317Urology, Otolaryngology.
SA020kit, loop snare (Microvena)kit275127536595, 37203Diagnostic Radiology.
agent, embolic, 2 ml uouunit25851,29037210Diagnostic Radiology, Interventional Radiology.
SD152catheter, balloon, PTAitem243.50248735472, 35473, 35475, 35476, G0392, G0393Cardiology, Vascular Surgery, Diagnostic Radiology, Nephrology.
stent, ureteral, w-guidewire, 3cm flexible tipitem235123552332Urology.
SD189plate, surgical, mini-compression, 4 holeitem226122621208Plastic Surgery, Oral Surgery.
SD207suture device for vessel closure (Perclose A-T)item225122537184, 37205Diagnostic Radiology, Vascular Surgery, Cardiology.
SD204sensor, pH capsule (Bravo)item225122591035Gastroenterology.
Start Printed Page 38585
SD207suture device for vessel closure (Perclose A-T)item225122535470, 35471, 35472, 35473, 35474, 35475, 37187, 37188, G0392Cardiology, Vascular Surgery, Diagnostic Radiology, Nephrology, Interventional Radiology.
SD072eyelid weight implant, golditem217.501217.5067912Ophthalmology, Otolaryngology.
SD216catheter, balloon, esophageal or rectal (graded distention test)item217121791040, 91120Colorectal Surgery, Gastroenterology, Physician Assistants.
SD094Mammotome probeitem200120019103Diagnostic Radiology, General Surgery.
tube, jejunostomyitem195119549441, 49446, 49451, 49452Gastroenterology.
SL225gas, nitogen, ultra-high purity (compressed), grade 5.0item189.870.035.5888385, 88386Independent Labs.
SD023catheter, enteroclysisitem183.011183.0174251, 74260, 89100, 89105, 89130, 89132, 89135, 89136, 89140, 89141Cardiovascular and Interventional Radiology, Diagnostic Radiology, Neurology, Pulmonary, Pathology.
SD175guidewire, steerable (Transcend)item180118036217, 36247, 37205, 37206, 37210, 49440, 49441, 49442, 49446, 49450, 49451, 49452, 49460Diagnostic Radiology, Interventional Radiology, Cardiology, Vascular Surgery, General Surgery.
SC085tubing set, plasma exchangeitem173.331173.3336514Hemotology, Nephrology.
SD019catheter, balloon, ureteral-GI (strictures)item166349843456, 45303, 45340, 45386, 46604Colorectal Surgery, Gastroenterology, General Surgery.
SD218stent, ureteral, without guidewireitem162116250382, 50385Diagnostic Radiology, Interventional Radiology.
SD205sheath, endoscope ultrasound balloonitem154115431620Pulmonary Medicine.
SL055DNA stain kit (per test)item150115088358Independent Labs.
SF029laser tip, bare (single use)item150115046917, 46924Colorectal Surgery, General Surgery.
1 CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
Start Printed Page 38586

2. Review of Services Often Billed Together and the Possibility of Expanding the Multiple Procedure Payment Reduction (MPPR) to Additional Non-Surgical Procedures

We have a longstanding policy of reducing payment for multiple surgical procedures performed on the same patient, by the same physician, on the same day. The policy is largely based on the efficiencies recognized in practice expenses for pre- and post-surgical services. Originally, payment was made in full for the highest priced procedure; at 50 percent for the second highest price procedure; and at 25 percent for the third through fifth procedures. In 1995, the policy was revised to pay the highest priced procedure in full and at 50 percent for the second through fifth procedures (59 FR 32767 through 32768 and 59 FR 63423 through 63426).

In 1995, the MPPR policy was also extended to six nuclear medicine diagnostic procedures performed on the same patient on the same day. Payment is made in full for the highest priced procedure, and at 50 percent for the second procedure. Prior to that time, no payment was generally made for the second procedure. We also indicated that we would consider applying the multiple procedure policy to other diagnostic tests in the future (59 FR 32769 and 59 FR 63427 through 63428).

In 2006, the policy was extended to certain diagnostic imaging procedures performed on contiguous areas of the body. In such cases, most clinical labor activities and most supplies are not performed or furnished twice. The payment reduction applies to 100 procedure codes within 11 families of codes. When two or more procedures within a family are performed on the same patient in a single session, the TC of the highest priced procedure is paid at 100 percent; the TC of each subsequent procedure is paid at 75 percent. The reduction does not apply to the PC (70 FR 45849 through 45851 and 70 FR 70261 through 70265).

