Federal Register, Volume 73 Issue 224 (Wednesday, November 19, 2008)

[Federal Register Volume 73, Number 224 (Wednesday, November 19, 2008)]
[Rules and Regulations]
[Pages 69726-70237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26213]

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Part II

Book 2 of 2 Books

Pages 69725-70238

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 409, et al.

Medicare Program; Payment Policies Under the Physician Fee Schedule and
Other Revisions to Part B for CY 2009; E-Prescribing Exemption for
Computer-Generated Facsimile Transmissions; and Payment for Certain
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS); Final Rule

Federal Register / Vol. 73, No. 224 / Wednesday, November 19, 2008 /
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 409, 410, 411, 413, 414, 415, 423, 424, 485, 486,
and 489

[CMS-1403-FC] [CMS-1270-F2]
RINs 0938-AP18, 0938-AN14

Medicare Program; Payment Policies Under the Physician Fee
Schedule and Other Revisions to Part B for CY 2009; E-Prescribing
Exemption for Computer-Generated Facsimile Transmissions; and Payment
for Certain Durable Medical Equipment, Prosthetics, Orthotics, and
Supplies (DMEPOS)

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period implements changes to the
physician fee schedule and other Medicare Part B payment policies to
ensure that our payment systems are updated to reflect changes in
medical practice and the relative value of services. It also finalizes
the calendar year (CY) 2008 interim relative value units (RVUs) and
issues interim RVUs for new and revised codes for CY 2009. In addition,
as required by the statute, it announces that the physician fee
schedule update is 1.1 percent for CY 2009, the preliminary estimate
for the sustainable growth rate for CY 2009 is 7.4 percent, and the
conversion factor (CF) for CY 2009 is $36.0666. This final rule with
comment period also implements or discusses certain provisions of the
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).
(See the Table of Contents for a listing of the specific issues
addressed in this rule.)

DATES: Effective Date: This final rule with comment period is effective
on January 1, 2009 except for amendments to Sec. 410.62 and Sec.
411.351 which are effective July 1, 2009.
Comment Date: Comments will be considered if we receive them at one
of the addresses provided below, no later than 5 p.m. e.s.t. on
December 29, 2008.

ADDRESSES: In commenting, please refer to file code CMS-1403-FC.
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 http://www.regulations.gov. 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 to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1403-FC, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1403-FC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to either of the following addresses:

7500 Security Boulevard, Baltimore, MD 21244-1850; or

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.)
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.

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.
Corinne Axelrod, (410) 786-5620, for issues related to Health
Professional Shortage Area Bonus Payments.
Henry Richter, (410) 786-4562, for issues related to payments for
end-stage renal disease facilities.
Lisa Grabert, (410) 786-6827, for issues related to hospital-
acquired conditions and the Physician Resource Use Feedback Program.
August Nemec, (410) 786-0612, for issues related to independent
diagnostic testing facilities; 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, Kristin Bohl, (410) 786-8680, or Don
Romano, (410) 786-1401, for issues related to anti-markup provisions
and physician self-referral (incentive payment and shared savings
programs).
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 nonemergency 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.
Regina Walker-Wren, (410) 786-9160, for information concerning
educational

[[Page 69727]]

requirements for nurse practitioners and clinical nurse specialists.
Randy Throndset, (410) 786-0131, for information concerning
physician certification and recertification for Medicare home health
services.
William Larson, (410) 786-4639, for coverage issues related to the
initial preventive physical examination.
Cathleen Scally, (410) 786-5714, for payment issues related to the
initial preventive physical examination.
Dorothy Shannon, (410) 786-3396, for issues related to speech
language pathology.
Kendra Hedgebeth, (410) 786-4644, or Gina Longus, (410) 786-1287,
for issues related to low vision aids.
Christopher Molling, (410) 786-6399, or Anita Greenberg, (410) 786-
4601, for issues related to the repeal to transfer of title for oxygen
equipment.
Karen Jacobs, (410) 786-2173, or Hafsa Bora, (410) 786-7899, for
issues related to the therapeutic shoes fee schedule.
Diane Milstead, (410) 786-3355, or Gaysha Brooks, (410) 786-9649,
for all other issues.

SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on the
following issues:
The Exception for Incentive Payment and Shared Savings
Programs (Sec. 411.357(x)) in section II.N.1. of this final rule with
comment period;
Sections 131(c), 144(b), and 149 of the MIPPA as described
in sections III.C., III.J., and III.M. of this final rule with comment
period.
Interim Relative Value Units (RVUs) for selected codes
identified in Addendum C;
Information on pricing for items in Tables 2 through 5;
Issues related to the Physician Resource Use Feedback
Program described in section II.S.6. of this final rule with comment
period; and
The physician self-referral designated health services
(DHS) codes listed in Tables 29, 30, and 31. You can assist us by
referencing the file code [CMS-1403-FC] and the section heading 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 XVI. of this
final rule with comment period.

I. Background
A. Development of the Relative Value System
1. Work RVUs
2. Practice Expense Relative Value Units (PE RVUs)
3. Resource-Based Malpractice RVUs
4. Refinements to the RVUs
5. Adjustments to RVUs are Budget Neutral
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to 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
1. Payment for Preadministration-Related Services for
Intravenous Infusion of Immune Globulin
2. Multiple Procedure Payment Reduction for Diagnostic Imaging
3. HCPCS Code for Prostate Saturation Biopsies
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. Amendment to the Exemption for Computer-Generated Facsimile
(FAX) 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
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
1. Exception for Incentive Payment and Shared Savings Programs
(Sec. 411.357(x))
2. Changes to Reassignment Rules Related to Diagnostic Tests
(Anti-Markup Provisions)
O1. Physician Quality Reporting Initiative
O2. Electronic Prescribing (E-Prescribing) Incentive Program
P. Discussion of Chiropractic Services Demonstration
Q. Educational Requirements for Nurse Practitioners and Clinical
Nurse Specialists
R. Portable X-Ray Issue
S. 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 Payment of Continuous Positive Airway
Pressure (CPAP) Devices
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
6. Physician Resource Use Feedback Program
T. Electronic Prescribing (E-Prescribing) Incentive Program
III. Medicare Improvements for Patients and Providers Act of 2008
(MIPPA) Provisions
A. Section 101: Improvements to Coverage of Preventive Services
B. Section 131: Physician Payment, Efficiency, and Quality
Improvements
C. Section 131(c): Physician Resource Use Feedback Program
D. Section 132: Incentives for Electronic Prescribing
E. Section 133(b): Expanding Access to Primary Care Services
F. Section 134: Extension of Floor on Medicare Work Geographic
Adjustment Under the Medicare Physician Fee Schedule
G. Section 136: Extension of Treatment of Certain Physician
Pathology Services Under Medicare
H. Section 141: Extension of Exceptions Process for Medicare
Therapy Caps

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I. Section 143: Speech-Language Pathology Services
J. Section 144(b): Repeal of Transfer of Title for Oxygen
Equipment
K. Section 145: Clinical Laboratory Tests
L. Section 146: Improved Access to Ambulance Services
M. Section 149: Adding Certain Entities as Originating Sites for
Payment of Telehealth Services
N. Section 153: Renal Dialysis Provisions
IV. Potentially Misvalued Codes Under PFS
A. Valuing Services Under the Physician Fee Schedule
B. Requested Approaches for the AMA RUC To Utilize
C. AMA RUC Review of Potentially Misvalued Codes
V. Refinement of Relative Value Units for Calendar Year 2009 and
Response to Public Comments on Interim Relative Value Units for 2008
A. Summary of Issues Discussed Related to the Adjustment of
Relative Value Units
B. Process for Establishing Work Relative Value Units for the
Physician Fee Schedule
C. Interim 2008 Codes
D. Establishment of Interim Work Relative Value Units for New
and Revised Physician's Current Procedural Terminology (CPT) Codes
and New Healthcare Common Procedure Coding System Codes (HCPCS) for
2009 (Includes Table Titled ``AMA RUC Recommendations and CMS'
Decisions for New and Revised 2009 CPT Codes'')
E. Discussion of Codes and AMA RUC Recommendations
F. Additional Coding Issues
G. Establishment of Interim PE RVUs for New and Revised
Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System (HCPCS) Codes for 2009
VI. Physician Self-Referral Prohibition: Annual Update to the List
of CPT/HCPCS Codes
A. General
B. Speech-Language Pathology Services
C. Annual Update to the Code List
VII. Physician Fee Schedule Update for CY 2009
A. Physician Fee Schedule Update
B. The Percentage Change in the Medicare Economic Index (MEI)
C. The Update Adjustment Factor (UAF)
VIII. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate (SGR)
A. Medicare Sustainable Growth Rate
B. Physicians' Services
C. Preliminary Estimate of the SGR for 2009
D. Revised Sustainable Growth Rate for 2008
E. Calculation of 2009, 2008, and 2007 Sustainable Growth Rates
IX. Anesthesia and Physician Fee Schedule Conversion Factors for CY
2009
A. Physician Fee Schedule Conversion Factor
B. Anesthesia Conversion Factor
X. Telehealth Originating Site Facility Fee Payment Amount Update
XI. Payment for Certain Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS)--Services Excluded From Coverage
A. Low Vision Aid Exclusion
B. Replacement of Reasonable Charge Methodology by Fee Schedules
for Therapeutic Shoes
XII. Provisions of the Final Rule
XIII. Waiver of Proposed Rulemaking and Delay in Effective Date
XIV. Collection of Information Requirements
XV. Response to Comments
XVI. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--Relative Value Units and Related Information Used in
Determining Medicare Payments for CY 2009
Addendum C--Codes With Interim RVUs
Addendum D--2009 Geographic Adjustment Factors (GAFs)
Addendum E--2009 Geographic Practice Cost Indices (GPCIs) by State
and Medicare Locality
Addendum F--Multiple Procedure Payment Reduction Code List
Addendum G--CY 2009 ESRD Wage Index for Urban Areas Based on CBSA
Labor Market Areas
Addendum H--CY 2009 ESRD Wage Index Based on CBSA Labor Market Areas
for Rural Areas
Addendum I--CPT/HCPCS Imaging Codes Defined by Section 5102(b) of
the DRA
Addendum J--List of CPT/HCPCS Codes Used To Define Certain
Designated Health Services Under Section 1877 of the Social Security
Act

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 Association
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
CMHC Community mental health center
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
CSW Clinical social worker
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
EMTALA Emergency Medical Treatment and Active Labor Act
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

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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
HOPD Hospital outpatient department
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)
MIPPA Medicare Improvements for Patients and Providers Act of 2008
(Pub. L. 110-275)
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
NPDB National Practitioner Data Bank
NPI National Provider Identifier
NPP Nonphysician practitioner
NPPES National Plan and Provider Enumeration System
NQF National Quality Forum
NRC Nuclear Regulatory Commission
NTTAA National Technology Transfer and Advancement Act of 1995 (Pub.
L. 104-113)
NUBC National Uniform Billing Committee
OACT [CMS'] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
ODF Open door forum
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
PHP Partial hospitalization program
PIM [Medicare] Program Integrity Manual
PLI Professional liability insurance
POA Present on admission
POC Plan of care
PPI Producer price index
PPS Prospective payment system
PPTA Plasma Protein Therapeutics Association
PQRI Physician Quality Reporting Initiative
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PSG Polysomnography
PT Physical therapy
ResDAC Research Data Assistance Center
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
SRS Stereotactic radiosurgery
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

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),

[[Page 69730]]

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-Year 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 and 2008. This approach is consistent with the method we used to
make BN adjustments to reflect the changes in the PE RVUs.
Section 133(b) of the MIPPA amends section 1848(c)(2)(B) of the Act
to specify that, instead of continuing to apply the BN adjustor for the
5-Year Review to work RVUs, the BN adjustment must be applied to the CF
for years beginning with CY 2009. Further discussion of this MIPPA
provision as it relates to the CY 2009 PFS can be found in sections
III. and IX. of this final rule with comment period.

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

[[Page 69731]]

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 x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x 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 for
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 requirements
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
preliminary estimate for the sustainable growth rate (SGR) for CY 2008
is -0.1 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. For the
first half of 2008 (that is, January through June), the Medicare PFS
conversion factor was $38.0870. In the absence of legislation, the PFS
conversion factor for the second half of 2008 would have been $34.0682,
as announced in the PFS final rule with comment period for CY 2008.
However, as a result of the enactment of the Medicare Improvements for
Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA), the
Medicare PFS conversion factor remained at $38.0870 for the remaining
portion of 2008 (July through December).

II. Provisions of the Final Rule With Comment Period

In response to the CY 2009 PFS proposed rule (73 FR 38502) we
received approximately 4,100 timely public comments. These included
comments from individual physicians, health care workers, professional
associations and societies, manufacturers and Congressmen. The majority
of the comments addressed proposals related to independent diagnostic
testing facilities, anti-markup, prohibition concerning providers of
sleep tests, and the general impact of the proposed rule on specific
specialties. To the extent that comments were outside the scope of the
proposed rule, they are not addressed in this final rule with comment
period.

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

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--
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

[[Page 69732]]

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 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 in most instances have accepted. As a result, the
current PE inputs differ markedly from those originally recommended by
the CPEPs. The PEAC was replaced by the Practice Expense Review
Committee (PERC) and now these PE-related activities are addressed by
the AMA RUC PE subcommittee.
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 of direct PE RVUs can be
derived using the following formula: (PE RVUs x physician CF) x
(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. We then 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 use the 2007
procedure-specific utilization data crosswalked to 2009 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

[[Page 69733]]

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 services, 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 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.

[[Page 69734]]

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 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.
Work RVUs: The setup file contains the work RVUs from this
final 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 $36.0666 which is the CF effective
January 1, 2009 as published in this final rule.

[[Page 69735]]

Table 1--Calculation of PE RVUs Under Methodology for Selected Codes
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
99213 Office 33533 CABG, 93000 ECG, 93005 ECG, 93010 ECG,
Step Source Formula visit, est arterial single 71020 Chest x- 71020TC Chest x- 7102026 Chest x- complete tracing report
nonfacility facility ray nonfacility ray nonfacility ray nonfacility nonfacility nonfacility nonfacility
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Labor cost (Lab)........... Step 1.......... AMA............... ................. $13.32 $77.52 $5.74 $5.74 $-- $6.12 $6.12 $--
(2) Suppy cost (Sup)........... Step 1.......... AMA............... ................. $2.98 $7.34 $3.39 $3.39 $-- $1.19 $1.19 $--
(3) Equipment cost (Eqp)....... Step 1.......... AMA............... ................. $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 2-4....... See footnote*..... ................. 0.625 0.625 0.625 0.625 0.625 0.625 0.625 0.625
(6) Adjusted labor............. Steps 2-4....... =Lab*Dir Adj...... =(1)*(5)......... $8.33 $48.48 $3.59 $3.59 $-- $3.83 $3.83 $--
(7) Adjusted supplies.......... Steps 2-4....... =Sup*Dir Adj...... =(2)*(5)......... $1.87 $4.59 $2.12 $2.12 $-- $0.75 $0.75 $--
(8) Adjusted equipment......... Steps 2-4....... =Eqp*Dir Adj...... =(3)*(5)......... $0.12 $0.41 $5.11 $5.11 $-- $0.07 $0.07 $--
(9) Adjusted direct............ Steps 2-4....... .................. =(6)+(7)+(8)..... $10.32 $53.48 $10.82 $10.82 $-- $4.65 $4.65 $--
(10) Conversion Factor (CF).... Step 5.......... MFS............... ................. 36.0666 36.0666 36.0666 36.0666 36.0666 36.0666 36.0666 36.0666
(11) Adj. labor cost converted. Step 5.......... =(Lab*Dir Adj)/CF. =(6)/(10)........ 0.23 1.34 0.10 0.10 -- 0.11 0.11 --
(12) Adj. supply cost converted Step 5.......... =(Sup*Dir Adj)/CF. =(7)/(10)........ 0.05 0.13 0.06 0.06 -- 0.02 0.02 --
(13) Adj. equip cost converted. Step 5.......... =(Eqp*Dir Adj)/CF. =(8)/(10)........ 0.00 0.01 0.14 0.14 -- 0.00 0.00 --
(14) Adj. direct cost converted Step 5.......... .................. =(11)+(12)+(13).. 0.29 1.48 0.30 0.30 -- 0.13 0.13 --
(15) Wrk RVU................... Setup File...... MFS............... ................. 0.92 33.64 0.22 -- 0.22 0.17 -- 0.17
(16) Dir--pct.................. Steps 6, 7...... Surveys........... ................. 33.8% 32.6% 40.7% 40.7% 40.7% 37.7% 37.7% 37.7%
(17) Ind--pct.................. Steps 6, 7...... Surveys........... ................. 66.2% 67.4% 59.3% 59.3% 59.3% 62.3% 62.3% 62.3%
(18) Ind. Alloc. formula (1st Step 8.......... See 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)
part).
(19) Ind. Alloc. (1st part).... Step 8.......... .................. See (18)......... 0.56 3.06 0.44 0.44 -- 0.21 0.21 --
(20) Ind. Alloc. formulas (2nd Step 8.......... .................. See Step 8....... (15) (15) (15)+(11) (11) (15) (15)+(11) (11) (15)
part).
(21) Ind. Alloc. (2nd part).... Step 8.......... .................. See (20)......... 0.92 33.64 0.32 0.10 0.22 0.28 0.11 0.17
(22) Indirect Allocator Step 8.......... .................. =(19)+(21)....... 1.48 36.70 0.76 0.54 0.22 0.49 0.32 0.17
(1st+2nd).
(23) Indirect Adjustment (Ind Steps 9-11...... See footnote**.... ................. 0.337 0.337 0.337 0.337 0.337 0.337 0.337 0.337
Adj).
(24) Adjusted Indirect Steps 9-11...... =Ind Alloc * Ind ................. 0.50 12.37 0.26 0.18 0.07 0.16 0.11 0.06
Allocator. Adj.
(25) Ind.Practice Cost Index Steps 12-16..... See Steps 12-16 = ................. 0.973 0.976 1.087 1.087 1.087 1.237 1.237 1.237
(PCI). Adj. Ind.
(26) Adjusted Indirect......... Step 17......... Alloc*PCI......... =(24)*(25)....... 0.49 12.07 0.28 0.20 0.08 0.20 0.13 0.07
(27) PE RVU.................... Steps 18-19..... =(Adj Dir+Adj Ind) =((14)+(26)) 0.77 13.44 0.57 0.49 0.08 0.33 0.26 0.07
*budn. *budn.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 69736]]

2. PE Proposals for CY 2009
a. RUC Recommendations for Direct PE Inputs
In the CY 2009 PFS proposed rule, we agreed with the AMA RUC PE
recommendations for 23 codes except for the inclusion of the clinical
staff for quality-related activities for 8 immunization injection
services (73 FR 38512). The AMA RUC recommendations and other PE issues
are addressed below.
Immunization Services
We did not accept the AMA RUC-recommended inclusion of 4 minutes of
clinical staff time related to quality activities (QA) for the 4
immunization codes for the initial injection: CPT codes 90465, 90467,
90471, and 90473; nor did we accept the recommended 1 minute of QA time
for the 4 ``each additional'' subsequent injection for CPT codes 90466,
90468, 90472 and 90474. As we explained, unlike the clinical staff time
related to quality activities that is included for mammography services
as required by the Mammography Quality Standards Act of 1992 (Pub. L.
102-539) (MQSA), there is no statutory requirement for quality-related
clinical staff time inputs for these services.
Comment: We received comments from individuals and group practice
physicians, specialty societies, the AMA RUC, the AMA, two State
medical societies, a vaccine manufacturer, a pharmaceutical research
association, and the National Vaccine Advisory Committee regarding our
omission of the QA clinical labor time for the immunization injection
codes. These commenters requested that we add back the QA clinical time
as recommended by the AMA RUC.
Response: Based on the commenters' requests, we reexamined the
issue. We have identified clinical QA time included in other services
that is not based on a statutory requirement. For many cardiac and
vascular ultrasound services, for example, QA time is included because
it is directly related to compliance with accreditation requirements.
After our review, we believe there was evidence to support the
inclusion of this QA time in this case in order to comply with State
and Federal regulatory guidelines. We have revised the PE database to
reflect QA time for these immunization services.
Comment: Other commenters representing specialty societies
supported our acceptance of the AMA RUC recommendations for the 15
other services identified in Table 2 of the proposed rule.
Response: We have finalized the AMA RUC PE recommendations for
these 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) x (7 days per week) x (52 weeks per year) x (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 proposed 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 x 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 x 24 hours per day x 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.
Comment: The majority of comments received supported our proposal
to assign the standard 50 percent utilization rate to CPT codes 93012
and 93271. Other comments disagreed with our proposal and described it
as an arbitrary method for changing equipment utilization rates. Many
commenters suggested that we should develop a survey process that would
obtain service specific utilization rates for all PFS services.
Response: We agree with the commenters that support assigning the
standard 50 percent equipment utilization rate to CPT codes 93012 and
93271 and we will finalize our proposal to use the standard 50 percent
utilization rate for CPT codes 93012 and 93271. Although we did not
make any proposals related to a comprehensive survey of services
specific equipment costs, we plan to continue to work with interested
parties to analyze the possibilities for potential inclusion in a
future rulemaking cycle.
c. Change to PE Database Inputs for Certain Cardiac Stress Tests
In the CY 2009 PFS proposed rule, we proposed to change the PE
database for CPT code 93025, Microvolt T-wave alternans for assessment
of ventricular arrhythmias, to make the clinical labor staff type
consistent with the other cardiac stress tests, CPT codes 93015 and
93017. In addition, we proposed to add the specific Microvolt T-wave
testing equipment in place of the cardiac stress testing treadmill
devices, as well as to revise the time-in-use for the equipment in CPT
93025 to reflect the service period. We also proposed to apply similar
revisions to the equipment time-in-use to the other 2 CPT codes, CPT
codes 93015 and 93017.
Comment: The manufacturer of the equipment technology and the
specialty society were supportive of these proposed changes. In
addition, the AMA RUC noted that it would address this issue at the
2008 October AMA RUC meeting.
Response: We have received and accepted the AMA RUC recommendations
for CPT 93025, 93015 and 93017 which support all of the changes in our
proposal. The PE database is revised to reflect these changes.
d. Revisions to Sec. 414.22(b)(5)(i) Concerning Practice Expense
Current regulations at Sec. 414.22(b)(5)(i) provide an explanation
of the two levels of PE RVUs for the facility and nonfacility settings
that are used in determining payment under the PFS. Section
414.22(b)(5)(i)(A) discusses

[[Page 69737]]

facility PE RVUs and Sec. 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 proposed to revise Sec. 414.22(b)(5)(i)(A) and (B)
to remove this language.
We received no comments on our proposed technical change and have
revised the regulations at Sec. 414.22(b)(5)(i)(A) and (B) as
proposed.
e. Other PE Direct Input Issues
(i) Removal of Conscious Sedation (CS) PE Inputs for Services in
Which CS is not Inherent--Technical Correction
In reviewing the PE database, we noted that the conscious sedation
(CS) PE inputs for 12 CPT codes in which CS is not inherent had not
been removed after CPT 2005 began identifying these codes in a separate
Addendum. The CS inputs for CPT codes 19300, 22520, 22521, 31717,
62263, 62264, 62268, 62269, 63610, 64585, 64590, and 64595 had been
added by the AMA RUC's PEAC prior to CY 2005. At that time, the AMA RUC
recommended deletion of the CS PE inputs for all procedures that were
not identified in the CPT 2005 manual Addendum which lists the services
in which CS is inherent; and thus include the associated direct PE
inputs. Due to a technical error, these inputs were not removed for CY
2005. We have removed the CS PE inputs for the 12 CPT codes noted
above. We ask that the AMA RUC permit specialty societies to bring any
CPT codes forward to either the February or April 2009 AMA RUC meetings
should any other discrepancies between the CPT Addendum and the PE
database be identified.
(ii) Jejunostomy Tube Price
A comment received on the CY 2009 PFS proposed rule stated that we
had mistakenly entered the price for a set of 2, rather than just 1,
jejunostomy tube in each of the following CPT codes 49441, 49446,
49451, and 49452. So that the price of this PE supply can be properly
valued as part of the PE RVUs for each of the four services in which it
is found, we have changed the price of this supply from $198 to $97.50
in CPT codes 49441, 49446, 49451, and 49452. In addition, because it's
correct price is less than $150, this item was erroneously placed on
the list for re-pricing of higher-cost supplies on Table 29 in the
proposed rule; and, as a result of this price correction, it has been
removed from the list of supply items in need of repricing.
(iii) Supply Code SH079, Collagen, Dermal Implant (2.5ml uou)
(Contigen)
We received comments from a specialty society representing
urologists noting that the dermal collagen implant, priced at $317, was
an inappropriate supply input for CPT 52330. The specialty society
asked that we remove this supply from this service. We agree that
inclusion of the dermal collagen implant as a supply input for CPT code
52330 is not appropriate. The PE RVUs for CPT 52330 reflect the removal
of this supply item.
(iv) Contractor Pricing of CPT 77371 for Stereotactic Radiosurgery
(SRS) Treatment Delivery
CPT code 77371, Radiation treatment delivery, stereotactic
radiosurgery (SRS) (complete course of treatment of cerebral lesion(s)
consisting of one session); multi-source Cobalt 60 based, (more
commonly known as Gamma Knife) was a new CPT code for CY 2007. At that
time, we accepted nearly all of the AMA RUC PE recommendations for this
procedure (we did not accept the Cobalt 60 radiation source as a direct
PE input) during CY 2007 rulemaking, and these recommendations are
reflected in the PE RVUs for CPT 77371. The PE inputs for CPT 77371 had
been proposed by the sitting AMA RUC specialty society representing
therapeutic radiation oncology physicians. The AMA RUC discussed and
amended the specialty's proposal for direct PE inputs (particularly the
amount of clinical labor time) prior to agreeing on the final AMA RUC
recommendation that was forwarded to CMS for CY 2007. Due to the
equipment expense (nearly $4 million) along with the many Nuclear
Regulatory Commission (NRC) requirements for construction of the
facility required to furnish these procedures, all but one of these
facilities is connected with a hospital setting, leaving a single free-
standing nonfacility provider.
Comment: We received 3 comments stating that the PE RVUs listed in
Addendum B for CPT 77371 are exceptionally inadequate. All commenters,
including the single freestanding nonfacility based provider, noted the
difference in payments between those made under OPPS and the PFS for
CPT 77371. For CY 2009, the commenters noted that the proposed OPPS
payment is $7,608 and the PFS payment under the proposed rule would be
$1,260. A freestanding nonfacility provider noted that it had worked
with the Medicare contractor but was unsuccessful in securing a higher
payment because the contractor could not deviate from the established
PE RVUs. Two commenters also stated that they believe the direct PE
inputs are incorrect since the cost data they had gathered from other
facility providers of this stereotactic radiosurgery (SRS) service
included extra clinical labor time due to Nuclear Regulatory Commission
(NRC) requirements for both the physicist and the registered nurse. In
addition, they disagreed with our decision to treat the Cobalt 60
radiation source (recommended by the AMA RUC as a 1-month renewable
equipment item) as an indirect PE cost in the CY 2007 PFS final rule
with comment period. The commenters have asked us to contractor-price
CPT 77371 for CY 2009 if a payment correction cannot be made in the
final rule.
Response: We will ask the AMA RUC to review the direct PE inputs
for this code in light of these comments. In the interim, we believe
the commenters have raised sufficient questions regarding the propriety
of the direct PE inputs and PE RVUs established for this new code in
2007 to warrant contractor-pricing for CPT 77371 for CY 2009.
f. Supply and Equipment Items Needing Specialty Input
We have identified some supply and equipment items from the CY 2008
final rule with comment period for which we were unable to verify the
pricing information (see Table 2: Items Needing Specialty Input for
Pricing and Table 3: Equipment Items Needing Specialty Input for
Pricing). For the items listed in Tables 2 and 3, we are requesting
that commenters provide pricing information. In addition, we are
requesting acceptable documentation, as described in the footnote to
each table, to support the recommended prices. For supplies or
equipment that previously appeared on these lists, we may propose to
delete these items unless we receive adequate information to support
current pricing by the conclusion of the comment period for this final
rule.
In Tables 4 and 5, we have listed specific supplies and equipment
items related to new CY 2009 CPT codes that are discussed in section V.
of this final rule with comment period. We have added these items to
the PE database along with the associated prices (on an interim basis).
We plan to propose finalized pricing information in the CY 2010 PFS
proposed rule. Item prices identified in these tables are also
reflected in the PE RVUs in Addendum B. In addition, we have asked
commenters to submit specific information in response to the

[[Page 69738]]

discussion of the supply and equipment items for some each of the new
CPT codes in section V. of this final rule with comment period. We have
also specifically asked for public comment about the direct cost inputs
for the 3 new 2009 CPT codes which we contractor-priced for CY 2009
(CPT codes 93229, 93299, and 95803).

Table 2--Supply Items Needing Specialty Input for Pricing
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Commenter
Code 2008/9 Unit Unit Associated Associated * Prior item status response and CMS 2009 Item status
Description price Specialties CPT code(s) on table action refer to note(s)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gas, argon, ................. ........ Urology, 50395 YES................ New item 2008... A, D.
cryoablation. Radiology,
Interventional
Radiology.
Gas, helium, ................. ........ Urology, 50395 YES................ New item 2008... A, D.
cryoablation. Radiology,
Interventional
Radiology.
SL119....... Sealant spray.... oz............... ........ Radiation 77333 YES................ No comments B.
Oncology. received.
Catheter, Kumpe.. Item............. ........ Radiology, 50385, 50386 YES................ New item 2008... A, D.
Interventional
Radiology.
Disposable ................. ........ Oral and 21073 YES................ New item 2008... A, D.
aspirating Maxillofacial
syringe. Surgery.
Guidewire, angle ................. ........ Radiology, 50385, 50386 YES................ New item 2008... A, D.
tip (Terumo), Interventional
180 cm.1 Radiology.
Snare, Nitinol Item............. ........ Radiology, 50385, 50386 YES................ New item 2008... A, D.
(Amplatz). Interventional
Radiology.
NA.......... Agent, neurolytic ml............... ........ Orthopedic 64632 NO................. New item 2009... A.
Surgery,
Podiatry.
NA.......... Strut, Item............. 1151 ................ 20697 NO................. New item 2009... A.
replacement,
dynamic external.
NA.......... Tube, anaerobic Item............. ........ 62267........... Lab NO................. New item 2009... A, B.
culture.
NA.......... Tube, Item............. 97.50 49441, 49446, Accessory NO................. Price changed/ C.
jejunsostomy. 49451 and 49452. CMS error. $195
price for 2 J-
tubes. $97.50
accepted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.

Note: Acceptable documentation includes detailed description (including system, kit or product components), source (multiple sources requested), and
current pricing information. For most items, there will be multiple sources of documentation available--multiple products/models that can be used as
acceptable substitutes in performing a procedure. We ask that documentation from multiple sources be submitted with verified prices of the various
products which represent the price range. In these instances, only one specific item/model/product is available on the market for use in a given
procedure, one source of documentation is required. However, CMS expects that all documentation reflect the market price for each product reflecting
the manufacturer or vendor discounts, rebates, etc. Invoices from physician purchases are the preferred documentation. In cases where this is not
possible, CMS may accept other documentation such as copies of catalog pages, hard copy from specific Web pages, physician invoices, and typical or
average sales price ``quotes'' (letter format okay) from manufacturers, vendors, or distributors. Unacceptable documentation includes phone numbers
and addresses of manufacturer, vendors or distributors, Web site links without pricing information, etc.
A. Additional documentation required. Need detailed description (including ``kit'', system, or product contents and component parts), source, and
current pricing information (including pricing per specified unit of measure in database).
B. No/Insufficient information received. Where applicable, retained price in database on an interim basis. Forward acceptable documentation promptly.
C. Submitted price accepted.
D. 2008/9 price retained on an interim basis. Forward acceptable documentation promptly.

Table 3--Equipment Items Needing Specialty Input for Pricing
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT
2008/9 Primary specialties code(s) Prior status on Commenter response 2009 Item status
Code 2008/9 Description Price associated with item associated table and CMS action refer to note(s)
with item
--------------------------------------------------------------------------------------------------------------------------------------------------------
Camera mount-floor... 2300 Dermatology......... 96904 Yes................. Specialty to submit, A and D.
asap.
Cross slide 500 Dermatology......... 96904 Yes................. Specialty to submit, A and D.
attachment. asap.
Plasma pheresis 37,900 Radiology, 36481, G0341 Yes................. Revised description B.
machine. Dermatology. based on comments
received that light
source was not part
of item.
Documentation
requested.
ED039........... Psychology Testing ......... Psychology.......... 96101, 96102 Yes................. Specialty to submit, B.
Equipment. asap.
Strobe, 400 watts 1500 Dermatology......... 96904 Yes................. Documentation B.
(Studio)(2). requested.
Cryosurgery system ......... Urology, Radiology, 50593 Yes................. New item 2008....... A and D.
(for tumor Interventional
ablation).1 Radiology.

[[Page 69739]]

Workstation, dual, 85000 Cardiology.......... 93351 No.................. New item 2009, E.
echocardiography. Specialty submitted
$173,509--CMS
accept $85,000.
EQ136........... Infrared Coagulator 3659.50 .................... 46606, No.................. New price for 2009 E.
(with hand 46608, with addition of
applicator, includes 46610, light guide, Supply
light guide). 46612, 46930 code, Eq136,
descriptor changed
to include the
light guide.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.

Note: Acceptable documentation includes detailed description (including system, kit or product components), source (multiple sources requested), and
current pricing information. For most items, there will be multiple sources of documentation available--multiple products/models that can be used as
acceptable substitutes in performing a procedure. We ask that documentation from multiple sources be submitted with verified prices of the various
products which represent the price range. In these instances, only one specific item/model/product is available on the market for use in a given
procedure, one source of documentation is required. However, CMS expects that all documentation reflect the market price for each product reflecting
the manufacturer or vendor discounts, rebates, etc. Invoices from physician purchases are the preferred documentation. In cases where this is not
possible, CMS may accept other documentation such as copies of catalog pages, hard copy from specific Web pages, physician invoices, and typical or
average sales price ``quotes'' (letter format okay) from manufacturers, vendors, or distributors. Unacceptable documentation includes phone numbers
and addresses of manufacturer, vendors or distributors, Web site links without pricing information, etc.
A. Additional documentation required. Need detailed description (including kit contents), source, and current pricing information (including pricing per
specified unit of measure in database). Accept copies of catalog pages or hard copy from specific Web pages. Phone numbers or addresses of
manufacturer, vendors, or distributors are not acceptable documentation.
B. No/Insufficient received. Retained price in database on an interim basis. Forward acceptable documentation promptly.
C. Submitted price accepted.
D. 2008/9 price, where specified, retained on an interim basis. Forward acceptable documentation promptly.
E. See discussion in section V. of this final rule with comment period. Forward requested documentation promptly, for example, whether item is typical.

Table 4--Practice Expense Supply Item Additions for CY 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT code(s)
Equip code Supply description Unit Unit associated with Supply category Comments
price item
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA.............................. Agent, neurolytic.. ml................. ........ 64632.............. Pharmacy, Rx....... A, B and D.
NA.............................. IV infusion set, Item............... 11.5 96369 and 96371.... Hypodermic, IV..... B.
Sof-set (Minimed).
NA.............................. Strut, replacement, Item............... 1151 20697.............. Accessory.......... A.
dynamic external.
NA.............................. Swab, patient prep, Item............... 1.04 93352.............. Pharmacy, NonRx.... B.
1.5 ml
(chloraprep).
NA.............................. Tube, anaerobic Item............... ........ 62267.............. Lab................ A.
culture.
NA.............................. Tube, jejunsostomy. Item............... 97.50 49441, 49446, 49451 Accessory.......... A and C.
and 49452.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
A. Price verification needed. Item(s) added to table of supplies requiring specialty input.
B. Request explanation/rationale as to why specific supply is necessary, how it differs from current PE database item, and why current PE item(s) cannot
be used for procedure(s).
C. CMS price correction.
D. Also, see discussion in section V. of this final rule with comment period. Proxy in use on an interim basis: SH062 Sclerosing solution, inj.

Table 5--Practice Expense Equipment Item Additions for CY 2009
----------------------------------------------------------------------------------------------------------------
* CPT code(s) Supply or
Item code Equipment Equip Unit price associated with equipment Comments
description life item category
----------------------------------------------------------------------------------------------------------------
NA................ Workstation, 5 85000 93351........... DOCUMENTATION... A and D.
dual,
echocardiograph
y.
NA................ Pacemaker, 5 123250 93693 and 93696. OTHER EQUIPMENT. B and D.
Interrogation,
System (CMS
used Pacemaker,
Monitoring,
System as proxy
for price).

[[Page 69740]]

EQ198............. Pacemaker follow- 7 23507 93279, 93280, OTHER EQUIPMENT. C and D.
up system (incl 93281, 93282,
software and 93284, 93285,
hardware) 93286, 93287,
(Paceart). 93288, 93289,
93290, 93291,
93292, 93724.
EQ136............. Infrared 10 3659.50 46606, 46608, OTHER EQUIPMENT. A and D.
Coagulator 46610, 46612,
(with hand 46930.
applicator,
includes light
guide).
----------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS apply.
A. Price verification needed. Item(s) added to table of equipment requiring specialty input.
B. Interim value, CY 2009 only. CMS assigned the pacemaker monitoring system to these two CPT codes that the
specialty association requested a pacemaker ``interrogation'' system. Since the CMS PE database does not
contain such an item, we assigned, on an interim basis, the pacemaker monitoring system that was assigned to
these 2 codes previously. Although we remain uncertain as to the appropriate equipment that should be
assigned, we will work with the specialty as they provide us with more information and documentation for the
typical equipment needed for these 2 services when provided in the physician's office.
C. Interim value, CY 2009 only. CMS assigned EQ198 to all new cardiac monitoring codes for CY 2009 because the
crosswalked codes (for CY 2008) each contained the equipment item EQ198. While the specialty requested the
``pacemaker monitoring system'' for these services, CMS was not provided any information to support the change
in technology for these services provided in the physician's office setting.
D. Also, see discussion in Section V. of this final rule with comment period.

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

1. Update
Section 1848(e)(1)(A) of the Act requires us to develop separate
Geographic Practice Cost Indices (GPCIs) to measure resource cost
differences among localities compared to the national average for each
of the three fee schedule components (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), we established new
GPCIs for each Medicare locality in CY 2008 and implemented them. The
CY 2008 adjustment to the GPCIs reflected the first year of the 2-year
phase-in.
We noted in the CY 2009 PFS proposed rule (73 FR 38513), that the
physician work GPCIs we calculated did not reflect the 1.000 floor that
was in place during CY 2006 through June 30, 2008. However, as
discussed in section III. of this preamble, section 134 of the MIPPA of
2008 extended the 1.000 work GPCI floor from July 1, 2008, through
December 31, 2009. Additionally, section 134(b) of the MIPPA sets a
permanent 1.500 work GPCI floor in Alaska for services furnished
beginning January 1, 2009. As such, the CY 2009 GPCIs and summarized
GAFs reflect these statutorily mandated work GPCI floors.
See Addenda D and E for the 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 in 1992. 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

[[Page 69741]]

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 subsequent final rule (61 FR 59494).
Although there have been no changes to the locality structure since
1997, we have proposed changes in recent years, although we did not
finalize them. 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, and consideration of potential alternatives.

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 PFS proposed rule, we described three options for
changing the payment localities in California. For a detailed
discussion of the options for changing the payment localities in
California, see 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 intended to conduct 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
In the CY 2009 PFS proposed rule, we explained that as a follow-up
to the CY 2008 PFS final rule with comment period, we 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. We also stated that we are not making any changes to our
payment localities at this time. For a discussion of the alternative
payment locality configurations currently under consideration, see the
CY 2009 PFS proposed rule (73 FR 38514).
Our preliminary study of several options for revising the payment
localities was posted on the CMS Web site on August 21, 2008. The
report entitled, ``Review of Alternative GPCI Payment Locality
Structures'', which was produced by Acumen, LLC under contract to CMS,
is accessible from the PFS Federal regulation notices Web page under
the download section of the CY 2009 PFS proposed rule (CMS-1403-P). The
report may also be accessed directly from the following link: http://www.cms.hhs.gov/PhysicianFeeSched/downloads/ReviewOfAltGPCIs.pdf.
Comments on the interim report were accepted through November 3, 2008.
In the CY 2009 PFS proposed rule and on the CMS Web site, we
encouraged interested parties to submit comments on the options
presented in the proposed rule and in our interim report. We also
requested comments on the administrative and operational issues
associated with each option, as well as suggestions for other options.
Comment: We received comments on the options discussed in the
proposed rule from various specialty groups and medical societies, as
well as a few group practices and individual practitioners. Generally,
commenters commended us for acknowledging the need for intermittent
reconfiguration of PFS payment localities and expressed support for our
study of alternative locality configurations. Some commenters urged us
to expedite changes in our payment localities and suggested that we do
so as part of the CY 2009 final rule. Other commenters requested that,
in any locality reconfiguration, we minimize the payment discrepancy
between urban and rural areas to ensure continued access to care.
Response: We would like to thank the public for the comments
submitted on the options presented in the proposed rule and in the
interim report posted on the CMS Web site. We will summarize all
comments received in future rulemaking. As we have stated previously,
we will provide extensive opportunities for public comment (for
example, town hall meetings or open door forums, as well as a proposed
rule) on any specific proposals for changes to the locality
configuration before implementing any changes.

C. Malpractice RVUs (PC/TC Issue)

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 TC MP RVUs that are

[[Page 69742]]

greater than the PC MP RVUs. The PLI workgroup requested that we make
changes to these MP RVUs and suggested that it is illogical for the MP
RVUs for the TC of a service to be higher than the MP RVUs for the PC.
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 such a change. We asked for information about
how, and if, technicians employed by facilities purchase PLI or how
their professional liability is covered. We also asked for comments on
what types of PLI are carried by facilities that perform these
technical services.
In the CY 2008 PFS final rule with comment period (72 FR 66248),
one commenter suggested that we ``flip'' the MP RVUs between the PCs
and TCs, or make them equal. Reversing the RVUs would reduce the MP
RVUs for the TC and increase the MP RVUs for 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.
We responded 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 has undergone a resource-based review, is derived from
actual data, and is consistent with the resource-based methodology for
PFS payments. We 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.
We also noted that we have received several comments supporting the
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.
We stated that we would continue to solicit, collect, and analyze
appropriate data on this subject. We noted 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.
In the CY 2009 PFS proposed rule (73 FR 38515), we stated that 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 noted that we did not receive a response to our CY 2008 request for
additional data on this issue and that this issue is one of importance
to CMS. We also stated that the lack of available PLI data affects our
ability to make a resource-based evaluation of the TC MP RVUs for these
codes. We indicated that as part of our work to update the MP RVUs in
CY 2010, we would instruct our contractor to research available data
sources for the MP costs associated with the TC portion of these codes
and that we would also ask the contractor to look at what is included
in general liability insurance versus PLI for physicians and other
professional staff. We also stated that if data sources are available,
we would 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.
The following is a summary of the comments we received on the CY
2009 PFS proposed rule and our responses.
Comment: Most commenters opposed any change to the MP RVUs that
would make the TC MP RVUs zero. The commenters stated that there are
identifiable MP expenses associated with allied health professionals
and that for many radiation oncology centers there are separate MP
insurance policies for the radiation oncologists and the nonphysician
clinical personnel. The commenters requested that we ensure that the
liability insurance associated with the nonphysician personnel is
reflected in the MP RVUs for technical services. The commenters also
stated that these expenses do not represent general insurance liability
premiums which are part of the PE RVUs. The commenters were supportive
of our plan for researching data sources for MP premium data for the TC
of these codes. One commenter provided the name of a company that
provides liability insurance to imaging facilities.
Other commenters, including the AMA, proposed that CMS reduce to
zero the TC MP RVUs associated with the codes identified as having
higher TC MP RVUs than PC MP RVUs. The commenters stated that any
premium data received would represent general liability insurance, not
liability insurance premium data related to nonphysician clinical
personnel. The commenters suggested that premium data does not exist to
support a resource-based computation of the MP RVUs for the TC and
stated that general liability insurance premiums are included in the PE
component and should not be part of the MP RVU calculation.
Response: We appreciate the comments in support of our proposal to
instruct our contractor to research available data sources for the MP
costs associated with the TC portions of these codes. As we stated in
the CY 2008 PFS final rule with comment period (72 FR 66248), we are
not able to evaluate whether sufficient data exists or to make a
judgment on the RUC's assertion that such data are not available. It is
possible that the contractor responsible for collecting the data for
the 5-year MP RVU update will identify providers of professional
liability insurance for nonphysician clinical personnel. We plan to
share the information received on a potential source of such data with
our contractor. If such premium data can be identified, it will be
incorporated into the MP RVU update. In the event that we adopt such
data, we will ensure there is no duplication of costs between the PE
and the MP RVUs. As noted in the CY 2009 PFS proposed rule, and
discussed above in this section, we will be addressing this issue as
part of the update to the malpractice RVUs for CY 2010.

D. Medicare Telehealth Services

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

[[Page 69743]]

and, if necessary, the telepresenter. We also look for similarities in
the telecommunications system used to deliver the proposed service, for
example, the use of interactive audio and video equipment.
Category 2: Services that are not similar to the
current list of telehealth services. Our review of these requests
includes an assessment of whether the use of a telecommunications
system to deliver the service produces similar diagnostic findings or
therapeutic interventions as compared with the 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. Each request for adding a service to the
list of Medicare telehealth services must include any supporting
documentation you wish us to consider as we review the request. Because
we use the annual PFS as a vehicle for making changes to the list of
Medicare telehealth services, requestors should be advised that any
information submitted is subject to disclosure for this purpose. For
more information on submitting a request for an addition to the list of
Medicare telehealth services, including where to directly mail these
requests, visit our Web site at http://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. In the CY 2009 PFS proposed rule (73 FR 38515), we responded
to these requests. We did not propose to add DSMT or critical care
services to the list of Medicare telehealth services. We proposed to
create HCPCS codes specific to follow-up inpatient consultations
delivered via telehealth, and we proposed to revise Sec. 410.78 and
Sec. 414.65 to revise our regulations accordingly. The following is a
summary of the discussion from the proposed rule and a summary of the
comments we received and our responses.
a. Diabetes Self-Management Training (DSMT)
The American Telemedicine Association (ATA) and the Marshfield
Clinic submitted a request to add individual and group 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. The requesters believe that DSMT services
can be considered and approved for telehealth as Category 1 services
because they are comparable to medical nutrition therapy (MNT) services
approved for telehealth.
As discussed in the CY 2009 PFS proposed rule (73 FR 38516), Sec.
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). In addition, 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. (See 70
FR 45787 and 70 FR 70157 for a previous discussion of group services.)
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 needed to evaluate whether these are services for which
telehealth can be an adequate substitute for a face to face encounter.
After reviewing studies submitted with the request, we determined that
we do not have sufficient comparative analysis that either individual
or group DSMT delivered via telecommunications is equivalent to DSMT
delivered face to face. We did not find evidence that providing DSMT
via telehealth is an adequate substitute for providing DSMT in person.
Therefore, we proposed not to add individual and group DSMT (as
described by HCPCS codes G0108 and G0109) to the list of approved
telehealth services.
Comment: Some commenters disagreed with our proposal and noted that
adding DSMT to the list of approved telehealth services would provide a
physician or practitioner with an additional tool for supporting
patient compliance with management of diabetes. One commenter
acknowledged that training patients in the self-administration of
injectable drugs, a required component of DSMT programs, would be
difficult to perform via telehealth. However, the commenter disagreed
that this concern should prevent diabetes patients from accessing the
DSMT benefit through telehealth. The commenter believes that educating
a patient on diet, exercise, medications, managing stress and illness,
and managing blood sugar can be taught via telehealth.
Another commenter agreed that telehealth should not serve as a
substitute for initial DSMT training that may involve hands-on teaching
of injectable medications or appropriate usage of glucose monitors.
However, the commenter believes that follow-up telehealth encounters
can help to quickly identify any potential problems or health concerns.
Response: The request we received was to add individual and group
DSMT as described by HCPCS codes G0108 and G0109 to the list of
Medicare

[[Page 69744]]

telehealth services. As discussed above, teaching beneficiaries the
skills necessary for the self administration of injectable drugs is a
statutorily required element of DSMT (and is typically provided as part
of an individual DSMT session). This skill based training is typically
not a component of any of the current Medicare telehealth services.
Group DSMT (which comprises the vast majority of DSMT; initial and
follow up) is by definition furnished in a group setting and,
therefore, the interactive dynamic is not similar to any existing
telehealth service. No group services are approved for telehealth. For
more information on our review of the use of telehealth to furnish
group services, see the CY 2006 PFS proposed rule (70 FR 45787).
In order to consider addition of services for Medicare telehealth
that are not similar to the existing list of telehealth services, we
require comparative studies showing that the use of an interactive
audio and video telecommunications system is an adequate substitute for
the in person (face-to-face) delivery of the requested service. To
date, requestors have not submitted sufficient comparative analyses
supporting the approval of skill based training (such as teaching a
patient how to administer self-injectable drugs) for telehealth.
Likewise, requestors have not submitted comparative analyses showing
that the use of a telecommunications system is an adequate substitute
for group counseling services (DSMT or otherwise) furnished in person.
We agree with the commenters that skill-based training, such as
teaching patients how to inject insulin, would be difficult to
accomplish without the physical in person presence of the teaching
practitioner. However, we disagree that this training element should be
carved out of individual (or group) DSMT for purposes of providing
Medicare telehealth services. The skill-based training involved in
teaching beneficiaries the skills necessary for the self-administration
of injectable drugs is a key component of this statutorily defined
benefit (and therefore inherent in the codes that describe DSMT). We do
not believe that it would be appropriate to carve out this statutorily
required component of DSMT for purposes of telehealth.
b. Critical Care Services
The (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
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.''
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
needed to evaluate whether these are services for which telehealth can
be an adequate substitute for a face-to-face encounter. We had 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 did not propose to add critical care services (as defined by HCPCS
codes 99291 and 99292) to the list of approved telehealth services.
Comment: UPMC submitted a detailed description of their experiences
using telehealth to support the treatment of acute stroke patients and
provided supporting studies describing the use of telemedicine in
remote stroke assessment. Per their comment, remote stroke assessment
has specific and unique clinical importance because an urgent decision,
based in part on a neurological examination, must be made regarding the
administration of thrombolytic therapy within 3 hours of the onset of
stroke symptoms. The elements of remote stroke assessment involve
discrete interactions between physicians and patients, and the
consultative input of specialists experienced in acute stroke treatment
is considered in directing the bedside care of the patient.
Some commenters were concerned that our proposal will not permit
the use of telehealth to treat critically ill patients. We received
comments and supporting documentation regarding the feasibility and
value of providing consultations via telehealth to patients who are
critically ill.
Response: Consultations are already included on the list of
approved telehealth services. Our proposal not to add critical care
services (as defined by 99291 and 99292) to the list of Medicare
telehealth services does not preclude physicians or NPPs from providing
medically necessary and clinically appropriate telehealth consultations
to patients who are critically ill. We believe that permitting initial
and follow up inpatient consultation via telehealth will help provide
greater access to specialty care for critically ill patients (including
stroke patients). If guidance or advice is needed regarding a
critically ill patient, a consultation may be requested from an
appropriate source and may be furnished as a telehealth service. (See
the CMS Internet-Only Medicare Claims Processing Manual, Chapter 12,
Section 30.6.10 for more information on Medicare policy regarding
payment for consultation services.)
In support of the request to approve critical care services (as
described by HCPCS codes 99291 through 99292), UPMC provided
comparative analyses involving the use of an interactive audio and
video telecommunications system as a substitute for an in-person (face-
to-face) clinical assessment. However, the focus of these studies was
limited to stroke patients (critical care services include a broad
range of disease categories). Additionally, one study recruited
clinically stable patients. This study noted that ``because of the
subacute nature of our test bed, the current data must be considered
preliminary in determining their potential impact on actual clinical
decision making.'' The same study also noted that although the use of
telehealth ``may expedite stroke-related decision making, it cannot and
should not be thought of as a substitute for the comprehensive clinical
evaluation of the acute stroke patient, including thorough medical and
cardiac evaluations.'' In another study submitted, the patients
selected were not randomized.
Comment: A few commenters supported our proposal not to add
critical care services to the list of Medicare approved telehealth
services. The commenters believe that, within the current standards of
practice, critical care services require the physical presence of the
physician rendering the critical care services.
We received approximately 20 comments expressing opposition to our
proposal not to add critical care services to the list of Medicare
approved telehealth services which distinguished between their use of
telehealth for

[[Page 69745]]

critical care services and the use of telehealth for remote stroke
assessments, as described in the original request. Many of the
commenters characterized our proposal as a ``non-coverage
determination'' of remote critical care services and described an
intensive care unit (ICU) model that integrates continuous surveillance
of the ICU with an electronic medical records interface. This model is
also programmed to automatically prompt the physician to rapidly
respond and intervene in the event of certain changes in a patient's
physiological status. Many of these commenters included documentation
and references to studies that the adoption of this model reduced
medical errors; enhanced patient safety; reduced complications;
decreased overall length of stay in the ICU; and resulted in a
statistically significant decrease in ICU mortality in comparison to
the traditional ICU model. The commenters also noted that patient
outcomes have been equivalent if not superior to patient outcomes prior
to adopting this model of care.
The American Medical Association (AMA) recently developed Category
III tracking codes for remote critical care services (0188T-0189T). Two
specialty societies commented that they are working with other critical
care organizations to collect and analyze data on remote critical care
services, as requested by the CPT editorial panel.
Response: In the CY 2009 PFS proposed rule, we explained that we
have no evidence suggesting that the use of telehealth could be a
reasonable surrogate for the face-to-face delivery of critical care
services, as defined by HCPCS codes 99291 and 99292. We agree with the
comments that, within the current standards of practice, critical care
services require the physical presence of the physician rendering the
critical care services.
Our proposal not to add critical care services to the list of
approved telehealth services for Medicare was in no way a ``non-
coverage determination'' for remote critical care services described by
the AMA's Category III tracking codes, 0188T-0189T. Consistent with the
AMA's creation of those tracking codes, we believe that remote critical
care services are different from the telehealth delivery of critical
care services (as defined by CPT codes 99291 through 99292). Category
III CPT codes track utilization of a service, facilitating data
collection on, and assessment of new services and procedures. We
believe that the data collected for these tracking codes will help
provide useful information on how to best categorize and value remote
critical care services in the future. However, at the present time, we
do not have sufficient evidence that the provision of critical care
services (as represented by HCPCS codes 99291 and 99292) via telehealth
is an adequate substitute for an in person (face-to-face) encounter.
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 subsequent 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).
In the CY 2009 PFS proposed rule, we proposed 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. We proposed that the new HCPCS codes would be limited
to the range of services included in the scope of the previous CPT
codes for follow-up inpatient consultations, and the descriptions would
be modified to limit the use of such services for telehealth. The HCPCS
codes would clearly designate these services as follow-up inpatient
consultations provided via telehealth, and not subsequent hospital care
used for inpatient visits. Utilization of these codes would allow for
payment for these services, as well as enable us to monitor whether the
codes are used appropriately. We also proposed 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.
Comment: Several commenters enthusiastically supported our proposal
to create a new series of HCPCS codes for follow-up inpatient
telehealth consultations. Some commenters were concerned that our
proposed definition of the new HCPCS codes did not clearly distinguish
these consultations from subsequent hospital care, and they believed it
would not preclude the use of telehealth for the ongoing E/M of an
inpatient. Other commenters supported our effort to reinstitute follow-
up inpatient consultations delivered via telehealth, but discouraged us
from creating new HCPCS codes for the long-term. A few commenters
recommended that instead we approve subsequent hospital care for
telehealth. The AMA and others urged us to implement the proposed G
codes as an interim measure, while working expeditiously with the CPT
Editorial Panel and the RUC to develop appropriate codes and RVUs for
the long-term.
Response: We are pleased that the majority of commenters supported
our proposal to create a new series of HCPCS codes for follow-up
inpatient telehealth consultations. As discussed in the CY 2009 PFS
proposed rule, we considered other approaches to provide and bill for
follow-up inpatient consultations delivered via telehealth. In response
to the comments requesting that we approve subsequent hospital care for
telehealth only when the codes are used for follow-up inpatient
consultations, we were concerned that

[[Page 69746]]

the other approaches under consideration would lead to a misuse of the
service, and practitioners would provide a broader range of services
via telehealth than was formerly approved, including the ongoing, day-
to-day E/M of a hospital inpatient. We were also concerned that it
could be difficult to implement sufficient controls and monitoring to
ensure that whatever mechanism we created would be limited to the
delivery of services that were formerly described as follow-up
inpatient consultations. We continue to believe that creating HCPCS
codes specific to the telehealth delivery of follow-up inpatient
consultations allows us to provide payment for these services, as well
as enables us to best monitor whether the codes are used appropriately.
As noted previously, CPT deleted the follow-up inpatient
consultation codes. We determined that there was a need to establish a
method by which practitioners could provide and bill Medicare for
follow-up inpatient consultations delivered via telehealth, without
allowing the ongoing E/M of a hospital inpatient via telehealth.
Physicians and NPPs 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).
In response to commenters concerns that the new HCPCS codes will
not prevent the use of telehealth for the ongoing E/M of an inpatient,
we have modified the definition of follow-up inpatient telehealth
consultations. We clarified that the criteria for these services will
be subject to and consistent with Medicare policy for consultation
services, including criteria that would distinguish a follow-up
consultation from a subsequent E/M visit.

Result of Evaluation of 2009 Requests

We will finalize our proposal not to add DSMT (as defined by HCPCS
codes G0108 and G0109) and not to add critical care services (as
defined by HCPCS codes 99291 and 99292) to the list of Medicare
telehealth services.
We will finalize our proposal to add follow-up inpatient telehealth
consultation, as represented by HCPCS codes G0406 through G0408, to the
list of Medicare telehealth services. We will also finalize our
proposal to add follow-up inpatient telehealth consultations to the
list of Medicare services at Sec. 410.78 and Sec. 414.65.
Practitioners would use the new HCPCS codes to submit claims to
their Medicare contractors for payment of follow-up inpatient
consultations provided via telehealth. These new HCPCS codes are
limited to the range of services included in the scope of the previous
CPT codes for follow-up inpatient consultations, and the descriptions
limit the use of such services for telehealth. The HCPCS codes clearly
designate these services as follow-up inpatient consultations provided
via telehealth, and not subsequent hospital care used for inpatient
visits. Utilization of these codes will allow for payment for these
services, as well as enable us to monitor whether the codes are used
appropriately.
We also will finalize our proposal 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).
Physicians and NPPs 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 are finalizing our proposal to create HCPCS codes specific 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 Sec. 410.78) requiring the
consultative input of physicians who are not available for an in person
(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 Medicare contractors that process claims for the 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 12, Sec. 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 12, Sec. 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 follow up on 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 Sec. 410.78.
Payment for these services is subject to the provisions of Sec.
414.65.
Follow-up inpatient telehealth consultations include monitoring
progress, recommending management modifications, or advising on a new
plan of care in response to changes in the patient's status or no
changes on the consulted health issue. Counseling and coordination of
care with other providers or agencies is included as well, consistent
with the nature of the problem(s) and the patient's needs. The
physician or practitioner who furnishes the inpatient follow-up
consultation via telehealth cannot 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. Follow-up inpatient telehealth
consultations are subject to the criteria for consultation services, as

[[Page 69747]]

described in the CMS Internet-Only Medicare Claims Processing Manual,
Pub 100-04, Chapter 12, Sec. 30.6.10.
Payment for follow-up inpatient telehealth consultations includes
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 are establishing
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 code G0406. 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 code G0407. 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 code
G0408. At this level of service, practitioners would typically spend 35
minutes or more communicating with the patient via telehealth.
We are establishing the following HCPCS codes to describe follow-up
inpatient consultations approved for telehealth:
G0406, Follow-up inpatient telehealth consultation,
limited, typically 15 minutes communicating with the patient via
telehealth.
G0407, Follow-up inpatient telehealth consultation,
intermediate, typically 25 minutes communicating with the patient via
telehealth.
G0408, Follow-up inpatient telehealth consultation,
complex, typically 35 minutes or more communicating with the patient
via telehealth.
3. Other Issues
Comment: In 2005, CMS received a request to add the following
procedure codes to the list of approved telehealth services: initial
nursing facility care (as described by HCPCS codes 99304 through
99306); subsequent nursing facility care (HCPCS codes 99307 through
99310); nursing facility discharge services (HCPCS codes 99315 and
99316); and other nursing facility services (as described by HCPCS code
99318). In the CY 2007 PFS final rule with comment period, we did not
add these nursing facility care services to the list of approved
telehealth services because these procedure codes did not describe
services that were appropriate to the originating sites eligible in CY
2007. At that time, SNFs were not defined in the statute as originating
sites. (See 71 FR 69657.)
Section 149 of the MIPPA recognizes SNFs as telehealth originating
sites, effective for services furnished on or after January 1, 2009. In
light of this provision, the American Telemedicine Association (ATA)
urged us to add nursing facility care codes to the list of telehealth
services for CY 2009, as requested in 2005.
Response: Section 149 of the MIPPA did not add any services to the
approved telehealth list. Currently, telehealth may substitute for a
face-to-face, ``hands on'' encounter for professional consultations,
office visits, office psychiatry services, and a limited number of
other PFS services that we have determined to be appropriate for
telehealth. We will continue to review requests for additions to this
list using our existing criteria.
Telehealth is a delivery mechanism for otherwise payable Part B
services. Although the requested nursing facility services are not on
the approved telehealth list, we will pay eligible distant site
physicians or practitioners for eligible Medicare telehealth services
if the service is separately payable under the PFS when furnished in a
face-to-face encounter at a SNF effective January 1, 2009.
Since we believed it was not relevant to add these codes when SNFs
were not eligible originating sites, we did not include a full review
of these codes in the CY 2007 PFS proposed rule or final rule with
comment period. We also note that in considering nursing facility care
for telehealth, we would need to carefully evaluate the use of
telehealth for the personal visits that are currently required under
Sec. 483.40, (which are billed using procedure codes included in this
request). Overall, we believe that it would be more appropriate to
consider the addition of nursing facility care services for telehealth
through full notice and comment procedures.
In the CY 2010 PFS proposed rule, we will address the request to
add nursing facility care services to the list of approved telehealth
services, as received in 2005. In light of the previous request to add
these services and the new legislation adding SNFs as permissible
telehealth originating sites, we will accept additional information in
support of this request for consideration in the CY 2010 proposed rule
if received prior to December 31, 2008.
Comment: We received a request to add health and behavior
assessment and intervention codes (as described by HCPCS codes 96150
through 96154) to the list of approved telehealth services.
Response: Requests submitted before the end of CY 2008 will be
considered for the CY 2010 proposed rule. Requestors should be advised
that each request to add a service to the list of Medicare telehealth
services must include any supporting documentation the requestor wishes
us to consider as we review the request. For more information on
submitting a request for an addition to the list of Medicare telehealth
services, including where to directly mail these requests, visit our
Web site at http://www.cms.hhs.gov/telehealth/.

E. Specific Coding Issues Related to the Physician Fee Schedule

1. Payment for Preadministration-Related Services for Intravenous
Infusion of Immune Globulin
In the CY 2009 PFS proposed rule (73 FR 38518), we proposed to
discontinue payment for HCPCS code G0332, Services for intravenous
infusion of immunoglobulin prior to administration (this service is to
be billed in conjunction with administration of immunoglobulin), for
services furnished after December 31, 2008.
Immune globulin is a complicated biological product that is
purified from human plasma obtained from human plasma donors. 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

[[Page 69748]]

processing steps, and low demand for byproducts from IVIG
fractionation.
When IVIG is furnished to a patient in a physician's office, three
different payments are usually recognized: payment for the IVIG product
itself (described by a HCPCS J code); payment for the administration of
the IVIG product (described by one or more CPT codes); and similar
payment for the preadministration-related services (HCPCS code G0332).
The Medicare payment rates for IVIG products are established through
the Part B average sales price (ASP) drug payment methodology.
As explained in detail in the CY 2006, CY 2007 and CY 2008 PFS
final rules with comment period (70 FR 70218 to 70221, 71 FR 69678 to
69679, and 72 FR 66254 to 66255, respectively), we created, in 2006, a
temporary code in order to pay separately for the IVIG
preadministration-related services in order to assist in ensuring
appropriate access to IVIG during a period of market instability. Part
of this instability was due to the implementation of the new ASP
payment methodology for IVIG drugs which began in 2005. The payment for
preadministration-related services was continued in 2007 and 2008
because of continued reported instability in the IVIG marketplace. The
preadministration-related payment was designed to pay the physician
practice for the added costs of obtaining adequate supplies of the
appropriate IVIG product and scheduling the patient infusion during a
period of market uncertainty.
The PFS rates for the pre-administration service codes were $72,
$75, and $75 respectively in 2006, 2007, and 2008.
In the CY 2009 PFS proposed rule, we noted that the Office of the
Inspector General's (OIG) study on the availability and pricing of IVIG
published in a April 2007 report entitled, ``Intravenous Immune
Globulin: Medicare Payment and Availability (OEI-03-05-00404),'' found
that for the third quarter of CY 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 3
distributors occurred at prices below the Medicare payment amounts. We
reviewed national claims data for IVIG drug utilization as well as
utilization of the preadministration-related services HCPCS code. The
data show modest increases in the utilization of IVIG drugs and the
preadministration-related services code, which suggest that IVIG
pricing and access may be improving.
In the CY 2009 PFS proposed rule, we noted that these factors,
taken as a whole, suggested a lessening of the instability of the IVIG
market. As a result of these developments, we proposed to discontinue
the preadministration-related service payment in 2009 for HCPCS code
G0332. For CY 2009, under the Outpatient Prospective Payment System
(OPPS), a proposal was made to package payment for HCPCS code G0332 (73
FR 41457).
The following is a summary of the comments received and our
responses.
Comment: We received several comments from beneficiaries, patient
advocate groups, manufacturers, and physicians. Most commenters opposed
the elimination of the preadministration-related services payment. A
few commenters requested that the preadministration-related services
payment become permanent for both the PFS and the OPPS. Some commenters
stated that the market conditions for IVIG are not fundamentally
different than they were when CMS initially instituted the
preadministration-related services payment in CY 2006. The commenters
requested that CMS continue the separate payment until there is more
stability in the IVIG market. Several commenters stated that the
information CMS presented in the CY 2009 PFS proposed rule did not
conclusively prove that the IVIG market was stabilizing. The commenters
stated that significant access problems remain.
In response to the findings of the OIG report, some commenters
stated that the lag inherent in the ASP pricing system may have played
a role in substantially increasing the percentage of IVIG sales at
prices below the Medicare payment amounts in the third quarter of 2006.
The preadministration-related service fee was cited as providing some
assistance to physicians and hospitals that are experiencing problems
obtaining IVIG. Several commenters noted that the OIG report could be
interpreted as leaving a large percent of hospitals and physicians
unable to acquire IVIG at prices below Medicare's payment amounts. Many
commenters stated that they do not believe the introduction of new
brand-specific reporting codes for IVIG will result in a more stable
marketplace.
One commenter presented patient surveys conducted in CYs 2006, 2007
and 2008 which described access limitations and shifts in the site of
service. These surveys were limited in size and surveyed only patients
receiving IVIG for primary immune deficiency. Another commenter
referred to a report on IVIG issued in February 2007 titled, ``Analysis
of Supply, Distribution, Demand and Access Issues Associated with
Immune Globulin Intravenous'' prepared by the Eastern Research Group
under contract (Contract No. HHSP23320045012XI) to the Assistant
Secretary of Planning and Evaluation in the U.S. Department of Health
and Human Services and cited this report as an important source of
information on IVIG usage and patient access.
Response: The separate payment for IVIG preadministration-related
service was designed to compensate the physician practice for the
additional, unusual, and temporary costs associated with obtaining IVIG
products and scheduling patient infusions during a temporary period of
market instability. This payment was never intended to subsidize
payment for drugs made under the ASP system.
In the CY 2009 PFS proposed rule, we referred to data from the OIG
study that indicated 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. We agree with the commenters that it is
likely that increased ASP payments were the result of previous price
increases from past quarters influencing future ASP data. Furthermore,
the new HCPCS codes for IVIG products allow the physician to report and
receive payment for the specific product furnished to the patient. We
stated clearly in the CY 2006 PFS final rule with comment period that
the preadministration-related services payment policy was a temporary
measure to pay physicians for the unusual and temporary costs
associated with procuring IVIG. We expected that these costs would
decline over time as practices became more familiar with the nuances of
the IVIG market and the availability of the limited primary and
secondary suppliers in their areas.
We did not reference the report conducted by the Eastern Research
Group (Contract No. HHSP23320045012XI) in the proposed rule. As the
commenter noted, this report provides important comprehensive
background on the IVIG marketplace. For example, it provides an
analysis of IVIG supply and distribution, and an analysis of the

[[Page 69749]]

demand for and utilization of IVIG products. This report describes how
IVIG is administered and paid and includes information from the
industry and others on physician and patient problems with access to
IVIG. The study is a collection of multi-source information that
provides an understanding of the IVIG marketplace. One limitation of
the study is it depicts the market only up through the first quarter of
2006 and it does not have detailed information on IVIG pricing as the
OIG report did. The OIG report also contains data from a later time
period because it includes data through the third quarter of 2006.
We note, based on the information that follows, that the IVIG
market today appears more stable than it was in CY 2006. We have
reviewed national claims data for IVIG drug utilization, as well as the
utilization of the preadministration-related services HCPCS code. These
data show a modest increase in the utilization of IVIG and the
preadministration-related services code in both physicians' offices and
hospital outpatient departments from CY 2006 to CY 2007, after a period
of decreased IVIG utilization in physicians' offices with a shift of
IVIG infusions to the hospital outpatient department in the previous
year, which suggests that IVIG pricing and access may be improving.
National Medicare claims history data show that there were about
3.1 million units of IVIG administered in physicians' offices in CY
2006, and 7.3 million units in hospital outpatient departments. In CY
2007, those numbers rose to estimates of 3.3 million units and 8.1
million units in the office and hospital outpatient department
settings, respectively. Under the OPPS, the total number of days of
IVIG administration increased modestly from CY 2006 to CY 2007, from
113,000 to 119,000. Aggregate allowed IVIG charges in the physician's
office setting for CY 2006 were $82 million, while total payments
(including beneficiary copayments) under the OPPS were $184 million for
the same time period. In CY 2007, aggregate allowed charges in the
physician's office setting are estimated at $8 million, while total
OPPS payments are estimated at $246 million.
In summary, beginning in CY 2007, IVIG utilization increased
modestly in both the physician's office setting and the hospital
outpatient department, after a prior shift to the hospital and away
from the physicians' offices, presumably reflecting increasing
availability of IVIG and appropriate payment for the drug in both
settings.
According to information on the Plasma Protein Therapeutics
Association (PPTA) Web site regarding the supply of IVIG, in the past
year, while the supply has spiked at various times throughout the year,
the supply has remained above or near the 12-month moving average.
While we acknowledge that the supply is only one of several factors
that influence the market, we believe that an adequate supply is one
significant factor that contributes to better access to IVIG for
patients.
Therefore, because we believe that the reported transient market
conditions that led us to adopt the separate payment for IVIG
preadministration-related services have improved, we believe that
continuation of the separate payment for preadministration services
beyond CY 2008 is not warranted.
After consideration of the public comments received, we are
finalizing our CY 2009 proposal, without modification, to discontinue
separate payment under the PFS for IVIG preadministration-related
services described by HCPCS code G0332. The treatment of payment for
preadministration-related services under the OPPS will be addressed
separately in that final rule. We will continue to work with IVIG
stakeholders to understand their concerns regarding the pricing of IVIG
and Medicare beneficiary access to this important therapy.
2. Multiple Procedure Payment Reduction for Diagnostic Imaging
In general, we price diagnostic imaging procedures in the following
three ways:
The PC represents the physician's interpretation (PC-only
services are billed with the 26 modifier).
The 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 percent 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. In the CY 2009 PFS proposed
rule, we proposed to subject several additional procedures to the MPPR
(73 FR 38519). 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
also proposed to remove CPT code 76778, a deleted code, from the list.
Table 6 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 BN requirement. Therefore, we proposed that
expenditure reductions resulting from these changes be exempt from BN.
(See the Regulatory Impact Analysis in section XVI. of this final rule
with comment period for a discussion of BN.) The complete list of
procedures subject to the MPPR is in Addendum F of this final rule with
comment period.

Table 6--Procedures Proposed for Multiple Procedure Payment Reduction
------------------------------------------------------------------------
CPT code Short descriptor Code family
------------------------------------------------------------------------
70336......................... mri, Family 5 MRI and MRA
temporomandibula (Head/Brain/Neck).
r joint(s).
70554......................... Fmri brain by Family 5 MRI and MRA
tech. (Head/Brain/Neck).
75557......................... Cardiac mri for Family 4 MRI and MRA
morph. (Chest/Abd/Pelvis).
75559......................... Cardiac mri w/ Family 4 MRI and MRA
stress img. (Chest/Abd/Pelvis).
75561......................... Cardiac mri for Family 4 MRI and MRA
morph w/dye. (Chest/Abd/Pelvis).
75563......................... Cardiac mri w/ Family 4 MRI and MRA
stress img & dye. (Chest/Abd/Pelvis).
76776......................... Us exam k transpl Family 1 Ultrasound
w/doppler. (Chest/Abdomen/
Pelvis--Non-
Obstetrical).
76870......................... Us exam, scrotum. Family 1 Ultrasound
(Chest/Abdomen/
Pelvis--Non-
Obstetrical).
77058......................... Mri, one breast.. Family 4 MRI and MRA
(Chest/Abd/Pelvis).

[[Page 69750]]

77059......................... Mri, broth Family 4 MRI and MRA
breasts. (Chest/Abd/Pelvis).
------------------------------------------------------------------------

The following is a summary of the comments we received and our
responses.
Comment: Some commenters indicated that the MPPR should not be
extended to additional procedures without providing data supporting the
appropriateness of a 25-percent payment reduction for the additional
procedures. A commenter expressed concern that the MPPR was being
extended to include breast MRIs, but the commenter provided no other
information.
Response: As stated in the CY 2006 PFS final rule with comment
period (70 FR 70261), when multiple images are taken in a single
session, most of the clinical labor activities and supplies are not
duplicated for subsequent procedures. Specifically, the following
activities are not duplicated for subsequent procedures:
Greeting the patient.
Positioning and escorting the patient.
Providing education and obtaining consent.
Retrieving prior exams.
Setting up the IV.
Preparing and cleaning the room.
In addition, we considered that supplies, with the exception of
film, are not duplicated for subsequent procedures.
To determine the appropriate level of the payment reduction for
multiple procedures, we examined multiple pairs of procedure codes from
the families representing all modalities (that is, ultrasound, CT/CTA,
and MRI/MRA studies) that were frequently performed on a single day
based on historical claims data. Using PE input data provided by the
RUC, we factored out the clinical staff minutes for the activities we
indicated are not duplicated for subsequent procedures, and the
supplies, other than film, which we considered are not duplicated for
subsequent procedures. We did not assume any reduction in procedure
(scanning) time or equipment for subsequent procedures. However,
equipment time and indirect costs are allocated based on clinical labor
time; therefore, these inputs were reduced accordingly. Removing the PE
inputs for activities that are not duplicated, and adjusting the
equipment time and indirect costs for the individual pairs of
procedures studied, supported payment reductions ranging from 40 to 59
percent for the subsequent services. Because we found a relatively
narrow range of percentage payment reductions across modalities and
families, and taking into consideration that we did not eliminate any
duplicative image acquisition time for subsequent procedures in our
analysis, we originally proposed an across-the-board MPPR for all 11
families of 50 percent (which is approximately the midpoint of the
range established through our analysis). We believe this level of
reduction was both justified and conservative (70 FR 45849). To allow
for a transition of the changes in payments for these services
attributable to this policy, we implemented a 25 percent payment
reduction for all code families in CY 2006 which was scheduled to
increase to a 50 percent reduction in CY 2007.
Subsequent to the publication of the CY 2006 PFS final rule with
comment period, section 5102 (b) of the DRA capped the PFS payment for
most imaging services at the amount paid under the hospital outpatient
prospective payment system (OPPS). In addition, in response to our
request for data on the appropriateness of the 50 percent reduction in
the CY 2006 PFS final rule with comment period, the American College of
Radiology (ACR) provided information for 25 code combinations
supporting a reduction of between 21 and 44 percent. Given the expected
interaction between the MPPR policy and the further imaging payment
reductions mandated by section 5102(b) of the DRA, along with the
information we received from the ACR on the MPPR as it applies to
common combinations of imaging services, we decided it was prudent to
maintain the MPPR at its current 25 percent level while we continue to
examine the appropriate payment levels. Therefore, we have maintained
the MPPR at the 25 percent level.
In establishing the MPPR, we elected to use a single reduction
percentage for all code pairs. We adopted a percentage reduction that
is considerably lower than the range supported by our prior analysis,
and slightly higher than the lowest percentage supported by ACR's
analysis. We do not believe it is necessary to conduct another analysis
for the additional codes because we adopted a conservative reduction
percentage and are continuing use of a single reduction percentage for
all code pairs. We believe the payment reduction policy, described
above, represents an appropriate reduction for the typical delivery of
multiple imaging services furnished in the same session.
Furthermore, in establishing the MPPR, we limited it to codes in
the same family, that is, contiguous areas of the body that are
commonly furnished on the same patient, in the same session, on the
same day. We believe that the eight CPT codes that were newly created
for 2007 or 2008, and proposed for inclusion in the MPPR beginning in
CY 2009 (CPT codes 70554, 75557, 75559, 75561, 75563, 76776, 77058, and
77059), would have been included on the MPPR list when it was finalized
in CY 2006, had they existed at the time. These CPT codes are similar
to CPT codes that were selected for the list in CY 2006 and can be
classified into the 11 contiguous body area families already in
existence. For example, the procedure described by CPT code 76776
(Ultrasound, transplanted kidney, real time and duplex Doppler with
image documentation) is similar to the procedure described by CPT code
76705 (Ultrasound, abdominal, real time with image documentation;
limited (for example, single organ, quadrant, follow-up), which has
been subject to the MPPR since the creation of the policy in CY 2006.
Similarly, we believe we should add CPT codes 70336 and 76870, which
were in existence in CY 2006, to the list because they also share
characteristics with other procedures subject to the MPPR.
In response to the commenter expressing concern that we were adding
the breast MRI CPT codes 77058 and 77059 in particular, we are not
certain of the reason for his or her concern because none was stated.
However, we continue to believe it is appropriate to add these CPT
codes because their addition is consistent with our policy for other
procedures included in Family 4, which describe procedures involving
MRI of the chest area.
To the extent that the newly added procedures do not meet the MPPR
criteria (for example, if they are not performed in the same session),
they will be unaffected by the MPPR.

[[Page 69751]]

Comment: Commenters noted that we proposed to establish new
composite rates for certain multiple diagnostic imaging procedures
performed at the same time in hospital outpatient settings. One
commenter asked whether individual procedure payment rates, or the
composite payment rates under hospital OPPS will be used for purposes
of applying the OPPS cap to PFS services. The commenter also asked
whether we will continue our policy of applying the MPPR before
application of the OPPS cap.
Response: Under the PFS, services are paid based on the individual
CPT or HCPCS code. Therefore, the OPPS cap will continue to be applied
based on the hospital OPPS ambulatory payment classification (APC) rate
for the individual procedure, and not the composite rate. The policy of
applying the MPPR before applying the OPPS cap remains unchanged.
Comment: Several commenters expressed concern that the proposed
MPPR undervalues the procedures and jeopardizes beneficiary access to
care. One commenter indicated that we should examine any shifts in the
site-of-service that may have resulted due to the MPPR.
Response: The Government Accountability Office (GAO) and the Office
of the Inspector General (OIG) have been performing several reviews
relating to the utilization of imaging procedures including the effects
of the OPPS cap and the MPPR on utilization, payment, and access to
care. We will continue to monitor the effects of the policies to ensure
that beneficiaries have proper access to care.
After reviewing the public comments, we are proceeding with the
policy as proposed. The ten additional procedures listed in Table 6
will be subject to the MPPR, effective January 1, 2009.
3. HCPCS Code for Prostate Saturation Biopsies
In the CY 2009 PFS proposed rule, we proposed to create four new G
codes for prostate saturation biopsy as shown in Table 7, currently
reported with CPT code 88305, Surgical pathology, gross and microscopic
examination, which is separately billed by the physician for each core
sample taken. We also proposed to have Medicare contractors price these
codes.

Table 7--G Codes for Prostate Biopsy
------------------------------------------------------------------------
G code Descriptor
------------------------------------------------------------------------
G0416.................................. Surgical pathology, gross and
microscopic examination for
prostate needle saturation
biopsy sampling, 1-20
specimens.
G0417.................................. Surgical pathology, gross and
microscopic examination for
prostate needle saturation
biopsy sampling, 21-40
specimens.
G0418.................................. Surgical pathology, gross and
microscopic examination for
prostate needle saturation
biopsy sampling, 41-60
specimens.
G0419.................................. Surgical pathology, gross and
microscopic examination for
prostate needle saturation
biopsy sampling, greater than
60 specimens.
------------------------------------------------------------------------

The following is a summary of the comments we received and our
responses.
Comment: Some commenters expressed opposition to this proposal,
while others supported it but recommended modifications to the proposed
G codes. All commenters were opposed to Medicare contractor pricing the
G codes and stated that CMS, rather than the Medicare contractor,
should assign an appropriate work value for each specimen level to
capture the expertise, skill, time, and resources used to determine if
prostate cancer is present.
Response: First, for CY 2009, the CPT Editorial Panel changed
Category III code (0137T) to a Category I code, 55706, Biopsies,
prostate; needle, transperineal, stereotactic template guided
saturation sampling including image guidance, which the AMA RUC valued
at 6.15 work RVUs. As discussed in the proposed rule, we currently pay
$102.35 for CPT code 88305, which is the code used by pathologists when
interpreting prostate biopsy samples. Patients requiring a prostate
saturation biopsy generally have 30 to 60 specimens taken. The
pathologist would bill CPT code 88305 for evaluation of each individual
specimen. When CPT code 88305 is used to evaluate prostate saturation
biopsies, the average total payment for the evaluation of samples from
one prostate needle saturation biopsy ranges from $3000 to $6000,
depending on the number of biopsies taken. We believe the use of CPT
code 88305 to bill individually for the evaluation of each biopsy
sample would result in overpayment for this service. Therefore, we are
proceeding with the proposal to create four G codes for pathologic
examination of prostate needle saturation tissue sampling for services
furnished beginning in 2009.
However, we agree with commenters that, rather than having Medicare
contractors price the new G codes, it would be preferable for us to
specify the payment for these services. We generally use contractor
pricing when we do not have sufficient information to set the price.
Upon further reflection, we believe we can set prices for the new G-
codes by analogy to the current RVUs for two existing codes: 88304 and
88305. We selected the mid-point of the range of samples for G0417,
G0418, and G0419 to calculate the average number of samples for each
code. We assumed 15 percent of the samples taken require considerable
clinical expertise to differentiate and distinguish carcinoma from
hyperplasia. We assigned the work and PE values of 88305 to the 15
percent of samples requiring this level of expertise. The remaining 85
percent of samples require confirmation of prostate tissue and
interpretation indicating the presence of cancer or not since the
diagnosis had been identified in the 15 percent of samples. We assigned
the work and PE of 88304 to this group of samples. We assigned the full
work and PE payment to the 15 percent sample component to reflect the
skill, time, and effort required to identify and diagnose carcinoma. We
applied the multiple surgical procedure discount (RVUs were reduced by
50 percent in accordance with current CMS policy) to the remaining 85
percent of samples reviewed for identification and confirmation of
prostate tissue. We selected the 75th percentile of samples from G0416
to recognize the greater degree of skill, time, and effort required to
review, identify, and interpret the initial biopsy specimens sampled.
(See Addendum B for the values assigned to these G codes.)

Note: Under the PFS, CPT code 88305 will continue to be
recognized for those surgical pathology services unrelated to
prostate needle saturation biopsy sampling.

F. Part B Drug Payment

1. Average Sales Price (ASP) Issues
Medicare Part B covers a limited number of prescription drugs and
biologicals. For the purposes of this final rule with comment period,
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.

[[Page 69752]]

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 final 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 four 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 x 20mg)/10mg = 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.
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. As a result of the legislation, we proposed to
revise Sec. 414.904 to codify the changes to the determination of
payment amounts as required by section 112 of the MMSEA. We solicited
comments on the proposed regulatory text.
The following is a summary of the comments we received and our
responses.
Comment: We received a number of comments regarding our proposed
regulatory text. All of comments we received strongly supported our
proposed regulatory text. Several comments strongly urged CMS to ensure
that the methodology is properly applied to all drugs paid under the
ASP methodology.
Response: We appreciate the support from the public with regard to
the implementation of this statutory provision. We have been applying
the revised methodology since April 2008 and are unaware of payment
issues resulting from its usage. The new methodology is being applied
consistently across all Part B drugs subject to the ASP methodology.
Comment: One commenter requested that we limit the application of
the special payment rule, established by section 112(b) of MMSEA to
only albuterol and levalbuterol.
Response: We disagree with this comment. While we currently believe
that we have identified all of the drugs to which the special payment
rule applies, it would be imprudent to expressly limit its application
to albuterol and levalbuterol in the regulations text because the
statute does not do so. The statute refers to certain drugs described
in section 1842(o)(1)(G) of the Act. Thus, we believe the regulations
text, as proposed, adequately specifies the drugs to which the special
rule applies. We have committed, via postings on our web site, to
proceeding transparently when making pricing determinations and have
done so by posting our decisions on our web site. We will continue to
do so in the future.
After review of the public comments, we are finalizing our proposed
regulatory text at Sec. 414.904.
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--

[[Page 69753]]

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 comparisons. We based this decision on the limited
data available to support a change in the current threshold percentage.
For CY 2009, we proposed to specify an applicable threshold
percentage of 5 percent for the WAMP and the AMP comparisons. As we
stated in the proposed rule, the OIG is continuing its ongoing
comparison of both the WAMP and the AMP. However, information on how
recent changes to the ASP weighting methodology may affect the
comparison of WAMP/AMP to ASP was not available in time for
consideration prior to developing our proposal to maintain the
applicable threshold percentage at 5 percent for CY 2009. Although we
have recently received reports comparing ASP to AMP in which the OIG
states it has applied the new volume-weighting methodology
consistently, we have not had sufficient time to analyze these reports.
Thus, we do not have data suggesting a more appropriate level for the
threshold at this time. Therefore, we believe that continuing the 5
percent applicable threshold percentage for both the WAMP and AMP
comparisons 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
associated 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 solicited comments on our proposal to continue the applicable
threshold at 5 percent for both the WAMP and AMP for CY 2009.
The following is a summary of the comments we received and our
responses.
Comment: Most commenters supported maintaining the threshold at 5
percent. Other commenters suggested that we exercise caution in the
determination of price substitutions and that we develop a formal
process and criteria to determine when substitutions are necessary.
Commenters also recommended that we provide adequate notice prior to
making a price substitution.
Response: We appreciate the comments to maintain the threshold at 5
percent. As we noted in the CY 2008 PFS final rule with comment period
(72 FR 66259), we understand that there are complicated operational
issues associated 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.
After reviewing of the public comments, we are finalizing our
proposal to establish the WAMP/AMP threshold at 5 percent for CY 2009.
2. Competitive Acquisition Program (CAP) Issues
Section 303(d) of the MMA requires the implementation of a
competitive acquisition program (CAP) for certain Medicare Part B drugs
not paid on a cost or PPS 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 (72 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 amounts 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 the CY 2009 PFS proposed rule, we proposed 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 (73 FR
38522). However, since the publication of our proposed rule, we have
announced the postponement of the CAP for 2009 due to contractual
issues with the successful bidders. As a result, CAP physician election
for participation in the CAP in 2009 is not being held this Fall, and
CAP drugs will not be available from an Approved CAP Vendor for dates
of service after December 31, 2008.
Moreover, we are currently soliciting public feedback on the CAP
from participating physicians, potential vendors, and other interested
parties. We are soliciting public comments

[[Page 69754]]

about a range of issues, including, but not limited to the following
issues: the categories of drugs provided under the CAP; the
distribution of areas that are served by the CAP; and procedural
changes that may increase the program's flexibility and appeal to
potential vendors and physicians. Interested parties can submit
feedback about the CAP electronically or request to meet with us in
person. Feedback about the CAP and meeting requests can be submitted
electronically to: [email protected].
We will also host a CAP Open Door Forum (ODF) this December for
participating physicians, potential vendors, and other interested
parties. Participants will have an opportunity to discuss the
postponement and suggest changes to the program. Additional information
about this event will be available on the CMS CAP Web site at http://www.cms.hhs.gov/CompetitiveAcquisforBios/.
We will assess information from the public and consider
implementing changes to the CAP before proceeding with another bid
solicitation for Approved CAP Vendor contracts. Furthermore, in light
of the postponement of the CAP, we believe it would be prudent to
consider the additional information that is being collected before
finalizing any further changes to the program. For this reason, we will
not finalize the CAP items in the CY 2009 proposed rule at this time.
We appreciate the comments that we have received and we will consider
these comments as we assess potential changes to the program and future
rulemaking.

G. Application of the HPSA Bonus Payment

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 the CY 2009 PFS proposed rule, we proposed to revise Sec.
414.67 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.
Comment: We received comments in support of using the AQ modifier
to ensure that all physicians furnishing services in a geographic HPSA
that is not included in the list of zip codes eligible for automatic
bonus payments will still receive the 10-percent HPSA bonus payment.
One commenter emphasized that this clarification would lessen the
administrative burdens they experienced from the lack of a modifier in
the past.
A few commenters expressed concern that many physicians may not be
aware of the AQ modifier requirement for services furnished in areas
that are not on the list of zip codes for automatic payment. One
commenter urged us to use educational materials and outreach in order
to ensure physicians are aware they may need to use the AQ modifier
when submitting their Medicare claims. Another commenter requested that
we develop a method to ensure payments are received automatically for
all physicians that would qualify for the HPSA bonus payment.
One commenter suggested that we change the HPSA bonus payment
program to include nonphysicians and work with the Congress to allow
all persons who directly bill under Part B to be eligible for the 10-
percent bonus for working in a designated HPSA.
Response: We appreciate the comments in support of our efforts to
ensure all physicians furnishing services to Medicare beneficiaries in
an area that is designated as a geographic HPSA on December 31 of the
prior year receive the HPSA bonus payment.
As a result of refinements in our systems, we expect that more
areas that are eligible for the bonus payment will be on the list of
zip codes eligible for automatic payment of the HPSA bonus, thereby
reducing the number of physicians who need to use the modifier.
However, we acknowledge that some physicians may not be aware of the
need to use the modifier if they are furnishing services in a
geographic HPSA that was designated after the list of eligible zip
codes was created but prior to December 31. We will continue to utilize
our provider education resources to increase awareness of the
appropriate application of the AQ modifier. We will also continue to
refine our systems to include as many areas as possible to the list of
zip codes that receive automatic HPSA bonus payments.
We recognize that there can be shortages of all types of healthcare
practitioners and we indeed appreciate the value of these
nonphysicians. However, section 1833(m) of the Act provides for the
payment of an additional amount only to physicians and a change would
require a statutory revision.
After careful consideration of all of the comments, we are adopting
our proposal to add Sec. 414.67(d) with minor revisions 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

In the CY 2009 PFS proposed rule (73 FR 38527), we outlined for CY
2009 the proposed updates to the case-mix adjusted composite rate
payment system established under section 1881(b)(12) of the Act, added
by section 623 of the MMA. These included updates to the drug add-on
component of the composite rate system, as well as the wage index
values used to adjust the labor component of the composite rate.
Specifically, we proposed the following provisions which are
described in more detail below in this section:
A zero growth update to the proposed 15.5 percent drug
add-on adjustment to the composite rates for 2009 required by section
1881(b)(12)(F) of the Act (resulting in a $20.33 per treatment drug
add-on amount).
An update to the wage index adjustment to reflect the
latest available

[[Page 69755]]

wage data, including a revised BN adjustment factor of 1.056672;
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 total of 56 comments were submitted under the caption ``ESRD
PROVISIONS.'' Eight of these comments pertained to the proposed changes
to ESRD payment related provisions listed above. The remaining 48
comments responded to the solicitation for public comment pertaining to
the application of preventable hospital-acquired condition (HAC)
payment provisions for IPPS hospitals in settings other than IPPS
hospitals, including ESRD facilities. Please refer to section II.H.6.
of this final rule with comment period for a discussion of the
applicability of the HAC payment provision for IPPS hospitals in
settings other than IPPS hospitals.
The ESRD payment related comments are discussed in detail below in
this section. In addition, subsequent to the publication of the CY 2009
PFS proposed rule, section 153 of the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted
on July 15, 2008, mandates changes in ESRD payment effective January 1,
2009.
Section 153(a) of the MIPPA amends section 1881(b)(12)(G) of the
Act to increase the composite rate component of the payment system and
amends section 1881(b)(12)(A) to revise payments to ESRD facilities.
The amendments that are effective January 1, 2009 include an update of
1 percent to the composite rate component of the payment system (for
services furnished on or after January 1, 2009, and before January 1,
2010), and the establishment of a site neutral composite rate for both
hospital-based and independent dialysis facilities which, when applying
the geographic index, shall reflect the labor share based on the labor
share otherwise applied for renal dialysis facilities. The labor share
for both hospital-based and independent dialysis facilities is 53.711.
In addition, since we compute the drug add-on adjustment as a
percentage of the weighted average base composite rate, the drug add-on
percentage is decreased to account for the higher composite payment
rate and will result in a 15.2 percent drug add-on adjustment for CY
2009. Since the statutory increase only applies to the composite rate,
this adjustment to the drug add-on percentage is needed to ensure that
the total drug add-on dollars remains constant.
Prior to the MIPPA provisions, effective for CY 2008, hospital-
based dialysis facilities received a base composite rate of $136.68 and
independent dialysis facilities received a base composite rate of
$132.49, and so the CY 2009 base composite rate for independent
dialysis facilities prior to the MIPPA was $132.49. The MIPPA mandates
that payments for both the hospital-based dialysis facilities and
independent dialysis facilities be based on the independent dialysis
facilities rate. The 1 percent increase to the independent dialysis
facility's 2008 composite rate of $132.49 results in a 2009 base
composite rate for both hospital-based and independent dialysis
facilities of $133.81. A drug add-on amount of $20.33 per treatment
remains the same for 2009, which results in a 15.2 percent increase
over the base independent composite rate of $133.81.
1. 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 us to establish 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 the 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 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).
a. Estimating Growth in Expenditures for Drugs and Biologicals for CY
2009
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 expenditures beginning in CY 2010.
For CY 2009, we proposed revising the interim methodology for
estimating the growth in ESRD drug expenditures by using ASP pricing
instead of the PPI to estimate the price component of the update
calculation.
As detailed below in this section, we proposed 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.
b. Estimating Growth in ESRD Drug Prices
For CY 2009, we proposed to estimate price growth using ASP pricing
data for the four quarters of CY 2006 and CY2007, and the two available
quarters of CY 2008. For this final rule with comment period, we are
using four quarters of ASP prices for CYs 2006, 2007, and 2008. We
calculated the weighted price change, for the original top ten ESRD
drugs for which we had acquisition pricing, plus Aranesp. 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 weighted
average ESRD drug pricing change projected for CY 2009 is a reduction
of 1.9 percent.
Comment: Commenters were generally opposed to the use of ASP prices
to estimate the price component of the drug add-on adjustment. One
commenter stated that although the price of EPO has declined in the
past few years, it has now stabilized and will likely not decline again
in CY 2009. Two commenters, including MedPAC, supported the use of ASP
prices stating that it is more closely related to the

[[Page 69756]]

actual ESRD drug pricing than the use of the overall drug PPI. Another
commenter stated that the PPI was a more accepted proxy for predicting
drug price increases compared to ASP price trends which have never been
used in forecasting drug price changes. Some suggested that we use a
blend of ASP and PPI to soften the impact of the change in the
methodology.
Response: Given that the statutory language mandates that we
estimate the growth in ESRD drug expenditures in order to update the
drug add-on adjustment, we believe we have an obligation to utilize the
best data available to make those estimates. Although the PPI is a well
recognized measure of overall drug price growth, it is not specific to
ESRD drug prices. Given that ESRD drug pricing trends are very
different from overall drug pricing trends, we do not believe it would
be appropriate to continue using the PPI when more specific data are
available. ASP pricing data that are specific to ESRD drugs provide the
most accurate measure for estimating the price component of the total
ESRD drug expenditure estimate for CY 2009. Therefore, for this final
rule with comment period, we used ASP pricing data to estimate price
growth in ESRD drugs.
c. Estimating Growth in per Patient Drug Utilization
To isolate and project the growth in per patient utilization of
ESRD drugs for CY 2009, we removed the enrollment and price growth
components from the historical drug expenditure data, and considered
the residual to be utilization growth. As discussed previously in this
section, we proposed to use ESRD facility drug expenditure data from CY
2006 and CY 2007 to estimate per patient utilization growth for CY
2009.
We first estimated total drug expenditures for all ESRD facilities.
For the CY 2009 PFS proposed rule (73 FR 38528), 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 this final rule with comment period,
we are using 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.
For the CY 2009 PFS proposed rule, we adjusted the December 2007
file to reflect our estimate of what total drug expenditures would be
using the final June 30, 2008 bill file for CY 2007. The net adjustment
we applied to the CY 2007 claims data was an increase of 12.6 percent
to the December 2007 claims file. To calculate the proposed 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 calculated the
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.
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 or 1.00/(1.03 * 0.982) = 0.99.
Since we observed a 1 percent drop in per patient utilization of
drugs between CY 2006 and CY 2007, we projected a 1 percent drop in per
patient utilization for ESRD facilities in CY 2009.
Comment: A few commenters suggested that the use of CY 2007 billing
data to predict utilization change in CY 2009 is not accurate since the
utilization change in CY 2007 was driven by a revision to the EPO
monitoring policy which caused a one-time decline in utilization that
has since leveled off.
Response: We agree that the revised monitoring policy for
erythropoesis stimulating agents (ESAs) that took effect in CY 2007
could have contributed to the observed decrease in ESRD drug
utilization between CY 2006 and CY 2007, especially given that EPO and
Aranesp make up over 75 percent of all ESRD drug expenditures.
Moreover, this effect could distort our estimate of per patient
utilization growth in CY 2009. Since CY 2007, we have analyzed 2 years
of historical claims data for estimating growth in utilization (CY 2005
and CY 2006). During that period, utilization based on an analysis of
independent ESRD facility drug data has indicated no growth. We believe
the use of CY 2005 and CY 2006 drug data is the best data available for
use in projecting utilization in CY 2009. Therefore, for CY 2009, we
will continue to use our estimate of growth in utilization based on CY
2005 and CY 2006 data (72 FR 66282). That is, we are finalizing an
estimation of no growth in utilization for CY 2009.
2. Applying the Proposed Growth Update to the Drug Add-on Adjustment
In the CY 2007 PFS final rule with comment period (71 FR 69684), we
revised 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.
For CY 2009, we proposed no update to the per treatment drug add-on
amount of $20.33 established in CY 2008.
3. Update to the Drug Add-On Adjustment
In the CY 2009 PFS proposed rule (73 FR 38529), we estimated a 1
percent reduction in per patient utilization of ESRD drugs for CY 2009.
Using the projected decline of the CY 2009 ASP pricing for ESRD drugs
of 1.9 percent, we projected 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, we proposed to
apply a zero percent update to the drug add-on adjustment and maintain
the $20.33 per treatment drug add-on amount for CY 2009 that reflects a
15.5 percent drug add-on adjustment to the composite rate for CY 2009.
In addition, for CY 2009 we presented an alternative approach to
the zero percent update. The alternative approach would be to apply an
adjustment of less than 1.0 to the drug add-on adjustment. For CY 2009,
we would ``increase'' the drug add-on 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 drug add-on adjustment to the composite rate for CY 2009
would be equal to 1.155 * 0.996 = 1.15 or 15.0 percent.
We solicited public comment on our proposal of a zero update, as
well as the alternative approach presented above, so that we could make
an informed decision with respect to the final update

[[Page 69757]]

to the CY 2009 drug add-on adjustment to the composite rate.
Comment: Commenters were uniformly opposed to any decrease in the
drug add-on adjustment, citing the plain reading of the statute which
calls for an annual ``increase'' in the adjustment. As support for the
reliance on the plain reading of the statute, several commenters cited
case law examples in which courts have relied on dictionary
definitions, biblical text, and common usage of terms for purposes of
interpreting statutory text. One commenter disagreed with CMS'
alternative reading of 1881(b)(12)(F) of the Act, under which an
increase in the drug add-on could not be implemented when estimated
drug growth is negative, pointing to MMA Conference Report language
that referenced a payment update that would be based on a ``growth'' in
drug spending and ``drug cost increases.'' Commenters further argued,
citing case law the priority on plain language over policy arguments
and cautioned against identifying gaps in statutes.
One commenter suggested that we should use the methodology to
estimate growth in ESRD drug expenditures that yields a positive
adjustment as required by the statute. Another commenter stated that if
we believe ESRD drug expenditures will decline, this would indicate
that the spread between AWP and ASP pricing will widen in CY 2009, thus
justifying an increase in the drug add-on adjustment.
Response: We agree that the plain reading of the statute would
preclude any decrease in the drug add-on adjustment and would not
support a negative growth update. Specifically, section 1881(b)(12)(F)
of the Act 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. We interpret the statutory language
``annually increase'' to mean a positive or zero update to the drug
add-on given that the statute also requires that the annual
``increase'' to the drug add-on adjustment reflect our estimate of the
growth in ESRD drug expenditures. Since our analysis indicates a
projected reduction in ESRD drug expenditures for CY 2009, we do not
believe it would be appropriate to provide an increase that cannot be
substantiated by the best data available.
Therefore, we are finalizing our proposal to provide a zero update
to the drug add-on adjustment for CY 2009. If the statute had included,
instead of the word ``increase,'' a broader term, we believe we would
have had authority to decrease the rate to take into account the
projected reduction.
4. Final Growth Update to the Drug Add-On Adjustment for 2009
As we indicated earlier, we have decided not to use CY 2007
expenditure data to estimate utilization growth for CY 2009, because of
the potential distortion of our estimates due to the implementation of
the ESA monitoring policy in 2007. Therefore, for this final rule with
comment period, we are using the same data we use to estimate growth in
utilization for CY 2008 as outlined in the CY 2008 PFS final rule with
comment period (72 FR 66282). That is, for CY 2009, we estimate no
growth in per patient utilization of ESRD drugs for CY 2009.
Similar to the CY 2009 PFS proposed rule, we estimated growth in
ESRD drug prices using ASP pricing data for CYs 2006, 2007 and 2008. In
the proposed rule, we had only 2 quarters of data for 2008, but for
this final rule all four quarters of ASP pricing data are available. We
calculated the weighted price change for the top eleven ESRD drugs.
Tables 8 and 9 show the average ASP prices and the 2007 weights used.
We note that the final CY 2007 weights are derived from the final CY
2007 ESRD facility claims file as of June 30, 2008. For 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 1.9 percent
between CY 2007 and CY 2008. The overall average price reduction is 1.8
percent over the 3-year period. Thus, the weighted average ESRD drug
pricing change projected for CY 2009 is a reduction of 1.8 percent.
We project that the combined growth in per patient utilization and
pricing of ESRD drugs for CY 2009 would result in a negative update
equal to -1.8 percent (1.00 * 0.982 = 0.982). If we implement this
decrease in the update to the drug-on adjustment, the resulting savings
would have been $14 million. However, as indicated above, for this
final rule with comment period, we are applying no update to the drug
add-on adjustment for CY 2009. Thus, we are applying a zero update to
the $20.33 per treatment drug add-on amount for CY 2009. After
adjusting for the MIPPA changes as discussed earlier in this section,
the final drug add-on adjustment to the composite rate for CY 2009 is
15.2 percent.

Table 8--CY 2006, 2007 and 2008 ESRD Drug ASP Prices
----------------------------------------------------------------------------------------------------------------
Independent drugs CY 2006 CY 2007 CY 2008
----------------------------------------------------------------------------------------------------------------
EPO............................................................. $9.46 $9.17 $9.05
Paricalcitol.................................................... 3.81 3.79 3.78
Sodium-ferric-glut.............................................. 4.88 4.76 4.81
Iron-sucrose.................................................... 0.36 0.37 0.36
Levocarnitine................................................... 9.44 8.07 6.31
Doxercalciferol................................................. 2.97 2.68 2.75
Calcitriol...................................................... 0.55 0.54 0.40
Iron-dextran.................................................... 11.94 11.69 11.69
Vancomycin...................................................... 3.23 3.43 3.19
Alteplase....................................................... 31.63 33.21 33.06
Aranesp......................................................... 3.01 3.29 2.86
----------------------------------------------------------------------------------------------------------------

Table 9--CY 2007 Drug Weights for ESRD Facilities
------------------------------------------------------------------------
CY 2007
Independent drugs weights (%)
------------------------------------------------------------------------
EPO..................................................... 69.1
Paricalcitol............................................ 11.9
Sodium-ferric-glut...................................... 2.5
Iron-sucrose............................................ 6.1
Levocarnitine........................................... 0.2
Doxercalciferol......................................... 2.8

[[Page 69758]]

Calcitriol.............................................. 0.1
Iron-dextran............................................ 0.0
Vancomycin.............................................. 0.1
Alteplase............................................... 1.0
Aranesp................................................. 6.2
------------------------------------------------------------------------

5. Update to the Geographic Adjustments to the Composite Rates
Section 1881(b)(12)(D) of the Act, as added 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 wage indexes are
calculated for each urban and rural area. 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.
a. 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 regarding
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.
b. 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. 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 (BNF).
We proposed 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 BNF is 1.056689.
This figure differs slightly from the figure in the proposed rule
(1.056672) because we used updated hospital wage data and treatment
counts from the most current claims data. (See section II.H.5.c. of
this final rule with comment period for details about this adjustment.)
For a detailed description of the development of the CY 2009 wage index
values based on FY 2005 hospital data, see the FY 2009 ``Hospital
Inpatient Prospective Payment Systems (IPPS) and Final Fiscal Year 2009
Rates'' rule (73 FR 23630). Section III.G. of the preamble to the FY
2009 IPPS final rule, Computation of the Final FY 2009 Unadjusted Wage
Index, 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 Final Rule Occupational Mix Adjusted and
Unadjusted Average Hourly Wage and Pre-reclassified Wage Index by
CBSA.''
i. Fourth Year of the Transition
In the CY 2006 PFS final rule with comment period (70 FR 70167
through 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. 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, each ESRD facility's composite
payment rate will be based entirely on the CBSA-based wage index.
For CY 2009, we proposed to reduce the wage index floor from 0.75
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 floor and blended share applicable for CY 2009 are
shown in Table 10.

Table 10--Wage Index Transition Blend
----------------------------------------------------------------------------------------------------------------
CY payment Floor Ceiling Old MSA New CBSA
----------------------------------------------------------------------------------------------------------------
2009......................... 0.70* None....................... 0% 100%
----------------------------------------------------------------------------------------------------------------
* Each wage index floor is multiplied by a BN adjustment factor. For CY 2009 the BN adjustment is 1.056689
resulting in an actual wage index floor of 0.7397.

[[Page 69759]]

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.
Comment: We received a few comments that commend CMS for its use of
a transition policy in shifting the Medicare ESRD program into a new
geographic wage index system. Commenters stressed that prior to the
elimination to the floor, we should provide protection to facilities in
areas that would otherwise not be able to support dialysis facilities,
which will ensure that access to care for beneficiaries is not
compromised.
Response: We note that our goal is the eventual elimination of all
wage index floors. However, 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. We will continue to
reassess the need for a wage index floor in future years.
ii. 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 CY 2008, we used an alternative methodology as
explained below.
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 will
continue to use the same methodology for CY 2009. Under this
methodology, the CY 2009 wage index values for the counties of
Barnstable (CBSA 12700, Barnstable Town, MA-1.2643) and Bristol (CBSA
39300, Providence-New Bedford-Fall River, RI-MA-1.0696) were averaged
resulting in an imputed proposed wage index value of 1.1670 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 final
ESRD wage index floor of 0.70. Therefore, we will apply the ESRD wage
index floor of 0.70 to all ESRD facilities that are located in rural
Puerto Rico.
For Hinesville, GA (CBSA 25980), which is an urban area without
specific hospital wage data, we proposed to apply the same methodology
in 2009 that we used to impute a wage index value in CY 2006, CY 2007,
and CY 2008. Specifically, we proposed to use the average wage index
value for all urban areas within the State of Georgia. We are
finalizing our proposal, which results in a CY 2009 wage index value of
0.9110 for the Hinesville-Fort Stewart GA CBSA.
In the CY 2008 PFS final rule with comment period (72 FR 66283
through 66284), 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, have emerged. Therefore, for ESRD purposes, we
continue to believe this is an appropriate policy. We received no
comments on this section and are finalizing our policies for wage areas
with no hospital data as proposed.
iii. Evaluation of Wage Index Policies Adopted in the FY 2008 IPPS
Final Rule
We stated in the CY 2008 PFS final rule with comment period (72 FR
66284) 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 also proposed 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.
(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
Sec. 412.64(b)(1)(ii)(B) that were deemed to 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 counties, 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.

[[Page 69760]]

In the FY 2008 IPPS final rule with comment period, for purposes of
IPPS, Sec. 412.64(b)(1)(ii)(B) was amended 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
Sec. 412.64(b)(1)(ii)(C). For purposes of the ESRD wage index, we have
recognized OMB's CBSA designations, as well as generally followed the
policies under the IPPS with regard to the definitions for ``urban''
and ``rural'' for the wage index, but we do not to take into account
IPPS geographic reclassifications in determining payments under the
composite payment system. Accordingly, to reflect our general policy
for the 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.
(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 that were 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. In the proposed rule, we noted 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, under the 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). This resulted
in the allocation of 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 Addenda G and H of this final rule with comment period.)
For CY 2009, we will 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.
Although we solicited comments, we did not receive any comments on
this section and are implementing these provisions in this final
notice. (For a detailed explanation of the multi-campus and New England
deemed counties policies, refer to the CY 2009 PFS proposed rule (73 FR
38531 through 38532)).
c. Budget Neutrality Adjustment
Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d) of
the MMA, requires that 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 did not propose 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 proposed to
apply a BN adjustment factor 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 final CY 2009 wage index BN adjustment factor
(1.056689), we used the most current FY 2005 pre-floor, pre-
reclassified, non-occupational mix-adjusted hospital data to compute
the wage index values, treatment counts from the most current 2007
outpatient claims (paid and processed as of June 30, 2008), and
geographic location information for each facility which may be found on
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 Final Proposed Rule Occupational Mix Adjusted and Unadjusted
Average Hourly Wage and Pre-Reclassified Wage Index by CBSA.''
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 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. Section 153(a) of the MIPPA
updated section 1881(b)(12)(G) of the Act and revised payments to ESRD
facilities. The revisions that are effective January 1, 2009 include an
update of 1 percent to the composite rate component of the payment
system, and the establishment of a site neutral composite rate to
hospital-based and independent dialysis facilities. We note that when
computing the 4th year new amount, we did not

[[Page 69761]]

include the MIPPA provisions because they are not budget neutral.
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 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 BN adjustment factor for the CY 2009 wage index is
1.056689. This figure differs slightly from the figure in the proposed
rule (1.056672) because we have used updated hospital wage data and
treatment counts from the most current claims data.
To ensure BN, we also must apply the BN adjustment factor to the
wage index floor of 0.7000 which results in a adjusted wage index floor
of 0.7397 (0.7000 x 1.056689) for CY 2009.
d. ESRD Wage Index Tables
The 2009 wage index tables are located in Addenda G and H of this
final rule with comment period.
6. 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 Data
for the Annual Payment Update), 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 principle behind the HAC payment provision (Medicare
will not provide additional payments to IPPS hospitals to treat certain
preventable conditions acquired during a beneficiary's IPPS hospital
stay) 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 Medicare Severity-Diagnosis Related Group (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 was not present, or could
not be identified based on clinical judgment, on admission. That is,
the case will be paid as though the secondary diagnosis related to the
HAC 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 (that is, Medicare not paying more for certain
reasonably preventable hospital-acquired 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,
ambulatory surgical centers, SNFs, HHAs, ESRD facilities, and physician
practices. Implementation would be different for each setting, as each
payment system is different and the level of reasonable prevention
through the application of evidence-based guidelines would vary for
candidate conditions across different settings of care. However,
alignment of incentives across settings of care is an important goal
for all of our VBP initiatives, including the HAC payment 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 reasonably preventable condition acquired in
the first setting but treated in the second setting.
We note that we did not propose new Medicare policy in this
discussion of the possible application of the HAC payment policy for
IPPS hospitals to other settings, as some of these approaches may
require new statutory authority. Instead of proposing policy, we
solicited public comment on the application of the preventable HAC
payment provision for IPPS hospitals to other Medicare payment systems.
We also stated that we look forward to working with stakeholders in the
fight against all healthcare-associated conditions.
The following is a summary of the comments we received and our
responses.
Comment: Commenters recommended that CMS work with technical
experts, such as physicians and hospitals, to determine the impact,
burden, and accuracy of POA indicator reporting in the inpatient
setting before it is expanded to other settings of care. Commenters
specifically recommended that CMS consider issues of adverse selection
and access to care for vulnerable populations. Many commenters had
concerns with CMS' authority and ability to implement such a policy for
the physician office setting.
Response: We agree that the HAC payment provision should be studied
to determine its impact. We also recognize the importance of aligning
VBP policy across all Medicare payment systems. We believe it is
appropriate to consider policies of not paying more for medical care
that harms patients or leads to complications that could have been
prevented. For example, we note that CMS is currently considering
National Coverage Determinations (NCDs) for three of the National
Quality Forum's Serious Reportable Events: (1) Surgery on the wrong
body part, (2) surgery on the wrong patient, and (3) wrong surgery
performed on a patient. NCDs can address physician services as well as
institutional services. We will work with stakeholders as we move
forward in combating healthcare-associated conditions in all Medicare
payment settings. Any additional policies, within statutory authority,
addressing these issues would be proposed through notice and comment
rulemaking.
Comment: Some commenters stated that CMS may need to implement a
Present on Admission (POA)-type indicator to recognize healthcare-
acquired conditions in the physician office and ESRD settings of care,
similar to the IPPS POA indicator.
Response: We agree that a POA-type indicator would aid in
determining the onset of a healthcare-acquired condition. We welcome
the opportunity to work with stakeholders to consider expansion of a
POA-type indicator to all Medicare settings of care. We look forward to
working with entities such as the National Uniform Billing Committee
(NUBC) on the implementation of a

[[Page 69762]]

POA-type indicator for all settings of care.
Comment: Many commenters identified attribution of a healthcare-
acquired condition to an individual physician who is broadly managing
the patient's care as a challenge in expanding the principle behind the
HAC payment provision to the physician office setting. Some commenters
noted that several physicians may be responsible for the care of a
patient, therefore attribution of the adverse event to a single
physician may be difficult.
Response: We recognize that because health care is delivered by a
team of professionals, several providers could potentially share
responsibility for the occurrence of a healthcare-associated condition.
We have extensive experience in testing various attribution
methodologies in our cost of care measurement initiative. We refer
readers to section III.C. of this final rule with comment period
(section 131(c) of the MIPPA) for further discussion of attribution.
Comment: Some commenters expressed concern regarding implementation
of the Medicare secondary payer policy to hold the provider in which a
health-care associated condition occurred liable for the cost of
subsequent care required to treat the condition.
Response: We appreciate the comments regarding MSP policy and
payment for health-care associated conditions in downstream care
settings. We look forward to further exploring these issues with
stakeholders.
Comment: A few commenters recognized that the HAC payment provision
targets a portion of an MS-DRG payment and were unsure how this concept
could be transferred to the physician office setting. Further, several
commenters mentioned bundled or global payment as a more rational way
to pay for Medicare services, which could obviate the need for a
healthcare-acquired condition payment provision.
Response: As commenters noted, the HAC payment provision prohibits
payment for a portion of the MS-DRG when a HAC occurs in the inpatient
setting. In that the HAC payment provision results in payment being
adjusted to a lower level of payment, the basic payment concept could
be made applicable to other Medicare payment settings. Implementation
of such policies would likely depend on the specific coding and payment
systems used for each payment system.
Comment: Several commenters expressed the need to adjust for
patient-specific factors like severity of illness and patient
compliance. A few commenters stated that unlike the inpatient setting,
the physician office setting does not lend itself to close monitoring
of patient compliance.
Response: We recognize that certain beneficiaries may pose a
greater risk of contracting a healthcare-acquired condition. We also
note that providers must carefully consider those risk factors to avoid
preventable conditions. We refer readers to the FY 2009 Inpatient
Prospective Payment System final rule (73 FR 48487 through 48488
(http://edocket.access.gpo.gov/2008/pdf/E8-17914.pdf)) where we
discussed risk-adjustment as a potential enhancement to the IPPS HAC
provision.
Comment: Many commenters believe that it could be more effective to
combat healthcare-acquired conditions by adjusting payments based on a
provider's rates of healthcare-associated conditions rather than to
directly adjust the payment for an individual service.
Response: We agree that capturing rates of healthcare-associated
conditions and using those rates for performance-based payment may be a
more sophisticated and effective way to adjust payment. Rates of
healthcare-associated conditions may be good candidates as possible
quality measures for VBP programs like the PQRI as discussed in more
detail in section II.O. of this final rule with comment period.
Further, the ESRD pay-for-performance program and the forthcoming
Physician VBP Plan Report to Congress may also address healthcare-
associated conditions.
Comment: Commenters raised concern regarding the use of financial
incentives to combat healthcare-associated conditions. Many commenters
suggested that CMS should encourage compliance with evidence-based
guidelines rather than use direct payment adjustments to address
healthcare-associated conditions in the physician office setting.
Response: We agree that it is important for Medicare providers to
provide care that is consistent with evidence-based guidelines. We
intend to consider all of our statutory and regulatory authorities,
including the implementation of quality measures and payment
adjustments, to encourage provision of care that is consistent with
evidence-based guidelines. We look forward to working with stakeholders
to further identify and apply available methods to combat healthcare-
acquired conditions.
Comment: Many commenters supported the alignment of incentives
across all Medicare settings of care.
Response: We appreciate the public's support of our efforts to
align incentives across all Medicare payment settings. We look forward
to working with stakeholders to expand VBP initiatives in all Medicare
payment settings. Further, we intend to host a public listening session
toward the end of CY 2008 to discuss the expansion of the HAC payment
provision, specifically targeting both the inpatient and hospital
outpatient department (HOPD) settings of care.

I. Independent Diagnostic Testing Facility (IDTF) Issues

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
Sec. 410.33. In the proposed rule, we proposed 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 Sec. 410.33, including prohibitions regarding the sharing
of space and leasing/sharing arrangements, apply to physicians and
nonphysician practitioners (NPPs) who are furnishing diagnostic testing
services for Medicare beneficiaries, and who have enrolled in the
Medicare program as a clinic, group practice, or physician's 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. Because these comments were outside of the scope of
the provisions in the CY 2008 PFS proposed rule, we were not able to
take action regarding these comments in the

[[Page 69763]]

CY 2008 PFS final rule with comment period.
In the CY 2009 PFS proposed rule, we stated that we are concerned
that--
Certain physician entities, including physician group
practices, and clinics, can enroll as a group practice or clinic and
furnish diagnostic testing services without the benefit of qualified
nonphysician personnel, as defined in Sec. 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 Sec. 410.33.
Some physician organizations are furnishing diagnostic
tests using mobile equipment provided by an entity that furnishes
mobile diagnostic services.
Therefore, we proposed certain exceptions to the established
performance standards found in Sec. 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
patients may make 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 proposed that physician entities do not need to comply with
the following standards:
Maintaining additional comprehensive liability insurance
for each practice location as required under Sec. 410.33(g)(6).
Maintaining a formal clinical complaint process as
required under Sec. 410.33(g)(8).
Posting IDTF standards as required under Sec.
410.33(g)(9).
Maintaining a visible sign posting business hours as
required under Sec. 410.33(g)(14)(ii).
Separately enrolling each practice location as required
under Sec. 410.33(g)(15)(i).
Accordingly, we proposed to add Sec. 410.33(j) which states that,
``A physician or NPP organization (as defined in Sec. 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 Sec. 410.33, except for Sec.
410.33(g)(6), Sec. 410.33(g)(8), Sec. 410.33(g)(9), Sec.
410.33(g)(14)(ii), and Sec. 410.33(g)(15)(i).'' As discussed in
section II.J. of this preamble, we proposed 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 maintained 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 Sec. 410.33(c). Moreover, we
proposed that physician or NPP organizations that do not enroll as an
IDTF and meet the provisions at Sec. 410.33 may be subject to claims
denial for diagnostic testing services or a revocation of their billing
privileges.
We solicited comments on whether we should consider establishing
additional exceptions to the established performance standards in Sec.
410.33(g) for physician and NPP organizations furnishing diagnostic
testing services. We stated in the proposed rule that while we believe
that most physician and NPP organizations utilize nonphysician
personnel described in Sec. 410.33(c) to furnish diagnostic testing
services, we also solicited comments on whether physician or NPPs
conduct diagnostic tests without benefit of qualified nonphysician
personnel and under what circumstances the testing occurs.
While we proposed to apply the IDTF requirement to all diagnostic
testing services furnished in physicians' offices, we stated that we
were 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
solicited comments 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 solicited comments 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 also solicited comments on what would be appropriate
criteria to limit this provision.
Finally, since these changes, if adopted, would take time to
implement for suppliers that have enrolled in the Medicare program, we
proposed an effective date of September 30, 2009, rather than the
effective date of the final rule with comment period. For newly
enrolling suppliers, we proposed the effective date of this rule which
is January 1, 2009.
With the enactment of section 135 of the MIPPA legislation and
after reviewing public comments, we are deferring the implementation of
these proposals while we continue to review the public comments
received on this provision and we will consider finalizing this
provision in a future rulemaking effort if we deem it necessary.
Section 135 of the MIPPA requires that the Secretary establish an
accreditation process for those entities furnishing advanced diagnostic
testing procedures which 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) by January 1, 2012.
Accordingly, we are not adopting our proposal to require physicians
and NPPs to meet certain quality and performance standards when
providing diagnostic testing services, except mammography services,
within their medical practice setting and have removed the paperwork
burden and regulatory impact analysis associated with this provision in
this final rule with comment period.
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 proposed a new performance
standard for mobile entities at Sec. 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 furnished. 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 furnish.

[[Page 69764]]

While we understand that a mobile entity can furnish diagnostic
testing services in various types of locations, we stated that we
believe that it is essential that mobile entities use qualified
physicians or nonphysician personnel to furnish diagnostic testing
procedures and that the enrolled mobile supplier bill for the services
furnished. We maintain that it is essential to our program integrity
and quality improvement efforts that an entity furnishing mobile
diagnostic testing services complies with the performance standards for
IDTFs and bill the Medicare program directly for the services furnished
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, we proposed that this provision
would be effective with the effective date of this final rule with
comment period.
Comment: Several commenters supported our proposal to require
mobile diagnostic service providers to enroll in Medicare as IDTFs and
to be required to bill Medicare directly for the TC services they
furnish.
Another commenter stated that this provision creates a single,
universal quality standard for outpatient imaging that eliminates any
possible inequity in standards that could exist between office-based
imaging and IDTF imaging.
Several other commenters support the concept that all providers and
suppliers serving Medicare beneficiaries must be enrolled to be
eligible to receive payments from Medicare, directly or indirectly.
Response: We agree with these comments and thank the commenters for
their support.
Comment: One commenter stated that this provision would eliminate
two distinct and unfair competitive advantages that mobile cardiac
nuclear imaging providers enjoy under existing regulations. One
advantage is the ability to operate under a ``mobile'' Nuclear
Regulatory Commission Radioactive Materials license, which does not
require the same regulatory filings as fixed-site cardiac nuclear
medicine laboratories, and in the case of some state Radioactive
Materials licenses, it does not subject the mobile provider to the same
pre-opening inspections that the fixed sites are subject to. Second,
some mobile providers are able to secure accreditation from certain
accrediting agencies that furnish a global, or ``hub'', accreditation
certification.
Response: We thank the commenter for its support.
Comment: One commenter stated that our proposal to require mobile
providers to enroll in Medicare as IDTFs, be subject to all IDTF
performance standards, and to bill Medicare directly, not only would it
create a single, universal standard for quality among all imaging
providers, but would also level the playing field in the competitive
market for management services for companies which provide high quality
fixed site programs for Medicare-enrolled physician practices and their
Medicare enrollees.
Response: We appreciate the comments and thank the commenter for
their support.
Comment: One commenter supports the proposal requiring these
entities to enroll in Medicare and as such, for them to be required to
abide by applicable Medicare policies. The commenter continued to state
that they do not oppose the direct billing requirement but that if the
proposal is finalized, CMS needs to provide a great amount of detail in
how the provision will work and its impact on hospital billing
practices.
Response: We have revised the provision at Sec. 410.33(g)(17) for
those IDTFs that are billing under arrangement with hospitals as
described in section 1862(a)(14)of the Act and Sec. 482.12(e).
Comment: Several commenters urged CMS to clarify that its proposal
to require mobile testing entities to bill directly for services they
furnish would not apply when such services are furnished ``under
arrangement to hospital inpatients and outpatients.'' In addition,
these commenters recommended that mobile diagnostic testing facilities
that furnish these services to hospitals be excluded from the proposed
IDTF performance standards.
Response: Although we are requiring all mobile entities that
furnish diagnostic testing services to enroll in the Medicare program,
we are not requiring mobile testing entities to bill directly for the
services they furnish when such services are furnished under
arrangement with hospitals as described in sections 1861(w)(1) and
1862(a)(14)of the Act and Sec. 482.12(e).
Comment: One commenter urges CMS to exclude from the definition of
entities furnishing mobile diagnostic testing services those entities
that do the following: lease equipment and provide technicians who
conduct diagnostic tests in the office of the billing physician or
physician organization; and furnish testing under the supervision of a
physician who shares an office with the billing physician or physician
organization.
Response: We disagree with the commenter. We maintain that a mobile
entity providing diagnostic testing services must enroll for any
diagnostic imaging services that it furnishes to a Medicare
beneficiary, regardless of whether the service is furnished in a mobile
or fixed base location so that CMS knows which entity is providing
these diagnostic testing services.
Comment: One commenter stated that the proposed IDTF performance
standard is contrary to the Medicare ``under arrangement'' provisions
and if the IDTF performance standard were extended into the hospital
setting, it would prohibit hospitals from providing diagnostic imaging
services under arrangement and present significant administrative and
operational challenges for hospitals and their patients.
Response: We agree and have revised the provision to account for
mobile IDTFs billing under arrangement with hospitals as described in
sections 1861(w)(1) and 1862(a)(14)of the Act and Sec. 482.12(e).
Comment: Several commenters requested that we not require mobile
units that furnish diagnostic testing services to enroll in Medicare or
be required to bill for all of the services they furnish.
Response: We disagree with the commenters. In order to maintain
program integrity and enable CMS to monitor services furnished by
mobile units providing diagnostic testing services, we maintain that a
mobile entity providing diagnostic testing services must enroll for
diagnostic imaging services that it furnishes to a Medicare
beneficiary, regardless of whether the service is furnished in a mobile
or fixed base location. We are requiring these mobile IDTFs to bill for
the services that they furnish unless they are billing under
arrangement with hospitals.
Comment: One commenter stated the contractual arrangement between
mobile diagnostic imaging services companies and hospitals are
commonplace throughout the United States health care industry and these
long-standing arrangements, which can be short-term or long-term
depending upon hospital demand, service a variety of important needs
within the hospital and provider community, including a valuable means
to address capacity, volume and equipment cost issue and limitations
imposed by State Certificate of Need (CON) requirements.

[[Page 69765]]

Response: We understand the commenters' concerns and we are
requiring these mobile IDTFs to bill for the services that they furnish
unless they are billing under arrangement with hospitals.
Comment: One commenter suggested that we should provide clear and
concise guidance on billing protocols that permit hospitals to continue
billing for mobile diagnostic testing services furnished as inpatient
and outpatient hospital services and allow informational billing (that
is, no payment impact) by the mobile entities through the use of a
billing modifier.
Response: We believe these comments are outside the scope of the
rule.
Comment: One commenter does not support a restriction of an
enrolled provider/supplier that would preclude them from arrangements
that are allowed under the purchased diagnostic test or purchased
interpretation rules due to their method of connecting a patient with
testing equipment.
Response: We understand the commenters' concerns and we are
requiring these mobile IDTFs to bill for the services they furnish
unless they are billing under arrangement with hospitals.
Comment: One commenter states that they believe that the provision
of diagnostic and other therapeutic services by a contracted provider
to registered inpatients and outpatients is fully consistent with
longstanding Medicare provisions expressly permitting hospitals to
furnish services directly or ``under arrangements,'' and that the
mobile entities that may furnish these services under arrangement would
not bill directly for their services but would be under the control of
another entity.
Response: We agree with the commenter and although we are requiring
all mobile entities that provide diagnostic testing services to enroll
in the Medicare program, we are not requiring mobile testing entities
to bill directly for the services they furnish when such services are
furnished under arrangement to hospitals.
After reviewing public comments, we are finalizing the provision at
Sec. 410.33(g)(16), which would require that entities furnishing
mobile diagnostic services enroll in Medicare program as an IDTF
regardless of where the services are furnished. By enrolling in the
Medicare program, CMS or our contractor can determine if the mobile
IDTF meets all of the performance standards found in Sec. 410.33(g)
and that its owners are not otherwise excluded or barred from
participation in the Medicare program. We believe that requiring mobile
IDTFs to enroll in order to furnish services to Medicare beneficiaries
is consistent with the existing enrollment regulation found at Sec.
424.505 which states that to receive payment for covered Medicare items
or services from either Medicare or a Medicare beneficiary, a provider
or supplier must be enrolled in the Medicare program. Moreover, by
requiring mobile IDTFs to enroll in order to furnish services to
Medicare beneficiaries, the Medicare contractor will be able to certify
that mobile IDTFs are in compliance with the requirements for enrolling
and maintaining enrollment set forth at Sec. 424.520. Finally, the
owner of a mobile IDTF is responsible for ensuring that the mobile IDTF
meets all applicable regulatory requirements to maintain their
enrollment in the Medicare program.
In addition, we are finalizing the provision at Sec. 410.33(g)(17)
requiring that mobile diagnostic services bill for the mobile
diagnostic services that they furnish, unless the mobile diagnostic
service is part of a hospital service and furnished under arrangement
with that hospital as described in section 1862(a)(14)of the Act and
Sec. 482.12(e). To ensure that IDTFs are actually furnishing services
under arrangement with a hospital, we will require that mobile IDTFs
provide documentation of the arrangement with their initial or
revalidation enrollment application, or change in enrollment
application.
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 proposed to
limit the claims submission timeframe after revocation. In Sec.
424.535(g) (redesignated as Sec. 424.535(g)), we proposed 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 stated that this change is necessary to
limit the Medicare program's exposure to future vulnerabilities from
physician and NPP organizations and individual practitioners that have
had their billing privileges revoked. Accordingly, the 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 also proposed to add a new provision at Sec. 424.44(a)(3)
to account for this provision related to the requirements for the
timely filing of claims. The timely filing requirements in Sec.
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.
Comment: Several commenters recommended that we withdraw all of our
proposed changes to the requirements for physician enrollment in
Medicare, including changes to the effective date of billing
privileges, eligibility to participate in the program, enrollment
processing, reporting requirements, and revocation of billing
privileges. Many of the commenters were concerned that it would be
burdensome to add new requirements where they must submit all claims
within 60 days of the effective date of revocation because of the time
it takes to process claims and that it would be easier to leave the
retrospective billing rules as they are.
Response: We are not adopting this recommendation. Instead, we will
respond to the specific comments received in response to our specific
proposals.
Comment: Several commenters requested that we make no revisions to
current physician and NPP enrollment rules at this time.
Response: We are not adopting this recommendation. Instead, we will
respond to the specific comments received in response to our specific
proposals.
After reviewing public comments, we are finalizing the provisions
found at Sec. 424.535(h) (formerly Sec. 424.535(g)) that require a
revoked physician organization, a physician, a NPP, or an IDTF to
submit all outstanding claims not previously submitted within 60
calendar days of the revocation effective date. Since IDTFs are already
afforded approximately 30 days notification before the effective date
of revocation (except for revocations identified in Sec. 405.874(b)(2)
and Sec. 424.535(f) of this final rule), we believe that almost 90
days is more than sufficient time to file any outstanding claims.
In addition, we are finalizing the provisions found at Sec.
424.44(a) related

[[Page 69766]]

to the requirements for the timely filing of claims. The timely filing
requirements in Sec. 424.44(a)(1) and (a)(2) will no longer apply to
physician and NPP organizations, physicians, NPPs or IDTFs. We revised
this provision so that it is consistent with Sec. 424.521 which limits
the ability of these suppliers to bill Medicare retrospectively.

J. Physician and Nonphysician Practitioner (NPP) Enrollment Issues

1. Effective Date of Medicare Billing Privileges
In accordance with Sec. 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 Sec.
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 that were furnished 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 final rule with comment period, we believe
that an NPP includes, but is not limited to, the following individuals:
anesthesiology assistants, audiologists, certified nurse midwives,
certified registered nurse anesthetists (CRNA), clinical social
workers, nurse practitioners (NPs), physician assistants (PAs),
clinical psychologists, psychologists billing independently, speech
language pathologists, 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
furnished 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 allowed to bill
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 furnished up to 27 months prior to their enrolling in the
Medicare program. In the proposed rule, we stated our concern 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 solicited 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
furnished 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). Physicians and NPPs are eligible
for NPIs and may apply for their NPIs at any time. To enroll in
Medicare, a physician or NPP must have an NPI. If an enrollment
application is received that is absent the NPI, it will be rejected.
The NPI regulation, at 45 CFR 162.410(a)(1), requires a health care
provider who is a covered entity under HIPAA to obtain an NPI. At 45
CFR 162.410(b), the NPI regulation states that a health care provider
who is not a covered entity under HIPAA may obtain an NPI. The
definition of ``health care provider'' is found at 45 CFR 160.103. The
preamble of the NPI final rule (69 FR 3450) states that HIPAA does not
prohibit a health plan from requiring its enrolled health care
providers to obtain NPIs if those health care providers are eligible
for NPIs (that is, that they meet the definition of ``health care
provider''). With exceptions for the two entities that are eligible to
enroll in Medicare but are not eligible for NPIs, Medicare requires all
providers, including physicians and NPPs, who apply for enrollment to
have NPIs, and to report them on their Medicare enrollment
applications. When applying for NPIs, providers indicate they are one
of the following: An Entity type 1 (an individual person, such as a
physician or an NPP, to include a sole proprietor/sole proprietorship);
or an Entity type 2 (an organization, which is any legal entity other
than an individual).
The date of approval is the date that a designated Medicare
contractor determines that the physician or NPP organization or
individual practitioner meets all Federal and State requirements for
their supplier type
Given this first approach, in proposed Sec. 424.520, we stated
that 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 a
NPI.''
We also stated in the CY 2009 PFS proposed rule that we believe
that this approach--
Prohibits physicians, 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 Sec. 489.13 for
those providers and suppliers that require a State survey prior to
being enrolled and the requirements for durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS) suppliers in Sec.
424.57(b)(2);
Is consistent with our requirements for providers
identified in Sec. 400.202 and surveyed suppliers that are allowed to
bill for services only after they are approved to participate in the
Medicare program. Surveyed suppliers are those 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 furnishing 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

[[Page 69767]]

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, newly enrolling physicians 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 proposed Sec. 424.520, we stated
that 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 a FFS contractor; or (2)
The date that the physician or NPP organization or individual
practitioner first furnished services at a new practice location.''
We also stated in the CY 2009 PFS proposed rule that 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 Sec.
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 physicians 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
physicians 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 an Internet-based enrollment process known as
the Internet-based Provider Enrollment, Chain and Ownership System
(PECOS) that is more streamlined and efficient than the traditional
paper-application enrollment method.
By using Internet-based PECOS, we expect that physician and NPP
organizations and individual practitioners will be able to reduce the
time necessary to enroll in the Medicare program or to 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 Sec. 424.502, we also proposed 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 a clinic or a group practice. In addition to establishing an
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
the proposed definition would include sole proprietorships that receive
a type 1 NPI and any organizational entity that is required to obtain a
type 2 NPI.
Comment: Several commenters urged CMS to adopt the proposal to
limit retrospective billing to the later of the date of filing or date
the practice location was established.
Response: We agree with these commenters and have finalized this
approach in this final rule with comment period.
Comment: One commenter recommended that we should not implement the
revised effective date for billing privileges until January 1, 2010.
Response: We disagree with the commenter because we believe that it
is essential that Medicare only pay for services to eligible
practitioners that are qualified to bill for services.
Comment: Several commenters recommended that we refrain from
implementing any proposed changes to the effective date of Medicare
billing privileges until the Provider Enrollment, Chain and Ownership
System (PECOS) system is fully functional and a thorough discussion is
held between all affected parties and/or all current National Provider
Identifier (NPI) applications are processed.
Response: While we understand this comment, we disagree with these
commenters. By establishing an effective date of billing for
physicians, NPPs, and physician and NPP organizations, we believe that
Medicare will only pay for services furnished by licensed practitioners
that meet all of the Medicare program requirements. In addition, we
implemented the NPI on May 23, 2008. Accordingly, we do not believe
that there is a nexus between the implementation of the effective date
for physicians, NPPs, and physician and NPP organizations and the
implementation of the Internet-based PECOS or the implementation of the
NPI.
Comment: One commenter suggested that payment not commence until
the provider's application has been processed and approved and that if
the approval date is after the date the provider first started to
render services, then payments will be paid retroactive to the
rendering date. The commenter also requested that CMS implement an
electronic enrollment processing system.
Response: We are finalizing a provision that allows physicians,
NPPs (including CRNAs), and physician or NPP organizations to
retrospectively bill

[[Page 69768]]

for services up to 30 days prior to their effective date of billing
when the physician or NPP organization met all program requirements,
including State licensure requirements, where services were provided at
the enrolled practice location prior to the date of filing and
circumstances precluded enrollment in advance of providing services to
Medicare beneficiaries in Sec. 424.521(a)(1). Further, we are
implementing Internet-based PECOS for physicians and NPPs by the end of
CY 2008 to facilitate the electronic enrollment process.
Comment: One commenter suggested that the enrollment payment policy
for CRNAs remain as it is.
Response: We are finalizing a provision that allows physicians,
NPPs (including CRNAs), and physician or NPP organizations to
retrospectively bill for services up to 30 days prior to their
effective date of billing when the physician or nonphysician
organization has met all program requirements, including State
licensure requirements, where services were provided at the enrolled
practice location prior to the date of filing and circumstances, such
as, when a physician is called to work in a hospital emergency
department which precluded enrollment in advance of providing services
to Medicare beneficiaries in Sec. 424.521(a)(1).
Comment: One commenter would like to recommend that CMS not make
the new Web-based enrollment system too cumbersome. Their concerns are
based on current member experiences with the IACS for review of PQRI
claims. The requirements for the practice to designate a security
officer, submit old IRS documents, etc., are extremely time-consuming,
burdensome and serve as disincentives to physician participation.
Response: This comment is outside the scope of the proposed rule
and cannot be addressed within this final rule.
Comment: One commenter asked that if we adopt either of these
enrollment strategies, we should consider an exemption for hospital-
based emergency physicians and NPP organizations to allow a period of
retroactive billing and payment once an enrollment application is
approved by the contractor.
Response: We are finalizing a provision that allows physicians,
NPPs, and physician or NPP organizations to retrospectively bill for
services up to a 30 days prior to their effective date of billing when
the physician or NPP organization met all program requirements,
including State licensure requirements, where services were furnished
at the enrolled practice location prior to the date of filing and
circumstances precluded enrollment in advance of providing services to
Medicare beneficiaries in Sec. 424.521(a)(1).
Comment: One commenter stated that they support our efforts to
ensure participating providers and suppliers of services are complying
with Medicare program requirements in a matter consistent with policy
and are not attempting to ``game'' the system. However, should we move
forward with this proposal, the commenter advises the drafting of
policies to identify unusual activities beyond the control of the
provider or supplier, such as hurricanes and other natural disasters,
that necessitate a provider or supplier of services obtaining
additional Medicare billing privileges in order to provide services.
Response: We are finalizing a provision that allows physicians,
NPPs, physician or NPP organizations to retrospectively bill for
services up to a 90 days prior to their effective date of billing when
the physician or NPP organization met all program requirements,
including State licensure requirements, services were furnished at the
enrolled practice location prior to the date of filing and a
Presidentially-declared disaster under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act, 42 U.S.C. Sec. Sec. 5121-5206
(Stafford Act) precluded enrollment in advance of providing services to
Medicare beneficiaries in Sec. 424.521(a)(2).
Comment: A large number of commenters do not support either
approach and go further to state that both proposals will negatively
impact the ability of hospital emergency departments and their
physicians to meet their statutory obligations under the Emergency
Medical Treatment and Active Labor Act (EMTALA). Many of these
commenters stated that in these emergency department situations,
physicians are hired in very short timeframes, sometimes just days
before they begin working in a new location that they cannot submit an
enrollment application in such a short timeframe. They also continued
to state that if we adopted the enrollment provisions as proposed,
these emergency department enrollment situations would cause the
physicians to forgo payment because they would not be able to submit an
enrollment application before they begin furnishing services. Other
commenters were opposed to both proposed approaches to limit
retrospective billing after enrolling in the Medicare program and asked
that we withdraw any proposed changes to the enrollment process.
Response: We disagree with the commenters. We believe that we have
adopted an approach that balances the need to strengthen the Medicare
enrollment process, protect the Medicare Trust Funds, and ensure that
individual practitioners and physician and NPP organizations receive
payment for services furnished to Medicare beneficiaries. The revised
provision allows up to 30 days after furnishing services to submit an
enrollment application (and up to 90 days when a Presidentially-
declared disaster under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act)) so the
physician, NPP or physician or NPP organization has sufficient time to
submit their enrollment application.
Comment: One commenter stated that they believe that it is
unreasonable to expect physicians to furnish care to their patients
without the ability to be paid for their services until they are
officially enrolled in the Medicare program.
Response: While we agree that physicians should be reimbursed for
the services furnished to Medicare beneficiaries, we also believe that
physicians, NPPs and physician and NPP organizations are responsible
for enrolling or making a change in their enrollment in a timely
manner. In most cases, we believe that physicians and NPP practitioners
can submit an enrollment application prior to providing Medicare
services at a new practice location.
Comment: One commenter stated that in emergency room situations
these enrollment scenarios will not work and gives the example using
the second approach of when an emergency department is in desperate
need of a provider. The department is able to obtain a physician almost
immediately who is already employed within the organization and is also
an approved provider in the Medicare program at their current practice
location. Simply because the events in this example happened so
quickly, the physician's CMS-855R was submitted to the Medicare
contractor 1 week after he began providing services in the emergency
department. If the second approach were in effect, 1 week of services
the physician furnished to Medicare beneficiaries in the emergency
department would be denied as his enrollment at this location was not
in effect.
Response: We understand this commenter's concerns and are
finalizing a provision that allows physicians, NPPs, physician or NPP
organizations to retrospectively bill for services up to 30

[[Page 69769]]

days prior to their effective date of billing when the physician or NPP
organization met all program requirements, including State licensure
requirements, where services were furnished at the enrolled practice
location prior to the date of filing and circumstances precluded
enrollment in advance of providing services to Medicare beneficiaries
in Sec. 424.521(a)(1).
Comment: One commenter stated that should we adopt the second
approach, they requested that a standard be established that defines
what constitutes the receipt of a substantially complete application
form for which the effective date under approach two may be
established. This approach would address the situations where denial
errors and clarifications can be corrected without delaying the
effective date.
Response: As a general rule, applicants are given at least 30 days
to cure any deficiencies/technicalities before a contractor rejects an
enrollment application (see Sec. 424.525). During the application
review process, contractors notify applicants about missing information
and documentation and afford the applicant at least 30 days to correct
deficiencies. With the implementation of Internet-based PECOS, we
expect that physicians and NPPs using the Web process will
significantly decrease the number of incomplete applications and the
need for contractors to request additional information. With the
implementation of this final rule, we would require contactor to deny,
rather than reject paper or Web applications when a physician, NPP, or
physician or NPP organization fails to cure any deficiencies/
technicalities.
Comment: One commenter urged CMS to adopt a standard establishing
that the filing date for an enrollment application is when a signed
application is first received by a contractor and not when the
application is deemed complete and ready for approval by that
contractor. Otherwise, delays associated with contractor processing
could become a larger concern.
Response: We agree with this commenter and have adopted the ``date
of filing'' as the date that the Medicare contractor receives a signed
provider enrollment application that the Medicare contractor is able to
process to approval.
Comment: Several commenters strongly opposed the approach where
billing privileges would be conveyed based on the date of approval by
the Medicare contractor and maintain that tying billing privileges to a
contractor's approval of a practitioner's Medicare enrollment
application could create unintended access problems for some patients.
Other commenters added that in certain situations, the physicians would
furnish services and would not be able to be compensated which they do
believe is an unintended consequence by CMS.
Response: We agree with the commenters and have not adopted the
proposed approach as it was proposed but revised it so that it would
establish the effective date of billing for physicians, NPPs, and
physician and NNP organizations as the later of date of filing of a
Medicare enrollment application that was subsequently approved by a
Medicare contractor or the date they first began furnishing services at
a new practice location.
Comment: The suggestion to use the Medicare contractor's date of
approval as the initial enrollment date would mean that an employer can
expect to generate no revenue from a new hire for a minimum of 3 to 6
months, which is unacceptable.
Response: As stated above, we have not adopted the proposed
approach but revised it so that it would establish the effective date
of billing for physicians, NPPs, and physician and NNP organizations as
the later of date of filing of a Medicare enrollment application that
was subsequently approved by a Medicare contractor or the date they
first began furnishing services at a new practice location.
Comment: One commenter supports the establishment of an effective
billing date for physicians, NPPs, and physician and NPP organizations
as the later of: (1) The date of filing of a Medicare enrollment
application that was subsequently approved by a Medicare contractor; or
(2) the date an enrolled physician or NPP first started furnishing
services at a new practice location. The commenter further urges the
agency to tie enrollment and when billing privileges begins to offering
services at a new practice location.
Response: We appreciate this comment and have adopted a modified
approach where that date of filing is the effective date of billing for
physicians, NPPs, and physician and NPP organizations.
Comment: One commenter requests that current procedures change and
allow enrollment applications to be submitted 60 days prior to a
change.
Response: We disagree with the commenter and maintain that
permitting billing 30 days before the filing of an enrollment
application will provide a sufficient amount of time in most cases.
Comment: One commenter stated that the establishment of an
effective billing date for physicians, NPPs, and physician and NPP
organizations as: (1) The date of filing of a Medicare enrollment
application that was subsequently approved by a Medicare contractor; or
(2) the date an enrolled physician or NPP first started furnishing
services at a new practice location will improve patient access to
Medicare providers, since patients could be scheduled for appointments
based on the date that a Medicare provider submits an enrollment
application to the Medicare Administrative Contractor (MAC). This also
allows new Medicare providers more flexibility when initiating services
under Medicare.
Response: We thank the commenter for their support of this
provision.
Comment: Several commenters recommend that providers should be able
to submit enrollment applications with a requested effective date.
Response: We believe limiting retrospective payments will ensure
that physicians, NPPs, and physician and NPP organizations will ensure
that only qualified practitioners are able to bill for services
furnished to Medicare beneficiaries. Moreover, we believe that
establishing an effective date of Medicare billing privileges and
establishing limited retrospective payments will encourage physicians,
NPPs, and physician and NPP organizations to enroll and maintain their
enrollment in with the Medicare program. However, the effective date of
billing privileges is 30 days prior to the later of the date an
enrollment application is filed or the date services were furnished at
a new practice location.
Comment: Several commenters urged CMS to retain its current
retrospective billing policy for physicians and NPPs. However, these
commenters stated that if CMS revised its retrospective billing policy
for physicians, NPPs, and NPP organizations that they preferred option
2 (establishment of an effective billing date for physicians, NPPs, and
physician and NPPs as the later of: (1) The date of filing of a
Medicare enrollment application that was subsequently approved by a
Medicare contractor; or (2) the date an enrolled physician or NPP first
started furnishing services at a new practice location), which limited
retrospective billing to the later of the date of filing or the date
the practice location was established.
Response: We agree with these commenters and have adopted this
approach in this final rule.
Comment: One commenter recommends allowing those physicians

[[Page 69770]]

who are about to complete their fellowship to submit an application to
Medicare for a generic provider number which at a later date can be
linked to an eventual employer.
Response: Since we do not establish a provisional enrollment status
for physicians or other suppliers, but rather convey billing privileges
to a NPI, we disagree with this commenter.
Comment: One commenter suggests that to improve the Medicare
enrollment process, the processing of enrollment applications should
take 30 to 45 days versus a 90 to 120 days activity. Medicare could
follow the process employed by private payers and utilize one central
repository for provider enrollment given that all processes basically
require the same essential information.
Response: CMS already utilizes a single national repository of
enrollment information. The national enrollment repository is known as
the Provider Enrollment, Chain and Ownership System (PECOS).
Comment: Several commenters supported our proposed approach that
would establish the initial enrollment date for individual
practitioners and physician and NPP organizations as the date an
enrolled supplier started furnishing services at the new practice
location as it would be the fairest option for all enrollees.
Response: We appreciate this comment, and as stated above, we are
finalizing this proposal with revisions so that it would establish the
effective date of billing for physicians, NPPs, and physician and NNP
organizations as the later of date of filing of a Medicare enrollment
application that was subsequently approved by a Medicare contractor or
the date they first began furnishing services at a new practice
location.
Comment: One commenter stated that physician practices that allow
new practitioners to treat Medicare patients before their applications
are approved run the risk of submitting an application that is
ultimately returned on a technicality, forcing them to begin the
application process all over again.
Response: As stated above, to address the concern that enrollment
applications are returned based on a technicality, we expect that
physicians and NPPs using the Web process will significantly decrease
the number of incomplete applications and the need for contractors to
request additional information. With the implementation of this final
rule, we would require contactor to deny, rather than reject paper or
Web applications when a physician, NPP, or physician or NPP
organization fails to cure any deficiencies/technicalities.
Comment: One commenter stated that new physicians' practices must
begin paying rent, salaries and other expenses the minute they become
operational, if not before. This commenter also stated that many of
these physicians are already forced to take out loans to pay expenses
in the early days of operation until they enroll and can bill for
services furnished in the interim. Finally, this commenter stated that
our proposal to limit retrospective billing to the later of the date of
filing or the date the practice location is operational will inhibit
the ability of physicians and NPPs to create their own organizations,
and instead, it will force them to join already existing entities.
Response: We do not believe that the Medicare program pays for
services rendered prior to the date a new practice location is
established. As described above, the physician or NPP would be allowed
to file his or her enrollment application 30 days prior to the opening
of new practice location and receive payments for services provided
from the day the practice location was established or opened assuming
that the physician met State licensing requirements and other Medicare
program requirements at the time of filing and subsequently thereafter.
Comment: One commenter urged CMS to withdraw any proposed changes
to the enrollment process, but stated that they would consider
supporting limiting retrospective billing to the later of the date of
filing or the date the practice location is operational but only after
Internet-based PECOS has been proven to facilitate timely enrollment
processing (fewer than 30 days). Another commenter supported CMS
implementing this requirement once the enrollment processing time is at
a period of 30 to 45 days.
Response: We do not believe that a change to the effective date of
Medicare billing privileges has a nexus to the implementation of the
Internet-based PECOS.
Comment: One commenter suggested that we allow 30 to 60 days before
submission of an application to serve as the date of approval because
this timeline will allow for practices to obtain provider signatures,
licenses, and certifications so that we can approve back to the date of
licensure and/or the date the provider started furnishing services with
a minimum of 30 to 60 days.
Response: We disagree with this commenter, because physicians, NPPs
and physician and NPP organizations should have all the necessary
licenses/certifications at the time of filing, not 30 or 60 days after
filing an enrollment application.
Comment: Several commenters asked for clarification of the ``date
of filing'' when submitting an application for enrollment.
Response: We have clarified the ``date of filing'' in the provision
of the final rule as the date that the Medicare contractor receives a
signed provider enrollment application that the Medicare contractor is
able to process to approval.
Comment: One commenter recommends that we wait until the Internet-
based PECOS system has been released and used by the physician
population before making these changes.
Response: As stated above, we do not believe that a change to the
effective date of Medicare billing privileges has a nexus to the
implementation of the Internet-based PECOS.
Comment: Several commenters recommended that we shorten the period
of time during which retrospective billing is permitted from 27 months
to 12 months. Another commenter stated that reducing retrospective
billing from 27 months to 12 months would provide sufficient time for
enrollment to occur, reduce the possibility of improper billing and
eliminate the unreasonable administrative burden that the our
alternatives would place on all new physicians.
Response: We appreciate these comments, but continue to believe
that allowing retrospective billing for 12 months prior to enrollment
poses a significant risk to the Medicare program. Accordingly, with the
implementation of this final rule, physician and NPPs and physician and
NPP organizations will have a limited time period to submit claims
before the effective date of their respective Medicare billing
privileges.
Comment: Several commenters urged CMS to establish the new Web-
based program and determine the accuracy and ease of the system before
making new enrollment rules. This commenter also stated the new Web-
based system should be far easier to use than the current process.
Response: We agree with these commenters and, as previously stated,
we expect to implement Internet-based PECOS for individuals by the end
of CY 2008.
Comment: One commenter stated that they have been advised by
Medicare that this change means upon receiving notice that a graduate
nurse anesthetist

[[Page 69771]]

had passed his or her certifying exam that the ``graduate'' now a CRNA
can retain any Medicare claims from his or her certification date
forward and then submit these held claims upon receiving his or her
National Provider Identifier (NPI). Further, the commenter stated that
Medicare carriers have allowed this payment practice with the
understanding that graduate nurse anesthetists are qualified to bill
Medicare for their services upon their certification date.
Response: While we understand this comment, we believe that
physicians and NPPs must meet all State licensing requirements before
Medicare can convey billing privileges. Moreover, with the
implementation of this final rule, physician and NPPs and physician and
NPP organizations will have a limited time period to submit claims
before the effective date of their Medicare billing privileges.
Comment: One commenter stated that they understand that there have
been Medicare Carriers that allow CRNAs to hold their claims and back
bill for up to 1 year prior to the date they are certified, consistent
with Medicare payment policy.
Response: We believe that physician and NPPs must meet all State
licensing requirements before Medicare can convey billing privileges.
Moreover, with the implementation of this final rule, physician and
NPPs and physician and NPP organizations will have a limited time
period to submit claims before their effective date of Medicare billing
privileges.
Comment: One commenter urged CMS to adopt the Council for
Affordable Quality Healthcare's (CAQH) Universal Credentialing Database
(UCD) as its provider credentialing information gathering tool. This
commenter stated that CAQH has over 600,000 providers and suppliers in
its database and is working with hospitals and State Medicaid programs
as well.
Response: While we appreciate this comment, this comment is outside
the scope of this final rule. However, it is important to understand
that CMS' national enrollment repository, PECOS, maintains Medicare
enrollment records on more than 610,000 physicians, 280,000 NPPs,
75,000 single specialty clinics, and 130,000 multi-specialty clinics.
In addition, PECOS maintains enrollment records for all other provider
and supplier types, except durable medical equipment, prosthetics,
orthotics, and supplies (DMEPOS) suppliers. This means that we have
collected and retained current enrollment information on approximately
80 percent of physicians and 98 percent of the NPPs enrolled in and
billing the Medicare program. In addition, since the information
obtained during the enrollment process for physician and NPP
organizations updates our claims payment systems for Part B services,
we are able to help ensure claims processing accuracy by utilizing its
existing processes.
Comment: One commenter urged CMS to produce educational materials
beyond the vague tip sheets located at the beginning of each
application. In addition, this commenter recommends that we develop a
series of frequently asked questions on Medicare provider enrollment.
Response: We already maintain a link to provider enrollment
frequently asked questions at http://www.cms.hhs.gov/MedicareProviderSupEnroll. In addition, this Web site maintains more
than 10 different provider enrollment outreach documents that the
public can view online or download for future reference.
In an attempt to ensure that all physicians, NPPs, and NPP
organizations are aware of and comply with their reporting
responsibilities, we developed and posted reporting responsibilities
for physicians, NPPs, and physician organizations on our provider
enrollment Web page at http://www.cms.hhs.gov/MedicareProviderSupEnroll
on September 16, 2008. In addition, on September 17, 2008, we issued a
listserv announcement to those individual physicians and NPPs who
subscribe to the CMS Physician Open Door Forum and to more than 150
national and State-level organizations that subscribe to the CMS
provider partnership network. We also expect that contractors will
continue to notify physicians and NPP organizations about their
reporting responsibilities by listserv, bulletin, and/or direct mail in
FY 2009 and beyond. With the implementation of this final rule with
comment period on January 1, 2009, we will revise the educational
materials found on our Web site and distribute this information through
our established communication channels. Finally, we will post
educational material, including fact sheets and frequent asked
questions, regarding Internet-based PECOS as soon as this system is
available to the public.
Comment: One commenter asked that we create extensive educational
programming on provider enrollment for both our contractors and
providers to ensure that both sides thoroughly understand the process
and expectations.
Response: We provide Medicare contractors with manual instructions
and other directives to ensure consistent enrollment processing. In
addition, as stated above, we are disseminating additional educational
materials to ensure that the public understands their reporting
responsibilities.
Comment: One commenter suggested a process for the Medicare
Contractor to notify the provider that the application has been
received and it is being processed to ensure the approved billing date
is the same between the provider and the Medicare contractor.
Response: Due to cost constraints, most Medicare contractors can
not notify an applicant when their paper enrollment application is
received; however, Medicare contractors are required to notify an
applicant when the application is missing information or if additional
supporting documentation is needed to process the enrollment request.
Comment: One commenter stated that the NPP nomenclature is
ambiguous because CMS lists all suppliers as NPPs (including
audiologists and physical and occupational therapists) on page 38535 of
the proposed rule, rather than limiting this term to physician
assistants, nurse practitioners, and clinical nurse specialists as
defined in Medicare policy manuals.
Response: We have revised this rule to refer to individual
physicians and NPPs and physician and NPP organizations.
Comment: One commenter urges CMS to require contractors to provide
accurate and complete information to applicants, allowing their
practices to complete their enrollment applications in an easy and
efficient manner.
Response: While we appreciate this comment, this comment is outside
the scope of this proposed rule and can not be addressed in this final
rule.
Comment: One commenter urged CMS to require Medicare contractors to
communicate requests for additional information in such a manner that
the communications can be easily tracked.
Response: We believe that this issue is outside the scope of the
proposed rule and can not be addressed in this final rule.
Comment: One commenter urged a ``timeout'' on the release of new
rules and regulations surrounding the Medicare provider enrollment
process.
Response: We recognize that we have published several regulations
within the last 3 years and a number of program integrity manual
instructions designed to strengthen the enrollment process. However, we
continue to believe that CMS must maintain the flexibility to issue
regulations in accordance with the Administrative Procedures Act.

[[Page 69772]]

Comment: One commenter urged CMS to clarify the apparent
inconsistent policies on revalidation as set forth in the April 21,
2006 provider enrollment rule titled, ``Medicare Program: Requirements
for Providers and Suppliers to Establish and Maintain Medicare
Enrollment (CMS-6002-F)'' and the June 27, 2008 provider enrollment
rule titled, ``Medicare Program: Appeals of CMS or CMS Contractor
Determinations When a Provider or Supplier Fails to Meet the
Requirements for Medicare Billing Privileges (CMS-6003-F).''
Response: In response to comment in the April 21, 2006 final rule
(71 FR 20754), we stated, ``We expect that a fee-for-service contractor
would notify the provider or supplier in writing regarding the need to
revalidate its enrollment information. Once notified, providers and
suppliers would be expected to review, update, and submit any changes
and supporting documentation regarding the enrollment record within 60
days. If no changes have occurred, a provider or supplier would simply
sign, date, and return the revalidation application.'' In addition, we
stated in the provisions of the final rule that, ``We will contact all
providers and suppliers directly as to when their 5-year revalidation
cycle starts beginning with those providers and suppliers currently
enrolled in the Medicare program but that have not submitted a
completed enrollment application. The revalidation process would ensure
that we collect and maintain complete and current information on all
Medicare providers and suppliers and ensure continued compliance with
Medicare requirements. In addition, this process further ensures that
Medicare beneficiaries are receiving items or services furnished only
by legitimate providers and suppliers, and strengthens our ability to
protect the Medicare Trust Funds.''
In response to a comment in the June 27, 2008 final rule (73 FR
36448), we stated, ``Therefore, providers and suppliers that enrolled
in the Medicare program prior to 2003, but who have not completed a
Medicare enrollment application since then, have had more than 2 years
to come into voluntary compliance with our enrollment criteria by
submitting a complete enrollment application. With this final rule, we
are again notifying physicians, providers, and suppliers that they may
voluntarily complete and submit a Medicare enrollment application and
the necessary supporting documentation prior to our formal request for
revalidation. Accordingly, providers and suppliers who choose not to
come into voluntary compliance or fail to respond to a revalidation
request in a complete and timely manner fail to satisfy our enrollment
criteria and may be subject to revocation of their billing
privileges.'' Accordingly, we do not believe that these policies are
inconsistent. We continue to encourage all physicians, providers, and
suppliers to update their enrollment records when a reportable change
occurs, and absent a reportable change we encourage all physicians,
providers, and suppliers who have not updated their enrollment record
within the last 5 years to do so in advance of contractor's
revalidation request. Once we initiate revalidation efforts, physicians
and other providers and suppliers will only be provided 60 days to
respond to a contractor's request.
Comment: One commenter stated that we should monitor, track, and
make publicly available the average length of time from submission of
an enrollment application for new procedures to the time the Medicare
contractors actually process and notify the providers of acceptance of
that enrollment application.
Response: While we monitor contractor provider enrollment
processing timeliness using PECOS, we do not currently calculate an
average length of time for initial enrollments, changes, and
reassignments. We will consider calculating the average length of time
for initial enrollment applications, changes of information, and
reassignments and making this information available to the public.
Comment: One commenter requests that if we finalize these
provisions, a notice of onsite review should be provided 14 days in
advance to allow the pharmacy to appropriately schedule for the onsite
review.
Response: We disagree with this commenter. We believe that onsite
reviews provide CMS and our contractors a valuable tool to ensure that
providers and suppliers are in compliance.
Comment: Several commenters remain concerned about the failure of
CMS to permit the use of electronic signatures and electronic documents
which would provide practitioners and practices the opportunity to
complete and submit the entire application package online.
Response: This comment is outside the scope of this proposed rule
and can not be addressed in this final rule.
Comment: One commenter recommended that we hold an open and
thorough dialogue with its contractors and the provider community
regarding the enrollment process as it currently stands and the
problems encountered by all.
Response: We believe that this issue is outside the scope of the
proposed rule and can not be addressed in this final rule.
Comment: One commenter stated that they support CMS and the
establishment of an electronic enrollment process but they do not
believe it will address the provisions in the rule.
Response: While we do not expect that Internet-based PECOS will
remedy all provider enrollment processing issues, we do believe that an
Internet-based enrollment process will allow physicians and other
providers and suppliers to reduce the time necessary to enroll or make
a change in enrollment in the Medicare program.
Comment: One commenter recommended that we establish streamlined
and user-friendly procedures that will encourage high rates of
physician participation in the Medicare program.
Response: We appreciate this comment and believe that Internet-
based PECOS will allow physicians and NPPs the ability to enroll or
make changes in their enrollment records faster and more accurately
than the paper-based enrollment process.
Comment: One commenter commended CMS for PECOS as it will provide
timely ease of use for enrollment as well as updating the enrollment
record.
Response: We appreciate this comment.
Comment: One commenter requested that we consider modifying
existing provider enrollment applications to include an attestation
statement for which an applicant would attest to those certain
requisite program requirements having been met prior to the filing of
the application.
Response: This recommendation is outside the scope of the proposed
rule and can not be addressed in this final rule.
Comment: One commenter stated that we should provide notice 14 days
in advance of conducting an onsite review and that reviews on Mondays
should be avoided.
Response: This comment is outside the scope of this proposed rule
and can not be addressed in this final rule.
Comment: One commenter urged that CMS and the NSC coordinate so
that only a single onsite review would be required and the least
disruptive to an operation.

[[Page 69773]]

Response: This comment is outside the scope of the proposed rule
and can not be addressed in this final rule.
After reviewing public comments, we are finalizing the definition
of ``physician or nonphysician practitioner (NPP) organization'' at
Sec. 424.502 as ``any physician or NPP organization that enrolls in
the Medicare program as a sole proprietorship or any organizational
entity.'' Organizational entities include, but are not limited to,
limited liability corporations, Subchapter S corporations,
partnerships, professional limited liability corporations, professional
corporations, and professional associations.
After reviewing public comments, we are finalizing the provision at
Sec. 424.520(d) to state that we will establish an effective date of
billing for physicians, NPPs and physician and NPP organizations that
would be the later of: (1) The date of filing of a Medicare enrollment
application that was subsequently approved by Medicare contractor (that
is, carrier, fiscal intermediary or A/B Medicare Administrative
Contractor); or (2) the date a physician, NPP or physician and NPP
organization first started furnishing services at its new practice
location.
In Sec. 424.521, Request for Payment by Physicians, Nonphysician
Practitioners, Physician or Nonphysician Organizations, we are
finalizing the proposals.
In Sec. 424.521(a)(1), we are finalizing a provision that allows
physicians, NPPs, physician or NPP organizations to retrospectively
bill for services up to 30 days prior to their effective date of
billing when the physician or NPP organization met all program
requirements, including State licensure requirements, services were
furnished at the enrolled practice location prior to the date of filing
and circumstances precluded enrollment in advance of providing services
to Medicare beneficiaries. Thus, physicians, NPPs, and physician or NPP
organizations would be limited to receiving reimbursement for services
for a maximum of 30 days prior to filing an enrollment application that
was subsequently approved by a Medicare contractor.
In Sec. 424.521(a)(2), we are finalizing a provision that allows a
physician, NPP, and physician or NPP organization to retrospectively
bill for services up to 90 days prior to their effective date of
billing privileges when the physician or NPP organization met all
program requirements, including State licensure requirements, services
were furnished at the enrolled practice location prior to the date of
filing, and a Presidentially-declared disaster under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C.
Sec. Sec. 5121-5206 (Stafford Act) precluded enrollment in advance of
providing services to Medicare beneficiaries.
While these changes limit the retrospective payments that a
physician, NPP, or physician and NPP organization may obtain from the
Medicare program, we believe that this approach will ensure that a
Medicare contractor is able to verify that a physician, NPP or
physician and NPP organization meets all program requirements at the
time of filing, including State licensure. In addition, this approach
will afford Medicare beneficiaries the appropriate protections under
the statute, regulations, and CMS policy.
To ensure that eligible physicians, NPPs or physician and NPP
organizations receive reimbursement for services furnished, we will
require that Medicare contractors deny Medicare billing privileges when
a Medicare contractor is not able to process an incomplete enrollment
application that is submitted by a physician, NPP or physician and NPP
organization. This is a change from our earlier final rule, ``Medicare
Program; Requirements for Providers and Suppliers to Establish and
Maintain Medicare Enrollment,'' (CMS-6002-F) which was published on
April 21, 2006. In this earlier rulemaking effort, we stated that we
would reject an incomplete enrollment application. In order to provide
physician and NPP organizations and individual practitioners with the
opportunity to preserve an initial application filing date, we will
deny incomplete applications for these supplier types. We believe that
Sec. 424.530(a)(1) permit a Medicare contractor to deny an incomplete
enrollment application.
By denying billing privileges for enrollment in the Medicare
program or to establish a new practice location, rather than rejecting
an enrollment application, physicians, NPPs or physician and NPP
organizations will be afforded appeal rights which will preserve the
original date of filing the application. Reimbursement for services
furnished back to the effective date of billing will be permitted as
long as the applicant submits a corrective action plan or appeal in
accordance with Sec. 405.874 and submits the necessary information to
cure any application deficiencies. However, if the applicant does not
submit a corrective action plan or appeal within the timeframe
established in Sec. 405.874, then the applicant would not preserve the
right to bill the Medicare program for services furnished from the date
of the initial filing of the application or the date the practitioner
or organization first started furnishing services at its new practice
location.
We are also adopting the ``date of filing'' as the date that the
Medicare contractor receives a signed provider enrollment application
that the Medicare contractor is able to process to approval. If the
Medicare contractor denies an enrollment application that is not later
overturned during the appeals process, the new date of filing would be
established when a physician or NPP organization submits a new
enrollment application that the contractor is able to process to
approval.
PECOS is the system that supports the Medicare provider and
supplier enrollment process by collecting and storing provider and
supplier information obtained from the Medicare enrollment application
(that is, the CMS-855). The PECOS database retains enrollment
information on Part A providers that bill fiscal intermediaries (FIs)
or A/B Medicare Administrative Contractors (A/B MAC) and Part B
providers, including physicians and NPPs that bill carriers or A/B
MACs.
Medicare contractors use PECOS to establish new enrollment records
for providers and suppliers, update provider and supplier information,
and process requests from individual health care practitioners for
assignment of benefits. PECOS standardized the Medicare enrollment
process and supplies enrollment data to the Part A and Part B claims
processing systems.
In June 2002 and November 2003, we implemented PECOS for fiscal
intermediaries (FIs) and carriers respectively. Today, PECOS is used by
carriers, FIs, and A/B MACs to enter data submitted on the Medicare
enrollment application. However, by establishing an Internet-based
enrollment process, we will allow providers and suppliers (except
suppliers of durable medical equipment, prosthetics, orthotics, and
supplies (DMEPOS)) suppliers, the option of enrolling or making a
change in their Medicare enrollment information via the Internet.
Internet-based PECOS will allow Medicare providers and suppliers to
enroll or make a change in their Medicare enrollment record. The
primary objectives for the Web enablement of PECOS are to: (1) Reduce
the time necessary for providers and suppliers to enroll or make a
change in their Medicare information; (2) streamline the enrollment
process for providers and suppliers; (3) allow

[[Page 69774]]

physicians and NPPs to manage their enrollment information and verify
their reassignments of benefits; and (4) reduce the administrative
burden associated with completing and submitting enrollment information
to Medicare.
Additional information regarding Internet-based PECOS will be made
available later this year. This information will be posted on the
Medicare provider/supplier enrollment Web site at http://www.cms.hhs.gov/MedicareProviderSupEnroll.
With the implementation of an Internet enrollment process referred
to as the Internet-based PECOS, the date of filing for individual
practitioners submitted through Internet-based PECOS is the date the
Medicare contractor receives both: (1) An electronic version of the
enrollment application; and (2) a signature page containing an original
signature that the Medicare contractor processes to approval. The date
of filing for organizational entities submitted through Internet-based
PECOS is the date the Medicare contractor receives all of the
following: (1) An electronic version of the enrollment application; (2)
a signature page containing an original signature that the Medicare
contractor processes to approval.
To address public concerns regarding the burden and complexity
associated with the Medicare enrollment process, we will implement
Internet-based PECOS in three distinct phases. We will implement
Internet-based PECOS for all individual physicians and NPPs enrolling
or making a change to an existing enrollment record in Phase I. In
Phase II, we will implement Internet-based PECOS for all organizational
providers and suppliers, except DMEPOS suppliers, enrolling or making a
change to an existing enrollment record. In Phase III, we will
implement Internet-based PECOS for DMEPOS suppliers.
Based on current operating assumptions, we expect to begin
implementation of Phase I by the end of CY 2008, with full
implementation scheduled for completion in January 2009. We also expect
to make Internet-based PECOS available to physicians and NPPs in all
States, including California, Missouri, and New York.
Phase II is tentatively scheduled for implementation beginning in
Spring 2009, with full implementation scheduled for completion by June
30, 2009. Phase III is tentatively scheduled for implementation in CY
2010.
Since Internet-based PECOS is a scenario-driven application process
with front-end editing capabilities and built-in help screens, we
believe that this new enrollment application process will significantly
simplify and streamline the enrollment process for physicians,
providers and suppliers, reduce the time necessary to enroll or make a
change to a Medicare enrollment record, reduce the administrative
burden associated with completing and submitting enrollment information
to Medicare, decrease the errors during the application submission
process, and allow physicians and NPPs to take personal responsibility
for their Medicare enrollment in a timely manner. Moreover, unlike the
paper-based enrollment process, Internet-based PECOS' scenario-driven
application process will ensure that prospective providers and
suppliers or enrolled providers and suppliers only complete and submit
the information necessary to apply or make a change in their Medicare
enrollment record. Physicians and NPPs will no longer see questions
that are not applicable for their supplier-type.
While we will encourage all physicians, NPPs, physicians and NPP
organizations and other providers and suppliers to utilize Internet-
based PECOS when it is made available for their provider/supplier type
and their State, all providers and suppliers will continue to have the
option of submitting an enrollment application by paper.
In order to use Internet-based PECOS to enroll or make a change in
an enrollment record, physicians and NPPs will be required to use the
User ID and user password obtained when applying for or updating their
National Provider Identifier (NPI) with the National Plan and Provider
Enumeration System (NPPES). Accordingly, physicians and NPPs will need
to know their NPPES User ID/password information before trying to
enroll or change their enrollment record with Medicare via Internet-
based PECOS. To ensure privacy and security for these individual
practitioners, we encourage that physicians and NPPs to reset their
user password prior to initiating their first enrollment action via
Internet-based PECOS, reset their user password at least once a year
thereafter, and that physicians and NPPs not share their NPPES User ID/
password with billing agents, clearinghouses, academic medical
institutions, or staff within their practice.
Physicians and NPPs choosing to use billing agents, clearinghouses,
academic medical institutions, etc. will be required to submit a paper
enrollment application to enroll or make a change in their Medicare
enrollment record.
In order to use Internet-based PECOS to enroll or make a change in
an organizational enrollment record, we will verify that the authorized
official associated with the Medicare enrollment record is employed by
the organization and is authorized by the organization to submit or
make changes to the organization enrollment record.
Over the last 2 years, we have stressed the importance of filing a
complete application at the time of filing or in response to a
contractor's request for additional information. However, Medicare
contractors continue to report that a significant number of
applications are incomplete at the time of filing or that applicants do
not respond timely and completely to a contractor's request for
additional information.
Finally, in the April 21, 2006 final rule, physicians, NPPs, and
physician and NPP organizations learned about our intent to begin a
revalidation process.
Specifically, Sec. 424.515 states that a provider or supplier
(other than a DMEPOS supplier), must resubmit and recertify the
accuracy of its enrollment information every 5 years. Therefore,
physicians, NPPs and physician and NPP organizations that enrolled in
the Medicare program prior to 2003, but who have not completed a
Medicare enrollment application since then, have had more than 2 years
to come into voluntary compliance with our enrollment criteria by
submitting a complete enrollment application. To date, approximately 80
percent of the enrolled physicians and 98 percent of NPPs have updated
their Medicare enrollment record within the last 5 years.
To ensure that Medicare only pays eligible physicians and NPPs, we
are again notifying physicians and NPPs that they may voluntarily
complete and submit a Medicare enrollment application and the necessary
supporting documentation prior to our formal request for revalidation.
In accordance with the existing provision at Sec. 424.535(a)(1)(ii),
providers and suppliers who choose not to come into voluntary
compliance or fail to respond to a revalidation request within 60 days
of the Medicare contractor's request may be subject to the revocation
of their billing privileges.
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 CY 2005 had tax debts
totaling over $1 billion.

[[Page 69775]]

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 the
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 whom a tax delinquency exists and we are
unable to directly levy future payments through the FPLP. While we did
not propose this change in this year's PFS proposed rule, 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 for
whom we are unable to directly levy future payments through the FPLP.
In addition, we expect to conduct outreach regarding our implementation
of 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 would be 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 a 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
payments to an individual who has not met his or her obligation to pay
their tax debts.
Finally, we solicited comments on whether we should consider
revoking a physician's 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 also
solicited 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.
Comment: One commenter recommends an alternative to payment denial
where an individual with a tax delinquency has reassigned their
benefits to a group. The commenter suggested that the government
garnish a portion of the individual practitioner's salary directly, as
appropriate. Another commenter does not believe it is appropriate to
penalize all of the partners in a practice, when only one individual is
guilty of tax evasion. One commenter requests that we define, in
greater detail, the term ``reliable information,'' and also that we
assure some formal type of appeals process apart from a simple
rebuttal. Another commenter questions if there is a mechanism in place
whereby a potential new hire can be held harmless should his or her
potential employer find itself in a delinquent status within a 12-month
period. One commenter questions whether the burden of reporting an
adverse legal action would be placed upon the individual saddled with
the action rather than his or her group managing partners, for
sometimes the principals are not aware of the actions of their
employees. Another commenter stated that at a minimum, the third party
involved should be sent notification of the provider's revoked billing
privileges 18 months before the date of revocation. One commenter
believes that this provision is not logistically possible because it
raises too many issues, including taxpayer privacy, equal opportunity
employment concerns, and perhaps even whistleblower triggers regarding
noncompliance.
Response: Section 189 of the MIPPA requires that CMS take all
necessary steps to participate in the Federal

[[Page 69776]]

Payment Levy Program (FPLP) under section 6331(h) of the Internal
Revenue Code of 1986. The FPLP process allows CMS to levy current and
future payments until the tax delinquency is eliminated.
After reviewing comments received in response to our solicitation
for comments regarding whether we should consider revoking billing
privileges or taking some other administrative action when a physician
or NPP has a Federal tax delinquency that cannot be levied through the
FPLP process, we are considering whether future rulemaking or
administrative action is needed in this area. We appreciate the public
insight regarding our solicitation for comments and will consider these
comments in developing any future rulemaking proposals; however, we
continue to maintain that physicians and NPPs should resolve any
existing Federal tax delinquency before enrolling in the Medicare
program or as soon as practical if the physician is enrolled in
Medicare.
3. Denial of Enrollment in the Medicare Program (proposed Sec.
424.530(a)(6) and (a)(7))
Currently, owners, authorized officials, and delegated officials of
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 furnished 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 existing Sec. 405.371, we will impose a payment
suspension when we possess reliable information that an overpayment or
fraud, or willful misrepresentation exists, or that payments to be made
may not be correct. Suspension procedures give providers and suppliers
an opportunity to 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 Sec.
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 apply 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, or if the overpayment
determination is upheld on appeal, we will initiate a recovery action.
Accordingly, we proposed to add a new Sec. 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 proposed to allow a Medicare
FFS contractor 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 suspension has been terminated or the Medicare overpayment has
been repaid in full. Specifically, we proposed to deny enrollment to
any current owner (as defined in Sec. 424.502), physician, or NPP, who
is participating in the Medicare program and is under a current
Medicare payment suspension.
We stated that 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, we believe this change would: (1) Allow
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.
Comment: Several commenters stated that our proposal to deny
additional billing privileges to a physician or an NPP when the
physician or NPP is suspended or has an outstanding overpayment is a
denial of due process and is in conflict with the principle of innocent
until proven guilty.
Response: We believe that we have an obligation to protect the
Medicare program from inappropriate payments. Conversely, physicians
and NPPs have an obligation to the Medicare program to resolve payment
suspensions and overpayment actions in a timely manner. Finally, as a
payer of health care, we believe that additional billing privileges
should not be conveyed to a physician, NPP or owners, authorized and
delegated officials who have an existing payment suspension or
overpayment. To grant additional billing privileges to individuals with
an existing payment suspension or overpayment exposes the Medicare
Trust Funds to additional risks.
With Medicare's implementation of the NPI on May 23, 2008, Medicare
contractors no longer issue billing numbers to providers and suppliers
participating in the Medicare program. However, Medicare contractors do
convey billing privileges to providers and suppliers that have an NPI
and meet all of the program requirements for their provider or supplier
type. Once enrolled, providers and suppliers are required to use their
NPI to submit claims to Medicare, and based on the NPI final rule,
organizations may obtain one or more NPIs.
After reviewing public comments, we are finalizing the provisions
at Sec. 424.530(a)(6) and (a)(7) to deny enrollment applications for
additional Medicare billing privileges if a physician, NPP, physician
or NPP organization has an existing payment suspension or has an
existing overpayment that has not been repaid. We believe that
permitting a Medicare contractor to deny enrollment applications
submitted by individual practitioners, authorized officials, delegated
officials, and owners until such time as the Medicare overpayment

[[Page 69777]]

has been repaid in full will require providers and suppliers to resolve
overpayments in a timely manner. Once CMS has imposed a payment
suspension, a provider or supplier may submit a rebuttal to CMS for the
purpose of reducing or terminating the payment suspension. As long as
the payment suspension is effective, the contractor has the task of
making an overpayment determination. Specifically, we are adopting the
provision to deny enrollment to any physician, or NPP current owner (as
defined in Sec. 424.502), authorized or delegated official who is
participating in the Medicare program and is under an existing Medicare
payment suspension or has an outstanding overpayment that has not been
repaid in full. As adopted, physicians and NPPs will not be allowed to
enroll and reassigning payments to a third-party if the individual
practitioner has an existing payment suspension or overpayment that
have not been repaid.
4. Reporting Requirements for Providers and Suppliers (Sec. 424.516
and Sec. 424.535(a)(10))
Currently, Sec. 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 Sec.
424.57(c)(2), DMEPOS suppliers have only 30 calendar days to submit
changes of information to CMS. As specified in Sec. 410.33(g)(2),
IDTFs, must report changes in ownership, changes in location, changes
in general supervision, and final adverse 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 as described in Sec. 424.535(a)(3), or other final adverse
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
final adverse 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 final adverse action after the fact,
we have lacked 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 adopting a new Sec.
424.516(d) which would establish more stringent reporting requirements
for physician NPP organizations and individual practitioners. (We
proposed to redesignate Sec. 424.520 as Sec. 424.516 and amend the
provisions in new Sec. 424.516.) In addition to a change of ownership
(as currently specified in redesignated Sec. 424.516(d)(1)(i)), we
proposed to add Sec. 424.516(d)(1)(ii) requiring all physician and NPP
organizations and individual practitioners to notify our designated
contractor of any final adverse action within 30 days. We stated that
final adverse actions include, but are not limited to, felonies,
license suspensions, and the HHS 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 a final adverse 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 final adverse action.
In addition, we added the word ``final'' to the beginning of the
term ``adverse legal action'' in the regulation text in Sec. 424.535
on overpayment. We define the term as a ``final adverse action'' in the
definition section at Sec. 424.502 and want to be consistent with that
definition. Also, we want to be consistent with our definition of this
term in the Durable medical Equipment prosthetics Orthotics and
Supplies surety bond rule (CMS-6006-F). Moreover, we want this term to
be consistent with the definition of ``final adverse action'' found in
section 221(g)(1)(A) of the Health Insurance Portability and
Accountability Act (HIPAA) of 1996. Finally, we believe that a final
adverse action has occurred when the sanction is imposed and not when a
supplier has exhausted all of the appeal rights associated with the
action itself.
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 a final adverse 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
their Medicare billing privileges revoked effective retroactively back
to June 30, 2007 as well.
Additionally, we proposed to add a requirement for change in
location at Sec. 424.516(d)(1)(iii). Since a change in location may
impact the amount of payment for services furnished by placing the
physician and NPP organizations and individual practitioners into a new
Core Based Statistical Area (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 a final adverse 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 proposed to add Sec. 424.535(a)(9) which would specify that
failure to comply with the reporting requirements

[[Page 69778]]

specified in Sec. 424.516(d) would be a basis for revocation.
Additionally, we proposed in Sec. 424.565, ``Failure to comply with
the reporting requirements specified in Sec. 424.516(d) would result
in a Medicare overpayment from the date of a final adverse 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 final adverse 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 100-06). Lastly, collection of
overpayments related to Sec. 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 1 year.
Comment: One commenter would like to laud CMS for expounding on
reporting requirements for the updates regarding address changes, as
well as reporting an adverse legal action in a manner to be complete
within 30 days. The commenter continued to state that failure to report
changes in location, leading to potential overpayment, and revocation
of Medicare billing privileges needs to be highlighted for all
providers.
Response: We appreciate this comment and will consider expanding
this provision to all providers and suppliers in a future rulemaking
effort.
Comment: One commenter stated that it disagrees with our assumption
that all payments subsequent to an adverse legal action are collectable
overpayments.
Response: Since final adverse actions such as Federal exclusion or
debarment, felony convictions as described in Sec. 424.535(a)(3) or
license suspension or revocation that precluded continued enrollment in
the Medicare program.
Comment: One commenter stated that while a CMS representative
publicly stated that the proposed rule should have referenced adverse
legal actions that have been finally adjudicated, the commenter
recommends that CMS clarify this language in the final rule. Several
commenters recommended that only adverse legal actions that are
relevant to the practice of medicine should be required to be reported
to CMS.
Response: Based on these comments, we are adding a definition of a
final adverse action to Sec. 424.502(a). Specifically, we have defined
a final adverse action to mean one or more of the following actions:
(1) A Medicare-imposed revocation of any Medicare billing privileges;
(2) Suspension or revocation of a license to provide health care by any
State licensing authority; (3) Revocation or suspension by an
accreditation organization; (4) A conviction of a Federal or State
felony offense (as defined in Sec. 424.535(a)(3)(i)) within the last
10 years preceding enrollment, revalidation, or re-enrollment; or (5)
An exclusion or debarment from participation in a Federal or State
health care program.
Comment: One commenter suggested that we should clarify in the
final rule that with regard to adverse legal actions, the requirements
should apply only to notification within 30 days of ``final'' legal
actions that are relevant to or otherwise impact the practice of
medicine.
Response: While we understand that physicians and NPPs are afforded
different appeal rights depending on the type of final adverse action,
we do not believe that it is appropriate to allow physicians and NPPs
to continue to furnish services to Medicare beneficiaries if their
State medical license has been suspended or revoked, a Federal
exclusion or debarment or Medicare revocation has been imposed, or the
physician or NPP was found guilty or pled to felony conviction as
described in Sec. 424.535(a)(3).
Comment: One commenter believes that if CMS wants to collect
alleged overpayments for services paid during the 90 days as if they
were performed in a higher-paying locale, then they should also pay the
difference for underpayments when a physician provides services for up
to 90 days in a higher paying locality prior to notifying CMS of the
change in location.
Response: We maintain that it is the responsibility of the
physician, NPP or physician or NPP organization to update their
enrollment information within the appropriate timeframes. Further, note
that CMS will not reprocess claims for the services provided when there
has been a failure to report a change in practice location.
Comment: Several commenters stated that a State licensing board is
the proper authority to weigh the significance of legal actions against
a physician. Another commenter stated that State licensing and other
requirements already protect beneficiaries from the most important
kinds of issues that could arise in medical care.
Response: While we agree that State licensing boards are
responsible for determining whether an individual meets or continues to
meet the qualifications for a specific State medical license, we do not
agree that a State license is the only criteria that an individual must
maintain in order to receive billing privileges from the Medicare
program.
Comment: One commenter stated that they do not oppose changing the
time period for reporting adverse legal actions from 90 days to 30
days, as generally payments should not be made under these
circumstances.
Response: We appreciate this comment.
Comment: One commenter stated that they did not agree that a change
in practice location should be treated as an urgent matter that would
support a retroactive revocation of billing authority.
Response: We disagree with this commenter. Since physicians and
NPPs receive payments in part on locality adjustments based on the
place of service, we believe that physicians, NPPs, and physician and
NPP organizations are responsible for updating their enrollment record
within 30 days of a change in practice location. It is also important
to note that we already have existing authority to revoke the billing
privileges of a Part B supplier, including physicians and NPPs, if CMS
or our contractor determines that upon an on-site review or other
reliable evidence that the supplier is not operational (see Sec.
424.535(b)(5)).
Comment: One commenter stated that they oppose changing the time
period for reporting a change in location from 90 days to 30 days
because the physician is still eligible for payment and Medicare's
vulnerability to overpayments is limited.
Response: While we agree that a physician may still be eligible to
receive

[[Page 69779]]

payment, the issue in question is the amount of payment. Moreover, as a
payer of health care, we believe that physicians and all other
providers and suppliers have a responsibility to update their
enrollment record when a change in practice location occurs. This will
allow CMS or our contractor to verify that services are actually
furnished at the practice locations identified by the medical
practices.
Comment: One commenter stated that if we finalize our reporting
requirements, a better option would be to limit the types of actions
that are reportable to similar actions that are required to be reported
to the National Practitioner Data Bank (NPDB) which was established by
the Congress to address the need to improve the quality of medical care
by encouraging State licensing boards, health care entities such as
hospitals, and professional societies to identify and discipline those
who engage in unprofessional behavior, as well as restrict a
practitioner's ability to move from State to State without disclosure
of previous adverse action history.
Response: We disagree with this commenter. In considering the types
of events that should be reported within 30 days of the reportable
event, with this final rule with comment period, we have limited the
types of reportable events to three specific types of events: (1)
Change in ownership, (2) final adverse actions, and (3) change in
practice location. We believe that the failure to report any of these
types of reportable events may result in payments to the wrong
organization, erroneous payments if the physician or NPP payment no
longer meets State licensure requirements, or payments in the wrong
amount when a change in practice location impacts the payment to a
physician, NPP or physician or NPP organization.
Comment: One commenter stated that our proposal to revoke billing
privileges for a period of not less than 1 year for failure to comply
with the proposed 30-day reporting period is a harsh and unjust penalty
for a minor paperwork offense.
Response: While we understand this commenter's concern, we believe
that physicians, NPPs, physician and NPP organizations have an
obligation to report certain changes, including State license
suspensions and revocations, felony convictions as described in Sec.
424.535(a)(3), Federal debarments and exclusions, within 30 days since
these adverse actions may affect a physician, NPP or physician or NPP
organization's ability to continue to participate in the Medicare
program.
Comment: One commenter urged CMS to consider that the failure to
notify Medicare contractors of a change in location is an oversight
rather than a true attempt to defraud the Medicare program.
Response: Since physicians, NPPs, and physician and NPP
organizations routinely notify State medical societies, vendors,
employees, utility companies, leasing companies, and others prior to a
change in practice location, we disagree with this commenter that
change in location is an oversight.
Comment: One commenter stated that that while there is a need to
maintain timely provider records and track Medicare payments, proposed
penalties for failure to report an address change promptly are so out
of proportion to the offense as to be draconian.
Response: We disagree with this commenter. As stated above, we
understand that physicians, NPPs, and physician and NPP organizations
routinely notify other payers and affiliated business partners about a
change of practice location in advance of the change. In addition, to
ensure payment accuracy, it is essential that physicians, NPPs, and
physician and NPP organizations report changes in practice locations
prior to change, but not later than 30 days after the reportable event.
Comment: One commenter stated that it seemed sufficient to collect
any overpayment from providers that file their change of address notice
within the traditional 90-day window for updating enrollment records.
Response: As a payer of health care, it is essential that we make
every attempt to make correct payments for services furnished by
qualified providers and suppliers. To help ensure that we are making
the correct payments the first time, we believe that it is necessary
that physicians, NPPs, and physician and NPP organizations update their
enrollment records when a change in practice location occurs.
Comment: One commenter urges CMS to withdraw the proposal to
establish authority to require that physicians report a change in
ownership, ``any'' adverse legal action, or change in practice location
within 30 days since these events may be unrelated to the Medicare
program and the reporting time frame is unduly burdensome to
physicians.
Response: We disagree with this commenter. Since June 20, 2006,
physicians and NPP organizations have been required to report a change
in ownership within 30 days and changes in practice locations and final
adverse actions within 90 days (see Sec. 424.516(d)). Since we are
aware of situations where physicians and NPPs have not reported State
license suspensions/revocations or final adverse actions which may
affect a physician or NPPs eligibility to participate in the Medicare
program, we believe that it is essential to establish more stringent
reporting requirements than in the past. We believe that these
requirements along with corresponding enforcement procedures will
encourage physicians, NPPs and physician and NPP organizations to
report changes in ownership, final adverse actions, and changes in
practice location in a timely manner (that is, 30 days.)
Comment: One commenter stated that ``any adverse legal action'' is
not defined; therefore a 30-day reporting requirement is unreasonable
as are the other proposed requirements. The commenter also stated that
we should save our severe penalties for proven fraudulent behavior, not
minor clerical oversights.
Response: We disagree with this commenter that failure to report a
final adverse action is a minor clerical oversight. Since reporting a
final adverse action may affect a physician or NPP's ability to
continue to participate in the Medicare program, we understand why
these actions may not be reported to a Medicare contractor; however, we
believe that final adverse actions, including State licensing
suspensions and revocations, should be reported within 30 days of the
reportable event, even if the physician or NPP plans on appealing the
final adverse action. By reporting the final adverse action within 30
days, the Medicare program will carefully review any revocation action
and exercise its discretion as to whether to impose a revocation and
the length of time of the reenrollment bar.
Comment: One commenter stated that a revocation of billing
privileges seems to be a disproportionately severe penalty for
infractions such as: (1) Failure to report changes in ownership,
adverse legal actions, and changes in practice location, or (2) not
maintaining ordering and referring documentation for a 10-year period.
Response: We disagree with this commenter. As stated above, we
believe reporting changes in ownership, final adverse actions, and
changes in practice locations are essential to ensuring that the
Medicare program makes correct payments to eligible practitioners and
organizations. We also believe that it is essential that physicians and
NPPs maintain ordering and referring documentation to support the
claims submissions.

[[Page 69780]]

Comment: One commenter stated that levying an overpayment for
failure to report a ``reportable event,'' within 30 days is excessive
for what is likely an honest oversight.
Response: We disagree with this commenter that establishing an
overpayment is excessive when a physician, NPP or physician and NPP
organization fails to report a final adverse action, such as a State
license suspension or revocation or adverse legal action, that may
preclude participation in the continued participation in the Medicare
program in a timely manner (that is, 30 days).
Comment: One commenter stated that Federal regulations regarding
overpayments are already established at 42 CFR part 405, therefore,
changing the provider enrollment requirements to prevent overpayments
is not necessary.
Response: We disagree with this commenter because the existing
overpayment regulations do not allow us to assess an overpayment based
on the failure of a physician, NPP, or physician or NPP organizations
to report certain reportable enrollment events.
Comment: One commenter stated that they were concerned over
inconsistency in the verbiage of this section where we state in the CY
2009 PFS proposed rule (73 FR 38538 through 38539) that billing
privileges may be revoked in one place and in the other place state
that they would be revoked.
Response: We appreciate this comment and have clarified in this
final rule to use the word, ``may'' when referring to the revocation of
Medicare billing privileges.
Comment: One commenter recommends that a 60-day limit be imposed
rather than the proposed 30 days for notifying CMS about a ``reportable
event.''
Response: We believe that changes of ownership, adverse legal
actions, and changes in practice locations can and should be reported
within 30 days of the reportable event. By reporting these types of
reportable events within 30 days, the Medicare program can take the
necessary steps to ensure that we are paying physicians and NPPs
correctly and ensure that only eligible physicians and NPPs are
enrolled in the Medicare program.
After reviewing public comments, we are finalizing the provision at
proposed Sec. 424.516(d) which would require physicians, NPPs or
physician and NPP organizations to notify its Medicare contractor of a
change of ownership, change in practice location or any final adverse
action within 30 days of the reportable event. In addition, we believe
that physician and NPP organizations' and individual practitioners'
failure to comply with the reporting requirements within the time frame
described above may result in the revocation of Medicare billing
privileges and the imposition of a Medicare overpayment from the date
of the reportable change. Specifically, we believe that a final adverse
action may preclude payment, and thus, establish an overpayment from
the date of the adverse legal 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 date of
the adverse legal action. In addition, physicians, NPPs, or physician
and NPP organizations who voluntarily report a final adverse action
that prohibits further payment will have their Medicare billing
privileges revoked and have an overpayment assessed back to the date of
the reportable event. CMS has the discretion to revoke the supplier's
billing privileges. Moreover, revocation affords the supplier appeal
rights and by reporting an adverse legal action within 30 days of the
reportable event, a physician or NPP or physician or NPP organization
may regain billing privileges if the final adverse action no longer
impedes the applicant's reenrollment into the Medicare program.
We are also finalizing the provision at Sec. 424.516(d)(1)(iii)
which requires physicians, NPPs and physician and NPP organizations to
report a change of practice location within 30 days. While we may not
revoke the billing privileges of physicians, NPPs and physician and NPP
organizations if a change of practice location is reported by the
practitioner or organization after the prescribed 30-day timeframe, we
will assess an overpayment, if applicable, for the difference in
payment rates retroactive to the date the change in practice location
occurred. In addition, with limited exceptions such as a
Presidentially-declared disaster under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act, 42 U.S.C. 5121-5206 (Stafford
Act), physicians, NPPs, and physician and NPP organizations can report
a change of practice location in advance of the reportable event. We
note that individual practitioners and physician and NPP organizations
routinely notify staff, the U.S. Post Office, telephone and electric
companies, suppliers, vendors, State medical associations and other
practitioner partners prior to a change in practice location.
Accordingly, we believe that it is appropriate that physicians and NPP
organizations notify the Medicare contractor in advance of any pending
change of practice location, but no later than 30 days after the
reportable event.
As such, we will not reprocess claims for those individual
practitioners and physician and NPP organizations that do not report a
change of practice location prior to a change in practice location
where the reported change would result in an underpayment, unless the
change of location was the direct result of a Presidentially-declared
disaster under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act). We believe that
this change will create an incentive for physicians, NPPs, and
physician and NPP organizations to report changes in practice locations
prior to the change of practice location or, at a minimum, within the
30 days of the reportable event.
Moreover, if we determine that a change of practice location
occurred and it has not been reported within the 30 days of the
reportable event, we may revoke billing privileges and assess any
applicable overpayment for the difference in payment rates retroactive
to the date the change in practice location occurred. We believe that
the authority to revoke billing privileges has already been established
in Sec. 424.535(a)(5)(ii).
We are finalizing the provision at proposed Sec. 424.535(a)(9)
which would specify that failure to comply with the reporting
requirements specified in Sec. 424.516(d) would be a basis for
revocation. Additionally, we are also finalizing the provision we
proposed in Sec. 424.565(a), ``Failure to comply with the reporting
requirements specified in Sec. 424.516(d) would result in a Medicare
overpayment from the date of a final adverse 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
final adverse 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.
Based on public comments, we are adding a definition of final
adverse action to Sec. 424.502(a). A final adverse action means one or
more of the following actions: (1) A Medicare-imposed revocation of any
Medicare billing privileges; (2) Suspension or revocation of a license
to furnish health care by any State licensing authority; (3) Revocation
or suspension by an accreditation organization; (4) A conviction of a
Federal or State felony

[[Page 69781]]

offense (as defined in Sec. 424.535(a)(3)(i)) within the last 10 years
preceding enrollment, revalidation, or re-enrollment; or (5) An
exclusion or debarment from participation in a Federal or State health
care program.
5. Maintaining Ordering and Referring Documentation
We proposed to add a new Sec. 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 proposed
to add Sec. 424.535(a)(10) that would state that failure to comply
with the documentation requirements specified in Sec. 424.516(f) would
serve 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 proposed to codify 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 submission and
subsequent 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 7
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.
Comment: One commenter urged CMS to adopt its proposal that would
specify that a provider or supplier is required to maintain ordering
and referring documentation, including the NPI received from the
physician or eligible NPP, for 10 years from the date of service, but
that this provision only apply to services furnished on or after the
effective date of this final rule with comment period.
Response: We agree with this commenter in that we are basing the
ordering and referring record retention requirement based upon the date
of service, however we are adopting the provision for 7 years from the
date of service. We believe that this approach is administratively
consistent with current manual record retention policy that requires
that suppliers retain ordering and referring documentation for 7 years
from the date of billing. We maintain that it is less burdensome for
providers and suppliers to maintain ordering and referring
documentation for 7 years from the date of service rather than
requiring providers and suppliers to maintain ordering and referring
documentation associated with the proposed provision for 10 years after
the date of payment.
Comment: One commenter disagrees with increasing the retention of
ordering and referring documentation beyond the current 7 years from
the date of payment. The commenter continued to state that the
provision as proposed may represent an additional cost for 3 years of
additional record retention.
Response: As stated above, we are establishing an ordering and
referring record retention period as 7 years from the date of service.
Comment: One commenter believes that CMS must understand that in
virtually all cases, the only information the laboratory receives is
the laboratory requisition submitted by the physician.
Response: We continue to believe that it is necessary that
providers and suppliers retain ordering and referring documentation for
services furnished 7 years from the date of service. However, we
understand that the supplier may not maintain the NPI documentation for
each service, but the provider or supplier must maintain sufficient
documentation to identify the individual who ordered or referred the
beneficiary for their services. In addition, upon review, CMS or our
contractor may validate the ordering/referring documentation maintained
by the billing provider or supplier with the individual practitioner
who ordered/ referred the beneficiary for these services.
Comment: One commenter recommends that CMS defer to the judgment of
the State boards of pharmacy regarding the length of record retention,
and also allow offsite electronic storage of ordering and referring
records.
Response: We appreciate the importance of the requirements of State
boards of pharmacy; however, we uphold that Medicare is a national
program and it is necessary to establish national standards for
maintaining the ordering and referring record retention period. We
believe that this approach will lead to consistency. Further, the
provisions of the final rule do not preclude offsite or electronic
storage as long as these records are readily accessible and
retrievable.
Comment: One commenter proposes CMS to abandon its proposal for the
10-year record retention period and allow pharmacies to follow record
retention requirements under State law.
Response: We appreciate the importance of the requirements of State
boards of pharmacy, however we uphold that Medicare is a national
program and it is necessary to establish national standards for
maintaining the ordering and referring record retention period. We
believe that this approach will lead to CMS consistency. While we are
not changing our record retention policy to account for different State
pharmacy laws, we are revising the proposed 10-year record retention
policy and establishing an ordering and referring record retention
period as 7 years from the date of service
Comment: One commenter believes that pharmacies should be allowed
to maintain their hard-copy records offsite electronically after a
certain time.
Response: The provisions of the final rule do not preclude offsite
or electronic storage as long as these records are readily accessible
and retrievable.
Comment: Several commenters recommended that pharmacies should
maintain the prescription record in written form for the greater of 3
years or the requirements in State law, and then allow the prescription
to be stored electronically for the remaining years. The commenter
continued to state that this would bring consistency to the Medicare
Parts B and D programs, and

[[Page 69782]]

reduce the need to create new storage capacity for paper prescription
records.
Response: Since Medicare is a Federal program that already requires
a 7-year retention period from the date of billing, we disagree that
this change will create a significant burden.
Comment: One commenter stated that the extension from 7 to 10 years
would add a substantial recordkeeping burden.
Response: We agree with this commenter and have revised this final
rule with comment period to establish an ordering and referring record
retention period as 7 years from the date of service.
Comment: One commenter urged CMS to reconsider our position
regarding maintaining ordering and referring documentation. In
addition, this commenter stated that this change would constitute an
unfunded mandate.
Response: We disagree with this commenter that this change is an
unfunded mandate because providers and suppliers are already required
by CMS' manual instructions to maintain ordering and referring
documentation for 7 years from the date of billing.
Comment: One commenter stated that we should allow offsite and
electronic storage of ordering and referring records.
Response: The provisions of the final rule do not preclude offsite
or electronic storage as long as these records are readily accessible.
Comment: One commenter urged CMS to adopt the proposed requirement
for record retention, but only with a provision that such record
retention requirements became effective as of the effective date of the
final rule. Further, the commenter states that those providers and
suppliers that, until now, have not kept ordering and referring
documentation for 10 years from the date of service (and were under no
other statutory or regulatory requirement to do so) would not be liable
and face possible revocation of billing privileges as long as the
provider or supplier was in compliance with currently existing
requirements.
Response: We agree with this commenter; however, we have revised
this final rule to establish the ordering and referring record
retention period as 7 years from the date of service.
After reviewing public comments, we are finalizing the provision at
proposed Sec. 424.516(f) that would require providers and suppliers 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 7
years from the date of service. In addition, we are finalizing the
provision found at Sec. 424.535(a)(10) that states that failure to
comply with the documentation requirements specified in Sec.
424.516(f) is a reason for revocation.
Finally, the aforementioned provisions regarding ordering and
referring documentation are effective with services furnished on or
after the implementation date of this final rule.
6. Revocation of Enrollment and Billing Privileges in the Medicare
Program (Sec. 424.535(h))
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 the Medicare program, we
proposed to limit the claims submission timeframe after revocation. In
Sec. 424.535(g) (Redesignated as Sec. 424.535(h), we proposed 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 stated that this change is necessary to limit the
Medicare program's 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, we stated that
the 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 also stated 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 submits claims on a nexus to the date of
service, we stated that the proposed change will not impose a
significant burden on physician organizations or individual
practitioners. In addition, we also proposed to add Sec. 424.44(a)(3)
to account for this provision related to the requirements for the
timely filing of claims.
Comment: One commenter supports our proposal to limit, to 30 days,
the time frame in which a provider whose billing services have been
revoked may continue to submit claims for services furnished prior to
such revocation.
Response: We appreciate this comment.
Comment: One commenter appreciated our concern regarding the
current period of up to 27 months but offered alternative time periods
of 60 or 90 days rather than the proposed time period of 30 days.
Response: We are finalizing the provisions at Sec. 424.535(h)
(proposed as Sec. 424.535(g)) that require a revoked physician, NPP or
a physician or NPP organization to submit all outstanding claims not
previously submitted within 60 calendar days of the effective date of
the revocation, (except for revocations identified in Sec.
405.874(b)(2) and Sec. 424.535(f) of this final rule).
Comment: Several commenters encouraged CMS to reset the period of
time a provider can submit claims after billing privileges have been
revoked from up to 27 months to 6 months, instead of the proposed 30
days.
Response: As stated above, we are finalizing the provisions found
at Sec. 424.535(g) (Redesignated as Sec. 424.535(h)) that require a
revoked physician, NPP or a physician or NPP organization to submit all
outstanding claims not previously submitted within 60 calendar days of
the effective date of the revocation, (except for revocations
identified in Sec. 405.874(b)(2) and Sec. 424.535(f) (redesignated as
Sec. 424.535(g)) of this final rule).
Comment: One commenter stated that 30 days is simply not enough
time to wrap up all of the details of a practice, in addition to the
other circumstances associated with a revocation of billing privileges.
Response: We are finalizing the provisions found at Sec.
424.535(h) (proposed as Sec. 424.535(g)) that require a revoked
physician, NPP or a physician or NPP organization to submit all
outstanding claims not previously submitted within 60 calendar days of
the effective date of the revocation, (except for revocations
identified in Sec. 405.874(b)(2) and Sec. 424.535(f) (redesignated as
Sec. 424.535(g)) of this final rule).
After reviewing public comments, we are finalizing the provisions
found at Sec. 424.535(h) (proposed as Sec. 424.535(g)) that require a
revoked physician, NPP or a physician or NPP organization to submit all
outstanding claims not previously submitted within 60 calendar days of
the effective date of the revocation. Since the physician, NPP or

[[Page 69783]]

a physician or NPP organization is already afforded approximately 30
days notification before the effective date of revocation (except for
revocations identified in Sec. 405.874(b)(2) and Sec. 424.535(f)
(redesignated as Sec. 424.535(g)) of this final rule), we believe that
almost 90 days is more than sufficient time to file any outstanding
claims with the Medicare program.
In addition, we are amending Sec. 424.44(a) to account for this
provision related to the requirements for the timely filing of claims.
We are revising the Sec. 424.44(a) to clarify that this provision is
consistent with Sec. 424.521 which limits the ability of physicians,
NPPs and physician and NPP organizations to bill retrospectively. The
timely filing requirements in Sec. 424.44(a)(1) and (a)(2) will no
longer apply to physician, NPPs, or physician or NPP organizations or
IDTFs.
7. Technical Changes to Regulations Text
We proposed to make the following technical changes:
Existing Sec. 424.510(d)(8) would be redesignated as
Sec. 424.517. This revision would separate our ability to conduct
onsite reviews from the provider and supplier enrollment requirements.
Existing Sec. 424.520 would be revised and redesignated
as Sec. 424.516. This redesignation would move the additional provider
and supplier enrollment requirements so that these requirements
immediately follow the provider and supplier enrollment requirements.
In new Sec. 424.520, we proposed to specify the effective
dates for Medicare billing privileges for the following entities:
Surveyed, certified, or accredited providers and suppliers; IDTFs; and
DMEPOS suppliers.
In Sec. 424.530, we proposed to add the phrase ``in the
Medicare program'' to the section heading to remain consistent with
other headings in the subpart.
After reviewing public comments, we are finalizing the following
technical changes:
Existing Sec. 424.510(d)(8) has been redesignated as
Sec. 424.517. This revision would separate our ability to conduct
onsite reviews from the provider and supplier enrollment requirements.
Existing Sec. 424.520 has been revised and redesignated
as Sec. 424.516. This redesignation would move the additional provider
and supplier enrollment requirements so that these requirements
immediately follow the provider and supplier enrollment requirements.
In new Sec. 424.520, we are adopting the effective dates
for Medicare billing privileges for the following entities: Surveyed,
certified, or accredited providers and suppliers; IDTFs; and DMEPOS
suppliers.
In Sec. 424.530, we are adding the phrase ``in the
Medicare program'' to the section heading to remain consistent with
other headings in the subpart.

K. Amendment to the Exemption for Computer-Generated Facsimile (Fax)
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

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 final rule with comment period 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
(Facsimiles)
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 (facsimiles generated by one computer and
electronically transmitted to another computer or facsimile 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.

[[Page 69784]]

b. Amendment of Exemption
In the CY 2008 PFS proposed rule (72 FR 38194), we proposed to
revise Sec. 423.160(a)(3)(i) to eliminate the computer-generated
facsimile 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 Sec.
423.160(b)(1)(i) through (xii).
Since computer-generated facsimiles retain 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 facsimile exemption
would encourage prescribers and dispensers using this computer-
generated facsimile technology to, where available, utilize true e-
prescribing (electronic data interchange using the NCPDP SCRIPT
standard) capabilities.
We proposed to eliminate the computer-generated facsimile 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-facsimile transactions.
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 facsimiles, indicating
that eliminating the exemption for computer-generated facsimiles would
act as an incentive to move prescribers and dispensers toward true e-
prescribing (electronic data interchange using the NCPDP SCRIPT
standard), although many commenters suggested that we continue to allow
for the use of computer-generated facsimiles in the case of
transmission failure and network outages. Less than half of the
commenters disagreed with our proposal to eliminate the exemptions for
computer-generated facsimiles, citing concerns about increased
hardware/software costs, transaction fees, certification, and other
activation costs.
Several commenters 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 data on the impact of the elimination of the computer-
generated facsimile exemption on prescription refill requests, and not
considering the industry's 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/transient network
transmission failures, effective January 1, 2009.
3. Proposal for CY 2009
Following the publication of the CY 2008 PFS final rule with
comment period, we received additional information regarding how the
modification of the exemption for computer-generated faxing to
eliminate use of computer-generated faxing in all instances other than
temporary/transient network transmission failures would adversely
impact the electronic transmission of prescription refill requests. The
submitted information offered additional support to the claim that in
all instances other than temporary/transient network transmission
problems, elimination of the use of computer-generated facsimiles would
adversely impact the electronic transmission of prescription refill
requests. These later materials substantiated the earlier claims that
the elimination of the exemption in all instances other than temporary/
transient network transmission failures would force dispensers who e-
prescribe and use these transactions to revert to paper prescribing.
These materials offered more specific information regarding the
economic and workflow impacts associated with the elimination of the
exemption for computer-generated facsimiles in all instances other than
temporary/transient network transmission failures that was not
forthcoming in the prior public comment period for the CY 2008 PFS
proposed rule. We also received unsolicited comments on this issue
during the comment period for the November 16, 2007 Part D e-
prescribing proposed rule (proposing the adoption of certain final Part
D e-prescribing standards and the use of NPI in Part D e-prescribing
transactions) (72 FR 64900). As a result of the new information, we
reexamined this issue and proposed additional modifications to the
computer-generated facsimile exemption in the CY 2009 PFS proposed rule
(73 FR 38502).
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 facsimile) 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 resent
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 prescriptions 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 would this be
counterproductive to the advances and efficiencies made in pharmacy
practice, it would impose an undue administrative burden on dispensing
pharmacies and pharmacists.
As a result of this additional information regarding the larger
than anticipated impact of the elimination of computer-generated
facsimiles for the prescription refill request transaction, we proposed
to further amend the

[[Page 69785]]

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 proposed to retain
the computer-generated facsimile exemption in instances of transient/
temporary network transmission failures, effective January 1, 2009. We
also proposed to revisit the computer-generated facsimile exemption for
the purpose of ultimately eliminating it for the prescription refill
request transaction found at Sec. 423.160(b)(1)(vii), and specifically
solicited industry and interested stakeholder comments regarding what
would constitute an adequate time to allow the industry to transition
to the use of the NCPDP SCRIPT standard.
We also solicited industry input on any other e-prescribing
transaction that might be similarly adversely impacted by the
elimination of computer-generated facsimiles in all instances other
than transient/temporary network transmission failures.
We received 52 relevant and timely public comments on our proposal
to further amend the exemption of computer-generated facsimiles from
the NCPDP SCRIPT standard for Part D e-prescribing to include an
exemption for refill request transactions with prescribers who are not
capable of e-prescribing using the adopted NCPDP SCRIPT standard as
detailed in the CY 2009 PFS proposed rule (73 FR 38600). While the
comments were few in number, they tended to provide multiple detailed
comments on what had been proposed.
Comment: Several commenters recommended that we reinstate the
exemption for computer-generated facsimiles in its entirety. The
commenters referenced the Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA) and its potential to help drive e-
prescribing adoption, stating that the e-prescribing incentives
contained in the MIPPA provide a better, more transitional path towards
that goal.
One commenter recommended that the elimination of the computer-
generated facsimile exemption coincide with the incentive provisions
contained in the MIPPA legislation. The commenter noted the eventual
penalty for Medicare providers who do not adopt e-prescribing by the
year 2012. The commenter also stated that structuring the elimination
of the computer-generated facsimile exemption to coincide with this
date would allow organizations the time needed to appropriately
implement e-prescribing.
Other commenters recommended that we adopt a computer-generated
facsimile exemption for pharmacies in areas where prescribers who do
not e-prescribe fall under the ``significant hardship'' exception
contained in the MIPPA. Commenters also recommended that the computer-
generated facsimile exemption be further modified so as to allow for
use of the computer-generated facsimile exemption that was adopted in
the November 7, 2005 final rule (the ``original'' computer-generated
facsimile exemption) until 2014, when provider disincentives/penalties
are maximized under the MIPPA, at which time a study could be conducted
to determine the number of prescriptions being e-prescribed. We assume
that the commenters' intent would be to use the information gleaned
from such a study as an indicator of whether or not e-prescribing had
reached an acceptable level of adoption among providers and pharmacies,
and that if an acceptable level of adoption among providers and
pharmacies had been demonstrated, that the computer-generated facsimile
exemption could be eliminated.
Similarly, other commenters suggested that the exemption should be
eliminated in 2012 when disincentives under the MIPAA e-prescribing
incentive program go into effect, or in 2014, when e-prescribing
provider disincentives/penalties are maximized under the MIPPA. Another
commenter urged that we reinstate the original (from the November 7,
2005 final rule (70 FR 67568)) exemption for computer-generated
facsimiles in its entirety, not just for prescription refill requests
and transmission failures.
Response: We agree with the commenters regarding the impact of the
MIPPA. In general, the MIPPA provides payment incentives for eligible
professionals who are ``successful electronic prescribers'' as that
term is defined in the law. The incentive payments are 2 percent of the
eligible professional's allowed charges under the PFS for CY 2009
through CY 2010; 1.5 percent in CY 2011 through CY 2012, and a 0.5
percent in CY 2013. Conversely, the MIPPA calls for payment reductions,
or disincentives, for those who are not successful electronic
prescribers beginning in CY 2012. For CY 2012, the payment amount under
the PFS will be reduced by 1 percent for eligible professionals who are
not successful electronic prescribers. In subsequent years, the payment
reduction is increased by 0.5 percent each year through CY 2014, and
then is fixed at 2 percent for later years. For more information on the
e-prescribing provisions of the MIPPA, please see section 132 of the
MIPPA legislation enacted on July 15, 2008 (Pub. L. 110-275, http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_public_laws&docid=f:publ275.110.pdf).
We envision that the MIPPA-created incentive payments for those
prescribers who successfully implement electronic prescribing in
accordance with MIPPA guidelines will provide the ``tipping point''--an
adequate level of industry adoption of e-prescribing using electronic
data interchange (EDI) that would in turn move the entire industry
toward widespread e-prescribing adoption. We believe that data from the
e-prescribing incentive program under the MIPPA and eventually from
Part D e-prescribing will offer evidence of the rate of e-prescribing
adoption, therefore making a study of e-prescribing for purposes of
determining e-prescribing adoption rates unnecessary.
We analyzed the industry feedback that we received in response to
the computer-generated facsimile exemption proposals in the CY 2009 PFS
proposed rule in light of the recent MIPPA legislation. While the MIPPA
legislation was not yet been enacted at the time of the CY 2009 PFS
proposed rule's publication, it was enacted in time for commenters to
discuss its provisions in their comments to our proposals. Based on
MIPPA-based and other comments received in response to our proposal to
further modify the computer-generated facsimile exemption, and taking
into consideration the potential positive impact on the industry of the
Part D e-prescribing incentives included in the recently-enacted MIPPA
legislation, we are reinstating the original exemption for computer-
generated facsimiles effective January 1, 2009. We also agree with
those commenters who suggested that the computer-generated facsimile
exemption should be eliminated (in all instances other than transient/
temporary network transmission failures) once provider e-prescribing
disincentives under the MIPAA program are initiated.
Although several commenters suggested that we should wait until the
disincentives are maximized in 2014, we feel that it is more
appropriate to eliminate the reinstated exemption (in all instances
other than temporary/transient network transmission problems) sooner,
when the MIPPA e-prescribing program disincentives for those who are
not successful electronic

[[Page 69786]]

prescribers begin in 2012. We believe that the January 1, 2012
compliance date for the elimination of the computer-generated facsimile
exemption (in all instances other than temporary/transient transmission
problems) will take advantage of the momentum that will be built by the
e-prescribing incentive program under the MIPPA, and affords the
industry an additional 3 years from the effective date of this final
rule with comment period to move toward true e-prescribing. We also
believe that the January 1, 2012 date will enable the industry to begin
taking advantage of the benefits of e-prescribing sooner, and in so
doing pass those advantages on to their patients in the way of
increased patient safety and convenience. Therefore effective January
1, 2012, we will eliminate the reinstated 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 in all instances other than transient/temporary
network transmission failures.
We do not believe that a computer-generated facsimile exemption is
needed for pharmacies in areas where prescribers who do not have access
to the technology that would allow them to e-prescribe under the
``significant hardship'' exception contained in the MIPPA. We would
expect that by the year 2012, the effective date of the elimination of
the computer-generated facsimile exemption (in all instances other than
temporary and transient network transmission failures), that most areas
would have the telecommunication and/or Internet connectivity capacity
to allow providers to conduct e-prescribing, and an exemption is not
warranted in the rare instance where this may not be the case.
Comment: We received feedback from 19 commenters who agreed with
the proposal to extend the exemption to computer-generated facsimiles
for the prescription refill request transaction in cases where the
physician is not NCPDP SCRIPT enabled.
Response: We agree with commenters. This issue will be resolved
with this final rule's reversal of the CY 2008 PFS final rule's e-
prescribing provisions that would have eliminated the computer-
generated faxing exemption (in all instances other than temporary and
transient network transmission failures) effective on January 1, 2009,
and concurrent reinstatement of the original exemption for computer-
generated facsimiles from the November 7, 2005 final rule effective
January 1, 2009. However, we will eliminate the reinstated exemption
for computer-generated facsimiles (in all instances other than
transient/temporary network transmission failures) effective when the
MIPPA e-prescribing program disincentives take effect on January 1,
2012.
Comment: Some commenters expressed opposition to the proposed
elimination of the exemption for computer-generated facsimiles in all
instances other than temporary/transient network transmission failures.
One commenter erroneously identified January 1, 2010 as the proposed
compliance date, but still asked for additional time for NCPDP SCRIPT-
noncompliant providers to become compliant with the NCPDP SCRIPT
standard.
Another commenter stated that the overall e-prescribing adoption
rate has not met a critical mass to justify a January 2009 deadline for
the elimination of the computer-generated facsimile exemption in all
instances other than transient/temporary network transmission failures.
The commenter noted that with the effective date fast approaching,
unless the computer-generated facsimile exemption is modified once
again, many organizations will have to hastily implement e-prescribing
solutions or revert back to paper prescribing.
Response: We agree with commenters that it is in the best interests
of the industry and consumers that the CY 2008 PFS final rule's
modifications to the computer-generated facsimile exemption be reversed
and the broad exemption originally created in the November 7, 2005
final rule for computer-generated facsimiles in Part D e-prescribing be
reinstated to prevent a reversion by providers to paper prescriptions,
and a reversion by pharmacies to traditional paper faxing. Therefore,
by this rule we have reinstated the original exemption for computer-
generated facsimiles effective January 1, 2009. However, we will
eliminate the reinstated computer-generated facsimiles exemption in all
instances other than transient/temporary network transmission failures
effective when the MIPPA e-prescribing program disincentives take
effect on January 1, 2012.
Comment: Some commenters requested clarification of our proposed
amendment to the exemption for computer-generated facsimiles. One
commenter stated that their customers believe that all Part D
prescriptions, without exception, must be sent via electronic
transmission as of January 1, 2009, and otherwise they may be liable
for conducting an ``illegal'' transaction. To avoid undue hardship,
costs, and confusion, the commenter asked that CMS clearly specify that
e-prescribing is preferred but still voluntary for providers and
dispensers; and those prescribers not currently e-prescribing under the
Medicare Part D pharmacy benefit program may still write paper
prescriptions, or call in or fax their prescriptions using a
traditional paper fax machine to a pharmacy.
Another commenter asked CMS to clarify that providers who use
prescription writing systems that enable computer based facsimiles but
do not enable NCPDP SCRIPT transactions are not subject to the
provisions of the computer-generated facsimile exemption. One commenter
asked CMS to clarify the definition of a ``true'' e-prescribing system.
Response: We recognize that there might be some confusion for
prescribers and dispensers with the elimination of certain portions of
the computer-generated facsimile exemption. In the November 7, 2005 e-
prescribing final rule (70 FR 67568), we defined ``e-prescribing'' to
mean the transmission, using electronic media, of prescription or
prescription-related information, between a prescriber, dispenser, PBM,
or health plan, either directly or through an intermediary, including
an e-prescribing network.
As we noted above, section 101 of the MMA amended title XVIII of
the Act to establish the Part D prescription drug benefit program. As
part of that program, the Congress required the establishment of a
``voluntary'' e-prescribing program. It is voluntary in that providers
and dispensers are not required to conduct e-prescribing for Medicare
covered drugs prescribed for Medicare Part D eligible beneficiaries,
but if they do conduct such e-prescribing, they must do so using the
applicable standards that are in effect at the time of the
transmission. Part D sponsors, in turn, must support e-prescribing so
that providers and dispensers who wish to conduct e-prescribing
transactions with plans will be able to do so using the adopted
standards that are in effect at the time of the transaction. We refer
those commenters with questions regarding the creation and scope of the
Medicare Part D e-prescribing program 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)
In the CY 2008 PFS proposed rule (72 FR 38194), we proposed to
revise

[[Page 69787]]

Sec. 423.160(a)(3)(i) to eliminate the computer-generated facsimile
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 Sec.
423.160(b)(1)(i) through (xii). In keeping with the comments that we
received, we finalized modifications that required prescribers and
dispensers to use NCPDP SCRIPT compliant e-prescribing software when
they conduct e-prescribing transactions for Part D covered drugs that
are prescribed for Part D eligible individuals in all instances other
than transient/temporary network transmission failures, effective
January 1, 2009. Those prescribers who choose not to e-prescribe Part D
covered drugs for Part D eligible individuals can continue to use non-
computer-generated facsimiles as a means to deliver such prescriptions
to a dispenser.
Providers who use electronic prescription writing systems that are
only capable of producing computer-generated facsimiles are not in
conformance with the adopted standards because they do not transmit
information using the adopted NCPDP SCRIPT standard. Those who utilize
their NCPDP SCRIPT enabled systems to produce computer-generated
facsimiles are likewise not in compliance with the adopted standards
because computer-generated facsimiles on these systems also do not use
the adopted standard. We believed that eliminating the exemption (in
all instances other than transient/temporary network transmission
failures) might encourage those with NCPDP SCRIPT capabilities that
have not been activated to use the NCPDP SCRIPT standard in electronic
data interchanges, and those without such capabilities to upgrade their
current software products, or, where upgrades are not available, to
switch to new products that would enable such true e-prescribing.
We believe that eliminating the computer-generated facsimile
exemption in 2012 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.
Eliminating the reinstated computer-generated facsimile exemption in
2012 would also afford current e-prescribers time to work with their
trading partners to eventually eliminate the use (in all instances
other than transient/temporary network transmission failures) of
computer-generated facsimiles in e-prescribing transactions.
From our analysis of the public comments that asked that the
elimination of the computer-generated facsimile exemption (in all
instances other than temporary/transient network transmission failures)
be reversed, and in view of the recent MIPPA legislation that provides
a more powerful incentive to providers to e-prescribe in accordance
with the standards adopted under Medicare Part D, we are reversing the
modifications to the computer-generated facsimile exemption that were
made in the CY 2008 PFS final rule with comment period and reinstating
the original computer-generated facsimile exemption that was adopted in
the November 7, 2005 e-prescribing final rule in its entirety,
effective January 1, 2009. However, we will eliminate the reinstated
exemption for computer-generated facsimiles in all instances other than
transient/temporary network transmission failures when the MIPPA e-
prescribing program disincentives take effect on January 1, 2012.
Comment: Several commenters who agreed with our proposal to
eliminate the computer-generated facsimile exemption (in all instances
other than transient/temporary network transmission failures) suggested
that we delay the January 1, 2009 effective date stated in the CY 2008
PFS final rule with comment period. One commenter urged CMS to conduct
studies on the barriers to use of NCPDP SCRIPT compliant systems, and
then work with stakeholders to identify pathways toward more widespread
use of e-prescribing systems. Another commenter noted that the recent
merger of the two major e-prescribing information exchange networks
still may hold unforeseen consequences for those vendors who have been
previously certified or are in the process of being certified by either
of those two networks. The commenter stated that any software changes
that the network may demand as a result of their merger may take time
to develop, and as a result, the effective date should be delayed.
A few commenters said that we should tie the computer-generated
facsimile exemption compliance to the April 1, 2009 compliance date of
the most recent round of final e-prescribing standards. One commenter
suggested that we delay the effective date of the CY 2008 PFS final
rule with comment period modifications to the computer-generated
facsimile exemption to 2012, when wireless broadband upload
connectivity is expected to achieve a speed of faster than 1MB/second.
Response: We do not see a correlation between the e-prescribing
network certification process, and the commenter's request to delay the
elimination of the computer-generated facsimile exemption based on what
may or may not take place in that process. Additionally, the process
for vendors to certify their products to an e-prescribing information
exchange network is a marketplace issue to which we are not a party.
We understand that some prescribers and dispensers may not have
been prepared to e-prescribe using the adopted standards by the January
1, 2009 effective date of the CY 2008 PFS final rule's e-prescribing
provisions. However, with this final rule's reversal of those
modifications and reinstatement of the original computer-generated
facsimile exemption that was adopted in the November 7, 2005 e-
prescribing final rule in its entirety, effective January 1, 2009, we
believe we have addressed commenters' concerns regarding effective
dates. However, we will eliminate the reinstated exemption for
computer-generated facsimiles in all instances other than transient/
temporary network transmission failures when the MIPPA e-prescribing
program disincentives take effect on January 1, 2012.
Comment: A comment concerning the computer-generated facsimile
exemption issue relative to non-NCPCP SCRIPT enabled pharmacies
(including many independent pharmacies) stated that there are still
significant segments of the retail pharmacy market not yet in a
position to receive electronic prescriptions because they are only
facsimile-enabled. The commenter cited national prescription
information exchange network data showing that only about 42,000 of the
nation's pharmacies are NCPDP SCRIPT e-prescribing enabled, and about
20,000 of the nation's pharmacies are only manual (traditional paper-
based) facsimile or computer-generated facsimile-enabled.
One commenter stated that e-prescribing technology has not yet been
perfected by its developers, and that the receiving parties (that is,
pharmacies) have not fully integrated this technology into their
workflows. The commenter also indicated that use of e-prescribing
technology is dependent on the availability of telecommunications
services and Internet connectivity, and this is problematic especially
in rural areas where there may be a lack of such telecommunications
and/or Internet connectivity services needed to support e-prescribing
systems.

[[Page 69788]]

A vendor expressed concern that their client pharmacies that rely
solely on computer-generated facsimiles may not be able to send or
receive computer-generated facsimile transmissions through national
prescription information exchange networks after January 1, 2009.
Response: We recognize that pharmacies that are not now conducting
e-prescribing transactions using the NCPDP SCRIPT standard will incur
costs to implement this capability, and that pharmacies will likely
experience an increase in e-prescribing transaction volumes and costs
as utilization of such transactions increases.
We agree that independent pharmacies and pharmacies that employ
only computer-generated facsimile capabilities need to be given the
opportunity to upgrade their systems and that elimination of the
computer-generated facsimile exemption (in all instances other than
transient/temporary network transmission failures) would place them at
a disadvantage at a time when the MIPPA incentive program is expected
to generate increased e-prescribing volumes. Therefore, for this reason
and the other reasons stated herein, we are reversing the modifications
to the computer-generated facsimile exemption that were made in the CY
2008 PFS final rule with comment period and reinstating the original
computer-generated facsimile exemption that was adopted in the November
7, 2005 e-prescribing final rule in its entirety, effective January 1,
2009. However, we will eliminate the exemption for computer-generated
facsimiles in all instances other than transient/temporary network
transmission failures when the MIPPA e-prescribing program
disincentives take effect on January 1, 2012.
Comment: We received comments requesting confirmation that the
proposed revisions to the computer-generated facsimile exemption would
not now apply to long term care providers. Another asked that CMS allow
long term care facilities to continue to transmit prescriptions via
computer-generated facsimile to pharmacies that are not yet using
systems capable of receiving NCPDP SCRIPT transactions appropriate to
this setting (NCPDP SCRIPT Version 10.2 or higher). A professional
association noted that eliminating the exemption for computer-generated
facsimiles (in all instances other than transient/temporary network
transmission failures) is unlikely to spur adoption among long term
care providers and could, if left standing, force some facilities to
resort to manual facsimiles. The commenter also urged CMS to eliminate
the e-prescribing exemption for long term care facilities.
Response: In Sec. 423.160(a)(3)(iii), long term care facilities
were specifically exempted from the requirement to use the adopted
standards in e-prescribing under Medicare Part D due to their unique
workflows and complexities associated with prescribing for patients in
long term care settings. This exemption remains in effect for long term
care facilities. Therefore, long term care facilities may continue to
use computer-generated facsimiles, and such facilities will continue to
be exempt from the requirement to use the NCPDP SCRIPT Standard in
prescription transactions between prescribers and dispensers where a
non-prescribing provider is required by law to be a part of the overall
transaction process.
Comment: Comments regarding other issues relevant to e-prescribing
in general, and the elimination of the computer-generated facsimile
exemption (in all instances other than transient/temporary network
transmission failures) specifically included comments requesting
amendments to the computer-generated facsimile exemption that would
address when a prescriber or dispenser is prohibited from using the
NCPDP SCRIPT standard for e-prescribing. The commenter noted that the
Drug Enforcement Administration's (DEA) prohibition of e-prescribing of
controlled substances would prevent a provider from prescribing such
controlled substances under the Part D program in accordance with the
adopted standards. One commenter stated that vendors would have to
disable electronic communication of prescriptions from their client
prescribers through the prescription information exchange network to
those pharmacies that are only computer-generated facsimile-enabled.
The vendor assumed that if their client prescriber attempts to send
those prescriptions electronically that the prescription will be
rejected by the prescription information exchange network because the
pharmacy is not activated with the network for electronic transactions
using the NCPDP SCRIPT standard. This same commenter noted that the
network has heretofore insulated the prescriber from having to be
concerned with whether or not the patient's choice of pharmacy was
enabled to receive prescriptions in a particular way. After the
proposed January 2009 compliance date, the commenter felt that
additional burdens would be placed on the prescriber to obtain this
information from the patient up front, or could compel patients to make
different pharmacy choices which could result in lost business for
pharmacies that are only facsimile-enabled.
Response: The DEA has authority through the Controlled Substances
Act over the electronic prescribing of controlled substances, and does
not currently allow for the electronic prescribing of Schedule II
drugs. As such substances currently may not be prescribed
electronically, there is no conflict of law at this time. As noted
previously, e-prescribing under Medicare Part D is voluntary for
prescribers and dispensers--they are not required to issue
prescriptions in electronic form. Although the DEA has published a
notice of proposed rulemaking to allow for the electronic prescribing
of controlled substances, we have no indication as to when the DEA will
make a final determination on this issue. We continue to work with the
DEA to help facilitate a solution that addresses both their enforcement
requirements with respect to the electronic prescribing of controlled
substances, and the needs of the healthcare community for a solution
that is interoperable with existing e-prescribing systems, scalable and
commercially viable.
After reviewing these comments, in the interest of patient care and
safety, and to foster the adoption of true e-prescribing among
prescribers and dispensers, we are reversing the modifications to the
computer-generated facsimile exemption that were made in the CY 2008
PFS final rule with comment period and reinstating the original
computer-generated facsimile exemption that was adopted in the November
7, 2005 e-prescribing final rule, effective January 1, 2009. However,
we will also eliminate the reinstated exemption for computer-generated
facsimiles in all instances other than transient/temporary network
transmission failures when the MIPPA e-prescribing program
disincentives take effect on January 1, 2012.

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

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.
In the CY 2008 PFS final rule with comment period (72 FR 66399), we

[[Page 69789]]

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 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 the CY 2009 PFS proposed rule, we addressed the comments
received in response to the CY 2008 PFS final rule with comment period
(72 FR 66222), proposed new provisions, and proposed revising other
provisions. We solicited comments on all of the 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.
Specifically, the American Association for Respiratory Care (AARC)
stated 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.
We proposed to revise Sec. 485.70(j) of the Conditions of
Participation of CORF services--setting forth the personnel
qualifications for respiratory therapists in CORFs--to be consistent
with current qualification requirements for RRTs, as recommended by
AARC. We also proposed to delete Sec. 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 stated that we
believed 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 Sec. 485.58(d)(4) state
that as a condition of participation for CORFs, CORF personnel must
meet the qualifications described at Sec. 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 proposed to amend the material
addressing personnel qualifications in Sec. 485.70. Specifically, we
proposed to amend paragraphs Sec. 485.70(c) and Sec. 485.70(e) by
referencing the personnel qualifications for HHAs at Sec. 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.
Also, at 485.58(a)(1)(i), we proposed 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.
The following is a summary of the comments received concerning
Personnel Qualifications and our responses.
Comment: Commenters generally supported our proposed changes. We
received a comment that supported the spirit of our proposed changes to
the definitions of respiratory therapists and provided further
clarification regarding current professional standards. Specifically,
in previous comments, the commenter noted that the term ``respiratory
therapy technician'' is an obsolete term. This is because today's
curriculum and educational standards are no longer structured to teach
at a technician level.
The commenter noted that, in our discussion of the issue in the
proposed rule, we stated that it was AARC's belief that the term
``certified respiratory therapist'' (CRT) had replaced the obsolete
term ``respiratory therapy technician'' and the term ``registered
respiratory therapist'' (RRT) has replaced the term ``respiratory
therapist.'' The commenter informed us that our statement was
incorrect. According to the commenter, today's educational programs
prepare students for the registry (RRT) examinations administered by
the National Board for Respiratory Care (NBRC). Before graduates are
eligible to sit for the RRT examinations they must first pass the
NBRC's entry-level examination, which results in the CRT credential.
Thus the CRT-credentialed individual is considered an ``entry-level
respiratory therapist,'' but unlike other allied health professions,
the terms ``technician'' or ``assistant'' are not used in the
respiratory therapy profession.
According to AARC, in the profession today, it is accepted clinical
and medical terminology that individuals holding the credentials of
both CRT and RRT are known simply as ``respiratory therapists.'' Also,
most State laws that require licensing of respiratory therapists make
no distinction in the

[[Page 69790]]

license as to whether the individual holds a credential of CRT or RRT.
They are both licensed as ``respiratory therapists.'' To the best of
AARC's knowledge, there are only six States that require a separate
license for a CRT or a RRT. AARC recommended that the proposed
definition be revised.
Since CMS uses the term ``respiratory therapist'' in other
regulatory provisions and manual instructions where applicable, AARC
recommended that CMS delete the word ``registered'' from the proposed
definition. This would also be consistent with the terms ``physical
therapist'' and ``occupational therapist'' used to define qualified
personnel in those professions.
AARC also believes that CMS can ensure that only registered
respiratory therapists, and not individuals holding only the CRT, meet
the personnel qualifications by revising the curriculum requirements to
require that respiratory therapists have passed the registry
examination administered by the NBRC. AARC also noted that the name of
the Board administering the certification and registry exams is the
NBRC, not the National Board for Respiratory Therapy, Inc.
Response: We thank the commenters for their support of our proposed
revisions. We believe that the comments provided by AARC reflect and
further clarify our intent to provide appropriate respiratory care to
patients served by CORFs. We want to ensure that only respiratory
therapists with the highest level of education and training can furnish
respiratory therapy services in a CORF. Therefore, only those
individuals holding the credential of registered respiratory therapist
(RRT) conferred by the NBRC would qualify. Qualifying by being
``eligible to take the registry examination,'' as we proposed, results
in the unintended consequence of permitting CRTs who have not yet taken
the registry exam to meet the personnel qualifications.
As a result of the public comments, we are finalizing the proposed
revisions that reference personnel qualifications for HHAs at Sec.
485.70(c) and (e). We are also finalizing our proposed revision to
Sec. 485.58(a)(i)(1) that amends the duties of CORF physicians to
include medical supervision of nonphysician staff (we received no
comments on this provision). We are adopting the revisions to the
personnel qualifications for respiratory therapists at Sec. 485.70(j)
as suggested by AARC, to read as follows:
(j) A respiratory therapist must--
(1) Be licensed by the State in which practicing, if applicable;
and
(2) Have successfully completed a nationally-accredited educational
program that confers eligibility for the National Board for Respiratory
Care (NBRC) registry exams, and have passed the registry examination
administered by the NBRC, or
(3) Have equivalent training and experience as determined by the
National Board for Respiratory Care (NBRC) and passed the registry
examination administered by the NBRC.
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 codes
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 in the CY 2008 PFS final rule with comment period, 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 was part of a series of codes
that was created by CPT in 2002 to address health and behavior
assessment issues. These services 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 Sec. 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, we proposed 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 proposed to use
salary and wage data from the Bureau of Labor Statistics to institute a
blended social worker/psychologist clinical labor category using a
price per minute rate of $0.45 for the PE component of GXXX5. We
proposed to 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 did not propose to
allocate a work RVU for these services.
We also proposed to revise Sec. 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 stated that we are concerned that the phrase
``and treatment'' currently included in the definition of CORF social
and psychological services may be

[[Page 69791]]

misconstrued to include social and psychological services for the
independent clinical treatment of mental illness. Therefore, we
proposed 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.
In addition, we proposed to remove Sec. 410.155(b)(1)(ii)
regarding the application of mental health limitations to CORF social
and psychological services. As we previously 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 Sec. 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 would not be
``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 would not apply. We
proposed changes to Sec. 410.155(b) to reflect our view regarding the
limited nature of these services.
The following is a summary of the comments received concerning our
proposal to create a HCPCS G-code to describe the unique CORF social
and psychological services and our responses.
Comment: One commenter stated that the G-code is more specific to
rehabilitation services and its implementation will support future
adoption as a CPT code. Another commenter stated that occupational
therapy services are a core CORF service. The commenter requested that
CMS clarify that the new G-code would not have a negative impact on the
provision of occupational therapy services to meet patient needs that
are similar to those addressed by the G-code. The commenter stated that
occupational therapy, as with all therapy services, includes assessment
of the patient level of functioning as an integral part of the therapy
services. Other commenters suggested that therapists and psychologists
assess and treat mental, cognitive, and emotional functioning as they
relate to a patient's rehabilitation plan of care. The commenters
further suggested that CMS revisit its decision not to allow CORF
therapists and psychologist to bill the Health and Behavioral
Assessment/Intervention codes (CPT codes 96150 through 96155), which
are used to identify and treat ``biopsycholosocial factors important to
physical health problems.'' One commenter also requested that the new
G-code include physician work in the RVUs since all other codes billed
by psychologist include physician work. Another commenter stated that
the statute clearly defines social and psychological services so there
is no need for the development of a G-code.
Response: Section 1861(cc)(2)(B) of the Act defines the term CORF
to mean a facility which provides at least physician services (as
defined at Sec. 410.100(a)), physical therapy services and social or
psychological services. As such, occupational therapy services are not
considered one of the core CORF services but are optional. The CORF
must provide the core CORF services. In addition it may furnish any of
the optional covered and medically necessary services and items such as
occupational therapy, speech-language pathology, or respiratory therapy
services. These optional services must directly relate to, and be
consistent with, the rehabilitation plan of treatment, and must be
necessary to achieve the rehabilitation goals. Occupational therapy
services include assessment of an individual's level of independent
functioning, selection and teaching of task-oriented therapeutic
activities to restore sensory-integrative functions, teaching of
compensatory techniques to permit an individual with a physical or
cognitive impairment or limitation to engage in daily activities. The
patient's plan of treatment will document all the covered and medically
necessary items and services that the patient requires which will
include the core CORF services as well as any of the optional services
such as occupational therapy.
In the CY 2007 PFS final rule with comment period, we revised Sec.
410.100(h) states that CORF social and psychological services include
the assessment and treatment of a CORF patient's mental health and
emotional functioning and the patient's response to/and rate of
improvement and progress towards the rehabilitation plan of treatment.
In our view, social and psychological services must contribute to the
improvement of the individual's rehabilitation condition and may not
relate to a mental health diagnoses. In the CY 2008 PFS final rule (72
FR 66298), we discussed the use of CPT codes 96150 through 96155 for
health and behavior assessment and treatment, which represent full-
scale clinical treatment of mental, psychoneurotic, personality
disorders and biopsychosocial functioning. We revised the previous
definition of CORF social and psychological services and instructed
that these services should be limited to those described by CPT code
96152. We stated that provision of other therapeutic services was
outside of the scope of coverage for CORFs. Since these CPT codes were
not a part of the proposed regulation, we will not revisit the use of
these CPT codes in this final regulation.
We are finalizing our proposal to create the CORF specific G-code
which will be G0409. The description of this G-code will be G0409,
Social work and psychological services. This code will directly relate
to and/or further 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. The code does not
include any physician work RVUs because the social and psychological
services are performed by a CORF social worker with a Bachelor of
Science degree or a Masters-level psychologist and not by a physician
as defined in the statute at section 1861(r) of the Act.
We did not receive any comments on our proposal to eliminate the
mental health limitation requirement. The mental health limitation is
no longer

[[Page 69792]]

applicable because 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 and do
not relate to a general diagnosis of mental, psychoneurotic, and
personality disorders which the mental health limitation addresses.
Therefore, we are finalizing our proposed change to remove Sec.
410.155(b)(1)(ii) regarding the application of mental health
limitations to CORD social and psychological 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.
In the CY 2009 PFS proposed rule, we proposed to revise Sec.
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 proposed to clarify that the alternate premises for provision of
physical therapy, occupational therapy, and speech-language pathology
services may be the patient's home.
The following is a summary of the comments received concerning CORF
CoPs and our responses.
Comment: Commenters concurred with the proposed clarification
regarding the patient's home as an alternate premise for provision of
physical therapy, occupational therapy, and speech-language pathology
services.
Response: We thank the commenters for their support of this
provision. As a result of the public comments, we are finalizing the
revisions to Sec. 485.58(e)(2) as proposed.
4. Extension Location
We proposed to add a definition for an ``extension location'' of a
rehabilitation agency to the definitions at Sec. 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 proposed 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
sufficiently 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.
The following is a summary of the comments received concerning an
extension location and our responses.
Comment: Some commenters supported our proposed revisions and
suggested that we add additional clarifying information. One commenter
suggested that we clarify the status of space that a rehabilitation
agency may use within another facility (for example, a room used by the
agency within a nursing facility). Another commenter suggested that we
specify a mile radius from the rehabilitation agency's primary site
within which an extension location may exist.
Response: We thank the commenters for their input. Regarding a mile
radius, mileage, and travel times from the primary location to the
extension location are significant factors to consider because they are
implicitly referenced in the proposed regulation. However, each alone
would not be the single issue in determining appropriateness as a sole
means for approving an extension location. We have decided to leave it
to the rehabilitation agency to prove to the State survey agency that
the rehabilitation agency is close enough to the extension location to
provide supervision of staff during its hours of operation. Supervision
of the extension location staff must be adequate to support the care
needs of the patients. We believe that our proposed definition for an
extension location is adequate, as it has been used successfully in our
State Operations Manual for other provider types. We are not making any
changes to our proposed revisions based on public comments, and are
finalizing them as proposed.
5. Emergency Care
We proposed to revise Sec. 485.711(c), Standard: Emergency care,
to reflect current medical practice. We proposed 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 proposed that each rehabilitation agency establish
procedures to be followed by personnel in an emergency that cover
immediate care of the patient, persons to be notified, and reports to
be prepared.
The following is a summary of the comments received concerning
Emergency care and our responses.
Comment: Most commenters concurred with our proposed changes to the
emergency care standard. Specifically, the commenters supported our
proposed elimination of the requirement that rehabilitation agencies
retain a physician on call for emergencies. The commenters cited
difficulty in recruiting physicians for this role, and stated that it
is often impractical to contact a physician in the rare case of an
emergency. One commenter also supported the revisions to the emergency
provisions because they allow facilities to develop emergency care
plans most appropriate for an individual facility's location and
patient population.
Response: We thank the commenters for their support, and agree that
these revisions will allow facilities to plan for, and respond to,
emergency care situations in appropriate ways. As a result of the
public comments, we are finalizing the provision as proposed with
slight non-policy revisions for grammatical purposes. We are also
revising the stem statement to remove the reference to the physician's
presence in emergency situations.
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

[[Page 69793]]

offered by CORFs, such as respiratory therapy and social services are
outside the scope of rehabilitation agency practice.
The current definition of ``rehabilitation agency'' at Sec.
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 Sec. 485.703, we proposed to
delete the requirement in paragraph (2)(ii) of the rehabilitation
agency definition requiring a rehabilitation agency provide social or
vocational services.
The following is a summary of the comments received concerning the
technical change and our responses.
Comment: Most commenters responded in support of this proposed
revision. Some commenters stated that this requirement, which is an
unfunded mandate, is burdensome, and that patients often resent being
required to release their personal information to a social worker they
will likely never meet or work with. The commenters also agreed that
social and vocational services are outside the scope of practice for
rehabilitation agencies.
Response: We thank the commenters for their support of this change.
As a result of the public comments, we are finalizing the provision as
proposed.
We also proposed to make a conforming change at Sec. 485.717, the
Condition of participation: Rehabilitation program. At 485.711(b)(3),
we proposed to remove the reference to Sec. 410.61(e), since Sec.
410.61(e) no longer exists in regulation.
The following is a summary of the comments received concerning this
technical change and our responses.
Comment: Some commenters concurred with this conforming change
while others objected to this conforming change because the commenters
believe that we did not also address the statement in Sec.
485.711(b)(3) that states that the patient plan of care must be
reviewed by a physician, nurse practitioner, clinical nurse specialist,
or physician assistant at least every 30 days. The commenters believe
that this conflicts with CMS payment policy, which requires
recertification of the plan of care at least every 90 days. We also
received several unsolicited comments requesting that we correct this
perceived discrepancy.
Response: We did not propose to revise the language to conform to
changes in the timing for recertification of outpatient therapy plans
of care as discussed in the CY 2008 PFS final rule with comment period
(72 FR 66396). Currently, Sec. 485.711(b)(3) requires that the plan of
care and results of treatment be reviewed by the physician or by the
individual who established the plan at least as often as the patient's
condition requires, and the indicated action is taken, which for
Medicare patients being treated in rehabilitation agencies must be at
least every 30 days. We believe that this requirement is in the best
interests of rehabilitation agency patients, and note that by meeting
this condition of participation, facilities would automatically meet
the CMS payment policy requiring review at least every 90 days.
We are not making any changes to our proposed revisions as a result
of public comments, and are finalizing the conforming change as
proposed.