Some observers have raised concerns that there may be inequities between specialties in the current coding and payment system regarding the extent to which there are opportunities for additional coding and payment for services performed on the same day. Physicians in some specialties, such as primary care physicians, typically bill for their services using evaluation and management (E/M) codes that represent a fairly broad package of services (that include a significant amount of pre- and post-service care, including coordination of care). Likewise, a significant portion of services performed by specialties such as general or cardiac surgeons are reported and paid through comprehensive global surgery policies which also include pre- and post-service work, reducing the possibilities for additional billings. In contrast, many other services under the PFS are paid for using codes that represent much smaller units of service, and in many cases the codes and payment amounts might represent fairly small portions of the total service provided on the same day.

We plan to perform a data analysis of non-surgical CPT codes that are often billed together (for example, 60 to 70 percent of the time) to determine if there are inequities in PFS payments that are a result of variations between services in the comprehensiveness of the codes used to report the services or in the payment policies applied to each (for example, global surgery, MPPRs). As noted above, clinical labor activities, supplies and equipment may not be performed or furnished twice when multiple procedures are performed.

We invite comments and suggestions from the RUC and others on this important issue. As a result of reviewing the data and any suggestions we receive regarding these concerns, we may consider developing proposals to either bundle additional services or expand the application of the MPPR to additional procedures. Any proposed changes will be made through rulemaking and be subject to public comment at a later date.

B. Requested Approaches for the RUC to Utilize

We have also identified methods that we are requesting the RUC undertake to assist in identifying potentially misvalued services including: (1) Review the Fastest Growing Procedure Codes; (2) Review Harvard-Valued Codes; and (3) Review PE RVUs.

1. Review the Fastest Growing Procedure Codes

We have identified the fastest growing services as measured by growth in utilization from CY 2004 through CY 2007. The codes we identified were the following:

  • Those that represent services that had three consecutive years of 10 percent (or more) annual growth in allowed services;
  • Excluded if there was less than $1 million in 2007 allowed charges; and
  • Included if still active in 2008.

This analysis has resulted in the identification of over 100 procedure codes, which are shown in Table 25. Some of the identified services are new, while others have been in the clinical arena for a number of years. These codes may warrant a reassessment to determine why there has been an increase in utilization. There may be a clinical rationale or there may have been changes in the relative resources involved with furnishing the service.

We have requested that the RUC immediately begin a review of the fastest growing services by examining the codes listed in Table 25, Fastest Growing Procedure Codes. We will work with the RUC on prioritizing the review of these codes.