M. Technical Corrections for Therapy-Related Issues

We proposed the following technical changes to the regulations
concerning therapy services:
In Sec. 409.17(a), we proposed to delete the reference to
paragraph (a)(1)(ii) which no longer exists.
In Sec. 409.23, we proposed to revise the title of this
section from ``Physical, occupational and speech therapy'' to
``Physical therapy, occupational therapy and speech-language pathology
services.''
Commenters voiced no objections to these technical corrections, and
we are finalizing these technical corrections as proposed.
Several commenters brought to our attention changes made to the
text of a regulation in the CY 2008 PFS final rule with comment period
that did not reflect our policy as expressed in the preamble
discussion. We intended to modify our regulations to make the policies
for therapy services consistent across all settings. We added Sec.
485.635(e) for the purpose of conforming the policies for physical
therapy, occupational therapy and speech-language pathology in the
critical access hospitals (CAHs) to the policies for therapy services
in Sec. 409.17. Section 485.635(e) describes therapy services when
furnished at the CAH as those that ``are provided as direct services by
staff qualified under State law, and consistent with the requirements
for therapy services described in Sec. 409.17.'' The reference in the
regulation to ``direct services'' was not intended to address the
employment status of staff providing those services, but we now
recognize that it could be interpreted as such. Therefore, we are
making a technical correction to the regulatory language at Sec.
485.635(e) to remove the words ``as direct services.''

N. Physician Self-Referral and Anti-Markup Issues

1. Exception for Incentive Payment and Shared Savings Programs (Sec.
411.357(x))
a. Introduction
In the CY 2009 PFS proposed rule (73 FR 38502), we proposed a new
exception to the physician self-referral law for incentive payment and
shared savings programs. The proposed exception covered various types
of hospital-sponsored pay-for-performance (P4P), shared savings (for
example, gainsharing), and similarly-styled programs that offer
financial incentives to physicians intended to foster high quality,
cost-effective care. The exception, as proposed, would provide more
flexibility than existing physician self-referral exceptions available
for such programs (73 FR 38548).
When establishing a new exception to the physician self-referral
law, we rely on the authority granted to us in section 1877(b)(4) of
the Act, which mandates that financial relationships permitted under an
exception, such as the types of compensation arrangements contemplated
by the proposed exception, not pose a risk of program or patient abuse.
As described more fully in the CY 2009 PFS proposed rule, in order to
ensure that we did not exceed this authority, the proposed exception
was targeted and relatively narrow. We acknowledged that it was
unlikely to cover as many arrangements as interested stakeholders would
like, and sought comments on ways that we might expand the proposed
exception without a risk of program or patient abuse.
We received approximately 55 timely public comment letters
regarding the proposed exception for incentive payment and shared
savings programs. The majority of commenters supported the
establishment of the following: (1) An exception for incentive payment
and shared savings programs; or (2) two exceptions--one for incentive
payment programs and one for shared savings programs. However, most of
these commenters urged us to finalize such an exception or exceptions
only if substantial modifications were made to the conditions proposed.
We also received a number of comment letters urging us not to finalize
an exception for incentive payment and shared savings programs, some of
which asserted that

[[Page 69794]]

we lack statutory authority to do so and contended that any such
exception necessarily would pose a risk of program or patient abuse.
As we stated in the CY 2009 PFS proposed rule (73 FR 38548):

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.

Our goal in establishing an exception or exceptions for incentive
payment and shared savings programs is ``to promulgate an exception
that is as broad as possible'' yet 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 (73 FR 38548). Although we received thoughtful
and instructive comments, we did not receive through the initial public
comment process sufficient information or agreement among commenters
regarding possible modifications to the proposal to allow us to
finalize an exception that expands the proposed exception in any
meaningful way. Therefore, we are reopening the public comment period
to obtain the specific information described below. We believe that, if
ultimately provided through the extended public comment process, the
additional information we are requesting will assist us in finalizing
an exception or exceptions for incentive payment and shared savings
programs. The comment period will be reopened for an additional 90 days
following publication of this final rule with comment period in the
Federal Register. Information regarding the submission of public
comments can be found in the ADDRESSES section of this final rule with
comment period. We will summarize and respond to all comments received
in response to our proposal (or any future proposal for an exception
(or exceptions) to the physician self-referral law for incentive
payment and shared savings programs), including the 55 comment letters
noted above, in a final rulemaking.
For ease of reference, we are numbering our solicitations of
comments in a continuous sequential order, and we encourage commenters
to refer to these numbers in their submissions to us. Although we have
offered many specific solicitations of comments in an effort to
stimulate and focus discussion, we do not mean to imply that we are
interested in receiving comments only on the specific questions noted
below; rather, we encourage comments on any and all relevant issues to
an exception or exceptions for incentive payment and shared savings
programs. In addition, we request that commenters consider all of the
issues in context and in conjunction with each other, as well as
consider the exception holistically rather than piecemeal. Many of the
specific solicitations below are related to each other and may be
better addressed if grouped together.
We urge commenters to respond with specificity and to include
detailed, practical examples whenever possible. Commenters are
encouraged to consider the requirement under section 1877(b)(4) of the
Act that any new regulatory exception pose no risk of program or
patient abuse. Although the following discussion segregates individual
issues, commenters are encouraged to comment on and recommend
combinations of conditions for an exception or exceptions that would
meet the ``no risk'' standard, would be sufficiently bright line to be
enforceable and to facilitate compliance, and would be sufficiently
flexible to foster beneficiary arrangements. Commenters should consider
suggesting alternative safeguards when recommending the elimination or
modification of a proposed condition or when recommending adoption of
an alternative to a proposed condition. As an initial matter, we are
interested in comments that address the best ways in an exception or
exceptions for incentive payment or shared savings programs to achieve
transparency and accountability, ensure quality of care, and prevent
disguised payments for referrals. We request that commenters address
these goals in their comments.
To better understand and address the variety of incentive payment
and shared savings programs that exist in the industry or that parties
would like to implement, we are interested in detailed descriptions of
incentive payment programs and shared savings programs that include
specific descriptions of the structure and operations of the programs
and payments. We are also interested in views addressing the likely
evolution of these programs.
b. Background: Incentive Payment and Shared Savings Programs
As we discussed in both the CY 2009 PFS proposed rule, and the FY
2009 IPPS proposed rule, the term ``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
(including, but not limited to, gainsharing) for the purpose of
achieving quality standards, generating cost savings, and reducing
waste. We refer to these programs as ``incentive payment'' and ``shared
savings'' programs. Within the category of ``incentive payment''
programs, we include P4P, also known as quality-based purchasing, and
other quality-focused programs that do not involve the sharing of cost
savings from the reduction of waste or changes in administrative or
clinical practice. Within the category of ``shared savings'' programs,
we include programs that involve the sharing of cost savings
attributable to physicians' efforts in controlling the costs of
providing patient care, as well as hybrid programs that involve both
the sharing of cost savings and payment for improvement or maintenance
of patient care quality. For a discussion of incentive payment and
shared savings programs, DHHS initiatives with respect to such
programs, and our proposed exception for incentive payment and shared
savings programs, we refer the reader to our solicitation of comments
in the FY 2009 IPPS proposed rule regarding the necessity of an
exception to the physician self-referral law for gainsharing programs
(73 FR 23692 through 23695) and the CY 2009 PFS proposed rule (73 FR
38548 through 38552).
In the CY 2009 PFS proposed rule, we described our concerns
regarding potential program and patient abuse from the implementation
of improperly structured incentive payment and shared savings programs.
Specifically, we stated:

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 (73 FR 38549).

We stated further:

Although properly structured shared savings programs may
increase efficiency and reduce waste, thereby potentially increasing
a hospital's profitability and contributing to

[[Page 69795]]

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 1
year to the next) without accountability for specific cost reduction
measures (73 FR 38550).

In addition, we expressed our continued concern about stinting
(limiting the use of quality-improving but more costly devices, tests
or treatments), cherry-picking (treating only healthier patients as
part of an incentive payment or shared savings program), steering
(avoiding sicker patients at the hospital sponsoring the incentive
payment or shared savings program), and quicker-sicker discharges
(discharging patients earlier than clinically indicated either to home
or to post-acute care settings).
c. Solicitation of Additional Public Comments
i. Distinguishing between ``incentive payment'' and ``shared savings
programs''
In the CY 2009 PFS proposed rule, we sought comments regarding
``whether separate exceptions for incentive payment and shared savings
programs would be preferable and, if so, how they should be structured,
and which requirements should appear in each'' (73 FR 38552). Most
commenters in support of establishing an exception for incentive
payment and shared savings programs recommended that we establish two
separate exceptions. Here, we are requesting specific comments
regarding how [1] to define the terms ``incentive payment program'' and
``shared savings program.'' We also request comments regarding [2]
whether the terminology ``incentive payment'' and ``shared savings''
programs is appropriate or whether different terminology would better
describe the range of nonabusive programs we intend to cover under the
proposed exception(s). Whatever terminology we employ, we must define
the terms with sufficient clarity to enable parties to determine which
exception, if more than one is finalized, would be applicable to the
specific arrangement being analyzed.
Commenters in support of the adoption of two separate exceptions
frequently asserted that many of the conditions in the proposed
exception are not applicable, or need not be applicable, to incentive
payment programs, asserting that incentive payment programs do not pose
the same risk of program or patient abuse as traditional gainsharing
programs or shared savings programs. We are seeking comments that [3]
identify with specificity which conditions should be made applicable to
incentive payment programs (and why), [4] identify which conditions
need not or should not be made applicable to incentive payment programs
(and why), and [5] indicate why it would not be necessary to impose the
same safeguards against program or patient abuse on both types of
programs. For example, we seek comments on [6] whether a program
involving cost savings measures that also improve quality should be
treated as an incentive payment or shared savings program.
ii. Risk of Program or Patient Abuse
As noted above, several commenters questioned our ability to
promulgate an exception for shared savings programs that satisfies the
mandate under section 1877(b)(4) of the Act that any exception issued
using that authority pose no risk of program or patient abuse. The
commenters asserted that, because gainsharing implicates sections
1128A(b)(1) and (b)(2) of the Act, commonly referred to as the Civil
Monetary Penalty (CMP) statute, any exception to the physician self-
referral law for incentive payment and shared savings programs would
necessarily pose a risk of program or patient abuse and would be
outside the scope of our authority under section 1877(b)(4) of the Act.
We disagree with these commenters. We believe that it is possible
within the meaning of section 1877(b)(4) of the Act to establish a set
of safeguards to guard against program and patient abuse. Moreover, it
is our understanding that many incentive payment programs would not
involve payments to physicians to reduce or limit services to hospital
patients. However, we are interested in comments that [7] specifically
address this issue in greater detail, including [8] how we can satisfy
the requirements of section 1877(b)(4) of the Act if we do not include
a condition prohibiting payment to a physician (under the incentive
payment or shared savings program) for reducing or limiting items or
services furnished to Medicare or Medicaid beneficiaries under the
physician's direct care. In addition, we are interested in comments
regarding [9] the utility of an exception that incorporates conditions
that are the same as or similar to conditions that have appeared in
favorable advisory opinions issued by the OIG on gainsharing
arrangements.
iii. Design of the Program
In the CY 2009 PFS proposed rule, we proposed protecting documented
programs that seek 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 (73 FR 38553). To be protected, the program
must achieve one or both of these goals without an adverse effect on,
or diminution in, the quality of hospital patient care services.
(1) Objective Medical Evidence and Independent Review
Under the proposed exception, incentive payment and shared savings
programs must be supported by objective, independent medical evidence
indicating that the applicable cost-savings or quality performance
measures would not adversely affect patient care. We also proposed that
patient care quality measures must derive from CMS' Specifications
Manual for National Hospital Quality Measures. Many commenters objected
to this limitation; however, the comments, for the most part, did not
contain suggestions regarding other appropriate lists of quality
measures or whether (and in what manner or under what circumstances) we
should permit parties to establish their own quality measures for
inclusion in a protected incentive payment or shared savings program.
We are seeking comments on this issue, including [10] how we might
avoid protecting payments based on sham measures or measures that do
not reflect objective quality outcomes or standards but instead may be
vehicles to reward referrals.
We proposed in the CY 2009 PFS proposed rule 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 proposed that this review must be
performed by an independent medical reviewer; that is, the review must
be conducted by a person or organization with relevant clinical
expertise that is not affiliated with the hospital operating the
program under review and not affiliated with any physician
participating in the program or with any physician organization with
which a participating physician is affiliated. We also proposed that
the reviewer could not be participating (at the time of the review) in
any incentive

[[Page 69796]]

payment or shared savings program operated by the hospital (73 FR 38553
through 38554). A substantial number of commenters objected to the
requirement of independent medical review, claiming that the expense of
independent medical review would likely be significant, and that many
hospitals may not be able to find an ``independent'' medical reviewer.
Commenters also contended that the impact on patient care can best be
ascertained through individuals associated with the hospital, because
hospital personnel and medical staff physicians are intimately aware of
hospital operations and patient populations.
We seek comments on [11] whether, assuming that there is a need for
independent medical review, the need would be greater if the exception
were to include outcome measures that are not on the CMS-approved list.
We also seek comments on an alternative to independent medical review
that would provide an objective, accurate and complete review.
Specifically, we request comments addressing [12] how, if no
independent medical review is required, we could ensure that a hospital
is objective in the review of its incentive payment and shared savings
program, that programs operate appropriately to improve (or maintain)
patient care quality, and that the incentive payment or shared savings
program results in no diminution of patient care quality or
inappropriate reduction in care. Finally, and irrespective of whether
we would require independent medical review or permit ``in-house''
review, we seek comments on: [13] How, when and what type of (for
example, further review, corrective action, or termination of the
incentive payment or shared savings program) recommendations should be
made by the reviewer when the program review identifies concerns with
patient care quality or the diminution in patient care quality
resulting from the implementation of the incentive payment or shared
savings program; and [14] requirements (including timeframes) for the
hospital to take corrective action based on the reviewer's
recommendations.
(2) Participating Physicians and Payment Amounts
The proposed exception included a requirement that the incentive
payment or shared savings program be structured to require physician
participation in the program in pools of five or more physicians, with
payments being distributed to members of each pool on a per capita
basis. Under the proposed exception, all physicians participating in
the program must be on the medical staff of the sponsoring hospital at
the commencement of the program. Most commenters objected to these
requirements, but did not provide clear suggestions regarding how to
address our concern regarding disguised payments that reward referrals
or other business generated by the physician in the absence of such
structural requirements. Therefore, we are seeking specific comments on
alternatives to these participation and payment restrictions, as well
as other safeguards that we could include in an exception(s) if we were
to omit the ``five-physician pool,'' per capita payment distribution,
and/or medical staff membership requirements. We request comments as to
[15] whether, if pools of less than five physicians are permitted, what
the minimum number of physicians should be; [16] whether all
participating physicians must be in the same specialty, and, if not,
what issues are raised by protecting arrangements between hospitals and
multi-specialty physician groups; [17] whether participating physicians
should be required to be on the medical staff at the hospital at the
commencement of the program and, if not, how we should address the risk
that programs will be used inappropriately as recruiting tools; and
[18] whether medical staff members may be added during an ongoing
program and, if so, how we should address the risk that payments would
be made to recruit physicians from other area hospitals, especially
hospitals that might not be able to afford to offer a similar program.
We also seek comments with respect to limitations on payments under
an incentive payment or shared savings program. Specifically, we are
interested in comments regarding whether: [19] We should impose a cap
on the payment made per participating physician, regardless of the
amount of cost savings or achievement of patient care quality goals
attributable to a particular physician; [20] whether payments should be
limited in duration and, if so, whether 3 years or some other period
should be the maximum time period for payments; and [21] whether
protected payments should be reasonably related to the measure that is
achieved and, if so, how a reasonable relationship should be
determined, and, if not, how we could protect against excessive
payments that might induce referrals. In this regard, we are interested
in comments addressing [22] methods for protecting against excessive
payments to referring physicians who participate in the program but may
contribute little or no work or expertise to the program. We are
further interested in comments on [23] the types of physicians who
should be protected participants and what it should mean to be a
``participating'' physician. Finally, we are interested in comments
addressing [24] the concept of restricting physicians from receiving
payments for previously achieved cost savings or for meeting quality
improvement goals that are, or have become over time, standard practice
(for example, we are concerned about payments that amount to little
more than supplemental payments to physicians to do nothing more than
what they are already doing) (73 FR 38555 through 38556).
In the CY 2009 PFS proposed rule, as described above, we proposed
that payments to physicians be made (whether directly to the physician
or to his or her qualifying physician organization) on a per capita
basis. We also solicited comments that would ``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 program (73 FR 38555). Although many commenters stated support for
permitting payments to physicians that directly correlate to their
personal efforts and achievement of performance measures in an
incentive payment or shared savings program, few comments provided
sufficient detail regarding how we could incorporate this expansion
into the exception without risk of program or patient abuse. We are
interested in comments that [25] outline with specificity how a
hospital would track or otherwise determine the ``personal efforts'' of
a physician and correlate the achievement of performance measures to a
particular physician's personal efforts and, in turn, to the amount of
the payment.
We also proposed a condition that would prevent physicians from
being paid in a manner that reflected increased volumes of Federal
health care program patients or services. Commenters generally opposed
this proposed restriction. We recognize as we stated in the CY 2009 PFS
proposed rule that volume changes can occur due to market forces and
physician practice growth, rather than from changes in referral
patterns due to financial incentives available to physicians
participating in an incentive payment or shared savings program (73 FR
38555). Where changes in the volume of Federal

[[Page 69797]]

health care patients or services occur because of financial incentives,
a risk of abuse exists. We are soliciting comments that [26]
specifically address how to account for legitimate fluctuations in the
volume of Federal health care patient procedures or services and
consider the potential that volume increases can indicate altered
referral patterns when a physician is participating in an incentive
payment or shared savings program. In addition, we are seeking comments
regarding [27] possible ways to ensure against increases in total
Medicare expenditures for patients for whom services are provided under
an incentive payment or shared savings program.
We proposed to require hospitals to make payments directly to
participating physicians or to a ``qualified physician organization,''
which we proposed to define as a physician organization composed
entirely of physicians participating in the incentive payment or shared
savings program (73 FR 38553). We sought comments regarding possible
expansion of this condition to allow payments to a physician
organization even if all of its affiliated physicians were not
participating in the incentive payment or shared savings program under
which the payment is made. We reiterate our concern that payments made
to physician organizations with nonparticipating physicians could be
used to reward such nonparticipating physicians for their referrals.
Many commenters objected to the strict limitations on the parties to
whom a hospital may make a payment under an incentive payment or shared
savings program. Commenters generally urged greater flexibility in the
distribution of payments. We are seeking here specific information
regarding [28] conditions that could be imposed to ensure no risk of
program or patient abuse including, for example, conditions on the use
and distribution of payments made to physician organizations on behalf
of participating physicians.
(3) Costs Savings for Shared Savings Programs
With respect to shared savings programs, we proposed various
methods and sought comments on other methods for limiting or capping
the total amount of cost savings available under the program. We
proposed a flat, 50 percent limit on the amount of cost savings
eligible for sharing with participating physicians, and also proposed
requiring rebasing of the baseline statistics against which reduction
in waste and cost savings would be measured. In the alternative, we
proposed a surrogate method of capping total available payments that
would be actuarially equivalent to a 50 percent cap with annual
rebasing of baseline statistics. Many commenters responded that we
should impose no limits on how a hospital determines the amount
available for shared savings payments, while other commenters objected
to the 50 percent cap and/or the rebasing requirement. As we noted in
the CY 2009 PFS proposed rule and above, our goal is to finalize an
exception (or exceptions) that provide sufficient flexibility for
hospitals to structure and implement a variety of nonabusive incentive
payment and shared savings programs. We are seeking comments that
specifically address: [29] What safeguards we could include in an
exception if we do not include a cap on the total amount of cost
savings available for distribution to participating physicians; [30]
What safeguards we could include in an exception to ensure that
physicians are not paid for achieving performance measures they
achieved in prior periods of the program if we do not require rebasing
of the baseline against which reductions in waste or costs are
measures; [31] whether it is appropriate to permit payments for
continued achievement (or maintenance) of performance measures, waste
reduction or cost savings and, if so, what safeguards we could include
in an exception if we were to do so (for example, reduced payments for
maintenance of patient care quality compared with payments for the
achievement of targets); and [32] whether the answer to [33] differs
for incentive payment programs as opposed to shared savings programs.
We have had limited opportunity to review incentive payment and
shared programs for compliance with the physician self-referral law,
and we lack familiarity with the specifics of measuring achievements
and calculating payments under such programs. We received insufficient
information in the public comments to set forth with enough specificity
conditions regarding the calculation of cost savings so as to enable
parties to evaluate compliance with the exception. We proposed to
require that payments that result from cost savings be calculated based
on 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 (73 FR 38556). Many commenters stated that the term
``acquisition costs'' was unclear or that it is difficult to determine
the actual costs involved in providing specified services, and
suggested that we provide additional guidance regarding these concepts
if we were to finalize this condition on payments. We are seeking
additional and specific comments regarding [34] the calculation of the
amount of total cost savings available for distribution under a shared
savings program, including a discussion of formulae used by parties to
existing arrangements.
(4) Protecting Quality of Care
We proposed that, under an exception for incentive payment and
shared savings programs, no payments could be made if the program
resulted in a diminution of patient care quality. Additional issues
were raised in the public comments, and we seek further comments on the
following: [35] Whether and, if so, how we should address the situation
in which the implementation of an incentive payment or shared savings
program results in a diminution in patient care quality measures not
included in the incentive payment or shared savings program; [36]
whether we should permit payments based on the global improvement in
patient care quality instead of individually identified and tracked
patient care quality measures; [37] if a program is structured to
result in payments when global quality improves, whether and, if so,
how should we permit payments to be made if only some of the quality
measures are met; [38] whether payments should be permitted for the
maintenance of patient care quality (as opposed to the improvement of
patient care quality) [39] whether payments should be permitted for the
achievement of intermediate targets for patient care quality and how
intermediate targets should be defined and measured; [40] what types of
medical evidence should support quality measures, and how we can ensure
that quality measures are supported by credible medical evidence; and
[41] whether measures must have some relation to the patient
populations and practices at the hospital and, if so, what the relation
should be, and, if not, how we could protect against programs that are
structured to reward physicians for reaching subjective or limited
goals that do not substantially benefit the hospital's patients.
We seek additional information on how parties measure patient care
quality and determine appropriate payment amounts for the achievement
of targets for patient care quality measures. For example, we request
comments on: [42] How quality improvement should be

[[Page 69798]]

measured, including how a baseline (that is, starting point) should be
set from which to measure the improvement, how recent the baseline
should be, and whether the targets should reflect regional data,
national data, or some other data; [43] whether we should recognize a
difference between ``quality improvement'' and ``quality maintenance''
and, if so, how we should define those terms in relation to each other,
whether an exception should protect payments for both, and whether they
should be valued differently (based on the supposition that improving
quality may require more effort than maintaining it); and [44] how we
can prevent protecting payments for programs that are not meeting their
quality goals or for measures that, when achieved, result in a
diminution of patient care quality.
iv. Structure of the Arrangement Between the Hospital Sponsoring the
Program and the Physicians Participating in the Program
(1) Documentation
In the CY 2009 PFS proposed rule, we included in the proposed
exception for incentive payment and shared savings programs a
requirement that the sponsoring hospital maintain certain documentation
regarding the program that must be made available to the Secretary upon
request. Many commenters supported this requirement, while others
stated that it presented an undue administrative burden. We are seeking
comments regarding [45] possible ways to reduce the administrative
burden and cost for hospitals that would not hinder the government's
ability to enforce the physician self-referral law and ensure
compliance with a final exception (or exceptions). We are also seeking
additional comments regarding [46] the inclusion of an audit
requirement with respect to the calculations of cost savings and
payment amounts under the incentive payment or shared savings program.
Many commenters supported such a requirement, and stated that we should
permit the audit to be performed ``in-house.'' We are seeking comments
here regarding [47] whether such an audit could satisfy our concerns
regarding the objectivity and accuracy of the audit. Specifically, we
seek comments on [48] whether parties should be required to monitor and
track each cost savings or quality measure and, if so, how we should
address the need for transparency and accountability.
(2) Sharing of Global Savings
Of particular concern from a fraud and abuse perspective is the
sharing of total (or global) savings for a particular department or
service line. Many commenters urged us to permit hospitals to share
with physicians a percentage or share of the total savings in a
particular department or service line, calculated from one period to
another. The calculation and sharing of such global savings would not
involve individually-tracked and measured performance measures, a
cornerstone of the programs that have received favorable advisory
opinions from the OIG to date. We seek comments regarding [49]
necessary safeguards to ensure that a final exception for shared
savings programs, when considered in its totality, would not present a
risk of program or patient abuse if we permitted the sharing of
departmental or service line global cost savings. In addition, we are
interested in [50] the impact that sharing such savings with physicians
would have on other potential requirements of a final exception, such
as the requirement that the calculation of cost savings and physician
payments be audited.
(3) Miscellaneous
We request comments on [51] whether the exception should protect
contracts/arrangements between hospitals and physician groups or only
contracts/arrangements between hospitals and individual referring
physicians (and, if the exception should allow contracts/arrangements
between hospitals and physician groups, how we could protect against
payments to physicians who do not actively participate in the program
and who might be rewarded merely for making referrals). Also, we seek
comments on [52] whether, if a physician group participates, the
physician group may be paid if some of its physicians fail to make
quality improvements; and [53] whether all physicians in the physician
group should be required to participate in the same measures.
v. Availability of Other Physician Self-Referral Exceptions
We note that there are many exceptions for compensation
arrangements in Sec. 411.355 and Sec. 411.357 of our regulations,
including exceptions for bona fide employment relationships (Sec.
411.357(c)), personal service arrangements (Sec. 411.357(d)),
arrangements involving fair market value compensation (Sec.
411.357(l)), arrangements involving indirect compensation (Sec.
411.357(p)), and services provided by an academic medical center (Sec.
411.355(e)). We believe that properly structured arrangements involving
physician participation in an incentive payment or shared savings
program may meet the requirements of one or more of the existing
physician self-referral exceptions for compensation arrangements. (An
arrangement that implicates the physician self-referral statute need
not satisfy more than one exception.) We request comments on [54] the
extent to which a ``stand-alone'' exception(s) for incentive payment
and shared savings programs is necessary given the existence of other
compensation exceptions, including the ones mentioned above. We request
comments on [55] whether it would preferable for us to modify aspects
of the existing exceptions to protect a broader range of beneficial,
nonabusive incentive payment and shared savings programs.
d. Conclusion
It is evident from the variety of comments that we received and the
detailed descriptions from some commenters of existing or ``ideal''
incentive payment or shared savings programs that such programs can be
structured in a multitude of ways. Experience with one program model
does not ensure an understanding of the impact of another program
model. The structures of programs with similar positive outcomes do not
necessarily resemble each other.
We intend to continue working toward finalizing an exception (or
exceptions) for incentive payment and shared savings programs. We do
not believe, as several commenters suggested, that we must or should
delay the issuance of a final exception until the completion of the
gainsharing demonstrations authorized by section 1866C of the Act and
section 5007 of the DRA. (See 73 FR 38550 for a description of these
initiatives.) However, without the additional information discussed in
this preamble, our efforts to finalize an exception(s) will be
hindered. By soliciting additional public comments on the proposed
exception for incentive payment and shared savings programs, we hope to
acquire information that will better inform the development of an
exception that is sufficiently flexible to encourage the development
and implementation of beneficial, nonabusive incentive payment and
shared savings programs that foster high quality, cost-effective care
for our beneficiaries.

[[Page 69799]]

2. Changes to Reassignment Rules Related to Diagnostic Tests (Anti-
Markup Provisions)
Section 1842(n)(1) of the Act requires us to impose a payment
limitation on certain diagnostic tests where the physician performing
or supervising the test does not share a practice with the physician or
other supplier that bills for the test. We implemented section
1842(n)(1) of the Act by applying an ``anti-markup'' payment limitation
to technical components (TCs) of diagnostic tests purchased from an
outside supplier, which has long appeared in our regulations in Sec.
414.50 and which is applicable to 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). In the CY 2008
PFS final rule with comment period (72 FR 66222), relying on section
1842(n)(1) of the Act, our general rulemaking authority under sections
1102(a) and 1871(a) of the Act, and authority under section 1842(b)(6)
of the Act, we amended the anti-markup provision in Sec. 414.50.
Specifically, we revised the anti-markup provision to apply to the 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 revised Sec. 414.50(a)(2)(iii) to
define 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 Sec. 411.351, 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. We
also imposed an anti-markup payment limitation 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. Under the CY 2008 PFS final
rule with comment period, 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 the CY 2009 PFS proposed rule (73 FR 38502), we proposed
revisions to the anti-markup provisions in Sec. 414.50, and solicited
comments on how best to implement these approaches. We proposed that
the anti-markup provisions would apply in all cases where the TC or the
PC 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 other supplier.
We proposed two alternative approaches to determining whether the
performing or supervising physician ``shares a practice'' with the
billing physician or other supplier. We also solicited comments
regarding other possible approaches to address our concerns regarding
overutilization that can occur when a physician or physician
organization is able to profit from diagnostic testing services not
actually performed by or supervised by a physician who ``shares a
practice'' with the billing physician or other supplier.
In what we designate here as ``Alternative 1,'' we proposed 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 stated 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. In light of this
proposal, we also requested comments on how to consider locum tenens
and other arrangements under which a physician provides occasional
services outside of his or her physician organization, as we recognized
that circumstances may exist under which it is beneficial or necessary
for a physician to provide diagnostic testing services to more than one
physician practice.
We proposed a second alternative proposal, which we designate here
as ``Alternative 2,'' which would maintain much of the current
regulation text, and its ``site-of-service'' approach to determining
whether a physician ``shares a practice'' with the billing physician or
other supplier, that was finalized in the CY 2008 PFS final rule with
comment period. In other words, we reproposed to apply the anti-markup
payment limitation to non-purchased TCs and PCs that are performed
outside the office of the billing physician or other supplier. We also
solicited comments on whether this is the best anti-markup approach or
whether we should employ a different approach.
Specifically, in Alternative 2, we proposed to amend Sec. 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 the office of the billing physician or other
supplier; (3) clarify when we consider the TC of a diagnostic test to
be purchased from an outside supplier; (4) clarify that, for purposes
of applying the payment limitation in Sec. 414.50(a)(1)(i) only, with
respect to the TC, the ``performing supplier'' is the physician who
supervised the TC and, with respect to the PC, the ``performing
supplier'' is the physician who performed the PC; and (5) include an
exception for diagnostic tests ordered by a physician in a physician
organization (as defined at Sec. 411.351) that does not have any
owners who have the right to receive profit distributions. Finally, we
solicited 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.
We received numerous comments in response to the proposals related
to the anti-markup provisions. Some commenters requested that we
withdraw both the CY 2008 PFS rulemaking and the current proposals.
Other commenters offered varied

[[Page 69800]]

support or criticism for one or both of the proposed alternatives. Some
commenters expressed concerns about eliminating legitimate, nonabusive
arrangements that serve Medicare beneficiaries. Quality concerns were
raised by commenters both in favor of and opposed to the proposals.
Commenters in support of Alternative 1 believe that it would be
more straightforward and easier to implement than Alternative 2. Some
commenters responded to Alternative 1 by requesting that a physician be
able to ``share a practice'' with up to 3 physicians or physician
organizations in order to accommodate arrangements that currently exist
among many part-time physicians and the groups for whom they work.
These commenters also stated that they would no longer be able to
support an in-office laboratory employing part-time physicians if the
Alternative 1 approach was implemented as proposed.
Some commenters offered support for Alternative 2 and its ``site-
of-service'' approach, which they argued would curb abusive
overutilization while granting physicians more flexibility in how to
structure arrangements to provide care as they see fit. Commenters
opposed to Alternative 2 were concerned that this approach focuses only
on where the test is performed and not by whom. Some commenters did not
support our proposal to clarify ``office of the billing physician or
other supplier'' as including diagnostic testing performed in the
``same building,'' but not in a ``centralized building,'' preferring
that ``office of the billing physician or other supplier'' also
encompass diagnostic testing performed in a ``centralized building.''
Most commenters agreed with our proposed clarification that the TC
of a diagnostic test is not ``purchased from an outside supplier'' if
the TC is both conducted by the technician and supervised by the
physician within the office of the billing physician or other supplier.
We received a few comments, some in favor of and some opposed to, the
proposed exception for diagnostic tests ordered by physicians in a
physician organization with no owners who have the right to receive
profit distributions. Most of the comments that we received in response
to the ``net charge'' solicitation expressed dissatisfaction regarding
the disallowance of overhead costs in the calculation of the ``net
charge.'' Other commenters, however, agreed that these costs should not
be included and that only those charges that are incurred from paying
the physician providing the PC or supervising the TC should be
included.
We received a number of comments addressing issues outside the
scope of this rulemaking, in particular, the in-office ancillary
services exception to the physician self-referral law, which is
codified in Sec. 411.355(b) of our regulations. Commenters believed
that we must curtail the types of arrangements currently permitted
under the in-office ancillary services exception in order to curb
overutilization through the ordering of unnecessary diagnostic tests.
After careful consideration of the comments that we received, we
are adopting a flexible approach that incorporates both proposed
alternatives. We are finalizing Alternative 1 with some modifications,
and retaining with some modifications the present ``site-of-service''
approach (Alternative 2) to allow physicians to consider both
approaches in determining if the anti-markup provisions apply to
particular diagnostic testing services. Arrangements should be analyzed
first under Alternative 1. Thus, where the performing physician (that
is, the physician who supervises the TC or performs the PC, or both)
performs substantially all (at least 75 percent) of his or her
professional services for the billing physician or other supplier, none
of the services furnished by the physician on behalf of the billing
physician or other supplier will be subject to the anti-markup payment
limitation in Sec. 414.50. If the performing physician does not meet
the ``substantially all'' services requirement of Alternative 1, an
analysis under the Alternative 2 requirements may be applied on a test-
by-test basis to determine whether the anti-markup payment limitation
applies. Under the Alternative 2 ``site-of-service'' approach, only TCs
conducted and supervised in and PCs performed in the office of the
billing physician or other supplier by an employee or independent
contractor physician will avoid application of the anti-markup payment
limitation. Both the ``substantially all professional services'' and
``site-of-service'' tests are measures of whether a performing/
supervising physician ``shares a practice'' with the billing physician
or other supplier. With respect to Alternative 2, we believe that
restrictions regarding the location of the conducting and supervising
of the TC are essential to ensure that, if the test is to be billed as
performed by the billing physician or other supplier, the billing
physician or other supplier exercise sufficient control and a proper
nexus to the individuals conducting and supervising the test. Requiring
that the TC be conducted and supervised in the office of the billing
physician or other supplier, under Alternative 2, creates this control
and nexus. We believe that allowing billing physicians and other
suppliers that cannot satisfy Alternative 1 to comply with the
requirements of Alternative 2 on a case-by-case basis affords
physicians flexibility while addressing our concerns regarding the
ordering of unnecessary diagnostic tests.
As we noted above, we have made one modification to Alternative 1
in response to comments we received. Rather than requiring that a
physician work exclusively for one physician practice, in order to
``share a practice'' with a particular physician or physician
organization, a physician must provide ``substantially all'' of his or
her professional services for that practice. For purposes of
Alternative 1, we are defining ``substantially all'' as ``at least 75
percent.'' In this regard we note that ``substantially all,'' as used
in certain of our physician self-referral rules, is defined as ``at
least 75 percent'' (see Sec. 411.352(d) and Sec. 411.356(c)(1)).
Although the anti-markup provisions in Sec. 414.50 and the physician
self-referral rules in Sec. 411.350 through Sec. 411.389 are separate
and distinct, we believe that ``at least 75 percent'' is an appropriate
test within the context of Alternative 1, and we also wish to avoid any
unnecessary confusion that could result from having one numerical test
for the anti-markup provisions and another numerical test for the
physician self-referral rules. Thus, for purposes of determining
whether the anti-markup provisions apply, the performing physician
(that is, the physician supervising the TC or performing the PC, or
both) is considered to share a practice with a physician group for
which he or she provides at least 75 percent of his or her professional
services--even if the physician works for one or more billing physician
groups or other health care entities. The final rule provides at
revised Sec. 414.50(a)(2)(ii) that the ``substantially all''
requirement is satisfied if the billing physician or other supplier has
a reasonable belief at the time it submits a claim that: (1) The
performing physician has furnished substantially all of his or
professional services through the billing physician or other supplier
for the period of 12 months prior to and including the month in which
the service was performed; or (2) the performing physician is expected
to furnish substantially all of his or her professional services
through the billing physician or other supplier during the

[[Page 69801]]

following 12 months (including the month the service is performed).
We believe that our modification to the proposal for Alternative 1
will satisfy the concerns regarding locum tenens arrangements (and
part-time and other on-call or similar arrangements), provided that the
performing physician is not furnishing more than 25 percent of his or
her professional services as a locum tenens physician (or in some other
capacity, such as a part-time physician for another billing group or
moonlighting at a hospital).
We are also retaining the present site-of-service approach to
determining whether a physician ``shares a practice'' with the billing
physician or other supplier. This approach was reproposed as
Alternative 2, with a proposed clarification that diagnostic testing
performed in the ``same building'' (as defined at Sec. 411.351) in
which the ``office of the billing physician or other supplier'' is
located would not be subject to the anti-markup provisions (provided
that the testing was not purchased from an outside supplier). We are
adopting this clarification, but deleting the references to purchased
TCs and PCs from Sec. 414.50, for the reasons explained below. We are
also adopting certain proposed clarifications and definitions.
Specifically, a physician or other supplier may have more than one
``office of the billing physician or other supplier,'' and the ``office
of the billing physician or other supplier'' is defined as space in
which the ordering physician or other ordering supplier regularly
furnishes care (and with respect to physician organizations, is the
space in which the ordering physician performs substantially the full
range of patient care services that the ordering physician provides
generally). We are adding to Alternative 2 the requirement, with
respect to the TC, that the physician supervising the TC be an owner,
employee, or independent contractor of the billing physician or other
supplier, and, with respect to the PC, that the physician performing
the PC be an employee or independent contractor of the billing
physician or other supplier. We are doing this in order to simplify our
rules and to avoid having a separate basis for imposing an anti-markup
payment limitation for TCs supervised and PCs performed by outside
suppliers. We explain our rationale for this change in the next
paragraph.
We are not finalizing a definition of outside supplier, and instead
we are deleting references to a ``purchased'' test or interpretation in
Sec. 414.50 because they are unnecessary, as explained below. We note
that section 1842(n)(1) of the Act requires us to impose an anti-markup
payment limitation on diagnostic tests that are performed or supervised
by a physician who does not share a practice with the billing physician
or other supplier. Traditionally, we have interpreted section
1842(n)(1) of the Act as applying to purchased TCs from an outside
supplier. Our longstanding policy of having an anti-markup payment
limitation on purchased TCs was codified in Sec. 414.50, and retained
in the CY 2008 PFS final rule with comment period. (Similarly, we
imposed an anti-markup payment limitation on purchased PCs in the CY
2008 PFS final rule with comment period and we proposed in the CY 2009
PFS proposed rule to retain status as a purchased PC as a separate
basis imposing an anti-markup payment limitation.) Based on our
decision to adopt Alternative 1 and to allow arrangements that do not
meet the requirements of Alternative 1 to nevertheless avoid the anti-
markup payment limitation if diagnostic testing services meet the
requirements of Alternative 2, we believe that it is not necessary, and
unduly complex, to use purchased tests and purchased interpretations as
separate bases for imposing an anti-markup payment limitation. We
provide a fuller explanation below, at section N.2.h., for deleting
from Sec. 414.50 references to TCs and PCs purchased from an ``outside
supplier.''
We are not creating an exception for tests ordered by a physician
in a physician organization with no physician owners who have the right
to receive profit distributions. By finalizing both proposed
alternatives, we believe that our concern that the Alternative 2
approach could disadvantage nonproblematic arrangements involving
nonprofit multi-specialty groups that have campus-based treatment
facilities (and thus do not perform diagnostic testing in the same
building as where patients are seen) largely becomes moot, as most such
arrangements should be able to be structured to fit into Alternative 1,
or failing that, Alternative 2.
With respect to our specific solicitations of comments, we are not
revising the meaning of ``net charge'' at this time. Moreover, we are
not requiring at this time direct billing instead of permitting
reassignment under certain circumstances; however, we may propose to do
so in a future notice of proposed rulemaking. We considered the various
recommendations commenters offered for the effective date for our
revisions. We have decided to not deviate from the effective date that
is generally applicable to this final rule with comment period and,
thus, the revisions to Sec. 414.50 will become effective on January 1,
2009.
Finally, we did not propose to make changes to the in-office
ancillary services exception and are not making any changes to that
exception in this final rule; however, we are aware of the commenters'
concerns and may propose rulemaking on this issue in the future.
a. General comments
Comment: Some commenters were concerned with their perceived
complexity of the anti-markup provisions and requested that we delay
making any revisions to the rule. A commenter argued that extending the
application of the anti-markup payment limitation only adds another
layer of unnecessary complexity and confusion to an area where
physicians want to provide high quality services in a cost efficient
manner. Some commenters, including a large medical association,
requested that we withdraw the proposals of this rule, as well as the
proposals contained in the CY 2008 PFS final rule with comment period.
In contrast, one commenter stated that the anti-markup provisions are
consistent with the aforementioned medical association's code of
ethics, which states that a physician should not charge a markup,
commission, or profit on services rendered by others. A second
commenter noted that the same medical association and many hospital
bylaws strongly discourage fee-splitting. Other commenters urged us to
not weaken or dilute last year's important anti-markup provision.
Response: We believe that the anti-markup provisions in Sec.
414.50, as revised by this final rule with comment period, are not
inordinately complex. We agree that it would be simpler to not have any
anti-markup provisions beyond what existed prior to the CY 2008 PFS
final rule with comment period, but we remain convinced that additional
rulemaking is necessary to address the potential for overutilization
through unnecessary testing. Likewise, we agree that it would be
simpler to adopt the approach, as suggested by one commenter, that we
not allow any reassignment of diagnostic testing services and, instead,
require direct billing, but, without studying that approach further, we
have concerns that doing so may unnecessarily prevent nonabusive
arrangements. Thus, the resulting rule presents some complexity in
order to both allow flexibility for the industry while implementing
statutory intent and addressing our concerns of

[[Page 69802]]

the potential for overutilization and patient abuse. To some extent, we
have simplified the anti-markup provisions in Sec. 414.50 by deleting
superfluous references to purchased TCs and PCs as bases for imposing
an anti-markup payment limitation, for the reasons discussed above and
more fully below at II.N.2.h.
Comment: A commenter recommended that we finalize a combination of
both Alternative 1 and Alternative 2, so that in order for the anti-
markup provision to not apply, an employee or contractor physician
should work solely for the billing group and meet the ``site-of-
service'' requirements. Two other commenters recommended that we
finalize both approaches and allow arrangements to avoid application of
the anti-markup provisions if they comply with either approach.
Response: We have adopted an ``either or'' approach to the two
proposed alternative approaches. Diagnostic testing services furnished
by physicians who meet the requirements of Alternative 1 (the
``substantially all'' services approach) will not be subject to an
anti-markup payment limitation. However, arrangements that do not meet
the requirements of the Alternative 1 approach nevertheless will avoid
application of the anti-markup provisions if they comply with
Alternative 2 (the ``site-of-service'' approach), as clarified in this
final rule. We believe that compliance with either one of the two
approaches finalized in this rule will implement statutory intent and
address our concerns regarding overutilization and abusive billing by
establishing a sufficient nexus with the billing entity to justify not
applying an anti-markup payment limitation.
Comment: One commenter noted that the application of some of the
proposed changes, both with respect to the anti-markup provisions in
Sec. 414.50 and with respect to the IDTF standards in Sec. 410.33,
may restrict the diagnostic testing services that physicians perform
for Medicare beneficiaries and may result in more physicians electing
to not accept new Medicare patients. A commenter stated that the
proposed revisions to the anti-markup provisions threaten cooperative
ventures and arrangements and, consequently, beneficiary access to
quality Medicare services, including ultrasound and other diagnostic
testing services. Other commenters asserted that both proposed
approaches are misguided and do not acknowledge the way that physicians
provide care under practical circumstances. A commenter contended that
both proposals would hamper the ability of large groups to provide
diagnostic services. Essentially, physician groups may have to bill
differently for some physicians, resulting in an administrative burden
for physician groups, and possibly curtailing the locations that a
Medicare beneficiary can receive diagnostic tests and thus affecting
patient care. Several commenters argued that the adoption of this rule
will have the effect of eliminating many legitimate, nonabusive
arrangements that serve to expand access to care to Medicare
beneficiaries, while resulting in little or no countervailing benefit
to the Medicare program
Response: We do not believe that the revisions included in this
final rule with comment period will discourage significantly or
negatively impact significantly legitimate, nonabusive arrangements. We
believe that the revisions strike an appropriate balance between
allowing billing physicians and other suppliers flexibility in
structuring their arrangements while protecting against program abuse
caused by unnecessary diagnostic testing. As explained in section II.I.
of this final rule, we are not finalizing our proposals at this time to
require physician offices to comply with the IDTF standards in Sec.
410.33.
Comment: Some commenters stated that there is no evidence that
bringing diagnostic services into a physician practice automatically
leads to overutilization; rather, many practices do so in order to
improve quality of patient care and efficiency and not for financial
gain.
Response: We disagree with the commenters' statement that there is
no evidence that self-referral of diagnostic services leads to
overutilization. We cited several studies in the CY 2008 PFS final rule
with comment period that supported the proposition that physician self-
referral (that is, the referral of diagnostic tests provided within the
physician practice) leads to overutilization (72 FR 66311 through
66312). Additionally, since publication of that rule, the Government
Accountability Office (GAO) has published a study indicating the
overuse of some diagnostic testing when performed in a physician's
office. The GAO report, Rapid Spending Growth and Shift to Physician
Offices Indicate Need for CMS to Consider Additional Management
Practices, (GAO-08-452), showed that spending for imaging services paid
under the PFS more than doubled over a 6-year period from 2000 through
2006. The report's findings reflect a link between spending growth and
the provision of imaging services in physician offices. The proportion
of Medicare spending on imaging services performed in-office rose from
58 percent to 64 percent and physicians received an increased share of
their total Medicare revenue from imaging services. We recognize that
not all arrangements necessarily lead to overutilization. However, we
are not able to regulate per individual practice and instead must issue
rules of general applicability to implement statutory intent and
address our concerns regarding the potential for overutilization
through unnecessary diagnostic testing.
b. Statutory Authority
Comment: A commenter noted that the anti-markup provisions in
section 1842(n)(1) of the Act are limited to ``diagnostic tests
described in section 1861(s)(3) [of the Act].'' According to the
commenter, the physician interpretation of a diagnostic test is not a
service described in section 1861(s)(3) of the Act, as physician
services are described in section 1861(s)(1) of the Act. Other
commenters stated that, in enacting section 1842(n) of the Act, the
Congress specifically limited the applicability of the anti-markup
provisions to diagnostic tests. Commenters expressed concern that
applying an anti-markup payment limitation to the PC of diagnostic
tests is inconsistent with the plain meaning of the law and
Congressional intent.
Response: As explained in the preamble to the CY 2008 PFS final
rule with comment period (72 FR 66308 through 66309), despite the fact
that we implemented section 1842(n)(1) of the Act to impose an anti-
markup payment limitation only on the TC of diagnostic tests, we are
not prevented from applying an anti-markup payment limitation to the PC
of a diagnostic test.
We believe that our general rulemaking authority under sections
1102(a) and 1871(a) of the Act provides us with authority to effectuate
fully the Congress's intent in enacting section 1842(n)(1) the Act to
remove the profit incentive for ordering unnecessary diagnostic tests.
As we indicated in the preamble to the CY 2008 PFS final rule with
comment period, the profit incentive to order unnecessary diagnostic
tests remains if the billing physician or other supplier may markup the
PC of the test (72 FR 66315). Moreover, and as also discussed in the
preamble of the CY 2008 PFS final rule with comment period, section
1842(b)(6) of the Act authorizes us, but does not command us, to allow
reassignment of physician services, including the PC of a diagnostic
test (72

[[Page 69803]]

FR 66309). At this time, we are not prohibiting reassignment of PCs and
instead requiring direct billing, but we are imposing restrictions on
the reassignment of PCs. That is, a PC that is reassigned by the
performing physician to the billing physician or other supplier that
ordered the PC may not be marked up by the billing physician or other
supplier, unless the performing physician shares a practice with the
billing physician or other supplier. If a physician or other supplier
that orders a PC does not find that billing for the PC under an
arrangement that is subject to the anti-markup provisions is profitable
or financially worthwhile, that physician or other supplier is free to
not accept reassignment and instead have the performing physician or
other supplier bill directly for the PC.
Comment: Several commenters questioned the appropriateness or the
legality of imposing an anti-markup payment limitation on the TC
supervised by, or the PC personally performed by, a physician in the
same group practice as the ordering physician. Some commenters asserted
that, because the anti-markup provision in section 1842(n) of the Act,
with its relatively general language, came first, and the much more
specific requirements of the physician self-referral law in section
1877 of the Act came later, the Congress has defined specifically what
it means for physicians to ``share a practice'' for Medicare purposes
and we should not interpret these provisions differently, particularly
without providing a clear rationale for doing so. One commenter
contended that the ``share a practice'' concept in section 1842(n) of
the Act simply was the Congress' short-hand version of what later
became the lengthy definition of ``group practice'' in section
1877(h)(4) of the Act. Other commenters asserted that, through the
anti-markup provisions, we are overlaying a new and inconsistent set of
requirements for providing diagnostic testing, with respect to bona
fide group practices meeting the physician self-referral law
requirements. According to these commenters, we are doing so by relying
on the ``anti-mark-up'' language of section 1842(n)(1) of the Act, even
though that language pre-dates the physician self-referral law and
explicitly exempts testing performed by physicians who ``share a
practice.'' One commenter stated that our proposals, if adopted, would
impose a new and untenable burden on physician practices that have
already taken pains to comply with the complex and onerous strictures
imposed by the physician self-referral law. Two commenters stated that
developing policies under one law only to make them largely irrelevant
under another law represents arbitrary government action.
Response: Section 1877(h) of the Act expressly states that the
definitions it sets forth apply only for purposes of section 1877 of
the Act. There is no indication in either the text or the legislative
history of section 1877(h) of the Act that the Congress intended the
definition of ``group practice'' to correlate with the term ``shares a
practice'' in section 1842(n)(1) of the Act. Also, we note that the
definition of group practice in section 1877(h) of the Act is
relatively narrow. That is, the definition of ``group practice'' in
section 1877(h) of the Act refers only to ``members'' of a group
practice, which could be construed to mean only physicians with an
ownership or investment interest in the group. (Note also that the
definition of ``group practice'' in section 1877(h) of the Act allows
the Secretary to impose other standards by regulation.) Likewise, the
text of the in-office ancillary services exception in section 1877(b)
of the Act, which allows referrals within a group practice, can be read
as being restricted to services referred and performed by members of
the group (and services performed by employees who are supervised by a
member of the group). Therefore, even if the Congress did intend the
definition of ``group practice'' in section 1877(h) of the Act for
purposes of the physician self-referral law to correlate with ``shares
a practice'' in section 1842(n)(1) of the Act for purposes of the
statutory anti-markup provision, and also intended that individuals
whose referrals are protected under the statutory in-office ancillary
services exception to the physician self-referral law necessarily
``share[] a practice'' for purposes of the statutory anti-markup
provision (and we agree with neither proposition), we would not be
required to take an expansive view of what it means to ``share[] a
practice'' for purposes of the statutory anti-markup provision. We also
note that section 1842(n)(1) of the Act does not prohibit us from using
other authority to impose an anti-markup payment limitation on TCs and
PCs.
As a policy matter, we do not agree with the commenters that
suggested that we should except from the anti-markup provisions any
arrangement that complies with the physician self-referral rules. The
anti-markup provisions, when applied, limit only how much a physician
or other supplier may bill Medicare, whereas the physician self-
referral rules, when implicated and not satisfied, prevent a physician
or other supplier (or provider) from billing Medicare (for any amount).
Accordingly, we approach physician self-referral rulemaking with added
caution, lest we prohibit a broad class of arrangements that in some
cases and under certain circumstances do not pose a risk of abuse.
Thus, using our general rulemaking authority and authority in section
1877(b)(2) of the Act, we have provided some flexibility, with respect
to which referrals are protected under the in-office ancillary services
exception and the definition of a ``centralized building,'' for
purposes of our physician self-referral rules. However, the fact that
the physician self-referral law, as interpreted or implemented by us,
does not prohibit a certain type of arrangement does not mean that we
should not take measures, through an anti-markup approach, to address
the potential for overutilization or other abuse that exists with
certain arrangements that seek to take advantage of our definitions of
``group practice'' and ``centralized building'' that are used for
purposes of the physician self-referral exception for in-office
ancillary services.
c. Alternative 1 (``Substantially All'' Professional Services)
Comment: Under Alternative 1 as proposed, which we referred to in
the proposed rule as the ``shares a practice'' approach (although the
second alternative was also designed to ensure, through a site-of-
service methodology, that performing physicians ``share a practice''
with the billing physician or other group), the anti-markup payment
limitation would not apply if a service is provided or supervised by a
physician who ``shares a practice'' with the billing physician or other
supplier by virtue of working exclusively with that physician or other
supplier. Several commenters noted that this alternative mirrors the
statutory language, but contended that the definition of ``shares a
practice'' suggested by the preamble of the proposed rule (that is, if
a physician contracts with more than one group, he or she does not
``share a practice'' with any group) is inconsistent with a common
sense interpretation of that term. A commenter stressed that even a
physician who spends 1 percent of his or her time interpreting
echocardiograms for an area hospital but spends the remainder of his or
her time working for his or her group practice would not be considered
to ``share a practice'' with the group under the

[[Page 69804]]

proposed approach. Some commenters suggested that physicians should be
able to have two or three relationships with physician organizations
and still be deemed to share a practice with each one and not be
subject to the anti-markup provisions. Some commenters requested that
the anti-markup provisions not apply when a physician works for a
physician group and also works for another type of health care provider
or supplier, such as a hospital, independent lab, or medical school.
Another commenter proposed that a physician who spends more than 40
percent of his ``total time spent on patient care services'' (as
defined at Sec. 411.352(d)) as a physician in any group practice
should be considered to ``share a practice'' with that group practice
for purposes of the anti-markup provisions. According to the commenter,
this requirement would ensure that a physician has a meaningful level
of actual economic and professional integration with a group practice
for which the physician provides DHS from which the group can profit,
but it would not penalize a physician for providing professional and
supervisory services to others. The commenter suggested that we should
permit a physician to share a practice with no more than two groups and
require extensive integration with each group.
A commenter stated that, if a physician is a full-time or part-time
employee of a physician group, that employment relationship in and of
itself should establish a sufficient nexus with that group to justify
not applying the anti-markup payment limitation to his or her
professional services for the physician group. This commenter also
noted that, under the proposed IDTF revisions in the CY 2009 PFS
proposed rule (73 FR 38533 through 38535), a physician may serve as an
IDTF medical director for no more than three IDTFs, and suggested that
a similar standard could be used for the application of the anti-markup
provisions by not allowing physicians to contract to provide services
for more than three physician organizations.
One commenter stated its belief that compliance with the proposed
requirements of the Alternative 1 approach may be possible by some
medical practices, such as those with the capital and testing volumes
sufficient to warrant engaging or contracting for exclusive physician
services needed to perform or supervise diagnostic testing. However,
the commenter also asserted that the proposal may be burdensome to many
physician offices. Another commenter asserted that some practices do
not have sufficient patient volume to support a full-time pathologist
or radiologist. A commenter representing an oncology practice noted
that the practice currently can bill a global fee for the TC and PC,
but the Alternative 1 proposal would apply the anti-markup payment
limitation to the PC. The commenter stated that use of a part-time
radiologist does not encourage overutilization, and, therefore, the
anti-markup payment limitation should not apply.
Response: We are modifying the proposed Alternative 1 approach so
that a performing physician (that is, a physician who supervises the TC
or performs the PC, or both) will be considered to share a practice
with a physician, physician organization, or other supplier if the
physician furnishes ``substantially all'' (at least 75 percent) of his
or her professional services through that physician, physician
organization, or other supplier. This means that a physician may
furnish up to 25 percent of his or her professional services through
any number of physicians (including himself or herself), physician
organizations or other suppliers, through acting as a locum tenens
physician, or in other circumstances without disqualifying himself or
herself from sharing a practice with the physician or physician
organization for which he or she provides the bulk (that is, at least
75 percent) of his or her professional services. For example, suppose
Physician A furnishes at least 75 percent of her services through
Physician Organization B, and furnishes 25 percent of her professional
services through Physician C and Laboratory Supplier D. Under this
example, Physician A would be considered to be sharing a practice with
Physician Organization B.
Revised Sec. 414.50(a)(2)(ii) provides that the ``substantially
all'' requirement is satisfied if the billing physician or other
supplier has a reasonable belief, when submitting a claim, that: (1)
The performing physician has furnished substantially all of his or her
professional services through the billing physician or other supplier
for the period of 12 months prior to and including the month in which
the service was performed; or (2) the performing physician will furnish
substantially all of his or professional services through the billing
physician or other supplier during the following 12 months (including
the month the service is performed).
Comment: In response to our request for comments on how to address
locum tenens relationships under Alternative 1, several commenters
recommended that the locum tenens relationships should not count in
calculating whether a physician shares a practice with another
physician or other supplier. Another commenter suggested that abuse of
locum tenens arrangements could be avoided through requirements for
these arrangements in the Medicare Claims Processing Manual, 100-04,
Chapter 1, Sec. 30.2.11. One commenter stated that, provided that
locum tenens physicians satisfy Medicare's requirements governing the
use of and billing for such physicians, the anti-markup payment
limitation should not apply to tests performed or supervised by such
physicians.
One commenter enumerated additional circumstances in which group
practice physicians provide services to or through entities other than
their primary group affiliation. These circumstances included: (1)
Covering for another practice while it recruits to replace a retired or
deceased physician; (2) providing specialty services at hospitals or
primary care clinics in areas (often rural, but not always) that would
otherwise not have those specialties available and convenient to
patients; and (3) providing specialty services to a different practice
that has only a part-time need for the service.
Another commenter noted the potential for situations where a non-
radiology practice contracts with a radiologist as a locum tenens
physician to circumvent the anti-markup provision. The commenter
recommended that we exclude only same-specialty locum tenens
arrangements from the anti-markup provision.
Response: In the CY 2009 PFS proposed rule, we requested comments
on how, under Alternative 1, 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 the physician organization for purposes of applying the
anti-markup provisions. To accommodate such temporary physician
arrangements, we have modified Alternative 1 so that a physician will
be considered to share a practice with a physician, physician
organization, or other supplier if the physician furnishes at least 75
percent of his or her professional services through that physician,
physician organization, or other supplier. Thus, the final rule allows
a physician to furnish up to 25 percent of his or her professional
services through other arrangements (including for the purpose of
acting as a locum tenens physician)

[[Page 69805]]

without disqualifying himself or herself from sharing a practice with
his or her primary physician practice. We believe that our modification
provides assurance that the performing physician has a sufficient nexus
with the billing physician or other supplier so as to share a practice
with such physician or other supplier. We are not persuaded that we
should disqualify the performing physician from sharing a practice with
the billing physician or other supplier if his or her locum tenens or
part-time arrangements do not involve performing work for a billing
physician or other supplier engaged in the same specialty as the
performing physician.
Immediately above, we address the issue of whether a physician may
share a practice with a billing physician or other supplier despite
furnishing some services through other arrangements, including acting
as a locum tenens physician. In this paragraph, we address the ``flip
side'' of this issue, that is, whether a billing physician or other
supplier can avoid application of the anti-markup payment limitation
where a locum tenens physician is substituting for a physician who does
in fact perform ``substantially all'' of his or her professional
services through the billing physician or other supplier. We wish to
clarify that, with respect to locum tenens situations only, whether an
arrangement satisfies Alternative 1 depends on whether the permanent
physician (that is, the physician for whom the locum tenens physician
is substituting) performs ``substantially all'' of his or her
professional services through the billing physician or other supplier.
For example, assume Physician A contracts with Group Practice C to
render services in place of Physician B, who is on vacation. Physician
B performs 100 percent of her professional services through Group
Practice C. This arrangement meets the requirements of Alternative 1,
because Physician B performs at least 75 percent of her professional
services through Group Practice C. It is irrelevant whether, or the
extent to which, Physician A furnishes professional services for Group
Practice C outside the locum tenens arrangements, for purposes of
determining whether the anti-markup payment limitation applies to the
services provided by Physician A under the locum tenens arrangement.
Comment: Many commenters were opposed to the proposed Alternative 1
approach to determining whether a physician shares a practice with the
billing physician or other supplier. Some commenters stated that they
employ a pathologist in-house in order to improve quality of care by:
(1) Using specialized pathologists for digestive diseases; (2) forming
normative standards based on the practices of the physicians in the
practice; and (3) decreasing the turnaround time for diagnostic tests.
Other commenters, who are physicians, stated that they were unhappy
with the professional services provided by commercial laboratory
companies due to slow turnaround time on pathology reports or
difficulty in asking follow-up questions of pathologists at remote
laboratories. According to these commenters, by employing a
pathologist, a group practice is able to ensure that the pathologist is
a specialist in a particular practice area (for example,
gastroenterology), something the commenters asserted they were unable
to do with commercial laboratories.
A commenter expressed concern regarding Alternative 1 because, in
the commenter's view, it would unfairly limit a specialty practice
(such as gastroenterology or urology) from billing and collecting the
full global reimbursement from the Medicare program for services
rendered by an in-office pathologist unless that pathologist works only
for that physician group. The commenter stated that it should not
matter if the pathologist works for more than one group practice. This
commenter expressed concern that eliminating the in-office laboratory
model would be a detriment to Medicare beneficiaries. Another commenter
objected to our assertion that anatomic pathology services provided in
a physician's office can result in overutilization. The commenter
expressed its view that gastroenterologists do not overutilize anatomic
pathology, even when profiting from it, because a colon biopsy is much
more invasive than clinical laboratory tests such as fingerstick for
hematocrit or a dipstick urine.
Response: Billing physicians and other suppliers will continue to
be able to employ a physician specialist on a part-time basis. Under
Alternative 1, if the specialist furnishes ``substantially all'' (at
least 75 percent) of his or her professional services through the
billing physician or other supplier, the specialist ``shares a
practice'' with the billing physician or other supplier. Because this
rule finalizes both proposed approaches, if an arrangement does not
satisfy the ``substantially all'' test of Alternative 1, the billing of
a TC or PC may still avoid application of the anti-markup payment
limitation if it meets, as determined on a case-by-case basis, the
``site-of-service'' requirements of Alternative 2. Alternatively, part-
time physicians can bill Medicare directly.
Comment: Some commenters contended that adoption of Alternative 1
would interfere unfairly with the practice of medicine by severely
limiting physician practices' right to organize themselves as they see
fit to deliver quality care to their patients. These commenters stated
that adoption of Alternative 1 would prevent a group from hiring a
part-time pathologist, as is common for gastroenterology practices that
provide pathology services to their patients. According to the
commenters, the elimination of full reimbursement (that is, the PFS
amount) for pathology services provided by part-time pathologists would
interfere with the multidisciplinary approach that the commenters have
chosen to best serve patients. One commenter asserted that, despite the
fact that the pathologist simply may bill the Medicare program
directly, Alternative 1 interferes with the practice of medicine. The
commenter asserted that our proposal is equivalent to saying that a
physician group cannot hire a part-time pathologist as part of its
practice. The commenter contended that finding a pathologist who would
travel to its offices was not easy, and that informing a pathologist
that he or she can bill Medicare directly from the group's office
provides no incentive to the pathologist. This commenter predicted that
the approach outlined in Alternative 1 would force pathology to revert
to the traditional model of referring physicians sending specimens to a
laboratory and receiving pathology reports, rather than communicating
with the pathologist directly. One commenter stated its belief that, if
we permit a pathologist to bill for professional services directly,
there is no reason for the pathologist to travel to different
physician's offices if he or she can collect the same amount for
professional fees while working in his or her own office. This
commenter also suggested that our proposal would discriminate against
small groups that cannot afford to employ a full-time pathologist. The
commenter asserted that full-time pathologists based in small
communities do not have the resources to bill and collect on their own
and working for one group on a part-time basis is not sufficient.
One commenter stated that it would support Alternative 1 if it was
extended to allow a physician to be employed by or under contract with
up to three physicians or physician organizations. Commenters
recommended that the ``one practice'' requirement be eliminated so as
not to harm small and

[[Page 69806]]

mid-sized practices that cannot afford to employ a full-time
pathologist. Two commenters stated that a physician should be allowed
to maintain ``two or three'' independent contractor or employee
relationships with physician organizations and be viewed as sharing a
practice with each. In the commenters' view, this less restrictive
approach would account for different practice situations while still
providing considerable protection against Medicare program abuse.
Another commenter requested that, in drafting any final rule, we permit
physicians to provide services in rural health or medically underserved
areas without the secondary arrangement precluding the physician from
sharing a practice with his or her physician organization.
Response: We have modified Alternative 1 so that a physician group
will be allowed to hire a part-time physician who will ``share a
practice'' with that group, provided that the part-time physician
furnishes ``substantially all'' (at least 75 percent) of his or her
professional services through the group. Again, in order to avoid
application of the anti-markup payment limitation under this final
rule, billing physicians and other suppliers have the option of
satisfying either the requirements of Alternative 1 (the
``substantially all'' professional services approach), or the
requirements of Alternative 2 (the ``site-of-service'' approach).
Comment: One commenter suggested that Alternative 1 may be simpler
and more effective if we clarify that the anti-markup provisions apply
only when the billing physician or physician organization generated the
referral for the pathology services. The commenter noted that, in
States that prohibit the corporate practice of medicine, independent
clinical laboratories contract with pathology groups to perform
pathology services. Because such pathologists have employment or
contractual relationships with both a pathology group and an
independent lab, the anti-markup provisions could be triggered under
Alternative 1 as proposed. The commenter cited the CY 2008 PFS final
rule with comment period, where we stated that independent laboratories
and pathologists do not trigger the initial order for pathology
services. Thus, the commenter suggested that we clarify that, under the
CY 2009 PFS proposals, anti-markup provisions still would only apply if
the physician billing for the services was also the physician or
supplier who provided the initial order for the service. Several
commenters were concerned that we did not mention this in our
commentary on the proposal.
Response: As finalized in the CY 2008 PFS final rule, and as
retained in this final rule with comment period, the anti-markup
provisions for the TC or PC of a diagnostic test apply only when the
billing physician or other supplier has ordered the TC. For example, if
a laboratory contracts with a pathologist instead of employing the
pathologist to perform the PC of a diagnostic test (because the
laboratory is located in a State that has a prohibition on the
corporate practice of medicine), the anti-markup payment limitation
would not apply to the lab if the lab chooses to bill for the
pathologist's interpretation, if the lab (or a party related to the lab
by common ownership or control) did not order the test. For example,
Physician Group A orders the TC and PC of a diagnostic test. Laboratory
B performs TC and contracts with Physician C to perform the PC, and
Laboratory B bills for the TC and the PC. In this example, the anti-
markup provisions would not apply to the TC or the PC billed by
Laboratory B. However, if the interpreting pathologist decides to order
additional tests that are then performed and/or interpreted by another
pathologist, the anti-markup payment limitation potentially would apply
if the ordering pathologist wishes to bill for the additional
interpretations performed by the different pathologist. Whether the
anti-markup payment limitation in fact would apply would depend on
whether the arrangement between the ordering/billing pathologist and
the pathologist performing or supervising the TC/performing the PC
satisfies the requirements of Alternative 1 (and, if not, whether it
satisfies, on a case-by-case basis, the requirements of Alternative 2).
Comment: Some commenters offered support for Alternative 1. The
commenters believed that this alternative has greater potential to
limit self-referral arrangements by requiring that a physician practice
should not be able to mark up anatomic pathology tests unless the
physician who performs and supervises the pathology services is
dedicated solely to that physician practice. Another commenter strongly
urged us to focus on this alternative to apply the anti-markup
provision to all TCs and PCs of diagnostic tests that are ordered by
the billing physician or other supplier unless the physician who
performs and supervises the pathology services is dedicated solely to
that physician practice or physician organization. According to the
commenter, this would protect legitimate multi-specialty group
practices that employ their pathologists on a full-time basis.
One commenter expressed support for not allowing a pathologist to
work for more than one group (pathology or subspecialty) in order to
maintain the quality and integrity of anatomic pathology. Other
remedies proposed by this commenter included disallowing any profit
made from anatomic pathology by the physician taking the biopsy, or
allowing ``upcharging'' only on tests that can be reported that same
day.
Response: We believe that it is not necessary to go so far as
requiring a physician not to work for more than one physician
organization, because requiring a physician to furnish ``substantially
all'' (at least 75 percent) of his or her professional services through
a billing physician or other supplier addresses our concerns regarding
overutilization and abusive billing and also allows physicians the
flexibility to work for other physician groups or health care entities
or to work as a locum tenens physician.
Comment: A commenter requested that, if Alternative 1 is finalized,
we clarify that a physician employee would be considered to be sharing
a practice with a physician or a physician group whether the physician
is hired directly or is a leased employee, whereas other commenters
stated that employment and contractual arrangements might not be enough
for determining whether a physician ``shares a practice'' as this could
be circumvented via shareholder, ownership, or joint partnership
arrangements.
A commenter asked that we consider including physicians who are
employed by affiliated (common ownership) organizations. This would
allow affiliated organizations to share physician resources and
expertise when interpreting tests via teleradiology. The commenter also
noted a concern that employers may not have knowledge of all
independent physician and supplier contracts and may not have
sufficient mechanisms to ensure sole employment. This commenter
requested clarification on how to manage independent physician and
supplier contracts to ensure that physicians are employed by only one
organization.
Response: As finalized, any physician (that is, regardless of
employment status or whether he or she is an owner of the billing
entity) who performs ``substantially all'' (at least 75 percent) of his
or her professional services for a billing physician or other supplier
will be deemed to share a practice with that billing physician or other
supplier.

[[Page 69807]]

d. Alternative 2 (``Site-of-Service'')
Comment: One commenter opposed our reproposal of the existing
``site-of-service'' approach for determining whether the physician
performing or supervising the TC or PC of a diagnostic test shares a
practice with the billing physician or other supplier, asserting that
it will do little to stifle the growth of self-referral in lab
arrangements. According to the commenter, this alternative focuses only
on where the test is performed and not by whom, and, thus, specialty
practices could profit from their referrals simply by bringing ``pod
labs'' in-house to the location where the group provides physician
services. The commenter advocated for the rule to require clearly a
greater connection and integration between the performing physician and
the practice before the practice can profit from lab tests ordered by
physicians in the group.
Response: We recognize the potential for arrangements that may be
troublesome to be restructured so that the diagnostic testing is
performed in the same building as where the testing is ordered;
however, we are also concerned that adopting Alternative 1 without
leaving in place the site-of-service approach of Sec. 414.50 (which we
reproposed as Alternative 2) may unnecessarily disrupt some
arrangements that do not appear problematic to us. We will continue to
monitor arrangements and may propose further changes if necessary.
Also, we continue to examine industry use of the in-office ancillary
services exception of the physician self-referral rules, and may
propose changes to that exception in a future rulemaking.
Comment: Some commenters did not believe that site-of-service
distinctions are relevant to determining the appropriate scope of
section 1842(n) of the Act. According to the commenters, it should not
matter if physicians are in a bona fide group practice that has one
building or ten, and, if ten, the particular geographic configuration
of the ten buildings should not matter. The commenters questioned the
legal or policy justification for applying different site-of-service
rules for purposes of the anti-markup provision than those that are
employed in the physician self-referral regulations. Of particular
concern for these commenters are distinctions that treat groups
differently from solo practitioners and that discriminate between
different types of groups. The commenter gave the example of a solo
practitioner with five offices with an x-ray machine in each: provided
that he or she regularly practiced in each office, he could order
diagnostic tests at all five locations, or from any one of them, and
the tests would be treated as ``furnished'' inside the practice rather
than ``purchased.'' According to the commenter, a group practice, on
the other hand, that has primary care physicians in one building and
specialists in another either has to have x-ray machines in both
buildings, to be used only by the physicians in each building, or do
diagnostic testing in only one building and treat the group practice
members in the other building as ``purchasing'' the tests. The
commenter also described its understanding of the proposed rule,
stating that, when diagnostic tests are provided in a centralized
building by a non-profit multi-specialty group, they would be
considered ``furnished,'' but the same tests provided by a physician-
owned group that is otherwise comparable in size and scope would be
considered ``purchased.'' The commenter questioned the relevance of
these distinctions related to quality, convenience, efficiency,
utilization, or potential abuse.
Response: Because the definition of ``centralized building'' at
Sec. 411.351 contains no requirements for minimum size, proximity to
the billing group's office, or staffing, and because our current policy
under the physician self-referral rules is to allow billing groups to
have more than one centralized building, we are concerned that the
potential exists for overutilization of diagnostic testing through
arrangements involving a billing group and physicians who have little
or no real connection to the billing group other than to serve as a
point of referral to generate profits for the billing group. We believe
that a site-of-service approach, employing the ``same building'' test,
is a reasonable means of determining whether a physician shares a
practice and has a sufficient nexus with the billing physician or other
supplier.
We reiterate that, in addition to section 1842(n) of the Act (and
our general rulemaking authority in sections 1102(a) and section
1871(a) of the Act to ``gapfill'' in order to effectuate fully the
Congress's intent in section 1842(n) of the Act to impose an anti-
markup provision on certain diagnostic tests), we have authority under
section 1842(b)(6) of the Act to prescribe limitations on the
reassignment of tests and test interpretations. However, in this final
rule with comment period, we have adopted an ``either/or'' approach to
the two proposed alternatives. That is, a billing physician or other
supplier can avoid application of the anti-markup provisions by meeting
either the ``substantially all'' professional services approach of
Alternative 1 or, on a case-by-case basis, the ``site-of-service''
approach of Alternative 2, which are set forth in revised Sec.
414.50(a)(2)(ii) and (iii). We believe that compliance with either one
of the two approaches finalized in this rule will further our goal of
reducing the potential for overutilization and other program or patient
abuse while providing sufficient flexibility for the industry.
Comment: One commenter contended that a ``one building'' ``site-of-
service'' standard is not a realistic means of ensuring proper billing
arrangements, as large single specialty practices often span beyond one
building. Another commenter remarked that the site-of-service
alternative should not be finalized because it would be problematic for
groups where specimens are collected at multiple sites but pathology
diagnostic testing services are done at a separate location owned or
leased by the group (the ``hub-and-spoke'' arrangement). Some
cardiologists also expressed concern that interpretations of EKGs and
other diagnostic testing services may be limited by the proposed site-
of-service approach. One commenter provided the example of a group that
has three offices but only one with a CT scanner. The commenter noted
that under the site-of-service approach, the anti-markup provision
would apply to tests ordered and supervised by physicians employed by
the group unless the physicians worked in the same office where the CT
scanner was located.
Response: We believe that allowing billing physicians and other
suppliers to comply with either the ``substantially all'' professional
services approach of Alternative 1 or the ``site-of-service'' approach
of Alternative 2 will address our concerns while providing sufficient
flexibility for the industry. In the situations described by the
commenters, if the performing physician furnished substantially all of
his or her professional services through the billing group, the anti-
markup payment limitation would not apply.
Comment: A commenter stated that the Alternative 2 site-of-service
approach is useful in deterring program abuse at locations other than
the office of the billing physician, and may benefit from being merged
with Alternative 1. However, the commenter asserted that we must
address the issue of the level of supervision that is required for the
TC of a pathology service. According to the commenter, it is unclear
what level of supervision of the TC must be furnished and where it must
be furnished, as CLIA does not govern the TC of a pathology service.
The

[[Page 69808]]

commenter suggested that we require that the TC be supervised by a
physician who meets, at a minimum, the general supervisor requirements
under CLIA, including the requirements for the subspecialties of
histopathology or dermatopathology, as necessary.
Another commenter expressed concerns about supervision
requirements, noting that ``the physician who supervised the TC'' is
not defined in the proposed rule or CLIA. The commenter suggested that
the supervising physician should meet the requirements for a laboratory
director under CLIA or use IDTF requirements. The commenter noted that,
in a separate proposal in the CY 2009 PFS proposed rule (73 FR 38533
through 38535), we proposed to require physicians performing testing in
their offices to enroll as IDTFs and meet the IDTF requirements. Among
the applicable requirements of that proposal are that the supervising
physicians have proficiency in the testing service being supervised and
meet the specific requirements established by medical specialty groups
or carriers.
Response: With respect to our proposal to revise the anti-markup
provisions in Sec. 414.50, we did not propose to impose special
standards or qualifications on the physician supervising the TC, and
decline to do so here. Section 410.32 establishes the level of
supervision (general, direct, or personal) for diagnostic tests
potentially subject to the anti-markup provisions (that is, services
covered under section 1861(s)(3) of the Act and paid under part 414 of
this chapter (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)).
Comment: A commenter requested that if we adopt the Alternative 2
approach, we clarify that block leases meeting the in-office ancillary
services exception ``same building'' test would not trigger the anti-
markup provision. Another commenter stated that it favored the
Alternative 2 ``site-of-service'' approach and that the anti-markup
provisions should apply to any shared facility in the ``same
building.''
Response: We are adopting, in part, the position favored by the
first commenter. Specifically, we are finalizing the Alternative 2
approach, which employs the definition of ``same building'' as defined
at Sec. 411.351 (as we proposed). However, we are not incorporating
each element of the same building ``location'' test from the in-office
ancillary services exception as set forth in Sec. 411.355(b)(2). A TC
that is performed (that is, both conducted by the technician and
supervised by the physician) in the ``office of the billing physician
or other supplier'' will not be subject to the anti-markup payment
limitation. Likewise, a PC that is performed in the ``office of the
billing physician or other supplier'' will not be subject to the anti-
markup payment limitation. Diagnostic testing services are performed or
interpreted in the ``office of the billing physician or other
supplier'' if they are performed or interpreted in the ``same
building'' (as defined in Sec. 411.351) as the space in which the
ordering physician or other ordering supplier regularly furnishes
patient care. In the CY 2008 PFS, we stated that various stakeholders
informed us that a physician organization, such as a multi-specialty
group, may not provide substantially its full range of services for a
certain specialty 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
situation, we proposed to focus on the medical office space where the
ordering physician provides substantially the full range of patient
care services that the ordering physician provides generally.
We are not adopting the approach suggested by the second commenter.
The fact that diagnostic testing services are performed or interpreted
in a space that is leased by two or more groups (but which is located
in the same building as the space in which the billing physician or
other supplier regularly furnishes patient care) does not cause the
testing to be subject to the anti-markup provisions. Example: Physician
A has an office located on the first floor of Medical Office Building.
In his office, Physician A performs the full range of services that he
provides generally (and thus the space meets the criteria for the
``office of the billing physician or other supplier'' under Sec.
414.50(a)(2)(iii). Physician A orders a diagnostic test, which is
conducted by a technician and supervised by Physician B in a diagnostic
testing facility located in the basement of Medical Office Building.
Physician B also performs the PC of the test in the diagnostic testing
facility. Physician B reassigns her right to bill for the TC and the PC
of the test to Physician A. The diagnostic testing facility is shared,
under block-time exclusive use leases, by Physicians A, C and D.
Neither the TC, nor the PC, is subject to the anti-markup payment
limitation, because the TC and the PC were performed in the ``office of
the billing physician or other supplier.'' We are permitting shared
space arrangements for diagnostic testing services that occur in the
``same building'' because we believe that such arrangements can promote
efficiency without raising the same concerns for overutilization or
other abuse as arrangements that involve centralized buildings for
diagnostic testing. We reiterate however, that we continue to have
concerns with the present use of the in-office ancillary services
exception and that we may issue a proposed rulemaking at a future date
to address those concerns.
Comment: One commenter supported the Alternative 2 ``site-of-
service'' approach as a reasonable approach to curbing potential
overutilization. One commenter characterized the ``site-of-service''
approach as more fair than the Alternative 1 approach, even though,
according to the commenter, Alternative 1 may control perceived
overutilization while respecting the rights of pathologists and
clinicians to practice medicine in the best manner possible. Another
commenter generally was supportive of both alternatives but favored the
Alternative 2 ``site-of-service'' approach because, in the commenter's
view, it would better protect against physicians who wish to profit
from their own referrals by preventing a multi-specialty physician
organization with several practice locations from benefiting from its
referrals to one central anatomic pathology laboratory. The commenter
acknowledged that these ``hub-and-spoke'' arrangements may offer the
advantage of patient convenience where diagnostic testing occurs
following an office visit with the patient present (for example, an x-
ray), but, in the context of anatomic pathology services, these
arrangements do not benefit the patient and may result in
overutilization and the provision of lower quality, less specialized
services.
Response: We received support for both alternatives regarding when
to apply the anti-markup provision to the TC and PC of diagnostic
tests. After reviewing all the comments, we have decided to finalize,
with some modification, both approaches. (As explained elsewhere in
this preamble, we have modified the Alternative 1 approach so that the
performing physician shares a practice with the billing physician or
other supplier if the performing physician furnished ``substantially
all'' (that is, at least 75 percent) of his or her professional
services through the billing physician or other supplier, and we have
modified

[[Page 69809]]

the Alternative 2 approach by clarifying that the performing physician
must be an employee or independent contractor of the billing physician
or other supplier (which has enabled us to delete the references to
purchased tests from an outside supplier.) Thus, billing physicians and
other suppliers may satisfy the Alternative 1 ``substantially all''
professional services approach or, on a case-by-case basis, the
Alternative 2 ``site-of-service'' approach in order to avoid
application of the anti-markup payment limitation. We believe that
complying with either approach will address our concerns regarding
potential overutilization and other abuse by establishing a sufficient
nexus with the billing entity.
e. Exception for Physician Organizations That Do Not Have Any Owners
Who Have the Right To Receive Profit Distributions
Comment: We proposed an exception to the requirement that
diagnostic testing be performed in the ``office of the billing
physician or other supplier'' in order to avoid application of the
anti-markup payment limitation. We proposed that (except for the
purchase of a TC from an outside supplier) the anti-markup provisions
would not apply 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. Some commenters supported adopting the
proposed exception. One commenter requested clarification regarding
whether the exception would apply only where the physician organization
does not have any owners who have the right to receive profit
distributions, or whether it would apply provided that the physician
organization does not have any physician owners who have the right to
receive profit distributions. In the commenter's view, if a physician
organization without physician owners is a non-profit entity with a
member that is another non-physician non-profit entity with typical
membership rights, the proposed exception still would apply to avoid
application of the anti-markup provisions. Another commenter stated
that an exception for diagnostic tests ordered by a physician in a
physician organization that does not have any physician owners with a
right to receive profit distributions is a bright-line approach and
consistent with program safeguards. Another commenter also asked that
physician practices with ``titular'' owners not be subject to the final
rule and that the definition be consistent with the definition of
``titular'' ownership in the FY 2009 IPPS Final Rule (73 FR 48434,
48693).
One commenter questioned whether there is evidence suggesting tax-
paying medical groups behave, or are likely to behave, in a manner
substantially different than tax exempt medical groups. The commenter
also stated that it was unaware of any instances where the Medicare
program differentiates policies based solely on institutional mode of
ownership, incorporation, or tax status, and questioned if we have
statutory authority to create such an exception based on type of
ownership.
Response: We have determined that it is not necessary to finalize
an exception for diagnostic tests ordered by a physician in a physician
organization that does not have any owners who have the right to
receive profit distributions. By finalizing both proposed alternative
approaches to avoiding application of the anti-markup payment
limitation we believe that our concern that the Alternative 2 approach
could hinder arrangements involving nonprofit multi-specialty groups
that have campus-based treatment facilities (and, thus, do not perform
diagnostic testing in the same building where patients are seen)
largely becomes moot, as most such arrangements should be able to be
structured (or are already structured) to meet the requirements of
either the Alternative 1 or Alternative 2 approach finalized here.
Similarly, there is no need to create an exception for titular owners.
f. Definition of the ``Office of the Billing Physician or Other
Supplier''
Comment: One commenter, generally supportive of our proposed
clarification of the definition of ``office of the billing physician or
other supplier'', questioned its application in Example 2 from the
proposed rule (73 FR 38547) which would allow two separate physician
organizations to share space used for diagnostic testing that is
located in the same building in which the physician organizations have
their respective offices. The commenter asserted that allowing two or
more providers to share a laboratory undermines the anti-markup payment
limitation, essentially enabling ``pod labs'' to regain their ability
to facilitate markups by the referring physician or physician
organization. The same commenter also requested clarification regarding
Example 3 in the proposed rule (73 FR 38547), in which 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.'' We noted
in this example that, under the proposed definition of the ``office of
the billing physician or other supplier,'' the anti-markup payment
limitation would not apply to diagnostic testing services provided in
Building B, but would apply to those services provided in Building C.
The commenter stated that it agreed with our conclusion, if the
ordering physician or supplier's services were provided in Building B.
According to the commenter, if the ordering physician provided his or
her services in Building A, the anti-markup provisions should apply.
Response: We do not agree with the commenter's assertion that our
revisions to Sec. 414.50(a)(2)(iv) undermine the anti-markup
provisions and enable ``pod labs'' to regain their ability to
facilitate markups. In particular, we refer the reader to the
definition of the ``office of the building physician or supplier'' at
Sec. 414.50(a)(2)(iv), which includes space in which diagnostic
testing services are performed, that is in the ``same building,'' (as
defined at Sec. 411.351), in which the ordering physician or ordering
supplier regularly furnishes patient care (and more specifically, for
physician organizations, in the same building in which the ordering
physician provides substantially the full range of patient care
services that the ordering physician provides generally). Many of the
potentially abusive pod lab arrangements that led to our extension of
the anti-markup provisions to the PC of diagnostic testing services
involved independent contractor pathologists who performed services in
off-site pathology labs. Those arrangements did not have the type of
nexus with the group practice required under Sec. 414.50(a)(2) (that
is, the pod labs were not within the same building in which the
ordering physician provided substantially the full range of patient
care services).
We do agree with the commenter's analysis of Example 3 given in the
proposed rule.
Comment: One commenter requested that, if adopted, the proposal for
Alternative 2 should include detailed examples that provide clear
definitions for several key terms, including ``office of the billing
physician or other supplier,'' ``conducting and supervising the TC,''
and ``full range of services.'' The commenter believes that, without
these definitions, our intent will be misconstrued and subject to
potential abuse.

[[Page 69810]]

Response: We do not provide a definition for ``conducting and
supervising the TC'' in the regulation text, as we believe that the
meaning of ``conducting'' is clear on its face; that is, the term
``conducting the TC'' refers to the technician's (or physician's)
performance of the test. Nor do we believe that it is necessary to
define the term ``supervising.'' For a service to be covered by
Medicare, the regulations at Sec. 410.32 define and specify various
levels of supervision (that is general, direct, or personal
supervision). The anti-markup provisions, when applied, limit the
amount a physician or other supplier may bill Medicare. In the context
of the applicability of the anti-markup provisions, we are requiring
that the physician supervising the TC be present in the same building
(as defined at Sec. 411.351); however, this has no impact on other
Medicare billing requirements, which may require a specific level of
supervision as described above. We decline to define the term ``full
range of services,'' because this would vary greatly based on factors
such as the specialty of the ordering physician, the types of services
within the physician's specialty, and the focus of services at the
specified practice.
Comment: According to one commenter, the ``office of the billing
physician or other supplier'' for multi-specialty groups should include
medical office space in which the physician group provides
substantially the full range of services of one or more of the
specialties of the group. The commenter contended that this requirement
would ensure an adequate nexus between the physician practice and the
testing being conducted in the building. The commenter asserted that
limiting the location to a building in which the ordering physician
provides substantially the full range of services that the ordering
physician typically provides imposes unnecessary restrictions that are
overly burdensome when compared to the purpose of the proposed rule.
Another commenter, in similar comments, urged us to consider replacing
``ordering physician'' with the words ``ordering physician or a member
of the ordering physician's group practice.'' According to the
commenter, this revision would permit any physician member of a group
practice to utilize the group's centralized designated health service
(``DHS'') facility (and bill under the normal physician fee schedule),
provided that the facility is located in the same building where the
group practice provides patient care services on a full-time basis. To
avoid the potential problem presented by a group practice with multiple
offices, none of which provide the full range of patient care services
provided by the group as a whole, the group proposed that we eliminate
the requirement that the group practice provide in the same building
``substantially the full range of patient care services that [it]
provides generally.'' The commenter suggested replacing this
requirement with a requirement that the group practice provide in the
same building ``physician services unrelated to the provision of DHS on
a full time basis.'' According to the commenter, this revision would be
consistent with the physician self-referral law and regulations, would
permit all physician members of a group practice to utilize the group's
centralized DHS facility (provided that the facility is located in the
same building where the group provides other physician services), and
would permit the group to bill for all DHS provided in such a facility
under the Medicare physician fee schedule.
Response: We believe that the changes recommended by the commenters
would not guard adequately against potential overutilization. In
addition, we believe that sufficient flexibility is afforded multi-
specialty groups and others by allowing arrangements to satisfy the
requirements of either the Alternative 1 or the Alternative 2 approach,
as revised.
Comment: One commenter expressed concern that the provision is more
complicated than necessary and, rather than a definition of ``office of
the billing physician or other supplier,'' a definition of an ``outside
entity'' is needed to determine which services would be affected by the
anti-markup provisions. The commenter suggested ``outside entity''
should be defined as an entity with a different identification number
(for example, tax identification number) than the billing entity. The
commenter asserted that our attempt to define ``office of the billing
physician or other supplier'' results in ``nonsensical situations'' in
which the anti-markup provisions do not apply if the diagnostic test is
done on a different floor of the same building but do apply if it is
done in a different building, even if the two buildings are closer
together than the two floors.
Several commenters argued that the ``same building'' test is
unworkable and contrary to longstanding CMS policy concerning testing
performed in a ``centralized building.'' According to the commenters,
the ``same building'' proposal assumes an old-fashioned health care
delivery system--that is, that all physician services are still
delivered in a single practice location. According to these commenters,
given market demands for services in multiple urban, suburban and rural
locations, the idea that diagnostic testing services should be provided
only in a building where ``substantially the full range'' of other
physician services also are provided is anachronistic. The commenters
opposed the implementation of the ``same building'' test as it relates
to the proposed anti-mark-up provisions due to the alleged economic
losses and decreased operating efficiencies that will result. The
commenters contended that the fact that the diagnostic equipment is
located in a separate building does not support an inference that the
diagnostic services are not an integral part of the practice, as our
proposal assumes.
Response: Under this final rule, the anti-markup provisions will
not apply to the TC or PC of a diagnostic test where the performing
physician shares a practice with the billing physician or other
supplier. With respect to a TC or PC of a diagnostic testing service,
the performing physician is considered to share a practice with the
billing physician or other supplier if: (1) He or she furnishes
substantially all (at least 75 percent) of his or her professional
services through the billing physician or other supplier; or (2) the TC
is conducted and supervised, or the PC is performed, in the office of
the billing physician or other supplier. We believe that, in the
situation where an arrangement would otherwise be subject to the anti-
markup payment limitation because the performing physician does not
furnish at least 75 percent of his or her professional services through
the billing physician or other supplier, services that satisfy the
site-of-service approach indicate a sufficient nexus between the
performing physician and the billing physician or other supplier. We
proposed clarifying that the ``office of the billing physician or other
supplier'' protects diagnostic testing that takes place in the ``same
building'' (as defined at Sec. 411.351) in which the ordering
physician sees patients because, following publication of the CY 2008
PFS final rule with comment period, stakeholders expressed concern that
arrangements in which the diagnostic testing takes place on one floor
of a building, but the billing physician or other supplier sees
patients on another floor, could be subject to the anti-markup
provisions. We agree with those stakeholders that it would be
unnecessarily disruptive to impose the anti-markup payment limitation
on

[[Page 69811]]

those types of arrangements, but we do not believe that it is
appropriate to go further and define ``office of the billing physician
or other supplier'' as including diagnostic testing space that is in a
separate building from where the ordering physician sees patients.
Specifically, we are unwilling to define ``office of the billing
physician or other supplier'' as including diagnostic testing space in
a ``centralized building'' due to the potential overbreadth of that
definition with respect to some arrangements. We also reject a square
footage test in lieu of using the ``same building'' definition because
the former may be more difficult to enforce and the latter is an
already-existing, well-defined concept.
Comment: Several commenters responded to our solicitation for
comments that would describe current business arrangements, such as
those that take place on a ``campus,'' and that would suggest any
additional or alternative criteria to permit such arrangements to avoid
application of the anti-markup provisions. We received a few comments
suggesting that we exempt arrangements taking place on a campus, and
suggesting criteria for how we would define ``campus.'' For example,
one commenter suggested that, to be considered ``on campus,'' the
diagnostic center/building/entity must be located within the main
building(s), or located in the physical area immediately proximate to
the provider's main building(s). Alternatively, the commenter
suggested, the diagnostic testing could be performed in other areas or
buildings that are not proximate to the main building(s) but which are
fully integrated (that is, financially integrated and administered in
concert with overall operations standards, guidelines, rules and
directives), with governance and operations functions determined by
central administrative processes and structures. Another commenter
encouraged us to consider the ``office of the billing physician or
other supplier'' to encompass all buildings on a campus or within a
multi-campus organization and the area of the entire legally-owned
organization, regardless of where the service is performed. Another
commenter noted that physician practices currently are required to list
each practice location with the Part B carrier, and asserted that,
because of this, there is adequate information for CMS (through the
carrier) to monitor the campus arrangement to assure that the
geographic layout of the physician practice is a bona fide campus.
Response: We believe that, at this time, providing a definition of
``campus'' that would be both workable for the industry yet address our
concerns of potential overutilization would be difficult and may add
unnecessary complexity to the final rule. We believe that the
commenters' concerns will be alleviated by allowing arrangements to
satisfy the requirements of either the Alternative 1 or the Alternative
2 approach, as revised.
Comment: A commenter questioned whether we intended ``ordering
physician'' to mean an individual physician or any physician in the
group. According to the commenter, in many specialty groups, a
particular ordering physician will work at only one location, but the
diagnostic services are provided at another location, where other
physicians in the same group and in the same specialty provide
substantial physician services. The commenter asserted that, if we mean
that, in order to avoid application of the anti-markup payment
limitation, a specific individual physician must provide the
substantial physician services in that particular location where the
diagnostic services are provided, the proposal would render
unprofitable many existing lawful arrangements for single-specialty
practices with multiple locations. The commenter further asserted that
our proposal would require physicians in multi-practice locations to
rearrange schedules so as to rotate through practice locations where
the diagnostic testing services are provided.
One commenter contended that the focus on where the ordering
physician regularly furnishes care will affect all physician groups
where all the physicians are not located in the same building and
diagnostic testing services are only offered in a few of the group's
locations. According to the commenter, the physician self-referral law
requires a group practice with multiple locations to function as one
group, and group practices have structured their arrangements to meet
existing governmental requirements and to serve patients. The commenter
asserted that changing these requirements may make it impossible for
some groups to continue to provide these services to Medicare
beneficiaries.
Response: We believe that the commenters' concerns that physician
practices with multiple locations will not be able to meet the ``site-
of-service'' approach are adequately addressed by allowing billing
physicians and other suppliers to comply with either the requirements
of Alternative 1 or Alternative 2.
Comment: A commenter requested that the definition of ``office of
billing physician or other supplier'' be modified to include a mobile
van that is used in the parking lot of a building in which the
physician group sees patients. Otherwise, the commenter argued, the use
of mobile MRI essentially will be barred. According to the commenter,
physician groups that use mobile MRI on an exclusive basis because of
the nature of their practices are not committing any abuse that we
should address in the anti-markup provisions. Another commenter noted
that alternative 2, as proposed, would not allow groups to operate
mobile diagnostic testing services performed in mobile vehicles, vans
or trailers because they are specifically excluded from the definition
of ``same building'' at Sec. 411.351.
Response: We are not modifying the definition of the ``office of
the billing physician or other supplier'' to include a mobile van that
is used in the parking lot of a building in which the physician group
sees patients. ``Same building,'' as defined at Sec. 411.351 of the
physician self-referral regulations, specifically excludes a mobile
vehicle, van, or trailer. Therefore, unless provided in a mobile unit
that qualifies as a ``centralized building'' (as defined at Sec.
411.351), diagnostic services provided in the parking lot of a building
in which a physician group sees patients already would be subject to
the physician self-referral restrictions and would not be protected
under the in-office ancillary services exception. In the January 4,
2001 Phase I final rule with comment period, we discussed our specific
reasons for declining to include within the definition of ``same
building'' a mobile van or other unit (66 FR 889 through 892). We are
concerned with the potential for confusion if we were to have one
definition of ``same building'' for physician self-referral purposes
and another, more expansive definition for purposes of applying the
anti-markup payment limitation. Moreover, we decline to expand the
definition of ``same building'' for purposes of applying the anti-
markup provisions given the potential we see for overutilization
through arrangements that take place outside the ``same building.''
Again, arrangements that do not satisfy the requirements of the
Alternative 2 ``site-of-service'' approach may fit under the
requirements of the Alternative 1 ``substantially all'' professional
services approach.
g. Services Performed at a Site Other Than the Office of the Billing
Physician or Other Supplier
Comment: A commenter offered strong support for the proposed

[[Page 69812]]

clarification that ``if the TC is conducted outside 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.'' The same commenter also
supported our proposal that the anti-markup payment limitation would
apply 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.'' Another commenter supported the proposed change that the
anti-markup payment limitation would apply if the TC is either
conducted or supervised outside the office of the billing physician or
other supplier in order to eliminate confusion among providers when
determining whether the TC is deemed to be provided by an outside
supplier for purposes of the anti-markup provisions. Another commenter
expressed concern that the TC will be considered to be performed
outside the office of the billing supplier if the physician is not in
the office when the test is being performed. According to the
commenter, this runs counter to long standing Medicare regulation and
policy regarding the supervision of diagnostic tests, as many of these
tests do not require physician presence during the performance of the
test. The commenter argued that changing this, requiring physicians to
be present, would only inflate healthcare costs.
A commenter recommended that TCs and PCs of non-purchased items
performed outside the office of the billing physician or other supplier
not be subject to the anti-markup provisions, noting that many
audiologists are self-employed and perform testing services for off-
site physicians. The commenter further asserted that audiology services
do not require physician supervision, and per CMS transmittal 84
(issued February 29, 2008 and effective April 1, 2008), these services
are to be billed by the provider of the service and benefits reassigned
to the employer. The commenter contended that there has been no
evidence of abuse with respect to billed audiology services, so no
change is warranted.
Response: We are adopting our proposal that, for purposes of
satisfying the requirements of Alternative 2 with respect to the TC,
the TC must be both conducted and supervised in the office of the
billing physician or other supplier. Although the requirement that the
supervising physician be present in the office of the billing physician
or other supplier may be more restrictive than some Medicare coverage
and payments regulations governing supervision of tests, we believe
that our amendment to Sec. 414.50(a)(2)(iii) is necessary in order to
minimize the potential for overutilization and program abuse. We do not
believe that healthcare costs would be inflated if physicians were
required to be present in the office of the billing physician or other
supplier. If the test was not conducted within the office of the
billing physician or other supplier, and/or the physician supervision
did not occur within the office of the billing physician or other
supplier, the service would still be payable by Medicare.
We recognize that where audiologist services are performed by an
audiologist, no physician supervision is necessary, and therefore the
anti-markup provisions do not apply (because Sec. 414.50 applies to
tests performed by a physician). We note further, however, that the TC
of some audiological tests can be conducted by a technician and
supervised by a physician, in which case, the anti-markup provisions
potentially are applicable to the TCs and PCs of such tests. Although
the commenter stated that there is no evidence of abuse with respect to
billed audiology services, we are not required to demonstrate that
fraud or abuse has occurred in order to finalize our proposals, but
rather we attempt to guard against the potential for overutilization or
patient abuse, and we strive to make distinctions between specific
types of diagnostic services only when there is a persuasive reason to
do so. We are unpersuaded to make such a distinction here. As noted
above at section II.N.2., and as discussed more fully below at section
II.N.2.h. in response to a comment, we are deleting references to
purchased TCs and PCs from Sec. 414.50.
Comment: Commenters expressed concern that the anti-markup
provisions would apply when cardiologists perform the PC of a
diagnostic testing service procedure in a hospital or other facility,
as is often the case for complex or high risk procedures, because the
test is conducted outside the office of the billing physician.
Commenters asserted that cardiology groups that provide outreach
services in rural areas and are the only providers of certain cardiac
subspecialty services in such areas are concerned that their provision
of hospital-based cardiac diagnostic tests to rural patients could
become financially impossible under the anti-markup provisions, thereby
reducing access to care for this already underserved population.
Response: We do not expect the anti-markup payment limitation would
apply in the situation described by the commenter, because, under
Alternative 1 as finalized in this final rule with comment period, the
performing cardiologist likely would share a practice with the
cardiology group billing for the PC (or would be billing for the PC
himself or herself). If the cardiologist reassigns payment to the
hospital which then bills for the PC, the anti-markup payment
limitation would not apply because the hospital did not order the PC.
h. Definition of Outside Supplier
Comment: We proposed that the TC of a diagnostic test is not
purchased from an outside supplier if the TC is both conducted and
supervised in 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. (For ease of reference, we
refer to this below as the ``primary proposed definition''.) In the
alternative, we proposed that: (1) 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; and (2) 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
considered 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. Several commenters offered support of the primary
proposed definition of outside supplier. One such commenter also
requested that the final rule make clear that, for anti-markup purposes
only, the performing supplier with respect to the TC would be the
physician who supervised the TC, even when the technician is not an
employee of the billing physician or other supplier.
One commenter supported the first alternative proposed definition
of outside supplier. This commenter suggested that the physician
organization should be permitted to mark up the TC only if the
technician is an employee and the supervising physician is on-site and
is also an employee of the billing physician or physician organization.
One commenter

[[Page 69813]]

supported adoption of the second alternative proposed definition. The
commenter expressed its view that this definition provides sufficient
flexibility to ensure that the anti-markup provisions will not be
applied unless there is an inadequate relationship between the
individual who performs or supervises the test and the billing entity.
Response: As explained above at II.N.2., we are deleting from Sec.
414.50 purchased tests and interpretations from an ``outside supplier''
as separate bases for imposing an anti-markup payment limitation. After
reviewing the comments, we have concluded that employing the concept of
a purchased TC or PC as a separate basis for imposing an anti-markup
payment limitation is unnecessary, redundant, and potentially confusing
in light of our decision to finalize Alternative 1 and to allow
arrangements that do not meet the requirements of Alternative 1 to
avoid application of the anti-markup provisions if they meet, on a
case-by-case basis, the requirements of Alternative 2. If we were to
adopt any of our proposals for the definition of ``outside supplier,''
it would mean we would effectively impose an anti-markup payment
limitation on some arrangements that meet the ``substantially all''
services requirement of Alternative 1. We believe that a physician who
performs ``substantially all'' of his services through a particular
billing physician or other supplier ``shares a practice'' not only
within the meaning of Alternative 1, but also within the meaning of
section 1842(n)(1) of the Act. Moreover, although we considered
adopting the second proposed alternative definition of ``outside
supplier'' so that a TC would 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 (regardless of the
employment status of the technician or where the technician conducts
the test), this too would be problematic in light of our decision to
adopt Alternative 1 but also allow arrangements that do not meet the
requirements of Alternative 1 to avoid application of the anti-markup
provisions by meeting, on a case-by-case basis, the site-of-service
criteria of Alternative 2. That is, with respect to arrangements that
do not meet the requirements of Alternative 1 and thus must meet the
site-of-service requirements of Alternative 2, adopting our second
alternative definition of ``outside supplier'' would have been
superfluous because, under Alternative 2, the TC must be both conducted
and supervised within the office of the billing physician or other
supplier. We retain the requirement, present in all of the proposed
definitions of ``outside supplier,'' that the physician must be an
employee or independent contractor of the billing physician or other
supplier by incorporating the requirement into the Alternative 2
criteria. Similarly, we believe that an anti-markup payment limitation
on purchased PCs is unnecessary with respect to diagnostic testing
services that meet the requirements of Alternative 2, because we are
adding the requirement to Alternative 2 that the physician performing
the PC is an employee or independent contractor of the billing
physician or other supplier. Thus, as finalized, we are deleting the
references in Sec. 414.50 to purchased tests and interpretations from
an outside supplier. As finalized, the anti-markup payment limitation
will apply to TCs and PCs that meet neither the requirements of
Alternative 1 nor Alternative 2, without regard to whether the TC or PC
was purchased from an outside supplier.
Comment: A commenter requested that we clarify our use of the term
``conducted or supervised'' because a physician may ``supervise'' an
imaging procedure, for instance, even though he or she is not
necessarily the physician who will be interpreting a test. According to
the commenter, Medicare's determination as to the level of supervision
required for a specific test supports this conclusion. The commenter
stated that a CT scan, for instance, when performed without contrast
requires only general supervision, whereas the same test performed with
contrast requires direct supervision. The commenter asserted that this
difference is due to the relative levels of medical risk to a patient
during a test, not the interpretation of results. The commenter
requested that we clarify that a ``supervising'' physician need not be
the physician responsible for interpreting test results or images.
Response: The commenter is correct that the supervising physician
need not be the physician responsible for interpreting test results or
images.
Comment: For purposes of the anti-markup payment limitation only,
we proposed to define the ``performing physician'' with respect to the
TC as the physician who supervised the TC and, with respect to the PC,
as the physician who performed the PC. One commenter supported this
proposal, but requested several clarifications. The commenter
understood the proposal to mean that the performing supplier of the TC
is the physician who supervised the TC rather than the technician who
actually conducted the test. The commenter inquired whether, if the
anti-markup provision were applied in this instance, the group could
recover only the fees it paid to the physician for the TC and not any
amounts paid directly to the histotechnologist who furnished the TC.
The commenter also requested clarification regarding application of the
rule where a group purchases the TC directly from an outside supplier
or histotechnologist, without any physician involvement.
Response: The commenter is correct in that the performing supplier
of the TC is the physician who supervised the TC. Where the anti-markup
payment limitation applies, the billing physician or other supplier may
bill for the lowest of the following amounts: (1) The performing
supplier's net charge to the billing physician or other supplier; (2)
the billing physician or other supplier's actual charge; or (3) the fee
schedule amount for the test that would be allowed if the performing
supplier billed directly. With respect to the commenter's question
regarding whether a TC purchased from a supplier ``without any
physician involvement,'' as noted in this section II.N.2.h., we have
deleted the references to purchased tests or interpretations from an
``outside supplier.'' The anti-markup payment limitation will apply if
a TC is supervised by a physician who does not, within the meaning of
Alternative 1, share a practice with the billing physician or other
supplier and the TC does not meet the site-of-service requirements of
Alternative 2 (that is, the TC was not conducted in the ``office of the
billing physician or other supplier'' or was not supervised in the
``office of the billing physician or other supplier'' by a physician
who is an owner, employee, or contractor of the billing physician or
other supplier). If the TC does not require physician supervision under
our rules, the anti-markup provisions are inapplicable.
i. Specific Solicitation of Comments
(1) Net Charge
Comment: We stated that we were interested in receiving comments
concerning the calculation of the ``net charge'' when the anti-markup
provisions apply (73 FR 38548). In response, many commenters expressed
concern that we did not propose to allow practices to which the anti-
markup provisions apply to recoup at least their direct practice costs
where the practice is limited to billing Medicare its ``net charge''
for the testing

[[Page 69814]]

service. One commenter asserted that if a group provides diagnostic
tests at a site other than the ``office of the billing physician or
other supplier,'' the calculation of a net charge is difficult and
punitive because a group practice cannot consider all of the actual
components of costs incurred, thereby compelling the group practice to
lose money. Another commenter argued that it is ``grossly unfair'' to
not allow physicians to recover any overhead costs. The commenter
further contended that, although we may be concerned about physicians
who may ``pad'' their charges with illegitimate amounts, this does not
justify penalizing providers who incur appropriate and often costly
overhead costs. According to the commenter, it would go against well-
established Medicare policy to not allow physicians to include
legitimate costs in calculating a net charge. Another commenter stated
that many suppliers would incur a loss, not just fail to profit, if
these ``confusing and hyper-technical rules'' are adopted. For example,
the commenter asserted, a billing physician would be prohibited from
billing for the costs incurred when a technician performs the TC of a
test because the physician group may bill only for the cost of the
physician who supervised the test. The commenter also stated that the
proposal effectively prohibits the payment for qualified technicians in
the performance of the TC of diagnostic tests, or, in the alternative,
requires that physicians who choose to provide their patients with such
tests do so at a loss.
One commenter explained that it is common practice for physician
groups to provide pathologists with office space, equipment,
administrative services, billing and collection services, and other
services and then bill for the PC itself. The commenter urged that net
charges should be defined to include these overhead costs rather than
just the amount the physician group pays the pathologist to perform the
PC. According to this commenter, it is critical that physicians be able
to recoup actual and readily allocable costs attributable to these
services. If they cannot, the commenter predicted, gastroenterology
groups will be forced to stop utilizing their labs for Medicare-
reimbursed services, and patient care will suffer.
Another commenter suggested that we allow a group practice to
include in the calculation of ``net charge'' actual additional
incremental costs incurred by the group which are directly allocable to
the provision of the service, for example, rental charges for a
facility used exclusively to provide diagnostic tests. If billing or
administrative staff are hired by the group solely to provide billing
services related to the provision of diagnostic tests, such costs
should appropriately be considered in calculating net charge. The
commenter contended that requiring that such costs be associated
exclusively with providing the diagnostic tests for which payment is
sought will ensure that only costs actually needed to provide the tests
are included in the calculation of net charge. The commenter further
asserted that this will permit groups to provide better diagnostic
health care services for their clients without losing substantial money
on every test performed.
A commenter stated that, without a proposed definition for ``net
charge,'' it did not understand how the anti-markup provisions could be
applied fairly and consistently to testing provided by physician
groups. The commenter stated that physician groups have standard fees
for diagnostic test components that they charge to patients and payers
and that, in order to determine an ``inside'' charge the group's usual
and customary external charges would have to be recognized. According
to the commenter, a fair net charge calculation would need to include
the cost of equipment, supplies, technical personnel, related benefits,
and allocated space, utilities, taxes and general overhead, which vary
between practitioners.
Another commenter stated that there should not be an allowance made
to recover overhead expenses, such as billing expenses, rental charges,
or equipment expenses, as these expenses will only help underwrite the
cost of the laboratory and will be contrary to the goal of reducing
overutilization. According to this commenter, the only costs that
should be included in the calculation of ``net charge'' are those
directly paid to the pathologist performing the PC or supervising the
TC and should be limited to the W-2 salary income of the pathologist,
not including any bonus.
Response: After considering the issue further, we decline at this
time to make any changes to what we allow to be included in the
calculation of ``net charge.'' As we stated in the preamble to the CY
2008 PFS final rule (72 FR 66319 through 66320), we are concerned that,
allowing billing physicians and other suppliers to recoup costs such as
overhead in situations in which the anti-markup provisions apply, would
undermine a purpose of the anti-markup payment limitation because the
incentive to overutilize (to recover capital outlays and other costs)
would still be present. Therefore, where the billing physician or other
supplier pays the performing supplier a fixed fee for the TC or the PC,
the ``net charge'' is the fixed fee (exclusive of any charge that is
intended to reflect the cost of equipment or space leased to the
performing supplier by or through the billing physician or other
supplier, per Sec. 414.50(a)(2)(i)). Where a fixed fee is not paid,
the billing physician or other supplier is limited to the salary and
benefits it paid to the performing supplier for the TC or PC. As we
indicated in the CY 2008 PFS final rule, it is the responsibility of
the billing entity to ascertain the amount it paid for the TC or PC.
The billing entity should maintain contemporaneous documentation of the
methodology and information used to calculate the net charge, and may
do so in any reasonable manner (72 FR 66318).
(2) Direct Billing
Comment: In the CY 2009 PFS proposed rule, we solicited comments on
whether, in addition to or in lieu of the anti-markup provisions, we
should prohibit reassignment in certain situations and require the
physician supervising the TC or performing the PC to bill Medicare
directly (73 FR 38548). One commenter opposed any requirement that a
physician performing either the TC or the PC of diagnostic tests
directly bill for such services. The commenter stated that the Congress
enacted the anti-markup provisions in section 1842(n) of the Act rather
than adopt the already established direct billing requirement for
clinical laboratory services. The commenter argued that we should not
second-guess the Congress' decision and choose to eliminate the system
of assignment and reassignment that is currently in place. Another
commenter agreed with the first commenter and stated that reassignment
is beneficial to both physicians and patients because physicians gain
flexibility to establish the most appropriate employment or contractual
relationships for their lives and lifestyles and patients benefit by
having medical services combined on one bill, which avoids confusion
and additional paperwork. A commenter opposed to direct billing stated
that, with respect to the situation in which multiple suppliers are
engaged in the treatment of a patient, a prohibition on reassignment
would force suppliers to bill Medicare directly only for the services
provided directly by each supplier, resulting in a doubling of the
claims that are submitted, with an increase in billing expenses. The
commenter asserted that this prohibition would also be a concern for

[[Page 69815]]

locum tenens physicians who are, by agency definition, independent
contractors. According to the commenter, it does not have the
infrastructure to submit and collect payments from Medicare, and thus
its contracts are based on the ability to reassign its Medicare claims
to the physician or practice it is supporting.
Some commenters were in favor of direct billing, stating that
itemized billing encourages transparency relative to the amounts paid
for the TC and PC of tests ordered by the billing physician or group.
The commenters stated that an itemized bill would identify the PC and
TC providers, the services provided, and associated charges as separate
line items on a single Medicare claim form. The commenters further
asserted that we would be able to reconcile TC and PC components
without an increase in billing expenses to either the providers or
Medicare. One commenter expressed its view that the most
straightforward way to address potential overutilization caused by
physicians being able to profit by billing for diagnostic services
performed by others would be to implement a direct billing requirement.
The commenter suggested that this would be a simple, understandable,
bright-line rule that could be effectively implemented and monitored.
Another commenter supported the establishment of direct billing for
anatomic and clinical pathology services for all payers, public and
private, so that payment should be made only to the person or entity
that performed or supervised the service, except for referrals between
laboratories independent of a physician's office. According to this
commenter, this policy would be consistent with ethics principles that
discourage fee-splitting.
Response: We appreciate the 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. The issues raised and the
suggestions made by the commenters will be taken into consideration for
purposes of future rulemaking. As we noted above in section II.N.2.a.,
we agree that it would be simpler to adopt the approach, as suggested
by one commenter, that we not allow any reassignment of diagnostic
testing services and, instead, require direct billing. However, without
studying that approach further, we have concerns that doing so may
unnecessarily prevent nonabusive arrangements.
(3) Effective Date
Comment: In the CY 2009 PFS proposed rule, we solicited comments on
whether revisions made by the CY 2008 PFS final rule with comment
period (but which were delayed until January 1, 2009 through a final
rule published on January 3, 2008 (73 FR 404)) should go into effect on
January 1, 2009, and whether any proposals from the CY 2009 PFS
proposed rule that we may finalize should go into effect on that date,
or whether some or all of the revisions should be delayed past January
1, 2009. One commenter urged us to implement the anti-markup provisions
without delay, as we have been studying this issue since 2004. The
commenter asserted that sufficient time has passed for consideration of
comments on the issue. The commenter also expressed its view that the
anti-markup payment limitation will not affect access to critical
patient services, only the ability of ordering providers to profit from
their referrals.
One commenter suggested an effective date of July 1, 2009, to
provide sufficient time to restructure affected relationships. Another
commenter, opposed to the anti-markup proposals, suggested that, if we
revise the provisions currently in effect, the new provisions should
not be effective until December 31, 2010 at the earliest. The commenter
asserted that such a delay would ensure providers a reasonable amount
of time to restructure their service and billing arrangements for
consistency with the new provisions.
Another commenter asserted that the delayed portions of last year's
rule should not go into effect on January 1, 2009, and that neither of
the alternative approaches discussed in this year's proposal should be
finalized. The commenter stated that we achieved our goal of regulating
so-called ``pod labs,'' and asserted that extending similar rules based
on site-of-service beyond the pathology laboratory context risks
disruption to a wide variety of diagnostic testing services that are
genuinely ``inside'' group practices. Commenters claimed that these
proposals have made it virtually impossible for physician practices or
suppliers potentially subject to these rules to plan for compliance or
alternative arrangements by January 1, 2009. One commenter requested
that, if we do proceed with the extension of the anti-markup provision,
the effective date of the rule be delayed until regulatory language can
be proposed for each of the alternatives under consideration and there
has been additional time to understand the impact of each proposal.
A commenter recommended that we delay beyond January 1, 2009, the
application of any further revisions until we can fully evaluate the
effect of such revisions on physician groups and work with the medical
community to simplify and streamline the anti-markup provisions, so
that their application is clear to all involved. One commenter
requested that we consider delaying the proposals until further
evaluation is completed on the impact of recent changes affecting
physicians such as MIPPA, DRA, ``Bottom-Up Methodology'' and the
proposed IDFT requirements. Another commenter recommended that
implementation should be delayed and that we should use the process set
forth by the Congress in MIPPA to establish accreditation requirements
for medical imaging to assess the appropriate use of imaging services
and to examine the perceived overutilization of in-office imaging. A
commenter recommended that we defer to the Congress regarding concerns
of overutilization of diagnostic testing services. According to the
commenter, the directives in MIPPA, released after the current proposed
rule, are much clearer on this issue. The commenter noted that the
Congress did not amend the anti-markup provision, choosing instead to
direct the agency to develop a demonstration project to determine the
appropriateness of advanced diagnostic imaging services furnished to
Medicare beneficiaries and require accreditation of advanced diagnostic
imaging suppliers by 2012.
Response: We do not agree with the commenters that suggested a
delayed effective date beyond January 1, 2009 for either the revisions
made by the CY 2008 PFS final rule with comment period or the revisions
that we are making in this CY 2009 PFS final rule with comment period.
We have decided to make the finalized revisions effective as of January
1, 2009. When we delayed, until January 1, 2009, the application of the
revisions to Sec. 414.50 we made in the CY 2008 PFS final rule with
comment period (except with respect to certain diagnostic testing
arrangements involving anatomic pathology performed in a ``centralized
building'' for which the revisions were applicable January 1, 2008), we
stated that we planned to issue clarifying guidance as to what
constitutes the ``office of the billing physician or other supplier''
within the following 12 months (73 FR 405). We proposed the
clarification and other revisions in the CY 2009 PFS proposed rule in
order to introduce the possible changes under consideration.

[[Page 69816]]

The revisions being finalized in this regulation stem from that
proposal and we believe that sufficient time has been given for
consideration of and response to the anti-markup revisions.
Irrespective of whether ``pod lab'' arrangements otherwise would
continue to exist or proliferate, we believe that the anti-markup
provisions are needed in order to address potential program and patient
abuse through the ordering of unnecessary diagnostic tests. Although
several commenters made mention of MIPPA and the impact that it may
have, we are not swayed by these arguments. MIPPA is a separate
authority with a different focus than that of the anti-markup
provisions. If, in the future, the anti-markup provisions are impacted
through our implementation of MIPPA, we will address this in subsequent
rulemaking.
j. Miscellaneous
Comment: One commenter, a professional association of pathologists,
suggested an exception from the anti-markup provisions for single-
specialty pathology physician groups and independent laboratories. The
commenter suggested that such entities be defined as those in which all
physicians within the group are pathologists and for which 75 percent
of all CPT codes billed by the entity are pathology and laboratory CPT
codes. According to the commenter, such an exception would ``clarify''
that dedicated pathology groups and independent laboratories are not
subject to the anti-markup provisions for certain purchased diagnostic
tests and interpretations or the ordering of special stains to perform
better the tests ordered by outside, independent physicians. The
commenter asserted that its proposed exception would be consistent with
the physician self-referral's exclusion from the definition of
``referral'' for services ordered by pathologists (and radiologists and
radiation oncologists) pursuant to a consultation with another
physician. According to the commenter, the exclusion from the
definition of ``referral'' reflects the Congress's recognition that
services ordered by such physicians pursuant to a consultation with
another physician do not pose the same risk of abuse that physician
self-referral generally poses. The commenter also suggested an
alternative to its proposed exception, for independent laboratories for
which at least 75 percent of the diagnostic tests have been ordered by
physicians outside the laboratory. A second commenter representing
pathologists also suggested an exception for pathology practices (which
it would define as any entity for which at least 75 percent of all CPT
codes billed by the entity are pathology and laboratory codes). The
commenter also cited the exclusion from the definition of ``referral''
in the physician self-referral rules for services ordered by
pathologists pursuant to a consultation, and asserted that there should
not be a self-referral or mark-up concern when pathology groups order
special stains or other tests. A third commenter stated that the
``rapid rise'' in special stains in the last eight years is not a
result of in-office pathology services or TC/PC arrangements, but
rather is a result of the failure of national, regional, and hospital-
based pathology laboratories to follow standard protocol for tissue
biopsies. The commenter contended that over-utilization of anatomic
pathology testing can be managed by imposing tighter controls on such
laboratory-based pathologists with respect to what stains they order
and the reasons for ordering them.
Response: We are not establishing an exception that would be
applicable to pathology practices or independent laboratories, to the
anti-markup provisions. We note that we did not propose such an
exception and, thus, question whether we would have the authority to
provide for such an exception in this final rule. Moreover, we are not
convinced of the need for or wisdom of such an exception. We believe
that the same potential that exists for the overutilization of
diagnostic tests ordered by single-specialty physician groups and other
suppliers, due to the profit motive, also exists for the ordering of
special stains or other tests by pathology groups or independent
laboratories.
Comment: An association that represents physician group practices
suggested that we establish a multi-specialty medical group ``carve
out'' for ``merit,'' that is, an exemption from the anti-markup
provisions based on delivery of high-quality health care services in
the multi-specialty/organized system of care model. According to the
commenter, the potential and risk for inappropriate actions is
outweighed by the attributes and meritorious actions of multi-specialty
groups. The commenter noted that, in section 131 of MIPPA, the Congress
recognized the coordinated approach to patient care that multi-
specialty medical groups provide.
A different commenter requested that multi-specialty group
practices not be permitted to use the employment or independent
contractor arrangements to bring pathology services in-house and then
claim that a referral is exempt from the physician self-referral
prohibition because it meets the requirements of the in-office
ancillary services exception or some other exception. The commenter
stated that pathology is a separate physician specialty and the
provision of these services is not ancillary to the provision of
urology or gastroenterology. According to the commenter, pathology
services provided in-office do not serve the patient's convenience or
increase access to these services as they are too time consuming and
complex to perform, as the patient has always left the doctor's office
by the time the pathology examination is complete and the report
issued. The commenter argued that not allowing pathology services to be
protected by the in-office ancillary services exception would be
consistent with the physician self-referral law and would eliminate the
incentive for overutilization that currently exists.
Response: For the same reasons expressed in the response to the
previous comment, we are not establishing an exception to the anti-
markup payment limitation, for multi-specialty groups. We also note
that because we have adopted the first proposed alternative with
modification, whereby the anti-markup provisions will not apply to TCs
and PCs supervised or performed by a physician who performs
``substantially all'' of his or her professional services for the
billing physician or other supplier, ``hub and spoke'' arrangements of
multi-specialty groups should not have significant difficulty avoiding
application of the anti-markup provisions. We understand the
commenter's concerns about the use of the in-office ancillary services
exception and may propose rulemaking on this issue in the future.
Comment: A commenter stated that dermatologic surgeons who order
and read their own diagnostic tests should not be penalized for doing
so by the addition of new and overly cumbersome regulations that the
commenter argued are inconsistent with the existing physician self-
referral law. According to the commenter, a dermatopathologist has the
expertise to diagnose and monitor diseases of the skin, which entails
the examination and interpretation of specially prepared tissue
sections, cellular scrapings, and smears of skin lesions by means of
routine and special (electron and fluorescent) microscopes. The
commenter was also concerned that patient access to care in rural and
underserved areas will be affected. The commenter urged that practices
that

[[Page 69817]]

order and interpret their own diagnostic tests in these areas should
have the same ability to recoup the costs of equipment, space, and
medical records management for services performed within their
practices as those practices that utilize an outside supplier for the
TCs or PCs of their tests.
Response: We are unclear as to what the commenter is suggesting. We
did not propose to, and this final rule does not, impose tighter
billing restrictions on TCs and PCs ordered by dermatologic surgeons
than for other specialties, and does not impose tighter billing
restrictions for dermatologic surgeons who perform TCs and PCs than it
does for those physician practices that purchase TCs and PCs from an
outside supplier. We note that the commenter did not provide an
explanation of why patient access to care in rural or underserved areas
would be affected by our proposed revisions.
Comment: A letter writing campaign expressed concern regarding the
proposals to the anti-markup provisions, contending that it would limit
the ability of allergists to provide services on a part-time basis with
more than one group and, in particular, would limit access to allergy
care (including allergy diagnostic tests), to Medicare beneficiaries in
rural or underserved areas. The commenters urged that our proposals not
be implemented.
Response: We have adopted the first proposed alternative with
modification, whereby the anti-markup provisions will not apply to TCs
and PCs supervised or performed by a physician who performs
``substantially all'' (at least 75 percent) of his or her professional
services for the billing physician or other supplier, which provides
some flexibility for the performing physician to work for more than one
billing physician or other supplier. Moreover, this final rule provides
additional flexibility by allowing arrangements that do not come within
the protection of the ``substantially all'' test to avoid the
application of the anti-markup payment limitation by complying on a
case-by-case basis with the existing site-of-service approach (as
clarified by this final rule with comment period). We believe that this
addresses the commenters' concerns.

O1. Physician Quality Reporting Initiative (PQRI)

a. Program Background and Statutory Authority
i. Division B of the Tax Relief and Health Care Act of 2006--Medicare
Improvements and Extension Act of 2006 (MIEA-TRHCA) and the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (MMSEA): Requirements for the
PQRI Program Prior to Enactment of the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA)
Section 101(b) of the MIEA-TRHCA (Pub. L. 109-432) 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 1848(k)(1) of the Act 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.
The MMSEA required 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 and 2009.
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 National Quality Forum (NQF) or the
AQA (formerly the Ambulatory Care Quality Alliance), 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 (e-prescribing) technology. The
Secretary must publish the final set of measures in the Federal
Register no later than November 15, 2008, as required by section
1848(k)(2)(B)(iii) of the Act, as amended by the MMSEA.
Although section 101(c) of the MIEA-TRHCA, as amended by the MMSEA,
authorized the Secretary to make incentive payments for satisfactorily
reporting quality measures data on covered professional services
furnished by eligible professionals during the reporting period for
2007 and 2008, neither MIEA-TRHCA nor MMSEA authorized an incentive
payment for PQRI for 2009. Also unlike the 2007 or 2008 PQRI, neither
the MIEA-TRHCA nor the MMSEA defined a specific reporting period for
the 2009 PQRI.
ii. Extension of and Enhancements to the PQRI Program Authorized by the
MIPPA
The MIPPA, which was enacted after the publication of the CY 2009
PFS proposed rule, included a number of provisions that impact the 2009
PQRI. Prior to enactment of the MIPPA, the MIEA-TRHCA, as amended by
the MMSEA, was the authorizing legislation for PQRI. The MIPPA codifies
the PQRI under sections 1848(k)(2) and 1848(m) of the Act. First, the
MIPPA makes the PQRI a permanent program and authorizes us to make
incentive payments for satisfactorily reporting data on quality
measures for covered professional services furnished by eligible
professionals during the 2009 PQRI reporting period equal to 2.0
percent of the estimated total allowed charges for all covered
professional services furnished during the reporting period that are
submitted no later than 2 months after the end of the reporting period.
In addition, the reporting period for the 2009 PQRI is defined as the
entire year, or January 1, 2009 through December 31, 2009. Therefore,
for the 2009 PQRI, eligible professionals who satisfactorily report
data on quality measures for covered professional services furnished
between January 1, 2009 through December 31, 2009 will receive an
incentive payment equal to 2.0 percent of the total estimated allowed
charges submitted by no later than February 28, 2010 for all covered
professional services furnished between January 1, 2009 and December
31, 2009.

[[Page 69818]]

Beginning with the 2009 PQRI, the MIPPA also amended the definition
of ``eligible professional'' to include qualified audiologists (as
defined in section 1861(11)(3)(B) of the Act). Thus, for purposes of
the 2009 PQRI, eligible professionals include physicians, other
practitioners as described in section 1842(b)(18)(C) of the Act,
physical and occupational therapists, qualified speech-language
pathologists, and qualified audiologists.
In addition, section 1848(k)(2)(D) of the Act, as added by the
MIPPA, requires that for each 2009 PQRI quality measure, ``the
Secretary shall ensure that eligible professionals have the opportunity
to provide input during the development, endorsement, or selection of
measures applicable to services they furnish.''
Section 1848(m)(3)(A) of the Act, as amended and redesignated by
the MIPPA, also requires that for years after 2008, the PQRI quality
measures shall not include e-prescribing quality measures. Even with
the removal of the e-prescribing measure, we continue to meet the
requirements under section 1848(k)(2)(B)(ii) of the Act to include the
use of structural measures.
Section 131(b)(6) of the MIPPA also specifies that none of the
amendments to the Social Security Act resulting from the MIPPA will
impact the operation of the PQRI for 2007 or 2008. Additional
information regarding the MIPPA provisions can be found in section III
of this final rule with comment period.
iii. General Program Comments and Responses
In the CY 2009 PFS proposed rule (73 FR 38558 through 38559), we
provided a longer summary of the history of the PQRI and a more
detailed discussion of the pertinent MIEA-TRHCA and MMSEA requirements
than is provided above in this section. We proposed to define the 2009
PQRI reporting period to be the entire CY 2009, but also proposed
alternative reporting periods and alternative criteria for
satisfactorily reporting quality measures data for measures groups and
registry-based reporting as required by the MMSEA (73 FR 38559 through
38564). The CY 2009 PFS proposed rule (73 FR 38564 through 38565) also
included proposed reporting options and reporting periods for
satisfactorily reporting quality measures data extracted from EHRs.
To satisfy section 1848(k)(2)(B) of the Act, as amended by the
MMSEA, we published 175 proposed 2009 PQRI quality measures in the CY
2009 PFS proposed rule (73 FR 38565 through 38572). We also proposed 9
measures groups for the 2009 PQRI on which eligible professionals may
report (73 FR 38572 through 38574) and described potential uses of the
PQRI information (73 FR 38574 through 38575).
In the CY 2009 PFS proposed rule (73 FR 38558 through 38575), we
solicited comments on the following areas:
Implications of including or excluding any given measure
from the set of proposed 2009 quality measures.
The new measures groups proposed for 2009 including
suggestions for other measures groups based on individual measures
included in the proposed 2009 PQRI measure 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 measure set
given that there is no specific authorization for an incentive payment
for the 2009 PQRI and beyond.
Various issues that we identified in the proposed rule to
help us determine the most appropriate uses of PQRI data.
We received 161 comments from the public on the CY 2009 PFS
proposed rule related to the PQRI. In this section of the final rule
with comment period, we first summarize the comments about the PQRI
program in general and our responses to those comments immediately
below. The remaining comments received and our responses to those
comments are discussed under the relevant topic areas of this section
of the final rule with comment period.
Comment: Several comments commended CMS and the PQRI program for
providing more flexibility and were generally supportive of the program
including the proposed addition of measures in the 2009 PQRI and the
continued development and implementation of a variety of reporting
periods and reporting methodologies.
Response: We appreciate the commenters' positive feedback.
Comment: Several commenters suggested that we conduct an
independent, formal evaluation of the PQRI program's processes and to
analyze and validate the data that has been gathered to date. One of
the major reasons cited for needing an evaluation component was the
fact that a relatively small percentage of those eligible professionals
who participated in the 2007 PQRI actually received an incentive
payment. Other common reasons cited include to assess the range of
specialties reporting information to ensure that most eligible
professionals have the opportunity to participate, to better understand
why some eligible professionals did not participate, and to fully
understand how improvements affect participation rates prior to
expansion of the PQRI.
Response: We are continuing to evaluate the results of the 2007
PQRI and will evaluate the results of the 2008 PQRI as they become
available as we develop and implement strategies for enhancing the PQRI
in the future.
Comment: A number of commenters also offered to assist us in
improving physician quality measure design and to help us better
understand the barriers to and the stimuli for participating by
requesting to review the data files used for calculating the 2007 and/
or 2008 incentive payments.
Response: Information about individuals that is retrieved by the
individuals' names or other personal identifiers is subject to the
Privacy Act of 1974 (that is, the Privacy Act), Freedom of Information
Act and other Federal government rules and regulations. As such, the
information cannot be released without the individual's written
consent, unless the Privacy Act permits release. See 5 U.S.C. 552a(b).
We employ strict security measures to appropriately safeguard
individual privacy and seek to ensure that files containing physician
and/or beneficiary identifiers are used only when necessary and in
accordance with disclosure provisions of the Privacy Act. The Privacy
Act, as well as the notice that is published in the Federal Register
for each CMS System of Records (SOR), provide the permitted disclosures
of individually identifiable information and explain the procedures
that need to be followed to safeguard the information. The notices that
describe each CMS SOR can be found on the CMS Web site at http://www.cms.hhs.gov/PrivacyActSystemofRecords/SR/list.asp#TopOfPage.
All research requests for individually identifiable data must be
submitted to the Research Data Assistance Center (ResDAC) for initial
review. More information on the policies and procedures for data
requests for data that are protected by the Privacy Act can be found on
the CMS Web site at http://www.cms.hhs.gov/

[[Page 69819]]

PrivProtectedData/01--Overview.aspTopOfPage.
Comment: Many commenters recommended we redesign the PQRI section
of the CMS Web site, including suggestions to provide an updated
listing of measures under formal consideration by the various measure
developers, as well as to provide more detailed information about the
PQRI measures.
Response: We concur with commenters' suggestions to redesign the
PQRI section of the CMS Web site. We are currently working to make the
Web site more user-friendly and will consider the commenters'
suggestions.
Comment: A few commenters suggested we establish a multi-
stakeholder advisory council or that we actively engage more
stakeholders, such as consumers and hospitals. Active engagement of
stakeholders could be used for a variety of purposes, such as to help
understand why some eligible professionals may not have participated;
to engage and obtain feedback and observations from those who will be
measured as well as those who successfully participated; to ensure that
the PQRI measures provide clinically-significant information while
being structured in the least administratively-burdensome manner
possible; or to advise us as we proceed with making information derived
from the PQRI publicly available.
Response: We plan to continue our dialogue with the stakeholder
community and will consider their and PQRI participants' input as we
continue to evaluate the results from the PQRI and to develop and
implement strategies for enhancing the PQRI in the future.
Comment: One commenter recommended different incentives that we
could employ to increase participation, such as reducing eligible
professionals' costs for collecting Medicare payments.
Response: We are bound by statute with respect to the types of
incentives that we can provide to eligible professionals, how those
incentives are calculated, and the amount of the incentive. The only
incentives we are authorized to provide eligible professionals are an
incentive for eligible professionals who satisfactorily report quality
measures data through the PQRI as discussed below and the new incentive
that we are implementing in 2009 for eligible professionals who are
successful electronic prescribers as discussed in section II.O2. below.
Comment: Other specific suggestions for improving the PQRI provided
by commenters include renaming the PQRI the ``Provider'' or
``Practitioner'' Quality Reporting Initiative to acknowledge potential
participation of all types of Medicare providers; separating the
quality reporting from the billing process by removing the requirement
that ``G'' codes are reported on the same claim as the denominator
service; developing guidelines on which measures are appropriate for
reporting by different medical specialties; designing reporting options
in a manner that would allow smaller providers to more easily
participate; considering assigning all measures to clinical area
groups; providing an appeal process for eligible professionals who
participate but are not deemed to be successful; and ensuring greater
transparency in all aspects of the program including, but not limited
to, in the measure selection process, in the provision of feedback, and
in the implementation of the pertinent MIPPA provisions.
Response: We appreciate and value the constructive feedback that we
have received from the wide variety of commenters who have provided
insights and information and partnered with us to disseminate
information about PQRI. As reflected in the variety of reporting
options that we are making available for the 2009 PQRI and the
expansion of measures groups, it is our desire to allow as many
eligible professionals to participate with as little additional burden
as possible. To the extent that we find it practical, feasible, and
appropriate to implement the commenters' suggestions, we would do so
via notice and comment rulemaking for future years' PQRI.
With respect to the commenters' suggestion to provide an appeals
process for eligible professionals who participate but are not deemed
to be successful, we note that section 1848(m)(5)(e) of the Act, as
amended by MIPPA, provides that with respect to the PQRI there shall be
no administrative or judicial review under sections 1869 or 1879 of the
Act, or otherwise of (1) the determination of measures applicable to
services furnished by eligible professionals; (2) the determination of
satisfactory reporting; and (3) the determination of any incentive
payment. Therefore, we have no authority to establish an appeals
process for the subject of eligible professionals ``not deemed to be
successful'' which we read to fall within the determination of
satisfactory reporting.
Comment: We received numerous comments providing general
recommendations for enhancing the Medicare program, such as suggestions
to transition the PQRI from a pay-for-reporting program to a pay-for-
performance program as quickly as possible; addressing problems of
underuse, overuse, and misuse of services; assuring that all Americans
receive the right care by reducing health care disparities and
encouraging that quality care be provided to at-risk populations;
encouraging care coordination and support for the integration and
delivery of services across providers and across care settings; and
providing payment that supports the re-engineering of care, such as
providing payment for e-visits and efficiency-enhancing forms of
telemedicine. One commenter expressed a desire to see the development
of a quality reporting mechanism similar to the PQRI that is applicable
to a pediatric population and Medicaid.
Response: While we appreciate these suggestions for enhancing the
Medicare and Medicaid programs mentioned, we note that those programs
are beyond the scope of this section of the final rule with comment
period. This section of the final rule with comment period is limited
to the 2009 PQRI.
Comment: Many commenters also commented on the MIPPA provisions
that were not directly related to the PQRI. For example, we received
many comments related to the plan for transitioning to a value-based
purchasing program for physicians' services that we are required to
submit to the Congress by May 1, 2010 under the MIPPA.
Response: While we appreciate the commenters' input for
implementing the MIPPA provisions, we note that MIPPA provisions that
are not directly related to the PQRI program are beyond the scope of
this section of the final rule with comment period. This section of the
final rule with comment period is limited to the 2009 PQRI.
Comment: Several commenters expressed confusion about participation
requirements and recommended that we implement an aggressive education
and outreach campaign on how to successfully participate, to help
eligible professionals who did not receive a bonus understand why, and
that provides participating eligible professionals with confidential
interim and final feedback and compliance reports.
Response: We agree that with increased flexibility comes more
potential for confusion about participation requirements. Section
1848(k)(6) of the Act requires the Secretary to provide for education
and outreach to eligible professionals on the operation of the PQRI.
To minimize any potential confusion, we have hosted monthly
national

[[Page 69820]]

provider calls on the PQRI in which our PQRI subject matter experts are
available to answer questions on the PQRI. We have also provided
guidance on specific topics on these calls, such as accessing the 2007
PQRI feedback reports, how the 2007 incentive payments were calculated,
and the various 2008 reporting options.
In addition to the national provider calls, we have worked with
various medical specialty societies, such as the American Academy of
Family Physicians, the American College of Physicians, American Academy
of Ophthalmology, American Optometric Association, and the American
Gastroenterological Association Institute to host Special Open Door
Forums to educate their membership on the PQRI. We anticipate
continuing these education and outreach activities as we implement the
2009 PQRI.
Information about these CMS-sponsored calls, including information
about upcoming calls, can be found on the PQRI section of the CMS Web
site at http://www.cms.hhs.gov/PQRI. The Web site itself also serves as
a useful resource for obtaining the most up to date information on the
PQRI. For example, the PQRI Tool Kit found on the PQRI section of the
CMS Web site at http://www.cms.hhs.gov/PQRI/31_PQRIToolKit.asp#TopOfPage contains valuable resources to help eligible
professionals in the successful integration of PQRI into their
practices. We encourage eligible professionals to visit this Web site
and to review the frequently asked questions found on this Web site.
Comment: Many commenters stated they were pleased the Congress
extended PQRI and authorized a 2.0 percent incentive payment for 2009,
but others noted that the incentive payment was not enough to outweigh
the burden of participating or noted concern about the number of
``quality and efficiency'' measures imposed on physicians without
evidence of improved health outcomes, health status, and reduced system
costs. One commenter recommended that we base the incentive payment on
RVUs rather than the amount billed to Medicare.
Response: We do not have the authority to change the basis for
calculation of the incentive payment. Section 1848(m)(1) of the Act, as
redesignated and amended by the MIPPA, authorizes us to make incentive
payments for satisfactorily reporting data on quality measures for
covered professional services furnished by eligible professionals
during the 2009 PQRI reporting period equal to 2.0 percent of the
estimated total allowed charges for all covered professional services
furnished during the reporting period that are submitted no later than
2 months after the end of the reporting period. However, we are
committed to exploring and supporting practical, effective mechanisms
for quality-of-care data submission that promote efficiency by
streamlining participants' and our data collection and handling. As
such, and as described below in this section of the final rule with
comment period, we have developed and are implementing options for
registry-based submission of quality measures data and plan to
implement options for EHR-based submission of quality measures data
after some additional testing.
In addition, we have increased the number of measures groups and
individual PQRI quality measures available for the 2009 PQRI in an
effort to expand opportunities for eligible professionals to
participate in PQRI.
Comment: We received many comments urging us to ensure that all
eligible professionals have meaningful opportunities to participate in
the PQRI. Some commenters were specifically concerned that funding for
the Quality Insights of Pennsylvania (QIP) project to develop
nonphysician quality measures has ended and hoped that CMS will
continue to extend funding in the future for the development and
implementation of quality measures for nonphysicians as well as to move
measures already developed by the QIP through the NQF endorsement and/
or AQA approval process.
Several commenters were also concerned that therapists who work in
certain outpatient settings (for example, acute care hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities,
or rehabilitation agencies) are unable to participate in PQRI since
they do not use the 1500 or 837-P claim form and instead submit claims
on the UB-04 or 837-I form where there is no place to report the
individual National Provider Identifier (NPI) of the eligible
professional furnishing the service. The commenters recommended
registry-based alternatives for PQRI participation.
A few commenters noted that pathologists who bill via independent
laboratories are also not able to participate in the PQRI because we
are not yet able to capture this billing situation.
Response: We agree with the goal of providing as many eligible
professionals the opportunity to participate in the PQRI as is
practical and feasible. As we stated in the CY 2009 PFS proposed rule
(73 FR 36566), one of the considerations we employed in the selection
of measures for the 2009 PQRI is to select measures that increase the
scope of applicability of measures to services furnished to Medicare
beneficiaries and expand opportunities for eligible professionals to
participate in PQRI. We seek to increase the circumstances where
eligible professionals have at least three measures applicable to their
practice.
For the 2008 PQRI, we supported, via contract with QIP, the
development of structural measures and measures applicable to a broad
cross-section of PQRI eligible professionals, including some NPPs who
had few or no measures available in the 2007 PQRI. We prioritized
development of these measures available or otherwise in development and
on a need to address as broad a cross-section of eligible professions
or specialties as possible within the limited volume of measures for
which we could support development in time for inclusion in the 2008
PQRI. As the contracted measure developer, QIP was responsible for
supporting the measures through the AQA adoption process. CMS funded a
project with the NQF which reviewed the measures for endorsement.
We plan to continue working to fill gaps in available consensus
endorsed or adopted measures consistent with available time and
resources. However, we largely depend on and encourage the development
of measures by professional organizations and other measure developers.
Ideally, in the future, there will be a sufficient number of clinician-
level quality measures that meet the statutory requirements that CMS
would be able to just select PQRI measures from these existing measures
rather than needing to fund the development of additional clinician-
level quality measures.
Regarding the concerns cited by therapists unable to participate in
PQRI since they do not use the 1500 or 837-P claim form, we note as we
did in the CY 2008 PFS final rule with comment period (73 FR 66337)
that our analysis of claims-based alternatives to enable participation
determined that extensive modifications to the claims processing
systems of CMS and providers would be required. Such modifications
would represent a material administrative burden to us and providers
and/or modifications to the industry standard claims formats, which
would require substantial time to effect via established processes and
structures that we do not maintain or control.
Our analysis of the two registry-based alternatives suggested by
the commenters indicate that it would be possible for therapists in
this situation

[[Page 69821]]

to participate in a registry because there are registries ``qualified''
to participate in our 2008 PQRI program that intended to report all of
the PQRI measures and that are open to all eligible professionals who
would like to participate with them. However, it would not be possible
to calculate an incentive payment for the therapists' participation
since our claims processing systems do not allow us to attribute
services furnished by therapists who bill through fiscal intermediaries
to an individual eligible professional to calculate the incentive
amount. As required by section 1848(1)(A)(ii) of the Act, as
redesignated and added by the MIPPA, the 2009 PQRI incentive must be
calculated based on each eligible professional's allowed charges for
covered professional services that are based on or paid under the
Medicare PFS. Although we are in the process of evaluating the impact
of making the changes to the fiscal intermediary claims processing
systems needed to be able to accept the PQRI quality data codes and
attribute them to an eligible professional, it is unknown at this time
whether these changes can be made without undue burden to our systems
or what the timeline for potential implementation would be.
Regarding the concern that pathologists who bill through
independent laboratories are unable to participate in the PQRI, we note
that only eligible professionals as defined in section 1848(k)(3)(B) of
the Act are eligible to participate in PQRI. As discussed in section
II.O1.a.ii. above, ``eligible professional'' is defined to include
physicians, other practitioners as described in section 1842(b)(18)(C)
of the Act, physical and occupational therapists, qualified speech-
language pathologists, and qualified audiologists for the purposes of
the 2009 PQRI. As noted in the comment, independent laboratories are
suppliers and are therefore not eligible to participate in PQRI.
Pathologists who bill directly to Medicare, however, are eligible to
participate in PQRI.
Comment: Several commenters noted the mechanism for viewing the
feedback reports was too cumbersome and were concerned about the lack
of timely feedback (both in terms of when the feedback reports are
received and when incentive payments are received). Several commenters
requested that more detailed information be provided in the feedback
reports so that eligible professionals can reconcile CMS' data with
their own claims information to ensure that codes were submitted
accurately, captured by the Medicare Administrative Contractor (MAC),
transferred to the PQRI data system, and result in meaningful data that
corresponds to the eligible professional's own experience.
Response: Although, as discussed in sections II.SG.6. and III. of
this final rule with comment period, section 1848(n) of the Act, as
added by the MIPPA, requires the Secretary to establish a Physician
Feedback Program to provide confidential reports to physicians (and, if
determined appropriate by the Secretary, groups of physicians) that
measure the resources involved in furnishing care to Medicare Part B
patients, we are not statutorily required to provide participants with
feedback reports on the quality measures data submitted for the PQRI
and are not committing to provide feedback reports for claims-based
submission of quality measures data for the 2009 PQRI. For registry-
based reporting in 2009, we would rely on the participating registries
to provide feedback to participating eligible professionals.
We do, however, understand the value of receiving meaningful
feedback reports and, to the extent that we continue to provide PQRI
participants with feedback reports for claims-based submission of
quality measures data for the 2009 PQRI, we will consider such concerns
as part of our ongoing dialogue with stakeholders in order to
collaboratively identify ways to enhance the program's value to its
participants and to the Medicare program. We note though that
information on all aspects of care billed to Medicare, including
quality data codes, is found on the remittance advice that eligible
professionals receive. We urge PQRI participants to review the
information received on the remittance advice along with their own
records (such as their own claims information) to ensure that PQRI
quality information is being accurately submitted and captured on
claims. We also note that 2007 was the first broad scale implementation
of quality data submission through the claims process. We are aware
that practice management systems have the capability to analyze
information received on the remittance advice. We anticipate that
practice management systems may be adapted in the future for analysis
of quality data code submission, as well. Such systems could provide
contemporaneous feedback and analysis for physicians.
With respect to the timeframe when incentive payments are received,
it is unlikely that we will be able to issue incentive payments for
participation in PQRI for a particular year much sooner than the middle
of the following year because of the way in which the incentive
payments are calculated. The incentive payments are calculated based on
the total estimated allowed charges for the reporting period. As
required by section 1848(m)(1)(A)(ii) of the Act, as redesignated and
added by the MIPPA, we must wait until 2 months after the end of the
reporting period to allow eligible professionals to submit claims for
covered professional services furnished during the reporting period.
Comment: The MIPPA requires that by January 1, 2010, the Secretary
shall establish and have in place a process under which eligible
professionals in a group practice shall be treated as satisfactorily
submitting data on quality measures for the PQRI. A few commenters
welcomed this option and offered to assist CMS in defining ``group
practice.'' Another commenter noted that it would be more cost-
effective for multi-specialty group practices to participate under this
new option.
Response: We welcome the commenters' interest in our plans for
implementing future enhancements to the PQRI based on the MIPPA.
However, we note that the scope of this section of the final rule is
limited to the 2009 PQRI. Our plans for future years' PQRI, including
our plans for implementing the MIPPA provisions that affect future
program years, will be discussed in future notice and comment
rulemaking. Thus, commenters can expect to see a discussion of our
plans for implementing the physician group practice option for the 2010
PQRI in the CY 2010 PFS proposed rule next year.
b. Satisfactory Reporting Criteria and Reporting Periods--Reporting
Options in the 2009 PQRI
In the CY 2009 PFS proposed rule (73 FR 38559), we proposed to
define the reporting period for the 2009 PQRI as the entire year
(January 1, 2009-December 31, 2009) and proposed two alternative
reporting periods for reporting measures groups and for registry-based
reporting: (1) January 1, 2009 through December 31, 2009; and (2) July
1, 2009 through December 31, 2009.
As discussed in section III. of this final rule with comment
period, the MIPPA defines the reporting period for the 2009 PQRI to be
the entire year. Therefore, for the 2009 PQRI the reporting period will
be January 1, 2009 through December 31, 2009. We are retaining the two
alternative reporting periods, which were unaffected by MIPPA, for
reporting measures groups and registry-based reporting (that is,
January 1, 2009 through December 31, 2009 and July 1, 2009 through
December 31, 2009) as proposed. These reporting periods result in
several reporting

[[Page 69822]]

options available to eligible professionals that vary by the reporting
mechanism selected. The reporting mechanisms and criteria for
satisfactorily reporting quality measures data for the 2009 PQRI are
described in the following section.
i. Claims-Based Submission of Data for Reporting Individual Measures
Under section 1848(m)(3) of the Act, as redesignated and added by
the MIPPA, the criteria for satisfactorily submitting data on
individual quality measures through claims-based submission 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, the
professional may meet the criteria by reporting on all applicable
measures (that is, one to two measures) for at least 80 percent of the
cases where the measures are reportable. It is assumed that if an
eligible professional submits quality data codes for a particular
measure, the measure applies to the eligible professional. These
criteria were proposed for the January 1, 2009 through December 31,
2009 reporting period.
We received a few comments on the proposed reporting period and
criteria for satisfactorily submitting quality data through claims for
reporting individual measures, as discussed below.
Comment: A few commenters encouraged CMS to establish alternative
reporting periods for claims-based submission of individual quality
measures. One commenter specifically requested us to extend the
alternative reporting period of July 1, 2009 through December 31, 2009
to eligible professionals participating in PQRI through claims-based
reporting of individual quality measures. The commenter stated that
measures groups and/or registries are not always an option for eligible
professionals.
Response: We appreciate the commenter's suggestions, which are
intended to enhance the claims-based reporting of individual measures
by providing greater flexibility. However, as discussed above and in
section III. of this final rule with comment period, the MIPPA defines
the reporting period for the 2009 PQRI to be the entire year and, as
discussed in section II.O1.a.i. above, the MMSEA authorizes the
Secretary to establish alternative reporting periods for registry-based
reporting and for reporting on measures groups only. We note, however,
that for years after 2009, the MIPPA authorizes the Secretary to revise
the reporting period for claims-based submission of quality measures
data if it is determined that such revision is appropriate, produces
valid results on measures reported, and is consistent with the goals of
maximizing scientific validity and reducing administrative burden.
Additionally, there are registries currently participating in the
2008 PQRI that report or are able to report all of the PQRI quality
measures. Alternative reporting periods are available for registry-
based submission of quality measures data, which enables all eligible
professionals who wish to participate in PQRI to do so through a
registry. For the 2008 PQRI, there are 32 registries ``qualified'' to
submit quality measure results and numerator and denominator data on
quality measures on behalf of eligible professionals.
Based on our review of this comment, we are retaining the reporting
option for claims-based submission of data on individual quality
measures as summarized in Table 11. That is an eligible professional
can meet 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 11--Final 2009 PQRI Claims-Based Reporting Options for Individual
Measures
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
Claims-based reporting........ At least 3 PQRI January 1, 2009-
measures, or 1-2 December 31,
measures if less than 2009.
3 apply to the
eligible
professional, for 80
percent of applicable
Medicare Part B FFS
patients of each
eligible professional.
------------------------------------------------------------------------

ii. Satisfactory Reporting of Data on Quality Measures and Reporting
Periods for Measures Groups, Through Claims-Based Reporting and
Registry-Based Reporting
As described in the CY 2009 PFS proposed rule, section 101(c)(5)(F)
of the MIEA-TRHCA, as added by the MMSEA and redesignated by the MIPPA
as section 1848(m)(5)(F) of the Act, requires that the Secretary
establish alternative reporting periods and alternative criteria for
satisfactorily reporting groups of measures. In establishing these
alternatives, we have 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.
For the 2009 PQRI, we proposed to expand the available measures
groups to a total of nine measures groups. We proposed to carry forward
three of the four 2008 measures groups for the 2009 PQRI: (1) Diabetes
Mellitus; (2) Chronic Kidney Disease (CKD); and (3) Preventive Care. In
addition, we proposed to add six new measures groups for the 2009 PQRI:
(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);
(5) Perioperative Care; and
(6) Back Pain.
We proposed to allow measures groups to be reported through claims-
based or registry-based submission for the 2009 PQRI.
We proposed that the form and manner of quality data submission for
2009 measures groups would 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.
The final 2009 PQRI measures groups and the measures selected for
inclusion in each of the 2009 measures groups are listed in section
II.O1.d.v. of this final rule with comment period.
We proposed (73 FR 38561) establishing three options for
satisfactorily reporting measures groups using claims-based reporting
and three options for satisfactorily reporting measures groups using
registry-based

[[Page 69823]]

submission for the 2009 PQRI. We proposed two basic criteria for
satisfactory reporting of measures groups for both claims-based
submission and registry-based submission. For claims-based reporting,
the two criteria were: (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 were:
(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).
We proposed that the 30 consecutive patients reporting criteria
apply only to the entire year (January 1, 2009 through December 31,
2009) reporting period, but would apply to both claims-based submission
and registry-based submission mechanisms.
We proposed that the alternative criteria for measures groups based
on reporting on 80 percent of patients for which one measures group
would 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 period (with a minimum of 15
patients). These alternative criteria would also be applicable for
either claims-based or registry-based reporting of measures groups.
In the CY 2009 PFS proposed rule (73 FR 38561), we requested
comments on the 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 minimum sample under these criteria during the full-
year 2009 reporting period.
We received numerous comments on the proposed alternative reporting
periods and alternative criteria for satisfactory reporting of data on
measures groups, including the proposed use of the consecutive patient
reporting criteria and proposed use of 30 consecutive patients. These
comments are summarized and addressed below.
Comment: Some commenters suggested that we establish general rules
governing measures groups reporting involving multiple providers from
separate entities.
Response: To qualify for the PQRI incentive, each individual
professional must separately qualify, based on the criteria for
reporting measures groups and the services rendered by the individual
professional. The reporting by other professionals and the
establishment of rules relating to the reporting of multiple providers
from separate entities is not germane to satisfactory reporting at the
individual level. Each individual professional must qualify based on
that individual's satisfactory reporting. No later than December 31,
2008, we will post the detailed specifications and specific
instructions for reporting measures groups at http://www.cms.hhs.gov/
pqri. This document is intended to promote an understanding of how to
implement and facilitate satisfactory reporting of quality measures
results and numerator and denominator data by individual eligible
professionals who wish to participate in PQRI via measures group
reporting.
Comment: Many commenters strongly supported the continued use of
measures groups, the expansion of measures groups, registry-based
submissions of measures groups, and alternative reporting periods for
measures groups.
Response: We are pleased that many commenters are supportive of the
measures groups concept, the expansion of measures groups, registry-
based submissions for measures groups, and alternative reporting
periods. These options provide for program efficiency, flexibility and
opportunities for physicians and other eligible professionals to more
broadly demonstrate their clinical performance for particular services
and provide a better basis for comparison among professionals. We plan
to continue a dialogue with stakeholders to discuss opportunities for
program efficiency and flexibility.
Comment: Many commenters were in support of the 30 consecutive
patient reporting option for the full year 2009 reporting period. One
commenter noted that a sample consisting of consecutive patients would
result in a nonrandom sample of patients. Another commenter requested
clarification on which 30 patients should be included in the
consecutive patient sample.
Response: We are pleased that many commenters found the 30
consecutive patient reporting option to be useful and were supportive
of this option. We agree that a sample of 30 consecutive patients would
be a nonrandom sample, but it is our intention to allow physicians and
other eligible professionals greater flexibility and opportunities to
participate in PQRI. In addition, requiring consecutive patients would
prevent eligible professionals from being able to selectively report
cases to enhance their performance rates.
While we do not have the results of the 2008 PQRI reporting, we
believe that a minimum sample size of 30 consecutive patients is
sufficient to calculate comparable performance rates across eligible
professionals furnishing comparable services. Patient sample sizes of
30 are commonly considered to be a reasonable minimum threshold for
being able to reliably report health care performance measurement
results. Results from our Better Quality Information for Medicare
Beneficiaries (BQI) pilot project indicate that minimum patient sample
sizes of between 30 through 50 patients per physician are needed to
make reliable distinctions between physicians' performance. (Delmarva
Foundation for Medical Care. Enhancing Physician Quality Performance
Measurement and Reporting Through Data Aggregation: The BQI Project.
October 2008.) We expect additional experience with PQRI reporting to
clarify optimal sample sizes and reporting criteria for use in future
reporting periods. We will continually evaluate our policies on
sampling and notify the public through future notice and comment
rulemaking if we make substantive changes. As we evaluate our policies,
we plan to continue a dialogue with stakeholders to discuss
opportunities for program efficiency and flexibility.
As described in Table 12, for claims-based reporting of measures
groups, eligible professionals wishing to report data on measures
groups using the consecutive patient criteria should include only
Medicare Part B FFS patients in the consecutive patient sample. For
registry-based reporting of measures groups, eligible professionals
wishing to report data on measures groups using the consecutive patient
criteria may include some non-Medicare FFS patients. However, there
must be more than one Medicare Part B FFS patient included in this
patient sample as well.
Comment: We received a large volume of comments in support of
discontinuing the 15 consecutive patients for a 6-month reporting
period

[[Page 69824]]

(that is, July 1 through December 31). We also received a few comments
suggesting we continue the option of allowing eligible professionals to
report data on 15 consecutive patients for a 6-month reporting period.
Response: Unlike in the 2008 PQRI, we will not include a reporting
option for 15 consecutive patients for a 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.
Comment: We received comments recommending that, regardless of the
reporting mechanism selected, the criteria for satisfactorily reporting
data on measures groups and individual quality measures be expanded to
include the reporting data on measures groups and/or individual quality
measures for 100 percent of patients for whom the measures group and/or
individual quality measures are applicable. One commenter thought that
we should specifically require eligible professionals who report via
registries to report on 100 percent of their eligible patients. Another
commenter suggested that for the option to report on 80 percent of
patients for registry-based reporting of measures groups we accept
quality measures results and numerator and denominator data on quality
measures on all patients, regardless of payer, rather than quality
measures results and numerator and denominator data on quality measures
on Medicare Part B FFS beneficiaries only. The commenter, however,
opposed requiring a minimum number of Medicare FFS patients be included
in the data submitted from the registry. Another commenter thought that
registry reporting and claims-based reporting requirements should be
the same.
Response: While we would encourage eligible professionals to report
data on measures groups and/or individual quality measures for all
patients who qualify for a measure they are reporting and eligible
professionals are not precluded from reporting data on measures groups
and/or individual quality measures for 100 percent of their eligible
patients, satisfactory reporting was established by the MIEA-TRHCA to
include reporting in at least 80 percent of the cases for which the
respective measure is reportable. Analysis of the 80 percent reporting
threshold has indicated it to be a sufficiently large sample size to be
representative of an eligible professional's patient population. That
is, 80 percent is a sufficiently large reporting rate that the
performance rates calculated from the 80 percent sample are
substantially the same as the performance rates calculated from 100
percent of applicable cases. Although a 100 percent sample of cases for
which individual quality measure or measures groups are applicable
would eliminate any sampling error, requiring 100 percent reporting of
applicable cases would cause eligible professionals to be ineligible
for an incentive payment based on a failure to report data on a single
missed case that falls into the quality measure's denominator.
Additionally, the 80 percent reporting criteria for individual
quality measures is statutorily required through 2009 for individual
quality measures reported through claims. While the Secretary is
authorized to establish a different reporting threshold for measures
groups and registry-based reporting, we believe that it is necessary
and desirable to maintain consistency and to achieve a balance amongst
the reporting options in order to promote a successful program.
With respect to requiring a minimum number of Medicare Part B FFS
patients in the sample for registry-based reporting options for
reporting on measures groups for at least 80 percent of applicable
cases, our primary interest is in improving the quality of care
Medicare beneficiaries receive. If we do not specify a minimum number
of Medicare Part B FFS on which eligible professionals should report,
it is feasible that an eligible professional could meet the 80 percent
threshold by treating just one or two beneficiaries. Thus, for those
eligible professionals who treat few Medicare beneficiaries, the sample
size would be too small to do any meaningful analysis of the eligible
professional's performance on that particular measure even though the
sample consists of 80 percent of the eligible professional's Medicare
beneficiaries to whom the measure applies.
Comment: One commenter suggested that registries ``facilitate
quality measures reporting for measures groups reporting regardless of
the relationship of the reporting provider to the registry.'' The
commenter suggested that we further clarify that in order to become
qualified to submit quality measures results and numerator and
denominator data on quality measures to the PQRI on behalf of eligible
professionals, a registry must assure a mechanism by which multiple
providers who collectively report the individual measures comprising a
measures group can do so and that there are no barriers to the
reporting of such information by any provider regardless of the
provider's relationship to the registry.
Response: Registries provide an alternative to claims-based
reporting. Regardless of the reporting mechanism (that is, claims or
registries), there is no provision for reporting by multiple
professionals under the PQRI since each individual eligible
professional must separately meet the criteria for satisfactory
reporting of PQRI quality measures. Registries have no responsibility
to establish a relationship with any particular professional. An
eligible professional who does not have a relationship with a qualified
registry has the option of submitting data on measures groups through
claims or establishing a relationship with a qualified registry unless
he or she wishes to report the CABG surgery measures group. The
measures in the CABG surgery measures group are reportable only through
a registry.
Comment: One commenter thought we should allow satisfactory
reporting of measures groups via registries to count for 2 years of
PQRI reporting.
Response: Our statutory authority authorizes an annual PQRI
program. For each year, there are established specific reporting
periods and reporting criteria. The incentive payment for PQRI must be
for covered professional services furnished during a given reporting
period. We do not have the authority to allow satisfactory reporting of
measures groups via registries for a 1-year reporting period to count
as satisfactory reporting for another year or reporting period.
Based on the comments received, we are finalizing the six options
proposed for satisfactorily reporting on measures groups as described
in Table 12. The details of the requirements for registries are
contained in section II.O1.b.iii.

[[Page 69825]]

Table 12--Final 2009 PQRI Reporting Options for Measures Groups
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
Claims-based reporting........ One Measures Group for January 1, 2009-
30 Consecutive December 31,
Medicare Part B FFS 2009.
Patients.
Claims-based reporting........ One Measures Group for January 1, 2009-
80 percent of December 31,
applicable Medicare 2009.
Part B FFS patients
of each eligible
professional (with a
minimum of 30
patients during the
reporting period).
Claims-based reporting........ One Measures Group for July 1, 2009-
80 percent of December 31,
applicable Medicare 2009.
Part B FFS patients
of each eligible
professional (with a
minimum of 15
patients during the
reporting period).
Registry-based reporting...... One Measures Group for January 1, 2009-
30 Consecutive December 31,
Patients. Patients 2009.
may include, but may
not be exclusively,
non-Medicare patients.
Registry-based reporting...... One Measures Group for January 1, 2009-
80% of applicable December 31,
Medicare Part B FFS 2009.
patients of each
eligible professional
(with a minimum of 30
patients during the
reporting period).
Registry-based reporting...... One Measures Group for July 1, 2009-
80% of applicable December 31,
Medicare Part B FFS 2009.
patients of each
eligible professional
(with a minimum of 15
patients during the
reporting period).
------------------------------------------------------------------------

While claims are submitted to CMS on Medicare patients only (for
claims-based reporting), the 30 consecutive patients option 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.
iii. Registry-Based Submission for Reporting Individual Measures
As discussed in the CY 2009 PFS proposed rule (73 FR 38562),
section 101(c)(5)(F) of the MIEA-TRHCA, as added by MMSEA and
redesignated by the MIPPA as section 1848(m)(5)(F) of the Act, requires
us to establish alternative criteria for satisfactorily reporting PQRI
quality measures data through medical registries. For 2009, we proposed
that eligible professionals would be able to report 2009 PQRI quality
measures results and numerator and denominator data on quality measures
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 (73 FR
38562). Similar to the 2008 PQRI, we proposed (73 FR 38562) that the
data to be submitted for the 2009 PQRI would include the reporting and
performance rates on PQRI measures or PQRI measures groups, as well as
the numerators and denominators for the reporting rates and performance
rates.
For the 2009 PQRI, we proposed (73 FR 38562) 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 proposed to accept
quality measures results and numerator and denominator data on quality
measures from registries that qualify as data submission vendors. We
proposed that these criteria would be available for each of the two
alternative reporting periods.
We also proposed (73 FR 38563) to require registries to complete a
self-nomination process based on meeting specific technical and other
requirements to submit on behalf of eligible professionals pursuing
incentive payment for reporting clinical quality information on
services furnished during 2009 for reporting both on individual
measures and measures groups. We proposed that this self-nomination
would be required regardless of whether or not the registry
participated in any way in PQRI in 2008 (73 FR 38563).
In the CY 2008 PFS proposed rule (73 FR 38564), we requested
comments on the proposed options for registry-based PQRI reporting of
data on measures and measures groups for services furnished in 2009. We
received several comments on the proposed options for registry-based
PQRI reporting of data on measures and measures groups for services
furnished in 2009. Comments related to the proposed options for
registry-based PQRI reporting of data on measures groups were
summarized and addressed above in section II.O1.b.ii of this final rule
with comment period. A summary of the comments received related to our
proposed use of registries and the proposed options for registry-based
PQRI reporting of data on individual quality measures and our responses
to those comments are discussed below.
Comment: We received numerous comments in support of continuing to
allow registries to report quality measures results and numerator and
denominator data on quality measures to CMS on behalf of eligible
professionals who submit quality data to them. Some commenters thought
permitting registry reporting would allow us to better track patient
outcomes by looking at results over a period of time rather than only
track processes of care and that registry reporting is less burdensome.
Additionally, one commenter suggested we allow those registries that
were ``qualified'' to report to PQRI in 2008 be ``qualified'' to report
to PQRI in 2009.
Response: For the 2009 PQRI, we are finalizing our proposal to
accept quality measures results and numerator and denominator data on
quality measures from registries as described in the

[[Page 69826]]

proposed rule (73 FR 38562 through 38564). The specifications and
qualifications for registries to participate in the 2009 PQRI will be
listed on the PQRI section of the CMS Web site at http://
www.cms.hhs.gov/pqri under the reporting tab, by November 15, 2008.
Based on the commenter's suggestion that registries that were
``qualified'' to report to PQRI in 2008 be ``qualified'' to report to
PQRI in 2009, registries that were ``qualified'' for 2008 will not need
to be ``re-qualified'' for 2009 unless they are unsuccessful at
submitting PQRI data for 2008 (that is, fail to submit 2008 PQRI data
per the 2008 PQRI registry requirements). By March 31, 2009, registries
that were ``qualified'' for 2008 and wish to continue to participate in
2009 should indicate their desire to continue participation for 2009
and their compliance with the 2009 PQRI registry requirements using the
process described below.
If a qualified 2008 registry is unsuccessful at submitting 2008
PQRI data (that is, fails to submit 2008 PQRI data per the 2008 PQRI
registry requirements), the registry will need to go through the full
qualification process similar to the qualification process that took
place for the 2008 PQRI. By March 31, 2009, registries that are
unsuccessful submitting quality measure results and numerator and
denominator data for the 2008 PQRI will need to be able to meet the
specifications listed below and in the document on the Web site and
send a letter of self-nomination to us.
Registries that were not qualified for the 2008 PQRI will need to
be able to meet the specifications listed below and in the document on
the Web site and send a letter of self-nomination to us by January 31,
2009.
Comment: One comment supported registry use if they were open to
all providers.
Response: We assume that by ``providers'' the commenter was
referring to eligible professionals. As we stated previously, registry
reporting is voluntary. There are ``qualified'' registries in our 2008
PQRI program that intend to report all of the PQRI measures. These
registries are accepting eligible professionals who wish to sign up as
new clients of the registry and are open to all eligible professionals
who would like to participate with them. There may be costs associated
with participating through registries but this is outside of the
purview of PQRI.
We note that although registries are not required to report all
PQRI measures, eligible professionals who wish to report PQRI quality
measures data through registries are required to report on at least 3
quality measures when reporting on individual quality measures or to
report all measures in at least one measures group when reporting on
measures groups. Thus, the eligible professional is responsible for
ensuring that the registry that he or she selects has the ability to
report the measures that the eligible professional intends to report
for PQRI.
Comment: We received one comment requesting eligible professionals
with only 1 or 2 measures to be able to report via registries.
Response: We did not propose to allow registry reporting of 1 or 2
measures if less than 3 measures apply. Analytically it would be
difficult to implement in that if an eligible professional submits
fewer than 3 measures via registries, we would not know whether the
eligible professional did so because only 2 measures applied or because
the registry only accepts data for 2 of the provider's measures and he
or she is reporting their third measure via claims. The amount of
cross-checking via different submission options that would be necessary
makes it impractical to implement the commenter's suggestion.
Comment: A few comments were received regarding the process for
correcting data that was sent in via registries that is incorrect.
Response: We highly discourage eligible professionals from changing
data once it is submitted to CMS from the registry. Allowing data to be
resubmitted for one or more professionals would not only be time-
consuming and delay reports and payment, but it could also result in
duplicating or erroneously leaving out some professionals' quality
measures results and/or numerator and denominator data on quality
measures.
Comment: Two commenters requested that we specify what constituted
an acceptable validation strategy for registries.
Response: As a result of the MMSEA, which was enacted in December
2007, and modified the PQRI, we implemented registry-based submission
for the 2008 PQRI. Thus, for 2008, we required registry vendors to
supply CMS with their validation strategy that would detail how the
registry would ensure that the data the registry reported to CMS was
accurate. We found that there are several variations for this process
that registries use. We do not believe we have enough experience with
registries to specify a single validation strategy that all should
employ and we believe we are benefited from allowing a variety of such
techniques to be employed based on our approval at this point.
Therefore, for the 2009 PQRI, registry vendors will again be required
to supply us with their validation strategy that details how the
registry would ensure that the data the registry reports to us is
accurate. In addition, we note that registries are required to sign an
attestation statement to CMS vouching for the accuracy of the data that
they submit to CMS on behalf of their eligible professionals.
As we gain more experience with registry submission, we would
expect to further specify through rulemaking qualification requirements
for registries that may include more comprehensive validation
requirements. As we evaluate our policies, we plan to continue a
dialogue with stakeholders to discuss opportunities for program
efficiency and flexibility.
Comment: One commenter requested that the registry record layout
and requirements be published by December 31, 2008. Similarly, many
commenters requested that the registry record layout and requirements
be published in this final rule with comment period.
Response: We intend to have the requirements posted on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/pqri by November
15, 2008. However, the technical specifications (that is,
specifications for the XML file format that registries would need to
use to submit PQRI quality measures results and numerator and
denominator data on quality measures to CMS) are not finalized and will
be made available to a registry after the registry passes an initial
qualification process. This will prevent registries that cannot satisfy
the requirements listed on the Web site from expending resources trying
to meet the technical specifications. Meeting only the technical
specifications would not in and of itself qualify the registry to
participate.
Comment: A commenter requested that CMS work with standards
development organizations to align our measures and specifications for
registries and EHRs with the standards development organizations'
standards.
Response: We agree with the commenter's suggestion and do actively
interact with standards development organizations. We desire to use
such standards when available and to promote the adoption and use of
such standards.
Based on the comments received, the 2009 reporting options for
registry-based submission of at least three individual PQRI measures
are finalized as proposed and are listed in Table 13.

[[Page 69827]]

Table 13--Final 2009 PQRI Registry-Based Submission Reporting Options
for Individual Measures
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
Registry-based reporting...... At least 3 PQRI January 1, 2009-
measures for 80% of December 31,
applicable Medicare 2009.
Part B FFS patients
of each eligible
professional.
Registry-based reporting...... At least 3 PQRI July 1, 2009-
measures for 80% of December 31,
applicable Medicare 2009.
Part B FFS patients
of each eligible
professional.
------------------------------------------------------------------------

As discussed in section II.O1.b.ii. of this final rule with comment
period, we are also establishing the three reporting options for
registry-based submission of quality measures results and numerator and
denominator data on PQRI measures groups summarized in Table 12.
To report quality measures results and numerator and denominator
data on quality measures or measures groups through registries,
eligible professionals will need to enter into and maintain an
appropriate legal arrangement with an eligible clinical registry. As we
described in the CY 2009 PFS proposed rule (73 FR 38562), such
arrangements will 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 Health Insurance Portability and
Accountability Act of 1996 (Pub. L. 104-191) (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, will submit registry-derived measures
information to the CMS designated database within the Quality Reporting
System, using a CMS-specified record layout.
To maintain compliance with applicable statutes and regulations,
including but not limited to the 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.
To submit on behalf of eligible professionals pursuing incentive
payment for reporting clinical quality information on services
furnished during 2009 for reporting both on individual measures and
measures groups, registries that were ``qualified'' for 2008 will not
need to be ``re-qualified'' for 2009 unless they are unsuccessful at
submitting 2008 PQRI data (that is, fail to submit 2008 PQRI data per
the 2008 PQRI registry requirements). Registries that were
``qualified'' for 2008 and wish to continue to participate in 2009
should indicate their desire to continue participation for 2009 by
submitting a letter indicating their continued interest in being a PQRI
registry for 2009 and their compliance with the 2009 PQRI registry
requirements by March 31, 2009. Such letters should be sent to: 2009
PQRI Registry Nomination, Centers for Medicare & Medicaid Services,
Office of Clinical Standards and Quality, Quality Measurement and
Health Assessment Group, 7500 Security Blvd., Mail Stop S3-02-01,
Baltimore, MD 21244-1850.
If a qualified 2008 registry is unsuccessful at submitting 2008
PQRI data (that is, fails to submit 2008 PQRI data per the 2008 PQRI
registry requirements), the registry will need to go through the full
self-nomination process again. By March 31, 2009, registries that are
unsuccessful submitting quality measure results and numerator and
denominator data for 2008 will need to be able to meet the
specifications listed in this final rule with comment period and in the
document on the Web site and send a letter of self-nomination to the
above address. Registries that were not ``qualified'' for 2008 will
need to be able to meet the specifications listed in this final rule
with comment period and in the document on the Web site and send a
letter of self-nomination to the above address by January 31, 2009.
As we stated in the CY 2009 PFS proposed rule (73 FR 38563), 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, but we cannot assume responsibility for the successful
submission of data on PQRI quality measures or measures groups, by the
registry.
The 2009 registry technical requirements will be posted on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/pqri by November
15, 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 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 measure numbers for the PQRI quality measures
on which the registry is reporting.
Provide the measure title for the PQRI quality measures on
which the registry is reporting.
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 an acceptable ``validation strategy'' to CMS by
March 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

[[Page 69828]]

participants' data, but may also be based on other credible means of
verifying the accuracy of data content and completeness of reporting or
adherence to a required sampling method.
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 measures groups will be
doing so for the 6- or 12-month period.
Base reported information only on patients to whom
services were furnished during the 12-month reporting period of January
through December 2009 or the 6-month 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 Part B FFS 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.
Registries that were ``qualified'' for 2008 and wish to continue to
participate in 2009 must indicate their compliance with the above
requirements for 2009 at the time that they indicate their desire to
continue participation for 2009.
We will provide the technical specifications (that is,
specifications for the XML file format that registries would need to
use to submit PQRI quality measures results and numerator and
denominator data on quality measures to CMS) to registries after a
registry passes an initial qualification process for the 2009 PQRI.
This will prevent registries that cannot satisfy the requirements
listed on the Web site from expending resources trying to meet the
technical specifications. Meeting only the technical specifications
would not in and of itself qualify the registry to participate.
iv. EHR-Based Submission for Reporting Individual Measures
In addition to the testing of registry-based submission, we also
described in the CY 2009 PFS proposed rule (73 FR 38564 through 38565)
our plans to test the submission of clinical quality data extracted
from EHRs for five 2008 PQRI measures and proposed to accept PQRI data
from EHRs and to pay the incentive payment based on that submission for
a limited subset of the proposed 2009 PQRI quality measures.
We proposed to begin accepting submission of clinical quality data
extracted from EHRs on January 1, 2009 or as soon thereafter as is
technically feasible, based upon our completion of the 2008 EHR data
submission testing process and our determination that accepting data
from EHRs on quality measures for the 2009 PQRI is practical and
feasible. We proposed in the CY 2009 PFS proposed rule (73 FR 38564)
that the date on which we will begin to accept quality data submission
on services furnished in 2009 would depend on having 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.
We proposed that 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 proposed that we
would use Certification Commission for Healthcare Information
Technology (CCHIT) criteria and the Healthcare Information Technology
Standards Panel (HITSP) interoperability standards where possible and
we encouraged vendors to do so also. We encouraged the use of EHRs that
have been certified by the CCHIT for data submission, but recognized
that there would 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.
We proposed 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 satisfactory
reporting and the same reporting period that we proposed for claims-
based submission of data for individual 2009 PQRI measures. The
proposed reporting criteria for EHR-based submission of individual PQRI
measures are summarized in Table 14.

[[Page 69829]]

Table 14--Proposed 2009 PQRI EHR-Based Submission Reporting Options for
Individual Measures
------------------------------------------------------------------------
Reporting mechanism Reporting criteria Reporting period
------------------------------------------------------------------------
EHR-based reporting........... At least 3 PQRI January 1, 2009-
measures, or 1-2 December 31,
measures if less than 2009.
3 apply to the
eligible
professional, for 80%
of applicable
Medicare Part B FFS
patients of each
eligible professional.
------------------------------------------------------------------------

In the CY 2008 PFS proposed rule (73 FR 38565), we invited comments
on the proposed use of EHR-based data submission for PQRI. We received
numerous comments on the proposed use of EHR-based data submission for
PQRI, which are summarized and addressed below.
Comment: We received many comments in favor of accepting quality
measures data through EHRs in 2009. These commenters cited EHRs as a
means for increasing PQRI participation and being able to report more
accurate data. There were a few commenters who, while favoring EHR data
submission in general, thought that it was premature to begin this
process in 2009.
Response: We proposed to begin EHR data submission for PQRI in 2009
based on anticipation that we would have sufficient testing completed
to be confident that systems would be in place and operational by
January 1, 2009. At this point, the testing process is incomplete. As a
result, we agree with the commenter's suggestion that it is premature
to begin EHR submission as part of the 2009 PQRI. Rather, we believe
that it is more prudent to allow the 2008 testing process to be
completed.
Furthermore, we are aware of the importance of promoting and
aligning with the work of health information technology (HIT) standards
development organizations. By postponing implementation of EHR
submissions for PQRI, we believe this alignment with and promotion of
the adoption and uses of HIT standards will be enhanced.
Finally, we believe it would benefit eligible professionals to know
in advance of the start of a PQRI reporting period which EHR vendors
are qualified to submit clinical quality data extracted from their EHR
to CMS. At this point, we would be unable to identify such vendors in
view of the incomplete testing process.
Rather than implement EHR reporting for the 2009 PQRI, and in order
to prepare for possible implementation of EHR reporting for the 2010
PQRI, we will complete the 2008 testing and continue additional testing
in 2009. In addition, upon completion of satisfactory testing, we
intend to qualify EHR vendors and their specific products to submit
clinical quality data extracted from their EHR products to the CMS
quality data warehouse. As vendors qualify, we would post the names on
the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri for
informational purposes.
It should be noted, however, that qualification of vendors for EHR
data submission does not assure that we will include EHR data
submission as an option for satisfactorily reporting data on quality
measures for the 2010 PQRI. Rather, this will be the subject of future
notice and comment rulemaking.
The process we will use to qualify EHR vendors and their specific
products is described below.
Comment: One commenter suggested we allow non-CCHIT certified EHRs
to submit data to PQRI.
Response: We are not planning to accept data via EHRs for purposes
of satisfactorily reporting data on quality measures in the 2009 PQRI
and instead will only continue testing in the 2009 PQRI. We do not
intend to limit testing to CCHIT certified EHRs given the fact that
relevant certification standards may not yet have been adopted. Any EHR
quality data submission will be required to comply with all current
regulations regarding security, privacy, and HIPAA.
Comment: A few commenters suggested allowing EHRs to report quality
measures data on measures groups.
Response: We did not propose this option because of our concerns
with the feasibility of such reporting. In addition, as discussed
previously, we are not including EHR reporting for the 2009 PQRI as an
option but instead will continue testing during 2009.
Comment: A commenter was concerned that CMS does not inadvertently
facilitate anti-competitive behavior by allowing reporting of
information on quality measures via EHRs.
Response: We are unclear as to how allowing quality data reporting
through EHRs could result in anti-competitive behavior.
Comment: A few commenters suggested either paying more money so
that providers can adopt HIT or paying more incentives for measures
submitted electronically.
Response: We are authorized by statute to provide incentive
payments in 2009 to eligible professionals who satisfactorily report
PQRI quality measures data and/or who are successful electronic
prescribers only. We lack specific authority to pay eligible
professionals more incentives for the adoption of HIT or for measures
submitted electronically.
The basis for the calculation of the incentive payment for PQRI is
also statutorily defined and previously discussed. We do not have the
authority to modify the amount of payments to promote particular
objectives, nor to base the incentive payments for PQRI on using an
electronic means of submission. As identified in section II.O1.d.i.
below, we note that one of the structural measures selected for
inclusion in the 2009 PQRI is an HIT measure (Measure 124).
Thus, an eligible professional who reports this measure along with
meeting the other criteria for satisfactorily reporting for the 2009
PQRI can earn an additional 2.0 percent of their estimated total
allowed charges for covered professional services furnished during the
2009 PQRI reporting period for their adoption and use of HIT.
Additionally, as described in section II.O2. of this final rule
with comment period, we are authorized to pay a 2.0 percent incentive
payment for eligible professionals who are successful electronic
prescribers in 2009. The 2.0 percent incentive payment for successful
electronic prescribers is a separate incentive payment from the 2.0
percent incentive payment authorized for satisfactory reporting of
quality information for the 2009 PQRI.
Comment: A few commenters requested that we publish the submission
standards for EHRs as soon as possible to allow practitioners and
vendors adequate time to modify their systems by January 1, 2009. In
addition, several commenters requested that the final rule specify the
procedures and requirements that EHR vendors must meet to minimize
errors in the EHR reporting process during the reporting period as well
as procedures to be followed to correct for errors that may

[[Page 69830]]

occur when the vendor submits data to CMS.
Response: As stated above, we are not planning to accept data via
EHRs for purposes of satisfactorily reporting data on quality measures
in the 2009 PQRI. We intend, however, to continue testing in 2009 and
to qualify EHR vendors and their specific products to submit clinical
quality data extracted from their EHR products to the CMS quality data
warehouse so that we may potentially begin to accept data via EHRs for
purposes of satisfactorily reporting data on quality measures in future
PQRI reporting. Therefore, by December 31, 2008, we anticipate posting
on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri
a list of requirements that EHR vendors must be able to meet in order
to self-nominate to have their product ``qualified'' to be able to
participate in the continued testing phase in 2009 and with
anticipation that such vendors' systems may be able to submit quality
measures data in the future to CMS for PQRI on behalf of the eligible
professional(s) using the system(s).
Based on the comments received related to our proposal to begin
accepting data from EHRs for the 2009 PQRI and our experience thus far
with testing the EHR reporting mechanism, we are not finalizing our
proposal to allow eligible professionals to submit clinical quality
data extracted from EHRs for purposes of receiving an incentive payment
for the 2009 PQRI. Instead, we will continue to test the submission of
clinical quality data extracted from EHRs in 2009. The measures on
which specifications are available for testing EHR data submission are
identified in Table 15. The specifications for these measures can be
found on the QualityNet Web site at http://www.qualitynet.org/dcs/ContentServer?cid=1214232460333&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page.
By December 31, 2008, we also anticipate posting on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/pqri a list of
requirements that EHR vendors must be able to meet in order to self-
nominate to have their product ``qualified'' to potentially be able to
submit quality measures data for the 2010 PQRI to CMS. Qualifying EHR
vendors ahead of actual data submission will facilitate the live data
submission process.
EHR vendors interested in engaging in the 2009 testing and
qualification process should review the EHR requirements document that
will be posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov. If an EHR vendor wishes to be included in the testing
and qualification process, the vendor should submit a letter of self-
nomination to CMS by February 13, 2009 to: PQRI EHR Nomination, Centers
for Medicare & Medicaid Services, Office of Clinical Standards and
Quality, Quality Measurement and Health Assessment Group, 7500 Security
Blvd, Mail Stop S3-02-01, Baltimore, MD 21244-1850.
The EHR vendors who self-nominate will be included in a
``qualifying'' process (similar to the process previously established
for registries) to assess their capabilities. If they are found to meet
the requirements, the EHR vendors will be included in the data
submission testing. These processes will have firm timelines that
vendors must meet. Failure to meet any of these deadlines will be a
basis for not continuing to consider the EHR vendor for qualification
to submit data to the CMS quality data warehouse. The number of self-
nominated vendors will determine the timeframe needed to complete the
testing and qualification process. However, it is expected that this
process will conclude by mid-summer 2009. The measures and reporting
mechanism for the 2010 PQRI will be the subject of future notice and
comment rulemaking. As previously noted, the completion of the EHR
vendor quality data submission qualification process does not ensure
that EHR reporting will be an option for the 2010 PQRI.
c. Statutory Requirements for Measures Included in the 2009 PQRI
i. Overview and Summary
Section 1848(k)(2)(B)(ii) of the Act requires CMS to publish in the
Federal Register by no later than August 15, 2008, a proposed set of
quality measures that the Secretary determines would be appropriate for
eligible professionals to use to submit data in 2009. In addition,
section 1848(k)(2)(B)(iii) of the Act requires CMS to publish in the
Federal Register by no later than November 15, 2008, the final set of
quality measures that would be appropriate for eligible professionals
to use to submit data in 2009.
As discussed in the CY 2009 PFS proposed rule (73 FR 38565), 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, 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 section 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
be included in the 2009 set of quality measures. 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 2009 PQRI measures were discussed in the CY 2009
PFS proposed rule (73 FR 38565 through 38566). As discussed in the
proposed rule, 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 limiting the
2009 PQRI measures 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 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.
In addition, section 1848(k)(2)(D) of the Act, as added by the
MIPPA, requires that for each 2009 PQRI quality measure, ``the
Secretary shall ensure that eligible professionals have the opportunity
to provide input during the development, endorsement, or selection of
measures applicable to services they furnish.'' Eligible professionals
have the opportunity to provide input during the development of a
measure during the public comment phase of a measure's

[[Page 69831]]

development. As part of the measure development process, measure
developers typically solicit public comments on measures that they are
testing in order to determine whether additional refinement of the
measure(s) is needed prior to submission for consensus endorsement.
Additional information on the measure development process used by CMS
contractors is available in the ``Quality Measures Development
Overview'' document found on the CMS Web site at http://www.cms.hhs.gov/QualityInitiativesGenInfo/downloads/QualityMeasuresDevelopmentOverview.pdf. Eligible professionals also
have the opportunity to provide input on a measure as the measure is
being vetted through the consensus endorsement and/or adoption process.
Both the NQF and AQA employ a public comment period for measures vetted
through their respective consensus endorsement or adoption processes.
Finally, eligible professionals have an opportunity to provide input on
measures selected for inclusion in PQRI through the notice and comment
rulemaking process we use to announce the measures selected for
inclusion in PQRI each year. As required by section 1848(k)(2)(B)(ii)
of the Act, we proposed measures for the 2009 PQRI in the Federal
Register in July, which was followed by a 60-day comment period in
which eligible professionals had the opportunity to comment.
Accordingly, we believe the additional requirement under MIPPA with
regard to the 2009 PQRI has been met in multiple ways.
ii. Summary of Comments and Responses
We received several comments related to the statutory requirements
for measures included in the 2009 PQRI and/or our approach to the
selection of measures, which are summarized and addressed below.
Comment: Several comments expressed concerns about the AQA's
structure and original intended purpose not being ideally suited to its
current role in PQRI, and its role in the measure endorsement process
not clearly adding value to the process. Many comments noted that the
AQA does not meet the NTTAA definition of a ``voluntary consensus
standards body.''
Response: Both the NQF and the AQA were identified as examples of
consensus organizations under section 1848(k)(2)(B)(i) of the Act. We
interpreted this to mean that for purposes of the PQRI, these
organizations, as constituted on the date of enactment of the MIEA-
THRCA authorizing legislation, are considered to be consensus
organizations. On the other hand we stated that we found the NQF to be
an organization organized and operating in a manner that meets the
NTTAA definition of a ``voluntary consensus standards body,'' but we
did not find that the AQA constituted such an organization. We also
stated our policy preference for measures endorsed by an organization
that meets the NTTAA definition of ``voluntary consensus standards
body'' to one that does not so qualify. Further, we stated our policy
that a measure that was specifically declined for endorsement by the
NQF would not be included in PQRI even though it was adopted by AQA.
Comment: Several commenters commended NQF for the scientific rigor
of its structure and review processes. Some commenters in favor of
establishing a single consensus organization entity whose approval
would qualify a measure for PQRI inclusion went on to name NQF as the
leading or only named candidate for such an organization.
Response: As stated previously, we have stated a policy preference
for NQF-endorsed measures. However, we are not limited by statute to
using only NQF-endorsed measures.
Comment: We received some comments supportive of having measures
that originate from a variety of sources and opposed to requiring PQRI
measurement development to come solely from physician controlled
organizations. At the same time, several commenters suggested we
consider establishing as policy that quality measures to be used by,
and analyzed at the level of, individual PQRI-eligible professionals,
must be developed by clinician controlled organizations to assure
relevance and promote uptake by the eligible professional community.
Multiple commenters suggested that explicit preference be given for
measures developed or endorsed by physician specialty societies, in the
context of consensus-organization review and CMS measure selection
processes. Some commenters stated that the AMA-PCPI should be the sole
source for physician level measures. Several commenters specifically
presented an interpretation of the requirement under section
1848(k)(2)(B)(i) of the Act for the 2009 PQRI measures to include
measures submitted by a physician specialty as meaning that the 2009
PQRI should include only measures developed by physician organizations,
to assure physician control of available measures applicable to
assessing the clinical performance of individual physicians.
Response: Physician involvement and leadership is standard in the
work of both measure developers and consensus organizations. As a
result, physicians are actively involved at all levels of measure
development and consensus adoption and endorsement. We are in agreement
that physician expertise is an important ingredient in measure
development and in the consensus process. We further recognize the
leadership of physician organizations, as is reflected in the large
number of physician quality measures included in PQRI which were
developed by the AMA-PCPI and its participating specialty societies.
However, we do not agree that physicians should be in complete
control of the process of measure development, as would be the case if
measures were required to be developed solely by physician-controlled
organizations. Any such restriction would unduly limit the basic
development of physician quality measures and the scope and utility of
measures that may be considered for endorsement as voluntary consensus
standards. We do not interpret the provisions in section
1848(k)(2)(B)(i) 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. Similarly, we do not interpret
section 1848(k)(2)(B)(i) of the Act to require that each measure
included in the 2009 PQRI have been developed by a physician specialty.
Section 1848(k)(2)(B)(i) of 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.
Comment: Several comments addressed gaps in the PQRI measure set,
such as the lack of measures related to patient-centeredness, equity/
disparities, and episodes of care based efficiency. One comment
expressed concern that the PQRI measures appear to be targeted to
single conditions and to patients where classical treatment goals are
appropriate and do not contain any quality measures specifically
addressing multiple, co-morbid conditions. A few comments urged CMS to
adopt quality measures that would enable the full range of physicians
to participate and to identify and add more quality measures to fill
the gaps. The commenters also requested that we consider developing
interim opportunities for eligible professionals for whom there is a

[[Page 69832]]

shortage of available measures to participate in the PQRI and to
receive an incentive for doing so. One comment urged funding for
consumer-relevant measure development to fill the existing gaps and to
include language in the measure development contracts that reflects the
perspectives of consumers and purchasers. Another commenter urged us to
include more measures on which specifications for electronic data
submission via EHRs are available.
Response: Health care quality measures are currently developed by a
variety of organizations and used by a variety of governmental and
nongovernmental, and public-private initiatives which have various and
at times differing priorities and programmatic needs for quality
measures. As reflected by the considerations for identifying proposed
PQRI quality measures described in the CY 2009 PFS proposed rule (73 FR
38566), we are committed to having a broad and robust set of quality
measures for the PQRI. However, we largely depend on the development of
measures by professional organizations and other measure developers.
Although we had significant involvement in the development of measures
applicable to eligible professionals at the start of the PQRI, ideally
we would not need to be closely involved in the development of
clinician-level quality measures but would select from measures that
meet the statutory requirements. Thus, we encourage professional
organizations and other measure developers to fund and develop measures
that address some of the gaps identified by the commenters.
Comment: One comment suggested that we add additional measures in
July of each year for implementation in that year's PQRI. For example,
in July 2009, we should announce additional measures for inclusion in
the 2009 PQRI.
Response: Section 1848(k)(2)(B)(ii) requires us to publish a
proposed set of quality measures for inclusion in a particular year's
PQRI program in the Federal Register by no later than August 15th of
the prior year. Additionally, section 1848(k)(2)(B)(iii) requires us to
publish a final set of quality measures for inclusion in a particular
year's PQRI program in the Federal Register by no later than November
15th of the prior year. We are not authorized to make any changes to
the final set of PQRI quality measures for a particular year once the
set has been published in the Federal Register.
However, as explained in the CY 2009 PFS proposed rule (73 FR
38570) we introduced a test measures process during 2008, which gives
eligible professionals the opportunity to submit the quality data codes
for measures included in the 2008 Measure Testing Process. No financial
incentive is associated with the reporting of these 2008 test measures
though. Instead, the test measures process helps provide experience
with using the measures which can contribute to future consideration
for the PQRI. We proposed and are finalizing as 2009 PQRI measures
certain measures included in the 2008 Test Measures Process.
d. The Final 2009 PQRI Quality Measures
In the CY 2009 PFS proposed rule (73 FR 38566 through 38567), we
solicited comments on the implication of including or excluding 175
specific quality measures in 4 categories. We also explained that while
we recognized that some commenters may wish to recommend additional
measures for inclusion in the 2009 PQRI measures that we had not
proposed, we would not be able to consider such additional measures for
inclusion in the 2009 measure set. We also described several
considerations used for selecting the measures proposed for the 2009
PQRI.
We received multiple comments on the proposed 2009 PQRI quality
measures, which are addressed below.
Comment: A number of comments requested or recommended that we make
readily available on an ongoing basis more detailed information on the
measure development process and measures in development. Numerous
commenters also requested final measure specifications be published as
far in advance of the beginning of the reporting period as possible,
and that more detailed information about measures proposed or finalized
for use in PQRI be published at the same time as or in advance of
future rulemaking.
Response: We agree that it is desirable for the public to have
information on the measures development process and measures in
development. To this end CMS has developed a standardized process to be
used for CMS contracted measures development. This standardized process
is detailed in the ``Quality Measures Development Overview'' document
found on the CMS Web site at http://www.cms.hhs.gov/QualityInitiativesGenInfo/downloads/QualityMeasuresDevelopmentOverview.pdf. Under the standardized measures
development process, we plan that all CMS contracted measures
developers, in the future, will post the measures for public comment on
the CMS Web site rather than solely on the individual contractor's Web
site. This will allow a uniform access point for information during the
CMS contracted basic development process for measures intended for
PQRI. Additionally, other major measures developers publish measures
and specifications during development and seek public comment as do
both NQF and AQA during their consensus processes.
We agree with the commenters that it is desirable to provide final
measure specifications sufficiently in advance of the reporting period
to allow reasonable time for professionals to analyze new or revised
measures and implement any needed changes in their office workflows to
accurately capture and successfully submit data on a selection of
measures applicable to their practice on which they can act to improve
the quality of the services they furnish. Having detailed information
on measures available in advance of the reporting period also enhances
the ability of vendors (such as practice-management software, billing
services, and electronic health records vendors) to support
professionals' successful implementation of revised data-capture
processes for the measures.
Given that section 1848(k)(2)(B)(iii) requires that we publish the
final list of 2009 PQRI measures in the Federal Register no later than
November 15, 2008, we expect to publish detailed specifications shortly
after that date. Detailed measure specifications for measures new or
revised for 2009 PQRI will be posted on the Measures/Codes tab of the
PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri. These
detailed specifications will include instructions for reporting and
identifying the circumstances in which each measure is applicable. The
detailed technical specifications for measures in the final listing for
the 2009 PQRI remain potentially subject to corrections until the start
of the 2009 reporting period, as we stated in the proposed rule. In
addition, the 2009 PQRI quality measure specifications for any given
quality measure may be different from specifications for the same
quality measure used for 2008. Specifications for all 2009 PQRI quality
measures, whether or not included in the 2008 PQRI program, must be
obtained from the specifications document for 2009 PQRI quality
measures.
Since its inception, the PQRI program has expanded rapidly in terms
of the number of measures included in the PQRI. This rapid growth was
necessary in order to meet a primary objective of having a sufficient
number of measures to allow broad participation by eligible
professionals who cover a broad scope

[[Page 69833]]

of services provided to Medicare beneficiaries. We now have a broad
range of measures and expect to rely more on the test measures program
to introduce new measures. In this way, by the time they may be
proposed for inclusion in a set of measures for a particular year, the
measures specifications will be published, established, and utilized by
eligible professionals for test submission.
Comment: Numerous commenters suggested quality measures in addition
to the quality measures we had proposed in Tables 11 through 14 of the
CY 2009 PFS proposed rule (73 FR 38567 through 38572) for the 2009
PQRI.
Response: We have not included in final 2009 PQRI quality measures
any quality measures that were not identified in the CY 2009 PFS
proposed rule as proposed 2009 PQRI measures. As discussed above in
this rule, we are obligated by section 1848(k)(2)(B)(ii) of the Act to
publish and provide opportunity for public comment on proposed 2009
PQRI quality measures. Measures recommended for selection via comments
on the proposed rule that were not included in the proposed rule have
not been placed before the public as part of notice and comment
rulemaking process. Thus, such additional measures recommended via
comments on the proposed rule cannot be included in the 2009 PQRI
quality measure set that is required to be finalized via publication in
the Federal Register by November 15, 2008 in accordance with section
1848(k)(2)(B)(iii) of the Act.
However, we have captured these recommendations and will have them
available for consideration in identifying measure sets for future
years' PQRI and other initiatives to which those measures may be
pertinent or possibly to be introduced as part of a PQRI Test Measures
Process.
Comment: We received a few comments that suggested that some
measures are not conducive to claims-based reporting but are good
measures if submitted via a registry or an EHR.
Response: We are not finalizing the proposal to allow submission of
clinical quality data extracted from EHRS for the 2009 PQRI. We,
however, agree that some measures are not conducive to claims-based
reporting. For the 2009 PQRI, there are 18 measures that will only be
accepted for reporting via registries due to their complex measure
specifications, which require multiple diagnosis codes; a low number of
satisfactory submissions during the 2007 PQRI; and a high occurrence of
inaccurate quality date codes reporting for the 2007 PQRI. These
measures are identified in Tables 15, 16, 18, and 22 with a ``+'' after
the Measure Title.
For the 2009 PQRI, the following 5 quality measures in Table 15
will be reportable only through registries as individual quality
measures:
Measure 7 CAD: Beta-Blocker Therapy for CAD
Patients with Prior Myocardial Infarction (MI)
Measure 33 Stroke and Stroke Rehabilitation:
Anticoagulant Therapy Prescribed for Atrial Fibrillation at Discharge
Measure 46 Medication Reconciliation:
Reconciliation After Discharge from an Inpatient Facility
Measure 81 End-Stage Renal Disease (ESRD): Plan
of Care for Inadequate Hemodialysis in ESRD Patients
Measure 82 ESRD: Plan of Care for Inadequate
Peritoneal Dialysis
The following 8 quality measures in Tables 16 and 22 will be
reportable only through registries as individual quality measures or
part of the CABG measures group for the 2009 PQRI:
CABG: Prolonged Intubation (Ventilation)
CABG: Deep Sternal Wound Infection Rate
CABG: Stroke/Cerebrovascular Accident (CVA)
CABG: Post-operative Renal Insufficiency
CABG: Surgical Re-exploration
CABG: Anti-platelet Medications at Discharge
CABG: Beta Blockade at Discharge
CABG: Lipid Management and Counseling
Finally, the following 5 quality measures in Table 18 will be
reportable only through registries as individual quality measures for
the 2009 PQRI:
Pediatric ESRD: Adequacy of Hemodialysis
HIV/AIDS: CD4+ Cell Count or CD4+ Percentage
HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP)
Prophylaxis
HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS Who
Are Prescribed Potent Antiretroviral Therapy
HIV/AIDS: HIV RNA Control After 6 Months of Potent
Antiretroviral Therapy
Comment: One commenter suggested that CMS accept as many measures
as possible that are based solely on information derived from
administrative claims so that professionals would not have to do
additional coding.
Response: Under the PQRI program eligible professionals are
provided an incentive payment for submission of quality data. What is
suggested would not involve submission of quality data but merely
normal claims submission from which quality inferences would be made.
An important difference in that approach to PQRI is that under PQRI, by
submitting quality data, the eligible professional indicates that the
patient is appropriately attributed to that professional. When purely
administrative data are used, attribution rules would need to be
applied, with which the physician or other eligible professional may
not agree. Thus, focusing on administrative-data based measures only
could have the unintended consequence of holding the eligible
professional responsible for certain services which the eligible
professional might feel are beyond their scope of care for a particular
patient.
Comment: Several commenters recommended changes to specific quality
measures' titles, definitions, and detailed specifications or coding.
Many of these recommendations were based on alternative interpretations
of clinical evidence or concerns about the utility of the measures.
Some requests were specifically concerned that measures be expanded to
include specific professionals to whom the measure may be applicable
such as occupational therapists, registered dieticians, and
audiologists. Specifically, one commenter suggested that in order to
maximize the impact of Measure 1 Diabetes Mellitus: Hemoglobin
A1c Poor Control in Diabetes Mellitus, the PQRI specifications should
continue to require a performance period of 12 months and reporting
that identifies whether A1c control is good (that is, A1c <= 7.0
percent), moderate (that is, A1c <= 9.0 percent, but > 7.0 percent), or
poor (that is, A1c > 9.0 percent). Another commenter requested that CMS
re-evaluate the use of inpatient site of service codes (99241 through
99245) for Measure 5 Heart Failure: Angiotensin-Converting
Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy
for Left Ventricular Systolic Dysfunction (LVSD), Measure 6
CAD: Oral Antiplatelet Therapy Prescribed for Patients with CAD,
Measure 7 CAD: Beta-Blocker Therapy for CAD Patients with
Prior MI, and Measure 8 Heart Failure: Beta-Blocker Therapy
for LVSD. Also another commenter requested the addition of
specifications for inpatient reporting for Measure 56
Community-Acquired Pneumonia (CAP): Vital Signs, Measure 57
CAP: Assessment of Oxygen Saturation, Measure 58 CAP:
Assessment of Mental Status, and Measure 59 CAP: Empiric
Antibiotic. One commenter expressed gratitude that audiologists are now
eligible to

[[Page 69834]]

participate in PQRI and willingness to work with the measure developer
to expand Measure 94 Otitis Media with Effusion (OME):
Diagnostic Evaluation--Assessment of Tympanic Membrane Mobility and
Measure 95 Otitis Media with Effusion (OME): Hearing Testing.
Lastly, one commenter requested that we not use Measures 73
Cancer: Plan for Chemotherapy Documented and Measure T143 Cancer Care:
Medical and Radiation--Plan of Care for Pain until the measure
developers revise the measure specifications to include all
chemotherapy and biologic disease modalities recognized in clinical
guidelines. Also, this same commenter requested that we not use the
Rheumatoid Arthritis measures group until the measures' developer
revises the measures to include all biologic disease-modifying
antirheumatic drugs (DMARDS) used as a monotherapy or in combination
with nonbiologic DMARDS, such as methotrexate.
Response: Quality measures that have completed the consensus
processes of NQF or AQA have a designated party (generally the measure
developer/owner) who has accepted responsibility for maintaining the
measure. In general, it is the role of the measure owner, developer, or
maintainer to make changes to a measure. The measure maintainer and/or
the developer/owner of a measure included in the final set of quality
measures selected for the 2009 PQRI is identified as the ``Measure
Source'' in Tables 15 through 18. In addition, NQF has, for its
endorsed measures, an established maintenance process which may be
accessed.
The Secretary is required to select measures through notice and
comment rulemaking. We do not, however, use notice and comment
rulemaking as a means to update or modify measure specifications. We
retain the ability to update or modify specifications to the measures
until December 31, 2008. After that date, there will be no changes to
the measure for the 2009 reporting period(s).
Comment: A number of comments requested or recommended that CMS
include ``paired'' measures in the 2009 PQRI. Commenters noted that
while under review by the NQF Steering Committee several measures
proposed for 2009 were recommended to be implemented as ``paired
measures'' by the NQF. Commenters referenced the following proposed
measures as paired measures based on the NQF Steering Committee's
recommendations:
(1) Hepatitis C: Hepatitis A Vaccination and Hepatitis C: Hepatitis
B Vaccination.
(2) Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating
Treatment and Hepatitis C: HCV Genotype Testing Prior to Therapy.
(3) Oncology: Medical and Radiation--Pain Intensity Quantified and
Oncology: Medical and Radiation--Plan of Care for Pain.
Response: The 2009 PQRI will include four measures sets that can be
considered paired measures. Each paired measures set consists of two
closely related individual measures, but which are composed of two
similar and complementary aspects of care. The measures assess uniquely
different constructs in the assessment and/or management of a
particular condition. Thus, while we note the recommendation that the
measures in a particular paired measures set be reported together, we
do not require for the 2009 PQRI that the measures in a particular
paired measures set be reported together.
These paired measures do not constitute a measures group. These
measures may be subject to the measures validation strategy posted on
PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/25_AnalysisAndPayment.asp#TopOfPage. Under the measures validation
strategy for eligible professionals that satisfactorily report less
than three measures, failure to report the additional measure(s) in a
valid set would cause the eligible professional to fail to meet the
validation requirements.
The four paired measures sets for the 2009 PQRI are as follows:
(1) Hepatitis C: Hepatitis A Vaccination and Hepatitis C: Hepatitis
B Vaccination.
(2) Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating
Treatment and Hepatitis C: HCV Genotype Testing Prior to Therapy.
(3) Oncology: Medical and Radiation--Pain Intensity Quantified and
Oncology: Medical and Radiation--Plan of Care for Pain.
(4) Falls: Risk Assessment and Falls: Plan of Care.
Reporting instructions and detailed measure specifications for the
2009 PQRI quality measures will be available by no later than December
31, 2008 on the PQRI section of the CMS Web site at http://
www.cms.hhs.gov/pqri.
Based on our review of these comments, the final set of 153 quality
measures selected for the 2009 PQRI are listed in Tables 15 through 18.
These measures can be categorized as follows: (1) Measures selected
from the 2008 PQRI quality measures set; (2) additional NQF-endorsed
measures; (3) additional AQA-adopted measures; and (4) additional
measures that had not received NQF endorsement or AQA adoption at the
time the proposed rule was published but whose selection was contingent
upon whether they received NQF endorsement or AQA adoption by August
31, 2008.
No changes (that is, additions or deletions of measures) will be
made after publication of this 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.
As described in section II.O1.b.ii. above, we are establishing a
total of seven measures groups for use in the 2009 PQRI. The measures
selected for inclusion in each of the 2009 measures groups are listed
in Tables 19 through 25.
i. Measures Selected From the 2008 PQRI Quality Measures Set
In the CY 2009 PFS proposed rule (73 FR 38567 through 38570) we
proposed to include in the 2009 PQRI quality measures set 111 2008 PQRI
quality measures. We received several comments on the 111 proposed
measures selected from the 2008 PQRI quality measure set. The comments
and our responses to those comments are discussed below.
Comment: We received numerous comments in support of the 2008 PQRI
measures selected for the 2009 PQRI. One commenter supports the
retention of all the 2008 PQRI measures proposed for 2009. Other
commenters specifically support inclusion of the following proposed
2008 PQRI measures in the 2009 PQRI:
Measure 1 Diabetes Mellitus: Hemoglobin A1c Poor
Control in Diabetes Mellitus

[[Page 69835]]

Measure 6 Coronary Artery Disease (CAD): Oral
Antiplatelet Therapy Prescribed for Patients With CAD
Measure 11 Stroke and Stroke Rehabilitation:
Carotid Imaging Reports
Measure 24 Osteoporosis: Communication With the
Physician Managing Ongoing Care Post-Fracture
Measure 39 Screening or Therapy for Osteoporosis
for Women Aged 65 Years and Older
Measure 40 Osteoporosis: Management Following
Fracture
Measure 41 Osteoporosis: Pharmacologic Therapy
Measure 48 Urinary Incontinence: Assessment of
Presence or Absence of Urinary Incontinence in Women Aged 65 Years and
Older
Measure 58 Community-Acquired Pneumonia (CAP):
Assessment of Mental Status
Measure 84 Hepatitis C: Ribonucleic Acid (RNA)
Testing Before Initiating Treatment
Measure 85 Hepatitis C: HCV Genotype Testing
Prior to Therapy
Measure 86 Hepatitis C: Consideration for
Antiviral Therapy in HCV Patients
Measure 94 Otitis Media With Effusion (OME):
Diagnostic Evaluation--Assessment of Tympanic Membrane Mobility
Measure 95 Otitis Media With Effusion (OME):
Hearing Testing
Measure 110 Preventive Care and Screening:
Influenza Immunization for Patients >= 50 Years Old
Measure 111 Preventive Care and Screening:
Pneumonia Vaccination for Patients 65 years and Older
Measure 112 Preventive Care and Screening:
Screening Mammography
Measure 113 Preventive Care and Screening:
Colorectal Cancer Screening
Measure 114 Preventive Care and Screening:
Inquiry Regarding Tobacco Use
Measure 115 Preventive Care and Screening:
Advising Smokers to Quit
Measure 128 Preventive Care and Screening: Body
Mass Index (BMI) Screening and Follow-Up
We also received several comments specifically suggesting that
Measure 73 Cancer: Plan for Chemotherapy Documented be removed from the
2009 PQRI quality measures for failure to achieve NQF endorsement.
Response: Table 15 shows that 101 of 111 proposed 2008 PQRI quality
measures have been finalized for the 2009 PQRI. All of the measures
specifically supported by commenters are included in Table 15. As
suggested by commenters Measure 73 Cancer: Plan for
Chemotherapy Documented has been removed from the 2009 PQRI quality
measures set because the measure was considered and specifically
declined for endorsement by NQF on or before August 31, 2008.
Comment: With respect to the two proposed structural measures
(Measure 124 and Measure 125), we received 2 comments
suggesting that we allow a practice or an eligible professional to
simply attest to the use of an EHR or electronic prescribing in their
office rather than report it on a claim as this was considered
burdensome. Another comment recommended we treat an eligible
professional's recognition under the National Committee for Quality
Assurance (NCQA) Physician Practice Connection (PPC) as equivalent to
reporting the two structural measures (Measures 124 and
125).
Response: For those professionals using an EHR, their system should
be able to auto populate a superbill with the appropriate G code for
this measure. Many EHRs already code the visit with diagnosis and level
of service. The G code could be added to the superbill in this way. The
EHR measure (Measure 124) requires more than just having an
EHR system and software available in the office; rather the measure
also measures ongoing use of the systems.
As required by section 1848(m)(3)(A) of the Act, as redesignated
and amended by the MIPPA, we are removing the electronic prescribing
measure (measure 125) from the 2009 PQRI quality measure set
and adopting the measure for use in the e-prescribing incentive program
described in section II.O2. of this final rule with comment period.
With respect to the recommendation to consider recognition under
the NCQA PPC as equivalent to satisfactory PQRI reporting, a
fundamental PQRI requirement is that the data be reported on PQRI
measures. The PPC is a proprietary recognition program that does not
utilize PQRI Measures 124 or 125.
Comment: One commenter requested clarification of a statement made
in the proposed rule regarding the 2008 PQRI Measure 4
Screening for Future Fall Risk not proposed for 2009. This commenter
noted that the measure developer did not make a request to retire this
measure from PQRI nor was the measure replaced by a new AQA-adopted or
NQF-endorsed measure proposed for 2009 as stated in the CY 2009 PFS
proposed rule (73 FR 38567). The commenter advocated for Measure
4 Screening for Future Fall Risk to remain available for the
2009 PQRI. Another commenter supported the removal of Measure
4 Screening for Future Fall Risk as a result of two new
substantially similar fall measures proposed for 2009.
Response: The commenter was correct in noting that the proposed
rule incorrectly stated that the 2008 PQRI Measure 4 Screening
for Future Fall Risk not proposed for 2009 was retired and intended to
be replaced by new AQA-adopted or NQF-endorsed measures proposed for
2009.
However, we are not including Measure 4 Screening for
Future Fall Risk in the final set of 2009 PQRI quality measures. We
consider the following proposed AQA-adopted measures included in the
final 2009 PQRI quality measures set listed in Table 17 to
substantially cover the same care process as Measure 4
Screening for Future Fall Risk and more comprehensive: Falls: Risk
Assessment and Falls: Plan of Care.
In addition, as previously stated in this final rule with comment
period, we are obligated by section 1848(k)(2)(B)(ii) of the Act to
publish and provide opportunity for public comment on proposed 2009
PQRI quality measures prior to including them in the final 2009 PQRI
quality measures set.
Based on whether a measure retained its NQF endorsement status as
of August 31, 2008 and the comments received, we are finalizing in the
2009 PQRI quality measure set the following 101 of 111 proposed 2008
PQRI measures identified in Table 15.

Table 15--Final 2008 PQRI Measures Selected for 2009
------------------------------------------------------------------------
Measure number and title Measure source
------------------------------------------------------------------------
1. Diabetes Mellitus: Hemoglobin A1c Poor NCQA.
Control in Diabetes Mellitus*.
2. Diabetes Mellitus: Low Density NCQA.
Lipoprotein (LDL-C) Control in Diabetes
Mellitus*.
3. Diabetes Mellitus: High Blood Pressure NCQA.
Control in Diabetes Mellitus*.
5. Heart Failure: Angiotensin-Converting American Medical
Enzyme (ACE) Inhibitor or Angiotensin Association--Physician
Receptor Blocker (ARB) Therapy for Left Consortium for Performance
Ventricular Systolic Dysfunction (LVSD)*. Improvement (AMA-PCPI).

[[Page 69836]]

6. Coronary Artery Disease (CAD): Oral AMA-PCPI.
Antiplatelet Therapy Prescribed for
Patients with CAD.
7. Coronary Artery Disease (CAD): Beta- AMA-PCPI.
Blocker Therapy for CAD Patients with
Prior Myocardial Infarction (MI)\+\,*.
8. Heart Failure: Beta-Blocker Therapy for AMA-PCPI.
Left Ventricular Systolic Dysfunction
(LVSD).
9. Major Depressive Disorder (MDD): NCQA.
Antidepressant Medication During Acute
Phase for Patients with MDD.
10. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Computed Tomography (CT) or Magnetic
Resonance Imaging (MRI) Reports.
11. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Carotid Imaging Reports.
12. Primary Open Angle Glaucoma (POAG): AMA-PCPI/NCQA.
Optic Nerve Evaluation.
14. Age-Related Macular Degeneration (AMD): AMA-PCPI/NCQA.
Dilated Macular Examination.
18. Diabetic Retinopathy: Documentation of AMA-PCPI/NCQA.
Presence or Absence of Macular Edema and
Level of Severity of Retinopathy.
19. Diabetic Retinopathy: Communication AMA-PCPI/NCQA.
with the Physician Managing Ongoing
Diabetes Care.
20. Perioperative Care: Timing of AMA-PCPI/NCQA.
Antibiotic Prophylaxis--Ordering Physician.
21. Perioperative Care: Selection of AMA-PCPI/NCQA.
Prophylactic Antibiotic--First OR Second
Generation Cephalosporin.
22. Perioperative Care: Discontinuation of AMA-PCPI/NCQA.
Prophylactic Antibiotics (Non-Cardiac
Procedures).
23. Perioperative Care: Venous AMA-PCPI/NCQA.
Thromboembolism (VTE) Prophylaxis (When
Indicated in ALL Patients).
24. Osteoporosis: Communication With the AMA-PCPI/NCQA.
Physician Managing Ongoing Care Post-
Fracture.
28. Aspirin at Arrival for Acute Myocardial AMA-PCPI/NCQA.
Infarction (AMI).
30. Perioperative Care: Timing of AMA-PCPI/NCQA.
Prophylactic Antibiotics--Administering
Physician.
31. Stroke and Stroke Rehabilitation: Deep AMA-PCPI/NCQA.
Vein Thrombosis Prophylaxis (DVT) for
Ischemic Stroke or Intracranial Hemorrhage.
32. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Discharged on Antiplatelet Therapy.
33. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Anticoagulant Therapy Prescribed for
Atrial Fibrillation at Discharge\+\.
34. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Tissue Plasminogen Activator (t-PA)
Considered.
35. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Screening for Dysphagia.
36. Stroke and Stroke Rehabilitation: AMA-PCPI/NCQA.
Consideration of Rehabilitation Services.
39. Screening or Therapy for Osteoporosis AMA-PCPI/NCQA.
for Women Aged 65 Years and Older.
40. Osteoporosis: Management Following AMA-PCPI/NCQA.
Fracture.
41. Osteoporosis: Pharmacologic Therapy.... AMA-PCPI/NCQA.
43. Coronary Artery Bypass Graft (CABG): The Society of Thoracic
Use of Internal Mammary Artery (IMA) in Surgeons (STS).
Isolated CABG Surgery.
44. Coronary Artery Bypass Graft (CABG): STS.
Preoperative Beta-Blocker in Patients with
Isolated CABG Surgery.
45. Perioperative Care: Discontinuation of AMA-PCPI/NCQA.
Prophylactic Antibiotics (Cardiac
Procedures).
46. Medication Reconciliation: AMA-PCPI/NCQA.
Reconciliation After Discharge from an
Inpatient Facility\+\.
47. Advance Care Plan...................... AMA-PCPI/NCQA.
48. Urinary Incontinence: Assessment of AMA-PCPI/NCQA.
Presence or Absence of Urinary
Incontinence in Women Aged 65 Years and
Older.
49. Urinary Incontinence: Characterization AMA-PCPI/NCQA.
of Urinary Incontinence in Women Aged 65
Years and Older.
50. Urinary Incontinence: Plan of Care for AMA-PCPI/NCQA.
Urinary Incontinence in Women Aged 65
Years and Older.
51. Chronic Obstructive Pulmonary Disease AMA-PCPI.
(COPD): Spirometry Evaluation.
52. Chronic Obstructive Pulmonary Disease AMA-PCPI.
(COPD): Bronchodilator Therapy.
53. Asthma: Pharmacologic Therapy.......... AMA-PCPI.
54. 12-Lead Electrocardiogram (ECG) AMA-PCPI/NCQA.
Performed for Non-Traumatic Chest Pain.
55. 12-Lead Electrocardiogram (ECG) AMA-PCPI/NCQA.
Performed for Syncope.
56. Community-Acquired Pneumonia (CAP): AMA-PCPI/NCQA.
Vital Signs.
57. Community-Acquired Pneumonia (CAP): AMA-PCPI/NCQA.
Assessment of Oxygen Saturation.
58. Community-Acquired Pneumonia (CAP): AMA-PCPI/NCQA.
Assessment of Mental Status.
59. Community-Acquired Pneumonia (CAP): AMA-PCPI/NCQA.
Empiric Antibiotic.
64. Asthma: Asthma Assessment.............. AMA-PCPI.
65. Treatment for Children with Upper NCQA.
Respiratory Infection (URI)--Avoidance of
Inappropriate Use.
66. Appropriate Testing for Children with NCQA.
Pharyngitis.
67. Myelodysplastic Syndrome (MDS) and AMA-PCPI/American Society
Acute Leukemias: Baseline Cytogenetic of Hematology (ASH).
Testing Performed on Bone Marrow.
68. Myelodysplastic Syndrome (MDS): AMA-PCPI/ASH.
Documentation of Iron Stores in Patients
Receiving Erythropoietin Therapy.
69. Multiple Myeloma: Treatment With AMA-PCPI/ASH.
Bisphosphonates.
70. Chronic Lymphocytic Leukemia (CLL): AMA-PCPI/ASH.
Baseline Flow Cytometry.
71. Breast Cancer: Hormonal Therapy for AMA-PCPI/American Society
Stage IC-III Estrogen Receptor/ of Clinical Oncology
Progesterone Receptor (ER/PR) Positive (ASCO)/National
Breast Cancer. Comprehensive Cancer
Network (NCCN).
72. Colon Cancer: Chemotherapy for Stage AMA-PCPI/ASCO/NCCN.
III Colon Cancer Patients.
76. Prevention of Catheter-Related AMA-PCPI.
Bloodstream Infections (CRBSI)--Central
Venous Catheter Insertion Protocol.

[[Page 69837]]

79. End-Stage Renal Disease (ESRD): AMA-PCPI.
Influenza Vaccination in Patients with
ESRD.
81. End-Stage Renal Disease (ESRD): Plan of AMA-PCPI.
Care for Inadequate Hemodialysis in ESRD
Patients\+\.
82. End-Stage Renal Disease (ESRD): Plan of AMA-PCPI.
Care for Inadequate Peritoneal Dialysis+.
83. Hepatitis C: Testing for Chronic AMA-PCPI.
Hepatitis C--Confirmation of Hepatitis C
Viremia.
84. Hepatitis C: Ribonucleic Acid (RNA) AMA-PCPI.
Testing Before Initiating Treatment.
85. Hepatitis C: HCV Genotype Testing Prior AMA-PCPI.
to Therapy.
86. Hepatitis C: Consideration for AMA-PCPI.
Antiviral Therapy in HCV Patients.
87. Hepatitis C: HCV Ribonucleic Acid (RNA) AMA-PCPI.
Testing at Week 12 of Treatment.
89. Hepatitis C: Counseling Regarding Risk AMA-PCPI.
of Alcohol Consumption.
90. Hepatitis C: Counseling of Patients AMA-PCPI.
Regarding Use of Contraception Prior to
Starting Antiviral Therapy.
91. Acute Otitis Externa (AOE): Topical AMA-PCPI.
Therapy.
92. Acute Otitis Externa (AOE): Pain AMA-PCPI.
Assessment.
93. Acute Otitis Externa (AOE): Systemic AMA-PCPI.
Antimicrobial Therapy--Avoidance of
Inappropriate Use.
94. Otitis Media with Effusion (OME): AMA-PCPI.
Diagnostic Evaluation--Assessment of
Tympanic Membrane Mobility.
95. Otitis Media with Effusion (OME): AMA-PCPI.
Hearing Testing.
99. Breast Cancer Resection Pathology AMA-PCPI/College of
Reporting: pT Category (Primary Tumor) and American Pathologists
pN Category (Regional Lymph Nodes) with (CAP).
Histologic Grade.
100. Colorectal Cancer Resection Pathology AMA-PCPI/CAP.
Reporting: pT Category (Primary Tumor) and
pN Category (Regional Lymph Nodes) with
Histologic Grade.
102. Prostate Cancer: Avoidance of Overuse AMA-PCPI.
of Bone Scan for Staging Low-Risk Prostate
Cancer Patients.
104. Prostate Cancer: Adjuvant Hormonal AMA-PCPI.
Therapy for High-Risk Prostate Cancer
Patients.
105. Prostate Cancer: Three-Dimensional AMA-PCPI.
(3D) Radiotherapy.
106. Major Depressive Disorder (MDD): AMA-PCPI.
Diagnostic Evaluation.
107. Major Depressive Disorder (MDD): AMA-PCPI.
Suicide Risk Assessment.
108. Rheumatoid Arthritis: Disease NCQA.
Modifying Anti-Rheumatic Drug Therapy.
109. Osteoarthritis (OA): Function and Pain AMA-PCPI.
Assessment.
110. Preventive Care and Screening: AMA-PCPI.
Influenza Immunization for Patients >= 50
Years Old*.
111. Preventive Care and Screening: NCQA.
Pneumonia Vaccination for Patients 65
years and Older*.
112. Preventive Care and Screening: NCQA.
Screening Mammography*.
113. Preventive Care and Screening: NCQA.
Colorectal Cancer Screening*.
114. Preventive Care and Screening: Inquiry AMA-PCPI.
Regarding Tobacco Use.
115. Preventive Care and Screening: NCQA.
Advising Smokers to Quit.
116. Inappropriate Antibiotic Treatment for NCQA.
Adults with Acute Bronchitis--Avoidance of
Inappropriate Use.
117. Diabetes Mellitus: Dilated Eye Exam in NCQA.
Diabetic Patient.
118. Coronary Artery Disease (CAD): AMA-PCPI.
Angiotensin-Converting Enzyme (ACE)
Inhibitor or Angiotensin Receptor Blocker
(ARB) Therapy for Patients with CAD and
Diabetes and/or Left Ventricular Systolic
Dysfunction (LSVD).
119. Diabetes Mellitus: Urine Screening for NCQA.
Microalbumin or Medical Attention for
Nephropathy in Diabetic Patients.
121. Chronic Kidney Disease (CKD): AMA-PCPI
Laboratory Testing (Calcium, Phosphorus,
Intact Parathyroid Hormone (iPTH) and
Lipid Profile).
122. Chronic Kidney Disease (CKD): Blood AMA-PCPI.
Pressure Management.
123. Chronic Kidney Disease (CKD): Plan of AMA-PCPI.
Care: Elevated Hemoglobin for Patients
Receiving Erythropoiesis--Stimulating
Agents (ESA).
124. HIT: Adoption/Use of Electronic Health Quality Insights of
Records (EHR)*. Pennsylvania (QIP)/CMS.
126. Diabetes Mellitus: Diabetic Foot and American Podiatric Medical
Ankle Care, Peripheral Neuropathy: Association (APMA).
Neurological Evaluation.
127. Diabetes Mellitus: Diabetic Foot and APMA.
Ankle Care, Ulcer Prevention: Evaluation
of Footwear.
128. Preventive Care and Screening: Body QIP/CMS.
Mass Index (BMI) Screening and Follow-Up.
130. Documentation and Verification of QIP/CMS.
Current Medications in the Medical Record.
131. Pain Assessment Prior to Initiation of QIP/CMS.
Patient Treatment.
134. Screening for Clinical Depression..... QIP/CMS.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
not reportable via claims-based reporting.
\*\ This measure is 1 of 10 measures on which specifications are
available for testing electronic submission via EHRs.

The following proposed measures included in the 2008 PQRI on the
basis of AQA adoption were considered and specifically declined for
endorsement by NQF on or before August 31, 2008 and therefore are not
included in the final measure set for the 2009 PQRI:
Measure 73 Cancer: Plan for Chemotherapy
Documented
Measure 77 Gastroesophageal Reflux Disease
(GERD): Assessment of GERD Symptoms in Patients Receiving Chronic
Medication for GERD
Measure 78 ESRD: Vascular Access for Patients
Undergoing Hemodialysis
Measure 101 Prostate Cancer: Appropriate Initial
Evaluation
Measure 132 Patient Co-Development of Treatment
Plan/Plan of Care.

[[Page 69838]]

As described in sections II.O2. and III. of this final rule with
comment period, the MIPPA authorized a new incentive program for
successful electronic prescribers. As a result, section 1848(m)(3)(A)
of the Act, as redesignated by section 131(b)(3)(C) of the MIPPA and
amended by section 131(b)(3)(D)(iii) of the MIPPA for 2009 and
subsequent years, specifies that the PQRI quality measures shall not
include electronic prescribing measures. Therefore, Measure
125 HIT: Adoption/Use of Medication e-Prescribing is not included in
the final set of 2009 PQRI quality measures. This measure will instead
be used for the new e-prescribing incentive program authorized by MIPPA
as discussed in section II.O2.
Lastly, we are not finalizing the following proposed measures
included in the 2008 PQRI primarily because our analysis of the 2007
PQRI results indicate that there were no satisfactory submissions and
no quality data codes accepted for these measures during the 2007 PQRI:
Measure 96 OME: Antihistamines or Decongestants--
Avoidance of Inappropriate Use
Measure 97 OME: Systemic Antimicrobials--
Avoidance of Inappropriate Use
Measure 98 OME: Systemic Corticosteroids--
Avoidance of Inappropriate Use
Measure 120 CKD: ACE/ARB Therapy.
With respect to Measures 96 through 98, we also
believe that eligible professionals would be unlikely to voluntarily
report inappropriate actions. With respect to Measure 120, our
analysis of the 2007 PQRI results revealed that the measure requires
multiple diagnosis codes.
Please note that detailed measure specifications for 2008 PQRI
quality measures may have been updated or modified during the NQF
endorsement process or for other reasons prior to 2009. The 2009 PQRI
quality measure specifications for any given quality measure may,
therefore, be different from specifications for the same quality
measure used for 2008. Specifications for all 2009 PQRI quality
measures, whether or not included in the 2008 PQRI program, must be
obtained from the specifications document for 2009 PQRI quality
measures, which will be available on the PQRI section of the CMS Web
site on or before December 31, 2008.
As stated above, there are 5 measures listed in Table 15 that can
be reported only via a registry for the 2009 PQRI and, therefore, are
not reportable via claims-based reporting.
ii. Additional NQF-Endorsed Measures
We proposed to include in the 2009 PQRI quality measure set 17 new
measures endorsed by the NQF but that were not included in the 2008
PQRI quality measures. We received several comments on the 17 proposed
additional NQF-endorsed measures, which are summarized and addressed
below.
Comment: We received several comments in support of the proposed
additional NQF-endorsed measures. Comments were received specifically
in support of the following measures:
Anti-platelet Medications at Discharge.
Hemodialysis Vascular Access Decision-making by Surgeons
to Maximize Placement of Autogeneous Arterial Venous Fistula.
One commenter, also the measure's developer, recommended the
removal of the proposed measure ``Use of Imaging Studies in Low Back
Pain'' and noted that this measure does not share a common denominator
with the other measures within the Back Pain measures group.
Response: We concur with the comments in support of the proposed
additional NQF-endorsed measures. However, for the reasons recommended
by the measure developer the proposed measure ``Use of Imaging Studies
in Low Back Pain'' has been removed from the 2009 PQRI quality measures
set.
For the 2009 PQRI quality measure set, we are finalizing 15 of the
17 proposed measures that were endorsed by the NQF but were not
included in the 2008 PQRI quality measures. These 17 measures are
identified in Table 16. Besides having NQF endorsement, these measures
were considered ready for implementation for the purposes of the 2009
PQRI as of October 15, 2008 based on the following--(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 to be reported by claims have been established and will be
effective for CMS claims data submission on or before January 1, 2009.

Table 16--Final Additional NQF-Endorsed Measures
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
Osteoarthritis (OA): Assessment for Use of AMA-PCPI.
Anti-Inflammatory or Analgesic Over-the-
Counter (OTC) Medications.
Back Pain: Initial Visit................... NCQA.
Back Pain: Physical Exam................... NCQA.
Back Pain: Advice for Normal Activities.... NCQA.
Back Pain: Advice Against Bed Rest......... NCQA.
Diabetes Mellitus: Foot Exam............... NCQA.
Coronary Artery Bypass Graft (CABG): STS.
Prolonged Intubation (Ventilation)\+\.
Coronary Artery Bypass Graft (CABG): Deep STS.
Sternal Wound Infection Rate\+\.
Coronary Artery Bypass Graft (CABG): Stroke/ STS.
Cerebrovascular Accident (CVA)\+\.
Coronary Artery Bypass Graft (CABG): Post- STS.
operative Renal Insufficiency\+\.
Coronary Artery Bypass Graft (CABG): STS.
Surgical Re-exploration\+\.
Coronary Artery Bypass Graft (CABG): Anti- STS.
platelet Medications at Discharge\+\.
Coronary Artery Bypass Graft (CABG): Beta STS.
Blockade at Discharge\+\.
Coronary Artery Bypass Graft (CABG): Lipid STS.
Management and Counseling\+\.
Hemodialysis Vascular Access Decision- Society for Vascular
Making by Surgeons To Maximize Placement Surgeons (SVS).
of Autogenous Arterial Venous Fistula.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
not reportable via claims-based reporting.

As previously mentioned in this final rule, we are not finalizing
the proposed measure, Use of Imaging Studies in Low Back Pain, in the
final 2009 PQRI quality measures set listed in Table 16 based on
comments received.

[[Page 69839]]

In addition, we are not finalizing the following proposed NQF-
endorsed measure in the final 2009 PQRI measures because its adaptation
to the PQRI format was subsequently found to be not feasible: Selection
of Antibiotic Administration for Cardiac Surgery Patients. Substantive
components of this measure are duplicative of Measure 21
Perioperative Care: Selection of Prophylactic Antibiotic--First OR
Second Generation Cephalosporin, which is listed in Table 15.
As stated above, there are 8 measures listed in Table 16 that can
be reported only via a registry for the 2009 PQRI and, therefore, are
not reportable via claims-based reporting.
As described in the CY 2009 PFS proposed rule (73 FR 38570),
measures designated as T in the proposed
rule indicated that the measure was included in the 2008 Measure
Testing Process. The T identifier
was removed from Table 16 in this final rule with comment because each
measure in the final 2009 PQRI quality measures set will be assigned a
unique number which may be obtained from the detailed specifications
which will be made available on the PQRI section of the CMS Web site no
later than December 31, 2008.
iii. Additional AQA Adopted Measures
As discussed in the CY 2009 PFS proposed rule (73 FR 38565 through
38566), 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
proposed 21 new measures adopted by the AQA that had not yet been
reviewed or endorsed by the NQF at the time the CY 2009 PFS proposed
rule was published and that were not included in the final set of 2008
PQRI quality measures (73 FR 38571).
We received numerous comments on the 21 proposed additional AQA-
adopted measures, which are summarized and addressed below.
Comment: Numerous commenters were in support of the inclusion of
the following proposed additional AQA-adopted measures in the final
2009 PQRI measures:
T138 Melanoma: Coordination of Care.
T139 Cataracts: Cataracts: Comprehensive Preoperative
Assessment for Cataract Surgery with Intraocular Lens (IOL) Placement.
T140 Age-Related Macular Degeneration (AMD): Counseling on
Antioxidant Supplement.
T141 Primary Open-Angle Glaucoma (POAG): Reduction of
Intraocular Pressure (IOP) by 15 percent OR Documentation of a Plan of
Care.
T143 Oncology: Medical and Radiation--Plan of Care for
Pain.
Oncology: Medical and Radiation-Pain Intensity Quantified.
Oncology: Recording of Clinical Stage for Lung Cancer and
Esophageal Cancer.
However, we received 2 comments specifically suggesting that the
proposed measure, T144 Radiology: Computed Tomography (CT) Radiation
Dose Reduction, not be finalized as part of the 2009 PQRI quality
measures for failure to achieve a recommendation for endorsement by the
NQF Steering Committee on Outpatient Imaging Efficiency.
Response: As suggested by commenters Measure T144 Radiology:
Computed Tomography (CT) Radiation Dose Reduction will not be finalized
as part of the 2009 PQRI quality measures set because the measure was
specifically reviewed by NQF on or before August 31, 2008 but declined
for endorsement. All other additional AQA-adopted measures specifically
supported by commenters are being finalized for the 2009 PQRI.
We are including in the final 2009 PQRI quality measure set 19 of
the 21 proposed measures adopted by AQA that had not yet been reviewed
or endorsed by the NQF at the time the CY 2009 PFS proposed rule was
published and that were not included in the final set of 2008 PQRI
quality measures. These measures are identified in Table 17.

Table 17--Final Additional AQA-Adopted Measures
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
Chronic Kidney Disease (CKD): AMA-PCPI.
Influenza Immunization.
Melanoma: Follow-Up Aspects of Care.. AMA-PCPI/NCQA.
Melanoma: Continuity of Care--Recall AMA-PCPI/NCQA.
System.
Melanoma: Coordination of Care....... AMA-PCPI/NCQA.
Cataracts: Comprehensive Preoperative AMA-PCPI/NCQA.
Assessment for Cataract Surgery with
Intraocular Lens (IOL) Placement.
Age-Related Macular Degeneration AMA-PCPI/NCQA.
(AMD): Counseling on Antioxidant
Supplement.
Primary Open-Angle Glaucoma (POAG) : AMA-PCPI/NCQA.
Reduction of Intraocular Pressure
(IOP) by 15% OR Documentation of a
Plan of Care.
Oncology: Medical and Radiation--Plan AMA-PCPI.
of Care for Pain.
Radiology: Exposure Time Reported for AMA-PCPI/NCQA.
Procedures Using Fluoroscopy.
Oncology: Medical and Radiation--Pain AMA-PCPI.
Quantified.
Radiology: Inappropriate Use of AMA-PCPI.
``Probably Benign'' Assessment
Category in Mammography Screening.
Coronary Artery Disease (CAD): Lipid AMA-PCPI.
Profile in Patients with CAD.
Chronic Kidney Disease (CKD): AMA-PCPI.
Referral for Arteriovenous (AV)
Fistula.
Falls: Plan of Care.................. AMA-PCPI.
Falls: Risk Assessment............... AMA-PCPI.
Oncology: Radiation Dose Limits to AMA-PCPI.
Normal Tissues.
Hepatitis C: Hepatitis A Vaccination. AMA-PCPI.
Hepatitis C: Hepatitis B Vaccination. AMA-PCPI.
Oncology: Recording of Clinical Stage STS.
for Lung Cancer and Esophageal
Cancer.
------------------------------------------------------------------------

The following proposed measures are not included in the final 2009
PQRI quality measure set because they were reviewed by NQF on or before
August 31, 2008 and were not recommended for endorsement:
Measure T144 Radiology: Computed Tomography (CT) Radiation
Dose Reduction; and
Osteoporosis: Counseling for Vitamin D, Calcium Intake,
and Exercise.
Besides being adopted by the AQA, the measures we finalized were
considered ready for implementation for the purposes of the 2009 PQRI
as of October 15, 2008 based on the following--(1) the final, detailed

[[Page 69840]]

specifications for use 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 to be reported by claims have been established
and will be effective for CMS claims data submission on or before
January 1, 2009.
As described in section III.O.4.b, measures designated as
T in the proposed rule indicated that the
measure was included in the 2008 Measure Testing Process. The
T identifier was removed from Table
17 in the final rule with comment period because each measure in the
final 2009 PQRI measure set will be assigned an unique number which may
be obtained from the detailed specifications which will be made
available on the PQRI section of the CMS Web site no later than
December 31, 2008.
iv. Additional Measures Selected Contingent upon NQF Endorsement or AQA
Adoption by August 31, 2008
We proposed to include in the 2009 PQRI quality measure set 26 new
measures that had not yet received NQF endorsement or AQA adoption at
the time of the publication of the proposed rule but whose selection
was contingent on NQF endorsement and/or AQA adoption by August 31,
2008 (73 FR 38571 through 38572).
We received several comments on these 26 proposed measures, which
are summarized and addressed below.
Comment: Several commenters were in support of the following
proposed measures that have since been NQF endorsed and/or AQA adopted
as of August 31, 2008:
Nuclear Medicine: Correlation with Existing Imaging
Studies for all Patients Undergoing Bone Scintigraphy; and
Preventive Care and Screening: Unhealthy Alcohol Use--
Screening & Brief Counseling.
One commenter, also the measure's developer, noted that the
proposed measure Lipid Screening is not available for use in the 2009
PQRI. Several commenters stated the following proposed measures do not
represent standards of care and have technical issues and therefore,
opposed inclusion of these measures in the final 2009 PQRI measure set:
Rheumatoid Arthritis: Appropriate Use of Biologic Disease
Modifying Anti-Rheumatic Drugs (DMARDs);
Chronic Wound Care: Offloading of Diabetic Foot Ulcers;
Diabetes Mellitus: Diabetic Foot and Ankle Care,
Peripheral Arterial Disease--Ankle Brachial Index; and
Palliative Care: Dyspnea Screening and Management.
Response: The final 2009 PQRI measures have been selected based
upon the following criteria as stated in the proposed rule:
Achievement of NQF endorsement or AQA adoption by August
31, 2008;
Readiness 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 to be reported by claims have been established and will
be effective for CMS claims based submission on or before January 1,
2009; and
Proposed for use in the 2009 PQRI in the CY 2009 PFS
proposed rule with an opportunity for public comment via the rulemaking
process.
As identified in Table 18, we are including in the final 2009 PQRI
quality measure set 18 of 26 proposed measures that were contingent
upon NQF endorsement or AQA adoption by August 31, 2008.