Table 25.—Fastest Growing Procedure Codes

CPT 1/HCPCS codeDescriptionAllowed charges 2007 (millions)Growth in allowed services 2004-2007 (percent)Annual growth in allowed services 2005 (percent)Annual growth in allowed services 2006 (percent)Annual growth in allowed services 2007 (percent)Screening criteria used by the AMA/RUC for codes reviewed between September 2007-April 2008
10022Fna w/image$1288312119
13121Repair of wound or lesion2345151411
14021Skin tissue rearrangement1249151315Site of Service Anomaly.
14300Skin tissue rearrangement1349141216Site of Service Anomaly.
15740Island pedicle flap graft663261117Site of Service Anomaly.
Start Printed Page 38587
19295Place breast clip, percut943101314
20551Inj tendon origin/insertion7101172141
20926Removal of tissue for graft463101627
22214Revision of lumbar spine2110341932
22533Lat lumbar spine fusion15841638144
22843Insert spine fixation device355201513
22849Reinsert spinal fixation2116471824
22851Apply spine prosth device2465291213
23430Repair biceps tendon390292121
23472Reconstruct shoulder joint2374321316
26480Transplant hand tendon357261112
27245Treat hip fracture8868271812High IWPUT.
27370Injection for knee x-ray2173485916High Volume Growth.
29822Shoulder arthroscopy/surgery377242019
29827Arthroscop rotator cuff repr4390332118
31579Diagnostic laryngoscopy851151415
32663Thoracoscopy, surgical4102351827
33213Insertion of pulse generator1663241415
35470Repair arterial blockage9132383525
35474Repair arterial blockage1949171611
36248Place catheter in artery170222015
36516Apheresis, selective2274753558
37765Phleb veins extrem 10-203158762517High Volume Growth
37766Phleb veins extrem 20+3200942326High Volume Growth.
38571Laparoscopy, lymphadenectomy2295496957
43236Uppr gi scope w/submuc inj261261511
43242Uppr gi endoscopy w/us fn bx774261916
43259Endoscopic ultrasound exam742141211
44205Lap colectomy part w/ileum11106531716
44207L colectomy/coloproctostomy9142672417
44970Laparoscopy, appendectomy751211310
45381Colonoscopy, submucous inj6105362322
47490Incision of gallbladder342101413
50542Laparo ablate renal mass1128543411
50548Laparo remove w/ureter256181317
50605Insert ureteral support166171523
51772Urethra pressure profile1176311814Codes Reported Together.
55866Laparo radical prostatectomy18329875548New Technology.
61793Focus radiation beam1353151615
61795Brain surgery using computer446131711
63056Decompress spinal cord658211118
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63650Implant neuroelectrodes9159472937Site of Service Anomaly.
63655Implant neuroelectrodes2106292330
63660Revise/remove neuroelectrode281291917Site of Service Anomaly.
63685Insrt/redo spine n generator3125532419Site of Service Anomaly.
64415N block inj, brachial plexus656221215
64445N block inj, sciatic, sng675222218
64447N block inj fem, single5116571619
64448N block inj fem, cont inf6232863533Site of Service Anomaly/High Volume Growth.
64483Inj foramen epidural l/s15762241514
64484Inj foramen epidural add-on4675341513
64555Implant neuroelectrodes6149863135316High Volume Growth.
64561Implant neuroelectrodes3169152586
64622Destr paravertebrl nerve l/s3289322415High Volume Growth.
64626Destr paravertebrl nerve c/t8109342229High Volume Growth.
64627Destr paravertebral n add-on7109352425High Volume Growth.
65780Ocular reconst, transplant3200466028
66982Cataract surgery, complex148103342719High IWPUT.
67028Injection eye drug15188320211254High Volume Growth.
69100Biopsy of external ear752181413
69801Incise inner ear354131617
70496Ct angiography, head11184614224High Volume Growth.
70498Ct angiography, neck18216705023High Volume Growth.
71250Ct thorax w/o dye14042151111
71275Ct angiography, chest56115512316
72125Ct neck spine w/o dye29102302623
72128Ct chest spine w/o dye671232016
72191Ct angiograph pelv w/o & w/dye15146553617High Volume Growth.
72192Ct pelvis w/o dye13540131211
72194Ct pelvis w/o & w/dye7278292213Codes Reported Together.
73200Ct upper extremity w/o dye660221317
73218Mri upper extremity w/o dye858231215
73580Contrast x-ray of knee joint2183585615High Volume Growth.
73700Ct lower extremity w/o dye1357221512
74175Ct angio abdom w/o & w/dye27123503113
75635Ct angio abdominal arteries16251716623High Volume Growth.
76513Echo exam of eye, water bath14201718755High Volume Growth.
76536Us exam of head and neck2851201311
76880Us exam, extremity1458231313
77301Radiotherapy dose plan, imrt8194352217
77418Radiation tx delivery, imrt681111372524
Start Printed Page 38589
77781High intensity brachytherapy8144354227
77782High intensity brachytherapy3189513641High Volume Growth.
90471Immunization admin20213774125CMS Request—Practice Expense Review.
92135Ophth dx imaging post seg246104322325
92136Ophthalmic biometry5778341714
92285Eye photography1053211114
92587Evoked auditory test264221418
92986Revision of aortic valve190261729
93308Echo exam of heart645171111
93613Electrophys map 3d, add-on6117333323
93652Ablate heart dysrhythm focus270171823
93743Analyze ht pace device dual38139522922
93922Extremity study4353211312
93976Vascular study938101112
93990Doppler flow testing3111352624
94681Exhaled air analysis, o2/co28141522724High Volume Growth.
94762Measure blood oxygen level6125463019
95922Autonomic nerv function test3247744835High Volume Growth.
95956Eeg monitoring, cable/radio4102501221
96567Photodynamic tx, skin24791157257High Volume Growth.
96920Laser tx, skin < 250 sq cm3137165036
96921Laser tx, skin 250-500 sq cm1213446730High Volume Growth.
G0179MD recertification HHA PT5259191912
G0181Home health care supervision3149151711
G0237Therapeutic procd strg endur2264696432High Volume Growth.
G0238Oth resp proc, indiv39444077717High Volume Growth.
G0249Provide test material, equipm43251177512High Volume Growth.
G0268Removal of impacted wax md457271111
1 CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.

2. Review Harvard-Valued Codes

Currently, there are approximately 2900 codes that were originally valued using Harvard data and which have not subsequently been evaluated by the RUC. These codes represent about $5.0 billion in annual spending under the PFS and are still being paid on RVUs that were determined almost 20 years ago. Reviewing these codes will ensure that they are valued based upon the most up to date clinical practice and that they are not creating inappropriate incentives.

We have requested the RUC to undertake an ongoing (multi-year) effort to review the Harvard-valued codes that have not subsequently been evaluated by the RUC. As part of our request, we requested that the initial focus be given to high-volume, low intensity codes. We look forward to receiving the recommendations from the RUC.

3. Review PE RVUs

Practice expenses represent about 44 percent of total relative values for physicians' services. Indirect PEs are allocated in some measure based on direct PE inputs. Thus, ensuring the accuracy of direct PE inputs and that they are in agreement with the clinical aspects specific to each procedure may aid in the identification of misvalued services. We have requested that the RUC continue the review of direct PE inputs. We request that the initial focus be given to the high-volume codes where the PE payments are significantly increasing during the transition to the new PE methodology.

We recognize that the work outlined here will require significant effort by the RUC and specialty societies but believe Start Printed Page 38590that this work is necessary to improve the PFS. We expect that all reviews and changes to RVUs would be conducted in tandem with our established regulatory process such as the annual review of new/revised codes and the Five-Year Review.

IV. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information (COI) requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

  • The need for the information collection and its usefulness in carrying out the proper functions of our agency.
  • The accuracy of our estimate of the information collection burden.
  • The quality, utility, and clarity of the information to be collected.
  • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements (ICRs):

A. ICRs Regarding Independent Diagnostic Testing Facility (§ 410.33)

Section 410.33(j) states that a physician or NPP organization furnishing diagnostic testing services, except diagnostic mammography services, must enroll as an IDTF for each practice location furnishing these services. The burden associated with this requirement is the time and effort for a physician group practice or clinic to enroll each of the practice locations in the Medicare program. To enroll in the program, the physician or NPP organization must complete a Medicare enrollment application, the CMS-855B. The burden associated with completing and submitting this application is currently approved under OMB control number 0938-0685 with an expiration date of February 28, 2011.

B. ICRs Regarding Exception to the Referral Prohibition Related to Compensation Arrangements (§ 411.357)

As discussed in section II.N. of the preamble of this proposed rule, proposed § 411.357(x) would set forth an exception for incentive payment and shared savings programs. The programs would involve improvement of quality of hospital patient care services through changes in physician clinical or administrative practices or actual cost savings for the hospital resulting from reduction of waste or changes in physician clinical or administrative practices, without an adverse affect or diminution in quality of hospital patient care services. The hospital-administered program would be required to have performance measures that would be individually tracked and monitored throughout the term of the arrangement. In addition, the program would be required to have at least five physicians participating in each performance measure and the program would be required to undergo periodic independent medical review (once prior to the commencement of the program and annually thereafter) for its impact (or potential impact) on the quality of patient care services provided at the hospital. We anticipate that many hospitals seeking to create new incentive payment or shared savings programs would structure those arrangements to comply with the requirements set forth in § 411.357(x).

We have no way of knowing for certain the number of hospitals that currently utilize incentive payment or shared savings programs nor the nature and/or type of existing programs. However, we are aware that the Office of the Inspector General has issued 10 advisory opinions to date approving proposed incentive payment or shared savings programs from entities. While the OIG opinions were limited to specific arrangements, they did not afford providers any protection from the physician self-referral regulations. Based on information furnished by one private industry consulting firm, we are aware of approximately 50 incentive payment, shared savings or related programs currently in operation. We have also received anecdotal information from industry stakeholders that the number of programs in operation may be as high as 100. Therefore, we estimate that there are approximately 75 incentive payment, shared savings or similar programs currently in operation.

We believe that this proposed exception, if finalized, would result in an increase in the number of hospitals that would create these types of programs. We clarify that this collection of information burden would pertain to hospitals seeking to develop or modify incentive payment or shared savings programs. For purposes of this requirement, we are estimating that 150 hospitals would avail themselves of this proposed exception.

Proposed § 411.357(x)(1) and (2) specifies the elements that would be required in an incentive payment or shared savings program, including the determination of performance measures, and target measures to be achieved under the program. In addition, proposed § 411.357(x)(11) would require that payments made to a physician must not be based on patient care quality improvements or cost savings that were achieved during a prior period of the arrangement. To the extent that a hospital elected to distribute payments to physicians more frequently than the term of the agreement (for example, a 3-year arrangement that provides payment on an annual basis), these payments would be required to take into account previous payments made for performance measures already achieved. We believe that the burden associated with the provisions listed in § 411.357(x)(1) through (2) and § 411.357(x)(11) would involve the time and effort each hospital would put forth into creating its program, and would vary greatly, depending upon the performance measures (clinical or administrative practices), size of the program, the number of physicians or other medical staff participating in the creation of the program, and the methods used for physician payment. We estimate 100 burden hours for the development of each incentive payment or shared savings program including, but not limited to, the professional services of the following individuals; attorneys, medical directors, accountants, and database administrators. The total burden associated with this requirement would be 150 hospitals × 100 hours = 15,000 burden hours.