Table 18--Final Measures Selected for 2009 Contingent Upon NQF
Endorsement or AQA Adoption by August 31, 2008
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
Nuclear Medicine: Correlation with AMA-PCPI.
Existing Imaging Studies for all
Patients Undergoing Bone
Scintigraphy.
Preventive Care and Screening: AMA-PCPI.
Unhealthy Alcohol Use--Screening &
Brief Counseling.
Pediatric ESRD: Adequacy of AMA-PCPI.
Hemodialysis\+\.
Pediatric ESRD: Influenza AMA-PCPI.
Immunization.
Rheumatoid Arthritis: Tuberculosis AMA-PCPI/NCQA.
Screening.
Rheumatoid Arthritis: Periodic AMA-PCPI/NCQA.
Assessment of Disease Activity.
Rheumatoid Arthritis: Functional AMA-PCPI/NCQA.
Limitation Assessment.
Rheumatoid Arthritis: Assessment and AMA-PCPI/NCQA.
Classification of Disease Prognosis.
Rheumatoid Arthritis: Glucocorticoid AMA-PCPI/NCQA.
Management.
Endoscopy & Polyp Surveillance: AMA-PCPI/NCQA.
Surveillance Colonoscopy Interval in
Patients with History of Adenomatous
Polyps.
Wound Care: Use of Compression System AMA-PCPI/NCQA.
in Patients with Venous Ulcers.
HIV/AIDS: CD4\+\ Cell Count or CD4+ AMA-PCPI/NCQA.
Percentage\+\.
HIV/AIDS: Pneumocystis Jiroveci AMA-PCPI/NCQA.
Pneumonia (PCP) Prophylaxis+.
HIV/AIDS: Adolescent and Adult AMA-PCPI/NCQA.
Patients with HIV/AIDS who are
Prescribed Potent Antiretroviral
Therapy\+\.
HIV/AIDS: HIV RNA Control After 6 AMA-PCPI/NCQA.
Months of Potent Antiretroviral
Therapy\+\.
Elder Maltreatment Screen and Follow- QIP/CMS.
up Plan.
Functional Outcome Assessment in QIP/CMS.
Chiropractic Care.
Endarterectomy: Use of Patch During SVS.
Conventional Endarterectomy.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
not reportable via claims-based reporting.

These measures were selected based on the comments received,
whether the measure received NQF endorsement and/or AQA adoption by
August 31, 2008, and whether the measure was ready for implementation
by October 15, 2008. A measure was 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.
These additional measures augment the opportunity for eligible
professionals to submit quality data under the PQRI where there were
limited measures. These additional measures include the addition of
measures for nuclear medicine services, pediatric ESRD services,
rheumatoid arthritis services, gastroenterology services, wound care,
and chiropractic services.
The following proposed measures are not included in the final set
of 2009

[[Page 69841]]

PQRI quality measures listed in Table 18 because they did not achieve
NQF endorsement or AQA adoption as of August 31, 2008:
Chronic Wound Care: Offloading of Diabetic Foot Ulcers;
Diabetes Mellitus: Diabetic Foot and Ankle Care,
Peripheral Arterial Disease--Ankle Brachial Index; and
Endarterectomy: Perioperative Stroke or Death in
Asymptomatic Patient Undergoing Carotid Endarterectomy (CEA).
The following proposed measures are not included in the final set
of 2009 PQRI quality measures listed in Table 18 because they were not
ready for implementation by October 15, 2008:
Lipid Screening;
Rheumatoid Arthritis: Appropriate Use of Biologic Disease
Modifying Anti-Rheumatic Drugs (DMARDs); and
Participation by Physician or Other Clinician in a
Systematic Clinical Database Registry that includes Consensus Endorsed
Quality Measures.
That is, by October 15, 2008, (1) the final, detailed
specifications for use of the measure in data collection for PQRI have
not been completed and/or are not ready for implementation, or (2) all
of the CPT II codes required for the measure to be reported by claims
have not been established and/or will not be effective for CMS claims
based submission on or before January 1, 2009.
In addition, we did not include in the final set of PQRI measures
listed in Table 18 the following proposed measures that subsequently
were adopted by the AQA, because their adaptation to the PQRI format
was subsequently found to be not feasible:
Palliative Care: Dyspnea Screening and Management.
Finally, we did not include in the final PQRI measures listed in
Table 18 the following proposed measure:
Endarterectomy: Peri-operative Anti-platelet Therapy for
Patients Undergoing Carotid Endarterectomy (CEA)
We did not include this measure in the final 2009 PQRI quality
measures set for many reasons. First, this measure is not reportable
through claims submission. The SVS did not self-nominate to become a
qualified registry for the 2008 PQRI and the SVS registry is not
currently collecting this measure. In addition, we are not aware of any
other registries collecting this measure.
As stated above, however, there are 5 measures listed in Table 18
that can be reported only via a registry for the 2009 PQRI, and
therefore, are not reportable via claims-based reporting.
v. Measures Selected for Inclusion in 2009 Measures Groups
As discussed in the CY 2009 PFS proposed rule, we proposed to
retain three of the four 2008 PQRI measures groups for the 2009 PQRI--
(1) Diabetes Mellitus, (2) CKD, and (3) Preventive Care. The measures
proposed for inclusion in the 2009 Diabetes Mellitus, CKD, and
Preventive Care measures groups were identified in the CY 2009 PFS
proposed rule (73 FR 38572 through 38573).
In addition to these three proposed measures groups retained from
2008 with applicable modifications, there were 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 measures groups was proposed to contain at least four PQRI
quality measures. Except for the Back Pain measures group, it was
proposed that all measures included in a measures group could be
reported individually or as part of a group. Measures in the Back Pain
measures group were proposed to be reportable only as a part of this
measures group.
In the CY 2009 PFS proposed rule (73 FR 38560), we invited comments
on the proposed new measures groups, including suggestions for other
measures groups based on individual measures included in the proposed
2009 PQRI measure set. We explained that for the 2009 PQRI, measures
groups must contain at least 4 measures and asked that all measures in
each measures group suggested by commenters be included in the list of
measures proposed in the CY 2009 PFS proposed rule (73 FR 38567 through
38572). We explained that 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 the 2009 PQRI, as identified
below.
We received numerous comments on the proposed measures groups,
which are summarized and addressed as follows.
Comment: Many commenters suggested that we create a composite code
for reporting all of the aspects of care within a measures group. One
commenter specifically recommended that the CABG Surgery measures group
be limited to a smaller number of measures unless a composite code is
created for all aspects of care in the measures proposed for inclusion
in the CABG Surgery measures group.
Response: We continue to seek methods to simplify reporting and
increase participation in PQRI. We agree with this suggestion and have
taken the necessary steps to develop composite codes for reporting all
of the aspects of care within a measures group. This composite code
will aid to simplify and allow for ease of reporting for those eligible
professionals who elect to report a measures group. The measures
groups' specifications document will be updated to include composite
codes. No later than December 31, 2008, we will post the detailed
specifications and specific instructions for reporting measures groups
on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri.
Comment: We received numerous comments suggesting additional
measures groups. Examples of measures groups' topics suggested by
commenters include, but are not limited to, geriatrics, hepatitis C,
respiratory, ischemic vascular disease (IVD), cardiovascular disease
and stroke care, stroke treatment, osteoporosis, and oral drug therapy.
One commenter noted that the proposed measures groups are applicable to
physicians only and encouraged us to consider other eligible
professionals as new measures groups are identified. Some commenters
suggested specific measures for inclusion in their suggested measures
groups, but many commenters did not suggest specific groups of at least
4 measures.
Response: While we welcome the additional measures groups suggested
by commenters, we are not able to consider such additional measures
groups for inclusion in the 2009 PQRI since there is no opportunity for
public comment on the measures groups' potential inclusion in the 2009
PQRI. However, to the extent that commenters suggested specific
measures for inclusion in a particular measures group, we will take the
commenters' suggestions into consideration for purposes of identifying
measures groups for possible inclusion in future years' PQRI.
As stated in the CY 2009 PFS proposed rule (73 FR 38560), each
measures group suggested by commenters must contain at least 4 measures
and must consist of the proposed measures cited in section II.O.4. of
the proposed rule, ``Proposed 2009 PQRI Quality Measures.'' The
measures groups must have a particular clinical condition or focus in
common, as identified by the denominator definition and coding of the
measures groups.
We encourage professional organizations and measure developers to
engage in the development of measures groups, including measures

[[Page 69842]]

groups that are applicable to other nonphysician professionals. We will
continue working with stakeholders to fill gaps for measures groups.
Comment: We received multiple suggestions for altering the proposed
measure groups.
Response: As stated previously, we requested in the CY 2009 PFS
proposed rule that suggestions for new measures groups or measures
included in a particular measures group, must be based on individual
measures included in the proposed 2009 PQRI quality measure set. In
response to the suggestions provided by commenters, the Use of Imaging
Studies in Low Back Pain measure has been removed from the Back Pain
measures group due to the frequency for the process of care being
inconsistent with the other measures in this measures group. No new
measures groups have been established outside of what was included in
the CY 2009 PFS proposed rule. However, we encourage professional
organizations and measure developers to engage in the development of
measure groups. We plan to continue working with stakeholders to fill
gaps for measures groups.
Comment: Several commenters recommended retaining the ESRD Measures
Group for the 2009 PQRI by replacing the 2008 PQRI Measure 80:
Plan of Care for ESRD Patients with Anemia which was declined for NQF
endorsement with the proposed 2009 PQRI Measure 82 ESRD: Plan
of Care for Inadequate Peritoneal Dialysis listed in section II.O1.d.
of this final rule, ``The Final 2009 PQRI Quality Measures.''
Response: As stated in the proposed rule (73 FR 38560), the ESRD
measures groups is not being included in the 2009 PQRI because one of
the measures in the group is no longer NQF-endorsed. The denominator
definition and coding of the ESRD measures proposed and selected for
the 2009 PQRI do not meet the requirements for a measures group as
stated in section II.O1.b.ii. of this final rule with comment period.
However, the proposed 2009 PQRI Measure 82 ESRD: Plan of Care
for Inadequate Peritoneal Dialysis is available to be reported as an
individual quality measure in the 2009 PQRI.
Based on the comments we received, we are retaining three 2008 PQRI
measures groups for the 2009 PQRI--(1) Diabetes Mellitus, (2) CKD, and
(3) Preventive Care. In some cases, different or additional measures
may be selected 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 selected for
inclusion in the 2009 Diabetes Mellitus, CKD, and Preventive Care
measures groups are listed in Tables 19 through 21.
Some measures selected 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 19 through 25. 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 until now. A number will be
assigned to such measures for the 2009 PQRI. 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.O1.b.ii.).

Table 19--Final Measures Selected for 2009 Diabetes Mellitus Measures
Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
1. Diabetes Mellitus: Hemoglobin A1c NCQA.
Poor Control in Diabetes Mellitus.
2. Diabetes Mellitus: Low Density NCQA.
Lipoprotein (LDL-C) Control in
Diabetes Mellitus.
3. Diabetes Mellitus: High Blood NCQA.
Pressure Control in Diabetes
Mellitus.
117. Diabetes Mellitus: Dilated Eye NCQA.
Exam in Diabetic Patient.
119. Diabetes Mellitus: Urine NCQA.
Screening for Microalbumin or
Medical Attention for Nephropathy in
Diabetic Patients.
Diabetes Mellitus: Foot Exam......... NCQA.
------------------------------------------------------------------------

Table 20--Final Measures Selected for 2009 CKD Measures Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
121. Chronic Kidney Disease (CKD): AMA-PCPI.
Laboratory Testing (Calcium,
Phosphorus, Intact Parathyroid
Hormone (iPTH) and Lipid Profile).
122. Chronic Kidney Disease (CKD): AMA-PCPI.
Blood Pressure Management.
123. Chronic Kidney Disease (CKD): AMA-PCPI.
Plan of Care: Elevated Hemoglobin
for Patients Receiving
Erythropoiesis--Stimulating Agents
(ESA).
Chronic Kidney Disease (CKD): AMA-PCPI.
Referral for Arteriovenous AV)
Fistula.
Chronic Kidney Disease (CKD): AMA-PCPI.
Influenza Immunization.
------------------------------------------------------------------------

Table 21--Final Measures Selected for 2009 Preventive Care Measures
Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
39. Screening or Therapy for AMA-PCPI/NCQA.
Osteoporosis for Women Aged 65 Years
and Older.
48. Urinary Incontinence: Assessment AMA-PCPI/NCQA.
of Presence or Absence of Urinary
Incontinence in Women Aged 65 Years
and Older.
110. Preventive Care and Screening: AMA-PCPI.
Influenza Immunization for Patients
[gteqt] 50 Years Old.
111. Preventive Care and Screening: NCQA.
Pneumonia Vaccination for Patients
65 Years and Older.
112. Preventive Care and Screening: NCQA.
Screening Mammography.
113. Preventive Care and Screening: NCQA.
Colorectal Cancer Screening.
114. Preventive Care and Screening: AMA-PCPI.
Inquiry Regarding Tobacco Use.

[[Page 69843]]

115. Preventive Care and Screening: NCQA.
Advising Smokers to Quit.
128. Preventive Care and Screening: QIP/CMS.
Body Mass Index (BMI) Screening and
Follow-Up.
------------------------------------------------------------------------

In addition to the three measures groups retained from 2008 with
applicable modifications, there are four new measures groups that we
are finalizing for the 2009 PQRI: (1) CABG Surgery; (2) Rheumatoid
Arthritis; (3) Perioperative Care; and (4) Back Pain. Each of the
measures groups contains at least four PQRI measures.
Tables 22 through 25 lists the measures selected for inclusion in
each of these new measures groups.

Table 22--Final Measures Selected for 2009 CABG Measures Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
43. Coronary Artery Bypass Graft STS.
(CABG): Use of Internal Mammary
Artery (IMA) in Isolated CABG
Surgery.
44. Coronary Artery Bypass Graft STS.
(CABG): Preoperative Beta-Blocker in
Patients with Isolated CABG Surgery.
Coronary Artery Bypass Graft (CABG): STS.
Prolonged Intubation (Ventilation)
\+\.
Coronary Artery Bypass Graft (CABG): STS.
Deep Sternal Wound Infection Rate
\+\.
Coronary Artery Bypass Graft (CABG): STS.
Stroke/Cerebrovascular Accident
(CVA) \+\.
Coronary Artery Bypass Graft (CABG): STS.
Post-operative Renal Insufficiency
\+\.
Coronary Artery Bypass Graft (CABG): STS.
Surgical Re-exploration \+\.
Coronary Artery Bypass Graft (CABG): STS.
Anti-platelet Medications at
Discharge \+\.
Coronary Artery Bypass Graft (CABG): STS.
Beta Blockers Administered at
Discharge \+\.
Coronary Artery Bypass Graft (CABG): STS.
Lipid Management and Counseling \+\.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
not reportable via claims-based reporting.

Table 23--Final Measures Selected for 2009 Rheumatoid Arthritis Measures
Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
108. Rheumatoid Arthritis: Disease NCQA.
Modifying Anti-Rheumatic Drug
(DMARD) Therapy.
Rheumatoid Arthritis: Tuberculosis AMA-PCPI/NCQA.
Screening.
Rheumatoid Arthritis: Periodic AMA-PCPI/NCQA.
Assessment of Disease Activity.
Rheumatoid Arthritis: Functional AMA-PCPI/NCQA.
Limitation Assessment.
Rheumatoid Arthritis: Assessment and AMA-PCPI/NCQA.
Classification of Disease Prognosis.
Rheumatoid Arthritis: Glucocorticoid AMA-PCPI/NCQA.
Management.
------------------------------------------------------------------------

Table 24--Final Measures Selected for 2009 Perioperative Care Measures
Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
20. Perioperative Care: Timing of AMA-PCPI/NCQA.
Antibiotic Prophylaxis--Ordering
Physician.
21. Perioperative Care: Selection of AMA-PCPI/NCQA.
Prophylactic Antibiotic--First OR
Second Generation Cephalosporin.
22. Perioperative Care: AMA-PCPI/NCQA.
Discontinuation of Prophylactic
Antibiotics (Non-Cardiac Procedures).
23. Perioperative Care: Venous AMA-PCPI/NCQA.
Thromboembolism (VTE) Prophylaxis
(When Indicated in ALL Patients).
------------------------------------------------------------------------

Table 25--Final Measures Selected for 2009 Back Pain Measures Group
------------------------------------------------------------------------
Measure title Measure source
------------------------------------------------------------------------
Back Pain: Initial Visit............. NCQA.
Back Pain: Physical Exam............. NCQA.
Back Pain: Advice for Normal NCQA.
Activities.
Back Pain: Advice Against Bed Rest... NCQA.
------------------------------------------------------------------------

We are not finalizing the proposed CAD and HIV/AIDS measures
groups. Analysis of the proposed CAD measures group has revealed
difficulty with determining a common denominator and that two of the
four measures within this measures group would require additional
diagnosis codes in order to be applicable for the group. Analysis of
the proposed HIV/AIDS measures group has revealed several barriers for
establishing the common denominator and the consecutive patient
determination. While these are meaningful individual quality measures,
we believe that the issues as stated make it impractical to use these
measures as measures groups.
The measures in the Diabetes Mellitus; CKD; Preventive Care;
Rheumatoid Arthritis, and Perioperative Care measures groups are
reportable either individually or as part of the measures group. The
measures in these measures groups can be reported through claims-based
or registry-based submission.
The measures in the Back Pain measures group are reportable only as
a measures group, not as individual

[[Page 69844]]

measures. As individual measures, the measures in the Back Pain
measures group are too basic; however, taken together they are
meaningful indicators of quality of care for back pain. These measures
are also reportable through claims-based or registry-based submission.
Eight measures in the CABG surgery measures group are reportable
only via registry-based reporting as a measures group or as individual
measures. These measures cannot be reported through claims-based
reporting because they cannot be feasibly specified for claims-based
reporting.
In addition, as discussed above, we did not finalize Measure
120 CKD: ACE/ARB Therapy in the 2009 PQRI. Therefore, we are
removing Measure 120 from the CKD Measures Group and are
instead replacing Measure 120 with the following 2 measures
from Table 17:
CKD: Referral for AV Fistula.
CKD: Influenza Immunization.
Analysis of Measure 120 revealed that the measure requires
multiple diagnosis codes, which is inconsistent with the other measures
in the CKD Measures Group.
As noted in the CY 2009 PFS proposed rule (73 FR 38560), the
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 could
be different from specifications and submission instructions for the
same measures group used for 2008. These measure specification changes
do not materially impact the intended meaning of the measures or the
strength of the measures. Additionally, the specifications for measures
groups would not necessarily contain all the specification elements of
each individual measure making up the measures group. This is based on
the need for a common set of denominator specifications for all the
measures making up a measures group in order to define the
applicability of the measures group. Therefore, the specifications and
instructions for measures groups will be provided separately from the
specifications and instructions for the individual 2009 PQRI measures.
We will post the detailed specifications and specific instructions for
reporting measures groups on the PQRI section of the CMS Web site at
http://www.cms.hhs.gov/pqri by no later than December 31, 2008.
e. Uses of PQRI Information
i. Overview and Summary
In the CY 2009 PFS proposed rule (73 FR 38574 through 38575) we
indicated that we are contemplating a ``Physician Compare'' Web site
similar to other Web pages we currently have 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) by enhancing the information found on the Physician and Other
Healthcare Professional 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. 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. As we indicated in the proposed rule, the
data on PQRI quality measures that is submitted at the individual (that
is, NPI) level by physicians and other eligible professionals could be
the basis for public reporting of quality measurement performance
results at either the individual or group (that is, TIN) level. We also
indicated that as part of our broader goal to measure and make the
quality of care for services furnished to Medicare beneficiaries
publicly available and in support of the four cornerstones for value-
driven health care (that is, connecting the health system through the
use of interoperable health information technology; measuring and
publishing information about quality; measuring and publishing
information about price; and using incentives to promote high-quality
and cost-effective care), we anticipate making information on the
quality of care for services furnished by professionals to Medicare
beneficiaries publicly available in the future. We also indicated that
we anticipate exploring the use of information collected from the PQRI,
including performance results, for this purpose. To assist us in
determining the most appropriate uses of PQRI data, we invited 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.
In addition, subsequent to the publication of the CY 2009 PFS
proposed rule, section 1848(m)(5)(G) of the Act, as added by the MIPPA
and described in section III. of this final rule with comment period,
requires the Secretary to post on the CMS Web site, in an easily
understandable format, a list of the names of eligible professionals
(or group practices) who satisfactorily submitted data on quality
measures for the PQRI and the names of the eligible professionals (or
group practices) who are successful electronic prescribers as defined
and discussed further below in section II.O2. This requirement,
however, cannot be applied retrospectively to data that was collected
prior to the enactment of the MIPPA.
ii. Summary of Comments and Responses
The following is a summary of the comments we received and our
responses.
Comment: A few commenters expressed general support for publicly
reporting physician performance and/or participation information and
applauded CMS' efforts to assist beneficiaries in making informed
decisions when choosing a health care provider. One commenter noted
that although reporting performance information back to providers is an
important first step, rapidly reporting performance information to the
public is critical for informed decision-making by consumers and
purchasers. Some commenters also expressed support for making specific
types of information public about eligible professionals. Examples of
information that commenters would like to see made public include, but
are not limited to, board certification status and certification
maintenance status, adding

[[Page 69845]]

hospital medicine to the list of specialties contained in the Physician
and Other Healthcare Professional Directory, CAHPS patient survey data,
an indicator of whether an eligible professional participates in a
clinical data registry, and the numerators and denominators for any
measure rates that are publicly reported.
Response: We are pleased to have the commenters' support for our
broader goal to make information on physician performance publicly
available. We agree that such information may be relevant and useful to
a broad audience. Physicians and other eligible professionals can use
information about their own performance and the performance of their
peers to improve the quality of the care they deliver. Medicare
beneficiaries and other consumers can use such information to inform
their decision-making when it comes to selecting their health care
providers. We note, however, that much of the information that
commenters specifically requested be made public is beyond the scope of
this final rule with comment period, which is limited to the public
disclosure of PQRI information.
Comment: A few commenters suggested that we limit public reporting
of PQRI information to the names of the clinicians and/or group
practices that satisfactorily participated and earned an incentive
payment.
Response: As stated previously, the MIPPA requires us to list the
names of eligible professionals (or group practices) who satisfactorily
submitted data on quality measures for the PQRI on our Web site. While
we agree that information on who satisfactorily submits data on quality
measures for the PQRI is useful information to have and plan to list
only the names of physicians who satisfactorily participated in the
2009 PQRI and earned an incentive payment, it is our goal to eventually
make performance information public as well. We have made information
on quality of care in other care settings publicly available and hope
to eventually do the same for physicians and other health care
practitioners as part of our broader goal to measure and make the
quality of care for services furnished to Medicare beneficiaries
publicly available.
Comment: Several commenters felt that it would be premature to
publicly report any information derived from PQRI at this time. Other
commenters merely urged CMS to proceed cautiously when creating a
Physician Compare Web site using PQRI data. Although some commenters
supported limiting the information to be publicly reported to the names
of eligible professionals and/or group practices that satisfactorily
participate in PQRI and earned the bonus incentive payment, many
commenters cited concerns with even listing just the names of
participants. Some of the specific concerns cited include:
Lack of program stability;
Lack of evidence demonstrating that compliance with pay-
for-reporting programs increases quality;
Lack of evidence to demonstrate the validity of some of
the PQRI quality measures;
Successful participation demonstrates only an eligible
professional's ability to implement a process and is not a measure of
quality;
Publicly reporting PQRI participation information may give
beneficiaries or others who visit the Web site the false impression
that eligible professionals who participated are practicing higher
quality medicine than those who do not participate;
Not clear how information on an individual's participation
in the PQRI would be helpful or meaningful;
The analysis of physician performance on some measures
will be based on small numbers;
CMS' data on PQRI participation may be an inaccurate
representation of the number of eligible professionals participating or
making a good faith effort to participate in PQRI since clearinghouses
inappropriately removed NPI information from claims submissions;
Major improvements are needed to the Physician and Other
Healthcare Professional Directory before it can form the basis for a
Physician Compare Web site because there are accuracy issues associated
with the data on the Physician and Other Healthcare Professional
Directory;
It would be unfair to eligible professionals to publish
PQRI information since no interim feedback reports are provided to help
participants determine if they are reporting correctly;
It would be especially unfair to publicly report 2007 and
2008 data because eligible professionals were not informed in advance
that such information would be publicly reported;
Publicly reporting 2007 PQRI participation information may
be perceived by physicians as reneging on prior commitments that CMS
made to physicians in which we indicated that we would not publicly
report PQRI information at this time;
While other providers, such as hospitals, home health
agencies, and nursing homes had many months of advance notice that CMS
would be launching public reporting programs for those provider
settings, eligible professionals were given no advance notice that PQRI
information would be made public until very recently;
CMS does not have the authority to publicly report PQRI
performance information since the Congress only gave CMS the authority
to publicly report the names of successful participants;
The PQRI program is too new and is a voluntary program;
Many eligible professionals cannot participate in PQRI due
to the lack of applicable measures;
Experience with PQRI is limited and individual eligible
professionals are still trying to determine how to integrate PQRI into
their office billing processes; and
There are numerous barriers, some of which are described
above, that make it difficult for physicians and other eligible
professionals to participate in the PQRI.
Response: We are appreciative of the commenters' thoughtful and
constructive feedback and will take these concerns into consideration
as we further develop our plans for publicly reporting PQRI
information. While we understand the commenters' concerns, we note that
section 1848(m)(5)(G) of the Act, as added by the MIPPA, requires us to
list the names of eligible professionals who satisfactorily submitted
PQRI quality measures data in an easily understandable format on our
Web site. As such, it is our intent to identify the eligible
professionals who satisfactorily submit data on quality measures for
the 2009 PQRI on the CMS Web site in 2010. We are not required, nor are
we specifically authorized by MIPPA or preceding PQRI authorizing
legislation, to publicly report 2007 and 2008 PQRI information
submitted prior to July 15, 2008.
Comment: A number of the commenters urged CMS to delay the public
reporting of information derived from PQRI that was authorized by the
MIPPA because eligible professionals should have the opportunity to
view their individual data for several years before it is made public.
Several commenters provided recommendations for CMS to consider with
respect to publicly reporting PQRI information and specifically as we
proceed with implementing the MIPPA provision to list the names of the
individuals or physician groups who successfully participate in the
PQRI on CMS's Web site. Examples of some of the recommendations
received include:
CMS should educate the public on PQRI and its limitations
and include disclaimer language on the Web site

[[Page 69846]]

explaining the PQRI program and its limitations, such as the program is
voluntary, there are many barriers to participation and many valid
reasons for nonparticipation, there are many factors that could impact
participation, the year to year changes to the program, and PQRI
participation status is not a proxy for quality.
CMS should conduct a formal evaluation to closely review
the 2007 and 2008 PQRI program, including the program's processes and
the analysis and validation of the data gathered, before proceeding
with public reporting of PQRI participation or performance data. No
PQRI data should be publicly released until its accuracy and
reliability is verified, otherwise, serious unintended consequences can
occur. CMS must make every effort to ensure the accuracy of any
information that will be made public, including demographic information
and other information listed in the Physician and Other Healthcare
Professional Directory, and provide the American Medical Association
and medical specialty societies access to aggregate PQRI participation
data so that these groups can analyze the data to ensure accuracy,
improve upon identified quality gaps in specialty care, and work with
physicians to boost participation.
The Web site should positively recognize physicians who
attempted to participate in the program and if a physician or other
eligible professional attempted to participate but was not deemed to be
a successful participant, CMS should provide the eligible professionals
with the reasons why and give the eligible professional the opportunity
to correct any errors, appeal, and/or request that the participant's
explanation for why he or she was not successful be made public.
Eligible professionals should also be given the
opportunity to publicly explain why they did not participate, including
the ability to describe any quality improvement initiatives the
eligible professional participates in.
CMS should provide more timely and detailed confidential
feedback reports (including interim feedback reports) to providers so
that they can quickly address any participation or performance issues
before data is posted to the Web site.
Eligible professionals should be notified prior to the
start of data collection that data collected in a particular year will
be publicly reported and should be given sufficient opportunity to
review and comment on any information that will be made public prior to
its public release following an initial dry run in which reports are
shared only with the eligible professionals. In addition, there should
be a formal process to allow eligible professionals to correct any
errors. CMS should also make the comments received from the review
period public.
CMS should not report the names of those who
satisfactorily submitted quality data until the data submission process
and the reporting results have been verified.
CMS should work closely with the physician community and
other stakeholders in establishing a Physician Compare Web site and
should establish a multi-stakeholder workgroup to provide input and
feedback to CMS on the development of the Web site, including
identifying potential problem areas. This includes conducting focus
groups with consumers and providers to determine the goals for public
reporting prior to deciding which data to report.
CMS may want to consider reporting data at the physician
group or team level as opposed to the individual level as well as
consider reporting composite measures rather than individual measures.
Eligible professionals should have the ability to opt-out
of having their information made public.
Public reporting of PQRI measurement results should be
limited to those measures that have achieved an agreed upon baseline of
scientific acceptability post-implementation or to those measures on
which eligible professionals chose to submit data.
CMS should publish the names of participating eligible
professionals only in cases where the PQRI measures that the eligible
professionals reported on has been in use in the PQRI for at least 3
years. This indicates at least some measure of stability in the program
and allows CMS to recognize those eligible professionals that reported
on measures that have been in use in PQRI for less than 3 years as
early adopters.
Any Physician Compare tool developed by CMS needs to be
user-friendly and thoroughly vetted and evaluated prior to going live
to the public. CMS should consider formats that balance the needs of
end users with the amount of data to be displayed and permit specific
action by patients, families, and others. The Web site should be
designed to report current measure sets but be flexible enough to grow
with the addition of measures and physicians over time.
CMS should take a two-phase approach to publicly reporting
PQRI information at the NPI level. In Phase 1 CMS should publicize only
the names of those who participated. After 2 years, then CMS should
publicize the names of those who participated, those who did not
participate and those who participated successfully in Phase 2.
Response: We appreciate the numerous recommendations that were
provided in the spirit of ensuring a successful launch of our efforts
to make information about physician performance publicly available. As
we proceed with making the names of the eligible professionals who
satisfactorily report data on quality measures for the 2009 PQRI, we
will consider these suggestions along with other input received (both
formally and informally) as part of our ongoing dialogue with
stakeholders. We believe that many of these suggestions are reasonable
and will try to incorporate them into our plans to the extent that they
are feasible and practical.
c. Plans for Publicly Reporting Information Derived From PQRI
To support the delivery of high-quality, efficient health care and
enable consumers and providers to make more informed health care
decisions, CMS plans to launch a Physician and Other Health Care
Professional Compare Web site that will enhance the information found
on the current Physician and Other Health Care Professionals Directory
at http://www.medicare.gov/Physician/Home.asp?bhcp=1. CMS anticipates
that the addition of a Physician and Other Health Care Professional
Compare Web site to the compare family of Web sites will complement the
quality information CMS already makes available for hospitals, dialysis
facilities, nursing homes, and home health facilities. Similar to the
other compare Web sites, Physician and Other Health Care Professional
Compare will include information about the quality of care and value
for services provided by physicians to Medicare beneficiaries.
As a first step, we plan to use information from the PQRI program
to populate a Physician and Other Health Care Professional Compare Web
site.
Based on the public comments received and the requirements under
section 1848(m)(5)(G) of the Act, we will report publicly the names of
eligible professionals that have satisfactorily submitted quality data
for the 2009 PQRI. This information will be available in 2010, in an
easily understandable format, on a Physician and Other Health Care
Professional Compare Web site at http://www.medicare.gov/Physician/Home.asp?bhcp=1.
For purposes of publicly reporting the names of eligible
professionals, on a Physician and Other Health Care

[[Page 69847]]

Professional Compare Web site, we will post the names of eligible
professionals who have (1) submitted data on the 2009 PQRI quality
measures through the claims-based reporting mechanism or through
registry-based reporting, (2) met one of the satisfactory reporting
criteria for the 2009 PQRI described in section II.O1.b above, and (3)
received a PQRI incentive payment for covered professional services
furnished between January 1, 2009 through December 31, 2009.
As with the other compare Web sites, CMS plans to continue to
expand the information that is available on the Physician and Other
Health Care Professional Compare Web site in the future. CMS may
publicly report physician information that is maintained in the
``Performance Measurement and Reporting System (PMRS),'' SOR number 09-
70-0584, as amended, in order to improve the quality and efficiency of
health care delivery and enable consumers to make more informed health
care decisions. This includes posting on an Internet Web site the names
of those physicians who report data on quality measures through the
PQRI as described above as well as other types of performance
measurement information. More information about the PMRS SOR is
available at http://www.cms.hhs.gov/PrivacyActSystemofRecords/downloads/0584.pdf.

O2. Electronic Prescribing (E-Prescribing) Incentive Program

a. Program Background and Statutory Authority
As discussed in section III. of this final rule with comment
period, the MIPPA authorizes a new incentive program beginning for 2009
for eligible professionals who are successful electronic prescribers.
Since MIPPA was enacted after publication of the CY 2009 PFS proposed
rule, there was no discussion of this new incentive program in the CY
2009 PFS proposed rule. We note, however, that many of the requirements
under MIPPA with respect to the new e-prescribing incentive program are
self-implementing. In addition, section 1848(m)(5)(C) of the Act, as
redesignated and amended by the MIPPA, authorizes us to implement
certain aspects of the 2009 e-prescribing incentive program by program
instruction or otherwise. Given that the e-prescribing quality measure
developed under the PQRI program will be used in 2009, however, we are
finalizing the 2009 e-prescribing incentive program in this final rule
with comment period.
As defined in Sec. 423.159(a), e-prescribing is the transmission,
using electronic media, of prescription or prescription-related
information between a prescriber, dispenser, pharmacy benefit manager
(PBM), or health plan, either directly or through an intermediary,
including an e-prescribing network. E-prescribing includes, but is not
limited to, two-way transmissions between the point of care and the
dispenser.
The MMA and the creation of the Medicare Prescription Drug Benefit
Program (Part D) promoted the use of electronic prescribing by
requiring the adoption of interoperable Part D standards for
electronically prescribing Part D covered drugs prescribed to Part D
eligible individuals. As required by section 1860(D)(4)(e) of the Act,
as added by the MMA, ``foundation standards'' were adopted on November
7, 2005 (70 FR 67568) and additional Part D e-prescribing standards
were adopted on April 1, 2008, that are to become effective April 1,
2009 (73 FR 18918).
Section 1860(D)(4)(e)(6) of the Act, as added by the MMA, also
permitted third parties to offset the implementation costs for
electronic prescribing by authorizing the creation of an exception to
the physician self-referral (``Stark'') prohibition for certain
donations of electronic prescribing technology. This enabled health
plans, hospitals, and medical groups to provide in-kind support to
physicians for electronic prescribing. Furthermore the MMA authorized
the creation of a ``safe harbor'' to protect these entities from
prosecution under the anti-kickback statute.
There are many potential advantages to e-prescribing. These
advantages include, but are not limited, to:
Improving patient safety and quality of care by (reducing
medication errors by up to 86 percent):
[cir] Reducing illegibility.
[cir] Reducing oral miscommunications.
[cir] Providing warnings and alert systems.
[cir] Providing access to patient's medication history;
Reducing time spent on pharmacy phone calls and faxing;
Automation of renewals and authorization;
Improving formulary adherence (from 14 percent to 88
percent after e-prescribing implementation) (Bell, Douglas S. and
Friedman, Maria A. ``E-Prescribing and the Medicare Modernization Act
of 2008.'' Health Affairs. 2005; Volume 24, no.5: 1159-1169); and
Improving drug surveillance/recall;
A more detailed description of the benefits of e-prescribing can be
found by clicking on the Clinician's Guide to Electronic Prescribing
link at http://www.ehealthinitiative.org/. Many of these advantages
were also discussed at a recent e-prescribing conference co-sponsored
by CMS. Downloadable information from this conference is available at
http://www.e-prescribingconference.com.
Although there are many benefits to electronic prescribing, there
has been limited adoption and use of electronic prescribing by
physicians and other professionals who prescribe medications. It is
estimated that only 5 to 18 percent of providers currently use e-
prescribing (Bell, Douglas S. and Friedman, Maria A. ``E-Prescribing
and the Medicare Modernization Act of 2008.'' Health Affairs. 2005;
Volume 24, no. 5: 1159-1169.). The enactment of the MIPPA in July,
2008, should encourage significant expansion of the use of electronic
prescribing by authorizing a combination of financial incentives and
payment differentials. Financial incentives are available for the years
2009 through 2013, and payment differentials apply starting 2012 and
for all subsequent years.
Specifically, for 2009, in accordance with section 1848(m)(2) of
the Act, as added by section 132(a) of the MIPPA, a ``successful
electronic prescriber'' as defined by MIPPA and further discussed
below, is eligible to receive an incentive payment equal to 2.0 percent
of the total estimated allowed charges submitted not later than 2
months after the end of the reporting period for all covered
professional services furnished during the 2009 reporting period. This
new E-prescribing Incentive Program is separate from and in addition to
any incentive payment that eligible professionals may earn through the
PQRI program discussed above.
Incentive payments for successful electronic prescribers for future
years are authorized as follows:
2.0 percent for 2010.
1.0 percent for 2011.
1.0 percent for 2012.
0.5 percent for 2013.
Under section 1848(a)(5) of the Act, as added by section 132(b) of
the MIPPA, a PFS payment differential applies beginning in 2012 to
those who are not successful electronic prescribers. Specifically, for
2012 and any subsequent year, if the eligible professional is not a
successful electronic prescriber for the reporting period for the year,
the fee schedule amount for covered professional services furnished by
such professionals during the year shall be less than the fee

[[Page 69848]]

schedule that would otherwise apply by:
1.0 percent for 2012.
1.5 percent for 2013.
2.0 percent for 2014 and each subsequent years.
The application of the payment differential will be the subject of
future notice and comment rulemaking and is beyond the scope of this
rule.
Under section 1848(m)(6) of the Act, as amended by the MIPPA, the
definition of ``eligible professional'' for purposes of eligibility for
the electronic-prescribing incentive program is identical to the
definition of ``eligible professional'' for the 2009 PQRI under section
1848(k)(3)(B) of the Act. In other words, eligible professionals
include physicians, other practitioners as described in section
1842(b)(18)(C) of the Act, physical and occupational therapists,
qualified speech-language pathologists, and beginning in 2009,
qualified audiologists. However, eligibility is further restricted by
scope of practice to those professionals who have prescribing
authority.
b. Requirement for Successful Electronic Prescriber
Under section 1848(m)(3)(B) of the Act, as redesignated and added
by the MIPPA, in order to qualify for the incentive payment, an
eligible professional must be a ``successful electronic prescriber,''
which the Secretary is authorized to identify using one of two possible
standards. For 2009, to be a successful electronic prescriber, the
standard under section 1848(m)(3)(B)(ii) of the Act will apply, in
which an eligible professional must report on at least 50 percent of
applicable cases, on such electronic prescribing quality measure(s)
established by the Secretary under the PQRI, for use in the Electronic
Prescribing Incentive Program. For 2009, as will be further discussed,
there is established one electronic prescribing measure, with the
applicable cases being those where particular services are furnished to
Medicare beneficiaries and billed under Part B.
The Secretary also has authority under section 1848(m)(3)(B)(iii)
of the Act to identify a substitute standard for successful electronic
prescriber based on the electronic prescribing of a sufficient number
(as determined by the Secretary) of Part D prescriptions by an eligible
professional for the requirement to report on electronic prescribing
measure(s). However, under section 1848(m)(3)(B)(i) of the Act, if this
standard were substituted by the Secretary for a particular year, then
the standard based on the reporting on electronic prescribing measures
would no longer apply or be available. If the Secretary decides to
establish the substitute requirement, the Secretary is authorized to
use Part D drug claims data to assess whether a sufficient number of
prescriptions have been submitted by eligible professionals.
For the 2009 Electronic Prescribing Incentive Program, as described
above, we will require eligible professionals to report on the existing
electronic prescribing measure established by the Secretary as
described in further detail below. In future years, we intend to
consider the use of a certain number of Part D prescribing events as
the basis for the incentive payment. However, our ability to use this
substitute requirement for 2009 is not feasible. Our future
consideration will depend on achievement of technical changes that may
be necessary and would be addressed in future notice and comment
rulemaking.
c. The 2009 Reporting Period for Successful Electronic Prescriber
Section 1848(m)(6)(C) of the Act, as redesignated and amended by
the MIPPA, defines ``reporting period'' for the 2009 E-Prescribing
Incentive Program to be the entire year. Therefore, like for the 2009
PQRI, the reporting period for the 2009 E-Prescribing Incentive Program
is defined as the entire calendar year, or January 1, 2009 through
December 31, 2009. Successful electronic prescribers are eligible to
receive an incentive payment equal to 2.0 percent of the total
estimated allowed charges submitted by no later than February 28, 2010
for all covered professional services furnished January 1, 2009 through
December 31, 2009.
d. 2009 Electronic Prescribing Measure
Section 1848(m)(3)(B)(ii) of the Act provides that a successful
electronic prescriber is required to report on each such electronic
prescribing measure established under the PQRI and that are applicable
to the eligible professional's services. There is one electronic
prescribing measure that has been established for the PQRI. This
measure was developed in response to the requirement under section
1848(k)(2)(B)(i) of the Act that the Secretary include structural
measures for the 2008 PQRI, such as the use of electronic health
records (EHRs) and electronic prescribing technology, and again
proposed for the 2009 PQRI. The measure is identified as Measure
125 and is included in the 2008 PQRI: ``HIT: Adoption/Use of
Medication E-Prescribing.'' This measure achieved AQA consensus
adoption in October 2007, and was included in the 2008 PQRI. The
measure was endorsed by the NQF during 2008. The measure is being
reported by physicians and other eligible professionals as a quality
measure for the 2008 PQRI. As required by section 1848(m)(3)(A) of the
Act, we will finalize Measure 125 in this final rule with
comment period (for use in the 2009 E-Prescribing Incentive Program)
and then the PQRI will have no electronic prescribing measures for 2009
or thereafter.
We will post the updated measure and its specifications for the
2009 Electronic Prescribing Incentive Program (that is, Measure
125) on or about the date of publication of this final rule
with comment period. However, as noted below, we retain the authority
to make specification code changes to the electronic prescribing
measure until December 31, 2008. Measure specifications and/or
reporting instructions for Measure 125 for the 2008 PQRI are
not identical to the measure specifications and/or reporting
instructions for the 2009 E-Prescribing Incentive Program. The final
measure specifications and reporting instructions for the E-Prescribing
Measure 125 for the 2009 E-prescribing incentive program will
be posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/03_EPrescribingIncentiveProgram.asp#TopOfPage as
soon as practical but by no later than December 31, 2008.
e. Reporting the Electronic Prescribing Measure
Reporting the electronic prescribing measure for 2009 is limited to
claims based submission. The reporting of the measure is subject to the
same technical requirements as for PQRI claims based measures in terms
of the items that need to be submitted on the claim. Examples of
technical requirements include submission of an NPI for the eligible
professional, inclusion of the measure reporting codes on the same
claim that contains the denominator codes, and no resubmission of the
claims for purpose of reporting numerator codes. Detailed information
on the technical submission requirements is available on the PQRI
section of the CMS Web site at http://www.cms.hhs.gov/pqri.
Measure 125, like other PQRI measures, has two basic
elements. These include: (1) A reporting denominator (for Measure
125, this consists of a set of procedure codes) that defines
the circumstances when the measure is reportable; and (2) a reporting
numerator (for Measure 125, this consists of three specific
codes, one of

[[Page 69849]]

which must be reported for successful reporting.)
The measure becomes applicable to a particular patient and
reportable when, in billing for Part B services, the professional
includes at least one of the procedure codes making up the denominator
on the claim for payment (for example, a medical visit for CPT code
99213). If one of the denominator codes is included on a claim for Part
B services, then the physician or other eligible professional must
report one of the numerator reporting codes on the same claim to meet
the reporting requirement. Where the eligible professional fails to
report a numerator reporting code specified for the measure on such a
claim, then the case would be included in the denominator count, but
not in the numerator count for satisfactory reporting. More detailed
information on the specific technical requirements for correctly
reporting quality data codes is available on the PQRI section of the
CMS Web site at http://www.cms.hhs.gov/pqri.
i. Reporting Denominator
The Measure 125 denominator consists of specific billing
codes for professional services. They are typically billed for services
in the office or outpatient setting furnished by physicians or other
eligible professionals. Currently, the denominator codes for the
electronic prescribing measure are CPT Codes: 90801, 90802, 90804,
90805, 90806, 90807, 90808, 90809, 92002, 92004, 92012, 92014, 96150,
96151, 96152, 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213,
99214, 99215, 99241, 99242, 99243, 99244, 99245, and G Codes: G0101,
G0108, G0109. Measure 125 has no diagnosis codes or age/gender
requirements in order to be included in the denominator (that is,
reporting of the e-prescribing measure is not further limited to
certain ages or gender). As previously discussed, for 2009, the measure
becomes reportable when any one of these procedure codes is billed by
an eligible professional as Part B services. As discussed further under
section II.O2.e.iii, however, eligible professionals are not required
to report this measure in all cases in which the measure is reportable.
Physicians and other eligible professionals who do not bill for one of
these procedure codes on at least one claim during 2009 for Part B
services will have no occasion to report the electronic prescribing
measure.
There is also a statutory limitation under section 1848(m)(2)(B) of
the Act for the E-Prescribing Incentive Program that will be discussed
below. For 2009, we are applying the limitation that requires that the
total estimated Part B allowed charges for the denominator codes to
which the electronic prescribing quality measure (that is, Measure
125) applies must constitute at least 10 percent of the
professional's total Part B allowed charges for the incentive to apply.
This limitation is designed to target the electronic prescribing
incentive payments to physicians or other eligible professionals who
have the opportunity to prescribe a statutorily determined sufficient
amount of prescriptions and not provide incentive payments of 2.0
percent of allowed charges in a year to those physicians who do not
have the opportunity to prescribe a threshold amount of prescriptions.
However, this limitation does not affect the ability to report the
measure, but rather we will apply it in the final determination as to
whether an incentive is earned. See the discussion below.
As initially required under section 1848(k)(2)(A)(ii) of the Act,
and further established through rulemaking and under section
1848(m)(2)(B) of the Act, we may modify the codes making up the
denominator of the electronic prescribing measure. We have considered
whether to expand the scope of the denominator codes to professional
services outside the professional office and outpatient setting for
2009, such as professional services furnished in hospitals or skilled
nursing facilities. Although we retain the authority to update
technical specifications of the measure until December 31, 2008 for use
in the 2009 E-Prescribing Incentive Program, we will not expand the
basic scope of the denominator outside the professional office and
outpatient setting.
We believe that several reasons support the limitation of the 2009
e-prescribing measure (that is, Measure 125) denominator codes
to physician and other eligible professional office and outpatient
settings. First, physicians and other eligible professionals have
limited ability to influence the adoption and availability of
electronic prescribing systems in hospitals or other provider settings.
Second, including codes for professional services in provider facility
settings may negatively impact the ability of professionals who
practice in office and facility settings to successfully report the
electronic prescribing measure at the required 50 percent of cases.
Without access to electronic prescribing for services furnished in a
provider setting, the professional would be unable to report and these
cases would count as not reporting if such codes were included in the
measure denominator. Third, the effect of the electronic prescribing
incentive payment is likely to have its greatest impact in stimulating
adoption and use of electronic prescribing in the professional office
and outpatient setting. While outpatient services are an imperfect
marker, outpatient services are likely to represent the largest
opportunity to expand electronic prescribing where prescribing is
frequent and the decision to adopt electronic prescribing systems is
also dependent on the choices, practices and funding by eligible
professionals. Fourth, the statutory limitation that applies to
eligibility for the incentive also applies to the future differential
payment provisions. Extension of the denominator codes to hospital-
based settings of care, may cause professionals who exclusively
practice in such settings to be liable for a differential payment for
services furnished in a setting where they have limited ability to
influence the adoption of electronic prescribing.
ii. Qualified Electronic Prescribing System--Required Functionalities
and Part D E-Prescribing Standards
To report Measure 125 the eligible professional must
report one of three ``G'' codes, as will be discussed below, on the
same claim for which one of the denominator codes is billed. In
reporting any of the G codes, however, and thereby qualifying for the
incentive payment for e-prescribing in 2009, the professional must have
and regularly use a ``qualified'' electronic prescribing system as
defined in Measure 125. If the professional does not have
general access to an e-prescribing system in the practice setting,
there is nothing to report. In this way, Measure 125 is more
than a ``pay-for-reporting'' measure since the reporting must relate to
an already implemented e-prescribing system.
Required Functionalities for a ``Qualified'' Electronic Prescriber
System. What constitutes a ``qualified'' electronic prescribing system
is based upon certain required functionalities that the system can
perform. As currently specified in Measure 125, a
``qualified'' electronic prescribing system is one that can:
(a) Generate a complete active medication list incorporating
electronic data received from applicable pharmacies and PBMs, if
available.
(b) Allow eligible professionals to select medications, print
prescriptions, electronically transmit prescriptions, and conduct
alerts (written or acoustic signals to warn the prescriber of possible
undesirable or unsafe

[[Page 69850]]

situations including potentially inappropriate dose or route of
administration of a drug, drug-drug interactions, allergy concerns, or
warnings and cautions).
(c) Provide information related to lower cost, therapeutically
appropriate alternatives (if any). The ability of an electronic
prescribing system to receive tiered formulary information, if
available, would suffice for this requirement for 2009 and until this
function is more widely available in the marketplace.
(d) Provide information on formulary or tiered formulary
medications, patient eligibility, and authorization requirements
received electronically from the patient's drug plan (if available).
Part D E-Prescribing Standards. Section 1848(m)(3)(B)(v) of the
Act, as redesignated and added by the MIPPA, requires that, to the
extent practicable, ``the Secretary shall ensure that eligible
professionals utilize electronic prescribing systems in compliance with
standards established for such systems pursuant to the Part D
Electronic Prescribing Program under section 1860D-4(e) of the Act.''
Part D sponsors must use when they transmit prescriptions and certain
prescription related information for Part D covered drugs that are
prescribed for Part D eligible individuals. In the qualified electronic
prescribing system context of this rule, electronic systems must convey
the information listed above under (a) through (d) using the standards
currently in effect for the Part D e-prescribing program. New Part D e-
prescribing standards will be effective April 1, 2009. These new Part D
e-prescribing standards can be found on the CMS Web site at http://www.cms.hhs.gov/eprescribing.
To ensure that eligible professionals utilize electronic
prescribing systems that meet these requirements, E-Prescribing Measure
125 requires that those functionalities required for a
``qualified'' electronic prescribing system must utilize the adopted
Part D e-prescribing standards.
The Part D e-prescribing standards relevant to the four
functionalities for a ``qualified'' system in Measure 125,
described above and listed as (a), (b), (c), and (d), are:
(a) Generate medication list--Use the National Council for
Prescription Drug Programs (NCPDP) Prescriber/Pharmacist Interface
SCRIPT Standard, Implementation Guide, Version 8, Release 1, October
2005 (hereinafter ``NCPDP SCRIPT 8.1'') Medication History Standard;
(b) Transmit prescriptions electronically--Use the NCPDP SCRIPT 8.1
for the transactions listed at 42 CFR 423.160(b)(2);
(c) Provide information on lower cost alternatives--Use the NCPDP
Formulary and Benefits Standard, Implementation Guide, Version 1,
Release 0 (Version 1.0), October 2005 (hereinafter ``NCPDP Formulary
and Benefits 1.0'');
(d) Provide information on formulary or tiered formulary
medications, patient eligibility, and authorization requirements
received electronically from the patient's drug plan--use:
(1) NCPDP Formulary and Benefits 1.0
(2) Accredited Standards Committee (ASC) X12N 270/271-Health Care
Eligibility Benefit Inquiry and Response, Version 4010, May 2000,
Washington Publishing Company, 004010X092 and Addenda to Health Care
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002,
Washington Publishing Company, 004010X092A1 for communicating eligibly
information between Medicare Part D sponsors and prescribers.
(4) NCPDP Telecommunication Standard Specification, Version 5,
Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch
Standard Batch Implementation Guide, Version 1, Release 1 (Version
1.1), January 2000 for communicating eligibility information between
Medicare Part D sponsors and dispensers.
There are, however, Part D e-prescribing standards that are or will
shortly be in effect for functionalities that are not commonly utilized
at this time. Such functionalities are not currently required for a
``qualified'' system under Measure 125. One example is Rx Fill
Notification, which is discussed in the e-prescribing final rule (73 FR
18918, 18926). For purposes of the 2009 electronic prescribing program
and incentive payments, it is not required that the electronic
prescribing system contain all functionalities for which there are
available Part D e-prescribing standards. Rather, the only required
functionalities are those stated in the measure and described above in
the section entitled ``Required Functionalities for a `Qualified'
Electronic Prescribing System.'' For those required functionalities
described above, a ``qualified'' system must use the adopted Part D e-
prescribing standards for electronic messaging. There are other aspects
of the functionalities for a ``qualified'' system that are not
dependent on electronic messaging and are part of the software of the
electronic prescribing system, for which Part D standards for
electronic prescribing do not pertain. For example, the requirements in
qualification (b) listed above that require the system to allow
professionals to select medications, print prescriptions, and conduct
alerts are functions included in the particular software, for which
Part D standards for electronic messaging do not apply.
We are aware that there are significant numbers of eligible
professionals who are interested in earning the incentive payment, but
currently do not have an electronic prescribing system. The electronic
prescribing measure does not require the use of any particular system
or transmission network, but only that the system be a ``qualified''
system having the functionalities described based on Part D e-
prescribing standards. While it is not appropriate for us to suggest
particular products, we will post general information at or about the
time of publication of this rule that may be helpful to the eligible
professional in selecting a system that meets the requirements of a
``qualified'' system under Measure 125. Additionally, we will
provide additional clarifying information, as needed, in the form of
Frequently Asked Questions (FAQs) and post them on the CMS Web site.
iii. Reporting Numerator
To report for an applicable case where one of the denominator codes
is billed on a claim for Part B services, an eligible professional must
submit one of three G codes specified in Measure 125 on the
same Medicare Part B claim.
One G code is used to report that all prescriptions in
connection with the visit billed were electronically prescribed;
Another G code indicates that no prescriptions were
generated during the visit; and
A third G code is used when some or all prescriptions were
written or phoned in due to patient request, State or Federal law, the
pharmacy's system being unable to receive the data electronically or
because the prescription was for a narcotic or other controlled
substance.
As we have previously discussed, to qualify for an incentive
payment under the electronic prescribing incentive program, the
eligible professional must report applicable G codes on claims
containing one or more denominator billing codes, in at least 50
percent of applicable cases. Since the measure does not apply to claims
for services not containing one of the denominator codes, professionals
need not report G codes for the electronic prescribing measure on
claims not containing one of the denominator codes.

[[Page 69851]]

Although only one of the three reportable G codes indicates that
the physician or eligible professional used electronic prescribing for
all of the prescriptions provided during the encounter, the reporting
of any one of the G codes counts as successful reporting and toward the
required 50 percent reporting requirement. However, as previously
discussed by reporting any one of the G codes, the physician or
eligible professional is indicating that an electronic prescribing
system has been adopted for use.
With respect to narcotics and controlled substances, the third G
code is reported in connection with using written prescriptions rather
than electronic prescribing for such medications, because electronic
prescribing of these medications is currently prohibited by Federal
regulation. We are aware that the Drug Enforcement Agency (DEA) has
proposed regulatory changes which if finalized would allow electronic
prescribing of controlled substances under certain circumstances. This
third G code would continue to be reportable for the 2009 Electronic
Prescribing Measure without regard to possible changes in the DEA's
regulations with respect to the electronic prescribing of controlled
substances. Based on concerns expressed to us, we are aware that
professionals may find it impractical to utilize electronic prescribing
for controlled substances, depending on specific requirements that may
be finalized by the DEA. Therefore, to alleviate uncertainty with
respect to the electronic prescribing incentive program, for 2009,
physicians and other eligible professionals may report the electronic
prescribing measure without any requirement to use electronic
prescribing for narcotics or other controlled substances without regard
to final action that the DEA may take on this subject, based on the G
codes contained in the Electronic Prescribing Measure.
f. Determination of Successful Electronic Prescriber and Amount of
Incentive Payment
Determination of professionals who are Successful Electronic
Prescribers for 2009 is at the individual professional level, based on
the National Provider Identifier (NPI) as it is under PQRI. However,
payment is made to the practice represented by the Tax Identification
Number (TIN) to which payments are made for the individual
professional's services. Inasmuch as some individuals (NPIs) may be
associated with more than one practice or TIN, determination of
Successful Electronic Prescriber for 2009, as it is for PQRI, will be
made for each unique NPI-TIN combination. Payment will be made to the
applicable TIN.
Under PQRI, a physician or other eligible professional may meet, in
theory, the criteria for satisfactory reporting on as few as a single
patient falling within the denominator of a measure and correctly
reporting on that measure. In the case of the E-Prescribing Incentive
Program, however, section 1848(m)(2)(B) of the Act, as added by the
MIPPA, imposes a limitation. As discussed above, for 2009, the
limitation provides that the electronic prescribing incentive is not
available to an eligible professional unless the eligible
professional's total estimated allowed charges for covered Medicare
Part B services furnished for the codes in the denominator of the 2009
Electronic Prescribing Measure make up at least 10 percent of the
eligible professional's total allowed charges for all covered Medicare
Part B professional services furnished by the eligible professional
during the 2009 reporting period (that is, January 1, 2009 through
December 31, 2009). The statutory limitation also applies to the future
application of the payment differential, which limits those to whom the
differential will apply as well.
Therefore, in determining whether an eligible professional will
receive an electronic prescribing incentive payment, CMS will determine
whether the 10 percent threshold is met based on the claims submitted
by the eligible professional at the NPI/TIN level. This calculation is
expected to take place in the first quarter of 2010 and will be
performed by dividing the individual's total 2009 charges submitted for
the measure's HCPCS codes by the individual's total Medicare Part B
charges (as assessed at the NPI/TIN level). If the result is 10 percent
or more, then the statutory limitation does not apply and a successful
electronic prescriber would earn the electronic prescribing incentive
payment. If the result were less than 10 percent, then the statutory
limitation would apply and the eligible professional could not receive
an electronic prescribing incentive payment.
As discussed previously, this limitation will be applied by CMS in
determining whether the individual professional meets the requirements
for the incentive payment. Although individual eligible professionals
may decide about whether to report based on their own assessment of
what portion of their allowed charges for Part B services are likely to
be made up of services represented by the denominator codes, individual
professionals may report the numerator codes without regard to the
statutory limitation for the incentive payment.
If an eligible professional meets the 10 percent threshold for
2009, we will determine whether the professional is a successful
electronic prescriber by reporting the numerator codes for 50 percent
of applicable cases. If the professional is determined to be a
successful electronic prescriber, then the incentive payment will be
made.
As indicated above, for 2009, the electronic prescribing incentive
payment is 2.0 percent of the total estimated Part B allowed charges
for the reporting period (that is, the entire year, for 2009). Thus,
the incentive payment is not solely 2.0 percent of the estimated Part B
allowed charges for services for which the measure is reported, but 2.0
percent of all estimated Part B allowed charges for the year. In other
words, although the measure denominator is limited to certain office
and outpatient professional services, and the requirement to be an
electronic prescriber is based on those services, the incentive payment
is paid as 2.0 percent of all estimated Part B allowed charges for the
professional, submitted by the end of February 2010.
g. Uses of Information on Successful Electronic Prescribers
As discussed in section II.O1.e.i. above, section 1848(m)(5)(G) of
the Act, as added by the MIPPA and described in section III. of this
final rule with comment period, requires the Secretary to post on the
CMS Web site, in an easily understandable format, a list of the names
of eligible professionals (or group practices) who satisfactorily
submitted data on quality measures for the PQRI and the names of the
eligible professionals (or group practices) who are successful
electronic prescribers. As noted previously, this requirement cannot be
applied retrospectively to data that was collected prior to the
enactment of the MIPPA.
In order to implement this requirement we will report publicly the
names of eligible professionals who are successful electronic
prescribers for the 2009 E-Prescribing Incentive Program. Along with
the names of eligible professionals who satisfactorily submitted data
on quality measures for the 2009 PQRI, the names of eligible
professionals who are successful electronic prescribers will be
available in 2010, in an easily understandable format, on a Physician
and Other Health Care Professional Compare Web site at http://www.medicare.gov/Physician/Home.asp?bhcp=1.

[[Page 69852]]

Accordingly, we will post on the CMS Web site the names of eligible
professionals (1) whose 2009 Medicare Part B charges for codes in the
denominator of the E-Prescribing Measure 125 make up at least
10 percent of the eligible professional's Medicare Part B charges for
2009; (2) who reported the E-Prescribing Measure 125 in at
least 50 percent of the cases in which the measure was reportable
during 2009; and (3) who received an e-prescribing incentive payment
for covered professional services furnished January 1, 2009 through
December 31, 2009.
Since the PQRI and the E-Prescribing Incentive Program are two
separate incentive programs, it is feasible for an eligible
professional who participated in both incentive programs to be listed
both as an individual eligible professional who satisfactorily
submitted data on quality measures for the PQRI and a successful
electronic prescriber if he or she met the criteria for both incentive
programs.
d. Summary of Comments and Responses
Although the MIPPA was not enacted until after publication of the
CY 2009 PFS proposed rule, we received some comments related to this
new incentive program that was authorized by the MIPPA. A summary of
these comments and our responses is below.
Comment: We received a few comments about the PQRI Measure
125. These commenters suggested that prior to implementation
of this quality measure in the e-prescribing incentive program, the
quality measure and our design of the e-prescribing incentive program
should go through a public comment process. One commenter indicated
support for the e-prescribing incentive but noted that implementing e-
prescribing in physicians' offices is resource intensive and many local
pharmacies are not prepared to use e-prescribing.
Response: As described above, the MIPPA requires us to implement an
incentive payment for successful electronic prescribers beginning in
2009. Many of the MIPPA requirements with respect to the incentive
payment for successful electronic prescribers are generally self-
implementing, require little exercise of discretion, and build on
existing aspects of the PQRI that have already been proposed. In
addition, although section 1848(m)(5)(C) of the Act, as redesignated
and amended by the MIPPA, authorizes us to implement certain aspects of
the 2009 e-prescribing incentive program by program instruction or
otherwise, we are finalizing this program for 2009 in this final rule
with comment period. The quality measure that we are using to determine
whether an eligible professional qualifies as a successful electronic
prescriber was available for public comment during its development by
QIP as well as during the consensus process for AQA adoption and NQF
endorsement, both of which have been achieved. Additionally, as this
quality measure was one of the quality measures proposed for the 2009
PQRI in the CY 2009 PFS proposed rule, the public had an opportunity to
comment on this quality measure during the proposed rule's comment
period.
Comment: One commenter was concerned that future DEA regulation
changes may complicate e-prescribing. The commenter urged us to exempt
e-prescribing of controlled substances from any assessment of
differential payments.
Response: We are aware of the proposed DEA regulation changes and
believe the modification and explanation of the third G code described
above adequately addresses this issue.
Comment: We received one comment that emergency department
evaluation and management codes do not appear in the denominator of the
e-prescribing measure proposed for the 2009 PQRI (Measure
125). Another commenter suggested that we maintain the eye
visit codes in this measure so that ophthalmologists can participate in
the e-prescribing incentive program.
Response: We have addressed in the body of the preamble the comment
with respect to hospital based services of professionals. The current
measure specifications contain office and outpatient codes applying to
eye care. As stated above, we will post the final specifications for
the e-prescribing measure for purposes of the 2009 e-prescribing
incentive program no later than December 31, 2008.
Comment: A few commenters objected to the fact that there is no
definition as to what constitutes an acceptable hardship exemption for
the e-prescribing incentive initiative.
Response: As discussed briefly above, section 1848(a)(5)(A) of the
Act, as added by the MIPPA, authorizes the Secretary, starting in 2012,
to apply a differential fee schedule amount for covered professional
services furnished by an eligible professional who is not a successful
electronic prescriber. In accordance with section 1848(a)(5)(B) of the
Act, the Secretary may, on a case-by-case basis, exempt an eligible
professional from the application of the payment differential if the
Secretary ``determines, subject to annual renewal, that compliance with
the requirement for being a successful electronic prescriber would
result in a significant hardship.'' This hardship exemption is to be
used at the discretion of the Secretary.
Since this hardship exemption pertains only to those eligible
professionals subject to a payment differential because they did not
meet the criteria for becoming a successful electronic prescriber, this
provision will not become effective until 2012 when the payment
differential for those eligible professionals who are not successful
electronic prescribers is first required. As such, the definition of
what constitutes an acceptable hardship is beyond the scope of this
final rule with comment period.

P. Discussion of Chiropractic Services Demonstration

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 BN 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 BN. We will assess BN by determining the
change in costs based on a pre- and post-comparison of aggregate
payments and the rate of change for specific

[[Page 69853]]

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 BN and the
proposed offset during the CY 2010 PFS rulemaking process.
The following is a summary of the public comments we received and
our responses.
Comment: We received one comment concerning the methodology for
determining BN. The commenter stated that the Congressional intent for
implementing BN is clearly spelled out in section 651(f)(1)(A) of the
MMA. The commenter believes the demonstration's costs should be offset
from the totality of services payable under the Part B Trust Fund, and
not a discrete minority of services. The commenter stated that our
methodology is flawed because it offsets demonstration costs only from
existing chiropractic services.
Response: Section 651(f)(1)(A) of the MMA requires that ``* * * the
Secretary shall ensure that the aggregate payment made by the Secretary
under the Medicare program do not exceed the amount which the Secretary
would have paid under the Medicare program if the demonstration
projects under this section were not implemented.'' The statute does
not specify a specific methodology for ensuring BN. Our methodology
meets the statutory requirement for BN and appropriately impacts the
chiropractic profession that is directly affected by the demonstration.
The BN adjustment under PFS will be limited to adjusting the
chiropractor fee schedule codes (comprised of the 3 currently covered
CPT codes: 98940, 98941, and 98942). No other codes would be affected.

Q. Educational Requirements for Nurse Practitioners and Clinical Nurse
Specialists

In the CY 2009 PFS proposed rule (73 FR 38576), we proposed a
technical correction to the nurse practitioner (NP) qualifications at
Sec. 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 on or after January 1,
2003, must meet all of the following criteria: (1) Be a registered
professional nurse who is authorized by State law to practice as a NP;
(2) be nationally certified as a NP; and (3) have a master's degree in
nursing. The current NP qualification standards in our regulations
include progressive requirements that are 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 in the CY 2000 PFS proposed rule (64 FR 39625) and the
subsequent final rule (64 FR 59411). In the CY 2000 PFS final rule, we
stated, ``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.''
In the CY 2009 PFS proposed rule (73 FR 38576), we also proposed to
amend our regulations at Sec. 410.75(b)(4) which require that NPs must
have a master's degree in nursing. We proposed 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 proposed to
amend a similar qualification standard for clinical nurse specialists
(CNSs) at Sec. 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.
In the proposed rule, we acknowledged that we are aware that some
educational institutions are offering programs to prospective NPs and
CNSs that allow students to move from a baccalaureate degree in nursing
directly to the doctoral degree in nursing where they earn a DNP as a
terminal clinical doctoral degree. 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 noted that a Wall Street Journal article (published April 2,
2008) 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 to recognize
APNs with more extensive education and training. Therefore, we proposed
to permit qualified APNs with the DNP degree to enroll and receive
Medicare Part B payment as NPs and CNSs.
We received several comments on our proposals with the majority
from national organizations. The following is a summary of the comments
received and our responses.
Comment: All of the comments that we received on our proposed
technical correction supported the change. The commenters agreed that
the intent of the graduated NP educational qualifications was to ensure
that practicing NPs and their patients were not left unable to enroll
in Medicare after we adopted our rules requiring national certification
and a master's degree in nursing for enrollment. Many commenters stated
that these NPs had already been recognized and practicing as Part B
suppliers. The commenters also stated that the technical correction
does not appear to violate the intent of the NP educational
qualifications and should reduce any confusion that might still remain
regarding this requirement.
Response: We are finalizing the technical correction as proposed in
order to clarify our requirement that effective on or after January 1,
2003, all NPs must have a master's degree in nursing.
Comment: The majority of commenters commended CMS for our proposal
to recognize the DNP degree and stated that we are keeping pace with
the transformation in advanced practice registered nursing education.
The commenters applaud CMS for recognizing the DNP degree as a valid

[[Page 69854]]

degree that exceeds a master's degree in nursing and stated that
recognition of the DNP degree will be positive for patients.
However, some commenters cautioned against eliminating the master's
degree in nursing for NPs and CNSs and replacing it with the DNP degree
only. The commenters stated that transitioning to the DNP degree as the
national standard by 2015 is only a goal toward which the nursing
profession will work and that it may take longer for some programs than
others to address State licensing and institutional issues.
Accordingly, the commenters requested that both the master's degree in
nursing and the DNP degree must be recognized by CMS as appropriate
credentials for APN reimbursement. Additionally, one commenter urged
CMS not to require a master's of science in nursing (MSN) degree
instead of a master's degree in nursing.
Response: As we stated in the CY 2009 PFS proposed rule, we believe
that it is logical for Medicare to recognize APNs with more extensive
education and experience while continuing to recognize NPs and CNSs
with a master's degree in nursing. NPs or CNSs with a doctoral degree
in nursing practice should not be denied enrollment in the Medicare
program because our educational standard for NPs and CNSs is a master's
degree. Additionally, we do not intend to eliminate the master's degree
in nursing requirement and replace it with solely the DNP degree. We
also have no plans to require a MSN degree in lieu of a master's degree
in nursing.
Comment: Two commenters stated that they have not yet taken a
position on the DNP degree and on the various DNP programs that
graduate APNs. However, the commenters noted that many schools offering
the DNP degree have programs that focus on areas other than clinical
practice such as administration, leadership, business, and nursing
policy. The commenters also stated that DNP graduates seeking to enroll
in Medicare as new suppliers should hold a clinically-based DNP degree
and also, ideally, attain advanced practice certification. The
commenters believe that NPs and CNSs who graduate from DNP programs
should not be allowed to bypass the master's degree in nursing before
achieving the DNP degree because they believe that the master's
education provides the appropriate foundation for CNS practice. One
commenter is opposed to Medicare's recognition of the DNP degree in
Medicare regulations at this time because of the varying routes of
entry into a DNP program have not been resolved, there is a lack of
standardization of DNP programs' multiple accreditation processes. The
commenters also stated that, and Federal recognition of an unproven
nursing doctoral program seems premature given that no State licensing
agency or State board of nursing has developed statutes or regulations
authorizing the utilization of the DNP as a substitute for the master's
education requirement and NP or CNS certification.
Response: We believe that as any new educational program develops,
there are likely to be some uncertainty and inconsistency inherent in
the process. However, the APN community has a stated goal of moving
toward a national standard of graduating APNs from DNP programs. We do
not believe that it is sensible to deny Medicare enrollment to a
registered professional nurse with a DNP degree who meets all of the
other qualification requirements when we enroll nurses with a master's
degree. We have relied on our contractors to enroll only those NPs and
CNSs who have graduated with a master's degree in nursing in addition
to meeting other qualification standards that require State licensure
and certification by a recognized national certifying body. We believe
that these collective qualifications ensure that only qualified nurses
with proper clinical training furnish services to Medicare patients.
However, we plan to study and monitor DNP programs as they continue to
evolve. If we discover that APNs enrolling in Medicare as graduates of
DNP programs are not sufficiently qualified to furnish services to
Medicare patients, we will reconsider our education requirements and
take appropriate action.
Comment: One commenter suggested revising the definition of a
physician under the NP and CNS qualifications.
Response: We believe this comment is outside the scope of this
regulation, and therefore, we are not addressing this comment at this
time.
After reviewing the public comments, we are finalizing our
proposals to amend the NP qualifications to incorporate the technical
correction and to include the DNP degree under the educational
qualification requirements for NPs and CNSs. However, we will continue
to study and monitor DNP nursing programs, State legislative action,
and the State boards of nursing as the DNP degree evolves.

R. Portable X-Ray Issue

The Conditions for Coverage (CfC) for Portable X-Ray services are
authorized by section 1861(s)(3) of the Act and were adopted in January
1969. These requirements have, for the most part, been subjected to
minimal modification over the years.
The current requirements in our regulations at Sec. 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 Sec. 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
Osteopathic 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
recognized by the USDE that approves these programs; however, JCERT is
not a recognized accrediting body under the current regulation at Sec.
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 Sec. 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 Sec. 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 Sec. 486.104(a)(1) are
outdated, referencing organizations that no longer perform the stated
function and requiring a specific duration of training that is no
longer the community standard, we proposed to revise the regulation to
reflect the current

[[Page 69855]]

requirements. References to schools approved by the CEAMA or the AOA
will be deleted, and approval by JRCERT will be added. In addition, we
proposed that the requirement for formal training of not less than 24
months in duration be deleted, since this criterion has not been part
of the criteria established by entities that evaluate and approve x-ray
technology programs since 1993.
We proposed to retain the 24-month criterion in Sec. 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 proposed the addition of a new
paragraph Sec. 486.104(a)(4) to this section. This addition will
reflect the standards for credentialing activities during this time
frame.
The following is a summary of the comments we received and our
responses.
Comment: Commenters suggested an alternate requirement for
qualification as an x-ray technologist, namely American Registry of
Radiologic Technologists (ARRT) certification. The commenters also
stated that restricting recognition to only graduates of JRCERT
accredited educational programs could create a shortage of
radiographers eligible to furnish procedures.
Response: We agree that certification by the ARRT is widely
recognized; however, ARRT certification is voluntary, and therefore,
may not be required as a condition of employment. Requiring ARRT
certification would present an additional expense and testing
obligation that individuals who are otherwise qualified might not
choose to incur. Such a requirement would also make it necessary for
those who are already working in the field to obtain ARRT certification
if they are not already certified.
The goal of our proposed revision was to update our regulations to
reflect the accurate accrediting entity and program requirements for x-
ray technology programs. As it stood, the regulation was inaccurate by
referencing organizations that no longer approve and accredit x-ray
technology programs, and by specifying an outdated 24-month program
requirement. It was not our intention to consider imposing new or
additional qualification requirements for technicians.
In accordance with existing regulations, we will continue to
recognize as qualified those individuals who have successfully
completed a program of formal training in x-ray technology in a school
approved by the JRCERT, as well as those who have earned a bachelor's
or associate degree in radiologic technology from an accredited college
or university. States will continue to have the autonomy to utilize the
ARRT exam for State licensing purposes.
After reviewing the public comments, we are finalizing the
provisions as proposed.

S. 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)
In the CY 2009 PFS proposed rule (73 FR 38578), we solicited public
comments on policy options regarding physician involvement in the
certification and recertification for Medicare-covered home health
services under a home health plans of care (POC), payment for those
services, and the basis for those payments (relative resources measured
in RVUs). Currently, we pay physicians for both the certification and
recertification of home health POCs under HCPCS codes G0180 and G01779,
respectively. We make payment for these services through the PFS.
In the CY 2009 PFS proposed rule, we expressed our concern that
physician involvement in the home health POC may not be as extensive as
we had hoped. We recognize that there exists a vast array of differing
levels of physician involvement in the certification and
recertification of home health POCs. We continue to believe that the
active involvement of the physician (to include ``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 offered different policy options and solicited the
public for comment on those options in an effort to gather more
information on this issue, and any other possible underlying issues
that may exist.
The following is a summary of the comments and our response.
Comment: Most commenters suggested that we leave our current
policies and payment to physicians unchanged, at least until the
further analysis is completed. To that end, it was suggested by
commenters that we continue to study the role of the physician in home
care and determine which factors enhance a physician's ability to
conduct oversight activities, ensure appropriateness of care, and work
collaboratively with home health agencies without further burdening
Medicare beneficiaries. Commenters urged CMS to engage with industry
organizations that represent the physicians that furnish these
services, to determine goals and assess options. Commenters further
suggested that goals and options could include revising the procedure
codes used for billing, assessing the current RVUs, and establishing
documentation expectations.
Some commenters suggested that payments to physicians for
certifying and recertifying HH POCs should be restructured to provide
incentives for greater physician involvement, to include personally
seeing the patients. Specifically, some commenters suggested adding
different payments for the varying levels of physician involvement in
the certification and recertification of HH POCs. Other commenters
urged CMS to consider how home telehealth can be employed to a greater
degree to increase input of clinical information directly to physicians
in lieu of face-to-face contact.
Other commenters suggested that we actively support amending the
Medicare statute to allow nurse practitioners (NPs) to certify and
recertify HH POCs. Some commenters suggested that we actively support
demonstrations and legislative proposals to build on the concept of
merging home care with primary care under a single care management
entity for persons in the advanced stages of chronic illnesses. Other
commenters suggested that payment to medical directors should be
restored to HHAs, along with requirements for their education and a
definition of their role, and that we consider reimbursement for a
planning teleconference between the physician and home health
personnel.
Response: We appreciate the comments from the public on this matter
and will continue to analyze and consider those comments and
suggestions in future rulemaking.
2. Prohibition Concerning Payment of Continuous Positive Airway
Pressure (CPAP) Devices
a. Background
Obstructive Sleep Apnea (OSA, sometimes referred to as Obstructive
Sleep Apnea Hypopnea Syndrome-OSAHS) is associated with significant
morbidity and mortality. It is a

[[Page 69856]]

commonly under-diagnosed condition that occurs in 4 percent of men and
2 percent of women. The prevalence increases with age (up to 10 percent
in persons 65 and older), as well as with increased weight.
Complications of OSA include excessive daytime sleepiness,
concentration difficulty, coronary artery disease, and stroke. It is
estimated that 10 percent of patients with congestive heart failure
(CHF) have OSA, which is independently associated with systemic
arterial hypertension. Also, untreated OSA is associated with a ten-
fold increased risk of motor vehicle accidents.
Continuous Positive Airway Pressure (CPAP) is prescribed by
physicians to treat OSA. The patient wears a face mask that provides
air pressure to help keep the breathing passages open during sleep. The
purpose is to prevent the collapse of the oropharyngeal walls and
thereby prevent the obstruction to airflow during sleep, which occurs
in OSA. This treatment is generally continued for the rest of the
patient's life.
In 2006, Medicare spent approximately $750 million for the
diagnosis and treatment of OSA. Sixty five percent of those
expenditures represent the amount Medicare spent on diagnostic related
costs of OSA using attended facility-based polysomnography (PSG). The
remaining $260 million represents the amount spent on treatment related
costs associated with the CPAP.
Stakeholders in the sleep community suggest that OSA is currently
underdiagnosed and that the numbers of persons using of CPAP will
rapidly grow with greater public awareness and the convenient
availability of in home testing. It is difficult to precisely estimate
the ultimate growth because the true proportion of undiagnosed
beneficiaries is unknown, and the current stakeholder estimates may
reflect the prior limited access to home sleep testing in the Medicare
population. We expect that this combined with the March 2008 expansion
of CPAP coverage may lead to significantly increased overall Medicare
payments related to OSA diagnosis and CPAP treatment. Though we believe
that most of this increase will likely arise from greater beneficiary
access to medically appropriate care, we are concerned that even a
limited proportion of fraud and abuse will be a significant
vulnerability when applied in a very large benefit.
On March 13, 2008, we published a national coverage determination
(NCD) that extends coverage of CPAP devices to beneficiaries whose OSA
has been diagnosed by certain unattended sleep tests furnished in a
setting other than a sleep laboratory facility, that is, tests that are
furnished in the beneficiary's home, commonly referred to as home sleep
tests (HSTs). Prior Medicare policy had covered CPAP devices only for
beneficiaries who's OSA had been diagnosed by facility-based attended
PSG. Attended facility-based PSG is a comprehensive diagnostic sleep
test including at least electroencephalography, electro-oculography,
electromyography, heart rate or electrocardiography, airflow, breathing
effort, and arterial oxygen saturation furnished in a sleep laboratory
facility in which a technologist supervises the recording during sleep
time and has the ability to intervene if needed.
The NCD represents a significant expansion of coverage and
facilitates the new participation of new entities that had not
previously been involved in the provision of this benefit. This also
allows testing to occur in patient homes, which are not regulated as
health care facilities. For these and additional reasons we describe
below, we believe that the diagnosis of OSA for coverage of CPAP merits
proactive and ongoing oversight by CMS. Therefore, we intend to closely
monitor this benefit.
During the NCD public comment period, we received many comments
expressing concern that financial incentives could lead to abusive
testing practices that may harm Medicare beneficiaries and the Medicare
program. Though these concerns were largely focused on vulnerability
that might accompany the entry of new types of entities into the sleep
test business following a broad expansion of coverage, some commenters
suggested that vulnerabilities would be found in sleep test facilities.
Therefore, in the CY 2009 PFS proposed rule, we proposed to prohibit
the provider of a qualifying sleep test--both PSG and HST--from also
being the supplier of the CPAP device. Our use of the term provider
throughout this rule refers to those individuals or entities that
administer and/or interpret the sleep test and/or furnish the sleep
test device, as described below. The provision of diagnostic sleep
testing includes TCs and PCs related to the administration and
interpretation of the test itself. Commonly one entity will furnish the
sleep test device and another entity, such as a physician, will furnish
the professional interpretation of the result generated by the device.
Depending on the location in which the test is performed (that is,
attended facility-based PSG or a HST), a sleep test provider may
furnish the sleep test in its own physical facility, that is, the sleep
laboratory, or may furnish the sleep test device and deliver it to and
retrieve it from the beneficiary's home.
We believe that Medicare beneficiaries and the Medicare program are
vulnerable if the provider of a diagnostic test has a financial
interest in the outcome of the test itself. This creates 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. In
the specific context of this rule, we believe that the provider of a
sleep test has self-interest in the result of that test if that
provider is affiliated with the supplier of the CPAP device that would
be covered by the Medicare program. We believe that in most cases the
provider that would be submitting a claim for payment related to the
sleep test will not be the beneficiary's primary physician but will be
another party, for example, another physician or a diagnostic testing
entity. We note that only rarely would a Medicare participating
physician also be enrolled as a Medicare DME supplier.
b. Regulation
In the CY 2009 PFS proposed rule, we proposed to prohibit DME
supplier payment for a CPAP device if the provider of a sleep test that
is used to diagnose obstructive sleep apnea (OSA) in the Medicare
beneficiary is the DME supplier or an affiliate of the supplier of the
CPAP machine used to treat the beneficiary's sleep apnea. The proposal
applied to all sleep testing from attended facility-based PSG to
unattended HST.
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 section 1834(j)(1)(B)(ii)(IV), which requires
suppliers of equipment and supplies to ``meet such other requirements
as the Secretary may specify,'' and due to our concerns with respect to
the potential for unnecessary utilization of sleep tests, we shall
prohibit payment to the supplier of the CPAP device when such supplier,
or its affiliate defined as a person or organization that is related to
another person or organization through a compensation arrangement or
some type of ownership, is directly or indirectly the provider or the
interpreter of the unattended out of facility sleep test that is used
to diagnose a Medicare beneficiary with OSA.
We considered several options. We considered whether a narrower

[[Page 69857]]

prohibition could reasonably accomplish the purposes of this regulation
at this time. Exceptions for providers that offer integrated disease
management models were considered. We also considered allowing an
exception for nationally accredited disease management programs but we
are unaware of any current model that was encompass accreditation for
both OSA diagnosis and CPAP supply under a single accreditation
certificate.
Therefore, we proposed to revise the durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS) supplier enrollment
safeguards set forth at Sec. 424.57 to protect the Medicare program
and its beneficiaries from fraudulent or abusive practices that may be
related to CPAP devices. We also proposed to add new definitions to
paragraph (a) to define ``Continuous positive airway pressure (CPAP)''
and ``sleep test'' 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 as defined above, is directly or indirectly
related to the provider of the sleep test that would used to diagnose
the beneficiary with OSA.
In this final rule, in response to public comment, we are adding
additional definitions for ``affiliate'', and ``attended facility-based
polysomnogram'', and clarify the definitions of ``Continuous positive
airway pressure (CPAP)'', and ``sleep test.'' In addition, we are
adding a new paragraph (g), which would create an exception to the
prohibition contained in (f) if the sleep test is an attended facility-
based PSG.
The following is a summary of the comments we received and our
responses.
Comment: Many commenters maintained that the prohibition is unfair
and that it ``singles out'' sleep diagnostics and therapies for a
special payment prohibition. They maintain that there is no evidence
that sleep tests promote ``self interested'' referrals any more than do
referrals from any other diagnostic tests.
Response: We disagree. During the process leading to the revised
NCD, we received many public comments expressing concern that financial
incentives involving sleep test providers being affiliated with CPAP
suppliers might very well lead to abusive practices that would harm
Medicare beneficiaries and threaten the integrity of the Medicare
program.
As we noted above, testing for the diagnosis of OSA will expand
into settings that are not regulated as health care facilities. CPAP
for the treatment of OSA differs from many other DME items in several
ways that are significant here. The clinical symptoms that prompt the
use of CPAP, for example, snoring, sleeplessness, daytime drowsiness,
generally occur in the home setting and are self reported by the
patient. The physical findings of patients with OSA are also seen in
persons who do not have OSA.
The diagnosis of OSA which may lead to coverage of CPAP hinges upon
the results of a clinical examination and a diagnostic test, the single
night sleep study. The interpretation of a sleep study is subject to
inter-interpreter variability. Sleep study results are known to vary
from night to night and are also technique dependent. Other conditions
for which Medicare covers DME, for example chronic obstructive
pulmonary disease, are generally diagnosed based on the combined
results of multiple tests such as chest x-rays, arterial blood gas
measurements and pulmonary function tests. Thus it is less likely that
a diagnosis of OSA will be supported by consistent findings across
multiple test platforms. We are concerned that the provider of a sleep
test will have a bias to interpret an inconclusive sleep test as
positive if that provider has a financial interest in the payment for
the CPAP device that would be used to treat the beneficiary. We believe
that this represents a vulnerability to the Medicare program.
We believe that we have sufficient reason to believe that OSA and
CPAP are more amenable to fraud and abuse than some other items and
services. We have seen program vulnerabilities in a similar benefit,
specifically oximetry testing in the home for coverage of the home use
of oxygen. For example, our local contractors informed us that
laboratories and DME suppliers were, without an order from the treating
physician, initiating oximetry testing. As a result, we acted to
prohibit DME suppliers from furnishing the oximetry testing used in
part to establish the beneficiary's eligibility for home oxygen
coverage.
Comment: Several commenters state that the best models utilize high
degrees of coordination and affiliation. The commenters claim that
integrated care models result in higher CPAP compliance and better
quality of care for the patient. The commenters state that the proposed
rule would force integrated sleep management programs to refer
beneficiaries to outside entities for the CPAP device, thus creating a
break in continuity and accountability. During the public comment
period on the proposed rule, several institutional stakeholders noted
that if finalized unchanged, the regulation would essentially eliminate
integrated sleep management programs that furnish coordinated
management of OSA from testing to therapy including provision of CPAP.
The commenters claimed that these programs, all facility-based, provide
a level of patient support in ensuring appropriate provision and
titration of CPAP that is not typical with many DME suppliers. These
programs note that under this scenario they would have reduced ability
to monitor the beneficiary's compliance with CPAP, including ensuring
that the CPAP device has been and continues to be optimized for the
individual beneficiary. The commenters believe that finalization of the
proposed rule would remove this option, thus they believe leading to
fragmented care, loss of accountability and potential harm to patients.
Response: Integrated sleep management programs furnish
comprehensive diagnostic and therapeutic services with a single
coordinated program that commonly includes ongoing assessment of the
patient's response to therapy and modifications to therapy as needed.
If finalized as proposed, the regulation would likely result in
these programs referring all beneficiaries to outside DME suppliers for
the CPAP device, thus creating a break in continuity of care.
This concern, which we recognize with attended facility-based PSG
furnished in integrated sleep management programs, is not applicable
outside of this setting. There is no substantive claim of continuity of
care and coordinated disease management in other settings where a sleep
test provider may have some other relationship with a DME supplier.
Our administrative contractors informed us that they have not
historically found these integrated sleep management programs
furnishing attended facility-based PSG to be a significant
vulnerability. We cannot at this time confidently exclude the
possibility that disrupting this model of care might be harmful to some
patients. To avoid disrupting established integrated sleep management
programs, this final rule with comment period will not prohibit DME
payment to suppliers of CPAP to beneficiaries who have been diagnosed
with OSA using attended facility-based PSG.
We are unaware of a reliable way to prospectively distinguish bona
fide integrated sleep management programs from other entities for the
purposes of this regulation. As we note below, there

[[Page 69858]]

is no currently available accreditation program under which an entity
can, under a single certificate, be accredited for sleep diagnosis and
the supply of CPAP treatment. Thus we considered how to balance these
concerns and minimize disruptions to continuity of care while
maintaining the necessary protections for the Medicare program and its
beneficiaries.
We believe that creating an exception for facility-based PSG
strikes a reasonable balance of these concerns. In the context of OSA
diagnosis and treatment for Medicare beneficiaries these integrated
sleep management programs have historically (before the March 2008 NCD)
used attended facility-based PSG for OSA diagnosis, as alternative
diagnostic strategies did not support Medicare coverage of the CPAP
device.
Excepting attended facility-based PSG from the payment prohibition
for CPAP does not exempt HST furnished by the same entity, that is, the
exception is at the test level not the program or facility level. Thus,
this final rule with comment period avoids disrupting established
integrated sleep management programs when they furnish attended
facility-based PSG while affording the public more time to propose
alternatives.
Comment: Several commenters stated that they would be forced to
provide supplementary, nonreimbursable services to CPAP patients as a
result of the rule. Sleep clinicians point to the fact that follow-up
care of an OSA patient is a requirement for AASM accreditation. The
commenters stated that under the provisions of the proposed rule, the
DME supplier would be reimbursed for the care, even when the DME fails
to furnish the follow up care.
Response: We disagree. We expect that treating physicians and other
recognized clinicians who evaluate and manage beneficiaries' sleep
apnea would continue to submit claims for Medicare payment for the
services that they furnish. This rule does not prohibit treating
physicians from appropriately providing follow up care to their
patients who use CPAP. A DME supplier that is not also enrolled by
Medicare as a physician would not furnish services that are properly
within the scope of practice of the beneficiary's physician, and we
would not expect to receive claims for Medicare payment for such
services.
Comment: Several commenters suggested that accredited entities
should be exempt from the prohibition. Some commenters have proposed
that facilities that have been accredited by a recognized accrediting
body to provide full diagnostic, therapeutic, and DME services should
have an exception from the prohibition required as stated in the
proposed rule.
Response: We agree that an entity that has been accredited by a
recognized sleep therapy accrediting body would likely have protections
in place that would minimize the potential fraud and abuse concerns we
addressed above. We believe that the scope of such accreditation
programs should be broad enough to include OSA diagnosis and the supply
of CPAP treatment under a unified certificate.
We have contacted JCAHO and AASM (American Academy of Sleep
Medicine) to determine whether either has an accreditation program that
could be applied to an integrated sleep management program that
includes complete patient management to include managing the DME. AASM
accredits sleep testing but not DME; JCAHO has nonspecific criteria
that might be applied to the testing and DME supplier separately.
However, we are unaware of any current model that would encompass both
under a single accreditation certificate. One commenter estimated that
it would take approximately 6 months to develop such an accreditation
framework. We expect that it would take 1 to 2 years to implement and
accredit sufficient programs to make this a viable alternative.
Ideally, we would like to require that all entities that furnish
both sleep testing and CPAP be accredited. We solicit public input on
accreditation models that might support this option. Once we are made
aware of appropriate accrediting models, we may readdress this issue in
future rulemaking.
Comment: Several commenters expressed concern regarding the delays
from time of OSA diagnosis to time of CPAP treatment that might arise
if the beneficiary is supplied CPAP from an unaffiliated supplier. The
commenters believe that this will have an adverse impact on the patient
and will affect their follow through related to the plan of care.
Response: OSA is not an acute condition. We are not aware of
credible evidence of serious harm due to delay of days or weeks between
OSA diagnosis and CPAP treatment.
The attended facility-based PSG testing paradigm may include same
night initiation and titration of CPAP treatment. The final rule
provides an exception for attended facility-based PSG. Thus, we believe
that the exception provides a reasonable option should the
beneficiary's treating physician determine that there is a pressing
need for urgent treatment in the case of an individual beneficiary.
Comment: Several commenters believe that the adoption of this rule
would cause disruptions in care of OSA treatments for patients in rural
areas by imposing new restrictions. These commenters expressed wishes
for a Stark-like rural exception, based on access to care arguments.
Response: Though various commenters have compared the provisions of
this rule to the ``Stark'' rules, this rule is distinct from Stark and
addresses separate concerns.
We acknowledge that rural beneficiaries are more likely to live at
greater distances from sleep facilities. Thus, these beneficiaries
would be more likely to avail themselves of home sleep testing if it
were available.
We also note that the final rule allows an exception for attended
facility-based PSG. Thus, when compared to Medicare coverage before the
March 2008 NCD expansion, the final rule's provisions in this regard do
not impose new restrictions for Medicare beneficiaries located in rural
areas. Therefore we believe that a specific rural exception is not
needed at this time.
Comment: Many commenters state that existing fraud and abuse laws
adequately address abuses arising out of affiliations. For example, the
commenters stated that the Stark regulations do not allow a physician
who has a financial relationship (ownership or compensation) with a DME
supplier to refer a patient to that DME supplier for CPAP, unless an
exception applies. In addition, commenters stated that under many State
regulations a physician cannot have a substantial ownership interest in
a DMEPOS supplier and still refer Medicare patients for DME. The
commenters also state that fraud and abuse is prevented by other
Medicare provisions, such as those limiting coverage of CPAP to a 12-
week period to identify beneficiaries diagnosed with OSA who benefit
from CPAP.
Response: We disagree. While Stark and other statutes and rules,
including the Federal anti-kickback statute, afford some protections,
we believe this regulation to be necessary in order to further protect
Medicare beneficiaries from potential abusive practices and to further
reduce the Medicare program's vulnerability to fraud and abuse. We
believe that the payment prohibition for CPAP in this rule will be
applied to a broader set of CPAP supplier relationships than would be
prohibited under Stark. We here address additional CPAP supplier
relationships that do not

[[Page 69859]]

necessarily depend on a relationship with the beneficiary's treating
physician who makes a referral, for example, a relationship between a
sleep test provider and a DME supplier when the provider of the sleep
test is not the beneficiary's treating physician who made the referral
for the test.
Comment: One commenter stated that this proposal is unlawful.
First, the commenter stated that general rulemaking authority cannot
support a ``Stark-like'' proposal such as the one under consideration.
Further, the commenter states that the preamble lacks sufficient facts
or data to support the statutory predicate under section 1871(a)(1)
that the rule must be ``necessary to carry out the administration'' of
the Medicare program. The commenter summarizes their concerns by
stating that the general grant of rulemaking authority is not plenary.
The commenter also stated that the rule is inconsistent with the Stark
statute and it's implementing regulations, which the commenter asserted
would not preclude a physician from selling a CPAP device to his or her
patient if the physician is enrolled as a DME supplier and personally
furnishes all of the services associated with the provision of the
CPAP. In addition, the commenter concludes that this rule is in direct
contradiction to the Stark law because, unlike the Stark law, this rule
does not contain an exception for referrals made by a physician who has
an ownership or investment interest in a ``rural provider.''
Response: We do not agree. Our authority for promulgating this rule
is supported by two different provisions in the Act. First, we believe
that section 1871(a)(1) of the Act, which authorizes the Secretary to
``prescribe such regulations as may be necessary to carry out the
administration of the insurance programs under this title,'' provides
sufficient authority for this regulation. We believe that the
prevention of fraud and abuse in the provision of CPAP devices is
essential to the efficient administration of the Medicare program.
While the use of unattended HSTs will provide more beneficiaries with
access to diagnosis and treatment of OSA, we are concerned that the
increased number of unattended HSTs will in turn increase the potential
for a test provider's affiliation with a CPAP supplier to lead to
overutilization as we discussed above. We believe that the
administration of the Medicare program includes a responsibility to
protect the program and its beneficiaries from the harmful effects of
fraud and abuse. Second, we also believe that section
1834(j)(1)(B)(ii)(IV) of the Act, which requires suppliers of equipment
and supplies to ``meet such other requirements as the Secretary may
specify,'' provides sufficient authority for this regulation.
We also disagree with the commenter's assertion that a physician's
furnishing of CPAP can easily escape the purview of Stark and that this
rule therefore conflicts with the Stark law. As we stated in the
``Phase III'' Stark final rule, although personally performed services
are not a ``referral'' for Stark purposes, ``the dispensing of CPAP
equipment by a physician would almost always constitute a ``referral''
* * *, as would the dispensing of CPAP equipment by anyone else
affiliated with the referring physician, such as a nurse or physician
assistant'' (72 FR 51020). This is because a referring physician
claiming to personally provide DME must personally furnish the CPAP
equipment as well as personally perform all activities necessary to
satisfy the DME supplier standards. Thus, in all but the rarest of
circumstances, the prohibition promulgated under this final rule does
not conflict with the Stark prohibition as applied to physicians who
refer for and furnish CPAP in their own medical practices. Moreover,
given our general rulemaking authority and our authority under section
1834(j)(1)(B)(ii)(IV) of the Act, we are not prevented from regulating
the provision of CPAP in those unusual circumstances in which Stark is
not implicated because there has been no ``referral.''
Similarly, we do not agree with the commenter's assertion that this
rule conflicts with the Stark prohibition because it does not contain
an exception for referrals made by a physician who has an ownership or
investment interest in a ``rural provider.'' Under the Stark statute,
section 1877(d)(2) of the Act, there ``shall not be considered to be an
ownership or investment interest * * * [i]n the case of designated
health services [including DME, such as CPAP] furnished in a rural area
(as defined in section 1886(d)(2)(D)) by an entity, if * * *
substantially all of the designated health services furnished by the
entity are furnished to individuals residing in such a rural area.''
Thus, Stark is not implicated in those circumstances. Nevertheless, we
are not precluded from using other authority to limit or prohibit
payment for items and services that are provided in a manner that does
not implicate Stark. Notwithstanding Stark, we have authority under
sections 1871(a)(1) and 1834(j)(1)(B) of the Act to issue this rule.
Comment: One commenter stated concerns that the rule will limit
appropriately trained and qualified DMEPOS suppliers' ability to
furnish home sleep tests. The association claims that the rule creates
unnecessary and artificially high barriers to DMEPOS suppliers' ability
to furnish services that are uniquely within their area of expertise.
The commenter stated that the DME business model is premised on the
ability to furnish medical equipment to patients in their homes and
DMEPOS suppliers may be the only providers with the immediate capacity
to furnish HST to Medicare beneficiaries.
Response: Only the physician treating the beneficiary can order a
HST and prescribe CPAP therapy. We expect that the sleep test would be
interpreted by a physician, and we do not believe CPAP suppliers should
be paid for supplying CPAP equipment when an affiliated physician has
interpreted the HST or ordered the equipment. We are not persuaded that
DME suppliers have any uniquely valuable expertise in the provision of
diagnostic testing.
Comment: Many commenters claimed the regulation will result in an
under availability of CPAP equipment and services in many communities.
One commenter explained that IDTFs are now permitted to utilize HST to
diagnose OSA, but point out that the vast majority of IDTFs do not have
the resources and infrastructure needed to deliver or pick-up HST
equipment to and/or from the beneficiary's home. The commenter
requested that CMS furnish a detailed analysis on beneficiary access to
CPAP supplies and services locally before implementing such a
provision.
Response: This rule does not prohibit IDTFs from establishing and
maintaining sufficient resources and infrastructure to deliver or pick
up HSTs, so long as the DME supplier who will be furnishing the CPAP to
the beneficiary as a result of the HST is not the same DME supplier
that the IDTF has affiliated with for purposes of delivering or picking
up the HSTs or performing other functions related to providing the HST.
In addition, the exception we are providing for attended facility-based
PSG is sufficient to maintain beneficiary access at historical levels
before the 2008 NCD.
Comment: One commenter stated that the mission of all nonprofit
healthcare systems includes furnishing care for the under and un-
insured populations. The commenter stated that healthcare systems would
no longer furnish sleep tests to the under and uninsured if the
healthcare system is prohibited from furnishing CPAP devices to
Medicare beneficiaries.
Response: It is not clear to us why a nonprofit would refuse to
offer HSTs to

[[Page 69860]]

the under- or uninsured simply because the nonprofit entity cannot use
an affiliated DME supplier to furnish a CPAP device prescribed after
the HST. We note that health care entities can continue to provide CPAP
when prescribed as a result of an attended facility-based PSG.
Comment: One commenter points to guidance issued in mid 2002, where
CMS recognized a separation between a hospital system and its ownership
of a DME business (otherwise referred to as a Hospital-based supplier).
By enacting this provision, the commenter concludes that CMS would no
longer recognize this separation. The commenter concludes that this
provision, if enacted, would result in other prohibitions for follow-up
care following a diagnostic test.
Response: We disagree with the commenter's conclusion, and we note
that the final rule's exemption of attended facility-based PSG would
likely apply to many hospital affiliated sleep programs.
Comment: Several commenters stated that there is a clear conflict
of interest for the provider of the test to also profit from the
provision of the CPAP therapy.
Response: We appreciate the supportive comments.
Comment: Several commenters wrote that physicians who work for
hospitals are under increasing pressure to generate revenue by
conducting more tests and prescribing CPAP through a hospital owned DME
supplier. Other commenters claim that bonus payments are made to
physician's who prescribe CPAP through a hospital owned DME supplier.
These commenters favor the payment prohibition.
Response: We appreciate the overall concerns expressed by the
commenters about pressure on physicians, but we wish to minimize the
disruption to programs that were in place prior to the March 2008 NCD
expansion of coverage. We believe that an exemption for attended
facility-based PSG is a reasonable balance between beneficiary access
and protection at this time.
Comment: Several commenters support a payment prohibition where the
diagnostic test facilities are not permitted to provide the CPAP and
related supplies. According to the commenters, the DMEPOS suppliers
claim to possess a higher degree of sophistication surrounding CPAP
technologies and related supplies by focusing exclusively on the
technologies rather than on the sleep diagnostics.
Response: We appreciate the supportive comment on the proposed
regulation. However we have been persuaded for reasons described above
to except attended facility-based PSG from the payment prohibition for
CPAP.
Comment: Several commenters stated that hospital-owned DME
qualifies as a monopoly, and results in an unfair competitive advantage
for hospitals and large sleep centers. The commenters favor the payment
prohibition and state that such a prohibition is good for small
businesses.
Response: Business monopoly is beyond the scope of this regulation
and we will not discuss it here.
Comment: Several commenters stated that the term ``affiliate'' is
ambiguous, and that the proposed rule is vague and overly broad in its
use of the terms ``affiliate'' and ``directly or indirectly''. The
commenters requested that CMS provide a clear definition of
``affiliate''. The commenters stated that without clear definitions
from CMS it is impossible to discern what types of affiliations CMS
intends to preclude under the rule or how the proposed rule would apply
to any given set of circumstances. One commenter recommended that a
definition of affiliate be common ownership of greater than 50 percent
of the supplier of the CPAP device.
Response: We define ``affiliate'' as a person or organization that
is related to another person or organization through a compensation
arrangement or some type of ownership.
We have defined a provider of sleep test as an individual or entity
that directly or indirectly administers and/or interprets the test and/
or furnishes the sleep test device. By indirect we mean that one or
more intermediary actors are used to accomplish the sleep test to its
end. For example, if a DME supplier contracted with a sleep test
provider to furnish HST, that supplier would indirectly provide the
HST. Directly providing the test means there are no intermediary
actors--no intervening persons or entities between them.
Comment: One commenter requested that sleep labs be permitted to
develop criteria to gauge the competency of the DME. Further, the
commenter requested that sleep labs be permitted to use such criteria
to discriminate against DME companies who fail to perform at an
acceptable level of competency.
Response: We believe that this concern can be addressed through the
development and implementation of accreditation standards. Ideally, we
would like to require that all entities furnishing sleep tests in any
settings in addition to supplying CPAP be accredited. Once we are made
aware of appropriate accrediting models, we will readdress the issue in
future rulemaking.
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 section 1834(j)(1)(B)(ii)(IV), which requires
suppliers of equipment and supplies to ``meet such other requirements
as the Secretary may specify,'' and due to our concerns with respect to
the potential for unnecessary utilization of sleep tests, we shall
prohibit payment to the supplier of the CPAP device when such supplier
or its affiliate is directly or indirectly the provider of the HST that
is used to diagnose a Medicare beneficiary with OSA.
We considered several options. We considered whether a narrower
prohibition could reasonably accomplish the purposes of this regulation
at this time. Exceptions for providers that offer integrated sleep
management programs were considered. We also considered allowing an
exception for nationally accredited disease management programs but we
are unaware of any current model that would encompass accreditation for
both OSA diagnosis and CPAP supply under a single accreditation
certificate.
After reviewing the public comments, we are finalizing the
prohibition in Sec. 424.57 as proposed but with an exception for
attended facility-based PSG. Excepting facility-based PSG from the
prohibition on providing CPAP would not except HST performed by the
same entity, that is, the exception is at the test level not the
facility level. We plan to solicit public input on accreditation models
that might support future exceptions to this prohibition. We add
additional definitions for ``affiliate'', ``attended facility-based
polysomnogram,'' and clarify the definitions of ``Continuous positive
airway pressure (CPAP)'' and ``Sleep test''.
3. Beneficiary Signature for Nonemergency Ambulance Transport Services
In the CY 2008 PFS final rule with comment period (72 FR 66406), we
created an additional exception to the beneficiary signature
requirements, applicable for emergency ambulance transports, in Sec.
424.36(b)(6). The exception allows ambulance providers and suppliers to
sign on behalf of the beneficiary, at the time of transport (that is,
the time during which the beneficiary is picked up and dropped off at
the receiving facility), provided that certain documentation
requirements are met. To take advantage of the exception at Sec.
424.36(b)(6), an

[[Page 69861]]

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 and 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 (72 FR 66324), we
clarified that, apart from the new exception in Sec. 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 Sec. 424.36(b)(1) through
(b)(5). We further clarified that only providers of services, and not
ambulance suppliers, can take advantage of Sec. 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 Sec. 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 Sec. 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
Sec. 424.36(b).
Because we do not anticipate an increased risk of fraud or program
abuse if the exception in Sec. 424.36(b)(6) is extended to include
nonemergency transports, we proposed to revise Sec. 424.36(b)(6) to
refer specifically to nonemergency transports. We also proposed to add
language to Sec. 424.36(a) to clarify that, apart from the use of the
exception in Sec. 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 Sec. 424.36(b). We note that Sec.
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 Sec. 424.36(b)(1) through (b)(4) sign the
claim. Finally, given that most claims are submitted electronically, we
proposed to amend Sec. 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.
We received comments that urged us to eliminate entirely the
beneficiary signature requirement where a beneficiary is mentally or
physically incapable of signing a claim and no other person authorized
to sign a claim on behalf of the beneficiary is available or willing to
sign at the time of transport. In addition, the commenters stated that
the proposed documentation requirements would be costly and burdensome
to ambulance providers and suppliers. Several commenters objected to
our proposal to amend Sec. 424.36(a) to clarify that, apart from the
use of the exception in Sec. 424.36(b)(6), providers and suppliers
must make reasonable efforts to obtain the beneficiary's signature
before relying upon one of the exceptions in 424.36(b).
We are adopting our proposals, with modification. Specifically, we
are amending the exception in Sec. 424.36(b)(6) to include
nonemergency ambulance transports. We are also amending Sec. 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. We are revising Sec. 424.36(b)(6)(ii)(C)(2) to include
secondary forms of verification from either a hospital or a facility.
The following is a summary of the comments we received and our
responses.
Comment: The majority of commenters stated that it is a burden on
ambulance providers and suppliers to obtain a signature for
nonemergency ambulance transports when a beneficiary is mentally
incapable of signing the ``waiver.'' The commenters contended that
asking for additional documentation to verify that a patient was
transported creates a financial burden on the ambulance provider. One
commenter stated that its billing office has to do more mailings,
follow-up calls and faxes to get a ``waiver'' completed, and that
spouses are reluctant to sign the form for fear that they will be
responsible for the ambulance transport bill. The commenter also stated
that the forms are confusing to its ambulance crew and that hospital
and rehabilitation representatives are reluctant to sign forms. One
commenter suggested that checking hospital and rehabilitation bills
would be an easier way to document a patient transport, whereas another
commenter suggested that we should abolish the signature requirement
entirely.
Response: We note that whereas several commenters referred to a
``waiver'' of the signature requirement of Sec. 424.36, in fact Sec.
424.36 sets forth a signature requirement and alternative means of
satisfying the signature requirement. That is, Sec. 424.36 generally
requires that the beneficiary sign the claim, unless the beneficiary is
deceased or unavailable to sign the claim, in which case other
individuals or entity representatives (as enumerated in Sec.
424.36(b), (c) and (d)) may sign the claim. We are adopting our
proposal to amend Sec. 424.36(a) to clarify that ``the claim''
includes the actual claim form or such other form that contains
adequate notice to the beneficiary or other authorized individual
signing on behalf of the beneficiary 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. The purpose of the
beneficiary signature is to verify that the services were in fact
rendered and were rendered as billed.
Our proposal does not impose any new burdens on ambulance providers
or suppliers, but rather offers an optional, alternative method, for
satisfying the beneficiary signature requirement. We do not agree with
the commenters that it is a significant burden on ambulance providers
and suppliers to comply with the proposed signature and documentation
requirements in order to meet the proposed exception for nonemergency
ambulance transports when a beneficiary is incapable of signing a claim
form; however, those

[[Page 69862]]

ambulance providers and suppliers that believe that the signature and
documentation requirements of the new exception at Sec. 424.36(b)(6)
are burdensome may avail themselves of the other means specified in
Sec. 424.36 for satisfying the beneficiary signature requirement.
In response to the assertion that the forms are confusing, we
reiterate that we did not create any new forms for ambulance personnel
or facility staff to sign. Ambulance providers or suppliers may use
whatever forms they wish (such as the patient care trip report, etc.)
for capturing the signature and documentation requirements specified in
Sec. 424.36(b)(6). In response to the assertion that spouses are
reluctant to sign a form for fear that they will be responsible for the
ambulance transport bill, signing of the claim form (or such other form
used as a proxy for the claim form) does not make a person financially
liable to pay the provider or supplier. However, if a beneficiary or
the beneficiary's authorized representative refuses to sign the claim
form, the ambulance company may bill the beneficiary directly for the
transport service. In addition, if the transport service is deemed not
medically necessary, and thus is not covered by Medicare, the
beneficiary may be held responsible for payment (subject to the
limitation of liability provisions of section 1879 of the Act and our
regulations at Sec. Sec. 411.404).
We are not persuaded to adopt the suggestion that we eliminate
entirely the beneficiary signature requirement for ambulance
transports. We are concerned that there may be an increased risk of
fraud or program abuse if we were to remove the signature requirement.
Moreover, we did not propose to eliminate the signature requirement and
therefore may lack the authority to abolish the requirement through
this final rule even if we were otherwise inclined to do so. With
respect to the suggestion that we should check hospital and
rehabilitation bills to document a patient transport (which is
tantamount to suggesting that we eliminate the signature requirement),
we do not agree that it should be the program's responsibility, at the
time of processing the claim, to guess whether the beneficiary would
have authorized the claim if asked, or to have to secure documentation
from providers and suppliers (which, to the extent that they have not
furnished the transport, may not be required to supply us with such
documentation and may even be precluded by privacy laws from supplying
us with such documentation). Accordingly, we believe providers and
suppliers should go on record, at the time of submitting the claim,
that the beneficiary (or someone authorized on his behalf) authorized
the filing of the claim.
Comment: Several commenters noted that, in light of our proposal to
expand the (b)(6) exception to include nonemergency ambulance
transports as well as emergency ambulance transports, the signature
requirements may apply when a beneficiary is being transported from or
to skilled nursing facilities, hospitals and other permissible
destinations. Therefore, the commenters requested that we revise Sec.
424.36(b)(6)(ii)(C)(2), which makes reference to ``the hospital
registration/admission sheet'', ``the hospital log'', or ``other
internal hospital records,'' and replace ``hospital'' with
``facility.''
Response: We agree with the commenter that there may be
nonemergency transports where the beneficiary is being transported from
or to skilled nursing facilities, hospitals and other permissible
destinations. Thus, we are revising Sec. 424.36(b)(6)(ii)(C)(2) to
replace ``hospital'' with ``hospital or other facility''.
Comment: One commenter requested that we clarify whether secondary
forms of verification must be signed by a representative of the
receiving facility. In response to a similar request for clarification
in the CY 2008 PFS final rule (72 FR 66323) we stated that secondary
forms of verification did require a signature; however, this
requirement was not included in the text of Sec.
424.36(b)(6)(ii)(C)(2), as finalized in the CY 2008 PFS final rule. The
commenter also stated that hospitals are moving toward electronic
recordkeeping, and urged us to clarify that secondary forms of
documentation used to verify transport do not need to be signed by a
representative of the facility, provided that the form of documentation
obtained is an official facility record that clearly indicates the name
of the patient, and the date and time the patient was received by or
transported from that facility.
Response: We acknowledge that, although the preamble language in
the CY 2008 PFS final rule stated that all forms of secondary
documentation used to verify transport need to be signed by a
representative of the receiving facility, the regulation text at Sec.
424.36(b)(6), as published in the 2008 CY PFS final rule, did not
include this specific requirement. We are clarifying Sec.
424.36(b)(6)(ii)(C)(2)to provide that secondary forms of documentation
used to verify transport do not need to be signed by a representative
of the receiving facility if the form of documentation obtained is an
official hospital or facility record, (such as the facility or hospital
registration/admissions sheet, patient medical record, facility or
hospital log, or other facility or hospital record), and it documents
the beneficiary's name, date, and time the beneficiary was received by
that facility.
Comment: Several commenters objected to our proposal to clarify
Sec. 424.36(a) to state that a provider or supplier must make
``reasonable efforts to locate and obtain the beneficiary's signature''
before a provider or supplier could rely upon one of the exceptions set
forth in Sec. 424.36(b)(1) through (5).
Response: We are not adopting our proposal because, having
reexamined the issue, we believe that the current language in Sec.
424.36(b)(5) provides adequate protection for the beneficiary and the
Medicare program. Prior to, and during the course of, the CY 2008 PFS
rulemaking, we were alerted to the fact that some ambulance providers
and suppliers were signing the claim on behalf of the beneficiary
simply because the beneficiary was not able to sign the claim at the
time of transport. We clarified in the preamble to the CY 2008 PFS
final rule with comment period that signing the claim on behalf of the
beneficiary simply because the beneficiary was not able to sign the
claim at the time of transport was not proper and, further, that only
providers (and not suppliers) are eligible to use the exception at
Sec. 424.36(b)(5). Our decision to make an exception to the
requirement that reasonable efforts must be made to obtain the
signature of the beneficiary, by creating a new exception at Sec.
424.36(b)(6) in the CY 2008 PFS final rule with comment period for
emergency ambulance transports, and in this final rule for nonemergency
ambulance transports, and to allow the provider or supplier to sign the
claim on behalf of the beneficiary at the time of the service, provided
certain safeguards are met, was a deliberate departure from the general
rule. However, because we amended Sec. 424.36(b)(5) in the CY 2008 PFS
final rule with comment period to state that, before relying on that
exception, providers must ``mak[e] reasonable efforts to locate and
obtain the signature of one of the individuals specified in paragraph
(b)(1), (2), (3) or (4) of this section,'' rather than to state that
the provider must first make reasonable efforts to locate and obtain
the signature of the beneficiary, we are concerned that we might create
confusion or add an unneeded degree of complexity if we were to
finalize our proposal to amend Sec. 424.36(a) to state

[[Page 69863]]

that a provider or supplier must make reasonable efforts to locate and
obtain the beneficiary's signature before a provider or supplier could
rely upon one of the exceptions set forth in Sec. 424.36(b)(1) through
(5). By requiring providers and suppliers to not sign claims on behalf
of the beneficiary under Sec. 424.36(b)(5) without having first made
reasonable efforts to procure the signature of the beneficiary or an
authorized individual, we address our core concerns. It is true that,
as clarified, our regulations allow providers and suppliers to procure
the signature of an authorized individual in a situation where the
beneficiary may be only temporarily unable to sign the claim, but, on
balance, we believe it is preferable, for the sake of convenience, to
give providers and suppliers some flexibility as to whether they obtain
the signature of the beneficiary or that of an authorized individual.
With respect to ambulance providers and suppliers, the matter of making
reasonable efforts to locate and obtain the signature of the
beneficiary or another authorized individual should largely be moot.
Ambulance providers and suppliers should be able to rely on the
exception at Sec. 424.36(b)(6) to sign the claim in the case of both
emergency and nonemergency transports, provided they meet the
documentation requirements therein. To the extent that ambulance
providers and suppliers do not wish to, or are unable to, comply with
the documentation requirements of Sec. 424.36(b)(6), they may obtain
the signature of an authorized individual specified at Sec.
424.36(b)(1) through (b)(4) (including in the situation where one of
the authorized individuals is available and willing to sign at the time
of transport). Moreover, an ambulance provider (but not a supplier),
may rely on the exception at Sec. 424.36(b)(5) to, itself, sign the
claim, after having made reasonable efforts (including over a
reasonable period of time) to locate and obtain the signature of either
the beneficiary or an authorized individual.
Comment: Several commenters requested that we make the new
exception in Sec. 424.36(b)(6) for nonemergency transports retroactive
to January 1, 2008. Commenters also asked us to clarify in this final
rule and/or in guidance on the CMS Web site that we will not take any
adverse action against an ambulance provider or supplier that made good
faith (but unsuccessful) attempts to comply with the beneficiary
signature requirement rules prior to January 1, 2009. The commenters
stated that, despite multiple attempts to obtain the required
signatures from the beneficiary or the beneficiary's authorized
representative, many ambulance providers and suppliers have been
unsuccessful, and thus, they are holding claims for nonemergency
transports. The commenters also asserted that ambulance providers and
suppliers have experienced difficulty in obtaining signatures from
facility representatives because of concerns that their signature would
render the facility financially liable for the transport.
Response: We are not making the new exception in Sec. 424.36(b)(6)
for nonemergency ambulance transports retroactive to January 1, 2008,
and are not making an exception for good faith efforts to comply with
the regulation as it existed prior to this final rule with comment
period. There would be significant legal issues if we were to make the
rule retroactive to January 1, 2008 or to waive the requirements as
they existed prior to this final rule. Moreover, apart from the legal
constraints, we are not persuaded that either course of action is
warranted. The CY 2008 PFS final rule did not create any new burden for
ambulance providers and suppliers (and, to the contrary, made it easier
for ambulance providers and suppliers to comply with the beneficiary
signature requirement for emergency transports). It did, however,
clarify our longstanding policy that providers and suppliers must make
reasonable efforts to obtain the beneficiary's signature before
submitting the claim and that it was not sufficient for providers to
submit the claim (utilizing the exception at Sec. 424.36(b)(5)) simply
because the beneficiary was able to sign the claim at the time of
transport. We also clarified that only providers, and not suppliers,
may utilize the exception at Sec. 424.36(b)(5), consistent with the
plain language of the exception. To the extent that, following the
November 27, 2007 final rule, ambulance providers and suppliers have
found it difficult to obtain the beneficiary's signature for
nonemergency transports (because they had not previously been following
our rules), we have addressed their concerns in two ways. First, on
July 24, 2008, we placed guidance on the CMS Web site at http://www.cms.hhs.gov/AmbulanceFeeSchedule/downloads/Guidance_On_Beneficiary_Signature_Requirements_for_Ambulance_Claims.pdf that
reiterated our position that ambulance providers and suppliers may
utilize the exception at Sec. 424.36(b)(4), which allows facilities to
sign on behalf of the beneficiary, and explained that such facilities
do not assume liability for payment of the services simply by signing
on behalf of the beneficiary. Second, in this final rule we are
finalizing our proposal to expand the exception in Sec. 424.36(b)(6)
to nonemergency transports. The new exception is effective for
``claims'' filed on or after January 1, 2009. Therefore, if claims have
been held and are still within the timely filing limit, as specified in
Sec. 424.44, the claims may be submitted to Medicare for payment in
accordance with the new exception.
Comment: A commenter recommended that the existing language in
Sec. 424.36(b)(6)(ii)(A) be modified to state that, in the case of an
emergency transport, the general crew signature on an emergency
ambulance incident report is sufficient to meet the requirements of
Sec. 424.36(b) and that a separate crew signature is not required. The
commenter suggested, as an alternative, that if we determine that the
signature of an ambulance employee present during the transport is
necessary, it should be sufficient if the employee signature on the
incident report is obtained ``after the fact,'' rather than
contemporaneous with the transport. The commenter stated that it is
necessary that we allow signatures obtained after the transport because
the ambulance crew's primary concern is taking care of the patient, not
doing paperwork, such as a signed incident report.
Response: We are not persuaded to modify the requirement in Sec.
424.36(b)(6)(ii)(A) to state that the general crew signature on an
incident report is sufficient and that a separate crew signature is not
required. We believe that the commenter's suggestion that any member of
the general crew be permitted to sign the incident report as evidence
that the service was rendered as billed would not satisfy our integrity
concerns, because the general crew member would have no direct
knowledge regarding the transport services. It is also our
understanding that the ambulance crew completes a trip report that
describes the condition of the beneficiary, treatment, origin/
destination, etc. Therefore, we believe it would be a minimal burden
upon the ambulance crew signing the incident or trip report to prepare
a statement detailing why the beneficiary is unable to sign a claim
form at the time of transport. We also emphasize that Sec.
424.36(b)(6)(ii)(A) requires that a contemporaneous statement signed by
an ambulance employee present during the trip be obtained. A
contemporaneous statement, rather than one obtained after the fact, is
necessary to meet our integrity concerns, that is,

[[Page 69864]]

to verify that the trip took place as claimed on the bill.
Comment: Several commenters suggested that we eliminate the terms
``emergency and nonemergency ambulance transport services'' in Sec.
424.36(b)(6) and replace those words with ``ambulance services.''
Response: We are not persuaded to revise Sec. 424.36(b)(6) in the
manner suggested by the commenters. Although readers familiar with the
Federal Register publications of the CY 2008 PFS final rule and the CY
2009 PFS final rule would realize that ``ambulance services'' would
refer to both emergency and nonemergency transports, we wish the
regulation text that will appear in the CFR to be clear on its own,
particularly to readers who may be accessing the regulation years from
now. Therefore, we believe it is preferable to retain the proposed
language ``emergency and nonemergency ambulance transport services'' so
as to leave no doubt that both emergency and nonemergency transports
are covered by the exception in Sec. 424.36(b)(6).
4. Solicitation of Comments and Data Pertaining to Physician Organ
Retrieval Services
Since 1987, we have limited the amount an Organ Procurement
Organization (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 to $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 solicited public comments and data that
are reflective of organ retrieval service costs. We did not limit our
solicitation to costs associated with kidney retrieval services, but
rather stated that we are interested in receiving comments and data
pertaining to retrieval services for all types of organs. We indicated
that we may use this information to determine the extent to which a
recalculation of the payment for cadaveric organ retrieval services
furnished by a physician is warranted and to inform any future
rulemaking on this subject. Any future rulemaking would provide for
notice and public comment.
We received four timely public comments in response to our request
for information and data for use in updating the organ retrieval
physician payment amount included in organ acquisition costs. The
following is a summary of the comments we received and our responses.
Comment: The commenters believed that the kidney retrieval rate of
$1,250 per donor is insufficient and three of the commenters
recommended that we increase that limit by either the Consumer Price
Index for all urban consumers (CPI-U) or the Medicare Economic Index.
Two commenters stated that little or no data on actual organ retrieval
services exists, and that any rulemaking without such data would be
inappropriate. The commenters stated that due to the extreme
variability associated with these services, they had serious concerns
as to the feasibility of establishing an accurate cost or payment for
organ retrieval using an approach like that employed by the AMA's
Relative Value Scale Update Committee (RUC). According to the
commenters, there are specific factors impacting the cost of organ
retrieval including donor evaluation, travel and wait time, dry runs
and other risks and costs. These factors contribute to the great
variability in measuring the time and expense associated with organ
retrieval services. These commenters offered to assist us in
establishing a process to collect data for the purpose of updating the
organ retrieval rates. One commenter stated that the retrieval rate
should be paid per kidney and not per donor.
Response: We thank the commenters who responded to our solicitation
of comments and appreciate the offer that some made to be involved in
future efforts to design a revised payment method. We are not inclined
to propose that the base organ retrieval rate for kidneys and other
organs simply be increased by an indexed amount (such as the CPI-U)
because we believe the base payment amounts for retrieval of the
various organs may need to be updated. Therefore, we are again
soliciting information from the transplant community. Specifically we
would like to obtain information on the physician effort and resources
required to procure an organ. These resources include surgical time,
dry runs (number and percentage of retrievals in which an organ is not
recovered), travel and wait times, as well as the incremental time
required for extended criteria donors and donors after cardiac death.
Additionally, because currently we limit kidney retrieval physician
reimbursement to $1,250 per donor, we would need resource information
to determine the difference in procuring one kidney or a pair of
kidneys from a single donor in order to determine a payment on a per
kidney basis as suggested by a commenter.
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
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 Sec. 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

[[Page 69865]]

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 proposed to revise Sec. 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 proposed to revise Sec.
424.535(f) (redesignated as Sec. 424.535(g)) 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 a 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 solicited 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) license 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.
In addition, we solicited 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.
The following is a summary of the comments we received and our
responses.
Comment: Several commenters recommended that we withdraw our
proposed changes to the appeals process.
Response: We disagree with these commenters because we continue to
believe that we should not make further payments to physicians and NPPs
who have had their State medical license suspended or revoked, were
convicted of a felony as described in Sec. 424.535(a)(3), were
excluded or debarred from participating in a Federal program, or were
determined by CMS or its contractor not to be operational.
Comment: One commenter urged CMS to require contractors to send
revocation notices in an effective manner that would establish a date
of receipt and the recipient.
Response: While this comment is outside the scope of the proposed
rule, Medicare contractors are instructed to mail revocation notices to
the correspondence address of the provider.
Comment: One commenter recommended that we create an expedited
reconsideration process of not more than 30 days in cases where
revocation is based on CMS/contractor error.
Response: While we have considered establishing an expedited
reconsideration process for those cases in which Medicare revoked
billing privileges due to a Federal exclusion or debarment, a felony
conviction as described in Sec. 424.535(a)(3), a State license
suspension or revocation, or the practice location is determined by CMS
or our contractor not to be operational, we do not believe that an
expedited reconsideration process is warranted.
Comment: One commenter stated that our proposal to make revocation
effective with limited notice and appeal rights in certain situations
is a violation of due process.
Response: While we agree that physicians, NPPs and physician and
NPP organizations will receive limited notice when CMS or our
contractor revokes Medicare billing privileges due to State licensure
suspension/revocation, Federal debarment or exclusion, felony
convictions as described in Sec. 424.535(a)(3), or when a practice
location is found to no longer to be in operation, we disagree with
this commenter's statement that we are violating due process rights.
Physicians, NPPs, and physician and NPP organizations are afforded
identical appeal rights as any other provider or supplier whose
Medicare billing privileges were revoked.
Comment: One commenter stated that retroactive revocation creates a
situation where Medicare denies payment for services physicians have
furnished in good faith reduces the time available for appeal and then
locks the physician out of Medicare for at least a year.

[[Page 69866]]

Response: We disagree with this commenter. Whenever a physician or
NPP's State medical license is suspended or revoked, is convicted of
felony as described in Sec. 424.535(a)(3), excluded or debarred from
participating the Federal exclusion or debarment, or is determined by
CMS or our contractor not to be operational, we believe that the
payments to these practitioners should immediately cease.
Comment: One commenter suggested, at the very least, current rights
of appeal should be preserved for all proposed denials and we should
actively research the performance of its contractors in auditing
clinicians who make ``all or substantially all of their clinical
encounters in the patient's home,'' and give provider feedback a
defined role in the evaluation and subsequent award of contracts to
intermediaries.
Response: This comment is outside the scope of this proposed rule
and can not be addressed in this final rule.
After reviewing public comments, we are finalizing Sec.
405.874(b)(2) to state ``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 as described in Sec. 424.535(a)(3), 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 a
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 are also
finalizing Sec. 424.535(f) (redesignated as Sec. 424.535(g)) to state
``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 revocations, or if the practice
location is determined by CMS or its contractor not to be operational.
When a revocation is based on a 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 continue to believe that revocations such as felony convictions
and license suspensions or revocations are determinations that 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 action. 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 revocations, 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
except for those revocation determinations imposed under Sec.
424.535(a)(2), (a)(3), and (a)(5).

6. Physician Resource Use Feedback Program

a. General Background
CMS' Office of the Actuary estimates that the Medicare PFS allowed
charges have grown approximately 55 percent from 2000 to 2007.\1\ The
Medicare Payment Advisory Commission (MedPAC) reports that since 2000,
total Medicare spending for physicians' services has climbed more than
9 percent per year.\2\ In addition to these rapid increases in cost,
the Dartmouth Atlas (http://www.dartmouthatlas.org/) shows that there
is significant geographic variation in the amount of services Medicare
beneficiaries receive, with little or no relationship to outcomes.\2\
We are implementing value-based purchasing (VBP) initiatives in
response to these concerning trends. VBP ties payment to performance
through the use of incentives based on measures of quality and cost of
care. The implementation of VBP will transform CMS from 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 Data 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.
---------------------------------------------------------------------------

\1\ CMS Office of the Actuary.
\2\ Assessing Alternatives to the Sustainable Growth Rate
System. Medicare Payment Advisory Commission Report to Congress.
March 2007. http://www.medpac.gov/documents/Mar07_SGR_mandated_report.pdf.
---------------------------------------------------------------------------

In its March 2005 Report to Congress, MedPAC recommended that CMS
use Medicare claims data to measure physicians' resource use and share
the results confidentially with physicians to educate them about how
their resource use compares with aggregated peer performance. MedPAC
envisioned that resource use measurement and feedback could encourage
physicians to reduce the volume and intensity of the services they
provide without sacrificing quality of care, thereby improving
efficiency.\3\
---------------------------------------------------------------------------

\3\ Medicare Payment Policy. Medicare Payment Advisory
Commission Report to Congress. March 2005. Chapter 3. http://www.medpac.gov/documents/Mar05_EntireReport.pdf.
---------------------------------------------------------------------------

In response to this MedPAC recommendation, we launched a study to
develop resource use reports (RURs), in early 2006, with an initial
focus on high cost imaging services. In Stage I of this study, we
developed RURs for physician referral and utilization patterns for
echocardiograms, along with a concentration on echocardiograms for
patients with congestive heart failure. We worked with two healthcare
systems in

[[Page 69867]]

Madison, WI and Cleveland, OH to recruit physicians for the study. We
used Medicare fee-for-service (FFS) claims data for the recruited
physicians to populate RURs. Based on the feedback received during
stage I, we redesigned the RURs (stage II) and focused on magnetic
resonance imaging and computerized tomography imaging. For stage II,
the RURs were modified to incorporate clinical guidelines into the
reports. The construct of the RURs included in stages I and II of the
study is similar to the RURs that are described, in detail, in section
6.c. of this final rule.
Building on its March 2005 recommendation, MedPAC subsequently
released an additional report on the topic of measuring physician
resource use. In its June 2006 Report to Congress, MedPAC focused on
commercial episode grouper products. In that report, MedPAC addressed
such issues as: risk adjustment, attribution (assignment) of cost per
episode to individual physicians, and variation in resource use across
geographic areas. MedPAC tested two commercially available episode
grouper products, Episode Treatment Groups (ETGs) and Medical Episode
Groups (MEGs), using Medicare fee-for-service claims data.\4\ The ETG
product is owned by Ingenix and ``identifies and classifies an entire
episode of care regardless of whether the patient has received medical
treatment as an outpatient, inpatient, or both.'' \5\ The MEG product
is owned by Thomson and ``groups inpatient, outpatient, and
pharmaceutical claims into clinically homogenous units of analysis
called episodes that describe a patient's complete course of care for a
single illness or condition.'' \6\
---------------------------------------------------------------------------

\4\ Increasing the Value of Medicare. Medicare Payment Advisory
Commission Report to Congress. June 2006. Chapter 1. http://www.medpac.gov/documents/Jun06_EntireReport.pdf.
\5\ Ingenix Product Sheet. http://www.ingenix.com/content/attachments/ETG_ProductSheet.pdf.
\6\ Thomson Product Sheet. http://home.thomsonhealthcare.com/uploadedFiles/docs/MEG_HP_TH10002.pdf.
---------------------------------------------------------------------------

In 2006, we awarded a contract to Acumen LLC, to explore how the
ETGs and MEGs handle Medicare FFS claims data. In addition to Acumen's
technical episode grouper analysis, we are also pursuing a contract
with Kennell, LLC to analyze selected claims grouping algorithms within
each of these commercial episode grouper products. Both of these
research contracts are currently underway.
The Government Accountability Office (GAO) has also addressed
physician resource use. In their April 2007 report, GAO compared the
resource use of physician practices with that of their peers and
specifically focused on outliers. In their report, GAO recommended that
CMS develop a system to identify physicians with inefficient practice
patterns and provide confidential feedback to improve efficiency.\7\
---------------------------------------------------------------------------

\7\ Focus on Physician Practice Patterns Can Lead to Greater
Program Efficiency. April 2007. http://www.gao.gov/new.items/d07307.pdf.
---------------------------------------------------------------------------

A number of other entities have also been developing approaches to
measuring and reporting on physician resource use, including the
National Quality Forum, the National Committee for Quality Assurance,
the Quality Alliance Steering Committee, and the AQA-Alliance.
b. Statutory Authority
Section 131(c) of the MIPPA amends section 1848 of the Act by
adding subsection (n), which requires the Secretary to establish and
implement by January 1, 2009, a Physician Feedback Program using
Medicare claims data and other data to provide confidential feedback
reports to physicians (and as determined appropriate by the Secretary,
to groups of physicians) that measure the resources involved in
furnishing care to Medicare beneficiaries. If determined appropriate by
the Secretary, the Secretary may also include information on quality of
care furnished to Medicare beneficiaries by the physician (or group of
physicians) in the reports. We have titled this initiative the
physician resource use feedback program.
Under section 1848(n)(1)(B) of the Act, resource use may be
measured on an: (i) Episode basis, (ii) per capita basis, or (iii) on
both an episode and a per capita basis. In addition, to the extent
practicable, data for reports shall be based on the most recent data
available. Section 1848(n)(4) authorizes the Secretary to focus the
application of the program as appropriate, such as focusing the program
on: (1) Physician specialties that account for a certain percentage of
all spending for physicians' services; (2) physicians who treat
conditions that have a high cost, of a high volume, or both; (3)
physicians who use a high amount of resources compared to other
physicians; (4) physicians practicing in certain geographic areas; or
(5) physicians who treat a minimum number of individuals. In addition,
section 1848(n)(5) authorizes the Secretary to exclude certain
information regarding a service from a report with respect to a
physician (or group of physicians) if the Secretary determines that
there is insufficient information relating to that service to provide a
valid report on that service. Finally, under section 1848(n)(6), to the
extent practicable, the Secretary shall make appropriate adjustments to
the data used to prepare RURs, such as adjustments to take into account
variations in health status and other patient characteristics.
c. Implementation of Section 1848(n)(1)(B)
In April 2008, we awarded a contract to Mathematica Policy Research
to assist in the development of physician resource use measures and
confidential feedback reports. The purposes of the contract were to:
(1) Develop meaningful, actionable, and fair measures of resource use
for physician practices with the ultimate goal of using the measures in
CMS' VBP initiatives; and (2) provide feedback and education to
encourage more efficient provision of services. The Mathematica
contract contains the following tasks: (1) Development of resource use
measures based on both an episode of care (ETG & MEG) and per capita
analysis; (2) risk adjustment of Medicare FFS claims data for patient
severity of illness; (3) development of methodologies to attribute both
episodes and total cost of care for a beneficiary to individual
physicians and multiple physicians; (4) development of benchmarks for
peer comparison; (5) populate RURs with Medicare FFS data for several
medical specialties; (6) recruit physicians to confidentially share the
feedback reports; and (7) submit all documentation and production
programming logic to allow for a possible national dissemination of
RURs to physicians. The work performed and derived from this contract
is the basis for establishing the program required under section
1848(n) of the Act, which we will refer to as the ``Physician Resource
Use Feedback Program.''
The Physician Resource Use Feedback Program will consist of
multiple phases. Under this approach, each phase of the program will
inform future phases of the Program. The tasks listed above comprise
phase I of the feedback program. To date, CMS has disseminated RURs in
two program sites: Baltimore, MD (August 2008) and Boston, MA
(September 2008). Baltimore was selected as a program site due to its
close proximity to the CMS central office and Boston was selected as a
program site due to its high per capita Medicare costs and utilization

[[Page 69868]]

rates.\8\ We refer readers to a detailed discussion of the Baltimore
and Boston program sites below. Any additional Phase I activities
completed for the Physician Resource Use Feedback Program will be
similar to activities completed in Baltimore and Boston, including the
same methodologies for: (1) Choosing additional program sites, (2)
recruitment of physicians, and (3) construction of RURs. We are
implementing Phase I of the Physician Resource Use Feedback Program on
an interim final basis with comment period and it is CMS' intent to
propose subsequent phases of the program through rulemaking.
---------------------------------------------------------------------------

\8\ Dartmouth Atlas of Healthcare. 2005 Medicare reimbursement
figures derived from Hospital Service Area (HSA).
---------------------------------------------------------------------------

As indicated above, section 1848(n)(1)(B) of the Act requires that
the physician resource feedback program address resources measured on:
(1) An episode basis; (2) a per capita basis; or (3) both an episode
and a per capita basis. The RURs used in the Baltimore program site
used a per capita analysis for measuring cost of care and the RURs used
in the Boston program site used both a per capita and an episode of
care analysis for measuring cost of care. Accordingly, we are
implementing this approach to resource measurement on an interim final
basis and solicit comments on this approach, as well as the following
additional questions:
Are per capita resource use measures meaningful and
actionable?
Are episode-based resource use measures meaningful and
actionable?
Are composite measures of resource use that combine
episodes of care valuable?
We also provided the Baltimore and Boston physicians with a cost of
service category breakdown (for example, imaging services, inpatient
admissions, or outpatient services) for both the per capita and episode
of care analyses. We are finalizing this approach and welcome public
comment on including cost of service categories to capture Medicare FFS
claims data, as well as other ways to capture data in the Physician
Resource Use Feedback Program. In particular, we are soliciting comment
on the following:
What cost of service categories are most meaningful and
actionable?
Section 1848(n)(3) of the Act, requires that, to the extent
practicable, the data for the reports shall be based on the most recent
data available. In Phase I of the Physician Resource Use Feedback
Program, we are using Medicare FFS claims data from 2004-2007, which is
currently the most recent data available. The per capita analysis used
in both Baltimore and Boston included Medicare FFS claims data for
calendar year 2005. The episode of care analysis used in Boston
included Medicare FFS claims data for calendar years 2004-2006.
Typically, when an episode of care analysis is used, one calendar year
of data is used as a focal year (in this case 2005) and the prior year
(2004) and following year (2006) are also included to ensure the
episode captures any services that may occur just outside of a calendar
year. We are implementing and soliciting comment on this approach to
data for Phase I, as well as seeking comments on the following:
How many years of data should be included for a per capita
analysis?
How many years of data should be included for an episode
of care analysis?
As explained above, under section 1848(n)(4) of the Act, the
Secretary may focus the application of the program as appropriate,
including focusing on physicians who treat conditions that are high
cost, a high volume, or both. CMS has identified several priority
conditions that are high cost, high volume, or both through an analysis
of Medicare FFS claims data. The reports disseminated in the Baltimore
and Boston program sites included the following conditions: (i)
congestive heart failure; (ii) chronic obstructive pulmonary disorder;
(iii) prostate cancer; (iv) cholecystitis; (v) coronary artery disease
with acute myocardial infarction flare-up; (vi) hip fracture; (vii)
community-acquired pneumonia; and (viii) urinary tract infections.
Under section 1848(n)(4) of the Act, we also are permitted to focus
the application as appropriate on physician specialties that account
for a certain percentage of all spending for physicians' services.
Based upon the high cost and high volume conditions selected above, CMS
identified the several medical specialties as being the most relevant
specialties for treating those conditions. The RURs disseminated in the
Baltimore and Boston program sites included the following physician
specialties: internal medicine, cardiology, gastroenterology, general
practice, orthopedic surgery, medical oncology, urology, pulmonology,
family practice, and primary care. We are implementing the focus of
Phase I of the Program on the above conditions and medical specialties
on an interim final basis and we welcome public comments on the
selected conditions and medical specialties, as well as any additional
conditions and medical specialties to include in the feedback program.
To select physicians, CMS recruited participants for the Baltimore
and Boston program sites based on self-designated medical specialty.
Both the Baltimore and Boston sites included physicians from all of the
medical specialties listed above. Once physicians agreed to participate
in the Baltimore and Boston program sessions, CMS used Medicare
physician identifiers to find Medicare FFS claims data to populate
individual physician RURs for the participating physicians.
Approximately 50 physicians participated in a 60-minute individual in-
depth session with one interviewer that covered approximately 4
different RUR designs. Each one-on-one physician/interviewer session
educated the physician on his/her individual Medicare FFS resource
utilization. In the cases where Medicare FFS data was available, a de-
identified report of real data was used for educational purposes. The
RURs contained all of the elements discussed throughout section 6.c of
this final rule. In particular, we are soliciting public comments on
the following:
Do physicians prefer paper or electronic feedback reports?
How do physicians prefer to provide comments on or ask
questions about the RURs?
What other types of the outreach/educational efforts are
useful in helping physicians understand resource use?
As mentioned previously, section 1848(n)(4) of the Act permits us
to focus the program as appropriate, such as focusing the program on
physicians practicing in certain geographic areas. The RURs
disseminated in Baltimore included a geographic benchmark for all
physicians treating one condition (listed above) in the Baltimore-
Washington, DC metro area, as defined by zip codes. The Baltimore
program site also used hospital service area (HSA) as a geographic
benchmark. The HSA was based upon all hospitals in the Baltimore-
Washington, DC metro area that physicians typically refer beneficiaries
to for a particular condition. The Boston program site also used the
HSA benchmark and used the state of Massachusetts as a benchmark. We
welcome public comment on the selected geographic benchmarks
implemented for those areas, as well as any additional geographic
benchmarks that could be included in the Physician Resource Use
Feedback Program.
Section 1848(n)(4) of the Act also permits us to focus the program
as appropriate, such as on physicians who use a high amount of
resources compared to other physicians. The RURs disseminated in
Baltimore and Boston contained distribution curves

[[Page 69869]]

that defined peer groups of physicians for one condition using the
specialty and geographic benchmarks mentioned above. Within each peer
group, a physician was identified as a high cost outlier if he/she fell
within the 90th percentile of cost or higher. In addition, to including
a high cost benchmark, the Baltimore and Boston RURs included a low
cost (10th percentile) benchmark and a median cost (50th percentile)
benchmark. We are implementing this approach and welcome public comment
on the cost benchmarks, as well as any additional cost benchmarks that
could be included in the program. Further, we are soliciting public
comment on which benchmarks (specialty, geography, and cost) are most
likely to motivate changes in resource use.
In order to identify a high cost outlier, attribution of cost must
be assigned to a physician. In the Baltimore and Boston program
sessions, CMS provided RURs that contained several different
methodologies for attribution or assignment of costs to physicians. The
following five attribution rules were included: (i) Physician billing
the most Evaluation and Management (E&M) visits and billing for at
least 10 percent of the total cost for a beneficiary or an episode of
care; (ii) physician billing the most established E&M visits (chronic
conditions only); (iii) assign all cost to each physician billing for
any E&M or procedure; (iv) assign cost to each physician in proportion
to billed visits; and (v) assign cost to the physician billing the
first E&M visit (acute episodes only). In our continued distribution of
RURs through phase I, we will continue to update and refine our
attribution rules. We are soliciting comments on this approach and the
following:
What criteria should be taken into account to ensure
equity when considering attribution rules?
Finally, although the statute authorizes the Secretary to focus the
application of the program as appropriate, on physicians who treat a
minimum number of individuals and authorizes us to provide feedback to
groups of physicians, as determined appropriate by the Secretary, we
did not exercise these optional provisions in the Baltimore and Boston
program sites and are not finalizing these in Phase I of the program.
In addition, section 1848(n)(6) of the Act also requires that
adjustments, to the extent practicable, take into account variations in
health status and other patient characteristics. This type of
adjustment was not practicable due to the complexity of risk adjustment
tasks, coupled with the short implementation time from passage of MIPPA
legislation to the start date of the Baltimore and Boston program
sites. We welcome public comment on factors to consider for
establishing minimum thresholds, risk adjustment methodologies, and
measuring group practice level resource use.

III. Medicare Improvements for Patients and Providers Act of 2008
(MIPPA) Provisions

The following section addresses certain provisions of the Medicare
Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L.
110-275). Except as noted otherwise within this final rule with comment
period, we consider these provisions to be self-implementing. We are
revising our policies and regulations as described below in order to
conform then to the statutory amendments.

A. Section 101: Improvements to Coverage of Preventive Services

1. Improvements to Coverage of Preventive Services
Over the past 25 years, the Congress has added specific preventive
and screening services to the voluntary Part B program. Most of the
preventive or screening services that are already covered under
Medicare are described in 42 CFR part 410, subpart B, and also as
exceptions to statutory exclusions in Sec. 411.15. These preventive
and screening services include the following:
Pneumococcal, influenza, and hepatitis B vaccinations
(Sec. 410.57 and Sec. 410.63);
Pap smear (section 1861(nn) of the Act);
Screening mammography (Sec. 410.34);
Colorectal cancer screening tests (Sec. 410.37);
Screening pelvic exams (Sec. 410.56);
Prostate cancer screening tests (Sec. 410.39);
Glaucoma screening exams (Sec. 410.23);
Ultrasound screening for abdominal aortic aneurysms (AAA)
(Sec. 410.19);
Cardiovascular disease screening tests (Sec. 410.17);
Diabetes screening tests (Sec. 410.18); and
The initial preventive physical examination (IPPE) (Sec.
410.16).
Section 101(a) of the MIPPA provides for coverage under Part B of
``additional preventive services'', which are determined to meet
certain requirements, effective for services furnished on or after
January 1, 2009. Section 101(a) of the MIPPA provides the Secretary
with the authority to add coverage of ``additional preventive
services'', and specifies the process and the criteria that are to be
used in making determinations regarding the coverage of such services
under the Part B program. As provided in the law, this new coverage
allows payment for ``additional preventive services'' not otherwise
described in Title XVIII of the Act, if the Secretary determines
through the national coverage determination (NCD) process (as defined
in section 1869(f)(1)(B) of the Act) that the new services meet
statutory requirements for coverage.
Specifically, section 101(a) of the MIPPA defines ``additional
preventive services,'' as services not otherwise described in title
XVIII that identify medical conditions or risk factors and that the
Secretary determines are--
(1) Reasonable and necessary for the prevention or early detection
of an illness or disability;
(2) Recommended with a grade of A or B by the United States
Preventive Services Task Force; and
(3) Appropriate for individuals entitled to benefits under Part A
or enrolled under Part B.
The U.S. Preventive Services Task Force (USPSTF) is an independent
panel of experts in primary care and prevention that systematically
reviews the evidence of effectiveness and develops recommendations for
clinical preventive services, under the sponsorship of HHS' Agency for
Healthcare Research and Quality (AHRQ). The USPSTF grades the strength
of the evidence from ``A'' (strongly recommends), ``B'' (recommends),
``C'' (no recommendation for or against), ``D'' (recommends against),
or ``I'' (insufficient evidence to recommend for or against).
In addition, section 101(a) provides that in making national
coverage determinations (NCDs) for the coverage of a new service, the
Secretary ``may conduct an assessment of the relation between predicted
outcomes and the expenditures for such service and may take into
account the results of such assessment in making such determination.''
We plan to evaluate the preventive services not otherwise described
in title XVIII of the Act and that have been recommended with a grade A
or B by the USPSTF and determine whether to open an NCD on one or more
of them. USPSTF currently has 15 to 20 preventive services with a Grade
A or B recommendation that may be appropriate for the Medicare
population. These services can be found on its Web site at http://

[[Page 69870]]

www.preventiveservices.ahrq.gov. We may exclude reviewing any one of
these services if: (1) There is an existing Medicare screening or
preventive benefit for that particular service; (2) the service does
not appear to be appropriate for the Medicare population (for example,
pediatric services). We invite public requests on the services on the
USPSTF list that CMS should consider for an NCD using the procedures
described at http://www.cms.hhs.gov/DeterminationProces/02_howtorequestanNCD.asp.
The NCD process consists of three major steps: (1) Initiation; (2)
review; and (3) completion. We initiate the NCD process by ``opening''
the NCD. This is announced to the public by posting a ``tracking
sheet'' on the CMS Coverage Web site with an initial 30-day public
comment period. The public will have another opportunity to comment on
the NCD when the proposed decision is published. After taking into
consideration all of the public comments and evidence, a final decision
will be made public. Development of a complete, formal request for an
NCD can be initiated either by an outside party or internally by CMS
staff.
We are establishing new Sec. 410.64, Additional Preventive
Services, to reflect these statutory requirements. To conform the
regulations to the statutory requirements of the MIPPA, we are also
adding new paragraph Sec. 411.15(k)(15) for ``additional preventive
services.''

Payment of Co-Insurance

Section 101(a)(2) of the MIPPA establishes payment rules under Part
B if the Secretary makes a NCD for an additional preventive service
under section 1861(ddd) of the Act. The amount of the Part B payment
and the amount of the beneficiary's Part B coinsurance will depend on
the nature of the new preventive service. For instance, if the
additional preventive service is a clinical diagnostic laboratory test,
Medicare pays on a fee schedule basis and the amount paid is 100
percent. There is no beneficiary coinsurance. For all other additional
preventive services, Medicare will pay 80 percent of the lesser of the
actual charge for the service or the amount of the fee schedule. The
beneficiary would be responsible for the remaining 20 percent as
coinsurance. We will specifically identify the type of service and the
accompanying payment levels in our implementing instructions that will
be issued contemporaneously with each NCD.
2. Revisions to Initial Preventive Physical Examination (IPPE)
Section 101(b) of the MIPPA also amended section 1861(ww)(1) of the
Act which establishes an IPPE for individuals who are newly enrolled in
the voluntary Part B program. This benefit was originally effective on
January 1, 2005, and is implemented at Sec. 410.16. Section 101(b) of
the MIPPA revises the benefit by the following:
(1) Adding the measurement of an individual's body mass index as
part of the IPPE;
(2) Upon the individual's consent, adding end-of-life planning to
the IPPE services; and
(3) Removing the electrocardiogram from the list of mandated
services that must be included in the IPPE benefit, and making it an
educational, counseling, and referral service to be discussed with the
individual and ordered by the physician, if necessary.
Section 101(b) of the MIPPA also amended section 1861(ww)(1) of the
Act by defining the term ``end-of-life planning'' to mean verbal or
written information regarding (1) an individual's ability to prepare an
advance directive in the case that an injury or illness causes the
individual to be unable to make health care decisions, and (2) whether
or not the physician is willing to follow the individual's wishes as
expressed in an advance directive.
We are amending Sec. 410.16(a)(4) (the physical exam element) of
the IPPE benefit so that it includes the measurement of an individual's
body mass index. We are amending Sec. 410.16(a)(5) to omit the
electrocardiogram as a mandatory part of the IPPE benefit, and add the
electrocardiogram to the list of education, counseling, and referral
services described in Sec. 410.16(a)(7) of the IPPE benefit.
We are also amending Sec. 410.16(a)(5) by inserting in the place
of the term ``electrocardiogram'' the language ``end-of-life planning''
and noting the need for the consent of the individual to have this
discussion.
We are also amending Sec. 410.16(a) of the IPPE benefit by adding
a definition of the term ``end-of-life planning'' to reflect the
statutory definition of that term as described above.
Section 101(b) of the MIPPA also amended section 1861(ww)(1) of the
Act (the IPPE benefit) by adding the ``additional preventive services''
benefit to the list of screening and preventive services for which
physicians and other qualified nonphysician practitioners must provide
``education, counseling and referral.'' The Congress also extended the
time period that newly eligible Part B beneficiaries can obtain the
IPPE benefit from 6 months to the first 12 months after the effective
date of their first Part B coverage period. Therefore, we are amending
Sec. 410.16(a)(7) to reflect the additional education, counseling and
referral responsibilities that physicians and other practitioners will
have under the IPPE benefit for the electrocardiogram and the
``additional preventive services'' that may be covered in the future.
As mentioned above, the Congress extended the eligibility period
for beneficiaries from 6 months to 1 year as provided in section
1862(a)(1)(K) of the Act. This statute is effective for services
furnished on or after January 1, 2009. We are revising the present
definition of the term ``eligible beneficiary'' in Sec. 410.16(a) to
read as follows: ``Eligible beneficiary'' means an individual who
receives his or her IPPE not more than 1 year after the effective date
of his or her first Medicare Part B coverage period.
3. Payment for IPPE
In order to implement section 101(b) of the MIPPA, beginning
January 1, 2009, we will pay for an IPPE performed not later than 12
months after the date of the beneficiary's initial enrollment in
Medicare Part B. We will pay for one IPPE per beneficiary per lifetime.
The Medicare deductible does not apply to the IPPE if performed on or
after January 1, 2009.
The section 101(b) of the MIPPA also removes the screening
electrocardiogram (EKG) as a mandatory requirement as identified in
section 1861(ww)(1) of the Act as part of the IPPE. The MIPPA requires
that there be education, counseling, and referral for an EKG, as
appropriate, for a once-in-a lifetime screening EKG performed as a
result of a referral from an IPPE as stated in revised Sec. 410.16.
Effective for beneficiaries who receive the IPPE on or after January 1,
2009, the screening EKG will be billable with G code(s) when it is a
result of a referral from an IPPE. Billing instructions for physicians,
qualified NPPs, and providers will be issued.
We are implementing the following G codes to identify these
services:
G0402: Initial preventive physical examination; face-to-
face visit, services limited to new beneficiary during the first 12
months of Medicare enrollment.
G0403: Electrocardiogram, routine ECG with at least 12
leads; performed as a screening for the initial preventive physical
examination with interpretation and report.

[[Page 69871]]

G0404: Electrocardiogram, routine ECG with at least 12
leads; tracing only, without interpretation and report, performed as a
screening for the initial preventive physical examination.
G0405: Electrocardiogram, routine ECG with at least 12
leads; interpretation and report only, performed as a screening for the
initial preventive physical examination.
The 4 existing G codes (G0344, G0366, G0367, and G0367) will be
active until December 31, 2008, for beneficiaries who have the IPPE
prior to January 1, 2009.
Work RVUs: We believe the additional work of performing a
measurement of an individual's body mass index and, upon consent of an
individual, the discussion of end-of-life planning, as described in the
coverage section, represent minimal work. A simple tool is used to
determine body fat based on an individual's height and weight that
applies to both adult men and women. End-of-life planning as previously
described is verbal or written information given to the beneficiary
regarding advance directive preparation and a discussion regarding
whether the physician is willing to follow an individual's wishes made
in an advance directive.
Therefore, for CY 2009, we are retaining the current work RVUs for
the new IPPE G code (G0402) which involves equivalent resources and
work intensity to those services contained in CPT evaluation and
management (E/M) code 99203, new patient, office or other outpatient
visit. However, we are interested in receiving comments on suggested
valuations of this service to reflect the resources required. We will
also retain the work RVUs for the new EKG G codes which are equivalent
to those for CPT codes 93000, 93005 and 93010. In addition, we note
that the policy for reporting a medically necessary E/M service
furnished at the same IPPE visit will still apply. CPT codes 99201
through 99215 may be used depending on the circumstances and appended
with CPT modifier ``25'' identifying the E/M visit as a significant,
separately identifiable service from the IPPE code G0402.
We do not believe this scenario will be the typical occurrence and
we will monitor utilization patterns involving the level 4/5 new or
established office or other outpatient visit codes being reported with
the IPPE. If there are consistent data that demonstrate high usage of
level 4/5 E/M codes in conjunction with the IPPE, we will reevaluate
the policy.
Additionally, since section 101(b) of the MIPPA provides that the
Medicare Part B deductible will not apply for the IPPE performed on or
after January 1, 2009 (as defined in section 1861(ww)(1) of the Act),
we are revising Sec. 410.160(b) to include an exception from the
Medicare Part B deductible for the IPPE as described in Sec. 410.16
(Initial preventive physical examination: Conditions for and
limitations on coverage). The co-insurance continues to apply.

B. Section 131: Physician Payment, Efficiency, and Quality Improvements

Section 131 of the MIPPA includes a number of provisions that
impact the quality reporting system defined in section 1848(k) of the
Act. For ease of reference, we have named this quality reporting
system, the ``Physician Quality Reporting Initiative'' (PQRI). Although
the new MIPPA amendments that pertain to the PQRI, including those
provisions that pertain to PQRI beyond 2009, are generally described
below, the scope of this final rule with comment period is limited to
the 2009 PQRI. The 2009 PQRI, including our implementation of the new
MIPPA amendments as they pertain to the 2009 PQRI, is discussed in
detail in section II.O1. of this final rule with comment period. This
final rule with comment period does not address nor does it attempt to
implement any of the new MIPPA amendments as they pertain to the PQRI
in 2010 and beyond. The new MIPPA amendments as they pertain to the
PQRI in 2010 and beyond will be addressed through future notice and
comment rulemaking.
Section 131(b)(1) of the MIPPA amends section 1848(k)(2) of the Act
to add new paragraph (C), which provides that for the purposes of
reporting quality measures for covered professional services furnished
during 2010 and subsequent years for the PQRI, the quality measures
(including electronic prescribing measures) shall be such measures
selected by the Secretary from measures that have been endorsed by the
entity with a contract with the Secretary under subsection 1890(a) as
added by the MIPPA. Section 1848(k)(2)(C) of the Act also provides that
for the 2010 and future years of the PQRI, in the case of a specified
area or medical topic determined appropriate by the Secretary for which
a feasible and practical measure has not been endorsed by the entity
with a contract under subsection 1890(a), as added by the MIPAA, the
Secretary may specify a measure that is not so endorsed as long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary, such as the
AQA-Alliance.
Paragraph (D) of section 1848(k)(2) of the Act, as added by section
131(b)(1) of the MIPPA, requires that for each quality measure
(including an electronic prescribing quality measure) adopted by the
Secretary for the PQRI in 2009 and subsequent years, the Secretary
shall ensure that eligible professionals have the opportunity to
provide input during the development, endorsement, or selection of
measures applicable to the services they furnish. Additional discussion
of the requirements of section 1848(k)(2)(D) of the Act as they pertain
to the 2009 PQRI can be found in section II.O1. of this final rule with
comment period.
Section 131(b)(2) of the MIPPA redesignates section 101(c) of the
MIEA-TRHCA, as amended by the MMSEA, as subsection (m) of the Act.
Section 1848(m)(1) of the Act authorizes the Secretary to make
incentive payments for satisfactorily reporting data on quality
measures for covered professional services furnished by eligible
professionals during the reporting period for the PQRI in 2007 through
2010. In addition to the 1.5 percent incentive payment already
authorized for the 2007 and 2008 PQRI, section 1848(m)(1)(B) of the
Act, as redesignated by section 131(b)(2) of the MIPPA and amended by
section 131(b)(3)(B) of the MIPPA, authorizes the Secretary, for the
2009 and 2010 PQRI, to provide an incentive payment equal to 2.0
percent of the estimated total allowed charges submitted not later than
2 months after the end of the reporting period for all covered
professional services furnished during the reporting period for 2009
and 2010, respectively.
Section 1848(m)(3)(A) of the Act, as redesignated by section
131(b)(3)(C) of the MIPPA and amended by section 131(b)(3)(D)(iii) of
the MIPPA, specifies that for 2009 and subsequent years, the PQRI
quality measures shall not include electronic prescribing measures.
Therefore, as discussed further in section II.O1. of this final rule
with comment period, we are not including measure 125, Health
Information Technology: Adoption/Use of Medication e-Prescribing, in
the final set of 2009 PQRI quality measures.
Section 1848(m)(3)(C) of the Act, as added by section
131(b)(3)(D)(iv) of the MIPPA, requires that ``by January 1, 2010, the
Secretary shall establish and have in place a process under which
eligible professionals in a group practice (as defined by the
Secretary) shall be treated as satisfactorily submitting data on
quality measures'' for the PQRI ``if,

[[Page 69872]]

in lieu of reporting measures under section 1848(k)(2)(C) of the Act
the group practice reports measures determined appropriate by the
Secretary, such as measures that target high-cost chronic conditions
and preventive care, in a form and manner, and at a time, specified by
the Secretary.'' Section 1848(m)(3)(C) of the Act also provides for the
use of a statistical sampling model to submit data on measures, such as
the model used under the Physician Group Practice demonstration
project, and provides that incentive payments made to a group practice
for satisfactorily submitting data on quality measures for the PQRI
shall be made in lieu of the incentive payments that would otherwise be
made to eligible professionals in the group practice for satisfactorily
submitting data on quality measures. The requirements at section
1848(m)(3)(c) of the Act also apply to successful electronic
prescribers (as defined in section 1848(m)(B)(ii) of the Act), which
are described generally in section III.D. and in detail in section
II.O2. of this final rule with comment period.
Section 1848(m)(3)(D) of the Act, as added by section
131(b)(3)(D)(iv) of the MIPPA, authorizes the Secretary, in
consultation with stakeholders and experts, to revise the criteria for
satisfactorily reporting data on quality measures for the PQRI and for
submitting data on electronic prescribing quality measures for years
after 2009.
Section 1848(m)(5)(D)(iii) of the Act, as redesignated by section
131(b)(2) of the MIPPA and amended by section 131(b)(3)(E) of the
MIPPA, provides that if the Secretary has determined an eligible
professional (or group practice) has not reported measures applicable
to covered professional services of such professional (or group
practice), the Secretary shall not pay the incentive payment, and that
if an incentive payment has already been made to an eligible
professional (or group practice), the Secretary shall recoup such
payments from the eligible professional (or group practice).
Subparagraph (G) of section 1848(m)(5) of the Act, as added by
section 131(b)(3)(E)(v) of the MIPPA, requires the Secretary to post on
the CMS Web site, in an easily understandable format, a list of the
names of: (1) The eligible professionals (or group practices) who
satisfactorily submitted data on quality measures for the PQRI; and (2)
the eligible professionals (or group practices) who are successful
electronic prescribers.
Section 1848(m)(6)(C) of the Act, as redesignated by section
131(b)(2) of the MIPPA and amended by section 131(b)(3)(F) of the
MIPPA, defines ``reporting period'' for the 2008 through 2011 PQRI to
be the entire year and authorizes the Secretary to revise the reporting
period for years after 2009 if the Secretary determines such ``revision
is appropriate, produces valid results on measures reported, and is
consistent with the goals of maximizing scientific validity and
reducing administrative burden.''
Section 131(b)(4) of the MIPPA amends section 1848(k)(3)(B) of the
Act to include a qualified audiologist (as defined in section
1861(ll)(3)(B) of the Act) in the definition of an ``eligible
professional'' beginning with the 2009 PQRI.
Section 131(b)(6) of the MIPPA provides that none of the amendments
made by subsection 131(b) or section 132 of the MIPPA shall affect the
operation of the provisions of section 1848(m) of the Act, with regard
to 2007 or 2008.
Further discussion of these MIPPA provisions as they relate to the
2009 PQRI can be found in section II.O1. of this final rule with
comment period.
In addition to the provisions that impact the PQRI, section 131(a)
of the MIPPA amended section 1848(d)(8) of the Act to extend the 6-
month increase in the CY 2008 CF to the entire year and added section
1848(d)(9) of the Act which provided that the update to the single CF
for CY 2009 shall be 1.1 percent. This subsection further specified
that the CFs for CY 2010 and subsequent years must be computed as if
these increases had never applied. Further discussion of these MIPPA
provisions as they relate to the PFS update and CF for 2009 can be
found in sections VII. and IX. of this final rule with comment period.

C. Section 131(c): Physician Resource Use Feedback Program

Section 131(c) of the MIPPA amends section 1848 of the Act by
adding subsection (n), which requires the Secretary to establish and
implement by January 1, 2009, a Physician Feedback Program using
Medicare claims data and other data to provide confidential feedback
reports to physicians (and as determined appropriate by the Secretary,
to groups of physicians) that measure the resources involved in
furnishing care to Medicare beneficiaries. If determined appropriate by
the Secretary, the Secretary may also include information on quality of
care furnished to Medicare beneficiaries by the physician (or group of
physicians) in the reports. In addition, section 131(c) of the MIPPA
outlines the general components and aspects of the program, but
provides the Secretary broad discretion with regard to implementation
and development of the program. Given the timing of the passage of
MIPPA and the deadline for implementing a program, we believe it would
be contrary to the public interest to delay implementation and
therefore, we will implement the physician feedback program on an
interim final basis and provide opportunity for public comment. We
refer readers to section II.S.6. of this final rule with comment period
for a detailed discussion and implementation of section 131(c) of the
MIPPA.

D. Section 132: Incentives for Electronic Prescribing

Section 132(a)(1) of the MIPPA amends section 1848(m) of the Act,
as redesignated by section 131(b)(2) of the MIPPA, to authorize for
2009 through 2013 incentives to eligible professionals or group
practices who are ``successful electronic prescribers.'' For 2009 and
2010, the Secretary is authorized to provide successful electronic
prescribers an incentive payment equal to 2.0 percent of the total
estimated allowed charges submitted not later than 2 months after the
end of the reporting period for all covered professional services
furnished during the 2009 and 2010 reporting periods, respectively.
Reduced incentive payments apply to subsequent years through 2013.
Section 132(b) of the MIPAA amends section 1848(a) of the Act such that
a payment differential applies to those who are not successful
electronic prescribers starting in 2012. During 2012 or any subsequent
year, if the eligible professional is not a successful electronic
prescriber for the reporting period, the fee schedule amount for
covered professional services furnished by such professional during the
year shall be reduced by:
1.0 percent for 2012.
1.5 percent for 2013.
2.0 percent for 2014 and each subsequent year.
Section 132(a)(2) of the MIPPA amends section 1848(m)(3) of the
Act, as redesignated by section 131(b)(2) of the MIPPA, to authorize
the Secretary to identify successful electronic prescribers for a
reporting period using one of two possible standards: One based on the
eligible professional's reporting, in at least 50 percent of the
reportable cases, on any electronic prescribing quality measures that
have been established under the physician reporting system under
subsection

[[Page 69873]]

1848(k) (which, as noted previously, we have named ``PQRI'' for ease of
reference) and are applicable to services furnished during a reporting
period, as amended by section 131(b) of the MIPPA, and one based on the
electronic submission by the eligible professional of a sufficient
number of prescriptions under the Medicare Prescription Drug Benefit
Program (Part D) during the reporting period. If the Secretary decides
to use the latter standard, the Secretary is authorized to use Part D
drug claims data to assess whether a ``sufficient'' number of
prescriptions have been submitted by eligible professionals. We do not
intend to use this latter standard for 2009. However, to the extent
that we intend to use this latter standard in future years, we will
address how we plan to define ``sufficient'' through notice and comment
rulemaking. Section 1848(m)(3)(B) of the Act, as added by section
132(a)(2)(B) of the MIPPA, also requires that to the extent
practicable, in determining whether eligible professions meet the
requirements to be identified as successful electronic prescribers,
``the Secretary shall ensure that eligible professionals utilize
electronic prescribing systems in compliance with standards established
for such systems pursuant to the Part D Electronic Prescribing Program
under section 1860D-4(e) of the Act.'' The 2009 electronic prescribing
incentive reporting period and the criteria that will be used by CMS to
identify successful electronic prescribers for 2009 are described in
detail in section II.O2. of this final rule with comment period.
Section 132(a)(1) of the MIPPA also amends section 1848(m) of the
Act, as redesignated by section 131(b)(2) of the MIPPA, to provide for
an exemption from both the incentive payment and the payment
differential for a particular reporting period of certain eligible
professionals. The Secretary is authorized to choose between two
possible standards for the exemption: One based upon whether the
allowed charges to which the electronic prescribing quality measure
applies are less than 10 percent of the total allowed charges for all
covered professional services furnished by the eligible professional
during the reporting period; and one based on whether the eligible
professional does not submit (including both electronically and
nonelectronically) a sufficient number (as determined by the Secretary)
of prescriptions under Part D (which can again be assessed using Part D
drug claims data). We do not intend to use this latter standard for
2009. However, to the extent that we intend to use this latter standard
in future years, we will address how we plan to define ``sufficient''
through notice and comment rulemaking. For 2009, the criteria for
exemption from the incentive payments for electronic prescribing are
described in section II.O2. of this final rule with comment period.
Section 132(b) of the MIPPA also amends section 1848(a) of the Act
to authorize the Secretary to apply a hardship exception on a case-by-
case basis to exempt eligible professionals from the payment
differential that applies to those who are not successful electronic
prescribers by 2012. Since this hardship exception does not apply until
2012, we will address the parameters that we intend to apply to
determine hardship through future notice and comment rulemaking.

E. Section 133(b): Expanding Access to Primary Care Services

Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or
decreases in RVUs for a year 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 must make adjustments to preserve BN.
The 5-Year Review of work RVUs would have resulted in a change in
expenditures that would exceed $20 million if we made no offsetting
adjustments to either the CF or RVUs. In CY 2007 and CY 2008, we met
the 5-Year Review BN requirement by making a separate adjustment to the
work RVUs.
Section 133(b) of the MIPPA amends section 1848(c)(2)(B) of the Act
to specify that the BN adjustor for the 5-Year Review must be applied
to the conversion factor beginning with CY 2009. Further discussion of
this MIPPA provision as it relates to the CY 2009 PFS can be found in
section IX. of this final rule with comment period.

F. Section 134: Extension of Floor on Medicare Work Geographic
Adjustment Under the Medicare Physician Fee Schedule

In accordance with section 103 of the MMSEA, the 1.000 work GPCI
floor was set to expire as of July 1, 2008. Section 134(a) of the MIPPA
extended the 1.000 work geographic practice cost index (GPCI) floor
from July 1, 2008 through December 31, 2009. Additionally, section
134(b) of the MIPPA sets a permanent 1.500 work GPCI floor in Alaska,
beginning January 1, 2009. As such, the CY 2009 GPCIs and summarized
GAFs reflect these statutorily mandated work GPCI floors.

G. Section 136: Extension of Treatment of Certain Physician Pathology
Services Under Medicare

The 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 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.
In the CY 2000 PFS final rule, we stated that we would implement a
policy to pay only the hospital for the TC of physician pathology
services furnished to hospital inpatients (64 FR 59380, 59408 through
59409). Prior to this proposal, any independent laboratory could bill
the Medicare contractor under the PFS for the TC of physician pathology
services for hospital inpatients. At the request of commenters on the
final rule that independent laboratories and hospitals needed
sufficient time to negotiate arrangements, we delayed the
implementation of that rule until 2001.
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 Medicare contractor
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 of the
physician pathology service to a hospital patient and submitted claims
to the Medicare contractor for payment. This provision was initially
effective for 2 years, 2001 through 2002.
Through subsequent legislation (that is, section 732 of the MMA,
section 104 of the MIEA-TRHCA, section 104 of the MMSEA, and section
136 of the MIPPA), this provision has been extended through December
31, 2009. 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 paid differently depending on the
status of the laboratory.

[[Page 69874]]

H. Section 141: Extension of Exceptions Process for Medicare Therapy
Caps

1. Background
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 outpatient hospital services.
The exceptions process for the therapy caps, originally authorized
by section 5107 of the DRA, was extended from January 1, 2006 through
December 31, 2007 by section 201 of the MIEA-TRHCA. Section 105 of the
MMSEA provided for a further extension of this exceptions process
through the first 6 months of CY 2008 (that is, January 1, 2008 through
June 30, 2008).
2. MIPPA Provision for Cap Exceptions
Section 141 of the MIPPA extends the exceptions process for therapy
caps from July 1, 2008 through December 31, 2009.
Section 1833(g)(2) of the Act provides that, for CY 1999 through CY
2001, the caps were $1500, and for the calendar years after 2001, the
caps are equal to the preceding year's cap increased by the percentage
increase in the Medicare Economic Index (MEI) (except that if an
increase for a year is not a multiple of $10, it is rounded to the
nearest multiple of $10). The annual, per beneficiary therapy cap for
2009 will be $1840 for physical therapy and speech-language pathology
services combined and $1840 for occupational therapy services,
separately. The MIPPA does not create a separate cap for SLP services.

I. Section 143: Speech-Language Pathology Services

1. Background
Currently, therapy services [physical therapy (PT), occupational
therapy (OT), and speech-language pathology (SLP)] may be billed by
providers, such as hospitals, and by suppliers, such as physicians or
NPPs. Physical therapists and occupational therapists may also
independently enroll as suppliers of Medicare services, and may bill
and receive payment for their services furnished in private practice.
Prior to enactment of the MIPPA, the statute did not allow SLPs to
enroll independently and to be paid directly.
The amendments made by section 143 of the MIPPA provide the
authority for CMS to enroll speech-language pathologists as suppliers
of Medicare services, and for speech-language pathologists to begin
billing Medicare for outpatient SLP services furnished in private
practice beginning July 1, 2009. Enrollment will allow SLPs in private
practice to bill Medicare and receive direct payment for their
services.
In general, section 143 of the MIPPA amends the statute to give
speech-language pathology services the meaning given the term
``physical therapy services'' in section 1861(p) of the Act. This
provides the authority to enroll speech-language pathologists and to
pay them for their services in the same way as physical therapists that
are separately enrolled. Section 143 made conforming changes to the
scope of benefits in section 1832(a)(2)(C) of the Act to include
outpatient speech-language pathology services furnished in a private
practice. Section 143 of the MIPPA also makes the following changes to
the Act:
Section 1832(a)(2)(C) of the Act is amended to
specifically include outpatient speech-language pathology services in
the scope of benefits for which payment may be made.
Section 1833(a)(8) of the Act is amended to describe
outpatient SLP services as separate and distinct services from PT.
Section 1833(g)(1) is amended to separately describe
outpatient SLP services, but the amendments do not create a separate
therapy cap for SLP services. The cap for PT and SLP combined is $1840
per beneficiary in CY 2009.
Section 1835(a) of the Act is amended to specify that
payment may be made for outpatient SLP services to a provider of
services, including a clinic, rehabilitation agency or public health
agency that meets the requirements described in the amended section
1861(p)(4)(A) and (B) of the Act.
Section 1861(p) of the Act is amended to remove from the
definition of ``outpatient physical therapy services'' SLP services
furnished by or under arrangements or supervision of a provider. These
SLP services are deleted from the definition of outpatient physical
therapy services because SLP services are now defined separately under
section 1861(ll)(2) of the Act.
Section 1861(s)(2)(D) of the Act is amended to add
outpatient SLP services as medical and other health services, along
with outpatient PT and OT.
Section 1862(a)(20) of the Act is amended to add SLP
services to the list of therapy services for which Medicare payment
cannot be made if furnished as an incident to a physician's
professional services unless standards and conditions specified by the
Secretary (other than licensing) are met, as such standards and
conditions would apply to such services if furnished by a therapist.
Section 1866 of the Act is amended to include SLP services
in the description of services that can be considered furnished by a
provider of services when furnished by a clinic, rehabilitation agency,
or public health agency that meets certain requirements.
Section 1877 of the Act is amended to include outpatient
SLP services in the list of designated health services for the purpose
of the prohibition on certain physician referrals. (See section VI.B.
of this preamble for a discussion of these changes.)
2. Implementation of the MIPPA
Section 143 of the MIPPA amends the statute to treat speech-
language pathologists (SLP) and speech-language pathology services in a
similar manner to physical therapists and physical therapy services.
Physical therapists are permitted to enroll in Medicare and to furnish
and bill for their services in private practice. To conform SLP
regulations to those for PT, we are adding provisions for services
furnished by SLPs in private practice to Sec. 410.62(c) using language
similar to the provisions of Sec. 410.59 and Sec. 410.60 that apply
to OT and PT enrollment. In Sec. 410.62, we are redesignating the
paragraph (c) as paragraph (d). The current paragraph (d) is deleted
since this language is covered in Sec. 410.60.
The amendments made by section 143 of the MIPPA concerning SLP
enrollment, billing and payment are generally self-implementing and we
are revising our regulations accordingly as noted above consistent with
our policies for PTs.
Section 410.62(c) contains a list of requirements that SLPs must
meet. The regulations require that an SLP be legally authorized to
engage in SLP private practice in the State where he or she practices.
The SLP must practice only within the scope of practice allowed by the
State. Section 410.62(c)(1)(ii) describes the various practice types in
which an individual SLP may provide services.
Section 410.62(c)(1)(iii)(A) requires that SLPs in private practice
must bill Medicare for services furnished in the State where they are
licensed, in the locations where the practice is operated, at a time
when the practice is operating. The space must be owned, leased or
rented by the practice and used for the exclusive purpose of operating
the practice during those hours the practice

[[Page 69875]]

is furnishing services to beneficiaries. Private practice services may
be furnished at a patient's home, but not at an institution that is a
hospital, CAH or SNF.
Section 410.62(c)(iv) also requires that SLPs must treat
individuals who are patients of the practice and for whom the practice
collects fees for the services furnished.
3. Operational Issues
We will revise our manual instructions to reflect that SLPs can now
enroll and be paid directly by Medicare for services furnished on or
after July 1, 2009. SLPs who wish to enroll in Medicare may submit
their Medicare enrollment application to their local Medicare
contractor on or after June 2, 2009. Before submitting a Medicare
enrollment application, SLPs are required to obtain a National Provider
Identifier, if they do not currently have one. For general information
on the Medicare provider enrollment process, please see the CMS Web
site at http://www.cms.hhs.gov/MedicareProviderSupEnroll.
To educate the public about this change, we will discuss the new
enrollment instructions during an upcoming Physician and Allied Health
Professionals Open Door Forum. In the coming months, we will also
revise our manual instructions and issue a MLN Matters article and
listserv messages to inform the public that SLPs may enroll as
suppliers of Medicare services and begin billing Medicare for
outpatient SLP services furnished in private practice beginning July 1,
2009. We also plan to contact national associations and request that
they notify their members about these changes. Finally, we will require
our Medicare contractors to contact SLPs via bulletins or listserv
announcements about these changes.

J. Section 144(b): Repeal of Transfer of Title for Oxygen Equipment

1. Payment Rules for Oxygen and Oxygen Equipment
a. Overview
The general Medicare payment rules for durable medical equipment
(DME) are set forth in section 1834(a) of the Act and 42 CFR part 414,
subpart D of our regulations. Section 1834(a)(1) of the Act and Sec.
414.210(a) of our regulations establish the Medicare payment for a DME
item as equal to 80 percent of either the lower of the actual charge or
the fee schedule amount for the item. The beneficiary coinsurance is
equal to 20 percent of either the lower of the actual charge or the fee
schedule amount for the item once the deductible is met.
Specific rules regarding payment for oxygen and oxygen equipment
are set forth in section 1834(a)(5) of the Act and Sec. 414.226 of our
regulations. Suppliers are paid a monthly payment amount for furnishing
medically necessary oxygen contents (stationary and portable) and
stationary oxygen equipment falling under the class described in Sec.
414.226(c)(1)(i). Equipment in this class includes stationary oxygen
concentrators, which concentrate oxygen from room air; stationary
liquid oxygen systems, which use oxygen stored as a very cold liquid in
cylinders and tanks; and gaseous oxygen systems, which administer
compressed oxygen directly from cylinders.
We also pay a monthly add-on payment to suppliers furnishing
medically necessary portable oxygen equipment falling under one of two
classes described in Sec. 414.226(c)(1)(ii) and (iii). Equipment in
these classes includes portable liquid oxygen systems, portable gaseous
oxygen systems, portable oxygen concentrators, and oxygen transfilling
equipment used to fill portable tanks or cylinders in the home. Both
liquid and gaseous oxygen systems (stationary and portable) require on-
going delivery of oxygen contents.
b. Provisions of the Deficit Reduction Act of 2005 (DRA)
Section 5101(b) of the DRA amended section 1834(a)(5) of the Act,
limiting monthly payments to suppliers for oxygen equipment to 36
months of continuous use. At the end of this 36-month period, suppliers
must transfer title to oxygen equipment rented on or after January 1,
2006 to the beneficiary. Payments for oxygen contents continue after
title to the equipment has been transferred.
On November 9, 2006, we issued a final rule (71 FR 65884) to
implement these changes. We amended Sec. 414.226 to clarify that the
monthly payments for items falling under the classes now described in
Sec. 414.226(c)(1)(i) thru (iii) are made for periods of continuous
use not to exceed 36 months. We revised the rules regarding a period of
continuous use for the rental of DME in Sec. 414.230 of our
regulations to clarify the continuous use determination.
We also added a new paragraph (f) to Sec. 414.226 of our
regulations, requiring a supplier to transfer title to the oxygen
equipment to the beneficiary on the first day after the 36th continuous
month in which payment is made for the equipment.
In addition, we revised Sec. 414.226 of our regulations to allow
monthly payments to suppliers for furnishing gaseous or liquid oxygen
contents for use with either beneficiary-owned stationary equipment or
beneficiary-owned portable equipment.
Section 5101(b) of the DRA also authorized payments for maintenance
and servicing of beneficiary-owned oxygen equipment if the Secretary
determined such payments to be reasonable and necessary. In keeping
with the longstanding Medicare policy to pay for maintenance and
servicing of DME that is owned by the beneficiary, we determined that
paying for necessary repairs and periodic maintenance and servicing of
beneficiary-owned oxygen equipment was reasonable and necessary to
ensure that oxygen equipment owned by beneficiaries continued to
function properly. Without these payments, we were concerned that there
was little incentive for suppliers to maintain this equipment, because
the equipment was no longer owned by the supplier. Our regulations
setting forth this payment amount are discussed in more detail in
section III.J.2.c. below in this section.
In the November 2006 final rule, we established other safeguards
for beneficiaries receiving oxygen and oxygen equipment, which are set
forth at Sec. 414.210(e)(5) and Sec. 414.226(g). Section
414.210(e)(5) requires suppliers--after transferring title to oxygen
equipment--to furnish replacement equipment at no cost to the
beneficiary or the Medicare program if the item furnished by the
supplier does not last for the entire reasonable useful lifetime
established for the equipment in accordance with Sec. 414.210(f)(1).
Per Sec. 414.210(f), if oxygen equipment has been in continuous use by
the beneficiary for the equipment's reasonable useful lifetime, the
beneficiary may elect to obtain new equipment. Section 414.210(f)(1) of
our regulations states the reasonable useful lifetime for equipment is
determined through program instructions. In the absence of program
instructions, the carrier may determine the reasonable useful lifetime
for equipment, but in no case can it be less than 5 years. Computation
is based on when the equipment is delivered to the beneficiary, not the
age of the equipment. If the beneficiary elects to obtain replacement
oxygen equipment, payment is made in accordance with Sec. 414.226(a).
Section 414.226(g)(2) prohibits suppliers from replacing oxygen
equipment prior to the expiration of the 36-month rental period unless
a specific exception applies. This

[[Page 69876]]

was intended to protect the beneficiary from the supplier changing the
beneficiary's equipment in order to maximize Medicare payments. For
example, the supplier may want to move a beneficiary from a portable
oxygen concentrator to portable gaseous equipment for which Medicare
makes additional payments after the 36-month rental period ends.
Section 414.226(g)(4) provides that, by no later than 2 months
before the date on which the supplier must transfer title to oxygen
equipment to the beneficiary, the supplier must disclose to the
beneficiary: (1) Whether, in the case of oxygen transfilling equipment
and stationary or portable oxygen concentrators, it can maintain and
service the equipment after the beneficiary acquires title to it; and
(2) whether, in the case of stationary or portable gaseous or liquid
oxygen systems, it can continue to deliver oxygen contents to the
beneficiary after the beneficiary acquires title to the equipment.
c. Medicare Improvements for Patients and Providers Act (MIPPA) Section
144(b)--Repeal of Transfer of Ownership of Oxygen Equipment
Section 144(b) of the MIPPA repeals the requirement that the
supplier transfer title to oxygen equipment to the beneficiary after
the 36-month rental period. In its place, section 144(b) establishes a
36-month rental cap and amends section 1834(a)(5)(F) of the Act by
adding three new payment rules and supplier requirements for furnishing
oxygen and oxygen equipment after the 36-month rental period. Each of
these provisions is discussed below.
2. Provisions of the Final Rule with Comment Period
a. Furnishing Oxygen Equipment After the Rental Cap
As discussed above, section 144(b)(1) of the MIPPA amends section
1834(a)(5)(F)(ii)(I) of the Act, replacing the transfer of title
provision with a 36-month rental cap. Under this new provision, the
supplier that furnishes oxygen equipment during the 36-month rental
period must continue to furnish the oxygen equipment after the 36-month
rental period. The supplier is required to continue to furnish the
equipment during any period of medical need for the remainder of the
reasonable useful lifetime of the equipment. Section 144(b) does not
provide any exceptions to the requirement that the supplier continue
furnishing the equipment during any period of medical need. For
example, if the beneficiary relocates at some time after the 36-month
rental period but before the end of the reasonable useful lifetime of
the equipment, we interpret this provision to require that the supplier
must make arrangements for the beneficiary to continue receiving the
equipment at his or her new place of residence. This responsibility is
not transferred to another supplier. It is important to note that our
current regulation at Sec. 414.226(g)(1)(ii) does not apply this same
requirement to situations in which the beneficiary relocates during the
36-month rental period. We welcome comments from interested parties on
whether this requirement should be changed in light of the repeal of
transfer of ownership of oxygen equipment and other recently enacted
provisions of the MIPPA.
We are revising Sec. 414.226(f) to conform our regulations to this
new requirement. We are deleting the transfer of ownership requirement
and adding the new requirement that the supplier must continue
furnishing the oxygen equipment after the 36-month rental period during
any period of medical need for the remainder of the reasonable useful
lifetime of the equipment.
The language of the statute mandates that the supplier shall
continue to furnish oxygen equipment after the 36-month rental period
``during any period of medical need'' rather than ``during the period
of medical need'' for the remainder of the reasonable useful lifetime
of the equipment. We interpret this to mean that the supplier is
responsible for continuing to furnish the equipment at any time
following the 36-month rental period and before the end of the
equipment's reasonable useful lifetime, for any period of medical need,
including multiple periods of medical need that are separated by
periods when interruptions in the use of the equipment occur.
For example, if, following the 36-month rental period and before
the end of the equipment's reasonable useful lifetime, the beneficiary
is admitted to a hospital as an inpatient and then discharged from the
hospital 3 weeks later, our interpretation requires the supplier to
furnish the oxygen equipment for the period leading up to the hospital
admission and for the period immediately following the hospital
discharge through the end of the equipment's reasonable useful
lifetime. The supplier's responsibility to continue furnishing the
equipment is not affected by the length of a break in medical need or
by the number of any such breaks in medical need that occur after the
36-month rental period and before the end of the equipment's reasonable
useful lifetime. Therefore, we are revising Sec. 414.230 to specify
that a new period of continuous use will not begin following the 36-
month rental period until the end of the equipment's reasonable useful
lifetime. The supplier is responsible for furnishing the equipment
after the 36-month rental period for any period of medical need for the
remainder of the reasonable useful lifetime of the equipment. If a
break in medical need occurs following the 36-month rental period, the
supplier must resume furnishing the oxygen equipment after the break
ends and the beneficiary once again has a medical need for the oxygen
equipment. In such a case, the supplier is responsible for furnishing
the item for no additional rental payments until the end of the
equipment's reasonable useful lifetime. If the equipment's reasonable
useful lifetime (which is determined based on the date the equipment is
first delivered rather than the age of the equipment) ends during a
break in medical need, the supplier is under no obligation to continue
furnishing the equipment once the beneficiary again has medical need
for the oxygen. However, in accordance with Sec. 414.210(f), the
beneficiary may elect to obtain new equipment in these situations where
the reasonable useful lifetime of the equipment ends during a break in
need. If the beneficiary elects to obtain new equipment, a new 36-month
rental period and a new reasonable useful lifetime (currently 5 years
for oxygen equipment) begin.
We note that, in accordance with section 5101(b)(2)(B) of the DRA,
the rental period for beneficiaries receiving oxygen equipment on
December 31, 2005, began on January 1, 2006. However, in accordance
with Sec. 414.210(f)(1), the reasonable useful lifetime of durable
medical equipment, including oxygen equipment, begins on the date that
the equipment is first delivered to the beneficiary. The reasonable
useful lifetime of oxygen equipment furnished to beneficiaries on
December 31, 2005, was not adjusted to begin anew on January 1, 2006,
to correspond with the start of the 36-month rental period. Therefore,
in these situations, the equipment's reasonable useful lifetime may end
at any point during or after the 36-month rental period.
For example, if oxygen equipment was delivered to a beneficiary on
May 1, 2003, and the beneficiary continued to use the equipment beyond
January 1, 2006, the 36-month rental period for the equipment would
begin on January 1, 2006, and end on December 31, 2008. However,
because the reasonable useful

[[Page 69877]]

lifetime of the equipment ended on April 30, 2008, the beneficiary
could have elected to obtain new oxygen equipment on May 1, 2008, prior
to the end of the 36-month rental period for the equipment. In another
example, if oxygen equipment was delivered to a beneficiary on July 1,
2004, and the beneficiary continued to use the equipment beyond January
1, 2006, the 36-month rental period for the equipment began on January
1, 2006, and will end on December 31, 2008. In this case, the
reasonable useful lifetime of the equipment would end on June 30, 2009,
and the beneficiary could elect to obtain new oxygen equipment on July
1, 2009, only 6 months after the end of the 36-month rental period for
the equipment. In these situations, a new 36-month rental period and a
new reasonable useful lifetime (for the new equipment) would begin
after the end of the existing equipment's reasonable useful lifetime if
the beneficiary elects to obtain new equipment.
We are also revising Sec. 414.210(e)(1), (2), (e)(4) and (e)(5) to
delete regulatory text which relates to beneficiary ownership of oxygen
equipment. In addition, we are deleting Sec. 414.210(e)(3) because
beneficiaries will no longer own oxygen tanks and cylinders. Because
Sec. 414.210(e)(3) is being deleted, we are redesignating Sec.
414.210(e)(4) and Sec. 414.210(e)(5) as Sec. 414.210(e)(3) and Sec.
414.210(e)(4), respectively.
We are also modifying Sec. 414.226 to state that the protection
against supplier replacement of oxygen equipment, unless an exception
applies, continues to be in effect after the 36-month rental period
ends. Specifically, we are revising Sec. 414.226(g)(2) to indicate
that this prohibition applies until the expiration of the reasonable
useful lifetime established for the equipment. As discussed in the
November 9, 2006 final rule (71 FR 65894), we believe this is a
necessary safeguard for the beneficiary against changes in equipment
made by the supplier in order to maximize payments resulting from
moving from one payment class or modality to another. Finally, we are
deleting Sec. 414.226(g)(4) because the transfer of ownership of
oxygen equipment provision has been repealed, rendering this provision
inapplicable.
b. Payment for Oxygen Contents After the Rental Cap
Section 144(b)(1) of the MIPPA amends section 1834(a)(5)(F)(ii)(II)
of the Act and requires us to continue to make payments to suppliers
for furnishing oxygen contents after the 36-month rental cap for oxygen
equipment ends. Under this provision, an oxygen supplier that furnished
liquid or gaseous oxygen equipment during the 36-month rental period,
and is required by section 1834(a)(5)(F)(ii)(I) of the Act to continue
furnishing the equipment after the 36-month rental period ends, will
receive payment for furnishing oxygen contents necessary for use with
liquid or gaseous oxygen equipment after the 36-month rental period.
Section 1834(a)(5)(F)(ii)(II) of the Act establishes the payment amount
for the oxygen contents as that set forth in section 1834(a)(9) of the
Act.
We are revising Sec. 414.226(d) and (f) to specify that payment
shall be made for oxygen contents for use with supplier-owned liquid or
gaseous oxygen equipment furnished after the 36-month rental period. An
oxygen supplier that furnishes liquid or gaseous oxygen equipment
during a 36-month rental period must continue to furnish both the
oxygen equipment and contents for any period of medical need for the
remainder of the reasonable useful lifetime of the liquid or gaseous
oxygen equipment established in accordance with Sec. 414.210(f)(1).
This requirement is necessary because liquid and gaseous oxygen
systems (stationary and portable) require on-going delivery of oxygen
contents in tanks or cylinders to furnish oxygen to the patient. When
read in conjunction with section 1834(a)(5)(F)(ii)(II) of the Act, we
interpret the mandate in section 1834(a)(5)(F)(ii)(I) of the Act to
include oxygen contents, as well as oxygen equipment, given the nature
of this benefit and the requirement that Medicare continue to pay for
oxygen contents following the 36-month rental period.
As noted in section III.J.2.a. of this final rule with comment
period, we are revising Sec. 414.226(f) to specify that the supplier
must make arrangements for the beneficiary to continue receiving the
equipment if the beneficiary relocates at some time after the 36-month
rental period but before the end of the reasonable useful lifetime of
the equipment. Likewise, for the reasons set forth in section
III.J.2.a. above, we are revising Sec. 414.226(f) to specify that, in
the case of liquid or gaseous equipment (stationary and portable) the
supplier must make arrangements for the beneficiary to continue
receiving oxygen contents if the beneficiary relocates at some time
after the 36-month rental period but before the end of the reasonable
useful lifetime of the liquid or gaseous equipment (stationary and
portable). The supplier must make arrangements for the beneficiary to
continue receiving the oxygen contents and equipment at his or her new
residence.
c. Maintenance and Servicing of Supplier-Owned Oxygen Equipment After
the Rental Cap
Section 1834(a)(5)(F)(ii)(III) of the Act, as amended by section
144(b)(1) of the MIPPA, authorizes payments for maintenance and
servicing of supplier-owned oxygen equipment after the 36-month rental
period if the Secretary determines that such payments are reasonable
and necessary. Section 5101(b)(1) of the DRA previously authorized
payment for reasonable and necessary maintenance and servicing of
beneficiary-owned oxygen equipment.
i. Current Payment for Maintenance and Servicing of Oxygen Equipment
In the August 3, 2006 proposed rule for implementing section
5101(b) of the DRA (71 FR 44082), we discussed the fact that it is
longstanding Medicare policy to pay for repair (fixing or mending) of
beneficiary-owned DME if such services are necessary to keep the
equipment functioning. It is also longstanding Medicare policy to pay
for non-routine maintenance of beneficiary-owned DME (that is,
extensive maintenance that must be performed by skilled technicians).
These policies were discussed in the November 9, 2006 final rule (71 FR
65918) and are set forth in Sec. 414.210(e)(1) and sections 40 and 50
of chapter 20 of the Medicare Claims Processing Manual (Pub. 100-04).
In keeping with these longstanding Medicare policies, we proposed to
pay for both services when performed on beneficiary-owned oxygen
equipment following passage of the DRA (see the proposed rule published
on August 3, 2006 (71 FR 44082)).
In response to the August 3, 2006 proposed rule, we received public
comments concerning the safe use and maintenance and servicing of
oxygen equipment once the supplier transferred title of the equipment
to the beneficiary. Commenters raised concerns that beneficiaries would
be unable to properly maintain their equipment and that unless Medicare
paid for maintenance and servicing of beneficiary-owned equipment,
suppliers would not have any incentive to provide these services.
In response to these concerns, we finalized our proposal to pay for
necessary repairs and non-routine maintenance of beneficiary-owned
oxygen equipment (See 71 FR 65917 through 65919) in accordance with the
rules set forth at Sec. 414.210(e). In addition, we revised Sec.
414.210(e) to allow for payment for general

[[Page 69878]]

maintenance and servicing of beneficiary-owned oxygen equipment other
than liquid or gaseous equipment (stationary and portable).
Section 414.210(e)(2) authorized payment for 30 minutes of labor
for general maintenance and servicing of beneficiary-owned oxygen
transfilling equipment and stationary or portable oxygen concentrators
every 6 months, beginning 6 months after transfer of title to the
equipment to the beneficiary. Medicare also made payment for parts
replaced during the general maintenance and servicing of the
beneficiary-owned oxygen equipment. As indicated in the November 9,
2006 final rule (71 FR 65917), we consider this payment for general
maintenance and servicing to be an important beneficiary safeguard. The
maintenance and servicing payments encourage suppliers to keep
beneficiary-owned oxygen equipment in good repair which ensures the
safety of the beneficiary.
The payment authorized by Sec. 414.210(e)(2) did not apply to
liquid or gaseous oxygen equipment (stationary or portable) because we
believe the supplier should ensure that the tanks and cylinders are
functioning properly at the time it is furnishing oxygen contents.
Also, in response to concerns regarding the safe use and disposal
of beneficiary-owned oxygen tanks and cylinders, we revised Sec.
414.210(e)(3) to allow payment for pick up of beneficiary-owned oxygen
tanks and cylinders that are no longer medically necessary.
ii. Revisions as a Result of the MIPPA
(1) Findings Related to Non-Routine Maintenance and Servicing
(Including Repair)
Section 1834(a)(5)(F)(ii)(III), as amended by section 144(b)(1) of
the MIPPA, authorizes similar payments for maintenance and servicing of
supplier-owned oxygen equipment furnished after the 36-month rental
period if we determine such payments are reasonable and necessary.
Based on a careful review of this issue, as discussed below, we have
determined that at this time it is not reasonable and necessary to pay
for non-routine maintenance and servicing (including repair) of
supplier-owned oxygen equipment. Given that the supplier owns the
equipment, we believe that the supplier should be responsible for
maintaining their equipment in working order as they did during the 36-
month rental period.
In addition, oxygen equipment is largely reliable equipment which
requires minimal maintenance and servicing during the first 5 years of
use. Warranties covering 5 years are generally available for the top
selling brands of oxygen equipment and as discussed in the November 9,
2006 final rule (71 FR 65917), we understand from manufacturers that
such products are generally dependable. The Department of Veterans
Affairs (VA) has reported to us that, based on their experience, oxygen
concentrators will usually operate for 5 years without the need for
significant repair or replacement of costly parts. The VA purchases and
maintains oxygen equipment, including oxygen concentrators, for
veterans through its Veterans Integrated Service Network (VISN).
In a September 2006 report entitled ``Medicare Home Oxygen
Equipment: Cost and Servicing,'' (OEI-09-04-00420), the Office of
Inspector General (OIG) of the Department of Health and Human Services
similarly found that only minimal servicing and maintenance for oxygen
concentrators and portable equipment is necessary. The OIG also found
that suppliers train beneficiaries to perform routine maintenance of
the equipment. As noted in that report, services performed by suppliers
during visits to the homes of beneficiaries to perform maintenance and
servicing of oxygen concentrators include checking the flow rate
prescribed by the physician and checking the concentration of oxygen
delivered by the unit.
Moreover, the OIG found that only 22 percent of Medicare
beneficiaries use oxygen equipment for 36 months or more. Therefore,
oxygen equipment is returned to suppliers before the end of the 36-
month rental period in approximately 78 percent of cases, and suppliers
are then able to furnish the equipment to other beneficiaries, starting
new 36-month periods of rental payments for the same equipment. Based
on current Medicare fee schedule amounts, during a 5-year period in
which a supplier rents an oxygen concentrator to multiple
beneficiaries, each using the equipment for less than 36 months, the
supplier is paid $11,957 for furnishing the oxygen concentrator, the
average cost of which was found by the OIG to be $587. Even in the
minority of cases in which beneficiaries use oxygen equipment for more
than 36 months, the supplier is paid $7,174 for furnishing the
equipment. Given this level of reimbursement, it is reasonable to
assume that each Medicare beneficiary should be receiving a fairly new
piece of oxygen equipment. If the supplier chooses instead to provide
older equipment to the beneficiary, we expect that the supplier, and
not Medicare or the beneficiary, should be responsible for performing
any non-routine maintenance and servicing (including repair) of the
supplier-owned equipment to ensure that it continues to function
properly during the 5-year reasonable useful lifetime of the equipment.
(2) Finding Related to Routine Maintenance and Servicing
We have determined at this time that it is not reasonable and
necessary to make payments for repair or non-routine maintenance and
servicing (including repair) of supplier-owned oxygen equipment. We
have made an initial determination that payments for periodic, in-home
visits by suppliers to inspect certain oxygen equipment and provide
general maintenance and servicing during these visits are reasonable
and necessary for the safety of the beneficiary. Therefore, for CY 2009
only, we are revising Sec. 414.210(e)(2), which provides payment for
general maintenance and servicing of certain beneficiary-owned oxygen
equipment, to apply to routine maintenance and servicing of supplier-
owned oxygen concentrators and transfilling equipment furnished after
the 36-month rental period consistent with our authority in section
1834(a)(5)(F)(ii)(III) of the Act. Based on our preliminary analysis,
we believe that payments in CY 2009 for periodic inspection and general
maintenance and servicing of oxygen concentrators and transfilling
equipment are reasonable and necessary for the safety of beneficiaries.
Therefore, for CY 2009 only, we will make payments when the supplier
performs a routine maintenance and servicing visit following each
period of continuous use of 6 months after the 36-month rental period
ends. Determining a period of continuous use is governed by Sec.
414.230, which we discussed in section III.J.2.a. above.
Payments for a routine maintenance and servicing visit in CY 2009
will be made when the beneficiary is at home or at a temporary
residence (for example, a vacation residence). For each visit, we
believe that it is appropriate to provide payment for 30 minutes of
labor for general maintenance and servicing of oxygen equipment other
than liquid or gaseous equipment (stationary and portable). As we
indicated in the November 9, 2006 final rule for implementing section
5101(b) of the DRA (71 FR 65917), we believe that payment for 30
minutes of labor will adequately compensate suppliers for general
maintenance and servicing visits based on findings by the OIG in their

[[Page 69879]]

September 2006 report (OEI-09-04-00420) that many routine maintenance
activities performed by suppliers on concentrators could be performed
within that timeframe.
We expect that the primary purpose of the periodic visit would be
to check the supplier-owned oxygen equipment to ensure that it will
continue to function properly for the succeeding 6-month period of
continuous use and does not need to be replaced. We are revising Sec.
414.210(e)(2) to permit payment in CY 2009 for general maintenance and
servicing of supplier-owned oxygen equipment beginning 6 months after
the end of the 36-month rental period.
As a result, we will make payments under Sec. 414.210(e)(2) only
for an actual visit to the beneficiary's home or temporary residence.
This provision is generally consistent with the additional maintenance
and servicing payments established at Sec. 414.210(e)(2) after the
enactment of the DRA, except that, in light of the repeal of transfer
of title for oxygen equipment provisions, separate payment will not be
made for parts replaced during the routine maintenance and servicing
visit. If parts need to be replaced in order to make supplier-owned
equipment suitable for the beneficiary, we believe that the supplier
should be responsible for replacing the parts on equipment from their
inventory in order to meet the beneficiary's medical need for oxygen.
We will make payments for general maintenance and servicing of
oxygen concentrators and transfilling equipment as discussed above.
However, we welcome comments from interested parties on this issue,
especially regarding whether these payments should continue past CY
2009 in light of the OIG's findings that only minimal maintenance and
servicing of oxygen equipment is necessary and that suppliers continue
to own the equipment.

K. Section 145: Clinical Laboratory Tests

Outpatient clinical laboratory services are paid under the clinical
laboratory fee schedule (CLFS) in accordance with section 1833(h) of
the Act. Section 1833(h)(2)(A)(i) of the Act specifies that the fee
schedules are adjusted annually, to become effective on January 1 of
each year, by a percentage increase or decrease equal to the percentage
increase or decrease in the Consumer Price Index for All Urban
Consumers (United States city average) (CPI-U). The Congress has frozen
the update to zero percent for CYs 2004 through 2008. The freeze on the
annual update expires beginning January 1, 2009.
For the period beginning January 1, 2009, the update factor for the
clinical lab fee schedule would be 5.0 percent. However, section 145(b)
of the MIPPA reduces this increase by 0.5 percent for each of the years
2009 through 2013. Therefore, for the period January 1, 2009, through
December 31, 2009, payments under the Clinical Laboratory Fee Schedule
will be increased by 4.5 percent.

L. Section 146: Improved Access to Ambulance Services

Section 146(a) of the MIPAA modifies section 1834(l)(13) of the Act
to specify that, effective for ground ambulance claims furnished during
the period July 1, 2008, the ambulance fee schedule through December
31, 2009 amounts for ground ambulance services shall be increased as
follows:
For covered ground ambulance transports which originate in
a rural area or in a rural census tract of a metropolitan statistical
area, the fee schedule amounts shall be increased by 3 percent; and
For covered ground ambulance transports which do not
originate in a rural area or in a rural census tract of a metropolitan
statistical area, the fee schedule amounts shall be increased by 2
percent.
We are revising Sec. 414.610(c)(1) to conform the regulations to
this statutory requirement. This statutory requirement is self-
implementing. A plain reading of the statute requires only a
ministerial application of the mandated rate increase, and does not
require any substantive exercise of discretion on the part of the
Secretary. We note that in adding language to Sec. 414.610(c)(1) to
set forth this statutory requirement, we have also divided it into 2
paragraphs for purposes of clarity.
In addition, section 146(b)(1) of the MIPPA specifies that any area
that was designated as a rural area for purposes of making payments
under the ambulance fee schedule for air ambulance services furnished
on December 31, 2006, shall be treated as a rural area for purposes of
making payments under the ambulance fee schedule for air ambulance
services furnished during the period July 1, 2008 through December 31,
2009. Accordingly, for areas that were designated rural on December 31,
2006, and were subsequently redesignated as urban, we have re-
established the ``rural'' indicator on the zip code file for air
ambulance services effective July 1, 2008. We are revising Sec.
414.610 to add a new paragraph (h) to conform the regulations to this
statutory requirement. This statutory requirement is self-implementing.
A plain reading of the statute requires only a ministerial application
of a rural indicator, and does not require any substantive exercise of
discretion on the part of the Secretary.

M. Section 149: Adding Certain Entities as Originating Sites for
Payment of Telehealth Services

Section 1834(m)(4)(C) of the Act defines a telehealth ``originating
site'' to mean only those sites described in the statute at which an
eligible telehealth individual is located at the time the service is
furnished via a telecommunications system. The statute requires
originating sites to be located in an area that is designated as a
rural health professional shortage area under section 332(a)(1)(A) of
the Public Health Service Act (42 U.S.C. 254e(a)(1)(A)); in a county
that is not included in a Metropolitan Statistical Area; or in an
entity that participates in a Federal telemedicine demonstration
project that has been approved by (or receives funding from) the
Secretary of Health and Human Services as of December 31, 2000.
Previously, the statute described the following originating sites: the
office of a physician or practitioner; a critical access hospital (as
defined in section 1861(mm)(1) of the Act); a rural health clinic (as
defined in section 1861(aa)(2) of the Act); a Federally qualified
health center (as defined in section 1861(aa)(4) of the Act); and a
hospital (as defined in section 1861(e) of the Act).
Section 149 of the MIPPA amended section 1834 of the Act to add
certain entities as originating sites for payment of telehealth
services. As explained further below, MIPPA also amended section
1888(e)(2)(A)(ii) of the Act to exclude telehealth services furnished
under section 1834(m)(4)(C)(ii)(VII) from the consolidated billing
provisions of the skilled nursing facility prospective payment system
(SNF PPS).
With respect to a telehealth service, subject to section
1833(a)(1)(U) of the Act, we pay a facility fee to the originating
site. The originating site facility fee is a separately billable Part B
payment, and we pay it to eligible originating sites outside of other
payment methodologies. As discussed in section X. of this final rule
with comment period, the originating site facility fee for CY 2009 is
$23.72.
Other than adding certain entities as originating sites for payment
of telehealth services, the MIPPA did not change the existing
telehealth eligibility criteria, or payment and billing requirements
related to telehealth services. Therefore, for the telehealth
originating sites added by section 149 of

[[Page 69880]]

the MIPPA, we are adopting policies similar to existing policies with
respect to the provision of, and payment for, telehealth services in
the various originating sites. We are adopting these policies for CY
2009 on an interim final basis, and will respond to any comments and
finalize our policies in subsequent rulemaking.
Telehealth is a delivery mechanism for otherwise payable Part B
services. We pay distant site physicians or practitioners for Medicare
telehealth services only if the service is separately payable under the
PFS when furnished in a face-to-face encounter at that location. For
example, we pay distant site physicians or practitioners for furnishing
services via telehealth only if such services are not included in a
bundled payment to the facility that serves as the originating site.
The regulations relating to the Medicare telehealth provisions
under section 1834(m) of the Act are at Sec. 410.78, which specifies
the conditions of payment for telehealth services, and Sec. 414.65,
which specifies the payment rules for telehealth services. (See also
the CMS Internet-Only Medicare Benefit Policy Manual, Pub. 100-02,
Chapter 15, Section 270, and the CMS Internet-Only Medicare Claims
Processing Manual, Pub. 100-04, Chapter 12, Section 190 for more
information on Medicare telehealth services and for updated
instructions for billing the originating site facility fee.)
As noted previously, the telehealth originating site facility fee
is a separately billable Part B payment that is payable outside of any
other payment methodology. Renal Dialysis Centers, Community Mental
Health Centers, and SNFs are all paid based under different payment
systems.
Renal Dialysis Centers
Section 149 of the MIPPA added hospital-based or CAH-based renal
dialysis centers (including satellites) to the list of originating
sites for Medicare telehealth services. As defined in Sec. 405.2102, a
renal dialysis center is a hospital unit or satellite approved to
furnish outpatient maintenance dialysis services required for the care
of end-stage renal disease (ESRD) dialysis patients. Independent renal
dialysis facilities are not authorized in the law to serve as
originating sites for Medicare telehealth services. Medicare pays for
outpatient maintenance dialysis services based on a case-mix adjusted
composite rate which includes the cost of some drugs, laboratory tests,
and other items and services routinely furnished to dialysis patients.
Medicare pays separately for physicians' professional services,
separately billable laboratory tests, and separately billable drugs
furnished in ESRD facilities. When a hospital-based or CAH-based renal
dialysis center (or their satellite) serves as the originating site for
a Medicare telehealth service, the originating site facility fee is
payable in addition to any case-mix adjusted composite rate or, as
explained further below, any monthly capitation payment (MCP) amount.
The originating site facility fee is a separately billable Part B
payment.
The Medicare composite rate for ESRD facilities includes payment
for social and dietetic services to meet the needs of the ESRD patient.
To prevent duplicate payment for services that the renal dialysis
center is required to furnish directly, and for which payment is
included in the case-mix adjusted composite rate, we will not pay
separately for the services of clinical social workers (CSW),
registered dietitians, and nutrition professionals furnished via
telehealth to ESRD outpatients in renal dialysis centers.
Physicians and practitioners managing ESRD facility patients are
paid a monthly rate (the MCP) for most outpatient maintenance dialysis-
related physician services furnished to a Medicare ESRD beneficiary.
The MCP amount varies based on the number of visits provided within
each month and the age of the ESRD beneficiary.
When the MCP is billed for ESRD-related services with 2 or 3 visits
per month or for ESRD-related services with 4 or more visits per month,
some of the visits may be furnished as a telehealth service. However,
at least one visit per month is required to be furnished by the
physician or practitioner in person to examine the vascular access
site. A clinical examination of the vascular access site must be
furnished once per month face-to-face (not as a telehealth service) by
a physician, nurse practitioner, or physician's assistant.
Consistent with existing policy, non-ESRD-related physicians'
services may be furnished via telehealth by the physician or
practitioner who furnishes renal care or by another physician or
practitioner. These are services that are not incidental to services
furnished during a dialysis session or office visits necessitated by
the renal condition. The physician or practitioner must provide
documentation that the illness is not related to the renal condition
and that the additional visits are medically necessary. The Medicare
contractor's medical staff determines whether additional reimbursement
is warranted for treatment of the unrelated illness. Medicare does not
pay separately for ESRD-related services furnished via telehealth that
are covered by the MCP. (See the CMS Internet-Only Medicare Claims
Processing Manual, Pub. 100-04, Chapter 8, Section 140, for more
information on Medicare policy regarding the monthly capitation payment
method for physicians' services.)
Community Mental Health Centers
Section 149 of the MIPPA added community mental health centers
(CMHCs), as defined in section 1861(ff)(3)(B) of the Act, to the list
of originating sites for Medicare telehealth services. The Medicare
statute recognizes CMHCs as ``providers of services'' for purposes of
furnishing partial hospitalization programs (PHP). PHPs are structured
and intensive programs consisting of a group of mental health services
paid on a per diem basis under the OPPS. A CMHC receives a per diem
payment for each PHP day, which consists of a minimum of three PHP
services. The HCPCS codes that are eligible for PHP services and count
towards the number of PHP service units required to receive the per
diem payment were originally defined in the April 7, 2000, OPPS final
rule with comment period (65 FR 18454).
The Medicare telehealth originating site facility fee is not a PHP
service and, as such, it does not count towards the number of PHP
services for purposes of determining payment to a CMHC for partial
hospitalization services. The originating site facility fee is not
bundled into the per diem payment for partial hospitalization. With
respect to a Medicare telehealth service furnished by a physician or
practitioner to a beneficiary at a CMHC, the originating site facility
fee is separately payable under Part B.
Consistent with existing policy, physicians and practitioners
furnishing services to beneficiaries in CMHCs can bill Medicare Part B
for telehealth services as long as the service would be separately
payable under the PFS when furnished in a face-to-face encounter at
that location. However, as noted above, PHP services furnished via
telehealth will not be included in the count of services used to
determine whether the CMHC should receive a PHP per diem payment.
Rather, in order to avoid duplicate payment, the facility is paid for
its role in furnishing telehealth services through the originating site
facility fee. Regardless of whether the CMHC has provided the minimum
number of PHP services to receive a per diem payment, CMHCs can bill
and receive payment for the originating site facility fee with respect
to a Medicare telehealth service that would otherwise

[[Page 69881]]

be eligible for payment at the CMHC. (See the CMS Internet-Only
Medicare Claims Processing Manual, Pub. 100-04, Chapter 4, Section 260,
for more information on Medicare payment policy regarding partial
hospitalization program services.)
The PHP per diem payment includes the services of clinical social
workers (CSWs) and other support staff trained to work with psychiatric
patients. CSW services furnished under a PHP are included in the
partial hospitalization rate. To prevent duplicate payment for services
that the CMHC is required to furnish and that are paid to the CMHC
through the PHP per diem payment, Medicare does not pay separately for
the services of CSWs furnished via telehealth to beneficiaries
receiving partial hospitalization services in a CMHC.
Skilled Nursing Facilities
Section 149 of the MIPPA added skilled nursing facilities (SNFs),
as defined in section 1819(a) of the Medicare statute, to the list of
originating sites for Medicare telehealth services. For residents in a
covered Part A SNF stay, the SNF receives a bundled per diem payment
under the SNF PPS for all covered skilled nursing facility services as
defined under section 1888(e)(2)(A) of the statute. The conforming
amendment in section 149(b) of the MIPPA amended section
1888(e)(2)(A)(ii) of the Act to exclude telehealth services furnished
under section 1834(m)(4)(C)(ii)(VII) of the Medicare statute from the
definition of ``covered skilled nursing facility services'' that are
paid under the SNF PPS. Therefore, when a SNF serves as the originating
site for Medicare telehealth services, the SNF can receive separate
payment for a telehealth originating site facility fee even in those
instances where it also receives a bundled per diem payment under the
SNF PPS for a resident's covered Part A stay. Moreover, not only would
the originating site facility fee be separately billable outside of the
SNF PPS, but so would those professional services (furnished at the
distant site) that meet the criteria specified in section 1834(m)(2)(A)
of the Act for payment as Medicare telehealth services. As indicated
previously, under section 1834(m)(2)(A) of the Act, telehealth is a
delivery mechanism for otherwise payable Part B services; that is,
services which would be separately payable under Part B if ``* * *
furnished without the use of a telecommunications system'' (emphasis
added). This means that distant site professional services can qualify
for separate telehealth payment only to the extent that they are not
already included within a bundled payment to the facility that serves
as the originating site. Thus, services furnished to a SNF resident
from the distant site by a physician, physician assistant, nurse
practitioner, clinical nurse specialist, certified nurse-midwife, or
qualified psychologist would be separately billable as telehealth
services, as the services of all of these practitioner types are
excluded from payment under the SNF PPS under section 1888(e)(2)(A)(ii)
of the Act. However, the services of other practitioners such as
clinical social workers (CSWs), registered dietitians, and nutrition
professionals are subject to SNF consolidated billing when furnished to
the SNF's Part A resident. In order to avoid duplicate payment,
telehealth services furnished by these practitioners would be
separately billable telehealth services only in those cases where the
SNF resident who receives them is not in a covered Part A stay.
Thus, for services that SNF residents receive during the course of
a covered Part A stay, the MIPPA's designation of a SNF as a telehealth
setting effectively leaves unchanged the scope of the bundled per diem
payment that the SNF PPS makes for the covered stay itself.
Accordingly, the use of telehealth as a vehicle for service delivery
would not serve to bundle types of services (such as those of
physicians) that are otherwise separately payable under Part B when
furnished to such residents, nor would it serve to unbundle types of
services (such as those of CSWs) that are otherwise included within the
bundled SNF PPS payment.
In order to reflect this conforming amendment, we are revising the
implementing regulations at Sec. 411.15(p)(2) to include an additional
clause, which specifies that types of services that would otherwise be
excluded from SNF consolidated billing when furnished in a face-to-face
encounter are also excluded when furnished via telehealth under section
1834(m)(4)(C)(ii)(VII) of the Act. Consistent with the preceding
discussion, this revision serves to clarify that a type of service
(such as a physician service) that is otherwise excluded from SNF
consolidated billing does not become subject to that provision merely
by virtue of being furnished via telehealth. Similarly, we are
including a conforming change in the regulations at Sec. 489.20(s)
that specify compliance with consolidated billing as a requirement
under the SNF's Medicare provider agreement.

N. Section 153: Renal Dialysis Provisions

The following changes affecting payment to ESRD facilities for ESRD
services are effective January 1, 2009:
Under section 153(a)(1) of the MIPPA, the ESRD composite
rate is increased by 1.0 percent for dialysis services furnished on or
after January 1, 2009, and before January 1, 2010. This will require us
to update the adjusted drug add-on adjustment as explained in section H
of the preamble of this final rule.
Section 153(a)(2) of the MIPPA requires that the composite
rate paid to hospital-based facilities be the same as the composite
rate paid to independent renal dialysis facilities for services
furnished on or after January 1, 2009. In addition, section 153(a)(2)
of the MIPPA requires that in applying the geographic index to
hospital-based facilities, the labor share shall be based on the labor
share otherwise applied for renal dialysis facilities. Accordingly, we
are revising Sec. 413.174, which describes the methodology for ESRD
composite rates for hospital-based and independent facilities, to
conform to the statutory requirement. These MIPPA provisions are self-
implementing and require no substantive exercise of discretion on the
part of the Secretary. They are discussed further in section II. H of
the preamble of this final rule with comment period.

IV. Potentially Misvalued Services Under the Physician Fee Schedule

A. Valuing Services Under the Physician Fee Schedule

As explained in the CY 2009 PFS proposed rule (73 FR 38582), the
AMA RUC provides recommendations to CMS for the valuation of new and
revised codes, as well as codes identified as misvalued under the 5-
Year Review of Work. On an ongoing basis, the RUC's 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 5-Year
Review of physician work, there continues to be concern that the
presence of many overvalued procedures within the PFS disadvantages
primary care services and creates distortions in the PFS. Critics have
stated the relative imbalance in the

[[Page 69882]]

number of codes for which the work RVUs are increased rather than
decreased in the three 5-Year Reviews of work RVUs.
The RUC has created the 5-Year Review Identification Workgroup to
respond to these concerns regarding the valuation of codes. The
workgroup 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.
In the proposed rule, we indicated we would 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 with
comment period in a manner consistent with the way we address other RUC
recommendations and that the values for these services would be
published as interim values for CY 2009.
In addition to the RUC's work, we believe that there are certain
steps we can take to help address the issue of potentially misvalued
services. A discussion of these steps are outlined below.
1. Updating High Cost Supplies
In the CY 2009 PFS proposed rule (73 FR 38582), we proposed a
process to update high-cost supplies over $150 every 2 years. In order
to obtain the typical price in the marketplace, we outlined examples of
acceptable documentation and stated that we would not accept
documentation that did not include specific pricing information. We
also noted that if acceptable documentation was not received within the
proposed rule's 60-day comment period, we would use prices from the
Internet, retail vendors, and supply catalogs to determine the
appropriate cost; and, that we would use the lowest price identified by
these sources. Table 25 in the proposed rule lists the top 65 high-cost
supplies over $150 which needed specialty input for price updates.
Comment: We received many comments on our proposed process. Some
commenters expressed support for our proposal but others thought the
process was flawed and burdensome. Some commenters stated that the
third year of the 4-year transition of the PE RVUs to the bottom up
methodology is an inappropriate time to update pricing and also
believed that the repricing of only the high-cost supplies over $150 is
unfair. MedPAC and others recommended that we use an independent entity
to update this pricing information in order to capture the ``average
transaction prices'' that reflect the discounts and rebates offered by
the manufacturers. Some commenters submitted data on the high-cost
supplies listed on the table. Of the 65 high cost supplies listed, we
received data on 53.
Response: Although we received some data in response to our request
for information on the top 65 high cost supplies over $150, much of
what we received was not complete and did not represent typical market
prices. Many specialty societies submitted quotes and list prices from
manufacturers for the premier models of many supply items. Where there
are less expensive alternatives for certain supply items, most
commenters did not report this information so we could not determine
what a typical price would be. We received no pricing information for
some items and commenters explained the absence of some prices by
saying a particular product was no longer being manufactured. In other
cases, we received incomplete pricing information, for example, a
typical stent size was not indicated.
We appreciate the many thoughtful comments we received on the
proposed process for updating high-cost supplies and believe this is an
important area to consider when evaluating potentially overvalued
services. However, we have decided not to finalize the proposed process
at this time, and not to revise the prices for the supplies listed in
the table. We plan to research the possibility of using an independent
contractor to assist us in obtaining accurate pricing information. We
plan to study the limitations of the data we received and determine how
to revise our proposed process to elicit better data. We will propose a
revised process in future rulemaking.
2. Review of Services Often Billed Together and the Possibility of
Expanding the Multiple Procedure Payment Reduction (MPPR) to Additional
Non-Surgical Procedures
In the CY 2009 PFS proposed rule, we stated that we plan to perform
data analysis on non-surgical CPT codes that are often billed together
(for example, 60 to 70 percent of the time). This would determine if
there are inequities in PFS payments that are a result of variations
between services or in the comprehensiveness of the codes used to
report the services or in the payment policies applied to each (for
example, global surgery and MPPRs). The rationale for the MPPR is that
clinical labor activities, supplies and equipment may not be performed
or furnished twice when multiple procedures are performed. We stated
that we would consider developing a proposal either to bundle
additional services or expand application of the MPPR to additional
procedures.
Comment: MedPAC requested that we consider duplicative physician
work, as well as PE, in any expansion of the MPPR. Several specialty
groups noted that the AMA RUC has already taken action to identify
frequently occurring code pairs. The commenters support the AMA RUC's
recommendation that CMS analyze data to identify nonsurgical CPT codes
that are billed together 90 to 95 percent of the time. Other commenters
did not believe a broad-based application of the MPPR to non-surgical
services was appropriate.
Response: Based on the comments received, we will continue to work
with the AMA RUC, MedPAC, and the specialty societies to determine
whether there are additional services that should be either bundled or
subjected to a MPPR.

B. Requested Approaches for the RUC To Utilize

In the CY 2009 PFS proposed rule, we identified methods that the
AMA RUC could undertake to assist in identifying potentially misvalued
services including reviewing: (1) The Fastest Growing Procedure Codes;
(2) the Harvard-Valued Codes; and (3) PE RVUs (see 73 FR 38586).
Comment: We received many comments on this issue from various
specialty groups and medical societies. Some commenters supported our
proposed approaches and looked forward to participating in the process,
while others expressed concern. Some specialty societies are opposed to
our selection of the fastest growing procedure codes based solely on
their rate of growth and total spending and cautioned CMS to consider
the clinical justification for increased utilization before making any
decisions to reduce the payment rates for these services.
The AMA and the AMA RUC both look forward to working with CMS on
the review of the fastest growing procedure codes and have developed
plans to address these codes. The AMA RUC noted that there are 2,856
services that contain Harvard-based time inputs that have not been
surveyed since the Harvard studies. The AMA RUC conducted an analysis
of Harvard-valued services with utilization above 10,000 services per
year, which resulted in a list of 296 distinct services. The AMA RUC
believes it would be effective to limit any review to these 296
services or fewer. The AMA RUC also noted that of the 296 services
identified, 23 have

[[Page 69883]]

already been identified by another screen and are being reviewed.
MedPAC supports our plan to review the fastest growing procedures
codes, services often furnished together, and the Harvard-valued codes
and believes it is consistent with their previous recommendations to
CMS. MedPAC disagrees with the process for identifying misvalued
services. MedPAC believes that it is our responsibility to identify
potentially misvalued services and that we should establish a standing
panel of experts to help identify overvalued services and to review AMA
RUC recommendations.
The AMA RUC, MedPAC and other specialty societies requested that we
clarify the timing of the 5-Year Review of PE RVUs. The AMA RUC
believes that the increases to PE RVUs for some codes are not
attributable to the direct inputs of the codes under the PE methodology
transition. Rather, the AMA RUC believes the increases are attributable
to our acceptance and incorporation of supplemental survey data for
certain specialties. MedPAC supports the review of PE inputs for the
fastest growing procedure codes. MedPAC also requests that CMS and the
AMA RUC review the PE inputs of high-volume codes, particularly those
whose inputs are not based on physician surveys.
Response: We look forward to continuing to work with the AMA RUC in
reviewing these issues and receiving alternative approaches for
identifying misvalued codes from the specialty societies. We are aware
that these approaches are long-term and will require time and effort
from the AMA RUC and specialty societies to complete these reviews. We
also believe the outlined approaches will address MedPAC's concerns. In
selecting these codes and reviewing the AMA RUC's recommendations
regarding misvalued codes we have taken into consideration whether
there is a clinical rationale for increased utilization, and we will
continue to take this into consideration in future reviews.

C. AMA RUC Review of Potentially Misvalued Codes

The AMA RUC started to review potentially misvalued codes using
various screens, including codes with site of service and high IWPUT
anomalies and high volume and a new technology designation, at the 2008
AMA RUC meetings. Review of the identified clinical services revealed
204 codes. Of those codes, 48 were recommended for a reduction in
valuation; 38 were recommended to maintain the same valuation; 105 were
referred to CPT for further code clarification; and 13 were recommended
for an increase in valuation.
All of these codes were reviewed and revalued by the AMA RUC; other
than the codes referred to CPT, we have agreed to accept the valuation
for these codes for CY 2009, including the conforming changes to the PE
inputs for these codes, as applicable. We recognize that many of the
site of service anomaly code changes included deletion or modification
of hospital days, office visits, intraservice time, and discharge day
management services. We have concerns that the methodology used by the
AMA RUC to review the services may have resulted in removal of hospital
days and deletion or reallocation of office visits without extraction
of the associated RVUs. We also have concerns about the methodology
used to value the high IWPUT and new technology codes. We note that the
high volume codes have been referred to CPT.
Although we have some questions or concerns with certain aspects of
the AMA RUC reviews of these codes, we believe the AMA RUC-recommended
valuations are still a better representation of the resources used to
furnish these services than the current valuations. We will continue to
examine the AMA RUC recommendations and will consider whether it would
be appropriate to propose further changes in future rulemaking.
During the review of the above-noted potentially misvalued codes,
the AMA RUC identified three codes that they believed needed review for
purposes of the PE inputs only including CPT codes 52214, 52224, and
94770. CPT codes 52214 and 52224 were identified by the high volume
growth screen. As a result, the AMA RUC identified a duplication of the
PE inputs that included supplies and equipment for both the laser and
electrocautery techniques and recommended this duplication be
eliminated. After a review of the PE inputs in October 2008, the AMA
RUC recommended that the electrocautery PE inputs be deleted. We agree
with this recommendation and have made these changes in the PE
database.
CPT code 94770 was identified through the high IWPUT screen. In
reviewing this diagnostic procedure, the AMA RUC and the specialty
society agreed that this test is currently being used inappropriately
in the nonfacility setting. The AMA RUC agreed with the specialty
society that this procedure is medically appropriate only in the
facility setting (provided at the patient's bedside) and that it should
not be valued in the nonfacility setting. Therefore, the AMA RUC
recommended that all of the PE inputs be removed from the nonfacility
setting. We have accepted the AMA's RUC recommendation and we have
changed the PE database to reflect these changes.
Table 26 includes codes identified in the screens identified above,
as well as other CMS requests.

Table 26--AMA RUC Recommendations for Potentially Misvalued Codes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Site of
CPT code Descriptor AMA RUC CMS decision 2009 service High IWPUT New tech Shift from Other CMS High
rec WRVU screen screen PE to work request volume
--------------------------------------------------------------------------------------------------------------------------------------------------------
11043................ Debride tissue/ CPT Agree............... 3.04 X .......... .......... .......... .......... ..........
muscle.
11044................ Debride tissue/ CPT Agree............... 4.11 X .......... .......... .......... .......... ..........
bone.
14000................ Skin tissue 6.19 Agree............... 6.19 X .......... .......... .......... .......... ..........
rearrangement.
14001................ Skin tissue 8.58 Agree............... 8.58 X .......... .......... .......... .......... ..........
rearrangement.
14020................ Skin tissue 7.02 Agree............... 7.02 X .......... .......... .......... .......... ..........
rearrangement.
14021................ Skin tissue 9.52 Agree............... 9.52 X .......... .......... .......... .......... ..........
rearrangement.
14040................ Skin tissue 8.44 Agree............... 8.44 X .......... .......... .......... .......... ..........
rearrangement.

[[Page 69884]]

14041................ Skin tissue 10.63 Agree............... 10.63 X .......... .......... .......... .......... ..........
rearrangement.
14060................ Skin tissue 9.07 Agree............... 9.07 X .......... .......... .......... .......... ..........
rearrangement.
14061................ Skin tissue 11.25 Agree............... 11.25 X .......... .......... .......... .......... ..........
rearrangement.
14300................ Skin tissue CPT Agree............... 13.26 X .......... .......... .......... .......... X
rearrangement.
15570................ Form skin pedicle 10.00 Agree............... 10.00 X .......... .......... .......... .......... ..........
flap.
15572................ Form skin pedicle 9.94 Agree............... 9.94 X .......... .......... .......... .......... ..........
flap.
15574................ Form skin pedicle 10.52 Agree............... 10.52 X .......... .......... .......... .......... ..........
flap.
15576................ Form skin pedicle 9.24 Agree............... 9.24 X .......... .......... .......... .......... ..........
flap.
15740................ Island pedicle CPT Agree............... 11.57 X .......... .......... .......... .......... X
flap graft.
17106................ Destruction of 3.61 Agree............... 3.61 .......... X .......... .......... .......... ..........
skin lesions.
17107................ Destruction of 4.68 Agree............... 4.68 .......... X .......... .......... .......... ..........
skin lesions.
17108................ Destruction of 6.37 Agree............... 6.37 .......... X .......... .......... .......... ..........
skin lesions.
19357................ Breast CPT Agree............... 20.57 X .......... .......... .......... .......... ..........
reconstruction.
20005................ Incision of deep CPT Agree............... 3.55 X .......... .......... .......... .......... ..........
abscess.
20900................ Removal of bone 3.00 Agree............... 3.00 X .......... .......... .......... .......... ..........
for graft.
20902................ Removal of bone 4.58 Agree............... 4.58 X .......... .......... .......... .......... ..........
for graft.
21015................ Resection of CPT Agree............... 5.59 X .......... .......... .......... .......... ..........
facial tumor.
21025................ Excision of bone, 9.87 Agree............... 9.87 X .......... .......... .......... .......... ..........
lower jaw.
21557................ Remove tumor neck/ CPT Agree............... 8.91 X .......... .......... .......... .......... ..........
chest.
21935................ Remove tumor, CPT Agree............... 18.38 X .......... .......... .......... .......... ..........
back.
22554................ Neck spine fusion CPT Agree............... 17.54 .......... .......... .......... .......... X ..........
22851................ Apply spine CPT Agree............... 6.70 .......... .......... .......... .......... .......... X
prosth device.
22900................ Remove abdominal CPT Agree............... 6.14 X .......... .......... .......... .......... ..........
wall lesion.
23076................ Removal of CPT Agree............... 7.77 X .......... .......... .......... .......... ..........
shoulder lesion.
23120................ Partial removal, 7.23 Agree............... 7.23 X .......... .......... .......... .......... ..........
collar bone.
23410................ Repair rotator 11.23 Agree............... 11.23 X .......... .......... .......... .......... ..........
cuff, acute.
23412................ Repair rotator 11.77 Agree............... 11.77 X .......... .......... .......... .......... ..........
cuff, chronic.
23415................ Release of 9.07 Agree............... 9.07 X .......... .......... .......... .......... ..........
shoulder
ligament.
23420................ Repair of 13.35 Agree............... 13.35 X .......... .......... .......... .......... ..........
shoulder.
25116................ Remove wrist/ 7.38 Agree............... 7.38 X .......... .......... .......... .......... ..........
forearm lesion.
25310................ Transplant 7.94 Agree............... 7.94 X .......... .......... .......... .......... ..........
forearm tendon.
26080................ Explore/treat CPT Agree............... 4.36 X .......... .......... .......... .......... ..........
finger joint.

[[Page 69885]]

27048................ Remove hip/pelvis CPT Agree............... 6.44 X .......... .......... .......... .......... ..........
lesion.
27062................ Remove femur 5.66 Agree............... 5.66 X .......... .......... .......... .......... ..........
lesion/bursa.
27244................ Treat thigh 18.00 Agree............... 18.00 .......... X .......... .......... .......... ..........
fracture.
27245................ Treat thigh 18.00 Agree............... 18.00 .......... X .......... .......... .......... ..........
fracture.
27250................ Treat hip 3.82 Agree............... 3.82 X X .......... .......... .......... ..........
dislocation.
27615................ Remove tumor, CPT Agree............... 12.93 X .......... .......... .......... .......... ..........
lower leg.
27619................ Remove lower leg CPT Agree............... 8.47 X .......... .......... .......... .......... ..........
lesion.
27640................ Partial removal CPT Agree............... 12.10 X .......... .......... .......... .......... ..........
of tibia.
27641................ Partial removal CPT Agree............... 9.73 X .......... .......... .......... .......... ..........
of fibula.
27650................ Repair achilles 9.00 Agree............... 9.00 X .......... .......... .......... .......... ..........
tendon.
27654................ Repair of 10.32 Agree............... 10.32 X .......... .......... .......... .......... ..........
achilles tendon.
27690................ Revise lower leg 8.96 Agree............... 8.96 X .......... .......... .......... .......... ..........
tendon.
27691................ Revise lower leg 10.28 Agree............... 10.28 X .......... .......... .......... .......... ..........
tendon.
28120................ Part removal of 5.64 Agree............... 5.64 X .......... .......... .......... .......... ..........
ankle/heel.
28122................ Partial removal 7.56 Agree............... 7.56 X .......... .......... .......... .......... ..........
of foot bone.
28296................ Correction of 8.16 Agree............... 8.16 X .......... .......... .......... .......... ..........
bunion.
28725................ Fusion of foot 11.97 Agree............... 11.97 X .......... .......... .......... .......... ..........
bones.
28730................ Fusion of foot 12.21 Agree............... 12.21 X .......... .......... .......... .......... ..........
bones.
28825................ Partial 5.85 Agree............... 5.85 X .......... .......... .......... .......... ..........
amputation of
toe.
29220................ Strapping of low CPT Agree............... 0.64 .......... .......... .......... .......... .......... X
back.
29888................ Knee arthroscopy/ 14.14 Agree............... 14.14 X .......... .......... .......... .......... ..........
surgery.
33213................ Insertion of CPT Agree............... 6.36 .......... .......... .......... .......... .......... X
pulse generator.
35470................ Repair arterial CPT Agree............... 8.62 .......... .......... .......... .......... .......... X
blockage.
35474................ Repair arterial CPT Agree............... 7.35 .......... .......... .......... .......... .......... X
blockage.
35490................ Artherectomy, CPT Agree............... 11.06 .......... .......... .......... .......... .......... X
percutaneous.
35491................ Artherectomy, CPT Agree............... 7.60 .......... .......... .......... .......... .......... X
percutaneous.
35492................ Artherectomy, CPT Agree............... 6.64 .......... .......... .......... .......... .......... X
percutaneous.
35493................ Artherectomy, CPT Agree............... 6.64 .......... .......... .......... .......... .......... X
percutaneous.
35494................ Artherectomy, CPT Agree............... 10.42 .......... .......... .......... .......... .......... X
percutaneous.
35495................ Artherectomy, CPT Agree............... 9.47 .......... .......... .......... .......... .......... X
percutaneous.
36248................ Place catheter in CPT Agree............... 1.01 .......... .......... .......... .......... .......... X
artery.
36415................ Routine CPT Agree............... 0.00 .......... .......... .......... .......... X ..........
venipuncture.
36820................ Av fusion/forearm 14.39 Agree............... 14.39 X .......... .......... .......... .......... ..........
vein.
36821................ Av fusion direct 12.00 Agree............... 12.00 X .......... .......... .......... .......... ..........
any site.

[[Page 69886]]

36825................ Artery-vein 10.00 Agree............... 10.00 X .......... .......... .......... .......... ..........
autograft.
36834................ Repair A-V CPT Agree............... 11.11 X .......... .......... .......... .......... ..........
aneurysm.
37760................ Ligation, leg CPT Agree............... 10.69 X .......... .......... .......... .......... ..........
veins, open.
38542................ Explore deep 7.85 Agree............... 7.85 X .......... .......... .......... .......... ..........
node(s), neck.
42145................ Repair palate, 9.63 Agree............... 9.63 X .......... .......... .......... .......... ..........
pharynx/uvula.
42415................ Excise parotid 17.99 Agree............... 17.99 X .......... .......... .......... .......... ..........
gland/lesion.
42420................ Excise parotid 20.87 Agree............... 20.87 X .......... .......... .......... .......... ..........
gland/lesion.
42440................ Excise 7.05 Agree............... 7.05 X .......... .......... .......... .......... ..........
submaxillary
gland.
45170................ Excision of CPT Agree............... 12.48 X .......... .......... .......... .......... ..........
rectal lesion.
47525................ Change bile duct 1.54 Agree............... 1.54 .......... X .......... .......... .......... ..........
catheter.
49420................ Insert abdom CPT Agree............... 2.22 X .......... .......... .......... .......... ..........
drain, temp.
49421................ Insert abdom CPT Agree............... 5.87 X .......... .......... .......... .......... ..........
drain, perm.
49507................ Prp i/hern init 9.97 Agree............... 9.97 X .......... .......... .......... .......... ..........
block > 5 yr.
49521................ Rerepair ing 12.36 Agree............... 12.36 X .......... .......... .......... .......... ..........
hernia, blocked.
49587................ Rpr umbil hern, 7.96 Agree............... 7.96 X .......... .......... .......... .......... ..........
block > 5 yr.
50605................ Insert ureteral CPT Agree............... 16.66 .......... .......... .......... .......... .......... X
support.
51102................ Drain bl w/cath 2.70 Agree............... 2.70 X .......... .......... .......... .......... ..........
insertion.
51726................ Complex CPT Agree............... 1.71 .......... .......... .......... .......... X ..........
cystometro- gram.
51772................ Urethra pressure CPT Agree............... 1.61 .......... .......... .......... .......... X X
profile.
51795................ Urine voiding CPT Agree............... 1.53 .......... .......... .......... .......... X ..........
pressure study.
51797................ Intra-abdominal CPT Agree............... 0.80 .......... .......... .......... .......... X ..........
pressure test.
52341................ Cysto w/ureter 5.35 Agree............... 5.35 X .......... .......... .......... .......... ..........
stricture tx.
52342................ Cysto w/up 5.85 Agree............... 5.85 X .......... .......... .......... .......... ..........
stricture tx.
52343................ Cysto w/renal 6.55 Agree............... 6.55 X .......... .......... .......... .......... ..........
stricture tx.
52344................ Cysto/uretero, 7.05 Agree............... 7.05 X .......... .......... .......... .......... ..........
stricture tx.
52345................ Cysto/uretero w/ 7.55 Agree............... 7.55 X .......... .......... .......... .......... ..........
up stricture.
52346................ Cystouretero w/ 8.58 Agree............... 8.58 X .......... .......... .......... .......... ..........
renal strict.
52400................ Cystouretero w/ 8.66 Agree............... 8.66 X .......... .......... .......... .......... ..........
congen repr.
52500................ Revision of 7.99 Agree............... 7.99 X .......... .......... .......... .......... ..........
bladder neck.
52640................ Relieve bladder 4.73 Agree............... 4.73 X .......... .......... .......... .......... ..........
contracture.
53445................ Insert uro/ves 15.21 Agree............... 15.21 X .......... .......... .......... .......... ..........
nck sphincter.
54405................ Insert multi-comp 14.39 Agree............... 14.39 X .......... .......... .......... .......... ..........
penis pros.
54410................ Remove/replace 15.00 Agree............... 15.00 X .......... .......... .......... .......... ..........
penis prosth.

[[Page 69887]]

54530................ Removal of testis 8.35 Agree............... 8.35 X .......... .......... .......... .......... ..........
55866................ Lapro radical CPT Agree............... 32.25 .......... .......... X .......... .......... X
prostetectomy.
56620................ Partial removal 7.35 Agree............... 7.35 X .......... .......... .......... .......... ..........
of vulva.
57155................ Insert uteri CPT Agree............... 6.79 X .......... .......... .......... .......... ..........
tandems/ovoids.
57287................ Revise/remove 10.97 Agree............... 10.97 X .......... .......... .......... .......... ..........
sling repair.
57288................ Repair bladder 12.00 Agree............... 12.00 .......... .......... X .......... .......... ..........
defect.
60220................ Partial removal 12.29 Agree............... 12.29 X .......... .......... .......... .......... ..........
of thyroid.
60225................ Partial removal 14.67 Agree............... 14.67 X .......... .......... .......... .......... ..........
of thyroid.
61885................ Insrt/redo 7.37 Agree............... 7.37 X .......... .......... .......... .......... ..........
neurostim 1
array.
62263................ Epidural lysis 6.41 Agree............... 6.41 X .......... .......... .......... .......... ..........
mult sessions.
62350................ Implant spinal 6.00 Agree............... 6.00 X .......... .......... .......... .......... ..........
canal cath.
62355................ Remove spinal 4.30 Agree............... 4.30 X .......... .......... .......... .......... ..........
canal catheter.
62360................ Insert spine 4.28 Agree............... 4.28 X .......... .......... .......... .......... ..........
infusion device.
62361................ Implant spine 5.60 Agree............... 5.60 X .......... .......... .......... .......... ..........
infusion pump.
62362................ Implant spine 6.05 Agree............... 6.05 X .......... .......... .......... .......... ..........
infusion pump.
62365................ Remove spine 4.60 Agree............... 4.60 X .......... .......... .......... .......... ..........
infusion device.
63075................ Neck spine disk CPT Agree............... 19.47 .......... .......... .......... .......... X ..........
surgery.
63650................ Implant 7.15 Agree............... 7.15 X .......... .......... .......... .......... ..........
neuroelectrodes.
63660................ Revise/remove CPT Agree............... 6.87 X .......... .......... .......... .......... X
neuroelectrode.
63685................ Insrt/redo spine 6.00 Agree............... 6.00 X .......... .......... .......... .......... ..........
n generator.
63688................ Revise/remove 5.25 Agree............... 5.25 X .......... .......... .......... .......... ..........
neuroreceiver.
64416................ N block cont CPT Agree............... 3.85 X .......... .......... .......... .......... ..........
infuse, B plex.
64446................ N block inj, CPT Agree............... 3.61 X .......... .......... .......... .......... X
sciatic, cont
inf.
64448................ N block inj, fem, CPT Agree............... 3.36 X .......... .......... .......... .......... X
cont inf.
64449................ N block inj, CPT Agree............... 3.24 X .......... .......... .......... .......... ..........
lumbar plexus.
64470................ Inj paravertebral CPT Agree............... 1.85 .......... .......... .......... .......... .......... X
C/T.
64472................ Inj paravertebral CPT Agree............... 1.29 .......... .......... .......... .......... .......... X
C/T add on.
64475................ Inj paravertbral CPT Agree............... 1.41 .......... .......... .......... .......... .......... X
L/S.
64476................ Inj paravertbral CPT Agree............... 0.98 .......... .......... .......... .......... .......... X
L/S add on.
64483................ Inj foramen CPT Agree............... 1.90 .......... .......... .......... .......... .......... X
epidural l/s.
64484................ Inj foramen CPT Agree............... 1.33 .......... .......... .......... .......... .......... X
epidural add-on.