Proposed § 411.357(x)(5) would require independent medical review of a hospital's incentive payment or shared savings program's impact on the quality of patient care services provided at the hospital. In addition, corrective action would be required in instances where the independent medical review indicates a diminution in the quality of patient care services. The review would be required to take place prior to commencement of the program and at least annually thereafter. The burden associated with the requirements in proposed § 411.357(x)(5) would be the time and effort necessary for a hospital to obtain, both prior to and during the term of the program, a written independent medical review of the program and follow up on any recommended corrective action. We believe it would take 20 hours for each Start Printed Page 38591hospital to initially obtain independent expert medical review. Thereafter, the independent medical review that would be required to be conducted periodically is estimated to impose a burden on the hospital of 10 hours. The total burden associated with this requirement would be 150 hospitals × 20 hours for the first year of a program and 150 hospitals × 10 hours annually thereafter = 4500 hours, assuming hospitals, on average, implement a 2-year incentive payment or shared savings program.

Proposed § 411.357(x)(7) would require hospitals to provide written disclosure to patients affected by the program regarding the program and the physician's participation in the program. The burden associated with this requirement would be time and effort necessary for the hospital to provide disclosure in writing to patients that would be affected by the program. We believe that it would take each hospital 1 hour to draft a standard disclosure. In addition, we believe it would take each hospital 1 minute to provide the written disclosure to potentially all patients. Based on anecdotal accounts of the number of patients involved historical gainsharing programs, we estimate that each hospital would need to provide standard disclosure to approximately 5,000 patients. However, we recognize that hospital size and patient volume will vary significantly from program to program. The total burden associated with this requirement would be 150 hospitals × 1 hour = 150 hours to draft a standard disclosure. We estimate the burden of providing the disclosure to patients to be (150 hospitals × (1 minute/60 minutes/hour) × 5,000 patients) = 12,500 hours. The total burden associated with the requirements contained in § 411.357(x)(7) is 12,650 hours.

Section 411.357(x)(8) would require that the incentive payment or shared savings program arrangements be set out in writing, signed by the parties, and specify the basis for the remuneration. Each specific performance measure and the resulting payment (or formula for payment) must also be clearly and separately identified. In addition, § 411.357(x)(15) would require that the hospital maintain accurate and contemporaneous documentation of the incentive payment or shared savings program and make documentation available to the Secretary upon request.

The burden associated with the requirements listed in § 411.357(x)(8) through (10) and § 411.357(x)(15) would be the time and effort necessary to draft an arrangement with the aforementioned information. While these requirements are subject to the PRA, we believe the burden associated with drafting and maintaining written arrangements detailing conditions of remuneration would be part of usual and customary business practices and thereby exempt from the PRA under 5 CFR 1320.3(b)(2).

C. ICRs Regarding Dispute Resolution and Process for Suspension or Termination of Approved CAP Contract and Termination or Physician Participation Under Exigent Circumstances (§ 414.917).

Section 414.917(b)(4) states that an approved CAP vendor may appeal a termination by requesting a reconsideration. The burden associated with this requirement is the time and effort necessary to submit a reconsideration request to CMS. While this requirement is subject to the PRA, the associated burden is exempt under 5 CFR 1320.4(a)(2). Information collected as part of an administrative action is not subject to the PRA.

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

Section 424.516(d) discusses the reporting requirements for physician groups/organizations, physicians and NPPs. Specifically, the aforementioned providers must report to CMS, within 30 days the information listed in § 424.516(d)(1). Additionally, all other changes in enrollment must be reported within 90 days.

Section 424.516(e) addresses the reporting requirements for all other providers and suppliers. Providers not mentioned in § 424.516(a) through (d) must report to CMS, within 30 days, changes of ownership, including changes in authorized official(s) or delegated official(s). All other changes in enrollment must be reported within 90 days.

The burden associated with the requirements contained in § 424.516(d) through (e) is the time and effort necessary to report the applicable information to CMS. While this requirement is subject to the PRA, we have no way to accurately quantify the number of submissions. Each submission will be reviewed on a case-by-case basis.

Section § 424.516(d) states providers or suppliers are required to maintain ordering and referring documentation, including the NPI, received from a physician or eligible NPP for 10 years from the date of service. Physicians and NPPs are required to maintain written ordering and referring documentation for 10 years from the date of service. The burden associated with these recordkeeping requirements is the time and effort associated with maintaining the aforementioned documentation for 10 years. While these requirements are subject to the PRA, we believe the burden is exempt because the requirement is part of a usual and customary business practice. As stated in 5 CFR 1320.3(b)(2), the time, effort, and financial resources necessary to comply with a COI that would be incurred by persons in the normal course of their activities (for example, in compiling and maintaining business records) is not subject to the PRA.