[[Page 69888]]

64555................ Implant CPT Agree............... 2.29 .......... .......... .......... .......... .......... X
neuroelectrodes.
64573................ Implant 8.15 Agree............... 8.15 X .......... .......... .......... .......... ..........
neuroelectrodes.
64581................ Implant CPT Agree............... 14.15 X .......... .......... .......... .......... ..........
neuroelectrodes.
64622................ Destr CPT Agree............... 3.02 .......... .......... .......... .......... .......... X
paravertebrl
nerve l/s.
64623................ Destr CPT Agree............... 0.99 .......... .......... .......... .......... .......... X
paravertebral n
add-on.
64626................ Destr CPT Agree............... 3.82 .......... .......... .......... .......... .......... X
paravertebrl
nerve c/t.
64627................ Destr CPT Agree............... 1.16 .......... .......... .......... .......... .......... X
paravertebral n
add-on.
64708................ Revise arm/leg 6.22 Agree............... 6.22 X .......... .......... .......... .......... ..........
nerve.
64712................ Revision of CPT Agree............... 7.98 X .......... .......... .......... .......... ..........
sciatic nerve.
64831................ Repair of digit 9.00 Agree............... 9.00 X .......... .......... .......... .......... ..........
nerve.
65285................ Repair of eye 14.43 Agree............... 14.43 X .......... .......... .......... .......... ..........
wound.
66982................ Cataract surgery, 14.83 Agree............... 14.83 .......... X .......... .......... .......... ..........
complex.
67210................ Treatment of CPT Agree............... 9.35 .......... X .......... .......... .......... ..........
retinal lesion.
67220................ Treatment of CPT Agree............... 14.19 .......... X .......... .......... .......... ..........
choroid lesion.
67225................ Eye photodynamic 0.47 Agree............... 0.47 .......... .......... X .......... .......... ..........
ther add-on.
67228................ Treatment of CPT Agree............... 13.67 .......... X .......... .......... .......... ..........
retinal lesion.
68810................ Probe 2.09 Agree............... 2.09 X .......... .......... .......... .......... ..........
nasolacrimal
duct.
69930................ Implant cochlear 17.60 Agree............... 17.60 X .......... .......... .......... .......... ..........
device.
72192................ Ct pelvis w/o dye CPT Agree............... 1.09 .......... .......... .......... .......... .......... X
72194................ Ct pelvis w/o & w/ CPT Agree............... 1.22 .......... .......... .......... .......... X X
dye.
74170................ Ct abdomen w/o & CPT Agree............... 1.40 .......... .......... .......... .......... X ..........
w/dye.
74175................ Ct angio abdom w/ CPT Agree............... 1.90 .......... .......... .......... .......... .......... X
o & w/dye.
75790................ Visualize A-V CPT Agree............... 1.84 .......... .......... .......... .......... X ..........
shunt.
75992................ Artherectomy, X- CPT Agree............... 0.54 .......... .......... .......... .......... .......... X
Ray exam.
75993................ Artherectomy, X- CPT Agree............... 0.36 .......... .......... .......... .......... .......... X
Ray exam.
75994................ Artherectomy, X- CPT Agree............... 1.31 .......... .......... .......... .......... .......... X
Ray exam.
75995................ Artherectomy, X- CPT Agree............... 1.31 .......... .......... .......... .......... .......... X
Ray exam.
75996................ Artherectomy, X- CPT Agree............... 0.36 .......... .......... .......... .......... .......... X
Ray exam.
76513................ Echo exam of eye, CPT Agree............... 0.66 .......... .......... .......... .......... .......... X
water bath.

[[Page 69889]]

77427................ Radiation tx CPT Agree............... 3.70 X .......... .......... .......... .......... ..........
management, x5.
77782................ High intensity CPT Agree............... 2.04 .......... .......... .......... .......... .......... X
brachytherapy.
78465................ Heart image (3d), CPT Agree............... 1.46 .......... .......... .......... .......... X ..........
multiple.
78478................ Heart wall motion CPT Agree............... 0.50 .......... .......... .......... .......... X ..........
add-on.
78480................ Heart function CPT Agree............... 0.30 .......... .......... .......... .......... X ..........
add-on.
78483................ Heart, first CPT Agree............... 1.47 .......... .......... .......... .......... .......... X
pass, multiple.
92270................ Electro- CPT Agree............... 0.81 .......... .......... .......... X X ..........
oculography.
92541................ Spontaneous CPT Agree............... 0.40 .......... .......... .......... .......... X ..........
nystagmus test.
92542................ Positional CPT Agree............... 0.33 .......... .......... .......... .......... X ..........
nystagmus test.
92544................ Optokinetic CPT Agree............... 0.26 .......... .......... .......... .......... X ..........
nystagmus test.
92545................ Oscillating CPT Agree............... 0.23 .......... .......... .......... .......... X ..........
tracking test.
92557................ Comprehensive CPT Agree............... 0.60 .......... .......... .......... .......... X ..........
hearing test.
92567................ Tympanometry..... CPT Agree............... 0.20 .......... .......... .......... .......... X ..........
92568................ Acoustic refl CPT Agree............... 0.29 .......... .......... .......... .......... X ..........
threshold tst.
92569................ Acoustic reflex CPT Agree............... 0.20 .......... .......... .......... .......... X ..........
decay test.
92620................ Auditory 1.50 Agree............... 1.50 .......... .......... .......... X .......... ..........
function, 60 min.
92621................ Auditory 0.35 Agree............... 0.35 .......... .......... .......... X .......... ..........
function, + 15
min.
92625................ Tinnitus 1.15 Agree............... 1.15 .......... .......... .......... X .......... ..........
assessment.
92626................ Eval aud rehab 1.40 Agree............... 1.40 .......... .......... .......... X .......... ..........
status.
92627................ Eval aud status 0.33 Agree............... 0.33 .......... .......... .......... X .......... ..........
rehab add-on.
92640................ Aud brainstem 1.76 Agree............... 1.76 .......... .......... .......... X .......... ..........
implt programg.
93236................ ECG monitor/ CPT Agree............... 0.00 .......... .......... .......... .......... .......... X
report, 24 hours.
93350................ Echo 1.46 Agree............... 1.46 X .......... .......... .......... .......... ..........
transthoracic.
93526................ Rt & Lt heart CPT Agree............... 5.98 .......... .......... .......... .......... X ..........
catheters.
93539................ Injection, CPT Agree............... 0.40 .......... .......... .......... .......... X ..........
cardiac cath.
93540................ Injection, CPT Agree............... 0.43 .......... .......... .......... .......... X ..........
cardiac cath.
93543................ Injection for CPT Agree............... 0.29 .......... .......... .......... .......... X ..........
heart x-rays.
93544................ Injection for CPT Agree............... 0.25 .......... .......... .......... .......... X ..........
aortography.
93545................ Inject for CPT Agree............... 0.40 .......... .......... .......... .......... X ..........
coronary x-rays.
93555................ Imaging, cardiac CPT Agree............... 0.81 .......... .......... .......... .......... X ..........
cath.
93556................ Imaging, cardiac CPT Agree............... 0.83 .......... .......... .......... .......... X ..........
cath.
93620................ Electrophysiology CPT Agree............... 11.57 .......... .......... .......... .......... X ..........
evaluation.
93621................ Electrophysiology CPT Agree............... 2.10 .......... .......... .......... .......... X ..........
evaluation.

[[Page 69890]]

94681................ Exhaled air CPT Agree............... 0.20 .......... .......... .......... .......... .......... X
analysis, o2/co2.
97802................ Medical 0.53 Agree............... 0.53 .......... .......... .......... .......... X ..........
nutrition,
indiv, in.
97803................ Med nutrition, 0.45 Agree............... 0.45 .......... .......... .......... .......... X ..........
indiv, subseq.
G0179................ MD CPT Agree............... 0.45 .......... .......... .......... .......... .......... X
recertification
HHA PT.
G0181................ Home health care CPT Agree............... 1.73 .......... .......... .......... .......... .......... X
supervision.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Note: The RUC reviewed and recommended work RVUs for 6 audiology
codes (CPT codes 92620, 92621, 92625, 92626, 92627, and 92640) with
which we have agreed. Under Medicare, audiology services are
provided under the diagnostic test benefit. We recognize that some
of the work descriptors include ``counseling,'' ``the potential for
remediation,'' and the establishment of ``interventional goals.'' We
do not believe those aspects fit within the diagnostic test benefit
but are interested in receiving comments on this issue.

V. Refinement of Relative Value Units for Calendar Year 2009 and
Response to Public Comments on Interim Relative Value Units for 2008

A. Summary of Issues Discussed Related to the Adjustment of Relative
Value Units

Sections IV.B. and IV.C. of this final rule with comment describe
the methodology used to review the comments received on the RVUs for
physician work and the process used to establish RVUs for new and
revised CPT codes. Changes to the RVUs and billing status codes
reflected in Addendum B are effective for services furnished beginning
January 1, 2009.

B. Process for Establishing Work Relative Value Units for the Physician
Fee Schedule

The CY 2008 PFS final rule with comment period (72 FR 66365)
contained the work RVUs for Medicare payment for existing procedure
codes under the PFS and interim RVUs for new and revised codes
beginning January 1, 2008. We considered the RVUs for the interim codes
to be subject to public comment under the annual refinement process. In
this section, we address comments on the interim work RVUs published in
the CY 2008 PFS final rule with comment period, and our establishment
of the work RVUs for new and revised codes for the CY 2009 PFS.

C. Interim 2008 Codes

1. Orthopedic Fracture Treatment Codes
Orthopedic fracture treatment codes were originally part of the
third 5-Year Review of work RVUs. The codes were referred by the AMA
RUC to the AMA's CPT Editorial Panel for further clarification because
it was unclear whether the previous valuation for these codes included
the circumstance when both internal and external fixation is applied to
the fracture site. The CPT Editorial Panel agreed the codes needed
further clarification and removed the reference relating to external
fixation from the codes.
As a result, the AMA RUC examined the various families of fracture
codes and recommended increased work RVUs for most of the codes. The
codes were submitted to CMS as part of the new and revised codes for CY
2008. Although we agreed with the work RVU recommendations and rank
order listing of the codes in each family, the increase in valuation of
the services created BN issues within certain fracture code families.
In order to retain BN within these families of codes, the work RVUs
associated with each code were adjusted. That is, the work RVUs were
adjusted so that the sum of the new or revised work RVUs (weighted by
projected frequency of use) for each family would be the same as the
sum of the current work RVUs (weighted by projected frequency of use)
for each family of codes.
Comment: Some commenters believed these codes should have been
considered as part of the 5-Year review process and the increase in
work RVUs should have been absorbed through the BN work adjuster. The
commenters also disagreed with the application of BN and noted that
this created rank order anomalies. The commenters requested that if BN
is applied, it should be implemented across the entire fracture family
of codes, which would include codes that have not been surveyed
(Harvard valued codes).
Response: The commenters did not submit sufficient information to
demonstrate that the application of BN created rank order anomalies for
these codes. We note that the base codes for each fracture family of
codes could be submitted to the AMA RUC for re-valuation. This would
enable the codes within the family, several of which have not undergone
an AMA RUC review, to be properly aligned in comparison to the base
codes within each family.
2. Cardiac MRI Codes
For CY 2008, the CPT Editorial Panel created eight new Cardiac
Magnetic Resonance Imaging (MRI) codes and deleted five existing
Cardiac MRI codes due to technological changes and advances in MRI
scanning. We established a national noncoverage determination (NCD) for
MRI when blood flow velocity measurement is a component, or comprises
all, of the service. As a result, we assigned a status indicator of
``N'' (Noncovered) to four of the new CPT codes (75558, 75560, 75562,
and 75564).
Comment: Some commenters expressed disappointment that these four
new MRI codes were designated as noncovered and stated that they did
not believe the existing NCD for MRI is applicable to flow and velocity
measurements.
Response: We have reviewed the information submitted by the
commenters and the national noncoverage determination. We have
determined that the existing NCD for MRI is applicable to these codes
because blood flow/velocity quantification is considered to be a
component of these services, which according to the NCD is not
considered reasonable and

[[Page 69891]]

necessary, and therefore, is noncovered. Any changes in coverage would
have to occur through the NCD process.
3. Non-Face-to-Face Physician and Qualified Healthcare Professional
Services
For CY 2008, the CPT Editorial Panel created eight new codes (CPT
codes 98966, 98967, 98968, 98969, 99441, 99442, 99443, and 99444) to
describe Evaluation and Management (E/M) services furnished by a
physician or qualified healthcare professional via telephone or online,
for which the AMA RUC and the AMA's Health Care Professionals Advisory
Committee provided work and PE valuations. We assigned a status
indicator of ``N'' (Noncovered) to these services because: (1) These
services are non-face-to-face; and (2) the code descriptors include
language that recognizes the provision of services to parties other
than the beneficiary for whom Medicare does not provide coverage (for
example, a guardian).
Comment: Some commenters requested that we reconsider the
assignment of an N status for these codes. The commenters believed that
failure to provide incentives and funding for these codes affects the
alignment of quality of care between providers.
Response: We have considered the commenters' request. However, we
will continue to recognize these services as noncovered because they
are not furnished in a face-to-face setting (nor are they furnished as
Medicare telehealth services), and the code descriptors include
language that recognizes the provision of services to a noncovered
entity.
In the CY 2008 PFS final rule with comment period (73 FR 66371), we
also responded to the AMA RUC recommendations on the PE inputs for the
new and revised CPT codes for 2008. In addition to the PE comments
discussed in section II.A.2. of this final rule with comment period, we
received the following comments concerning PE inputs:
Comment: The specialty societies and the AMA RUC provided
clarification and pricing information concerning direct PE inputs for
CPT Code 43760, Change of gastrostomy tube, percutaneous, without
imaging or endoscopic guidance.
Response: We have revised the PE database to reflect this
information.
Comment: Several commenters questioned the PE RVUs for CPT code
68816, Probing of nasolacrimal duct, with or without irrigation; with
transluminal balloon catheter dilation, believing it to be undervalued.
In particular, one commenter stated that the payment for this service
is less than a specific supply item.
Response: We have reviewed the PE inputs for this service and
determined that they accurately represent the inputs recommended by the
AMA RUC. The difference in the actual costs of the direct PE inputs and
the payment amount for this service is due to the application of the
uniform BN adjustment that is applied to all direct inputs as part of
the bottom-up PE methodology.

D. Establishment of Interim Work Relative Value Units for New and
Revised Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System Codes (HCPCS) for 2009
(Includes Table Titled ``AMA RUC Recommendations and CMS' Decisions for
New and Revised 2009 CPT Codes'')

One aspect of establishing RVUs for 2008 was to assign interim work
RVUs for all new and revised CPT codes. As described in our November
25, 1992 notice on the 1993 PFS (57 FR 55951) and in section III.B. of
the CY 1997 PFS final rule (61 FR 59505), we established a process,
based on recommendations received from the AMA RUC, for establishing
interim work RVUs for new and revised codes.
We received work RVU recommendations for 128 new and revised CPT
codes from the AMA RUC this year. We reviewed the AMA RUC
recommendations by comparing them to our reference set or to other
comparable services for which work RVUs had previously been
established. We also considered the relationships among the new and
revised codes for which we received AMA RUC recommendations and agreed
with the majority of the relative relationships reflected in the AMA
RUC values. Table 27: AMA RUC Recommendations and CMS' Decisions for
New and Revised 2009 CPT Codes lists the new or revised CPT codes, and
their associated work RVUs, that will be interim in CY 2009. Table 27
includes the following information:
A ``'' identifies a new code for CY 2009.
CPT code. This is the CPT code for a service.
Modifier. A ``26'' in this column indicates that the work
RVUs are for the PC of the code.
Description. This is an abbreviated version of the
narrative description of the code.
AMA RUC recommendations. This column identifies the work
RVUs recommended by the AMA RUC.
CMS decision. This column indicates whether we agreed or
we disagreed with the AMA RUC recommendation. Codes for which we did
not accept the AMA RUC recommendation are discussed in greater detail
following this table.
2009 Work RVUs. This column establishes the interim 2009
work RVUs for physician work.

Table 27--AMA RUC Recommendations and CMS' Decisions for New and Revised 2009 CPT Codes
----------------------------------------------------------------------------------------------------------------
AMA RUC work
CPT \1\ code Mod Descriptor RVU CMS decision 2009 WRVU
recommendation
----------------------------------------------------------------------------------------------------------------
20696........ * ..... COMP MULTIPLANE 17.32 Agree................ 17.32
EXT FIXATION.
20697........ * ..... COMP EXT FIXATE 0.00 Agree................ 0.00
STRUT CHANGE.
22856........ * ..... CERV ARTIFIC 23.90 Agree................ 23.90
DISKECTOMY.
22861........ * ..... REVISE CERV 33.21 Agree................ 33.21
ARTIFIC DISC.
22864........ * ..... REMOVE CERV ARTIF 29.25 Agree................ 29.25
DISC.
27027........ ...... ..... BUTTOCK FASCIOTOMY 12.90 Agree................ 12.90
27057........ ...... ..... BUTTOCK FASCIOTOMY 14.77 Agree................ 14.77
W/DBRDMT.
27215................. ...... ..... TREAT PELVIC 10.45 Agree (a)............ 10.45
FRACTURE(S).
27216................. ...... ..... TREAT PELVIC RING 15.73 Agree (a)............ 15.73
FRACTURE.
27217................. ...... ..... TREAT PELVIC RING 14.65 Agree (a)............ 14.65
FRACTURE.
27218................. ...... ..... TREAT PELVIC RING 20.93 Agree (a)............ 20.93
FRACTURE.
35535........ ...... ..... ARTERY BYPASS 38.00 Agree................ 38.00
GRAFT.
35570........ ...... ..... ARTERY BYPASS 29.00 Agree................ 29.00
GRAFT.

[[Page 69892]]

35632........ ...... ..... ARTERY BYPASS 36.00 Agree................ 36.00
GRAFT.
35633........ ...... ..... ARTERY BYPASS 38.98 Agree................ 38.98
GRAFT.
35634........ ...... ..... ARTERY BYPASS 35.20 Agree................ 35.20
GRAFT.
41512........ ...... ..... TONGUE SUSPENSION. 6.75 Agree................ 6.75
41530........ ...... ..... TONGUE BASE VOL 4.38 Agree................ 4.38
REDUCTION.
43273........ * ..... ENDOSCOPIC 2.24 Agree................ 2.24
PANCREATOSCOPY.
43279........ * ..... LAP MYOTOMY, 22.00 Agree................ 22.00
HELLER.
46930........ ...... ..... DESTROY INTERNAL 1.56 Agree................ 1.56
HEMORRHOIDS.
49652........ ...... ..... LAP VENT/ABD 12.80 Agree................ 12.80
HERNIA REPAIR.
49653........ ...... ..... LAP VENT/ABD HERN 16.10 Agree................ 16.10
PROC COMP.
49654........ ...... ..... LAP INC HERNIA 14.95 Agree................ 14.95
REPAIR.
49655........ ...... ..... LAP INC HERN 18.00 Agree................ 18.00
REPAIR COMP.
49656........ ...... ..... LAP INC HERNIA 15.00 Agree................ 15.00
REPAIR RECUR.
49657........ ...... ..... LAP INC HERN RECUR 22.00 Agree................ 22.00
COMP.
55706........ * ..... PROSTATE 6.15 Agree................ 6.15
SATURATION
SAMPLING.
61796........ ...... ..... SRS, CRANIAL 15.50 Disagree............. 10.79
LESION SIMPLE.
61797........ ...... ..... SRS, CRAN LES 3.48 Agree................ 3.48
SIMPLE, ADDL.
61798........ ...... ..... SRS, CRANIAL 19.75 Disagree............. 10.79
LESION COMPLEX.
61799........ ...... ..... SRS, CRAN LES 4.81 Agree................ 4.81
COMPLEX, ADDL.
61800........ ...... ..... APPLY SRS 2.25 Agree................ 2.25
HEADFRAME ADD-ON.
62267........ ...... ..... INTERDISCAL PERQ 3.00 Agree................ 3.00
ASPIR, DX.
63620........ * ..... SRS, SPINAL LESION 15.50 Disagree............. 10.79
63621........ * ..... SRS, SPINAL 4.00 Agree................ 4.00
LESION, ADDL.
64416................. ...... ..... N BLOCK CONT 1.81 Agree................ 1.81
INFUSE, B PLEX.
64446................. ...... ..... N BLK INJ, 1.81 Agree................ 1.81
SCIATIC, CONT INF.
64448................. ...... ..... N BLOCK INJ FEM, 1.63 Agree................ 1.63
CONT INF.
64449................. ...... ..... N BLOCK INJ, 1.81 Agree................ 1.81
LUMBAR PLEXUS.
64455........ ...... ..... N BLOCK INJ, 0.75 Agree................ 0.75
PLANTAR DIGIT.
64632........ ...... ..... N BLOCK INJ, 1.20 Agree................ 1.20
COMMON DIGIT.
65756........ ...... ..... CORNEAL TRNSPL, 16.60 Agree................ 16.60
ENDOTHELIAL.
65757........ ...... ..... PREP CORNEAL ENDO 1.44 Disagree............. (\2\ )
ALLOGRAFT.
77785........ ...... 26 HDR BRACHYTX, 1 1.42 Agree................ 1.42
CHANNEL.
77786........ ...... 26 HDR BRACHYTX, 2-12 3.25 Agree................ 3.25
CHANNEL.
77787........ ...... 26 HDR BRACHYTX OVER 4.89 Agree................ 4.89
12 CHAN.
78808........ ...... ..... IV INJ RA DRUG DX 0.18 Agree................ 0.18
STUDY.
90951........ ...... ..... ESRD SERV, 4 18.46 Agree................ 18.46
VISITS P MO, <2.
90952........ ...... ..... ESRD SERV, 2-3 (\2\ ) Agree................ (\2\ )
VSTS P MO, <2.
90953........ ...... ..... ESRD SERV, 1 VISIT (\2\ ) Agree................ (\2\ )
P MO, <2.
90954........ ...... ..... ESRD SERV, 4 VSTS 15.98 Agree................ 15.98
P MO, 2-11.
90955........ ...... ..... ESRD SRV 2-3 VSTS 8.79 Agree................ 8.79
P MO, 2-11.
90956........ ...... ..... ESRD SRV, 1 VISIT 5.95 Agree................ 5.95
P MO, 2-11.
90957........ ...... ..... ESRD SRV, 4 VSTS P 12.52 Agree................ 12.52
MO, 12-19.
90958........ ...... ..... ESRD SRV 2-3 VSTS 8.34 Agree................ 8.34
P MO 12-19.
90959........ ...... ..... ESRD SERV, 1 VST P 5.50 Agree................ 5.50
MO, 12-19.
90960........ ...... ..... ESRD SRV, 4 VISITS 5.18 Agree................ 5.18
P MO, 20+.
90961........ ...... ..... ESRD SRV, 2-3 VSTS 4.26 Agree................ 4.26
P MO, 20+.
90962........ ...... ..... ESRD SERV, 1 VISIT 3.15 Agree................ 3.15
P MO, 20+.
90963........ ...... ..... ESRD HOME PT, SERV 10.56 Agree................ 10.56
P MO, <2.
90964........ ...... ..... ESRD HOME PT SERV 9.14 Agree................ 9.14
P MO, 2-11.
90965........ ...... ..... ESRD HOME PT SERV 8.69 Agree................ 8.69
P MO 12-19.
90966........ ...... ..... ESRD HOME PT, SERV 4.26 Agree................ 4.26
P MO, 20+.
90967........ ...... ..... ESRD HOME PT SERV 0.35 Agree................ 0.35
P DAY, <2.
90968........ ...... ..... ESRD HOME PT SRV P 0.30 Agree................ 0.30
DAY, 2-11.
90969........ ...... ..... ESRD HOME PT SRV P 0.29 Agree................ 0.29
DAY 12-19.
90970........ ...... ..... ESRD HOME PT SERV 0.14 Agree................ 0.14
P DAY, 20+.
93228........ * ..... REMOTE 30 DAY ECG 0.52 Agree................ 0.52
REV/REPORT.
93229........ * ..... REMOTE 30 DAY ECG 0.00 Disagree............. (\2\ )
TECH SUPP.
93279........ * 26 PM DEVICE PROGR 0.65 Agree................ 0.65
EVAL, SNGL.
93280........ * 26 PM DEVICE PROGR 0.77 Agree................ 0.77
EVAL, DUAL.
93281........ * 26 PM DEVICE PROGR 0.90 Agree................ 0.90
EVAL, MULTI.
93282........ * 26 ICD DEVICE PROG 0.85 Agree................ 0.85
EVAL, 1 SNGL.
93283........ * 26 ICD DEVICE PROGR 1.18 Disagree............. 1.05
EVAL, DUAL.
93284........ * 26 ICD DEVICE PROGR 1.25 Agree................ 1.25
EVAL, MULT.
93285........ * 26 ILR DEVICE EVAL 0.52 Agree................ 0.52
PROGR.
93286........ * 26 PRE-OP PM DEVICE 0.30 Agree................ 0.30
EVAL.
93287........ * 26 PRE-OP ICD DEVICE 0.45 Agree................ 0.45
EVAL.
93288........ * 26 PM DEVICE EVAL IN 0.43 Agree................ 0.43
PERSON.
93289........ * 26 ICD DEVICE 0.92 Disagree............. 0.78
INTERROGATE.

[[Page 69893]]

93290........ * 26 ICM DEVICE EVAL... 0.43 Agree................ 0.43
93291........ * 26 ILR DEVICE 0.43 Agree................ 0.43
INTERROGATE.
93292........ * 26 WCD DEVICE 0.43 Agree................ 0.43
INTERROGATE.
93293........ * 26 PM PHONE R-STRIP 0.32 Agree................ 0.32
DEVICE EVAL.
93294........ * 26 PM DEVICE 0.65 Agree................ 0.65
INTERROGATE
REMOTE.
93295........ * 26 ICD DEVICE 1.38 Disagree............. 1.17
INTERROGAT REMOTE.
93296........ * ..... PM/ICD REMOTE TECH 0.00 Agree................ 0.00
SERV.
93297........ * ..... ICM DEVICE 0.52 Agree................ 0.52
INTERROGAT REMOTE.
93298........ * ..... ILR DEVICE 0.52 Agree................ 0.52
INTERROGAT REMOTE.
93299........ * ..... ICM/ILR REMOTE 0.00 Disagree............. (\2\ )
TECH SERV.
93306........ * 26 TTE W/DOPPLER, 1.30 Agree................ 1.30
COMPLETE.
93351........ * ..... STRESS TTE 1.75 Agree................ 1.75
COMPLETE.
93352........ * ..... ADMIN ECG CONTRAST 0.19 Agree................ 0.19
AGENT.
95803........ * 26 ACTIGRAPHY TESTING 1.00 Disagree............. (\2\ )
95992........ ...... ..... CANALITH 0.75 Agree (b)............ (\3\ )
REPOSITIONING
PROC.
96360........ ...... ..... HYDRATION IV 0.17 Agree................ 0.17
INFUSION, INIT.
96361........ ...... ..... HYDRATE IV 0.09 Agree................ 0.09
INFUSION, ADD-ON.
96365........ ...... ..... THER/PROPH/DIAG IV 0.21 Agree................ 0.21
INF, INIT.
96366........ ...... ..... THER/PROPH/DIAG IV 0.18 Agree................ 0.18
INF ADDON.
96367........ ...... ..... TX/PROPH/DG ADDL 0.19 Agree................ 0.19
SEQ IV INF.
96368........ ...... ..... THER/DIAG 0.17 Agree................ 0.17
CONCURRENT INF.
96369........ ...... ..... SC THER INFUSION, 0.21 Agree................ 0.21
UP TO 1 HR.
96370........ ...... ..... SC THER INFUSION, 0.18 Agree................ 0.18
ADDL HR.
96371........ ...... ..... SC THER INFUSION, 0.00 Agree................ 0.00
RESET PUMP.
96372........ ...... ..... THER/PROPH/DIAG 0.17 Agree................ 0.17
INJ, SC/IM.
96373........ ...... ..... THER/PROPH/DIAG 0.17 Agree................ 0.17
INJ, IA.
96374........ ...... ..... THER/PROPH/DIAG 0.18 Agree................ 0.18
INJ, IV PUSH.
96375........ ...... ..... TX/PRO/DX INJ NEW 0.10 Agree................ 0.10
DRUG ADDON.
96376........ ...... ..... TX/PRO/DX INJ NEW 0.00 Agree................ 0.00
DRUG ADON.
96379........ ...... ..... THER/PROP/DIAG INJ/ 0.00 Agree................ 0.00
INF PROC.
99460........ ...... ..... INIT NB EM PER 1.17 Agree................ 1.17
DAY, HOSP.
99461........ ...... ..... INIT NB EM PER 1.26 Agree................ 1.26
DAY, NON-FAC.
99462........ ...... ..... SBSQ NB EM PER 0.62 Agree................ 0.62
DAY, HOSP.
99463........ ...... ..... SAME DAY NB 1.50 Agree................ 1.50
DISCHARGE.
99464........ ...... ..... ATTENDANCE AT 1.50 Agree................ 1.50
DELIVERY.
99465........ ...... ..... NB RESUSCITATION.. 2.93 Agree................ 2.93
99466........ ...... ..... PED CRIT CARE 4.79 Agree................ 4.79
TRANSPORT.
99467........ ...... ..... PED CRIT CARE 2.40 Agree................ 2.40
TRANSPORT ADDL.
99468........ ...... ..... NEONATE CRIT CARE, 18.46 Agree................ 18.46
INITIAL.
99469........ ...... ..... NEONATE CRIT CARE, 7.99 Agree................ 7.99
SUBSQ.
99471........ ...... ..... PED CRITICAL CARE, 15.98 Agree................ 15.98
INITIAL.
99472........ ...... ..... PED CRITICAL CARE, 7.99 Agree................ 7.99
SUBSQ.
99475........ ...... ..... PED CRIT CARE AGE 11.25 Agree................ 11.25
2-5, INIT.
99476........ ...... ..... PED CRIT CARE AGE 6.75 Agree................ 6.75
2-5, SUBSQ.
99478........ ...... ..... IC, LBW INF < 1500 2.75 Agree................ 2.75
GM SUBSQ.
99479........ ...... ..... IC LBW INF 1500- 2.50 Agree................ 2.50
2500 G SUBSQ.
99480........ ...... ..... IC INF PBW 2501- 2.40 Agree................ 2.40
5000 G SUBSQ.
----------------------------------------------------------------------------------------------------------------
New CPT code.
\1\ All CPT codes copyright 2008 American Medical Association.
\2\ Medicare Contractor Priced.
\3\ Bundled.
* New Code for Re-Examination at the next 5-Year Review.
(a) See code discussion in section E, Discussion of Codes and RUC Recommendations.
(b) RUC-recommended work RVU accepted but coverage status of code is Bundled.

Table 28: AMA RUC Anesthesia Recommendations and CMS Decisions for
New 2009 CPT Codes lists the new CPT codes for anesthesia and their
base units that will be interim in CY 2009. Table 28 includes the
following information:
CPT code. This is the CPT code for a service.
Description. This is an abbreviated version of the
narrative description of the code.
AMA RUC recommendations. This column identifies the base
units recommended by the AMA RUC.
CMS decision. This column indicates whether we agreed or
we disagreed with the AMA RUC recommendation.
2009 Base Units. This column establishes the CY 2009 base
units for these services.

[[Page 69894]]

Table 28--AMA RUC Anesthesia Recommendations and CMS Decisions for New and Revised/Reviewed CPT Codes
----------------------------------------------------------------------------------------------------------------
RUC 2009 base
*CPT \1\ code Description recommendation CMS decision units
----------------------------------------------------------------------------------------------------------------
00211.................... ANESTH, CRAN SURG, 10.00 Agree................ 10.00
HEMOTOMA.
00567.................... ANESTH, CABG W/PUMP.. 18.00 Agree................ 18.00
----------------------------------------------------------------------------------------------------------------
\1\ All CPT codes copyright 2008 American Medical Association.
New CPT code.

E. Discussion of Codes and AMA RUC Recommendations

The following is an explanation of our rationale for not accepting
particular AMA RUC-recommended work RVUs. It is arranged by type of
service in CPT order and refers only to work RVUs.
1. Pelvic Bone Fracture Codes
For CY 2009, the CPT Editorial Panel revised the following four CPT
codes to report pelvic bone fractures as being unilateral, and
reportedly, to clarify the nature of ring fractures as follows:
27215, Open treatment of iliac spine(s), tuberosity
avulsion, or iliac wing fractures(s), unilateral for pelvic bone
fracture patterns which do not disrupt the pelvic ring includes
internal fixation, when performed.
27216, Percutaneous skeletal fixation of posterior pelvic
bone fracture and/or dislocation, for fracture patterns which disrupt
the pelvic ring, unilateral, (includes ipsilateral ilium, sacroiliac
joint and/or sacrum).
27217, Open treatment of anterior pelvic bone fracture
and/or dislocation for fracture patterns which disrupt the pelvic ring,
unilateral includes internal fixation when performed (includes
ipsilateral pubic symphysis and/or superior/inferior rami).
27218, Open treatment of posterior pelvic bone fracture
and/or dislocation, for fracture patterns which disrupt the pelvic
ring, unilateral, includes internal fixation, when performed (includes
ipsilateral ilium, sacroiliac joint and/or sacrum.
The AMA RUC reviewed these codes and agreed with the specialty
society that revisions to the code descriptors were editorial because
these services were previously valued as typically unilateral with
internal fixation. The AMA RUC recommended maintaining the current work
RVUs for these codes: 10.45 work RVUs for CPT code 27215; 15.73 work
RVUs for CPT code 27216; 14.65 work RVUs for CPT code 27217; and 20.93
work RVUs for CPT code 27218.
We do not agree with CPT and the AMA RUC that the pelvis is a
unilateral structure and that the code descriptor change was editorial.
The pelvis is formed by adjoining the ilium, ischium, pubis, and sacrum
together. Clinically, it is a single anatomic entity and has been
referenced as a single anatomic entity. We believe the previous code
descriptors more accurately describe the structure of the pelvis and
subsequent treatment of fractures. Therefore, we created four G codes
to be used with pelvic bone fracture repairs that may occur on one side
or both sides of the pelvis consistent with CY 2008 descriptors. We
believe the following codes represent these services more
appropriately:
G0412, Open treatment of iliac spine(s), tuberosity
avulsion, or iliac wing fractures(s), unilateral or bilateral for
pelvic bone fracture patterns which do not disrupt the pelvic ring
includes internal fixation, when performed.
G0413, Percutaneous skeletal fixation of posterior pelvic
bone fracture and/or dislocation, for fracture patterns which disrupt
the pelvic ring, unilateral or bilateral, (includes ilium, sacroiliac
joint and/or sacrum).
G0414, Open treatment of anterior pelvic bone fracture
and/or dislocation for fracture patterns which disrupt the pelvic ring,
unilateral or bilateral, includes internal fixation when performed
(includes pubic symphysis and/or superior/inferior rami).
G0415, Open treatment of posterior pelvic bone fracture
and/or dislocation, for fracture patterns which disrupt the pelvic
ring, unilateral or bilateral, includes internal fixation, when
performed (includes ilium, sacroiliac joint and/or sacrum).
We have decided to assign the same work RVU values for the G codes
as for the corresponding CPT codes: 10.45 work RVUs for G0412; 15.73
work RVUs for G0413; 14.65 work RVUs for G0414; and 20.93 work RVUs for
G0415. For CY 2009, we will not recognize CPT codes 27215, 27216,
27217, and 27218 as covered services under the PFS and have assigned a
status indicator of ``I'' (Not valid for Medicare purposes, Medicare
recognizes another code).
2. Stereotactic Radiosurgery Codes
The CPT Editorial Panel made a significant revision to the
stereotactic radiosurgery codes for cranial and spinal stereotactic
radiosurgery (SRS) codes, for which the AMA RUC provided recommended
work and PE valuations. For CY 2009, the CPT Editorial Panel deleted
CPT code 61793, Stereotactic radiosurgery (particle beam, gamma ray, or
linear accelerator), one or more sessions, and created seven new codes
for cranial and spinal lesions to replace CPT code 61793. We believe
that the deleted CPT code 61793 accurately describes a complete course
of stereotactic radiosurgery, inclusive of all lesions and anatomic
sites.
Delivery of radiation as a therapeutic modality consists of many
components, including planning, physics, dosimetry, simulation,
treatment delivery, and management. Regardless of the clinical
background or training received by the clinician, we believe the work
involved in providing radiation therapy services or radiosurgery
radiation therapy is similar, and that the work relative values should
be similar. Currently, CPT code 77432, Stereotactic radiation treatment
management of cranial lesion(s) (complete course of treatment
consisting of one session), with 7.92 work RVUs, is used by providers
when managing certain pre- and post-delivery-related services of
stereotactic radiation. CPT code 77432 includes treatment-related
services of all cranial lesions during one session. We have been
informed that CPT code 77421, Stereoscopic X-ray guidance for
localization of target volume for the delivery of radiation therapy,
with 0.39 work RVUs, often is used, in association with CPT code 77432,
when appropriate.
The specialty societies and the AMA RUC, in general, used open
surgical codes as comparators during the RUC process. For example, for
CPT code 61797, the comparison code was CPT code 63048, Laminectomy,
facetectomy and foraminotomy (unilateral or bilateral with
decompression of spinal cord, cauda equina and/or nerve root[s], [eg,
spinal or lateral recess stenosis]),

[[Page 69895]]

single vertebral segment; each additional segment, cervical, thoracic,
or lumbar (List separately in addition to code for primary procedure),
instead of a more equivalent stereotactic radiation treatment code.
Therefore, we disagree with the work RVUs for the following CPT
codes: 61796, Stereotactic radiosurgery (particle beam, gamma ray, or
linear accelerator); 1 simple cranial lesion; 61797, Stereotactic
radiosurgery (particle beam, gamma ray, or linear accelerator); each
additional cranial lesion, simple; 61798, Stereotactic radiosurgery
(particle beam, gamma ray, or linear accelerator); 1 complex cranial
lesion; 61799, Stereotactic radiosurgery (particle beam, gamma ray, or
linear accelerator); each additional cranial lesion, complex; 63620,
Stereotactic radiosurgery (particle beam, gamma ray, or linear
accelerator); 1 spinal lesion; and 63621, Stereotactic radiosurgery
(particle beam, gamma ray, or linear accelerator); each additional
spinal lesion.
We believe that the more appropriate comparison for the replacement
codes for CPT code 61793 is with CPT codes 77432 plus 77421. The AMA
RUC recommended that CPT codes 61796, 61798, and 63620 include a half-
day discharge day and two 99213 office visits. We include those
recommended values within our valuation of these services.
Therefore, the new work values for these codes would be as follows:
10.79 work RVUs for CPT codes 61796, 61798, and 63620. For the add-on
CPT codes 61797, 61799, and 63621, the specialty societies and the AMA
RUC used open surgical codes as comparison codes. As noted above, we do
not believe that such codes provide the correct comparison, which led
to an inappropriate valuation of these codes. Although we disagree with
the methodology and valuation of the add-on codes, we will accept the
values as recommended on an interim basis. We urge the AMA RUC, to the
extent that the type of specialty involved played a part in the
valuation of these codes, to place an emphasis on the type of work
performed, not the specialty provider.
3. Endothelial Keratoplasty
The CPT Editorial Panel created two CPT codes (65756, Keratoplasty
(corneal transplant); endothelial and 65757, Backbench preparation of
corneal endothelial allograft prior to transplantation (List separately
in addition to code for primary procedure) to describe the physician
service of endothelial keratoplasty, which is a new surgical method of
repairing certain types of diseased corneas that in the past would have
required a full thickness corneal transplant (also called penetrating
keratoplasty). The AMA RUC recommended 16.60 work RVUs for CPT code
65756 and 1.44 work RVUs for CPT code 65757. We have accepted the AMA
RUC recommended work RVUs for CPT code 65756; however, we have decided
to have Medicare contractors price CPT code 65757. We recognize that it
is difficult to assess the intensity and work of the other backbench
transplant codes and have generally contractor priced them. We also
recognize that this service is one of short duration and high
intensity. The intra-service work per unit time (IWPUT) may not be of
the greatest accuracy in evaluating this service.
4. Cardiac Monitoring
The CPT Editorial Panel made significant revisions to the cardiac
device monitoring (CDM) codes, for which the AMA RUC provided work and
PE valuations. The CDM codes describe services that generally fall into
three categories: Interrogation of devices (retrieval and evaluation of
stored device data); programming of devices (retrieval and evaluation
of stored device data and programming of the device); and remote
monitoring of devices (solely technical services for monitoring, basic
analysis and assemblage of device data).
We agree with the majority of the AMA RUC-recommended valuations.
However, we question the recommended values of the increments between
some codes within families and across families of pacemakers,
implantable cardioverter defibrillators (ICDs), implantable loop
recorders, and implantable cardiovascular monitoring systems. CPT codes
93279 through 93281 (0.65 to 0.90 work RVUs, with a work RVU difference
between the codes of 0.12 to 0.13) describe the programming of
pacemakers according to the number of leads. CPT codes 93282 through
93284 (0.85 to 1.25 work RVUs, with a work RVU difference between the
codes of 0.07 to 0.33) describe the programming of ICDs according to
the number of leads. We note that the recommended difference in the
work RVUs between CPT code 93279 (single lead programming pacemaker
code) and CPT code 93282 (single lead ICD code) is 0.20 work RVUs, and
that the difference between CPT code 93281 (multiple lead programming
pacemaker code) and CPT code 93284 (multiple lead ICD code) is 0.35
work RVUs. The AMA RUC primarily used a comparison methodology to
determine the value of the pacemaker codes and the surveyed 25th
percentile to determine the value of the implantable cardioverter
defibrillator (ICD) codes. Even though different methodologies were
utilized to develop the recommended values, we do not understand why
the increments between various levels of the pacemaker programming
codes are not also the appropriate increment between the various levels
of ICD programming codes. Therefore, we are not accepting these
recommendations and instead will establish work RVUs that maintain the
same incremental difference between levels of programming codes. This
change will help to ensure consistency and relativity within all
cardiac device monitoring codes. The specific changes to the codes are
discussed below.
In addition, we believe that although the surveyed 25th percentile
of 1.18 work RVUs was chosen for valuation of CPT code 93283, the
increment of 0.33 work RVUs between CPT codes 93282 and 93283 is
excessive. Therefore, we believe that the appropriate value for CPT
code 93283 is 1.05 work RVUs, slightly below the 25th percentile. We
believe that an appropriate comparison CPT code for 93283 is CPT code
93890 (Transcranial Doppler study of the intracranial arteries;
vasoreactivity study) which has a work RVU of 1.00. CPT code 93286
(0.30 work RVUs) describes periprocedural programming of a pacemaker.
CPT code 93287 (0.45 work RVUs) describes periprocedural programming of
an ICD. These codes have recommended work RVU differences of 0.15 work
RVUs and 0.30 work RVUs between the pacemakers and ICDs for a single
service and for services pre- and postsurgery, respectively. CPT code
93288 (0.43 work RVUs) describes in person interrogation of pacemakers.
CPT Code 93289 (0.92 work RVUs, which was developed by means of a
crosswalk to a 99213 office visit) describes in person interrogation of
an ICD, a work RVU difference of 0.49 RVUs between the pacemakers and
ICDs.
As noted above, the work RVU difference between programming
pacemakers and ICDs varies from 0.20 to 0.35. Therefore, we believe
that the appropriate value for CPT code 93289 should be 0.78 (0.43 (the
work value of CPT code 93288) plus 0.35 (the largest difference between
pacemaker and ICD programming codes families)). Appropriate comparisons
are CPT codes 99231 (Subsequent hospital care) which has a work RVU of
0.76, and CPT code 93015 (Cardiovascular stress test using maximal or
submaximal treadmill or bicycle exercise, continuous
electrocardiographic monitoring, and/or

[[Page 69896]]

pharmacological stress; with physician supervision, with interpretation
and report) which has a work RVU of 0.75. Therefore, we believe a work
RVU of 0.78 is appropriate for CPT code 93289.
The AMA RUC-recommended work RVUs of 0.65 for CPT code 93294,
Interrogation device evaluation(s) (remote), up to 90 days; single,
dual, or multiple lead pacemaker system with interim physician
analysis, review(s) and report(s), was determined by multiplying 1.5
(the average number of transmissions per 90 days) times the work RVU
for CPT code 93288 (0.43). The AMA RUC-recommended work RVUs of 1.38
for CPT code 93295, Interrogation device evaluation(s) (remote), up to
90 days; single, dual, or multiple lead pacemaker system with interim
physician analysis, review(s) and report(s), was determined by
multiplying 1.5 (the average number of transmissions per 90 days) times
the work RVU for CPT code 93289 (0.92). Because we are adjusting the
work value for CPT code 93289 to 0.78, using the RUC-recommended
methodology, the adjusted work value for CPT code 93295 is 1.17.
We note that certain CDM codes were not reviewed by the RUC. For
example, CPT codes 93230, Wearable electrocardiographic rhythm derived
monitoring for 24 hours by continuous original waveform recording and
storage without superimposition scanning utilizing a device capable of
producing a full miniaturized printout; includes recording,
microprocessor-based analysis with report, physician review and
interpretation, and 93233, Wearable electrocardiographic rhythm derived
monitoring for 24 hours by continuous original waveform recording and
storage without superimposition scanning utilizing a device capable of
producing a full miniaturized printout; physician review and
interpretation, currently have work RVUs of 0.52 each. Some of the
newly valued CDM codes that provide payment for 30 days of work (for
example, CPT codes 93268, Wearable patient activated
electrocardiographic rhythm derived event recording with presymptom
memory loop, 24-hour attended monitoring, per 30 day period of time;
includes transmission, physician review and interpretation, and 93272,
Wearable patient activated electrocardiographic rhythm derived event
recording with presymptom memory loop, 24-hour attended monitoring, per
30 day period of time; physician review and interpretation, also have
work RVUs of 0.52. We urge the AMA RUC to assess the work valuation of
CPT codes 93230 and 93233 in the future in light of the valuation of
the other new similar codes.
The adjusted work RVUs are as follows: 1.05 work RVUs for CPT code
93283; 0.78 work RVUs for CPT code 93289; and 1.17 work RVUs for CPT
code 93295.
5. Mobile Cardiovascular Telemetry and Implantable Loop Monitoring
The CPT Editorial Panel created two new codes 93228 and 93229 for
mobile cardiovascular telemetry and a new code 93299 related to
implantable cardiovascular monitoring systems or implantable loop
recorder systems. The AMA RUC recommended 0.52 work RVUs for CPT code
93228 and only direct cost inputs for CPT code 93229 and 93299. These
services were previously billed using unlisted codes, which were
contractor priced. CPT code 93228 represents the professional aspect of
the mobile cardiovascular telemetry service and CPT code 93229
represents the technical aspect. We have accepted the AMA RUC
recommended work RVUs for CPT code 93228. However, we will continue to
contractor price CPT codes 93229 and 93299 in order to provide
additional time to better understand the direct cost inputs for this
service and to allow us to collect actual utilization data under the
new code.
6. Canalith Repositioning
The CPT Editorial Panel created and the AMA RUC valued a new code
(CPT code 95992, Canalith repositioning procedure(s) (eg, Epley
maneuver, Semont maneuver), per day) for canalith repositioning, which
is described as ``therapeutic maneuvering of the patients' body and
head designed to use the force of gravity. By using this type of
maneuvering, the calcium crystal debris that is in the semi-circular
canal system is redeposited into a neutral part of the end organ where
it will not cause vertigo.'' This is a procedure that has been
performed for several years. Previously this maneuver was billed by
physicians as part of an E&M service and by nonphysician practitioners,
primarily therapists, under a number of CPT codes, including 97112,
Therapeutic procedure, one or more areas, each 15 minutes;
neuromuscular reeducation of movement, balance, coordination,
kinesthetic sense, posture, and/or proprioception for sitting and/or
standing activities, which has 0.45 work RVUs. Therapists usually bill
2 units of service. The RUC recommended work RVUs for this service is
0.75.
We believe a status indicator of ``B'' (Bundled Code, payments for
covered services are always bundled into payment for other services not
specified) is most appropriate because this service is currently being
paid for as part of an E&M service. (Note: Because neurologists and
physical therapists are the predominant providers of this service to
Medicare patients (each at 22 percent) it has been assigned as a
``sometimes therapy'' service under the therapy code abstract file.)

F. Additional Coding Issues

1. Reduction in the Technical Component (TC) Payment for Imaging
Services Paid Under the PFS to the Outpatient Department (OPD) Amount
Effective January 1, 2007, section 5102(b)(1) of the Deficit
Reduction Act of 2005 (Pub. L. 109-171) (DRA) capped the TC of most
imaging services paid under the PFS to the amount paid under the
Outpatient Prospective Payment System (OPPS) (71 FR 69659).
The list of codes subject to of OPPS cap has been revised to
reflect new and deleted CPT codes for 2009. CPT Codes 78890 and 78891
have been deleted and have been removed from the list. The following
new CPT codes have been added to the list:
93306, Echocardiography, transthoracic real-time with
image documentation (2D), including M-mode recording if performed, with
spectral Doppler echocardiography, and with color flow Doppler
echocardiography.
The complete list of codes subject to the OPPS cap is in Addendum
I.
2. Moderate (Conscious) Sedation Codes (CPT Codes 99143 to 99150)
In 2006, the moderate sedation codes were adopted by the CPT. We
did not accept the AMA RUC-recommended work values for these codes, but
stated that they would be contractor priced under the PFS. At that
time, we indicated that we would continue to review this issue.
In August 2008, the AMA RUC convened a workgroup to review the
moderate sedation codes. The workgroup examined national claims data
provided to them by CMS to determine if any further action was
necessary for these codes. The workgroup concluded its work in
September 2008. It recommended that CMS again consider assigning the
previously AMA RUC-recommended work values to both the pediatric and
adult moderate sedation codes.
Comment: Although not specifically discussed in the CY 2009 PFS
proposed rule, we received comments concerning the pricing of these
codes. Commenters requested that CMS assign the status

[[Page 69897]]

indicator of ``A'' to these codes under the PFS Database and include
the AMA RUC-recommended RVUs for these codes. Another commenter
requested that we implement the AMA RUC recommendations for the
pediatric conscious sedation codes which are represented by CPT codes
99143 and 99150.
Response: When these codes were established by the CPT, the
physician specialties that were surveyed by the AMA RUC to recommend
work RVUs were the pediatricians, emergency medicine physicians, spine
surgeons, and oral and maxillofacial surgeons. Our review of Medicare
national claims data shows that these codes are most often utilized by
anesthesiologists and interventional pain management physicians. We
continue to have concerns about the utilization of these codes and will
continue to review them under the Medicare program.
We will also continue contractor pricing of these codes under the
PFS. Regarding the AMA RUC-recommended work values for the moderate
sedation codes, which we have not accepted, we note that RUC-
recommended values for these codes were included in the CY 2006 PFS
final rule with comment period (70 FR 70282).
3. Inpatient Dialysis Services (CPT Codes 90935, 90937, 90945, and
90947)
Although not discussed in the CY 2009 PFS proposed rule, we
received comments requesting that CMS apply the increases in work RVUs
for E&M services recommended by the AMA RUC for each CPT code with a
global period of 10 and 90 days as part of the 2007 PFS proposed and
final rules to the inpatient dialysis family of services.
Comment: Some commenters believed that the outpatient and inpatient
dialysis services that use E&M codes as ``building blocks'' or
components of their valuation should have the full increases for the
E&M codes incorporated into their values as well.
Response: Increases in E&M codes were not applied to the inpatient
dialysis services because these codes do not have a global period of 10
or 90 days. The AMA RUC recommendations were specifically for codes
with global periods of 10 or 90 days. We suggest that the specialty
society work with the AMA RUC using the existing process to address
this issue.
4. New Codes for Re-Examination at the Next 5-Year Review
As part of its annual recommendation, the AMA RUC includes a list
identifying new CPT codes which will be reexamined at the next 5-Year
Review of Work RVUs. New CPT codes that have been added to this list
are identified with an asterisk (*) on Table 27: AMA RUC
Recommendations and CMS' Decisions for New and Revised 2009 CPT Codes.
5. Comments Received on New CPT Codes for CY 2009
We received comments on new CPT codes for CY 2009 including
Category III codes. Since these are new codes for CY 2009, they are
subject to comment as part of this final rule. Note: Category III codes
are contractor priced under the PFS.

H. Establishment of Interim PE RVUs for New and Revised Physician's
Current Procedural Terminology (CPT) Codes and New Healthcare Common
Procedure Coding System (HCPCS) Codes for 2009

We have developed a process for establishing interim PE RVUs for
new and revised codes that is similar to that used for work RVUs. Under
this process, the AMA RUC recommends the PE direct inputs (the staff
time, supplies and equipment) associated with each new code. CMS
reviews the recommendations in a manner similar to our evaluation of
the recommended work RVUs. The AMA RUC recommendations on the PE inputs
for the new and revised CY 2009 codes were submitted to CMS as interim
recommendations.
We have accepted, in the interim, the PE recommendations submitted
by the RUC for the codes listed in Table 27: AMA RUC Recommendations
and CMS' Decisions for New and Revised 2009 CPT Codes and Table 26
except as noted below in this section.
1. CPT Code Series 93279 Through 93292
The AMA RUC PE recommendations for cardiac monitoring services in
the CPT code series 93279 through 93292 recommended that we include a
``pacemaker monitoring system'' as the necessary equipment to be used
in each code of the 14 CPT code series 93279 through 93292. Because the
specialty did not list a price along with the equipment item we
reviewed the equipment used in the existing services that were used to
crosswalk to the new codes. We found that the existing services are
each assigned the pacemaker follow-up system (including software and
hardware), CMS equipment code EQ198 and, as such, we have assigned this
equipment item to each of the 14 new services on an interim basis.
The RUC recommended that a ``pacemaker interrogation system'' be
used for the two CPT codes 93293 and 93296. However, the PE database
does not contain an equipment item with this description. Because we
noted a 100 percent crosswalk from existing CPT code 93733 that
utilizes the pacemaker follow-up system to the new CPT code 93293, we
have assigned, on an interim basis, the pacemaker follow-up system to
CPT codes 93293 and 93296 (a ``new'' service without a crosswalk).
We ask commenters to provide documentation to us as to the type and
cost of equipment that is used in furnishing these services in the
physician office and other information to support any suggested changes
from the prior inputs.
2. CPT Code 41530
The AMA RUC recommended PE direct inputs for CPT code 41530,
Submucosal ablation of the tongue base, radiofrequency, one or more
sites, per session, include a disposable pulse oximeter finger probe.
We did not accept the addition of this item to the PE database for this
or any other procedure because, as we have discussed in the CY 2004 PFS
proposed and final rules (68 FR 49037 and 63206), we continue to treat
the pulse oximeter probe as reusable.
3. CPT Code 46930
In the AMA RUC PE recommendations for CPT code 46930, Destruction
of internal hemorrhoid(s) by thermal energy (eg, infrared coagulation,
cautery, radiofrequency), the specialty society requested that we add a
light guide to the existing price of $3,087.50, for the infrared
coagulator and provided the list price of $730 for this item. In
addition, the specialty society requested that a sheath (pricing
information provided by the specialty at $10.50) for the light guide be
included as a typical supply for this procedure. We have reviewed the
components of the existing infrared coagulator in the PE database and
note its price of $3087.50 includes an infrared power unit and a hand
applicator. Using our existing pricing information, we have added the
price of $572 for the indicated (6mm x 220mm) light guide (the price
resulting from averaging the costs of the Teflon and Sapphire tips) to
the infrared coagulator for a total price of $3,659. We did not accept
the AMA RUC-recommended sheath to cover the light guide that the
specialty proposed to add to the PE database for this service and 4
other procedures as we do not believe it to be typically used in
furnishing these services. Because the

[[Page 69898]]

light guide was not a component of the infrared coagulator item at the
time we re-priced our entire equipment file for CY 2005, and because
this same equipment item is used for 4 other endoscopy procedures--
including CPT codes 46606, 46608, 46610, and 46612--we ask commenters
to provide us with information and documentation as to whether the
light guide is typical to any of these 5 procedures. Additionally, we
also invite comments about the typical use of the sheath in
relationship to the light guide. In the interim, while we await
comments, we have assigned the new equipment price including the light
guide to the new CPT code 46930 as well as the four other procedures
that employ this infrared coagulator for CY 2009.
4. CPT Code 64632
For CPT code 64632, Destruction by neurolytic agent; plantar common
digital nerve, the AMA RUC recommended that supply code SH062, a
sclerosing solution for injection, be used as a proxy for the
neurolytic agent needed to perform this procedure. We are concerned
about the appropriateness of this substitution suggested by the
specialty society. The society stated that it was not able to find
pricing for either phenol or 4 percent ethyl alcohol, which the society
believes are the commonly used analytics for this procedure. We ask
commenters to provide us documentation for pricing of the phenol or 4
percent ethyl alcohol that are appropriately used in furnishing this
service. In the interim, we will accept the recommendation to use the
$2.029 sclerosing solution as the proxy for the analytic agent.
5. CPT Code Series 90951 Through 90966
For the End-Stage Renal Disease (ESRD) Services including new CPT
codes 90951, 90952, 90953, 90954, 90955, 90956, 90957, 90958, 90959,
90960, 90961, 90962, 90963, 90964, 90965 and 90966, the AMA RUC
recommended PE direct inputs (36 minutes of clinical labor for the pre-
service period and an additional 6 minutes in the post period for CPT
codes 90960, 90961, 90962 and 90966) for the monthly capitation
payments. For CPT codes 90967, 90968, 90969, and 90970, the ESRD codes
representing per-day payments, the AMA RUC PE recommendations included
1.2 minutes of clinical labor per day. Prior to accepting these PE
recommendations, we have asked the AMA RUC to review the PE inputs at
an upcoming meeting to make certain that they accurately reflect the
typical direct resources required for these services. In the interim,
we will continue to use the established PE RVUs for these services. In
addition, for CPT codes 90960 and 90961, we will ask the RUC to review
the physician times for these services.
6. CPT Code 93306
The AMA RUC recommended PE direct inputs for CPT code 93306,
Echocardiography, transthoracic real-time with image documentation
(2D), including M-mode recording if performed, with spectral Doppler
echocardiography, and with color flow Doppler echocardiography.
However, the AMA RUC did not recommend any changes to the PE direct
inputs for the related echocardiography codes 93307, 93320 and 93325.
Prior to accepting this recommendation, we have asked the AMA RUC to
review the PE inputs 93307, 93320 and 93325 to ensure that they are
consistent with the recommended direct inputs for 93306. In the
interim, we will continue to use the established PE RVUs for these
services.
7. CPT Code 93351
The AMA RUC recommended PE inputs for CPT code 93351,
Echocardiography, transthoracic real-time with image documentation
(2D), including M-mode recording, when performed, during rest and
cardiovascular stress test using treadmill, bicycle exercise and/or
pharmacologically induced stress, with interpretation and report;
including performance of continuous electrocardiographic monitoring
with physician supervision, includes three new equipment items with
pricing information proposed by the specialty society. These new
equipment items include an ultrasound machine, an echocardiography exam
table, and a dual image viewing and reporting system. We did not accept
the recommended ultrasound machine valued at $325,000 which appears to
be a newer model than that currently used in a similar procedure and
priced at $248,000 in the PE database. We also did not accept the
echocardiography exam table ($11,095) because we do not believe it to
be the typical equipment item found in the physician's office. In place
of these two new items, we assigned those PE inputs from the PE
database that are typical to similar services--the $248,000 ultrasound
machine and a $1,915 stretcher. We ask commenters to provide us with
documentation as to the type and cost of equipment that is used in
furnishing the procedure in the physician office setting along with a
rationale for suggested changes from the existing inputs.
We have included the ``dual'' echocardiography image viewing and
reporting system, although we accepted the base unit price of $85,000
in place of the $173,000 price provided by the specialty. This basic
system is sufficient to manage, import, export, archive, and review and
report digital exams; and, it contains an additional work station that
is designed to function concurrently with a second ultrasound machine.
Because this unit is designed for the concurrent use of two ultrasound
units (a connection for managing the images from a third unit can be
added for an additional fee), we ask commenters to provide us with the
typical scenario as to whether one, two, or three ultrasound units will
be connected to this image management system. We also ask commenters
for information as to the amount of time that this dual image
management system is in use for this procedure. In the interim, we have
assigned the 7 minutes from the AMA RUC PE recommendation that is
indicated for the cardiac sonographer to enter the ECG and echo report
elements into reporting system.
8. CPT Code 95803
CPT code 95803, Actigraphy, testing, recording, analysis,
interpretation and report (minimum of 72 hours to 14 consecutive days
of recording), requires the patient to wear a home monitor for 24 hours
a day for 3 to 14 days. The RUC PE recommendations did not include the
typical number of days the home monitor would be in use. They also did
not include the necessary equipment used to analyze the data.
Therefore, we seek comment on the typical number of days for this
service. We will continue to contractor price this service for 2009.

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

A. General

Section 1877 of the Act prohibits a physician from referring a
Medicare beneficiary for certain designated health services (DHS) to a
health care entity with which the physician (or a member of the
physician's immediate family) has a financial relationship, unless an
exception applies. Section 1877 of the Act also prohibits the DHS
entity from submitting claims to Medicare or billing the beneficiary or
any other entity for Medicare DHS that are furnished as a result of a
prohibited referral.
Section 1877(h)(6) of the Act specifies that the following services
are DHS:

[[Page 69899]]

Clinical laboratory services.
Physical therapy services.
Occupational therapy services.
Radiology services.
Radiation therapy services and supplies.
Durable medical equipment and supplies.
Parenteral and enteral nutrients, equipment, and supplies.
Prosthetics, orthotics, and prosthetic devices and
supplies.
Home health services.
Outpatient prescription drugs.
Inpatient and outpatient hospital services.

B. Speech-Language Pathology Services

As we stated in section III.I. of this final rule with comment
period, section 143 of the MIPPA amended section 1877(h)(6) of the Act
to specify that ``outpatient speech-language pathology services'' are
DHS, effective July 1, 2009. We note that, in the ``Phase I'' physician
self-referral final rule, we defined the DHS category of ``physical
therapy services'' to include speech-language pathology services
because the statutory definition of ``outpatient physical therapy
services'' (section 1861(p) of the Act) included speech-language
pathology services (66 FR at 925). To conform the language of the
regulations to MIPPA, we are revising two of the definitions at Sec.
411.351. First, we are revising the definition of ``Designated health
services (DHS)'' by adding the word ``outpatient'' before the phrase
``speech-language pathology services'' in paragraph (2). Second, we are
revising the definition of ``Physical therapy, occupational therapy,
and speech-language pathology services'' by:
Removing the phrase ``speech-language pathology'' in the
heading of the definition and wherever it occurs within the
introductory paragraph and adding, in its place, the phrase
``outpatient speech-language pathology'';
Deleting the parenthetical ``(including speech-language
pathology services)'' from paragraph (1) of the description of physical
therapy services;
Deleting sub-paragraph (1)(iv), which describes physical
therapy services as including ``Speech-language pathology services that
are for the diagnosis and treatment of speech, language, and cognitive
disorders that include swallowing and other oral-motor dysfunctions;''
and
Adding the following new paragraph to describe outpatient
speech-language pathology services: ``(3) Outpatient speech-language
pathology services, meaning those services as described in section
1861(ll)(2) of the Act that are for the diagnosis and treatment of
speech, language, and cognitive disorders that include swallowing and
other oral-motor dysfunctions''.
Consistent with the provisions of section 143 of the MIPPA, these
changes will be effective July 1, 2009.

C. Annual Update to the Code List

1. Background
In Sec. 411.351, we specify that the entire scope of four DHS
categories is defined in a list of CPT/HCPCS codes (the Code List),
which is updated annually to account for changes in the most recent CPT
and HCPCS publications. The DHS categories defined and updated in this
manner are:
Clinical laboratory services.
Physical therapy, occupational therapy, and outpatient
speech-language pathology services.
Radiology and certain other imaging services.
Radiation therapy services and supplies.
The Code List also identifies those items and services that may
qualify for either of the following two exceptions to the physician
self-referral prohibition:
EPO and other dialysis-related drugs furnished in or by an
ESRD facility (Sec. 411.355(g)).
Preventive screening tests, immunizations, or vaccines
(Sec. 411.355(h)).
The Code List was last updated in the CY 2008 PFS final rule with
comment period (72 FR 66222) and in a subsequent correction notice (73
FR 2568).
2. Response to Comments
We received no public comments relating to the Code List that
became effective January 1, 2008.
3. Revisions Effective for 2009
The updated, comprehensive Code List effective January 1, 2009
appears as Addendum J in this final rule with comment period and is
available on our Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/11_List_of_Codes.asp#TopOfPage. Additions,
deletions, and revisions to the Code List conform the Code List to the
most recent publications of CPT and HCPCS.
Tables 29, 30, and 31 identify the additions, deletions, and
revisions, respectively, to the comprehensive Code List that was
published in Addendum I of the CY 2008 PFS final rule (72 FR 66574
through 66578) and revised in a subsequent correction notice (73 FR
2568).
Tables 29 and 30 also identify the additions and deletions to the
lists of codes used to identify the items and services that may qualify
for the exceptions in Sec. 411.355(g) (regarding EPO and other
dialysis-related outpatient prescription drugs furnished in or by an
ESRD facility) and in Sec. 411.355(h) (regarding preventive screening
tests, immunizations, and vaccines).
In Table 29, we specify additions that generally reflect new CPT
and HCPCS codes that become effective January 1, 2009, or that became
effective since our last update. Also, we are adding CPT code 0183T
(Low frequency, non-contact, non-thermal ultrasound) to the category of
Physical Therapy, Occupational Therapy, and Outpatient Speech-Language
Pathology Services. The AMA added this code to the CPT for 2008, but we
inadvertently failed to add this code to our Code List.
Table 30 reflects the deletions necessary to conform the Code List
to the most recent publications of CPT and HCPCS. It also reflects our
decision to delete CPT codes 78000, 78001, and 78003 from the Radiology
and Certain Other Imaging Services category of the Code List because we
realized that these codes do not involve imaging and, therefore, should
not be included in that category.
Also in the category of Radiology and Certain Other Imaging
Services and as shown in Table 31, we are making revisions to our
qualifying language included in brackets for CPT codes 93320, 93321 and
93325. Our revisions reflect changes made by the AMA for the CPT 2009
that specify with which codes CPT codes 93320, 93321, and 93325 may be
used. Additionally, we found that we had previously failed to include
certain CPT codes with which CPT code 93325 may be used. Thus, we are
revising our qualifying language in brackets for CPT 93325 to clarify
that it is considered a DHS when used in conjunction with CPT codes
76825, 76826, 76827, 76828, 99903, 93304, and 93308.
We will consider comments regarding the codes listed in Tables 29,
30, and 31. Comments will be considered if we receive them by the date
specified in the ``DATES'' section of this final rule with comment
period. We will not consider any comment that advocates a substantive
change to any of the DHS defined in Sec. 411.351.

[[Page 69900]]

Table 29--Additions to the Physician Self-Referral List of CPT \1\ HCPCS
Codes
------------------------------------------------------------------------

-------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
------------------------------------------------------------------------
0194T Procalcitonin (PCT).
------------------------------------------------------------------------
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT SPEECH-LANGUAGE
PATHOLOGY SERVICES
------------------------------------------------------------------------
0183T Wound ultrasound.
95992 Canalith repositioning proc.
------------------------------------------------------------------------
RADIOLOGY AND CERTAIN OTHER IMAGING SERVICES
------------------------------------------------------------------------
93306 TTE w/Doppler, complete.
A9580 Sodium fluoride F-18.
------------------------------------------------------------------------
RADIATION THERAPY SERVICES AND SUPPLIES
------------------------------------------------------------------------
0190T Place intraoc radiation src.
0197T Intrafraction track motion.
61796 SRS, cranial lesion simple.
61797 SRS, cran les simple, addl.
61798 SRS, cranial lesion complex.
61799 SRS, cran les complex, addl.
61800 Apply SRS headframe add-on.
63620 SRS, spinal lesion.
63621 SRS, spinal lesion, addl.
77785 HDR brachytx, 1 channel.
77786 HDR brachytx, 2-12 channel.
77787 HDR brachytx over 12 chan.
------------------------------------------------------------------------
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
------------------------------------------------------------------------
J1750 Inj iron dextran.
------------------------------------------------------------------------
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
------------------------------------------------------------------------
[No additions].
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2008 AMA. All rights
are reserved and applicable FARS/DFARS clauses apply.

Table 30--Deletions to the Physician Self-Referral List of CPT \1\/HCPCS
Codes
------------------------------------------------------------------------

-------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
------------------------------------------------------------------------
0026T Measure remnant lipoproteins.
0041T Detect ur infect agnt w/cpas.
0043T Co expired gas analysis.
0058T Cryopreservation, ovary tiss.
0059T Cryopreservation, oocyte.
------------------------------------------------------------------------
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT SPEECH-LANGUAGE
PATHOLOGY SERVICES
------------------------------------------------------------------------
0029T Magnetic tx for incontinence.
------------------------------------------------------------------------
0029T Magnetic tx for incontinenceRADIOLOGY AND CERTAIN OTHER IMAGING
SERVICES
------------------------------------------------------------------------
0028T Dexa body composition study.
78000 Thyroid, single uptake.
78001 Thyroid, multiple uptakes.
78003 Thyroid, suppress/stimul.
78890 Nuclear medicine data proc.
78891 Nuclear med data proc.
------------------------------------------------------------------------
RADIATION THERAPY SERVICES AND SUPPLIES
------------------------------------------------------------------------
61793 Focus radiation beam.
77781 High intensity brachytherapy.
77782 High intensity brachytherapy.
77783 High intensity brachytherapy.
77784 High intensity brachytherapy.
------------------------------------------------------------------------
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
------------------------------------------------------------------------
J1751 Iron dextran 165 injection.
J1752 Iron dextran 267 injection.
------------------------------------------------------------------------
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
------------------------------------------------------------------------
[No deletions].
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2008 AMA. All rights
are reserved and applicable FARS/DFARS clauses apply.

Table 31--Revisions to the Physician Self-Referral List of CPT \1\ HCPCS
Codes
------------------------------------------------------------------------

-------------------------------------------------------------------------
CLINICAL LABORATORY SERVICES
------------------------------------------------------------------------
[No revisions].
------------------------------------------------------------------------
PHYSICAL THERAPY, OCCUPATIONAL THERAPY, AND OUTPATIENT SPEECH-LANGUAGE
PATHOLOGY SERVICES
------------------------------------------------------------------------
[No revisions].
------------------------------------------------------------------------
RADIOLOGY AND CERTAIN OTHER IMAGING SERVICES
------------------------------------------------------------------------
93320 Doppler echo exam, heart [if used in conjunction with 93303-
93304].
93321 Doppler echo exam, heart [if used in conjunction with 93303,
93304, 93308].
93325 Doppler color flow add-on [if used in conjunction with 76825,
76826, 76827, 76828, 93303, 93304, 93308].
------------------------------------------------------------------------
RADIATION THERAPY SERVICES AND SUPPLIES
------------------------------------------------------------------------
[No revisions].
------------------------------------------------------------------------
DRUGS USED BY PATIENTS UNDERGOING DIALYSIS
------------------------------------------------------------------------
[No revisions].
------------------------------------------------------------------------
PREVENTIVE SCREENING TESTS, IMMUNIZATIONS AND VACCINES
------------------------------------------------------------------------
[No revisions].
------------------------------------------------------------------------
\1\ CPT codes and descriptions only are copyright 2008 AMA. All rights
are reserved and applicable FARS/DFARS clauses apply.

VII. Physician Fee Schedule Update for CY 2009

A. Physician Fee Schedule Update

The PFS update is set under a formula specified in section
1848(d)(4) of the Act. Section 101 of the MIEA-TRHCA provided a 1-year
increase in the CY 2007 conversion factor (CF) and specified that the
CF for CY 2008 must be computed as if the 1-year increase had never
applied. Section 101 of the MMSEA provided a 6-month increase in the CY
2008 CF, from January 1, 2008, through June 30, 2008, and specified
that the CF for the remaining portion of 2008 and the CFs for CY 2009
and subsequent years must be computed as if the 6-month increase had
never applied. Section 131 of the MIPPA extended the increase in the CY
2008 CF that was applicable for the first half of the year to the
entire year, provided for a 1.1 percent increase to the CY 2009 CF, and
specified that the CFs for CY 2010 and subsequent years must be
computed as if the increases for CYs 2007, 2008, and 2009 had never
applied.
If section 101 of the MMSEA had not been enacted, the CY 2008 CF
update would have been -10.1 percent (0.89896), as published in the CY
2008 PFS final rule with comment period (72 FR 66383). For CY 2009, the
Medicare Economic Index (MEI) is equal to 1.6 percent (1.016). The
update adjustment factor (UAF) is -7.0 percent (0.930). Our
calculations of these figures are explained below in this section. If
section 131 of the MIPPA had not been enacted, the CY 2009 CF update
would have been the -15.1 percent (0.84941), which is the product of
the published CY 2008 update (0.89896), the MEI (1.016), and the UAF
(0.930). Consistent with section 131 of the MIPPA, however, the update
for CY 2009 is 1.1 percent.

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

The Medicare Economic Index (MEI) is authorized by section
1842(b)(3) of the Act, which states that prevailing charge levels
beginning after June 30, 1973, may not exceed the level from the
previous year except to the extent that the Secretary finds, on the
basis of appropriate economic index data, that the higher level is
justified by year-to-year economic changes.
The MEI measures the weighted-average annual price change for
various inputs needed to produce physicians' services. The MEI is a
fixed-weight input price index, with an adjustment for the change in
economy-wide multifactor productivity. This index, which has CY 2000
base year weights,

[[Page 69901]]

is comprised of two broad categories: (1) Physician's own time; and (2)
physician's PE.
The physician's own time component represents the net income
portion of business receipts and primarily reflects the input of the
physician's own time into the production of physicians' services in
physicians' offices. This category consists of two subcomponents: (1)
Wages and salaries; and (2) fringe benefits.
The physician's PE category represents nonphysician inputs used in
the production of services in physicians' offices. This category
consists of wages and salaries and fringe benefits for nonphysician
staff and other nonlabor inputs. The physician's PE component also
includes the following categories of nonlabor inputs: Office expense;
medical materials and supplies; professional liability insurance;
medical equipment; prescription drugs; and other expenses. The
components are adjusted to reflect productivity growth in physicians'
offices by the 10-year moving average of productivity in the private
nonfarm business sector.
Table 32 presents a listing of the MEI cost categories with
associated weights and percent changes for price proxies for the 2009
update. For CY 2009, the increase in the MEI is 1.6 percent, which
includes a 1.4 percent productivity offset based on the 10-year moving
average of multifactor productivity. This is the result of a 3.6
percent increase in physician's own time and a 2.4 percent increase in
physician's PE. Within the physician's PE, the largest increase
occurred in prescription drugs, which increased 6.0 percent, and
employee benefits, which increased 4.3 percent.

Table 32--Increase in the Medicare Economic Index Update for CY 2009 \1\
------------------------------------------------------------------------
CY 2009
Cost categories and price measures CY 2000 percent
weights \2\ changes
------------------------------------------------------------------------
Medicare Economic Index Total, productivity N/A 1.6
adjusted \3\.................................
Productivity: 10-year moving average of N/A 1.4
multifactor productivity, private nonfarm
business sector \3\......................
Medicare Economic Index Total, without 100.000 3.0
productivity adjustment......................
1. Physician's Own Time \4\............... 52.466 3.6
a. Wages and Salaries: Average Hourly 42.730 3.8
Earnings, private Nonfarm............
b. Fringe Benefits: Employment Cost 9.735 2.7
Index, benefits, private Nonfarm \4\.
2. Physician's Practice Expense \4\....... 47.534 2.4
a. Nonphysician Employee Compensation. 18.653 3.6
(1) Wages and Salaries: Employment 13.808 3.4
Cost Index, wages and salaries,
weighted by occupation...........
(2) Fringe Benefits: Employment 4.845 4.3
Cost Index, fringe benefits,
weighted by occupation...........
b. Office Expense: Consumer Price 12.209 3.1
Index for Urban Areas (CPI-U),
housing..............................
c. Drugs and Medical Materials and 4.319 4.1
Supplies.............................
(1) Medical Materials and 2.011 1.4
Supplies: Producer Price Index
(PPI), surgical appliances and
supplies/CPI-U, medical equipment
and supplies (equally weighted)..
(2) Pharmaceuticals: Producer 2.308 6.0
Price Index (PPI ethical
prescription drugs)..............
d. Professional Liability Insurance: 3.865 -2.7
Professional liability insurance
Premiums \5\.........................
e. Medical Equipment: PPI, medical 2.055 0.5
instruments and equipment............
f. Other Expenses..................... 6.433 2.3
------------------------------------------------------------------------
\1\ The rates of historical change are estimated for the 12-month period
ending June 30, 2008, which is the period used for computing the CY
2009 update. The price proxy values are based upon the latest
available Bureau of Labor Statistics data as of September 5, 2008.
\2\ The weights shown for the MEI components are the 2000 base-year
weights, which may not sum to subtotals or totals because of rounding.
The MEI is a fixed-weight, Laspeyres-type input price index whose
category weights indicate the distribution of expenditures among the
inputs to physicians' services for CY 2000. To determine the MEI level
for a given year, the price proxy level for each component is
multiplied by its 2000 weight. The sum of these products (weights
multiplied by the price index levels) over all cost categories yields
the composite MEI level for a given year. The annual percent change in
the MEI levels is an estimate of price change over time for a fixed
market basket of inputs to physicians' services.
\3\ These numbers may not sum due to rounding and the multiplicative
nature of their relationship.
\4\ The measures of productivity, average hourly earnings, Employment
Cost Indexes, as well as the various Producer and CPIs can be found on
the BLS Web site at http://stats.bls.gov.
\5\ Derived from data collected from several major insurers (the latest
available historical percent change data are for the period ending
second quarter of 2008).

C. The Update Adjustment Factor (UAF)

Section 1848(d) of the Act provides that the PFS update is equal to
the product of the percentage change in the MEI and the update
adjustment factor (UAF). The UAF is applied to make actual and target
expenditures (referred to in the statute as ``allowed expenditures'')
equal. Allowed expenditures are equal to actual expenditures in a base
period updated each year by the sustainable growth rate (SGR). The SGR
sets the annual rate of growth in allowed expenditures and is
determined by a formula specified in section 1848(f) of the Act.
The PFS update is set under a formula specified in section
1848(d)(4) of the Act. Section 101 of the MIEA-TRHCA provided a 1-year
increase in the CY 2007 CF and specified that the CF for CY 2008 must
be computed as if the 1-year increase had never applied. Section 101 of
the MMSEA provided a 6-month increase in the CY 2008 CF, from January
1, 2008, through June 30, 2008, and specified that the CF for the
remaining portion of 2008 and the CFs for CY 2009 and subsequent years
must be computed as if the 6-month increase had never applied. Section
131 of the MIPPA extended the increase in the CY 2008 CF that was
applicable for the first half of the year to the entire year, provided
for a 1.1 percent increase to the CY 2009 CF, and specified that the
CFs for CY 2010 and subsequent years must be computed as if the
increases for CYs 2007, 2008, and 2009 had never applied.
1. Calculation Under Current Law
Under section 1848(d)(4)(B) of the Act, the UAF for a year
beginning with CY 2001 is equal to the sum of the following--
Prior Year Adjustment Component. An amount determined by--
+ Computing the difference (which may be positive or negative)
between

[[Page 69902]]

the amount of the allowed expenditures for physicians' services for the
prior year (the year prior to the year for which the update is being
determined) and the amount of the actual expenditures for those
services for that year;
+ Dividing that difference by the amount of the actual expenditures
for those services for that year; and
+ Multiplying that quotient by 0.75.
Cumulative Adjustment Component. An amount determined by--
+ Computing the difference (which may be positive or negative)
between the amount of the allowed expenditures for physicians' services
from April 1, 1996, through the end of the prior year and the amount of
the actual expenditures for those services during that period;
+ Dividing that difference by actual expenditures for those
services for the prior year as increased by the SGR for the year for
which the UAF is to be determined; and
+ Multiplying that quotient by 0.33.
Section 1848(d)(4)(E) of the Act requires the Secretary to
recalculate allowed expenditures consistent with section 1848(f)(3) of
the Act. Section 1848(f)(3) specifies that the SGR (and, in turn,
allowed expenditures) for the upcoming CY (CY 2009 in this case), the
current CY (that is, CY 2008) and the preceding CY (that is, CY 2007)
are to be determined on the basis of the best data available as of
September 1 of the current year. Allowed expenditures for a year are
initially estimated and subsequently revised twice. The second revision
occurs after the CY has ended (that is, we are making the final
revision to 2007 allowed expenditures in this final rule with comment).
Once the SGR and allowed expenditures for a year have been revised
twice, they are final.
Table 33 shows annual and cumulative allowed and actual
expenditures for physicians' services from April 1, 1996, through the
end of the current CY, including the short periods in 1999 when we
transitioned to a CY system. Also shown is the SGR corresponding with
each period. The calculation of the SGR is discussed in detail below in
this section.

Table 33--Annual and Cumulative Allowed and Actual Expenditures for Physicians' Services from April 1, 1996 Through the End of the Current Calendar Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Cumulative Cumulative
allowed Annual actual allowed actual
Period expenditures expenditures expenditures expenditures FY/CY SGR
($ in ($ in ($ in ($ in
billions) billions) billions) billions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
4/1/96-3/31/97............................... \1\ $48.9 $48.9 $48.9 $48.9 N/A.
4/1/97-3/31/98............................... 50.5 49.5 99.4 98.4 FY 1998 = 3.2%.
4/1/98-3/31/99............................... 52.6 50.8 152.0 149.2 FY 1999 = 4.2%.
1/1/99-3/31/99............................... 13.3 13.2 (\2\) 149.2 FY 1999 = 4.2%.
4/1/99-12/31/99.............................. 42.1 39.7 (\3\) 188.9 FY 2000 = 6.9%.
1/1/99-12/31/99.............................. 55.3 52.9 194.0 188.9 FY 1999/2000.
1/1/00-12/31/00.............................. 59.3 58.4 253.4 247.3 CY 2000 = 7.3%.
1/1/01-12/31/01.............................. 62.0 66.7 315.4 314.1 CY 2001 = 4.5%.
1/1/02-12/31/02.............................. 67.2 71.5 382.6 385.6 CY 2002 = 8.3%.
1/1/03-12/31/03.............................. 72.1 78.8 454.6 464.4 CY 2003 = 7.3%.
1/1/04-12/31/04.............................. 76.8 87.7 531.5 552.1 CY 2004 = 6.6%.
1/1/05-12/31/05.............................. 80.1 92.4 611.5 644.5 CY 2005 = 4.2%.
1/1/06-12/31/06.............................. 81.3 94.1 692.8 738.6 CY 2006 = 1.5%.
1/1/07-12/31/07.............................. 84.1 93.9 776.9 832.4 CY 2007 = 3.5%.
1/1/08-12/31/08.............................. 86.8 94.4 863.7 926.8 CY 2008 = 3.2%.
1/1/09-12/31/09.............................. 93.2 NA 956.9 NA CY 2009 = 7.4%.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Allowed expenditures in the first year (April 1, 1996-March 31, 1997) are equal to actual expenditures. All subsequent figures are equal to
quarterly allowed expenditure figures increased by the applicable SGR. Cumulative allowed expenditures are equal to the sum of annual allowed
expenditures. We provide more detailed quarterly allowed and actual expenditure data on our Web site at the following address: http://www.cms.hhs.gov/SustainableGRatesConFact/ SustainableGRatesConFact/. We expect to update the Web site with the most current information later this month.
\2\ Allowed expenditures for the first quarter of 1999 are based on the FY 1999 SGR.
\3\ Allowed expenditures for the last three quarters of 1999 are based on the FY 2000 SGR.

Consistent with section 1848(d)(4)(E) of the Act, Table 33 includes
our final revision of allowed expenditures for CY 2007, a recalculation
of allowed expenditures for CY 2008, and our initial estimate of
allowed expenditures for CY 2009. To determine the UAF for CY 2009, the
statute requires that we use allowed and actual expenditures from April
1, 1996 through December 31, 2008 and the CY 2009 SGR. Consistent with
section 1848(d)(4)(E) of the Act, we will be making revisions to the CY
2008 and CY 2009 SGRs and CY 2008 and CY 2009 allowed expenditures.
Because we have incomplete actual expenditure data for CY 2008, we are
using an estimate for this period. Any difference between current
estimates and final figures will be taken into account in determining
the UAF for future years.
We note that Table 33 contains updated actual expenditures for each
time period from April 1, 1997 through December 31, 2008. We discovered
that fifteen procedure codes were inadvertently omitted from the
measurement of actual expenditures beginning in 1998. An additional 6
codes were omitted from the measurement of actual expenditures in 2005
and 2006 only, but have been included in actual expenditures since
2007. Therefore, the measurement of actual expenditures for FY 1998 and
each subsequent time period was lower than it should have been. We will
be making no changes to PFS payments made for services furnished prior
to CY 2009. However, under section 1848(d) of the Act, we must include
these codes in the measurement of actual expenditures for historical,
current, and future periods. The inclusion of these additional actual
expenditures will have no effect on the 2009 update. Also, we estimate
that the inclusion of the additional expenditures for these codes will
not increase the number of years that we expect the maximum reduction
in the physician fee schedule update to apply under current law. This
correction is consistent with the actions taken in 2001 when we
discovered that another set of codes inadvertently had not been
included in the measurement

[[Page 69903]]

of actual expenditures (66 FR 55314). As discussed in detail below,
consistent with section 1848(f)(3) of the Act, in this final rule with
comment, we are making our preliminary estimate of the CY 2009 SGR, a
revision to the CY 2008 SGR, and our final revision to the CY 2007 SGR.
All of the inadvertently excluded codes were taken into consideration
for purposes of estimating the SGRs for these 3 years.
We are using figures from Table 33 in the following statutory
formula:
[GRAPHIC] [TIFF OMITTED] TR19NO08.294

UAF09 = Update Adjustment Factor for CY 2009 = -26.6
percent
Target08 = Allowed Expenditures for CY 2008 = $86.8
billion
Actual08 = Estimated Actual Expenditures for CY 2008 =
$94.4 billion
Target 4/96-12/08 = Allowed Expenditures from 4/1/1996-
12/31/2008 = $863.7 billion
Actual 4/96-12/08 = Estimated Actual Expenditures from 4/
1/1996-12/31/2008 = $926.8 billion
SGR09 = 7.4 percent (1.074)
[GRAPHIC] [TIFF OMITTED] TR19NO08.295

Section 1848(d)(4)(D) of the Act indicates that the UAF determined
under section 1848(d)(4)(B) of the Act for a year may not be less than
-0.07 or greater than 0.03. Since -0.266 is less than -0.07, the UAF
for CY 2009 will be -0.07.
Section 1848(d)(4)(A)(ii) of the Act indicates that 1.0 should be
added to the UAF determined under section 1848(d)(4)(B) of the Act.
Thus, adding 1.0 to -0.07 makes the UAF equal to 0.93.

VIII. Allowed Expenditures for Physicians' Services and the Sustainable
Growth Rate (SGR)

A. Medicare Sustainable Growth Rate

The SGR is an annual growth rate that applies to physicians'
services paid by Medicare. The use of the SGR is intended to control
growth in aggregate Medicare expenditures for physicians' services.
Payments for services are not withheld if the percentage increase in
actual expenditures exceeds the SGR. Rather, the PFS update, as
specified in section 1848(d)(4) of the Act, is adjusted based on a
comparison of allowed expenditures (determined using the SGR) and
actual expenditures. If actual expenditures exceed allowed
expenditures, the update is reduced. If actual expenditures are less
than allowed expenditures, the update is increased.
Section 1848(f)(2) of the Act specifies that the SGR for a year
(beginning with CY 2001) is equal to the product of the following four
factors:
(1) The estimated change in fees for physicians' services;
(2) The estimated change in the average number of Medicare fee-for-
service beneficiaries;
(3) The estimated projected growth in real GDP per capita; and
(4) The estimated change in expenditures due to changes in statute
or regulations.
In general, section 1848(f)(3) of the Act requires us to publish
SGRs for 3 different time periods, no later than November 1 of each
year, using the best data available as of September 1 of each year.
Under section 1848(f)(3)(C)(i) of the Act, the SGR is estimated and
subsequently revised twice (beginning with the FY and CY 2000 SGRs)
based on later data. (The Act also provides for adjustments to be made
to the SGRs for FY 1998 and FY 1999. See the February 28, 2003 Federal
Register (68 FR 9567) for a discussion of these SGRs). Under section
1848(f)(3)(C)(ii) of the Act, there are no further revisions to the SGR
once it has been estimated and subsequently revised in each of the 2
years following the preliminary estimate. In this final rule with
comment, we are making our preliminary estimate of the CY 2009 SGR, a
revision to the CY 2008 SGR, and our final revision to the CY 2007 SGR.

B. Physicians' Services

Section 1848(f)(4)(A) of the Act defines the scope of physicians'
services covered by the SGR. The statute indicates that ``the term
physicians' services includes other items and services (such as
clinical diagnostic laboratory tests and radiology services), specified
by the Secretary, that are commonly performed or furnished by a
physician or in a physician's office, but does not include services
furnished to a Medicare+Choice plan enrollee.'' We published a
definition of physicians' services for use in the SGR in the November
1, 2001 Federal Register (66 FR 55316). We defined physicians' services
to include many of the medical and other health services listed in
section 1861(s) of the Act. For purposes of determining allowed
expenditures, actual expenditures, and SGRs, we have specified that
physicians' services include the following medical and other health
services if bills for the items and services are processed and paid by
Medicare carriers (and those paid through intermediaries where
specified) or the equivalent services processed by the Medicare
Administrative Contractors:
Physicians' services.
Services and supplies furnished incident to physicians'
services.
Outpatient physical therapy services and outpatient
occupational therapy services.
Antigens prepared by, or under the direct supervision of,
a physician.
Services of PAs, certified registered nurse anesthetists,
certified nurse midwives, clinical psychologists, clinical social
workers, NPs, and certified nurse specialists.
Screening tests for prostate cancer, colorectal cancer,
and glaucoma.
Screening mammography, screening pap smears, and screening
pelvic exams.
Diabetes outpatient self-management training (DSMT)
services.
MNT services.
Diagnostic x-ray tests, diagnostic laboratory tests, and
other diagnostic tests (including outpatient diagnostic laboratory
tests paid through intermediaries).
X-ray, radium, and radioactive isotope therapy.
Surgical dressings, splints, casts, and other devices used
for the reduction of fractures and dislocations.
Bone mass measurements.
An initial preventive physical exam.

[[Page 69904]]

Cardiovascular screening blood tests.
Diabetes screening tests.
Telehealth services.
Physician work and resources to establish and document the
need for a power mobility device.
Comment: We received over 40 comments from organizations
representing physicians, practitioners, and beneficiaries concerning
the SGR and the physician update. Many commenters expressed relief
that, as a result of the MIPPA, the 0.5 percent update in effect for
the first half of 2008 was extended to the entire year, and the mid-
year 2008 rate reduction of -10.6 percent was retroactively replaced
with the rates in effect from January through June 2008. They were
further relieved that in lieu of the estimated -15 percent update that
would otherwise have applied for 2009, the MIPPA specified a 1.1
percent update for CY 2009. However, these commenters remain concerned
about the estimated negative update for CY 2010 of approximately -21
percent, followed by multiple years of negative physician updates of
approximately -5 percent. Commenters described how they believe the SGR
and update formulas are flawed, and they urged us to work with the
Congress to develop a new methodology. Some commenters suggested using
our administrative authority to lessen the negative impact by removing
drugs from the SGR, accounting for NCDs in the allowed expenditures
targets, and reducing the productivity adjustment to the MEI.
Response: Ultimately, the formula for the SGR and the physician
update are dictated by statute. We are required to follow this
methodology when calculating the payment rates under the PFS. We look
forward to working with the Congress, the physician community, and
other interested parties as we continue to analyze appropriate
alternatives to the current system that could ensure appropriate
payments while promoting high quality care, without increasing Medicare
costs.
Comment: Many commenters emphasized that we must implement the 1.1
percent update using the current 2008 CF as the base rate. Some
requested that we include explanations of the calculations used to
implement the 1.1 percent conversion factor update and how we changed
the application of 5-Year Review BN. Many commenters requested that we
provide examples showing how these changes affect different categories
of services.
Response: Per the MIPPA, the 1.1 percent physician update is
applied to the CY 2008 CF. Later in this section, we explain the
calculations used for the CY 2009 CF, including how we implemented both
the 1.1 percent update and the change in the application of 5-Year
Review BN.
For the impact of these changes by specialty, see the Regulatory
Impact Analysis in section XVI. of this final rule with comment period.
In that section, we also include the overall impact of this final rule
with comment period on selected procedures.

C. Preliminary Estimate of the SGR for 2009

Our preliminary estimate of the CY 2009 SGR is 7.4 percent. We
first estimated the CY 2009 SGR in March 2008, and we made the estimate
available to the MedPAC and on our Web site. Table 34 shows the March
2008 estimate and our current estimates of the factors included in the
CY 2009 SGR.

Table 34--2009 SGR Calculation
------------------------------------------------------------------------
Statutory factors March estimate Current estimate
------------------------------------------------------------------------
Fees............................ 2.1 percent 2.1 percent
(1.021). (1.021).
Enrollment...................... -0.2 percent -0.2 percent
(0.998). (0.998).
Real Per Capita GDP............. 1.8 percent 1.2 percent
(1.018). (1.012).
Law and Regulation.............. -2.9 percent 4.2 percent
(0.971). (1.042).
---------------------------------------
Total....................... 0.7 percent 7.4 percent
(1.007). (1.074).
------------------------------------------------------------------------

Note: Consistent with section 1848(f)(2) of the Act, the
statutory factors are multiplied, not added, to produce the total
(that is, 1.021 x 0.998 x 1.012 x 1.042 = 1.074). A more detailed
explanation of each figure is provided in section VIII.F.1 of this
preamble.

D. Revised Sustainable Growth Rate for 2008

Our current estimate of the CY 2008 SGR is 3.2 percent. Table 35
shows our preliminary estimate of the CY 2008 SGR that was published in
the CY 2008 PFS final rule with comment period (72 FR 66379) and our
current estimate.

Table 35--2008 SGR Calculation
------------------------------------------------------------------------
Estimate from CY
Statutory factors 2008 final rule Current estimate
------------------------------------------------------------------------
Fees............................ 1.9 percent 1.4 percent
(1.019). (1.014).
Enrollment...................... -0.7 percent -3.2 percent
(0.993). (0.968).
Real Per Capita GDP............. 1.7 percent 1.6 percent
(1.017). (1.016).
Law and Regulation.............. -2.9 percent 3.5 percent
(0.971). (1.035).
---------------------------------------
Total....................... -0.1 percent 3.2 percent
(0.999). (1.032).
------------------------------------------------------------------------
A more detailed explanation of each figure is provided in section
VIII.F.2 of this preamble.

E. Final Sustainable Growth Rate for 2007

The SGR for 2007 is 3.5 percent. Table 36 shows our preliminary
estimate of the 2007 SGR from the CY 2007 PFS final rule with comment
period (71 FR 69757), our revised estimate from the CY 2008 PFS final
rule with comment period (72 FR 66380) and the final figures determined
using the best available data as of September 1, 2008.

[[Page 69905]]

Table 36--2007 SGR Calculation
----------------------------------------------------------------------------------------------------------------
Estimate from CY 2006 Estimate from CY 2007
Statutory factors final rule final rule Final
----------------------------------------------------------------------------------------------------------------
Fees................................. 2.2 percent (1.022).... 1.9 percent (1.019).... 2.0 percent (1.020).
Enrollment........................... -0.9 percent (0.991)... -2.6 percent (0.974)... -2.0 percent (0.980).
Real per Capita GDP.................. 2.0 percent (1.020).... 1.9 percent (1.019).... 1.8 percent (1.018).
Law and Regulation................... -1.5 percent (0.985)... 2.0 percent (1.020).... 1.7 percent (1.017).
--------------------------------------------------------------------------
Total............................ 1.8 percent (1.018).... 3.2 percent (1.032).... 3.5 percent (1.035).
----------------------------------------------------------------------------------------------------------------

A more detailed explanation of each figure is provided in section
VIII.F.3. of this final rule.

E. Calculation of 2009, 2008, and 2007 Sustainable Growth Rates

1. Detail on the CY 2009 SGR
All of the figures used to determine the CY 2009 SGR are estimates
that will be revised based on subsequent data. Any differences between
these estimates and the actual measurement of these figures will be
included in future revisions of the SGR and allowed expenditures and
incorporated into subsequent PFS updates.
Factor 1--Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for CY 2009
This factor is calculated as a weighted-average of the CY 2009
changes in fees for the different types of services included in the
definition of physicians' services for the SGR. Medical and other
health services paid using the PFS are estimated to account for
approximately 81.7 percent of total allowed charges included in the SGR
in CY 2009 and are updated using the MEI. The MEI for CY 2009 is 1.6
percent. Diagnostic laboratory tests are estimated to represent
approximately 7.7 percent of Medicare allowed charges included in the
SGR for CY 2009. Medicare payments for these tests are updated by the
Consumer Price Index for Urban Areas (CPI-U), which is 5.0 percent for
CY 2009. However, section 145 of the MIPPA reduces the increase applied
to clinical laboratory tests by 0.5 percent for CY 2009 through CY
2013. Therefore, for CY 2009, diagnostic laboratory tests will receive
an update of 4.5 percent. Drugs are estimated to represent 10.6 percent
of Medicare allowed charges included in the SGR in CY 2009. We
estimated a weighted-average change in fees for drugs included in the
SGR (using the ASP+6 percent pricing methodology) of 3.9 percent for CY
2009.
Table 37 shows the weighted-average of the MEI, laboratory, and
drug price changes for CY 2009.

Table 37--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2009
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician............................... 0.817 1.6
Laboratory.............................. 0.077 4.5
Drugs................................... 0.106 3.9
Weighted-average........................ 1.000 2.1
------------------------------------------------------------------------

We estimate that the weighted-average increase in fees for
physicians' services in CY 2009 under the SGR (before applying any
legislative adjustments) will be 2.1 percent.
Factor 2--The Percentage Change in the Average Number of Part
B Enrollees From CY 2008 to CY 2009
This factor is our estimate of the percent change in the average
number of fee-for-service enrollees from CY 2008 to CY 2009. Services
provided to Medicare Advantage (MA) plan enrollees are outside the
scope of the SGR and are excluded from this estimate. We estimate that
the average number of Medicare Part B fee-for-service enrollees will
decrease by 0.2 percent from CY 2008 to CY 2009. Table 38 illustrates
how this figure was determined.

Table 38--Average Number of Medicare Part B Fee-for-Service Enrollees
From CY 2008 to CY 2009
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2008 2009
------------------------------------------------------------------------
Overall......................... 41.662 million.... 42.425 million.
Medicare Advantage (MA)......... 9.592 million..... 10.431 million.
Net............................. 32.070 million.... 31.995 million.
Percent Increase................ .................. -0.2 percent.
------------------------------------------------------------------------

An important factor affecting fee-for-service enrollment is
beneficiary enrollment in Medicare Advantage (MA) plans. Because it is
difficult to estimate the size of the MA enrollee population before the
start of a CY, at this time we do not know how actual enrollment in MA
plans will compare to current estimates. For this reason, the estimate
may change substantially as actual Medicare fee-for-service enrollment
for CY 2009 becomes known.
Factor 3--Estimated Real Gross Domestic Product per Capita
Growth in 2009
We estimate that the growth in real GDP per capita from CY 2008 to
CY 2009 will be 1.2 percent (based on the

[[Page 69906]]

10-year average GDP over the 10 years of 2000 through 2009). Our past
experience indicates that there have also been changes in estimates of
real per capita GDP growth made before the year begins and the actual
change in GDP computed after the year is complete. Thus, it is possible
that this figure will change as actual information on economic
performance becomes available to us in 2009.
Factor 4--Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2009
Compared With CY 2008
The statutory and regulatory provisions that will affect
expenditures in CY 2009 relative to CY 2008 are estimated to have an
impact on expenditures of 4.2 percent. These include the DRA provision
reducing payments for imaging services, the MMSEA provision regarding
the PQRI bonuses payable in 2009, and the MIPPA provisions regarding
the change in cost sharing for mental health services, the physician
update, and the change in application of BN to the CF. The details of
the MIPPA provisions are discussed in section III. of this final rule
with comment period.
2. Detail on the 2008 SGR
A more detailed discussion of our revised estimates of the four
elements of the 2008 SGR follows.
Factor 1--Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for 2008
This factor was calculated as a weighted-average of the 2008
changes in fees that apply for the different types of services included
in the definition of physicians' services for the SGR.
We estimate that services paid using the PFS account for
approximately 81.9 percent of total allowed charges included in the SGR
in CY 2008. These services were updated using the CY 2008 MEI of 1.8
percent. We estimate that diagnostic laboratory tests represent
approximately 7.7 percent of total allowed charges included in the SGR
in CY 2008. Medicare payments for these tests are updated by the CPI-U.
However, section 628 of the MMA specifies that diagnostic laboratory
tests will receive an update of 0.0 percent from CY 2004 through CY
2008. We estimate that drugs represent 10.4 percent of Medicare-allowed
charges included in the SGR in CY 2008. We estimate a weighted-average
change in fees for drugs included in the SGR of -0.5 percent for CY
2008.
Table 39 shows the weighted-average of the MEI, laboratory, and
drug price changes for CY 2008.

Table 39--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2008
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician............................... 0.819 1.8
Laboratory.............................. 0.077 0.0
Drugs................................... 0.104 -0.5
Weighted-average........................ 1.000 1.4
------------------------------------------------------------------------

After considering the elements described in Table 39, we estimate
that the weighted-average increase in fees for physicians' services in
2008 under the SGR (before applying any legislative adjustments) will
be 1.4 percent. Our estimate of this factor in the CY 2008 PFS final
rule with comment period was 1.9 percent (72 FR 66380). The decrease in
the estimate is due to the availability of some actual data.
Factor 2--The Percentage Change in the Average Number of Part
B Enrollees From CY 2007 to CY 2008
We estimate that the average number of Medicare Part B fee-for-
service enrollees (excluding beneficiaries enrolled in Medicare
Advantage plans) decreased by 3.2 percent in CY 2008. Table 40
illustrates how we determined this figure.

Table 40--Average Number of Medicare Part B Fee-for-Service Enrollees
From CY 2007 to CY 2008
[Excluding beneficiaries enrolled in MA plans]
------------------------------------------------------------------------
2007 2008
------------------------------------------------------------------------
Overall......................... 41.055 million.... 41.662 million.
Medicare Advantage (MA)......... 7.926 million..... 9.592 million.
Net............................. 33.129 million.... 32.070 million.
Percent Increase................ .................. -3.2 percent.
------------------------------------------------------------------------

Our estimate of the -3.2 percent change in the number of fee-for-
service enrollees, net of Medicare Advantage enrollment for CY 2008
compared to CY 2007, is lower than our original estimate of -0.7
percent in the CY 2008 PFS final rule with comment period (72 FR
66381). While our current projection based on data from 8 months of
2008 is lower than our original estimate of -0.7 percent when we had no
actual data, it is still possible that our final estimate of this
figure will be different once we have complete information on CY 2008
fee-for-service enrollment.
Factor 3--Estimated Real Gross Domestic Product per Capita
Growth in CY 2008
We estimate that the growth in real GDP per capita will be 1.6
percent for CY 2008 (based on the 10-year average GDP over the 10 years
of CY 1999 through CY 2008). Our past experience indicates that there
have also been differences between our estimates of real per capita GDP
growth made prior to the year's end and the actual change in this
factor. Thus, it is possible that this figure will change further as
complete actual information on CY 2008 economic performance becomes
available to us in 2009.

[[Page 69907]]

Factor 4--Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2008
Compared With CY 2007
The statutory and regulatory provisions that will affect
expenditures in CY 2008 relative to CY 2007 are estimated to have an
impact on expenditures of 3.5 percent. These include the DRA provision
reducing payments for imaging services, the MIEA-TRHCA provisions
regarding the 2007 PQRI reporting bonuses payable in 2008, and the
MIPPA provisions regarding the physician update and the bonus payments
for mental health services. The details of the MIPPA provisions are
discussed in section III of this final rule with comment period.
3. Detail on the CY 2007 SGR
A more detailed discussion of our final revised estimates of the
four elements of the CY 2007 SGR follows.
Factor 1--Changes in Fees for Physicians' Services (Before
Applying Legislative Adjustments) for 2007
This factor was calculated as a weighted-average of the CY 2007
changes in fees that apply for the different types of services included
in the definition of physicians' services for the SGR.
Services paid using the PFS accounted for approximately 82.8
percent of total Medicare-allowed charges included in the SGR for CY
2007 and are updated using the MEI. The MEI for CY 2007 was 2.1
percent. Diagnostic laboratory tests represented approximately 7.4
percent of total CY 2007 Medicare allowed charges included in the SGR
and are updated by the CPI-U. However, section 628 of the MMA specifies
that diagnostic laboratory tests will receive an update of 0.0 percent
from CY 2004 through CY 2008. Drugs represented approximately 9.7
percent of total Medicare-allowed charges included in the SGR for CY
2007. We estimate a weighted-average change in fees for drugs included
in the SGR of 2.1 percent for 2007. Table 41 shows the weighted-average
of the MEI, laboratory, and drug price changes for CY 2007.

Table 41--Weighted-Average of the MEI, Laboratory, and Drug Price
Changes for CY 2007
------------------------------------------------------------------------
Weight Update
------------------------------------------------------------------------
Physician............................... 0.828 2.1
Laboratory.............................. 0.074 0.0
Drugs................................... 0.097 2.1
Weighted-average........................ 1.000 2.0
------------------------------------------------------------------------

After considering the elements described in Table 41, we estimate
that the weighted-average increase in fees for physicians' services in
CY 2007 under the SGR (before applying any legislative adjustments) was
2.0 percent. This figure is a final one based on complete data for CY
2007.
Factor 2--The Percentage Change in the Average Number of Part
B Enrollees From CY 2006 to CY 2007
We estimate the decrease in the number of fee-for-service enrollees
(excluding beneficiaries enrolled in MA plans) from CY 2006 to CY 2007
was -2.0 percent. Our calculation of this factor is based on complete
data from CY 2007. Table 42 illustrates the calculation of this factor.

Table 42--Average Number of Medicare Part B From CY 2006 to CY 2007
[Excluding beneficiaries enrolled in MA Plans]
------------------------------------------------------------------------
2006 2007
------------------------------------------------------------------------
Overall......................... 40.360 million.... 41.055 million.
Medicare Advantage (MA)......... 6.550 million..... 7.926 million.
Net............................. 33.811 million.... 33.129 million.
Percent Increase................ .................. -2.0 percent.
------------------------------------------------------------------------

Factor 3--Estimated Real Gross Domestic Product per Capita
Growth in 2007
We estimate that the growth in real per capita GDP was 1.8 percent
in 2007 (based on the 10-year average GDP over the 10 years of CY 1998
through CY 2007). This figure is a final one based on complete data for
CY 2007.
Factor 4--Percentage Change in Expenditures for Physicians'
Services Resulting From Changes in Statute or Regulations in CY 2007
Compared With CY 2006
Our final estimate for the net impact on expenditures from the
statutory and regulatory provisions that affect expenditures in CY 2007
relative to CY 2006 is 1.7 percent. These include the DRA provision
reducing payments for imaging services and the MIEA-TRHCA 1-year
adjustment to the CF.

IX. Anesthesia and Physician Fee Schedule Conversion Factors for CY
2009

The CY 2009 PFS CF is $36.0666. The CY 2009 national average
anesthesia CF is $20.9150.

A. Physician Fee Schedule Conversion Factor

The PFS CF for a year is calculated in accordance with section
1848(d)(1)(A) of the Act by multiplying the previous year's CF by the
PFS update. The formula for calculating the PFS update is set forth in
section 1848(d)(4)(A) of the Act. In general, the PFS update is
determined by multiplying the CF for the previous year by the
percentage increase in the MEI times the update adjustment factor
(UAF), which is calculated as specified under section 1848(d)(4)(B) of
the Act. However, section 101 of the MIEA-TRHCA provided a 1-year
increase in the CY 2007 CF and specified that the CF for CY 2008 must
be computed as if the 1-year increase had never applied. Section 101 of
the MMSEA provided a 6-month increase in the CY 2008 CF, from January
1, 2008, through June 30, 2008,

[[Page 69908]]

and specified that the CF for the remaining portion of 2008 and the CFs
for CY 2009 and subsequent years must be computed as if the 6-month
increase had never applied. Section 131 of the MIPPA extended the MMSEA
increase in the CY 2008 CF that was applicable to the first half of the
year to the entire year, provided a 1.1 percent increase to the CY 2009
CF, and specified that the CFs for CY 2010 and subsequent years must be
computed as if the increases for CYs 2007, 2008, and 2009 had never
applied.
If section 101 of the MMSEA had not been enacted, the CY 2008 CF
update would have been -10.1 percent (0.89896), as published in the CY
2008 PFS final rule with comment period (72 FR 66383). For CY 2009, the
percentage increase in the MEI is equal to 1.6 percent (1.016). The UAF
is -7.0 percent (0.930). If section 131 of the MIPPA had not been
enacted, the CY 2009 CF update would have been -15.1 percent, which is
the product of the published CY 2008 update (0.89896), the percentage
increase in the MEI (1.016), and the UAF (0.930).
Section 131 of the MIPPA provided a 1.1 percent increase in the CY
2009 CF. Consistent with section 131 of the MIPPA, the update for CY
2009 is 1.1 percent.
Budget Neutrality Adjustment: Section 133(b) of the MIPPA
Section 1848(c)(2)(B)(i) of the Act requires that we review the
RVUs no less often than every 5 years. Section 1848(c)(2)(B)(ii)(II) of
the Act requires that increases or decreases in RVUs for a year 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 must make adjustments
to preserve BN.
The most recent 5-Year Review of the work RVUs was implemented in
2007 and 2008. We estimated that the 5-Year Review of work RVUs,
including the refinement to the work RVU changes for the additional
codes and the increases in the work of anesthesia services, would
result in a change in expenditures that would exceed $20 million if we
made no offsetting adjustment. In CY 2007, we met the BN requirement by
applying a separate BN adjustment factor to the work RVUs of -10.06
percent. In CY 2008, due to subsequent changes related to the 5-Year
Review of work, the separate BNF for work RVUs was -11.94 percent.
Section 133(b) of the MIPPA requires the Secretary, instead of
continuing to apply the BN adjustment required as a result of the 5-
Year Review of work to the work RVUs, to apply the required BN
adjustment to the CF beginning with CY 2009. Shifting the 11.94 percent
separate work adjustment to the CF requires a reduction to the CF of
6.41 percent (0.9359). (Work RVUs represent slightly over half of PFS
payments; PE and malpractice RVUs comprise the rest.) Payments for the
work portion of the PFS will increase as a result of this change.
However, this increase will be offset in the aggregate by the decrease
to the CF. Therefore, this increase is budget neutral prior to the
interaction with section 5102 of the DRA (see below for a discussion of
the interaction with section 5102 of the DRA.) For the impact by
specialty of section 133(b) of the MIPPA, see the Regulatory Impact
Analysis in section XVI. of this final rule with comment period.
Section 5102(b)(1) of the DRA amended section 1848(b) of the Act
and added paragraph (4), requiring that the payment for the TC of
certain imaging services (including the technical portion of the global
fee) cannot exceed the payment for the same service under the
Outpatient Prospective Payment System (OPPS). In general, if the
payment for these services as calculated using PFS RVUs would exceed
the payment for the same service under the OPPS, we cap the TC of the
PFS payment amount at the OPPS payment amount. Section 5102(a)(3)
amended section 1848(c)(2)(B) of the Act and added clause (v) to exempt
certain reduced expenditures from the BN provision. Section 5102(b)(2)
added subclause (II), which specifically excluded savings generated by
the OPPS imaging services cap from the PFS BN requirement. (For further
discussion of section 5102 of the DRA, see the CY 2007 PFS final rule
with comment period (71 FR 69659).)
The separate work BN adjustor did not impact payment for the TC of
imaging services, since this portion of the service does not have work
RVUs. When the BN adjustment is made to the CF as required under
section 133(b) of MIPPA, however, the adjustment does lower payments
for the TC of imaging services. Because the reduction to the CF lowers
the payments for the TC of imaging services, there are less aggregate
savings resulting from the OPPS payment cap under section 5102 of the
DRA with the BN adjustment to the CF than there are with the separate
work BN adjustment. This is because services will be paid at the OPPS
rate both before and after the application of the BN adjustment,
resulting in no BN savings from these services. We estimate that the
reduction in aggregate savings will be approximately $0.2 billion in
2009. In other words, Medicare expenditures in the aggregate will
increase by $0.2 billion relative to what would have occurred in the
absence of section 133(b) of the MIPPA.
As stated earlier, section 1848(c)(2)(B)(ii)(II) of the Act
requires that increases or decreases in RVUs may not cause the amount
of expenditures for the year to differ by more than $20 million from
what expenditures would have been in the absence of these changes. If
this threshold is exceeded, we must make adjustments to preserve BN. We
estimate that CY 2009 RVU changes would result in a decrease in
Medicare physician expenditures. Therefore, we are increasing the CF by
1.0008 to offset this estimated decrease in Medicare physician
expenditures due to the CY 2009 RVU changes.
We illustrate the calculation of the CY 2009 PFS CF in Table 43.

Table 43--Calculation of the CY 2009 PFS CF
------------------------------------------------------------------------

------------------------------------------------------------------------
CY 2008 Conversion Factor....................... $38.0870.
CY 2009 CF Update............................... 1.1 percent (1.011).
CY 2009 CF Budget Neutrality Adjustment......... 0.08 percent (1.0008).
5-Year Review Budget Neutrality Adjustment...... -6.41 percent
(0.9359).
CY 2009 Conversion Factor....................... $36.0666.
------------------------------------------------------------------------

Payment for services under the PFS will be calculated as follows:
Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.

B. Anesthesia Conversion Factor

We calculate the anesthesia CF in Table 44. Anesthesia services do
not have RVUs like other PFS services. Therefore, we account for any
necessary RVU adjustments through an adjustment to the anesthesia CF to
simulate changes to RVUs. More specifically, if there is an

[[Page 69909]]

adjustment to the work, PE, or malpractice RVUs, these adjustments are
applied to the respective shares of the anesthesia CF as these shares
are proxies for the work, PE, and malpractice RVUs for anesthesia
services.
As explained above, section 133(b) of the MIPPA provided for the
application of the 2007-2008 5-Year work review BN adjustor to the PFS
CF for years beginning with CY 2009. To make this change for the
anesthesia CF, we recalculated the adjustments to the anesthesia CF for
CY 2007 and CY 2008 by removing the BN adjustor for work, which had
been applied to calculate the CF for each of these years. The adjustor
for the work BN is applied as a separate adjustment to the anesthesia
CF as it is similarly applied to the PFS CF. In addition, for the
calculation of the CY 2008 anesthesia CF, we recognized the 32 percent
increase in anesthesia work adopted under the third 5-Year Review of
work. We also applied the adjustments that were made in CY 2007 and CY
2008 for anesthesia PE and anesthesia malpractice. (The anesthesia CFs
shown in the Table 44 for 2007 and 2008 are not the rates used to pay
claims for services furnished in those calendar years, but are
recalculated anesthesia CFs showing the removal of the work BN
adjustor.)

Table 44--Calculation of the CY 2009 Anesthesia Conversion Factor
------------------------------------------------------------------------

------------------------------------------------------------------------
CY 2006 Anesthesia CF................................... $17.7663
2007 Adjustment without BN adjustor..................... 0.9874
CY 2007 Anesthesia CF................................... $17.5424
2007 Adjustment without BN adjustor..................... 1.2528
2008 Legislative Update Factor.......................... 0.5% (1.0050)
CY 2008 Anesthesia CF................................... $22.0871
2009 MIPPA CF Adjustor.................................. 0.9359
2009 MIPAA Update (1.1%)................................ 1.0110
2009 Combined Adjustment to Anesthesia CF............... 1.0008
CY 2009 Anesthesia CF................................... $20.9150
------------------------------------------------------------------------

X. Telehealth Originating Site Facility Fee Payment Amount Update

Section 1834(m) of the Act establishes the payment amount for the
Medicare telehealth originating site facility fee for telehealth
services provided from October 1, 2001, through December 31 2002, at
$20. For telehealth services provided on or after January 1 of each
subsequent calendar year, the telehealth originating site facility fee
is increased by the percentage increase in the MEI as defined in
section 1842(i)(3) of the Act. The MEI increase for 2009 is 1.6
percent.
Therefore, for CY 2009, the payment amount for HCPCS code Q3014,
Telehealth originating site facility fee, is 80 percent of the lesser
of the actual charge or $23.72.
The Medicare telehealth originating site facility fee and MEI
increase by the applicable time period is shown in Table 45.