Table 26.—Estimated Annual Reporting and Recordkeeping Burden

Regulation section(s)OMB control No.RespondentsResponsesBurden per response (hours)Total annual burden (hours)
§ 410.330938-0685400,000400,0002.51,001,503
§ 411.357(x)(1-2) and (x)(11)0938-New15015010015,000
§ 411.357(x)(5)0938-New150150204,500
150150101,500
§ 411.357(x)(7)0938-New1501501150
150750,000.0166612,500
Total400,1501,150,150133.516661,035,153
Start Printed Page 38592

This proposed rule imposes COI requirements as outlined in the regulation text and specified above. However, this proposed rule also makes reference to several associated information collections that are not discussed in the regulation text. The following is a discussion of these collections, which have already received OMB approval.

Part B Drug Payment

Section II.F.1 of the preamble of this proposed rule discusses payment for Medicare Part B drugs and biologicals under the ASP methodology. Drug manufacturers are required to submit ASP data to us on a quarterly basis. The collection of ASP data imposes a reporting requirement on the public. The burden associated with this requirement is the time and effort required by manufacturers of Medicare Part B drugs and biologicals to calculate, record, and submit the required data to CMS. While the burden associated with this requirement is subject to the PRA, it is currently approved under OMB control number 0938-0921, with an expiration date of May 31, 2009.

Competitive Acquisition Program (CAP)

Section II.F.2. of this proposed rule discusses the Part B CAP issues. While we are not imposing any new burden, it should be noted that all of the information collection components of the CAP have been reviewed and approved by OMB. They are approved under OMB control numbers, 0938-0987, 0938-0955, and 0938-0954 with expiration dates of April 30, 2009, August 31, 2009, and July 31, 2008, respectively.

Physician Quality Reporting Initiative

Section II.O. of the preamble discusses the background of the reporting initiative and provides information about the measures available to eligible professionals who choose to participate in PQRI. Section 1848(k)(1) of the Act requires the Secretary to implement a system for the reporting by eligible professionals of data on quality measures.

As stated in section II.O.1, eligible professionals include physicians, other practitioners as described in section 1842(b)(18)(c) of the Act, physical and occupational therapists, and qualified speech-language pathologists. This is a voluntary reporting initiative. Eligible professionals may choose whether to participate and satisfactorily submit data on quality measures for covered professional services.

The burden associated with the requirements of this voluntary reporting initiative is the time and effort associated with eligible professionals identifying applicable PQRI quality measures for which they can report the necessary information.

In addition, for claims-based reporting, eligible professionals must gather the required information, select the appropriate quality data codes, and include the appropriate quality data codes on the claims they submit for payment. The PQRI will collect quality-data codes as additional (optional) line items on the existing HIPAA transaction 837-P and/or CMS Form 1500. We do not anticipate any new forms and no modifications to the existing transaction or form. We also do not anticipate changes to the 837-P or CMS Form 1500 for CY 2009.

Because this is a voluntary program, it is impossible to estimate with any degree of accuracy how many eligible professionals will opt to participate in the PQRI in CY 2009. Moreover, the time needed for an eligible professional to review the quality measures and other information, select measures applicable to his or her patients and the services he or she furnishes to them, and incorporate the use of quality data codes into the office work flows is expected to vary along with the number of measures that are potentially applicable to a given professional's practice.

We estimate that the additional time required to put quality data codes on each claim is not a material increment to the time required to code the claim for payment. The total estimated annual burden for this requirement will also vary along with the volume of claims on which quality data is reported.

For registry-based reporting, there would be no additional burden for eligible professionals to report data to a registry as eligible professionals are not required to report data to registries to participate in the PQRI and more than likely would already be reporting data to the registry. Little, if any, additional data would need to be reported to the registry for purposes of participation in the 2009 PQRI. However, eligible professionals would need to authorize or instruct the registry to submit quality measures results and numerator and denominator data on quality measures to CMS on their behalf. We estimate that the time and effort associated with this would be approximately 5 minutes for each eligible professional that wishes to authorize or instruct the registry to submit quality measures results and numerator and denominator data on quality measures to CMS on their behalf.

Similarly, registries are not required to participate in this voluntary initiative. Registries interested in submitting quality measures results and numerator and denominator data on quality measures to CMS on their participants' behalf would need to complete a self-nomination process in order to be considered “qualified” to submit on behalf of eligible professionals.

The burden associated with the registry-based submission requirements of this voluntary reporting initiative is the time and effort associated with the registry calculating quality measure results from the data submitted to the registry by its participants and submitting the quality measures results and numerator and denominator data on quality measures to CMS on behalf of their participants. The time needed for a registry to review the quality measures and other information, calculate the measures results, and submit the measures results and numerator and denominator data on the quality measures on their participants behalf is expected to vary along with the number of eligible professionals reporting data to the registry and the number of applicable measures. However, we believe that registries already perform many of these activities for their participants. The number of measures that the registry intends to report to CMS and how similar the registry's measures are to CMS' PQRI measures will determine the time burden to the registry.

For EHR-based submission, the eligible professional must review the quality measures on which we will be accepting PQRI data extracted from EHRs, select the appropriate quality measures, extract the necessary clinical data from his or her EHR, and submit the necessary data to the CMS-designated clinical warehouse. Because this manner of reporting quality data to CMS is new to PQRI for 2009 and participation in this reporting initiative is voluntary, it is impossible to estimate with any degree of accuracy how many eligible professionals will opt to participate in the PQRI through the EHR mechanism in CY 2009. Similar to the burden associated with claims-based reporting of quality data, the time needed for an eligible professional to review the quality measures and other information, select measures applicable to his or her patients and the services he or she furnishes to them, is expected to vary along with the number of measures that are potentially applicable to a given professional's practice. Once the EHR is programmed by the vendor to allow data Start Printed Page 38593submission to CMS, the burden to the eligible professional should be minimal.

If you comment on these information collection and recordkeeping requirements, please do either of the following:

1. Submit your comments electronically as specified in the ADDRESSES section of this proposed rule; or

2. Mail copies to the address specified in the ADDRESSES section of this proposed rule and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: CMS Desk Officer, [CMS-1403-P], Fax (202) 395-6974.

V. Response to Comments

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

VI. Regulatory Impact Analysis

[If you choose to comment on issues in this section, please include the caption “IMPACT” at the beginning of your comments.]

We have examined the impact of this rule as required by Executive Order 12866 on regulatory planning and review (September 30, 1993, as further amended), the Regulatory Flexibility Act (RFA) (September 19, 1980 Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Order 12866 (as amended by Executive Order 13258 and 13422), directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). As indicated in more detail below in this regulatory impact analysis, we estimate that the PFS provisions included in this proposed rule will redistribute more than $100 million in 1 year. We estimate that this rulemaking is “economically significant” as measured by the $100 million threshold, and hence also a major rule under the Congressional Review Act. Accordingly, we have prepared a RIA that to the best of our ability presents the costs and benefits of the rulemaking.

The RFA requires agencies to analyze options for regulatory relief of small businesses and other small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, we estimate that most hospitals and most other providers are small entities as that term is used in the RFA (including small businesses, nonprofit organizations, and small governmental jurisdictions). Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6.5 million to $31.5 million in any 1 year (for further information, see the Small Business Administration's regulation at 70 FR 72577, December 6, 2005.) Individuals and States are not included in the definition of a small entity. The RFA requires that we analyze regulatory options for small businesses and other entities. We prepare a regulatory flexibility analysis unless we certify that a rule would not have a significant economic impact on a substantial number of small entities. The analysis must include a justification concerning the reason action is being taken, the kinds and number of small entities the rule affects, and an explanation of any meaningful options that achieve the objectives with less significant adverse economic impact on the small entities.

For purposes of the RFA, physicians, NPPs, and suppliers including IDTFs are considered small businesses if they generate revenues of $6.5 million or less. Approximately 95 percent of physicians are considered to be small entities. There are about 980,000 physicians, other practitioners, and medical suppliers that receive Medicare payment under the PFS.

The CAP provides alternatives to physicians who do not wish to purchase drugs directly or collect coinsurance. The impact of the CAP provisions on an individual physician is dependent on whether the drugs they provide to Medicare beneficiaries are included in the list of CAP drugs and whether the physician chooses to obtain drugs administered to Medicare beneficiaries through the CAP. The proposed CAP provisions in this proposed rule will also have a potential impact on entities that are involved in the dispensing or distribution of drugs, plan to become approved CAP vendors, or are approved CAP vendors.

For purposes of the RFA, approximately 80 percent of clinical diagnostic laboratories are considered small businesses according to the Small Business Administration's size standards. These are posted on the following Web site: http://sba.gov/​idc/​groups/​public/​documents/​sba_​homepage/​serv_​sstd_​tablepdf.pdf .

In addition, most ESRD facilities are considered small entities for purposes of the RFA, either based on nonprofit status or by having revenues of $6.5 million to $31.5 million or less in any year. We consider a substantial number of entities to be affected if the proposed rule is estimated to impact more than 5 percent of the total number of small entities. Based on our analysis of the 926 nonprofit ESRD facilities considered small entities in accordance with the above definitions, we estimate that the combined impact of the proposed changes to payment for renal dialysis services included in this proposed rule would have a 0.2 percent increase in overall payments relative to current overall payments. The majority of small entities would experience impacts of less than 3 percent of total revenues. We note that although the overall effect of the wage index changes is budget neutral, there are increases and decreases based on the location of individual facilities. The analysis and discussion provided in this section, as well as elsewhere in this proposed rule, complies with the RFA requirements.

For the e-prescribing provisions, physician practices and independent pharmacies are considered small entities.

Because we acknowledge that many of the affected entities are small entities, the analysis discussed throughout the preamble of this proposed rule constitutes our initial regulatory flexibility analysis for the remaining provisions. Therefore, we are soliciting comments on our estimates and analysis of the impact of this proposed rule on those small entities.

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside a metropolitan statistical area and has fewer than 100 beds. We have determined that this proposed rule would have minimal impact on small hospitals located in rural areas. Of the 196 hospital-based Start Printed Page 38594ESRD facilities located in rural areas, only 40 are affiliated with hospitals with fewer than 100 beds.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2008, that threshold is approximately $130 million. This proposed rule will not mandate any requirements for State, local, or tribal governments. Medicare beneficiaries are considered to be part of the private sector for this purpose. A discussion concerning the impact of this rule on beneficiaries is found later in this section.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. The e-prescribing portions of this proposed rule present a potential Federalism implication. No State categorically bars e-prescribing, but the scope and substance of State laws varies widely among the States. In recent years, many States have more actively legislated in this area. Should a State law be contrary to the Part D e-prescribing standards, or should it restrict the ability to carry out the Medicare Part D e-prescribing program, the MMA provides for preemption of that State law at section 1860D-4(e)(5) of the Act. It provides:

(5) Relation to State Laws. The standards promulgated under the subsection shall supersede any State law or regulation that—

(A) Is contrary to the standards or restricts the ability to carry out this part; and

(B) Pertains to the electronic transmission of medication history and of information on eligibility, benefits, and prescriptions with respect to covered part D drugs under this part.

For the reasons given above, we have determined that States would not incur any direct costs as a result of this proposed rule. However, as mandated by section 1860D-4(e) of the Act, and under Executive Order 13132, we are required to minimize the extent of preemption, consistent with achieving the objectives of the Federal statute, and to meet certain other conditions. We believe that, taken as a whole, this proposed rule would meet these requirements.

We have prepared the following analysis, which, together with the information provided in the rest of this preamble, meets all assessment requirements. The analysis explains the rationale for and purposes of this proposed rule; details the costs and benefits of the rule; analyzes alternatives; and presents the measures we propose to use to minimize the burden on small entities. As indicated elsewhere in this proposed rule, we propose a variety of changes to our regulations, payments, or payment policies to ensure that our payment systems reflect changes in medical practice and the relative value of services. We provide information for each of the policy changes in the relevant sections of this proposed rule. We are unaware of any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. The relevant sections of this proposed rule contain a description of significant alternatives if applicable.

A. RVU Impacts

1. Resource-Based Work and PE RVUs

Section 1848(c)(2)(B)(ii) of the Act requires that increases or decreases in RVUs may not cause the amount of expenditures for the year to differ by more than $20 million from what expenditures would have been in the absence of these changes. If this threshold is exceeded, we make adjustments to preserve budget neutrality (BN). In the CY 2007 PFS final rule with comment period, the $4 billion impact of changes in work RVUs resulting from the 5-Year Review required that a BN adjustment be made.

As stated in the CY 2007 PFS final rule with comment period, the work adjustor for 2008, was approximately 0.8806. Since there are no additional work RVU changes associated with the 5-Year Review of work RVUs, the work adjustor will remain at 0.8806. Table 27 shows the specialty-level impact of the work and PE RVU changes. This rule proposes the PE RVUs for CY 2009 which is the third year of a four-year transition to fully implemented resource based PE RVUs. There are no changes in work RVUs proposed in this rule. The process for changes in work RVUs is to publish these changes as interim final in the final rule with comment published later in the year.

Our estimates of changes in Medicare revenues for PFS services compare payment rates for CY 2008 with proposed payment rates for CY 2009 using CY 2007 Medicare utilization for all years. We are using CY 2007 Medicare claims processed and paid through March 30, 2008, that we estimate are 98 percent complete. To the extent that there are year-to-year changes in the volume and mix of services provided by physicians, the actual impact on total Medicare revenues will be different than those shown in Table 27. The payment impacts reflect averages for each specialty based on Medicare utilization. The payment impact for an individual physician would be different from the average, based on the mix of services the physician provides. The average change in total revenues would be less than the impact displayed here because physicians furnish services to both Medicare and non-Medicare patients and specialties may receive substantial Medicare revenues for services that are not paid under the PFS. For instance, independent laboratories receive approximately 80 percent of their Medicare revenues from clinical laboratory services that are not paid under the PFS.

Table 27 shows only the payment impact on PFS services. The following is an explanation of the information presented in Table 27.

  • Specialty: The physician specialty or type of practitioner/supplier.
  • Allowed Charges: Allowed charges are the Medicare Fee Schedule amounts for covered services and include coinsurance and deductible