Table 45--The Medicare Telehealth Originating Site Facility Fee and MEI
Increase by the Applicable Time Period
------------------------------------------------------------------------
MEI increase
Facility fee (percent) Period
------------------------------------------------------------------------
$20.00....................... N/A 10/01/2001-12/31/2002
$20.60....................... 3.0 01/01/2003-12/31/2003
$21.20....................... 2.9 01/01/2004-12/31/2004
$21.86....................... 3.1 01/01/2005-12/31/2005
$22.47....................... 2.8 01/01/2006-12/31/2006
$22.94....................... 2.1 01/01/2007-12/31/2007
$23.35....................... 1.8 01/01/2008-12/31/2008
$23.72....................... 1.6 01/01/2009-12/31/2009
------------------------------------------------------------------------

XI. Payment for Certain Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS)--Services Excluded From Coverage

A. Low Vision Aid Exclusion

1. Background
Section 1862(a)(7) of the Act excludes payment under Medicare Part
A and Part B where ``expenses are for * * * eyeglasses (other than
eyewear described in section 1861(s)(8) of the Act) or eye examinations
for the purpose of prescribing, fitting, or changing eyeglasses,
procedures performed (during the course of any eye examination) to
determine the refractive state of the eyes * * *'' Section 411.15(b)
excludes from coverage, eyeglasses and contact lenses, except for--
Post-surgical prosthetic lenses customarily used during
convalescence for eye surgery in which the lens of the eye was removed
(for example, cataract surgery);
Prosthetic lenses for patients who lack the lens of the
eye because of congenital absence or surgical removal; and
One pair of conventional eyeglasses or conventional
contact lenses furnished after each cataract surgery during which an
intraocular lens is inserted.
From as early as 1980, we have clarified that we viewed closed
circuit visual aid systems and other low vision devices to be subject
to the eyeglass coverage exclusion at section 1862(a)(7) of the Act. On
July 16, 1980, we conveyed from the Acting Director, Office of Coverage
Policy, Bureau of Program Policy, Health Care Financing Administration,
to the Regional Administrator, San Francisco, an example of this
clarification. We stated in a memorandum that closed circuit visual aid
systems, in providing magnification serve the same function as
eyeglasses, coverage of which is specifically excluded by Medicare law

[[Page 69910]]

(section 1862(a)(7) of the Act). This document explained that section
1862(a)(7) of the Act is an overriding statutory coverage exclusion
which would apply even if these devices were determined to meet
Medicare's definition of durable medical equipment. Moreover, the
Medicare Appeals Council has recognized that video magnifiers, or
closed circuit televisions (CCTVs), are subject to the eyeglass
coverage exclusion at section 1862(a)(7) of the Act. However, we have
never issued a regulation or national coverage decision (NCD) that
specifically states that the eyeglass exclusion at section 1862(a)(7)
of the Act applies to low vision aids.
2. Provisions of the Proposed Rule
In the Competitive Acquisition for Certain Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) proposed rule
(hereinafter referred to as the May 1, 2006 proposed rule (71 FR 25654,
at 25659 and 25687)), we proposed to revise Sec. 411.15(b), which
provides certain specific exceptions to the eyeglass coverage
exclusion, to expressly state the scope of the eyeglass exclusion. In
proposing this revision, we were mindful that three United States
District courts found that the Act does not prohibit payment for video
magnifiers. (Collins v. Thompson, No 2:03-cv-265-FtM-29SPC (M.D. Fla.
June 4, 2004); Davidson v. Thompson, No. Civ. 04-32 LFG (D.N.M. 2004);
Currier v. Thompson, 369 F. Supp. 2d 65 (D. Me. 2005)). We also noted
that the Currier case recognized that the statute was ambiguous, and
the Supreme Court has recognized that a prior judicial construction of
an ambiguous statute does not categorically control an agency's
contrary construction (National Cable & Telecommunications Association
v. Brand X Internet Services, 545 U.S. 967, 982 (2005)).
We have a longstanding practice of denying claims for low visions
aids and have stated in both judicial and administrative processes our
position that low vision aids fall within the statutory eyeglass
exclusion. The purpose of this final regulation is not to withdraw
coverage of low vision aids but to codify in regulations our
longstanding practice of not covering these devices.
In the May 1, 2006 proposed rule, we proposed to clarify under
proposed Sec. 411.15(b) that the scope of the eyeglass coverage
exclusion encompasses all devices irrespective of their size, form, or
technological features that use one or more lenses to aid vision or
provide magnification of images for impaired vision. This proposed
regulatory provision would clarify that the statute does not support
the interpretation that the term ``eyeglasses'' only applies to lenses
supported by frames that pass around the nose and ears. The underlying
technology and the function of eyeglasses are to use lenses to assist
persons with impaired vision. Dorland's Illustrated Medical Dictionary
(28th Ed. 1994) defines ``eyeglass'' simply as a ``lens for aiding
sight.'' Low vision aids depend on the use of a lens to aid vision. For
example, computers can use lenses to enlarge print to help individuals
who need visual assistance in reading. The Cleveland Clinic on its Web
site, under the heading of ``Coping with Vision Loss'', lists examples
of popular low vision aids. The examples include telescopic glasses,
lenses that filter light, magnifying glasses, hand magnifiers, close-
circuit television, and reading prisms.
We interpret the eyeglass exclusion at section 1862(a)(7) of the
Act as encompassing all of the various types of devices that use lenses
for the correction of vision unless there is a statutory exception that
allows for coverage, or the existing regulatory exceptions that remain
unchanged at Sec. 411.15(b) allow coverage. For example, section
1861(s)(8) of the Act provides for one pair of conventional eyeglasses
or contact lenses after each cataract surgery with insertion of an
intraocular lens.
We noted that if the term ``eyeglasses'' as used at section
1862(a)(7) of the Act was interpreted to refer only to the exclusion of
payment for lenses supported by frames that pass around the nose and
ears, then the eyeglass exclusion would not apply to contact lenses and
there would have been no reason for the Congress to make an exception
to section 1862(a)(7) of the Act for contact lenses. However, the
Congress enacted the Omnibus Budget Reconciliation Act of 1990 (Pub. L.
101-508) (OBRA 90). Section 4153(b)(2)(B) of the OBRA 90 provides for
an exception to section 1862(a)(7) of the Act that allows coverage of
contact lenses furnished after cataract surgery with the insertion of
an intraocular lens.
Considering sections 1862(a) and 1861(s) of the Act together
indicates that the eyeglass exclusion also applies to contact lenses,
except for contact lenses furnished under the specific conditions noted
in section 1861(s) of the Act, that being, after each cataract surgery
with the insertion of an intraocular lens. By applying the eyeglass
exclusion to contact lenses, we believe that not only does the plain
language of the statute reinforce our interpretation that the exclusion
encompasses the use of any device that uses a lens to aid vision, and
is not limited to just lenses supported by frames that pass around the
nose and ears, but that this interpretation best captures the Congress'
intent.
Also, when referring to ``conventional eyeglasses,'' section
1861(s)(8) of the Act is affirming that the term ``eyeglasses'' has a
wider application than ``conventional eyeglasses'' and the terms
``conventional eyeglasses'' and ``eyeglasses'' are not synonymous in
the statute. Moreover, the statute uses the terms ``eyewear'' and
``contact lenses'' in reference to the eyeglass exclusion, further
suggesting that these terms are not synonymous.
Our interpretation of the term eyeglasses is consistent with the
regulatory language used for the optional benefit in the Medicaid
program under Sec. 440.120(d) for eyeglasses. Section 1905(a)(12) of
the Act defines the term ``medical assistance'' to include eyeglasses
as an optional service. The Medicaid regulations implementing this
section of the statute defines eyeglasses to mean ``lenses, including
frames, and other aids to vision * * * '' Therefore, in setting program
parameters, both Medicaid and Medicare are consistently interpreting in
regulations a statutory reference to eyeglasses as including low vision
aids.
Although the technology of using lenses to aid low vision may
continue to be improved with new innovations, such as contact lenses,
progressive lenses, and low vision aids, this does not exempt the new
technology from the eyeglass exclusion. The adaptation of the vision
aid technology does not change the essential nature of the device: a
video magnifier is a device that utilizes a lens to enhance vision. We
believe this interpretation is consistent with the decision in Warder
v. Shalala, 149 F 3d 73 (1st Cir. 1998), in which the United States
Court of Appeals for the First Circuit held, in part, that the
Secretary's classification of a seating system as DME, even though it
was a technologically advanced seating system, was supported by the
Medicare statute and regulations. In reaching this conclusion, the
Court stated that the Secretary could conclude that the seating system
met the definition of DME, which ``unequivocally includes
`wheelchairs,' '' since the system served the same (as well as
additional) functions as a wheelchair. We believe this case affirms the
principle that the Secretary has the discretion to interpret the
statute and to assign a product to a particular Medicare category even
when

[[Page 69911]]

this will result in non-coverage determinations by Medicare.
3. Public Comments Received on the Proposed Rule
Comment: Several commenters urged that low vision aids should be
covered for individuals with vision loss to help individuals to remain
as independent as possible, to ensure quality of life, to conduct
activities of daily living safely and effectively, and to avoid
placement in assistive living or nursing homes. The commenters believe
the use of prescribed low vision aids would help avoid greater expenses
to the Medicare program due to reduced illnesses, injuries, and loss of
independence. Several commenters indicated that they did not have
sufficient funds to obtain these items without Medicare coverage.
Response: We understand and can appreciate the commenters'
concerns. However, the Medicare statute does not provide for the
coverage of every service or item that may increase an individual's
quality of life or which may provide a medical benefit. For example, in
addition to excluding eyeglasses from coverage, the Act also generally
excludes coverage of dental services, orthopedic shoes, and hearing
aids. We understand that eyeglasses aid individuals in conducting
activities of daily living; however, the Medicare statute makes only
limited exceptions to the statutory eyeglass coverage exclusion, such
as for ``conventional eyeglasses and contact lenses,'' in certain
cases. Moreover, we believe the appropriate regulatory interpretation
of this statutory exclusion is to remain consistent with our
longstanding views, and finalize the proposed regulation without
modification.
Comment: Some commenters stated that the regulation does not rely
on the plain language of the statute. The commenters suggested that
eyeglasses and low vision devices are dissimilar: eyeglasses are
optical systems to aid the vision of a person who essentially has
normal vision, while low vision aids are prosthetic in nature for
persons whose vision is impaired in other ways than refractive error.
The commenters believe that the regulation fails to distinguish between
lenses that correct refractive errors in eyes with normal visual
function and lenses and devices that enlarge images to make them
visible to eyes with subnormal visual function. The commenters also
stated that the regulation is not in accord with certain established
case law, that it conflicts with Congressional intent, and ignores
other Medicare regulations and definitions that could be used to cover
low vision aids as DME or prosthetic devices.
Response: As a general matter, we disagree with the commenters'
concerns raised above. First, we continue to believe that our
interpretation is consistent with the plain language of the Medicare
statute, and alternatively, if the statute is ambiguous to this point,
we believe our interpretation best captures the Congress' intent and is
a reasonable and permissible interpretation.
Second, eyeglasses and low vision aids are not dissimilar, but the
same, in that, they both use lenses to aid poor vision or provide
magnification of images for impaired vision. The operative component of
the eyeglass is the lens because it is the component that provides
visual improvement. It may be useful to consider standard dictionary
definitions of the word ``eyeglass.'' For example, the Webster's Third
New Int. Dictionary (1976) defines ``eyeglass'' to include the eyepiece
of an optical instrument (as in a microscope or telescope). Also, the
Webster's New Collegiate Dictionary (8th Ed, 1979) includes eyepiece as
its first definition for eyeglass. It defines eyepiece as the lens or
combination of lenses at the eye end of an optical instrument.
As can be clearly seen through the dictionary definitions, any type
of eyeglass, conventional or otherwise, is a device used for aiding
sight. Lenses used with low vision aids are for the purpose of
improving vision, as are the lenses used with conventional eyeglasses.
While we understand that some may suggest that a more narrow
reading of the statutory exclusion may be appropriate, we disagree and
believe that our interpretation is a reasonable and permissible
construction of the statutory exclusion, and one that best matches the
Congress' intent.
In addition to the plain language of the Medicare statutory
exclusion itself, language in other sections of the statute further
supports our interpretation. For example, in section 1862(a)(7) of the
Act, the Congress makes an exception to the eyeglass exclusion for
certain conventional eyeglasses and contact lenses used after cataract
surgery. This exception indicates that the eyeglass exclusion applies
to more than lenses in frames worn around the nose and ears. In
referring to the eyeglass exclusion, the Medicare statute uses various
terms, such as eyeglasses, eyewear, conventional eyeglasses and contact
lenses, which strongly indicates that the eyeglass exclusion applies to
more than just conventional eyeglasses. Additional evidence of
Congressional intent regarding the meaning of the term ``eyeglasses''
can be found in the conference report accompanying the original
legislation in 1965 (S. Rep. No. 89-404, 49). Although the original
statutory language referred to eyeglasses, the conference report also
referred to contact lenses, suggesting that the Congress did not intend
to construe the term narrowly.
We also note that there is nothing in either the Medicare statutory
language of the eyeglass coverage exclusion or the accompanying
legislative history to suggest that the exclusion is limited to lenses
used to correct refractive errors or other types of specific visual
problems; rather, it is stated without reference to any particular
types of visual problems.
Additionally, to the extent there is some ambiguity (as noted above
in our discussion of the Currier case, where the court noted that
ambiguity exists with respect to this statutory exclusion and low
vision aids), the Supreme Court recognizes that a prior judicial
construction of an ambiguous statute does not categorically control an
agency's contrary construction. As noted above, we understand that some
may believe a more narrow interpretation would be appropriate in this
instance. We disagree and continue to believe we have interpreted the
Medicare statute in a way that best captures the Congress's intent and
that our interpretation is a reasonable and permissible reading of the
statutory exclusion.
Furthermore, we have followed the necessary procedures set forth
under the Administrative Procedures Act for agencies to follow in
establishing interpretive rules to ensure that this regulatory
clarification of our longstanding Medicare policy has been given the
appropriate consideration and review.
Finally, as noted in more detail below, if an item or service falls
within a benefit category, it must not be otherwise excluded, in order
for coverage to be considered. Thus, whether an item that falls within
the scope of statutory exclusion clarified by this regulation falls
within a defined Medicare benefit category, does not alter the analysis
as to whether the statutory exclusion for eyeglasses may apply.
Comment: Some commenters believe the regulation does not consider
advancements in medical technology and would automatically deny
coverage for any new technology designed to assist individuals with
vision impairments. As a result, the commenters stated this regulation
creates a disincentive for manufacturers

[[Page 69912]]

and innovators to develop new and progressive vision technology.
Response: We disagree with the commenters that this regulation
creates a disincentive for manufacturers and innovators to develop new
and progressive vision technology. As noted above, it is true that new
medical advancements and new technologies in the area of vision
impairment may fall within the scope of the statutory exclusion
clarified in this regulation and coverage may be prohibited under
Medicare.
We do not automatically deny coverage for technologically improved
items or services, instead, as a general matter, we cover
technologically improved items or services if all coverage requirements
are met. Many items, however, are not covered by Medicare, yet the
relevant industries continue to develop and achieve major advancements
in technology. For example, while we do not cover dental services or
hearing aids, there continue to be advances in the furnishing of dental
care and technological advances in the use of hearing aids. In
addition, Medicare has had a longstanding history of not covering low
vision aids, yet, manufacturers continue to make technological
improvements in this area. Moreover, there are existing incentives
beyond Medicare reimbursement that will continue to encourage
manufacturers and innovators to improve vision technology.
Comment: Other commenters believe it is inconsistent and
discriminatory for Medicare to cover wheelchairs to assist individuals
with impaired mobility and not to cover low vision aids to assist
individuals with impaired vision.
Response: In order to be covered under Medicare, an item or service
must fall within one or more benefit categories contained within Part A
or Part B, and must not be otherwise excluded from coverage.
Wheelchairs, which may assist individuals with impaired mobility, fall
within the defined benefit category for durable medical equipment under
section 1861(n) of the Act, and are not otherwise excluded from
coverage under section 1862(a) of the Act. Low vision aids, on the
other hand, are excluded from coverage under section 1862(a)(7) of the
Act and we must comply with this provision.
Comment: Some commenters suggested that CMS allow for a more fully
vetted process prior to any rule for or against low vision aid
coverage.
Response: We are issuing this final regulation in accordance with
the requirements of the Administrative Procedures Act (the APA). On May
1, 2006, we issued a proposed rule that discussed the background and
rationale pertaining to our proposed provisions to apply the eyeglass
coverage exclusion to low vision aids. In accordance with section
1871(b)(1) of the Act, we proposed this regulation pursuant to a 60-day
public comment period. After reviewing and considering the public
comments, relevant case law, and our existing policies on this issue,
we are issuing this final rule without modification. We believe it sets
forth a reasonable and permissible interpretation of the Medicare
statutory eyeglass coverage exclusion.
Comment: Commenters expressed concern that the use of assistive low
vision aids associated with rehabilitative therapy services, which are
identified by Medicare-covered Current Procedural Terminology (CPT)
codes, such as CPT code 97535, would no longer be covered by Medicare
if subjected to the eyeglass exclusion.
Response: Low vision aids are not covered, items based on the
statutory eyeglass exclusion. A practitioner is paid for his or her
professional services. Supplies and instruments used in providing those
services are not paid for separately, rather payment is made based on
the practitioner's PEs.
4. Provisions of the Final Rule
After consideration of the public comments received, we are
finalizing Sec. 411.15(b) without modification.

B. Replacement of Reasonable Charge Methodology by Fee Schedules for
Therapeutic Shoes

We are finalizing proposed Sec. 414.228(c) to codify that the
Medicare fee schedule amounts for therapeutic shoes, inserts, and shoe
modifications are established in accordance with the methodology
specified in sections 1833(o) and 1834(h) of the Act.
Section 627 of the MMA mandated fee schedule amounts for
therapeutic shoes and inserts effective January 1, 2005, calculated
using the prosthetic and orthotic fee schedule methodology in section
1834(h) of the Act. In accordance with section 627 of the MMA, fee
schedule amounts for therapeutic shoes, inserts and shoe modifications
were established and added to the DMEPOS fee schedule through program
instructions, effective January 1, 2005.
In our May 1, 2006 proposed rule (71 FR 25654), we proposed to add
Sec. 414.228(c) to specify that the Medicare fee schedule amounts for
therapeutic shoes, inserts, and shoe modifications are established in
accordance with the methodology specified in sections 1833(o) and
1834(h) of the Act. Section 627 of the MMA amended section 1833(o)(2)
of the Act to require implementation of fee schedule amounts, effective
January 1, 2005, for the purpose of determining payment for custom
molded shoes, extra-depth shoes, and inserts (collectively,
``therapeutic shoes''). Section 627 of the MMA was initially
implemented through program instructions, and on January 1, 2005,
Medicare began paying for therapeutic shoes, inserts, and shoe
modifications based on fee schedule amounts determined in accordance
with section 1834(h) of the Act and 42 CFR part 414, subpart D of our
regulations.
We did not receive any comments on our proposal to add Sec.
414.228(c) to 42 CFR part 414, subpart D of our regulations. Therefore,
we are finalizing proposed Sec. 414.228(c) regarding the methodology
used to establish fee schedule amounts for therapeutic shoes, inserts
and shoe modifications.

XII. Provisions of the Final Rule

The provisions of this final rule with comment period restate the
provisions of the CY 2009 PFS proposed rule, except as noted elsewhere
in the preamble.

XIII. Waiver of Proposed Rulemaking and Delay in Effective Date

We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and
substances of the proposed rule or a description of the subjects and
issues involved. This procedure can be waived, however, if an agency
finds good cause that a notice-and-comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
We utilize HCPCS codes for Medicare payment purposes. The HCPCS is
a national drug coding system comprised of Level I (CPT) codes and
Level II (HCPCS National Codes) that are intended to provide uniformity
to coding procedures, services, and supplies across all types of
medical providers and suppliers. Level I (CPT) codes are copyrighted by
the AMA and consist of several categories, including Category I codes
which are 5-digit numeric codes, and Category III codes which are
temporary codes to track emerging technology, services, and procedures.

[[Page 69913]]

The AMA issues an annual update of the CPT code set each Fall, with
January 1 as the effective date for implementing the updated CPT codes.
The HCPCS, including both Level I and Level II codes, is similarly
updated annually on a CY basis. Annual coding changes are not available
to the public until the Fall immediately preceding the annual January
update of the PFS. Because of the timing of the release of these new
codes, it is impracticable for CMS to provide prior notice and solicit
comment on these codes and the RVUs assigned to them in advance of
publication of the final rule that implements the PFS. Yet, it is
imperative that these coding changes be accounted for and recognized
timely under the PFS for payment because services represented by these
codes will be provided to Medicare beneficiaries by physicians during
the CY in which they become effective. Moreover, regulations
implementing HIPAA (42 CFR parts 160 and 162) require that the HCPCS be
used to report health care services, including services paid under the
PFS. We also assign interim RVUs to any new codes based on a review of
the RUC recommendations for valuing these services. By reviewing these
RUC recommendations for the new codes, we are able to assign RVUs to
services based on input from the medical community and to establish
payment for them, on an interim basis, that corresponds to the relative
resources associated with furnishing the services. If we did not assign
RVUs to new codes on an interim basis, the alternative would be to
either not pay for these services during the initial CY or have each
carrier establish a payment rate for these new codes. We believe both
of these alternatives are contrary to the public interest, particularly
since the RUC process allows for an assessment of the valuation of
these services by the medical community prior to our establishing
payment for these codes on an interim basis. Therefore, we believe it
would be contrary to the public interest to delay establishment of fee
schedule payment amounts for these codes.
For the reasons outlined above in this section, we find good cause
to waive the notice of proposed rulemaking for the interim RVUs for
selected procedure codes identified in Addendum C and to establish RVUs
for these codes on an interim final basis. We are providing a 60-day
public comment period.
Section IV.C. of this final rule with comment discusses the
identification and review of 204 potentially misvalued codes by a
workgroup of the AMA RUC, as well as our review and decisions regarding
the AMA RUC workgroup's recommendations. The AMA RUC submitted several
recommendations for misvalued codes in May 2008 and the remainder of
their recommendations for misvalued codes in October 2008. Due to the
timing of the May 2008 AMA RUC recommendations, it was impracticable
for CMS to adequately evaluate and solicit public comment prior to this
final rule with comment period. We believe it is in the public interest
to implement the revised RVUs for the 61 codes that were identified as
misvalued, and that have been reviewed and re-evaluated by the AMA RUC
workgroup, on an interim final basis for CY 2009. These revisions will
establish a more appropriate payment for these services, some of which
changed significantly since they were originally valued. The revisions
of RVUs for these codes will establish a more appropriate payment that
better corresponds to the relative resources associated with furnishing
these services. A delay in implementing revised values for these
misvalued codes would not only perpetuate the known misvaluation for
these services, it would also perpetuate a distortion in the payment
for other services under the PFS. Implementing the changes now allows
for a more equitable distribution of payments across all PFS services.
We believe a delay in implementation of these revisions would be
contrary to the public interest, particularly since the AMA RUC process
allows for an assessment of the valuation of these services by the
medical community prior to the AMA RUC's recommendation to CMS.
For the reasons described above, we find good cause to waive notice
and comment procedures with respect to the misvalued codes identified
in Table 26, and to revise RVUs for these codes on an interim final
basis. We are providing a 60-day public comment period.
Sections III. and VI.B. of this final rule with comment period also
address certain provisions of the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) which became law
after publication of the CY 2009 PFS proposed rule. Except as noted
further below, we consider these provisions to be self-implementing. We
are revising our policies and regulations as described in this final
rule with comment period in order to conform them to the statutory
amendments. Because these revisions are in accordance with explicit
statutory amendments, we find that notice and comment procedures are
unnecessary for their implementation. Therefore, we find good cause to
waive notice and comment procedures with respect to the changes in
policy and regulations to effectuate the self-implementing provisions
of the MIPPA as described in this final rule with comment period.
Section 131(c) of the MIPPA requires the Secretary to implement a
Physician Feedback Program no later than January 1, 2009. Under the
program, the Secretary must use claims data to provide confidential
reports to physicians that measure resources involved in furnishing
care to individuals (and, if determined appropriate, the reports can
also include information about the quality of care furnished). Although
this provision is self-implementing in certain respects, especially
given that many elements of this program are already in place as a
result of our previous data analysis and reporting efforts, we would
ordinarily engage in notice and comment rulemaking to establish other
aspects of this program. To the extent this provision is not self-
implementing, we find good cause to waive notice and comment rulemaking
because it would be contrary to the public interest to delay
implementation of this program. Moreover, we note that the confidential
feedback reporting will serve informational purposes and will not
affect any rights or obligations under the Medicare program.
Section 144(b) of the MIPPA repeals the requirement that an oxygen
supplier transfer title to oxygen equipment to the beneficiary after a
36-month rental period. In its place, section 144(b) of the MIPPA
establishes a 36-month rental cap and sets forth new rules for
furnishing oxygen and oxygen equipment after the 36-month period. The
current oxygen payment regulations reflect the previous transfer of
title requirements, and we are revising these rules to reflect the
changes set forth in section 144(b) of the MIPPA.
These changes are largely self-implementing. Section
1834(a)(5)(F)(ii)(I) of the Act, as amended by MIPPA, requires
suppliers to continue to furnish oxygen equipment following the 36-
month rental period, and section 1834(a)(5)(F)(ii)(II) of the Act
mandates continued Medicare payments for oxygen contents following the
36-month rental period. When read in conjunction with section
1834(a)(5)(F)(ii)(II) of the Act, we interpret the mandate in section
1834(a)(5)(F)(ii)(I) of the Act to include oxygen contents, as well as
oxygen equipment, given the nature of this benefit and the requirement
that Medicare continue to pay for oxygen contents following the 36-
month rental

[[Page 69914]]

period. To the extent these subsections are not self-implementing, we
find good cause to waive notice and comment rulemaking as contrary to
the public interest, because timely implementation of these provisions
is necessary to ensure that beneficiaries' oxygen treatment--which for
many beneficiaries includes both oxygen equipment and contents--
continues uninterrupted after January 1, 2009.
Subsection 1834(a)(5)(F)(ii)(III) of the Act, as amended by MIPPA,
authorizes payments for maintenance and servicing of oxygen equipment
furnished after the 36-month rental period if the Secretary determines
such payments are reasonable and necessary. As set forth in section
III. J. of this preamble, we have determined that certain routine
maintenance and servicing payments are reasonable and necessary to
protect Medicare beneficiaries from malfunctioning oxygen equipment.
For the reasons described above, we believe the completion of
notice and comment rulemaking would prevent the timely implementation
of payment for certain maintenance and servicing of oxygen equipment
that we have determined to be necessary for the safe use of oxygen
equipment by Medicare beneficiaries, and that any such delay would be
contrary to the public interest. Therefore, we find good cause to waive
the notice of proposed rulemaking with respect to implementation of
subsection 1834(a)(5)(F)(ii)(III) of the Act.
Section 149 of the MIPPA amended section 1834(m)(4)(C)(ii) of the
Act to add certain entities as originating sites for purposes of
Medicare telehealth services effective January 1, 2009: A hospital-
based or critical access hospital-based (CAH-based) renal dialysis
center (including satellites); a skilled nursing facility (as defined
in section 1819(a) of the Act); and a community mental health center
(as defined in section 1861(ff)(3)(B) of the Act). Section 149 of the
MIPPA also amended section 1888(e)(2)(A)(ii) of the Act to exclude
telehealth services furnished under section 1834(m)(4)(C)(ii)(VII) of
the Act from the consolidated billing provisions of the skilled nursing
facility prospective payment system (SNF PPS). Apart from adding
certain entities as originating sites for payment of telehealth
services, section 149 of the MIPPA did not change the existing
telehealth eligibility criteria, or payment and billing requirements
related to telehealth services. Thus, the new authority for these
entities to serve as originating sites for Medicare telehealth services
is largely self-implementing. However, there are some operational and
payment issues that arise as to which we would ordinarily engage in
notice and comment rulemaking. In section III. M. of this final rule
with comment period, we describe certain limitations on the types of
services for which a Medicare telehealth payment will be made when
these entities serve as the originating site. These requirements are
similar to those in place under current policies for the existing list
of telehealth originating sites, but are also tailored to address the
particular characteristics of the newly added originating sites. It is
necessary to address these requirements in a timely manner in order to
avoid potential duplicate billing and payment, and to ensure that
facilities appropriately furnish the requisite scope of services for
which payment is included in their bundled or prospective payment. For
the reasons described above, we believe that completion of notice and
comment rulemaking prior to adopting these policies would delay timely
implementation of policies that are important to quality care and
program integrity. Therefore, to the extent these requirements are not
self-implementing, we find good cause to waive notice and comment
rulemaking as a delay in implementation would be contrary to the public
interest.
As detailed above in this section, we are implementing certain
aspects of sections 131(c), 144(b), and 149 of the MIPPA as described
in sections III.C., III.J., and III.M. (respectively) of this final
rule with comment period on an interim final basis for CY 2009, and
include a 60-day comment period.

XIV. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information (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.
The collection of information section for this final rule with
comment period contains the discussion of the information collection
requirements as it appeared in the CY 2008 PFS proposed rule (73 FR
38502), with updated information included as necessary. In addition, we
have included a new discussion of the information collection
requirements associated with the Electronic Prescribing (E-Prescribing)
Incentive Program, as detailed in section II.O2. of the preamble of
this final rule with comment period.

A. ICRs Regarding Independent Diagnostic Testing Facility (Sec.
410.33)

Section 410.33(j) initially proposed that a physician or
nonphysician practitioner organization furnishing diagnostic testing
services, except diagnostic mammography services, must enroll as an
IDTF for each practice location furnishing these services. However, we
have removed this requirement and the associated paperwork burden from
this final rule with comment period.
For mobile units furnishing diagnostic testing services that are
not enrolled in the Medicare program to enroll in the program, they
must complete a Medicare enrollment application, the CMS-855B, and
attachment 2 of the enrollment application. 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. We believe that most of these mobile entities are already
enrolled as IDTFs, as required in Sec. 410.33(g).
However, we have no way to accurately quantify the burden because
we cannot estimate the number of this type of requests that we may
receive. We did not receive any public comments to assist us in our
burden analysis. We also recognize that we will not be able to
determine the number of the IDTFs that are billing only under
arrangement with a hospital. Therefore, while we acknowledge that there
is a burden associated with this provision, we also acknowledge that we
have no way to quantify this provision's burden. For that reason, we
are assigning 1 token burden hour to this requirement until such a time
that we can conduct an accurate burden analysis for this information
collection requirement.

[[Page 69915]]

B. ICRs Regarding Exception to the Referral Prohibition Related to
Compensation Arrangements (Sec. 411.357)

As discussed in section II.N.1. of the preamble of this final rule
with comment period, we are not finalizing the exception for incentive
payment and shared savings programs contained in Sec. 411.357(x).
Consequently, we have removed all discussion of the associated
information collection requirements.

C. ICRs Regarding Dispute Resolution and Process for Suspension or
Termination of Approved CAP Contract and Termination or Physician
Participation Under Exigent Circumstances (Sec. 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.
In section II.F.2 of this final rule with comment period, we
discuss the postponement of the CAP for CY 2009.

D. ICRs Regarding Additional Provider and Supplier Requirements for
Enrolling and Maintaining Active Enrollment Status in the Medicare
Program (Sec. 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 Sec. 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 Sec.
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 Sec.
424.516(d) through (e) is the time and effort necessary to report the
applicable information to CMS. These provisions change the reporting
timeframes for the actions but not the burden associated with the
requirement. 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 Sec. 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 7 years from the date of
service. As discussed in Section II.I.5 of this final rule with comment
period, we are not adopting the proposed record retention requirement
of 10 years from the date of service. Physicians and NPPs are currently
required to maintain written ordering and referring documentation for 7
years from the date of service within the CMS Program Integrity Manual.
The burden associated with these recordkeeping requirements is the time
and effort associated with maintaining the aforementioned documentation
for 7 years, which is merely the codification of the requirements that
already exist. 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 46--Estimated Annual Reporting and Recordkeeping Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
OMB control Burden per Total annual
Regulation section(s) number Respondents Responses response (hours) burden (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 410.33............................................ 0938-0685 400,000 400,000 2.5 1,001,503
----------------------------------------------------------------------------------------------
Total................................................ ................. 400,000 400,000 2.5 1,001,503
--------------------------------------------------------------------------------------------------------------------------------------------------------

This final rule with comment period imposes COI requirements as
outlined in the regulation text and specified above. However, this rule
also makes reference to several associated information collections that
are not discussed in the regulation text which have already received
OMB approval.
These include the following:
Part B Drug Payment
Section II.F.1 of the preamble of this final rule with comment
period 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 final rule with comment period 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 June 30, 2011,
respectively.
Physician Quality Reporting Initiative (PQRI)
Section II.O1. of this final rule with comment period discusses the
background of the PQRI 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. We are requesting OMB's emergency review and approval of the
information collections referenced below. Emergency review and approval
is necessary to meet the statutory effective date of January 1, 2009.

[[Page 69916]]

As stated in section II.O1.a.ii., eligible professionals include
physicians, other practitioners as described in section 1842(b)(18)(c)
of the Act, physical and occupational therapists, qualified speech-
language pathologists, and qualified audiologists. Eligible
professionals may choose whether to participate and, to the extent they
satisfactorily submit data on quality measures for covered professional
services, they can qualify to receive an incentive payment. To qualify
to receive an incentive payment for 2009, the eligible professional
must meet one of the criteria for satisfactory reporting described in
section II.O1.b. of the preamble.
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. We have no way to accurately
quantify the burden because it would vary with each eligible
professional by the number of measures applicable to the eligible
professional, the eligible professional's familiarity and understanding
of the PQRI, and experience with participating in the PQRI. In
addition, eligible professionals may employ different methods for
incorporating the use of quality data codes into the office work flows.
Therefore, we will assign 3 hours as the amount of time needed for
eligible professionals to review the PQRI quality measures, identify
the applicable measures for which they can report the necessary
information, and incorporate the use of quality data codes into the
office work flows. Information from the Physician Voluntary Reporting
Program (PVRP) indicated an average labor cost of $50 per hour. Thus,
we estimate the cost for an eligible professional to review the PQRI
quality measures, identify the applicable measures for which they can
report the necessary information, and incorporate the use of quality
data codes into the office work flows to be approximately $150 per
eligible professional ($50 per hour x 3 hours). We expect the ongoing
costs associated with PQRI participation to decline based on an
eligible professional's familiarity with and understanding of the PQRI,
experience with participating in the PQRI, and increased efforts by CMS
and stakeholders to disseminate useful educational resources and best
practices.
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. Preliminary results from the 2007
PQRI (the first year of PQRI reporting) indicate that of approximately
619,000 unique individual eligible professionals, approximately 101,000
unique individual eligible professionals, or 16 percent, attempted to
submit PQRI quality measures data in 2007. Therefore, for purposes of
conducting a burden analysis for the 2009 PQRI, we will assume that all
eligible professionals who attempted to participate in the 2007 PQRI
will also attempt to participate in the 2009 PQRI.
Moreover, the time needed for an eligible professional to review
the quality measures and other information, select measures applicable
to his or her patients and the services he or she furnishes to them,
and incorporate the use of quality data codes into the office work
flows is expected to vary along with the number of measures that are
potentially applicable to a given professional's practice. Since
eligible professionals are generally required to report on at least 3
measures to earn a PQRI incentive, we will assume that each eligible
professional who attempts to submit PQRI quality measures data is
attempting to earn a PQRI incentive payment and that each eligible
professional reports on an average of 3 measures for this burden
analysis.
Based on our experience with the PVRP, we estimate that the time
needed to perform all the steps necessary to report each measure (that
is, reporting the relevant quality data code(s) for a measure) on
claims ranges from 15 seconds (0.25 minutes) to over 12 minutes for
complicated cases and/or measures, with the median time being 1.75
minutes. Information from the PVRP indicates that the cost associated
with this burden ranges from $0.21 in labor time to about $10.06 in
labor time for more complicated cases and/or measures, with the cost
for the median practice being $0.90.
The total estimated annual burden for this requirement will also
vary along with the volume of claims on which quality data are
reported. Preliminary results from the 2007 PQRI indicate that eligible
professionals reported on 1 to 3,331 eligible instances per measure.
For all 2007 PQRI measures, the median number of eligible instances
reported on per measure was less than 60. On average, the median number
of eligible instances reported on per measure was about 9. Therefore,
for this burden analysis, we estimate for each measure on which an
eligible professional reports, the eligible professional reports the
quality data on 9 cases.
Based on the assumptions discussed above, we estimate the total
annual burden per eligible professional associated with claims-based
reporting to range from 186.75 minutes, or 3.1 hours [(0.25 minutes per
measure x 3 measures x 9 cases per measure) + 3 hours] to 504 minutes,
or 8.4 hours [(12 minutes per measure x 3 measures x 9 cases per
measure) + 3 hours]. We estimate the total annual cost per eligible
professional associated with claims-based reporting to range from
$155.67 [($0.21 per measure x 3 measures x 9 cases per measure) + $150]
to $421.62 [($10.06 per measure x 3 measures x 9 cases per measure) +
$150].
For registry-based reporting, there would be no additional burden
for eligible professionals to report data to a registry as eligible
professionals 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.
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

[[Page 69917]]

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.
We are not finalizing our proposal to allow eligible professionals
to submit clinical quality data extracted from electronic health
records (EHRs) for purposes of receiving an incentive payment for the
2009 PQRI.
The Electronic Prescribing (E-Prescribing) Incentive Program
It is impossible to estimate with any degree of accuracy how many
eligible professionals will opt to participate in the e-prescribing
incentive program in CY 2009. However, if we assume that every eligible
professional who attempted to participate in the 2007 PQRI will also
attempt to participate in the 2009 E-Prescribing Incentive Program,
then we can estimate that approximately 101,000 unique individual
eligible professionals will participate in the 2009 E-Prescribing
Incentive Program.
Section II.O2. of the preamble discusses the background of a new
incentive program that is available to eligible professionals in
addition to the PQRI. This incentive program is known as the e-
prescribing incentive program. Section II.O2. of the preamble provides
information on how eligible professionals can qualify to be considered
a successful electronic prescriber in 2009 in order to earn an
incentive payment. Similar to the PQRI, the e-prescribing incentive
program is a voluntary initiative. Eligible professionals may choose
whether to participate and, to the extent they meet (1) certain
thresholds with respect to the volume of covered professional services
furnished and (2) the criteria to be considered a successful electronic
prescriber described in section II.O2. of this final rule with comment
period, they can qualify to receive an incentive payment.
Similar to claims-based reporting for the PQRI, we estimate the
burden associated with the requirements of this new incentive program
is the time and effort associated with eligible professionals
determining whether the quality measure is applicable to them,
gathering the required information, selecting the appropriate quality
data codes, and including the appropriate quality data codes on the
claims they submit for payment. Since the e-prescribing program
consists of only 1 quality measure, we will assign 1 hour as the amount
of time needed for eligible professionals to review the e-prescribing
measure and incorporate the use of quality data codes into the office
work flows. At an average cost of approximately $50 per hour, we
estimate the total cost to eligible professionals for reviewing the e-
prescribing measure and incorporating the use of quality data codes
into the office work flows to be approximately $50 ($50 per hour x 1
hour).
The quality-data codes will be collected as additional (optional)
line items on the existing HIPAA transaction 837-P and/or CMS Form
1500. We do not anticipate any new forms and no modifications to the
existing transaction or form. We also do not anticipate changes to the
837-P or CMS Form 1500 for CY 2009. Based on our experience with the
PVRP described above, we estimate that the time needed to perform all
the steps necessary to report the e-prescribing measure to be 1.75
minutes. We also estimate the cost to perform all the steps necessary
to report the e-prescribing measure to be $0.90 based on the experience
with the PVRP described above.
The total estimated annual burden for this requirement will also
vary along with the volume of claims on which quality data is reported.
Based on preliminary results from the 2007 PQRI described above and the
fact that the measure's denominator consists of only billing codes for
professional services, we estimate that each eligible professional
reports the quality data on 60 cases for the e-prescribing measure.
Therefore, we estimate the total annual burden per eligible
professional associated with claims-based reporting of the e-
prescribing measure to be 165 minutes, or 2.75 hours [(1.75 minutes per
measure x 1 measure x 60 cases per measure) + 1 hour]. The total
estimated cost per eligible professional to report the e-prescribing
measure is estimated to be $104 [($0.90 per measure x 1 measure x 60
cases per measure) + $50].
If you choose to comment on these information collection and record
keeping requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Division of Regulations Development,
Attn.: William Parham, CMS-1403-FC, Room C5-14-03, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
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-FC, Fax (202) 395-6974.

XV. 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.

XVI. Regulatory Impact Analysis

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, directs agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
As indicated in more detail below in this regulatory impact analysis,
we estimate that the PFS provisions included in this final rule with
comment period will redistribute more than $100 million in 1 year.
Therefore, we estimate that this rulemaking is ``economically
significant'' as measured by the $100 million threshold, and hence also
a major rule under the Congressional

[[Page 69918]]

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
$7 million to $34.5 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 $7
million or less based on SBA size standards. 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.
For purposes of the RFA, approximately 85 percent of suppliers of
durable medical equipment, prosthetics, orthotics and supplies (DMEPOS)
are considered small businesses according to the Small Business
Administration's (SBA) size standards. We estimate that approximately
66,000 entities bill Medicare for DMEPOS each year. Total annual
estimated Medicare revenues for DMEPOS suppliers are approximately
$10.8 billion in 2007 for which $8.3 billion was for fee-for-service
and $2.5 billion was for managed care. However the therapeutic shoe,
oxygen and oxygen equipment, and low vision aids provisions in this
rule do not have a significant economic impact on a substantial number
of small entities. In the case of therapeutic shoes, the regulation is
being updated to reflect the fact that fee schedules were implemented
on January 1, 2005, in accordance with the requirements of MMA section
627. Since the fees themselves are not impacted by this change,
suppliers are likewise not impacted by this change. In the case of
oxygen and oxygen equipment, as explained in section S.9. below, it is
difficult to estimate the impact of section 144(b) of the MIPPA on
small entities and oxygen and oxygen equipment suppliers in general.
Nevertheless, we do believe that the net impact on small entities and
other suppliers of oxygen and oxygen equipment will be positive rather
than negative. This is based on the fact that this change allows
suppliers to retain ownership of oxygen equipment in all cases when it
is no longer needed by the beneficiary. Prior to this change, suppliers
were required to relinquish ownership of oxygen equipment after 36
continuous rental months. While suppliers will be required to continue
furnishing the equipment after the 36-month rental period for up to 2
additional years in some cases until the 5 year reasonable useful
lifetime of the equipment ends, they will retain ownership of equipment
when it is no longer needed and can furnish the equipment to other
patients. Although suppliers will not be paid for non-routine
maintenance or repair of oxygen equipment they own and furnish to
Medicare beneficiaries, the equipment itself is very dependable and
requires very little maintenance and servicing, so this change should
not significantly impact suppliers. As previously noted, approximately
78 percent of Medicare beneficiaries that need oxygen do not use the
oxygen equipment for more than 36 months. The changes mandated by
section 144(b) of the MIPPA will have no impact on suppliers or
beneficiaries in these cases.
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. Ambulance providers and
suppliers for purposes of the RFA are also considered to be small
entities.
In addition, most ESRD facilities are considered small entities for
purposes of the RFA, either based on nonprofit status or by having
revenues of $7 million to $34.5 million or less in any year. We
consider a substantial number of entities to be significantly affected
if the final rule with comment period has an annual average impact on
small entities of 3 to 5 percent or more. 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
changes to payment for renal dialysis services included in this final
rule with comment period for nonprofit facilities will have a 0.7
percent decrease in overall payments relative to current overall
payments. The majority of ESRD facilities will 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 XVI.F. of this
final rule with comment period 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 rule
constitutes our final regulatory flexibility analysis for the remaining
provisions and addresses comments received on these issues.
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 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside a metropolitan
statistical area and has fewer than 100 beds. We have determined that
this final rule with comment period will have minimal impact on small
hospitals located in rural areas. Of the 196 hospital-based ESRD
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 final rule with comment
period will not mandate any requirements for State, local, or tribal
governments. Medicare beneficiaries are considered to be part of the
private

[[Page 69919]]

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 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.
Section 1860D-4(e)(5) provides:
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 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 final
rule with comment period 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 final rule with comment period; details the costs and benefits of
the rule; analyzes alternatives; and presents the measures we will use
to minimize the burden on small entities. As indicated elsewhere in
this rule, we are implementing a variety of changes to our regulations,
payments, or payment policies to ensure that our payment systems
reflect changes in medical practice and the relative value of services.
We provide information for each of the policy changes in the relevant
sections of this final rule with comment period. We are unaware of any
relevant Federal rules that duplicate, overlap, or conflict with this
final rule with comment period. The relevant sections of this rule
contain a description of significant alternatives if applicable.

A. RVU Impacts

1. Resource-Based Work 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 BN.
Section 133(b) of the MIPPA requires an alternative application of
the BN adjustment that resulted from the 5-Year Review of Work RVUs.
The 0.8806 percent BN adjustment that is currently being applied to the
work RVUs will be removed from the work RVUs and applied to the
physician CF (See the CY 2008 PFS final rule with comment period (72 FR
66389) for further discussion of the BN adjustment that resulted from
the 5-Year Review of Work RVUs). See sections III.E. and VII. of this
final rule with comment period for more information on the provisions
of section 133(b) of the MIPPA. The effect of this change on selected
procedures is shown in Table 50.
Table 47 shows the specialty-level impact of the work and PE RVU
changes.
Our estimates of changes in Medicare revenues for PFS services
compare payment rates for CY 2008 with payment rates for CY 2009 using
CY 2007 Medicare utilization for all years. To the extent that there
are year-to-year changes in the volume and mix of services provided by
physicians, the actual impact on total Medicare revenues will be
different than those shown in Table 47. 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 47 shows only the payment impact on PFS services. The
following is an explanation of the information represented in Table 47.
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
deductibles (which are the financial responsibility of the
beneficiary). These amounts have been summed across all services
furnished by physicians, practitioners, or suppliers within a specialty
to arrive at the total allowed charges for the specialty.
Impact of Work RVU Changes for any new or revised CY 2009
PFS services.
Impact of PE RVU changes. The impact is shown for both
2009 which is the third year of the 4-year transition using the new
methodology and the fully implemented 2010 PE RVUs.
Combined impact of the work RVUs and PE RVUs for both 2009
and the fully implemented 2010 PE RVUs.

Table 47--Combined Total Allowed Charge Impact for Work and Practice Expense RVU Changes
----------------------------------------------------------------------------------------------------------------
Impact of Impact of PE RVU changes Combined impact of PE
work RVU -------------------------- and work changes *
changes -------------------------
Specialty Allowed ------------- 2009 (PE 2010 (PE 2009 (PE 2010 (PE
charges (mil) trans. year full trans. year full
2009 3) implement.) 3) implement.)
(percent) (percent) (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
1 TOTAL........................ $81,669 0 0 0 0 0
2 ALLERGY/IMMUNOLOGY........... 184 0 1 2 1 2
3 ANESTHESIOLOGY............... 1,966 0 -1 -1 -1 -1

[[Page 69920]]

4 CARDIAC SURGERY.............. 400 0 0 0 0 0
5 CARDIOLOGY................... 7,775 0 -2 -3 -2 -4
6 COLON AND RECTAL SURGERY..... 136 0 1 1 0 1
7 CRITICAL CARE................ 224 0 0 0 0 0
8 DERMATOLOGY.................. 2,557 0 2 5 2 5
9 EMERGENCY MEDICINE........... 2,451 0 0 0 0 0
10 ENDOCRINOLOGY............... 385 0 0 0 0 0
11 FAMILY PRACTICE............. 5,354 0 0 1 0 1
12 GASTROENTEROLOGY............ 1,883 0 2 3 2 3
13 GENERAL PRACTICE............ 842 0 0 0 0 0
14 GENERAL SURGERY............. 2,408 0 0 1 1 1
15 GERIATRICS.................. 175 0 0 1 0 1
16 HAND SURGERY................ 88 0 -1 -2 -1 -2
17 HEMATOLOGY/ONCOLOGY......... 2,019 0 -1 -1 -1 -1
18 INFECTIOUS DISEASE.......... 561 0 1 2 1 2
19 INTERNAL MEDICINE........... 10,662 0 0 0 0 0
20 INTERVENTIONAL RADIOLOGY.... 228 0 -1 -1 -1 -2
21 NEPHROLOGY.................. 1,840 0 -1 -2 -1 -2
22 NEUROLOGY................... 1,489 0 0 0 0 0
23 NEUROSURGERY................ 620 -1 0 -1 -1 -2
24 NUCLEAR MEDICINE............ 79 0 -1 -2 -1 -1
25 OBSTETRICS/GYNECOLOGY....... 654 0 0 0 0 -1
26 OPHTHALMOLOGY............... 5,026 0 0 0 0 0
27 ORTHOPEDIC SURGERY.......... 3,454 0 0 0 0 -1
28 OTOLARYNGOLOGY.............. 984 0 -1 -1 -1 -1
29 PATHOLOGY................... 1,007 0 0 0 0 0
30 PEDIATRICS.................. 72 0 1 1 1 1
31 PHYSICAL MEDICINE........... 850 0 0 -1 0 -1
32 PLASTIC SURGERY............. 288 0 0 1 0 1
33 PSYCHIATRY.................. 1,169 0 1 1 1 1
34 PULMONARY DISEASE........... 1,828 0 1 1 1 1
35 RADIATION ONCOLOGY.......... 1,854 0 -1 -2 -1 -2
36 RADIOLOGY................... 5,554 0 0 1 0 1
37 RHEUMATOLOGY................ 521 0 0 -1 0 -1
38 THORACIC SURGERY............ 431 0 0 0 0 0
39 UROLOGY..................... 2,146 0 0 0 0 0
40 VASCULAR SURGERY............ 685 0 0 0 0 0
41 AUDIOLOGIST................. 33 1 -10 -20 -9 -19
42 CHIROPRACTOR................ 768 0 -1 -1 -1 -1
43 CLINICAL PSYCHOLOGIST....... 571 0 -2 -4 -2 -3
44 CLINICAL SOCIAL WORKER...... 378 0 -2 -3 -1 -3
45 NURSE ANESTHETIST........... 846 0 0 0 0 0
46 NURSE PRACTITIONER.......... 963 0 1 1 1 1
47 OPTOMETRY................... 867 0 0 0 0 0
48 ORAL/MAXILLOFACIAL SURGERY.. 38 0 1 2 1 2
49 PHYSICAL/OCCUPATIONAL 1,772 0 2 4 2 4
THERAPY.......................
50 PHYSICIAN ASSISTANT......... 711 0 0 1 0 1
51 PODIATRY.................... 1,727 0 1 3 1 2
52 DIAGNOSTIC TESTING FACILITY. 1,186 0 -2 -4 -2 -4
53 INDEPENDENT LABORATORY...... 878 0 5 9 5 10
54 PORTABLE X-RAY SUPPLIER..... 87 0 2 4 2 4
----------------------------------------------------------------------------------------------------------------
* Components may not sum to total due to rounding.

2. Adjustments for Payments for Imaging Services
Section 1848(c)(2)(B)(iv)(II) of the Act as added by section 5102
of the Deficit Reduction Act of 2005 (Pub. L. 109-171) (DRA) exempts
the estimated savings from the application of the OPPS-based payment
limitation on PFS imaging services from the PFS BN requirement. We
estimate that the combined impact of the current BN exemptions
instituted by such section, the addition of 4 new codes and the removal
of 2 codes from the list of services subject to the DRA OPPS cap (See
section V. G. Additional Coding Issues), and the payment revisions to
OPPS cap amounts would result in no measurable changes in the specialty
specific impacts of the DRA provisions.
3. Combined Impact
Table 48 shows the specialty-level impact of the work and PE RVU
changes, the impact of the MIPPA provision to apply the BN adjustment
to the CF, the MIPPA provision for a 1.1

[[Page 69921]]

percent increase to the CF, and the combined impact of all of these
changes. Additionally, the impacts in this final rule with comment
period rule reflect the use of the updated physician time data from the
AMA-RUC, that is, used in step 13 of the detailed description of the PE
methodology described in section II.A.1.i. of this final rule with
comment period.
As indicated in Table 48, our estimates of changes in Medicare
revenues for PFS services compare payment rates for CY 2008 with
payment rates for CY 2009 using CY 2007 Medicare utilization
crosswalked to 2009 services. To the extent that there are year-to-year
changes in the volume and mix of services furnished by physicians, the
actual impact on total Medicare revenues will be different than those
shown in Table 48. These payment impacts reflect averages for each
specialty based on Medicare utilization. The payment impact for an
individual physician would be different from the average, based on the
mix of services the physician furnishes.
Table 48 shows only the payment impact on PFS services. The
following is an explanation of the information represented in Table 48.
Specialty: The physician specialty or type of
practitioner/supplier.
Allowed Charges: Allowed charges are the Medicare Fee
Schedule amounts for covered services and include coinsurances and
deductibles (which are the financial responsibility of the
beneficiary.) These amounts have been summed across all services
furnished by physicians, practitioners, or suppliers within a specialty
to arrive at the total allowed charges for the specialty.
Impact of the CY 2009 Work and PE RVU changes using the
methodology finalized in the CY 2007 PFS final rule with comment period
and the revised data sources discussed in this final rule with comment
period.
Impact of section 133(b) of the MIPPA which applies the BN
adjustment resulting from the 5-Year Review of work RVUs to the
physician CF rather than to the work RVUs.
Impact of section 131(a)(1) of the MIPPA which provides
for a 1.1 update to the Medicare PFS CF.
Combined impact of the finalized work and PE RVUs, section
133(b) of the MIPPA, and section 131(a)(1) of the MIPPA.

Table 48--Combined CY 2009 Total Allowed Charge Impact for Work RVU Changes, Practice Expense Changes, and MIPPA
Changes
----------------------------------------------------------------------------------------------------------------
Work and PE MIPPA MIPPA 131
Specialty Allowed RVU Changes 133(b) ** Update Total ***
Charges (mil) * (percent) (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
1 TOTAL.................................... $81,669 0 0 1 1
2 ALLERGY/IMMUNOLOGY....................... 184 1 -3 1 -1
3 ANESTHESIOLOGY........................... 1,966 -1 3 1 3
4 CARDIAC SURGERY.......................... 400 0 1 1 2
5 CARDIOLOGY............................... 7,775 -2 -1 1 -2
6 COLON AND RECTAL SURGERY................. 136 0 1 1 2
7 CRITICAL CARE............................ 224 0 2 1 3
8 DERMATOLOGY.............................. 2,557 2 -2 1 1
9 EMERGENCY MEDICINE....................... 2,451 0 3 1 4
10 ENDOCRINOLOGY........................... 385 0 0 1 2
11 FAMILY PRACTICE......................... 5,354 0 0 1 2
12 GASTROENTEROLOGY........................ 1,883 2 1 1 3
13 GENERAL PRACTICE........................ 842 0 0 1 2
14 GENERAL SURGERY.......................... 2,408 1 1 1 3
15 GERIATRICS.............................. 175 0 2 1 3
16 HAND SURGERY............................ 88 -1 -1 1 -1
17 HEMATOLOGY/ONCOLOGY..................... 2,019 -1 -2 1 -1
18 INFECTIOUS DISEASE...................... 561 1 2 1 4
19 INTERNAL MEDICINE....................... 10,662 0 1 1 2
20 INTERVENTIONAL RADIOLOGY................ 228 -1 0 1 0
21 NEPHROLOGY.............................. 1,840 -1 1 1 2
22 NEUROLOGY............................... 1,489 0 0 1 1
23 NEUROSURGERY............................ 620 -1 0 1 0
24 NUCLEAR MEDICINE........................ 79 -1 -2 1 -1
25 OBSTETRICS/GYNECOLOGY................... 654 0 0 1 0
26 OPHTHALMOLOGY........................... 5,026 0 0 1 0
27 ORTHOPEDIC SURGERY...................... 3,454 0 0 1 0
28 OTOLARNGOLOGY........................... 984 -1 -1 1 -1
29 PATHOLOGY............................... 1,007 0 0 1 1
30 PEDIATRICS.............................. 72 1 0 1 2
31 PHYSICAL MEDICINE....................... 850 0 1 1 1
32 PLASTIC SURGERY......................... 288 0 0 1 1
33 PSYCHIATRY.............................. 1,169 1 2 1 4
34 PULMONARY DISEASE....................... 1,828 1 1 1 3
35 RADIATION ONCOLOGY...................... 1,854 -1 -3 1 -3
36 RADIOLOGY............................... 5,554 0 -1 1 0
37 RHEUMATOLOGY............................ 521 0 -1 1 -1
38 THORACIC SURGERY........................ 431 0 1 1 2
39 UROLOGY................................. 2,146 0 -1 1 0
40 VASCULAR SURGERY........................ 685 0 -1 1 1
41 AUDIOLOGIST............................. 33 -9 -2 1 -10
42 CHIROPRACTOR............................ 768 -1 2 1 2
43 CLINICAL PSYCHOLOGIST................... 571 -2 3 1 2
44 CLINICAL SOCIAL WORKER.................. 378 -1 3 1 3

[[Page 69922]]

45 NURSE ANESTHETIST....................... 846 0 4 1 5
46 NURSE PRACTITIONER...................... 963 1 1 1 3
47 OPTOMETRY............................... 867 0 -1 1 0
48 ORAL/MAXILLOFACIAL SURGERY.............. 38 1 -1 1 1
49 PHYSICAL/OCCUPATIONAL THERAPY........... 1,772 2 0 1 3
50 PHYSICIAN ASSISTANT..................... 711 0 1 1 2
51 PODIATRY................................ 1,727 1 -1 1 1
52 DIAGNOSTIC TESTING FACILITY............. 1,186 -2 -5 1 -6
53 INDEPENDENT LABORATORY.................. 878 5 -4 1 2
54 PORTABLE X-RAY SUPPLIER................. 87 2 -4 1 -2
----------------------------------------------------------------------------------------------------------------
* PE changes are CY 2009 third year transition changes. For fully implemented CY 2010 PE changes, see Table 1.
** Prior to the application of the OPPS imaging caps under DRA 5102.
*** Components may not sum to total due to rounding.

We received comments from individuals and organizations concerning
the impact of the proposed rule, which reflected the projected negative
update. These commenters stated that the proposed cuts in payment for
services, particularly those for interventional pain management, could
have a devastating impact on their ability to provide services to
Medicare beneficiaries. The commenters also expressed concern that the
current PE payment methodology does not accurately reflect the costs
needed to provide their services.
As discussed in sections III. and VII. of this final rule with
comment period, section 131(a) of the MIPPA provides that the update to
the single CF for CY 2009 shall be 1.1 percent. Tables 47 and 48
reflect this change. As required by the statute, payment under the PFS
is resource-based. In future rulemaking, we expect to include
improvements to the resource-based PE methodology that will include
more current specialty specific aggregate cost data obtained through
physician specialty practice surveys.
Table 49 shows the estimated impact on total payments for selected
high-volume procedures of all of the changes discussed previously. We
selected these procedures because they are the most commonly furnished
by a broad spectrum of physician specialties. There are separate
columns that show the change in the facility rates and the nonfacility
rates. For an explanation of facility and nonfacility PE refer to
Addendum A of this final rule with comment period.

Table 49--Impact of Final Rule With Comment Period and Estimated Physician Update on 2009 Payment for Selected Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facility Non-facility
-----------------------------------------------------------------------
CPT/HCPCS MOD Description Percent Percent
2008 2009 change 2008 2009 change
--------------------------------------------------------------------------------------------------------------------------------------------------------
11721.................................. ..... Debride nail, 6 or more......... $27.42 $27.77 1 $39.61 $40.39 2
17000.................................. ..... Destruct premalg lesion......... 46.47 48.69 5 67.41 69.97 4
27130.................................. ..... Total hip arthroplasty.......... 1,336.09 1,359.71 2 NA NA NA
27244.................................. ..... Treat thigh fracture............ 1,077.10 1,144.39 6 NA NA NA
27447.................................. ..... Total knee arthroplasty......... 1,435.12 1,456.37 1 NA NA NA
33533.................................. ..... CABG, arterial, single.......... 1,854.84 1,892.05 2 NA NA NA
35301.................................. ..... Rechanneling of artery.......... 1,045.11 1,067.93 2 NA NA NA
43239.................................. ..... Upper GI endoscopy, biopsy...... 156.92 165.55 5 329.07 323.16 -2
66821.................................. ..... After cataract laser surgery.... 249.47 251.38 1 266.23 266.53 0
66984.................................. ..... Cataract surg w/iol, 1 stage.... 626.15 638.74 2 NA NA NA
67210.................................. ..... Treatment of retinal lesion..... 545.79 561.56 3 567.88 580.67 2
71010.................................. ..... Chest x-ray..................... NA NA NA 25.52 24.16 -5
71010.................................. 26 Chest x-ray..................... 8.76 9.02 3 8.76 9.02 3
77056.................................. ..... Mammogram, both breasts......... NA NA NA 104.74 107.48 3
77056.................................. 26 Mammogram, both breasts......... 41.90 44.36 6 41.90 44.36 6
77057.................................. ..... Mammogram, screening............ NA NA NA 82.65 81.15 -2
77057.................................. 26 Mammogram, screening............ 33.90 35.71 5 33.90 35.71 5
77427.................................. ..... Radiation tx management, x5..... 177.10 188.27 6 177.10 188.27 6
78465.................................. 26 Heart image (3d), multiple...... 74.27 78.99 6 74.27 78.99 6
88305.................................. 26 Tissue exam by pathologist...... 36.18 37.15 3 36.18 37.15 3
90801.................................. ..... Psy dx interview................ 125.31 128.04 2 147.02 152.92 4
90862.................................. ..... Medication management........... 43.80 45.08 3 52.18 55.18 6
90935.................................. ..... Hemodialysis, one evaluation.... 65.13 66.36 2 NA NA NA
92012.................................. ..... Eye exam established pat........ 43.04 45.80 6 70.08 70.69 1
92014.................................. ..... Eye exam & treatment............ 66.27 70.33 6 101.69 103.15 1
92980.................................. ..... Insert intracoronary stent...... 806.30 847.93 5 NA NA NA
93000.................................. ..... Electrocardiogram, complete..... 23.23 20.92 -10 23.23 20.92 -10

[[Page 69923]]

93010.................................. ..... Electrocardiogram report........ 8.38 9.02 8 8.38 9.02 8
93015.................................. ..... Cardiovascular stress test...... 103.98 100.27 -4 103.98 100.27 -4
93307.................................. 26 Echo exam of heart.............. 47.23 49.77 5 47.23 49.77 5
93510.................................. 26 Left heart catheterization...... 241.09 248.86 3 241.09 248.86 3
98941.................................. ..... Chiropractic manipulation....... 28.57 30.30 6 33.14 33.90 2
99203.................................. ..... Office/outpatient visit, new.... 65.51 68.17 4 91.03 91.97 1
99213.................................. ..... Office/outpatient visit, est.... 41.90 44.72 7 59.80 61.31 3
99214.................................. ..... Office/outpatient visit, est.... 65.51 69.25 6 89.89 92.33 3
99222.................................. ..... Initial hospital care........... 116.93 122.63 5 NA NA NA
99223.................................. ..... Initial hospital care........... 171.77 180.33 5 NA NA NA
99231.................................. ..... Subsequent hospital care........ 35.42 37.15 5 NA NA NA
99232.................................. ..... Subsequent hospital care........ 63.22 66.72 6 NA NA NA
99233.................................. ..... Subsequent hospital care........ 90.65 95.58 5 NA NA NA
99236.................................. ..... Observ/hosp same date........... 200.34 207.38 4 NA NA NA
99239.................................. ..... Hospital discharge day.......... 92.93 96.30 4 NA NA NA
99243.................................. ..... Office consultation............. 92.93 97.38 5 122.26 124.79 2
99244.................................. ..... Office consultation............. 145.49 154.00 6 179.01 184.30 3
99253.................................. ..... Inpatient consultation.......... 108.55 114.69 6 NA NA NA
99254.................................. ..... Inpatient consultation.......... 156.54 165.55 6 NA NA NA
99283.................................. ..... Emergency dept visit............ 59.03 61.31 4 NA NA NA
99284.................................. ..... Emergency dept visit............ 108.93 114.33 5 NA NA NA
99291.................................. ..... Critical care, first hour....... 204.15 212.07 4 250.99 253.91 1
99292.................................. ..... Critical care, addtl 30 min..... 102.45 106.04 3 111.98 114.69 2
99348.................................. ..... Home visit, est patient......... NA NA NA 76.17 79.35 4
99350.................................. ..... Home visit, est patient......... NA NA NA 155.78 160.86 3
G0008.................................. ..... Admin influenza virus vac....... NA NA NA 20.57 20.92 2
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 50 illustrates, for selected commonly provided procedures,
how the payment amounts are affected solely by the requirement in
section 133(b) of the MIPPA that BN for the 5-Year Review of physician
work be applied to the CF instead of through a separate work adjustor.
While section 133(b) of the MIPPA does not increase or decrease
expenditures in the aggregate for physician services, it will have a
differential effect on services depending on the proportion of the PFS
payment that is accounted for by work, PE, and malpractice. Physician
work accounts for--on average across all PFS services--52.5 percent of
total work RVUs. As BN for the 5-Year Review is being moved from the
physician work RVUs only to the total payment, any service that has a
higher than average proportion of its total payment accounted for by
physician work will see its total payment increase solely as a result
of section 133(b) of the MIPPA. Conversely, any service where physician
work accounts for a lower than average proportion of its total payment,
section 133(b) of the MIPPA will result in a reduction in payment.
Thus, section 133(b) of the MIPPA results in a payment reduction of 5
percent to CPT code 78565, Heart Image, 3d, Multiple, for the global
service and 6 percent for the TC only. Physician work is 11 percent of
the total RVU for the global and 0 percent of the TC of this service.
These percentages are less than the 52.5 percent on average that is
attributed to physician work and explains why payment for these
services declines as a result of section 133(b) of the MIPPA.
Similarly, the nonfacility amount for CPT code 99213 (Office/outpatient
visit, est) increases by 0.5 percent because its work RVUs are a
slightly higher proportion of its total payment (54 percent) than the
52.5 percent average for all physician services while the facility
amount increases even more because its work RVUs as a percent of total
RVUs (74 percent) are significantly higher than the proportion on
average for all physician services. A hospital visit (CPT code 99223)
and an emergency department visit (CPT code 99285) also show higher
increases in payment (3 and 4 percent respectively) due to section
133(b) of the MIPPA because physician work RVUs also account for a
higher proportion of the total RVUs (76 and 80 percent respectively)
than the average for all physician services.

Table 50--CY 2009 Impact of Placing Budget Neutrality Adjustment on the Conversion Factor
[Section 133(b) of the MIPPA]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Physician
Facility or work as a % 2009 BN on 2009 BN on Percent
CPT/HCPCS Mod Description nonfacility of total work RVU CF change
RVUs
--------------------------------------------------------------------------------------------------------------------------------------------------------
78465.............................. ............... Heart image (3d), Nonfacility........... 11 $509.48 $485.46 -5
multiple.
78465.............................. TC............. Heart image (3d), Nonfacility........... 0 432.18 406.47 -6
multiple.
99213.............................. ............... Office/outpatient Nonfacility........... 54 60.98 61.26 0.5
visit, est.
99213.............................. ............... Office/outpatient Facility.............. 74 43.34 44.69 3
visit, est.
99223.............................. ............... Initial hospital care. Facility.............. 76 174.43 180.33 3

[[Page 69924]]

99285.............................. ............... Emergency dept visit.. Facility.............. 80 163.99 170.60 4
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Telehealth

In section II.D. of this final rule with comment period, we are
creating HCPCS codes specific to the telehealth delivery of follow-up
inpatient consultations. The new HCPCS codes will be limited to the
range of services included in the scope of deleted CPT codes previously
approved for telehealth, with the descriptions modified to limit the
use of such services for telehealth. Utilization of these codes will
allow us to provide payment for follow-up inpatient telehealth
consultations, as well as enable us to monitor whether the codes are
used appropriately.
The total annual Medicare payment amount for telehealth services
(including the originating site facility fee) is approximately $2
million. Previous additions to the list of Medicare telehealth services
have not resulted in a significant increase in Medicare program
expenditures. While we believe that the addition of follow-up inpatient
telehealth consultation services to the approved telehealth service
list will enable more beneficiaries access to these services, we do not
anticipate that this change will have a significant budgetary impact on
the Medicare program.

C. Payment for Covered Outpatient Drugs and Biologicals

1. ASP Issues
The changes discussed in section II.F.1. of this final rule with
comment period with respect to payment for covered outpatient drugs and
biologicals, are estimated to have no impact on Medicare expenditures.
2. CAP Issues
In the CY 2009 PFS proposed rule, we proposed minor refinements for
the CAP, specifically the annual CAP payment amount update mechanism,
the definition of a CAP physician, easing the restriction on the
transportation of CAP drugs between practice locations, and the dispute
resolution process. After the publication of the CY 2009 PFS proposed
rule, further CAP implementation for 2009 was postponed. At this time,
we are seeking feedback about the CAP from current and former CAP
physicians, potential vendors, and other interested parties. We will
assess the information and consider implementing changes to the CAP
before proceeding with another bid solicitation.
Our proposed refinements to the CAP are not being finalized in this
rule. Therefore, there is no potential impact associated with CAP
provisions in the CY 2009 PFS rule.

D. Application of the HPSA Bonus Payment

As discussed in section II.G. of this final rule with comment
period, there are no program cost savings or increased expenditures
associated with this change; however, we expect that the regulation
will increase the number of physicians who receive the bonus
automatically, while decreasing the number of physicians required to
use a modifier in order to receive the payment. It will also provide
assurance to physicians and eligible recipients, for example health
care facilities that bill under the CAH II method in qualified areas,
that they will receive the HPSA bonus payment throughout the calendar
year.

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

The ESRD-related provisions are discussed in section II.H. of this
final rule with comment period. To understand the impact of the changes
affecting payments to different categories of ESRD facilities, it is
necessary to compare estimated payments under the current year (CY 2008
payments) to estimated payments under the revisions to the composite
rate payment system (CY 2009 payments) as discussed in section II.H. of
this final rule with comment period. To estimate the impact among
various classes of ESRD facilities, it is imperative that the estimates
of current payments and payments contain similar inputs. Therefore, we
simulated payments only for those ESRD facilities that we are able to
calculate both current 2008 payments and 2009 payments.
ESRD providers were grouped into the categories based on
characteristics provided in the Online Survey and Certification and
Reporting (OSCAR) file and the most recent cost report data from the
Healthcare Cost Report Information System (HCRIS). We also used the
June 2008 update of CY 2007 National Claims History file as a basis for
Medicare dialysis treatments and separately billable drugs and
biologicals. Due to data limitations, we are unable to estimate current
and proposed payments for 96 of the 4954 ESRD facilities that bill for
ESRD dialysis treatments.
Table 51 shows the impact of this year's changes to CY 2009
payments to hospital-based and independent ESRD facilities. The first
column of Table 51 identifies the type of ESRD provider, the second
column indicates the number of ESRD facilities for each type, and the
third column indicates the number of dialysis treatments.
The fourth column shows the effect of all changes to the ESRD wage
index for CY 2009 as it affects the composite rate payments to ESRD
facilities. The fourth column compares aggregate ESRD wage adjusted
composite rate payments in the fourth year of the transition (CY 2009)
to aggregate ESRD wage adjusted composite rate payments in the third
year of the transition (CY 2008). In the fourth year of the transition
(CY 2009), ESRD facilities receive 100 percent of the CBSA wage
adjusted composite rate and 0 percent of the MSA wage adjusted
composite rate. In the third year of the transition, ESRD facilities
receive 75 percent of the CBSA wage adjusted composite rate and 25
percent of the MSA wage adjusted composite rate. The overall effect to
all ESRD providers in aggregate is zero because the CY 2009 ESRD wage
index has been multiplied by a BN adjustment factor to comply with the
statutory requirement that any wage index revisions be done in a manner
that results in the same aggregate amount of expenditures as would have
been made without any changes in the wage index. The impacts are
similar to those shown in the proposed rule. (See the CY 2009 PFS
proposed rule (73 FR 38599) for a

[[Page 69925]]

breakout of the effects associated with the change in the wage index
floor.)
The fifth column shows the effect of the MIPPA provisions on
hospital-based and independent ESRD facilities. Section 153(a) of the
MIPPA updated section 1881(b)(12)(G) of the Act and revised payments to
ESRD facilities. The revisions that are effective January 1, 2009
include an update of 1 percent to the composite rate component of the
payment system and the establishment of a site neutral composite rate
to hospital-based and independent dialysis facilities.
The sixth column shows the overall effect of the changes in the
composite rate payments to ESRD providers excluding the drug add-on.
This column shows the percent change between CY 2009 and CY 2008
composite rate payments to ESRD facilities. The sixth column combines
the effects of changes in the wage index (column 4) with the effect of
the MIPPA provisions (column 5). This column does not include the drug
add-on to the composite rate.
The seventh column shows the overall effect of the changes in
composite rate payments to ESRD providers including the drug add-on.
The overall effect is measured as the difference between the CY 2009
payment with all changes as proposed in this rule and current CY 2008
payment. This payment amount is computed by multiplying the wage
adjusted composite rate with the drug add-on for each provider times
the number of dialysis treatments from the CY 2007 claims. The CY 2009
payment is the transition year 4 wage-adjusted composite rate for each
provider (with the 15.2 percent drug add-on) times dialysis treatments
from CY 2007 claims. The CY 2008 current payment is the transition year
3 wage-adjusted composite rate for each provider (with the current 15.2
percent drug add-on) times dialysis treatments from CY 2007 claims.
The overall impact to ESRD providers in aggregate is 0.4 percent.
Most ESRD facilities will see an increase in payments as a result of
the MIPPA provisions. However, the site neutral composite rate results
in a 2.1 percent decrease in payments to hospital-based ESRD
facilities. Since many hospital-based ESRD facilities are nonprofit,
there is a 0.7 percent decrease in payments to all nonprofit ESRD
facilities.
While the MIPPA provision includes a 1 percent increase to the ESRD
composite rate, this 1 percent increase does not apply to the drug add-
on to the composite rate. For this reason, the impact of all changes in
this final rule is a 0.4 percent increase for all ESRD providers.
Overall, payments to independent ESRD facilities will increase by 0.7
percent and payments to hospital-based ESRD facilities will decrease
2.1 percent.

Table 51--Impact of CY 2009 Changes in Payments to Hospital-Based and Independent ESRD Facilities
[Percent change in composite rate payments to ESRD facilities (both program and beneficiaries)]
----------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7
----------------------------------------------------------------------------------------------------------------
Number of Overall Overall
dialysis Effect of Effect of effect effect
Number of treatments changes in the MIPPA without including
facilities (in wage index provisions drug add-on drug add-on
millions) \1\ only \2\ \3\ \4\
----------------------------------------------------------------------------------------------------------------
All Providers:.................... 4,858 36.4 0.0 0.7 0.7 0.4
Independent....................... 4,303 32.8 0.0 1.0 1.0 0.7
Hospital Based.................... 555 3.7 0.2 -2.1 -1.9 -2.1
By Facility Size:
Less than 5000 treatments..... 1,732 5.0 -0.1 0.6 0.5 0.2
5000 to 9999 treatments....... 1,915 13.9 0.0 0.8 0.8 0.5
Greater than 9999 treatments.. 1,211 17.6 0.0 0.6 0.6 0.4
Type of Ownership:
Profit........................ 3,932 29.8 0.0 1.0 0.9 0.7
Nonprofit..................... 926 6.6 0.2 -0.7 -0.5 -0.7
By Geographic Location:
Rural......................... 1,320 7.6 -0.5 0.6 0.1 -0.1
Urban......................... 3,538 28.8 0.1 0.7 0.8 0.5
By Region:
New England................... 154 1.2 1.2 0.5 1.8 1.5
Middle Atlantic............... 566 4.6 0.1 0.2 0.3 0.0
East North Central............ 768 5.8 -1.0 0.6 -0.4 -0.7
West North Central............ 372 2.0 0.0 0.3 0.3 0.0
South Atlantic................ 1104 8.3 -0.1 0.8 0.8 0.5
East South Central............ 379 2.7 -1.0 0.9 0.0 -0.3
West South Central............ 667 5.2 -0.5 0.9 0.3 0.1
Mountain...................... 259 1.6 0.0 0.7 0.7 0.5
Pacific....................... 555 4.6 2.2 0.8 3.0 2.7
Puerto Rico & Virgin Islands.. 34 0.4 -4.6 0.8 -3.8 -4.1
----------------------------------------------------------------------------------------------------------------
\1\ This column shows the overall effect of wage index changes on ESRD providers. Composite rate payments
computed using the current wage index are compared to composite rate payments using the CY 2009 wage index
changes. This column does not include the drug add-on to the composite rate.
\2\ This column shows the effect of the MIPPA provisions which include a 1 percent increase to composite rate
and elimination of separate composite rate for hospital-based ESRD providers. These provisions are effective
January 1, 2009. This column does not include the drug add-on to the composite rate.
\3\ This column shows the percent change between CY 2009 and CY 2008 composite rate payments to ESRD facilities.
This column does not include the drug add-on to the composite rate.
\4\ This column shows the percent change between CY 2009 and CY 2008 composite rate payments to ESRD facilities.
The CY 2009 payments include the CY 2009 wage adjusted composite rate, and the 15.2 percent drug add-on times
treatments. The CY 2008 payments to ESRD facilities includes the CY 2008 wage adjusted composite rate and the
15.5 percent drug add-on times treatments.

[[Page 69926]]

G. IDTF Issues

We believe that the provisions regarding IDTFs as discussed in
Section II.I. of this final rule with comment period will have minimal
budgetary impact. We believe that the IDTF enrollment provisions
contained in this rule are necessary and will help ensure that
beneficiaries receive quality care by making certain that those
entities providing mobile diagnostic testing services meet established
performance standards and are enrolled in the Medicare program as
IDTFs. We maintain that most of these mobile units providing diagnostic
testing services are already enrolled as IDTFs as required in Sec.
410.33(g), however we have no way of determining how many of these
units are providing mobile diagnostic testing services, yet are not
enrolled. We do not believe that beneficiary access to IDTF services
will be affected by these requiring mobile units providing diagnostic
testing services to enroll in the Medicare program.

H. Physician and Nonphysician Practitioner Enrollment Issues

We believe that the provisions regarding physicians, NPPs, and
physician and NPP organizations as discussed in section II.J. of this
final rule with comment period will have minimal budgetary impact. The
provisions of this final rule supplement, but do not replace or
nullify, existing regulations concerning the issuance of physician and
NPP billing privileges, and payment for Medicare covered items or
services to eligible physicians and NPPs. We have already increased our
efforts to seek more uniformity in the enrollment process. However, our
experience clearly shows that the best means for preventing payment
errors and, in worst cases, abuse by providers and suppliers, is to
discourage and prevent their entry into the Medicare program. While
some individuals and organizations may perceive our requirements as a
barrier to their access to serving Medicare beneficiaries, we do not
believe that bona fide physicians, NPP, or physician or NPP
organizations will experience any difficulty in obtaining or
maintaining Medicare billing privileges.
We expect this final rule with comment period to ensure that the
Medicare program has adequate information on those who seek to bill the
program for items or services. The primary goal of this provision of
the final rule with comment period, through standard enrollment
requirements is to allow us to collect and maintain (keep current) a
unique and equal data set on all current and future physicians, NPPs,
and physician and NPP organizations that are billing or will bill the
Medicare program for items or services furnished to Medicare
beneficiaries. By achieving this goal, we will be better positioned to
protect the Medicare Trust Funds and the Medicare beneficiaries.
This rule will also allow us to develop, implement, and enforce
national enrollment procedures to be administered uniformly by all
Medicare contractors. Further, we believe that the enrollment
provisions contained in this rule are necessary to ensure that
beneficiaries receive quality care by making certain that the
physicians, NPPs, and physician or NPP organizations providing care
meet established standards and are enrolled in the Medicare program.
As a result of currently not having quantifiable data, we cannot
effectively derive an estimate of the monetary impacts of these
provisions. Accordingly, we sought public comment so that the public
may provide any data available that provides a calculable impact or any
alternative to the proposed provision. However, no further data was
presented by the public in order to provide a calculable impact. We
adopted a modified enrollment policy after considering the alternatives
that were suggested through the public comment period of the regulatory
process which established the effective date of billing privileges for
newly enrolling physicians, NPPs, and physician and NPP organizations.

I. Amendment to the Exemption for Computer-Generated Facsimile
Transmissions From the NCPDP SCRIPT Standard for Transmitting
Prescription and Certain Prescription-Related Information for Part D-
Covered Drugs Prescribed to Part D Eligible Individuals

The amendment to the exemption for computer-generated facsimiles
from the NCPDP SCRIPT Standard under the Medicare Part D e-prescribing
provisions is discussed in section II.K. of this rule. E-prescribing
Part D covered drugs to Part D eligible individuals is voluntary for
providers and dispensers. The MMA only requires that if prescribers and
dispensers choose to e-prescribe, that they use the standards adopted
by the Secretary for those specific e-prescribing transactions. The
amendment to the exemption for computer-generated faxing from the NCPDP
SCRIPT standard only affects pharmacies that already conduct e-
prescribing using products that generate facsimiles.
This amendment of the exemption for computer-generated facsimiles
to include prescription refill requests sent from dispensers to
providers who do not possess the capability to conduct electronic
refill request transactions using the NCPDP SCRIPT standard will not
affect non-NCPDP SCRIPT enabled prescribers. Prescribers that currently
e-prescribe using NCPDP SCRIPT would continue to receive refill
requests electronically. Prescribers that currently e-prescribe with
computer-generated faxes using a system that can utilize the NCPDP
SCRIPT standard will simply turn that function on, and receive refill
request transactions using the NCPDP SCRIPT standard in place of the
computer-generated facsimiles that they used to receive. Prescribers
that do not have the capacity to use NCPDP SCRIPT standard would
continue to receive computer-generated facsimiles. Moreover, the
amendment would not impose costs on dispensers, as they would be
permitted to continue using computer-generated facsimiles with partners
that cannot conduct electronic refill request transactions using the
NCPDP SCRIPT standard. The amendment will have direct benefits for
dispensers. One national drug store chain estimated that its stores
generate 150,000 non-EDI prescription refill requests each day. If the
computer-generated facsimile exemption were not modified, these
dispensers would have to revert to paper/phone calls in instances in
which a provider is not able to accept electronic refill requests
utilizing the NCPDP SCRIPT standard. One chain pharmacy has relayed
that moving forward with the scheduled elimination of the computer-
generated faxing exception to the NCPDP SCRIPT standard in all
instances other than transmission failures and similar communication
problems of temporary or transient nature would result in approximately
105,000 initial paper facsimiles and 45,000 initial phone calls/oral
scripts per day. They also consider a 2 percent facsimile failure rate
that translates into phone calls, or approximately 2,100 additional
phone calls per day. Ten percent of all phone calls require a second
call back, or 4,710 call backs per day. Therefore, without further
modification of computer-generated facsimiles exception, as of January
1, 2009 this national drug store chain would have to make a total of
51,810 additional phone calls for prescription refill requests per day.
They estimate the cost of reverting to paper facsimiles, including
purchasing fax machines, labor, paper, printing, hardware, and service
costs at over $12.5 million a year. They also estimate the cost per
year of phone calls,

[[Page 69927]]

including an average of 4 minutes per call, labor, and
telecommunication costs, at more than $78 million per year, for a total
cost for faxes and phone calls of $88.8 million per year.\9\
---------------------------------------------------------------------------

\9\ CVS/Caremark Discussion Points on E-Fax Ruling Exceptions,
January 3, 2007.
---------------------------------------------------------------------------

Another national drug store chain offered a similar analysis. They
estimated that a prescription refill request undertaken by telephone
takes 1.43 minutes longer to complete than one initiated by computer-
generated facsimile. Without further modification of the computer-
generated facsimile exception, as of January 1, 2009 this national drug
store chain would have to replace the more than 123 million computer-
generated facsimile refill requests that are made each year with phone
calls or paper faxes. They estimate that this would result in 9.2 lost
hours of staff time per store per week, resulting in $88 million in
additional costs, based on a blended payroll rate of pharmacists and
staff. Extrapolating this cost across the entire pharmacy industry
based on this commenter's market share, they estimated an impending
pharmacy industry loss of at least $520 million unless the computer-
generated facsimile exception is further modified.\10\
---------------------------------------------------------------------------

\10\ December 22, 2007 correspondence from Walgreen's to CMS re:
CMS-1385-FC, Final Rule with Comment Period: Amendment of the E-
Prescribing Exemption for Computer-Generated Facsimile
Transmissions.
---------------------------------------------------------------------------

According to industry reports in 2006 approximately 3.309 billion
prescriptions \11\ were filled by retail dispensers, and according to
CMS data, in 2006, approximately 825,000,000 Part D claims
(prescription drug events) were finalized and accepted for payment,\12\
or approximately 25 percent of the total prescriptions filled that
year. Thus, $130 million of the $520 million total loss estimated above
would be attributable to Medicare Part D claims. We invite comments on
these savings and loss assumptions estimates and assumptions.
---------------------------------------------------------------------------

\11\ http://www.statehealthfacts.org.
\12\ CMS, November 16, 2007 Proposed Rule, 72 FR 64913.
---------------------------------------------------------------------------

We also assume that expanding the computer-generated facsimile
exception to allow for computer-generated faxing in instances in which
the provider is incapable of receiving electronic refill request
transactions using the NCPDP SCRIPT standard would result in improved
patient satisfaction through timely prescription refill request
authorizations from prescribers and maintenance of existing workflows
at both the prescriber and dispenser ends.
Our decision to retain the exemption for computer-generated
facsimiles in all instances other than temporary/transient transmission
failures will have a positive impact on the industry overall, including
small pharmacies and prescribers who are early adopters of e-
prescribing and who may still depend on the use of computer-generated
facsimiles to communicate. In the CY 2009 PFS proposed rule (73 FR
38601), we discussed the estimated losses that could result if we moved
forward with the elimination of the computer-generated faxing exemption
to the NCPDP SCRIPT standard in all instances other than temporary/
transient transmission failures. We stated that two national chain
pharmacies said the proposed elimination of the computer-generated
faxing exemption would result in a loss to each chain of approximately
$88 million in labor, lost productivity and telecommunications costs.
If this cost was extrapolated across the entire pharmacy industry,
industry estimated an impending pharmacy industry loss of at least $520
million a year. As Medicare Part D claims account for approximately 25
percent of the total prescriptions filled annually, we estimated that
$130 million of that $520 loss would be attributable to Medicare Part D
claims. We also considered other alternatives, including eliminating
the exemption for computer-generated facsimiles in all instances, with
an effective date of January 1, 2009, as detailed in the final rule
with comment at 72 FR 66396; and eliminating the exemption for
computer-generated facsimiles in all instances except for the
prescription refill request transaction and in instances of temporary/
transient transmission failures. As we discussed previously in this
final rule, we decided against imposing either of those alternatives in
light of the advantage of the momentum that will be built by the e-
prescribing incentive program under MIPPA, and affording the industry
an additional 3 years from the effective date of this final rule to
move toward true e-prescribing.

J. CORF Issues

The revisions to the CORF regulations discussed in section II.L. of
this final rule with comment period updates the regulations for
consistency with the PFS payment rules and make additional changes to
the conditions of participation to reflect industry standards. These
revisions will help to clarify payment and operational requirements for
CORF services and are expected to have minimal impact on Medicare
expenditures.

K. Therapy Issues

The revisions to the therapy regulations discussed in section II.M.
of this final rule with comment period make technical corrections and
update the regulations and are expected to have minimal impact on
Medicare expenditures.

L. Physician Self-Referral Provisions

We anticipate that the provisions in section II.N. of this final
rule with comment period concerning the anti-markup provisions in Sec.
414.50 will result in savings to the program by reducing
overutilization and anti-competitive business arrangements. We cannot
gauge with any certainty the extent of these savings to the Medicare
program.

M1. Physician Quality Reporting Initiative (PQRI)

As discussed section II.O1. of this final rule with comment period,
the final 2009 PQRI measures satisfy the requirement of section
1848(k)(2)(B)(iii) of the Act that the Secretary publish in the Federal
Register by November 15, 2008 a final set of quality measures that the
Secretary determines would be appropriate for eligible professionals to
use to submit data to the Secretary in 2009. As discussed in section
II.O1. of this final rule with comment period, we are also offering
options in 2009 for reporting some of the 2009 PQRI measures via
submission of data to a clinical registry and options for reporting on
measures groups rather than individual measures.
Although there may be some cost incurred for maintaining the
measures used in the PQRI and their associated code sets, and for
expanding an existing clinical data warehouse to accommodate registry-
based data submission for the PQRI, we do not anticipate a significant
cost impact on the Medicare program.
Participation in the PQRI by eligible professionals is voluntary
and eligible professionals may have different processes for integrating
the PQRI into their practices' work flows. Therefore, it is not
possible to estimate with any degree of accuracy the impact of the PQRI
on providers. One factor that influences the cost to eligible
professionals is the time and effort associated with eligible
professionals identifying applicable PQRI quality measures for which
they can report the necessary information. We have no way to accurately
quantify the burden because it would vary with each eligible
professional by the number of measures applicable to the eligible
professional, the eligible professional's familiarity

[[Page 69928]]

and understanding of the PQRI, and experience with participating in the
PQRI. In addition, eligible professionals may employ different methods
for incorporating the use of quality data codes into the office work
flows. Therefore, we will assign 3 hours as the amount of time needed
for eligible professionals to review the PQRI quality measures,
identify the applicable measures for which they can report the
necessary information, and incorporate the use of quality data codes
into the office work flows. Information from the Physician Voluntary
Reporting Program (PVRP) indicated an average labor cost of
approximately $50 per hour. Thus, we estimate the cost for an eligible
professional to review the PQRI quality measures, identify the
applicable measures for which they can report the necessary
information, and incorporate the use of quality data codes into the
office work flows to be approximately $150 per eligible professional
($50 per hour x 3 hours).
For claims-based PQRI reporting, one factor in the cost to eligible
professionals is the time and effort associated with gathering the
required information, selecting the appropriate quality data codes, and
including the appropriate quality data codes on the claims an eligible
professional submits for payment. Information from the PVRP, estimates
the cost to physicians to perform all the steps necessary to report 1
quality measure ranges from $0.21 in labor time to about $10.06 in
labor time for more complicated cases and/or measures. For the median
practice, the cost was about $0.90 in labor time per measure. Eligible
professionals are generally required to report at least 3 measures to
satisfactorily report PQRI quality measures data. Therefore, for
purposes of this impact analysis we will assume that eligible
professionals participating in the 2009 PQRI will report an average of
3 measures each.
The cost of implementing claims-based reporting of PQRI quality
measures data also varies with the volume of claims on which quality
data is reported. Preliminary results from the 2007 PQRI indicate that
eligible professionals reported on 1 to 3,331 eligible instances per
measure. For all 2007 PQRI measures, the median number of eligible
instances reported on per measure was less than 60. On average, the
median number of eligible instances reported on per measure was about
9. Therefore, for this analysis, we estimate that for each measure, an
eligible professional reports the quality data on 9 cases.
Thus, we estimate the cost to each eligible professional associated
with claims-based reporting of PQRI quality data codes to range from
$155.67 [($0.21 per measure x 3 measures x 9 cases per measure) + $150]
to $421.62 [($10.06 per measure x 3 measure x 9 cases per measure) +
$150].

M2. Electronic Prescribing (E-Prescribing) Incentive Program

Section II.O2. of this final rule with comment period describes a
new incentive program for eligible professionals who are considered
successful electronic prescribers. To be considered a successful
electronic prescriber, an eligible professional must report on the e-
prescribing measure identified in section II.O2. of this final rule
with comment period.
We anticipate that the cost impact of the E-Prescribing Incentive
Program on the Medicare program would be minimal since the program
consists of only 1 quality measure.
Participation in the E-Prescribing Incentive Program by eligible
professionals is voluntary and eligible professionals may have
different processes for integrating the E-Prescribing Incentive Program
into their practices' work flows. Therefore, it is not possible to
estimate with any degree of accuracy the impact of the E-Prescribing
Incentive Program on eligible professionals. Similar to claims-based
reporting for the PQRI, one factor in the cost to eligible
professionals is the time and effort associated with eligible
professionals determining whether the quality measure is applicable to
them, gathering the required information, selecting the appropriate
quality data codes, and including the appropriate quality data codes on
the claims they submit for payment. Since the E-Prescribing Incentive
Program consists of only 1 quality measure, we will assign 1 hour as
the amount of time needed for eligible professionals to review the e-
prescribing measure and incorporate the use of quality data codes into
the office work flows. At an average cost of approximately $50 per
hour, we estimate the total cost to eligible professionals for
reviewing the e-prescribing measure and incorporating the use of
quality data codes into the office work flows to be approximately $50
($50 per hour x 1 hour).
Another factor in the cost to eligible professionals is the time
and effort associated with gathering the required information,
selecting the appropriate quality data codes, and including the
appropriate quality data codes on the claims an eligible professional
submits for payment. Information from the PVRP, estimates the cost to
physicians to perform all the steps necessary to report 1 quality
measure ranges from $0.21 in labor time to about $10.06 in labor time
for more complicated cases and/or measures. For the median practice,
the cost was about $0.90 in labor time per measure. Therefore, we
estimate the costs to eligible professionals to perform all the steps
necessary to report the e-prescribing measure on a claim to be
approximately $0.90.
The cost for this requirement will also vary along with the volume
of claims on which quality data is reported. Based on preliminary
results from the 2007 PQRI described above and the fact that the
measure's denominator consists of only billing codes for professional
services, we estimate that each eligible professional reports the
quality data on 60 cases for the e-prescribing measure.
Thus, we estimate the cost to each eligible professional associated
with claims-based reporting of the e-prescribing measure to be
$104[($0.90 per measure x 1 measures x 60 cases per measure) + $50].
In addition, the e-prescribing measure requires eligible
professionals to have and use a ``qualified'' e-prescribing system.
There are currently many commercial packages available for e-
prescribing. One study indicated that a mid-range complete electronic
medical record costs $2500 per license with an annual fee of $90 per
license for quarterly updates of the drug database after setup costs
while a standalone prescribing, messaging, and problem list system
costs $1200 per physician per year after setup costs. Hardware costs
and setup fees substantially add to the final cost of any software
package. (Corley, S.T. (2003). ``Electronic prescribing: a review of
costs and benefits.'' Topics in Health Information Management 24(1):
29-38.). The cost to an eligible professional of obtaining and
utilizing an e-prescribing system varies not only by the commercial
software package selected but also by the level at which the
professional currently employs information technology in his or her
practice and the level of training needed.

N. Educational Requirements for Nurse Practitioners and Clinical Nurse
Specialists

We anticipate that there are no program cost savings or increased
expenditures associated with the changes discussed in section II.Q. of
this final rule with comment period. However, we expect that the
technical correction to the NP qualifications will

[[Page 69929]]

make the regulations comport with the agency's intent to require a
master's degree in nursing as the minimum educational level for new NPs
independently treating beneficiaries and directly billing the Medicare
program. Also, the changes to the NP and CNS educational requirement to
include the DNP doctoral degree will help to eliminate any concern or
confusion for contractors and the nursing industry about whether APNs
with doctoral degrees in nursing (but without a master's degree in
nursing) meet our program qualifications.

O. Portable X-ray Personnel Qualifications

We anticipate that there are no program cost savings or increased
expenditures associated with the changes discussed in section II.R. of
this final rule with comment period; however, we expect that the
revisions to the regulations will have a positive impact on patient
care.

P. Prohibition Concerning Payment of Continuous Positive Airway
Pressure (CPAP) Devices

The provisions discussed in section II.S.2 of this final rule with
comment period will reduce Medicare Trust Fund vulnerability to fraud
and abuse and protect Medicare Beneficiaries from the burden of
unnecessary sleep testing and unnecessary exposure to a medical device.
This prohibition will have no effect on providers as the majority of
providers are not DMEPOS suppliers who would by supplying CPAP devices.
Only providers or other entities that perform both unattended out-of-
facility sleep testing and supply CPAP machines to beneficiaries they
have tested will be impacted which we believe would be very few, if
any. For the reasons listed above, this final will have no impact on
DMEPOS suppliers because most suppliers only supply the CPAP machines;
they do not evaluate patients, order sleep tests, nor do they interpret
them.

Q. Beneficiary Signature Requirements for Nonemergency Ambulance
Services

We believe that our proposal in section II.S.3. of this final rule
with comment period for allowing the ambulance provider or supplier to
sign the claim on behalf of the beneficiary with respect to
nonemergency transport services, provided that certain conditions are
satisfied, will have no budgetary impact.

R. 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

We expect that the provision in section II.S.5. of this final rule
with comment period will have an impact on an unknown number of persons
and entities; however, we believe that this provision will impact only
a small number of suppliers whose billing privileges are revoked due to
Federal debarment or exclusion, felony convictions, license suspensions
or revocation, or because the supplier is no longer operating at a
practice location provided to Medicare. We also believe that while this
provision changes the effective date of revocation for certain
suppliers that are no longer in compliance with Medicare enrollment
requirements, this provision does not expand or change our revocation
authority.
As a result of not having quantifiable data for the suppliers that
meet the criteria for immediate revocation, we cannot effectively
derive an estimate of the monetary impacts of this provision.
Accordingly, we sought public comment so that the public may provide
any data available that provides a calculable impact or any alternative
to the proposed provision. However, no further data was presented by
the public in order to provide a calculable impact.

S. MIPPA Provisions

1. Section 101: Improvements to Coverage of Preventive Services
a. Section 101(a) Coverage of Additional Preventive Services
As discussed earlier in the preamble, section 101(a) of the MIPPA
provides the Secretary with the authority to add coverage of
``Additional Preventive Services'' and specifies the process and the
criteria that are to be used in follow-up determinations regarding the
coverage of such services under the Part B Program. As provided in the
law, this new coverage allows payment for ``additional preventive
services'' not otherwise described in Title XVIII of the Act, if the
Secretary determines through the national coverage determination (NCD)
process that the new services meet statutory requirements for coverage.
We estimate that the new authority to review and add coverage of
additional preventive services, if appropriate, will result in an
increase in Medicare payments in the next couple of years to physician
and other providers for such services. However, based on our experience
in adding coverage of other preventive services (for example, the
tobacco cessation benefit) we do not expect that the amount of the
increase will be more than a modest amount. Since MIPPA refers to the
evidence-based preventive services recommended by the USPSTF, costs
would be aligned with the most effective screenings, and would avoid
use of resources for those services that are not based on available
evidence of effectiveness, thus reducing wasted resources.
b. Section 101(b)--Revisions to Initial Preventive Physical Examination
(IPPE)
Section 101(b) of the MIPPA expands the eligibility period for
beneficiaries using the initial preventive physical examination (IPPE)
from 6 to 12 months, waives the Part B deductible, and makes several
other changes to the benefit such as adding the measurement of the body
mass index (BMI) and end-of-life planning to the list of required
services. We estimate that the expansion of these Medicare Preventive
services and the waiver of the Part B deductible requirement may
increase the number of covered services that are performed in the next
several years. As a result, we expect the amendment may result in a
small but modest increase in payments to physicians and other qualified
practitioners who provide these examinations and for any medically
necessary follow-up (tests, counseling or treatment) that occur as a
result of the initial preventive physical examination as beneficiaries
increase their use of the benefit. The estimated financial impact is
shown in Table 52.

Table 52--Medicare Cost Estimates for Section 101(b) of the MIPPA
[In millions]
----------------------------------------------------------------------------------------------------------------
MIPPA CY 2009 CY 2010 CY 2011 CY 2012 CY 2013
----------------------------------------------------------------------------------------------------------------
Section 101(b)............................ $5 $5 $5 $5 $5
----------------------------------------------------------------------------------------------------------------

[[Page 69930]]

2. Section 131: Physician Payment, Efficiency, and Quality
Improvements; and Section 132: Incentives for Electronic Prescribing
A discussion of the impact of these MIPPA provisons is addressed
earlier in this section in conjunction with the other PQRI provisions
being implemented (see section XV.M. of this final rule with comment
period).
3. Section 131(c): Physician Resource Use Feedback Program
Section 131(c) of the MIPPA amends section 1848 of the Act by
adding subsection (n), which requires the Secretary to establish and
implement by January 1, 2009, a Physician Feedback Program using
Medicare claims data and other data to provide confidential feedback
reports to physicians (and as determined appropriate by the Secretary,
to groups of physicians) that measure the resources involved in
furnishing care to Medicare beneficiaries. If determined appropriate by
the Secretary, the Secretary may also include information on quality of
care furnished to Medicare beneficiaries by the physician (or group of
physicians) in the reports. We anticipate the impact of this section to
be negligible for the work completed in the phased pilot physician
feedback program to date.
4. Section 133(b): Expanding Access to Primary Care Services (BN
Adjustment)
The impact of this MIPPA provision is addressed in section VII. and
previously in this section (XVI.A.) as part of the RVU impact
discussion.
5. Section 134: Extension of Floor on Medicare Work Geographic
Adjustment Under the Medicare PFS
As discussed in section III.F. of this preamble, section 134 of the
MIPPA of 2008 extended the 1.000 work GPCI floor from July 1, 2008,
through December 31, 2009. Additionally, the MIPPA sets a permanent
1.500 work GPCI floor in Alaska, beginning January 1, 2009. As a result
of this MIPPA provision, 55 (out of 89) PFS localities will receive an
increase in their work GPCI. Alaska receives the largest increase
(+47.49 percent), followed by Puerto Rico (+10.62 percent), South
Dakota (+6.16 percent), North Dakota (+5.60 percent) and the Missouri
``rest of state'' locality (+5.37 percent). The estimated impact for
this provision is $400 million for CY 2009.
6. Section 136: Extension of Treatment of Certain
We do not have specific information on the number of independent
laboratories that would be affected by section 136 of the MIPPA. We
think that most, if not, all independent laboratories have some
exposure to this billing practice. The estimated CY 2009 incurred
benefit impact of the extension of this practice is $80 million.
7. Section 141: Extension of Exceptions Process for Medicare Therapy
Caps
Section 141 of the MIPPA extends the exceptions process for therapy
caps from July 1, 2008, through December 31, 2009. The estimated impact
of this provision for CY 2009 is $1.69 billion.
8. Section 143: Speech-Language Pathology Services
Amendments made by section 143 of the MIPPA provide the authority
to enroll speech-language pathologists as suppliers of Medicare
services and for speech-language pathologists to begin billing Medicare
for outpatient speech language pathology services furnished in private
practice beginning July 1, 2009. The enrollment of speech language
pathologists to provide services in outpatient settings is expected to
have a minimal impact on Medicare expenditures.
9. Section 144(b): Repeal of Transfer of Title for Oxygen Equipment
The revisions pertaining to oxygen and oxygen equipment in section
III.J. of this final rule with comment period reflect changes made by
the MIPPA. Prior to the MIPPA, section 1834(a)(5)(F) of the Act limited
monthly payments to suppliers furnishing oxygen equipment to 36 months
of continuous use. At the end of this 36-month period, suppliers were
required to transfer title to oxygen equipment rented on or after
January 1, 2006 to the beneficiary. Section 144(b) of the MIPPA
repealed the transfer of title provision. In its place, section 144(b)
establishes a 36-month rental cap and amends section 1834(a)(5)(F) of
the Act by adding additional payment rules discussed previously in this
preamble.
These changes may provide an economic benefit to suppliers because
they will now retain ownership of oxygen equipment after 36 months of
rental payments. If a beneficiary stops needing oxygen after the 36-
month rental cap but before the end of the reasonable useful lifetime
of the equipment (currently 5 years), the supplier will be able to
retrieve the equipment and rent it to another Medicare beneficiary or
other customer and receive additional rental payments for the remainder
of the equipment's reasonable useful lifetime. It is difficult to
estimate the impact of this change, but we believe the impact will be
minimal and, therefore, do not believe it will be economically
significant.
In addition, our regulations implementing MIPPA may provide a
slight financial benefit to Medicare because we have determined that at
this time it is not reasonable and necessary to make payments for non-
routine maintenance and servicing (including repair) of supplier-owned
oxygen equipment. We understand that oxygen equipment is very durable
and should need few repairs in the first 5 years. Any costs suppliers
may incur in repairs would be offset by the gains they achieve through
retaining ownership of the equipment. Taken together, we expect these
changes to have a minimal impact on Medicare expenditures.
10. Section 145: Clinical Laboratory Tests
Section 145 of the MIPPA reduces the Clinical Laboratory Fee
Schedule update by 0.5 percentage points for each year, CY 2009 through
CY 2013, and is estimated to result in an incurred benefit savings of
$40 million.
11. Section 146: Improved Access to Ambulance Services
Section 146 of the MIPPA makes certain changes to Medicare payment
for ambulance services. Specifically, this section: Increases the
payment rate under the Ambulance fee schedule by 2 percent or 3 percent
for ground ambulance trips in urban and rural areas, respectively
furnished during the period July 1, 2008 through December 31, 2009;
and, for air ambulance services furnished during the period beginning
on July 1, 2008, and ending on December 31, 2009, any area that was
designated as a rural area for purposes of making payments under such
section for air ambulance services furnished on December 31, 2006,
shall be treated as a rural area for purposes of making payments for
ambulance services furnished during such period. This section is
estimated to increase Medicare expenditures by $20 million for CY 2009.
12. Section 149: Adding Certain Entities as Originating Sites for
Payment of Telehealth Services
This provision will increase access to telehealth services through
the new authority for certain facilities to serve as originating sites
and is expected to have a negligible budgetary impact on Medicare
expenditures.
13. Section 153: Renal Dialysis Provisions
A discussion of the impact of section 153 of the MIPPA is addressed
in

[[Page 69931]]

section XV.F. of this regulatory impact analysis in conjunction with
the other ESRD provisions of this rule.

T. Competitive Acquisition for Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS)

1. Low Vision Aids
We have determined that there will be no impact on Medicare
beneficiaries, medical equipment industry, or the Medicare program.
This final rule with comment period clarifies a longstanding Medicare
practice of not covering low vision aids.
2. Therapeutic Shoes Fee Schedule
The revisions to the therapeutic shoes regulations discussed in
section XI.B. of this final rule are expected to have no impact on
Medicare expenditures. This final rule with comment period merely
codifies in regulations our current practice of paying for therapeutic
shoes on a fee schedule basis.

U. Alternatives Considered

This final rule with comment period contains a range of policies,
including some provisions related to specific MMA provisions. The
preamble provides descriptions of the statutory provisions that are
addressed, identifies those policies when discretion has been
exercised, responds to comments on our proposals, presents rationale
for our decisions and, where relevant, alternatives that were
considered. For a discussion of the sections that could impact small
entities see the following sections: II.A.2. PE Proposals for CY 2009;
II.B. GPCIs: Locality Discussion; II.D. Medicare Telehealth Services;
II.E. Specific Coding Issues related to PFS; II.F. Part B Drug Payment;
II.G. Application of the HPSA Bonus Payment; II.H. Provisions Related
to Payment for Renal Dialysis Services Furnished by ESRD Facilities;
II.I. IDTF Issues; II.J. Physician and NPP Enrollment Issues; II.K.
Amendment to the Exemption for Computer-Generated Facsimile
Transmission from the NCPDP SCRIPT Standard for Transmitting
Prescription and Certain Prescription-Related Information for Part D
Covered Drugs Prescribed for Part D Eligible Individuals; II.L. CORF
and Rehabilitation Agency Issues; II.N. Physician Self-Referral and
Anti-Markup Issues; II.O1. Physician Quality Reporting Initiative and
O2. Electronic Prescribing (E-Prescribing) Incentive Program; II.Q.
Educational Requirements for Nurse Practitioners and Clinical Nurse
Specialists; II.R. Portable X-Ray Issue; II.S.2. Prohibition Concerning
Payment of Continuous Positive Airway Pressure (CPAP) Devices; II.S.3.
Beneficiary Signature for Nonemergency Ambulance Transport Services;
II.S 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; II.S.6.
Physician Resource Use Feedback Program; II.T. Electronic Prescribing
(E-Prescribing) Incentive Program; III.A. Section 101: Improvements to
Coverage of Preventive Services: III.I. Section 143: Speech-Language
Pathology Services; III.J. Section 144(b): Repeal of Transfer of Title
for Oxygen Equipment; III.M. Section 149: Adding Certain Entities as
Originating Sites for Payment of Telehealth Services; IV. Potentially
Misvalued Codes Under PFS; V.E. Discussion of Codes and AMA RUC
Recommendations for Which There Was No AMA RUC recommendation or for
Which the Recommendation Was Not Accepted; V.G. Additional Coding
Issues; and V.H. Establishment of Interim PE RVUs for New and Revised
Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System (HCPCS) Codes for 2009.

V. Impact on Beneficiaries

There are a number of changes made in this final rule with comment
period that would have an effect on beneficiaries. In general, we
believe these changes, including the refinements of the PQRI with its
focus on measuring, submitting, and analyzing quality data, the MIPPA
provisions related to the IPPE, and the changes with respect to
telehealth services will have a positive impact and improve the quality
and value of care provided to Medicare beneficiaries.
We do not believe that beneficiaries will experience drug access
issues as a result of the changes with respect to Part B drugs and
discontinuation of payment for preadministration services associated
with IVIG.
As explained in more detail subsequently in this section, the
regulatory provisions may affect beneficiary liability in some cases.
Most changes aggregate in beneficiary liability due to a particular
provision would be a function of the coinsurance (20 percent if
applicable for the particular provision after the beneficiary has met
the deductible). Beneficiary liability would also be impacted by the
effect of the aggregate cost (savings) of the provision on the standard
calculation of the Medicare Part B premium rate (generally 25 percent
of the provision's cost or savings). In 2009, total cost sharing
(coinsurance and deductible) per Part B enrollee associated with PFS
services is estimated to be $468. In addition, the portion of the 2009
standard monthly Part B premium attributable to PFS services is
estimated to be $40.10.
To illustrate this point, as shown in Table 47, the 2008 national
payment amount in the nonfacility setting for CPT code 99203 (Office/
outpatient visit, new), is $91.03 which means that in 2008 a
beneficiary is responsible for 20 percent of this amount, or $18. Based
on this rule, the 2009 national payment amount in the nonfacility
setting for CPT code 99203, as shown in Table 47, is $91.97 which means
that, in 2009, the beneficiary coinsurance for this service would be
$18.39.
Policies discussed in this rule that do affect overall spending,
such as the additions to the list of codes that are subject to the MPPR
for diagnostic imaging, would similarly impact beneficiaries'
coinsurance.

W. Accounting Statement

As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 53, we have
prepared an accounting statement showing the classification of the
expenditures associated with this final rule with comment period. This
estimate includes the incurred benefit impact associated with the
estimated CY 2009 PFS update based on the 2008 Trustees Report
baseline, as well as certain MIPPA provisions. All estimated impacts
are classified as transfers.

Table 53--Accounting Statement: Classification of Estimated Expenditures
From CY 2008 to CY 2009
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.... Estimated increase in expenditures
of $3.00 billion.
From Whom To Whom?................ Federal Government to physicians,
other practitioners and providers
and suppliers who receive payment
under Medicare.
------------------------------------------------------------------------

[[Page 69932]]

In accordance with the provisions of Executive Order 12866, this
final rule with comment period was reviewed by the Office of Management
and Budget.

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 409

Health facilities, Medicare.

42 CFR Part 410

Health facilities, Health professions, Kidney diseases,
Laboratories, Medicare, Reporting and recordkeeping requirements, Rural
areas, X-rays.

42 CFR Part 411

Kidney diseases, Medicare, Physician Referral, Reporting and
recordkeeping requirements.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 414

Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping.

42 CFR Part 415

Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.

42 CFR Part 423

Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professionals, Medicare, Penalties, Privacy, Reporting and
recordkeeping requirements.

42 CFR Part 424

Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.

42 CFR Part 485

Grant programs--health, Health facilities, Medicaid, Medicare,
Reporting and recordkeeping requirements.

42 CFR Part 486

Grant programs--health, Health facilities, Medicare, Reporting and
recordkeeping requirements, X-rays.

42 CFR Part 489

Health facilities, Medicare, Reporting and recordkeeping
requirements.

0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for part 405 continues to read as follows:

Authority: Secs. 1102, 1861, 1862(a), 1871, 1874, 1881, and
1886(k) of the Social Security Act (42 U.S.C. 1302, 1395x, 1395y(a),
1395hh, 1395kk, 1395rr and 1395ww(k)), and sec. 353 of the Public
Health Service Act (42 U.S.C. 263a).

Subpart H--Appeals Under the Medicare Part B Program

0
2. Section 405.874 as is amended by revising paragraph (b)(2) to read
as follows:

Sec. 405.874 Appeals of CMS or a CMS contractor.

* * * * *
(b) * * *
(2) Effective date of revocation. 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 a 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 a 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.
* * * * *

PART 409--HOSPITAL INSURANCE BENEFITS

0
3. The authority citation for part 409 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart B--Inpatient Hospital Services and Inpatient Critical
Access Hospital Services

0
4. Section 409.17 is amended by revising paragraph (a)(1) to read as
follows:

Sec. 409.17 Physical therapy, occupational therapy, and speech-
language pathology services.

(a) * * *
(1) Except as specified in this section, physical therapy,
occupational therapy, or speech-language pathology services must be
furnished by qualified physical therapists, physical therapist
assistants, occupational therapists, occupational therapy assistants,
or speech-language pathologists who meet the requirements specified in
part 484 of this chapter.
* * * * *

Subpart C--Posthospital SNF Care

0
5. Section 409.23 is amended by revising the section heading to read as
follows:

Sec. 409.23 Physical therapy, occupational therapy and speech-
language pathology.

* * * * *

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
6. The authority citation for part 410 continues to read as follows:

Authority: Secs. 1102, 1834, 1871, and 1893 of the Social
Security Act (42 U.S.C. 1302, 1395m, 1395hh, and 1395ddd).

Subpart B--Medical and Other Health Services

0
7. Section 410.16 is amended in paragraph (a) by--
0
A. Revising the definition of ``Eligible beneficiary''.
0
B. Adding the definition of ``End-of-life planning'' in alphabetical
order.
0
C. Revising paragraphs (4), (5), and (7) of the definition ``Initial
preventive physical examination.''

Sec. 410.16 Initial preventive physical exam: Conditions for and
limitations on coverage.

(a) * * *
Eligible beneficiary means, for the purposes of this section, an
individual who receives his or her initial preventive examination not
more than 1 year after the effective date of his or her first Medicare
Part B coverage period.
End-of-life planning means, for purposes of this section, verbal or
written information regarding the following areas:
(1) An individual's ability to prepare an advance directive in the
case where

[[Page 69933]]

an injury or illness causes the individual to be unable to make health
care decisions.
(2) Whether or not the physician is willing to follow the
individual's wishes as expressed in an advance directive.
Initial preventive physical exam * * *
(4) An examination to include measurement of the beneficiary's
height, weight, body mass index, blood pressure, a visual acuity
screen, and other factors as deemed appropriate, based on the
beneficiary's medical and social history, and current clinical
standards.
(5) End-of-life planning as that term is defined in this section
upon agreement with the individual.
* * * * *
(7) Education, counseling, and referral, including a brief written
plan such as a checklist provided to the individual for obtaining an
electrocardiogram, as appropriate, and the appropriate screening and
other preventive services that are covered as separate Medicare Part B
benefits as described in sections 1861(s)(10), (jj), (nn), (oo), (pp),
(qq)(1), (rr), (uu), (vv), (xx)(1), (yy), (bbb), and (ddd) of the Act.
* * * * *

0
8. Section 410.33 is amended by adding paragraphs (g)(16) and (17) to
read as follows:

Sec. 410.33 Independent diagnostic testing facility.

* * * * *
(g) * * *
(16) Enrolls for any diagnostic imaging services that it furnishes
to a Medicare beneficiary, regardless of whether the service is
furnished in a mobile or fixed base location.
(17) Bills for all mobile diagnostic services that are furnished to
a Medicare beneficiary, unless the mobile diagnostic service is part of
a hospital service provided under arrangement with that hospital.
* * * * *

0
9. Section 410.62 is amended by--
0
A. Revising paragraphs (a)(2) and (3).
0
B. Amending the heading of paragraph (b) by removing the phrase,
``services to certain inpatients'' and adding in its place ``services
furnished to certain inpatients.''
0
C. Removing paragraph (d).
0
D. Redesignating paragraph (c) as paragraph (d).
0
E. Adding new paragraph (c).
The revisions and addition read as follows:

Sec. 410.62 Outpatient speech-language pathology services: Conditions
and exclusions.

(a) * * *
(2) They are furnished under a written plan of treatment that meets
the requirements of Sec. 410.61.
(3) They are furnished by one of the following:
(i) A provider as defined in Sec. 489.2 of this chapter, or by
others under arrangements with, and under the supervision of, a
provider.
(ii) A speech-language pathologist in private practice as described
in paragraph (c) of this section.
(iii) Incident to the service of, a physician, physician assistant,
clinical nurse specialist, or nurse practitioner when those
professionals may perform speech-language pathology services under
State law. When a speech-language pathology service is provided
incident to the services of a physician, physician assistant, clinical
nurse specialist, or nurse practitioner, by anyone other than a
physician, physician assistant, clinical nurse specialist, or nurse
practitioner, the service and the person who furnishes the service must
meet the standards and conditions that apply to speech-language
pathology and speech-language pathologists, except that a license to
practice speech-language pathology services in the State is not
required.
* * * * *
(c) Special provisions for services furnished by speech-language
pathologists in private practice.
(1) Basic qualifications. In order to qualify under Medicare as a
supplier of outpatient speech-language pathology services, each
individual speech-language pathologist in private practice must meet
the following requirements:
(i) Be legally authorized (if applicable, licensed, certified, or
registered) to engage in the private practice of speech-language
pathology by the State in which he or she practices, and practice only
within the scope of his or her license and/or certification.
(ii) Engage in the private practice of speech-language pathology as
an individual, in one of the following practice types:
(A) An unincorporated solo practice.
(B) An unincorporated partnership or unincorporated group practice.
(C) An unincorporated solo practice, partnership, or group
practice, or a professional corporation or other incorporated speech-
language pathology practice.
(D) An employee of a physician group.
(E) An employee of a group that is not a professional corporation.
(iii) Bill Medicare only for services furnished in one of the
following:
(A) A speech-language pathologist's private practice office space
that meets all of the following:
(1) The location(s) where the practice is operated, in the State(s)
where the therapist (and practice, if applicable) is legally authorized
to furnish services and during the hours that the therapist engages in
practice at that location.
(2) The space must be owned, leased, or rented by the practice, and
used for the exclusive purpose of operating the practice.
(B) A patient's home not including any institution that is a
hospital, a CAH, or a SNF.
(iv) Treat individuals who are patients of the practice and for
whom the practice collects fees for the services furnished.
* * * * *

0
10. Section 410.64 is added to read as follows:

Sec. 410.64 Additional preventive services.

(a) Medicare Part B pays for additional preventive services not
otherwise described in this subpart that identify medical conditions or
risk factors for individuals if the Secretary determines through the
national coverage determination process (as defined in section
1869(f)(1)(B) of the Act) that these services are all of the following:
(1) Reasonable and necessary for the prevention or early detection
of illness or disability.
(2) Recommended with a grade of A or B by the United States
Preventive Services Task Force.
(3) Appropriate for individuals entitled to benefits under part A
or enrolled under Part B.
(b) In making determinations under paragraph (a) of this section
regarding the coverage of a new preventive service, the Secretary may
conduct an assessment of the relation between predicted outcomes and
the expenditures for such services and may take into account the
results of such an assessment in making such national coverage
determinations.

0
11. Section 410.75 is amended by revising paragraph (b) to read as
follows:

Sec. 410.75 Nurse practitioners' services.

* * * * *
(b) Qualifications. For Medicare Part B coverage of his or her
services, a nurse practitioner must be a registered professional nurse
who is authorized by the State in which the services are

[[Page 69934]]

furnished to practice as a nurse practitioner in accordance with State
law, and must meet one of the following:
(1) Obtained Medicare billing privileges as a nurse practitioner
for the first time on or after January 1, 2003, and meets the following
requirements:
(i) Be certified as a nurse practitioner by a recognized national
certifying body that has established standards for nurse practitioners.
(ii) Possess a master's degree in nursing or a Doctor of Nursing
Practice (DNP) doctoral degree.
(2) Obtained Medicare billing privileges as a nurse practitioner
for the first time before January 1, 2003, and meets the standards in
paragraph (b)(1)(i) of this section.
(3) Obtained Medicare billing privileges as a nurse practitioner
for the first time before January 1, 2001.
* * * * *

0
12. Section 410.76 is amended by revising paragraph (b)(2) to read as
follows:

Sec. 410.76 Clinical nurse specialists' services.

* * * * *
(b) * * *
(2) Have a master's degree in a defined clinical area of nursing
from an accredited educational institution or a Doctor of Nursing
Practice (DNP) doctoral degree; and
* * * * *
0
13. Section 410.78 is amended by--
0
A. Revising the introductory text of paragraph (b).
0
B. Adding paragraphs (b)(3)(vi), (vii), and (viii).
The revision and additions read as follows:

Sec. 410.78 Telehealth services.

* * * * *
(b) General rule. Medicare Part B pays for office and other
outpatient visits, professional consultation, psychiatric diagnostic
interview examination, individual psychotherapy, pharmacologic
management, end-stage renal disease-related services included in the
monthly capitation payment (except for one visit per month to examine
the access site), individual medical nutrition therapy, the
neurobehavioral status exam, and follow-up telehealth consultations
furnished by an interactive telecommunications system if the following
conditions are met:
* * * * *
(3) * * *
(vi) A hospital-based or critical access hospital-based renal
dialysis center (including satellites).
(vii) A skilled nursing facility (as defined in section 1819(a) of
the Act).
(viii) A community mental health center (as defined in section
1861(ff)(3)(B) of the Act).
* * * * *

Subpart I--Payment of SMI Benefits

0
14. Section 410.155 is amended by revising paragraph (b)(1)
introductory text to read as follows:

Sec. 410.155 Outpatient mental health treatment limitation.

* * * * *
(b) * * *
(1) Services subject to the limitation. Except as specified in
paragraph (b)(2) of this section, services furnished by physicians and
other practitioners, whether furnished directly or incident to those
practitioners' services, are subject to the limitation if they are
furnished in connection with the treatment of a mental, psychoneurotic,
or personality disorder (that is, any condition identified by a
diagnosis code within the range of 290 through 319) and are furnished
to an individual who is not an inpatient of a hospital:
* * * * *

0
15. Section 410.160 is amended by adding paragraph (b)(9) to read as
follows:

Sec. 410.160 Part B annual deductible.

* * * * *
(b) * * *
(9) Beginning January 1, 2009, initial preventive physical
examinations as described in Sec. 410.16.
* * * * *

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT

0
16. The authority citation for part 411 continues to read as follows:

Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).

Subpart A--General Exclusions and Exclusion of Particular Services

0
17. Section 411.15 is amended by--
0
A. Revising paragraphs (a)(1) and (b).
0
B. Adding new paragraph (k)(15).
0
C. Redesignating paragraphs (p)(2)(xii), (xiii), (xiv), and (xv) as
(p)(2)(xiii), (xiv), (xv), and (xvi) respectively.
0
D. Adding new paragraph (p)(2)(xii).
The revision and additions read as follows:

Sec. 411.15 Particular services excluded from coverage.

* * * * *
(a) * * *
(1) Examinations performed for a purpose other than treatment or
diagnosis of a specific illness, symptoms, complaint, or injury, except
for screening mammography, colorectal cancer screening tests, screening
pelvic exams, prostate cancer screening tests, glaucoma screening
exams, ultrasound screening for abdominal aortic aneurysms (AAA),
cardiovascular disease screening tests, diabetes screening tests, a
screening electrocardiogram, initial preventive physical examinations
that meet the criteria specified in paragraphs (k)(6) through (k)(15)
of this section, or additional preventive services that meet the
criteria in Sec. 410.64 of this chapter.
* * * * *
(b) Low vision aid exclusion--(1) Scope. The scope of the eyeglass
exclusion encompasses all devices irrespective of their size, form, or
technological features that use one or more lens to aid vision or
provide magnification of images for impaired vision.
(2) Exceptions. (i) Post-surgical prosthetic lenses customarily
used during convalescence for eye surgery in which the lens of the eye
was removed (for example, cataract surgery).
(ii) Prosthetic intraocular lenses and one pair of conventional
eyeglasses or contact lenses furnished subsequent to each cataract
surgery with insertion of an intraocular lens.
(iii) Prosthetic lenses used by Medicare beneficiaries who are
lacking the natural lens of the eye and who were not furnished with an
intraocular lens.
* * * * *
(k) * * *
(15) In the case of additional preventive services not otherwise
described in this title, subject to the conditions and limitation
specified in Sec. 410.64 of this chapter.
* * * * *
(p) * * *
(2) * * *
(xii) Services described in paragraphs (k)(15)(i) thorugh (vi) of
this section when furnished via telehealth under section
1834(m)(4)(C)(ii)(VII) of the Act.
* * * * *

0
18. Section 411.351 is amended by--
0
A. Amending the definition of ``Designated health services (DHS)'' by
adding the word ``outpatient'' before the phrase ``speech-language
pathology services'' in paragraph (1)(ii).
0
B. Amending the definition of ``Physical therapy, occupational

[[Page 69935]]

therapy, and speech-language pathology services'' by--
0
1. Removing the phrase ``speech-language pathology'' wherever it
appears within the heading or introductory text and adding in its place
the phrase ``outpatient speech-language pathology.''
0
2. Removing the parenthetical phrase ``(including speech-language
pathology services)'' from the introductory text in paragraph (1).
0
3. Adding the word ``or'' to follow ``equipment;'' at the end of
paragraph (1)(ii).
0
4. Removing ``; or'' at the end of paragraph (1)(iii) and replacing it
with a period.
0
5. Removing paragraph (1)(iv).
0
6. Adding a new paragraph (3).
The addition reads as follows:

Sec. 411.351 Definitions.

* * * * *
Physical therapy, occupational therapy, and outpatient speech-
language pathology services * * *
* * * * *
(3) Outpatient speech-language pathology services, meaning those
services as described in section 1861(ll)(2) of the Act that are for
the diagnosis and treatment of speech, language, and cognitive
disorders that include swallowing and other oral-motor dysfunctions.
* * * * *

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT FOR END-STAGE
RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT RATES FOR
SKILLED NURSING FACILITIES

0
19. The authority citation for part 413 continues to read as follows:

Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act
(42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n),
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Public Law 106-133 (113 Stat. 1501A-332).

Subpart H--Payment for End-Stage Renal Disease (ESRD) Services and
Organ Procurement Costs

0
20. Section 413.174 is amended by--
0
A. Revising the introductory text of paragraphs (a) and (c).
0
B. Revising paragraph (a)(1).
0
C. Redesignating paragraphs (a)(2) and (a)(3) as paragraphs (a)(3) and
(a)(4), respectively.
0
D. Adding new paragraph (a)(2).
The revisions and addition read as follows:

Sec. 413.174 Prospective rates for hospital-based and independent
ESRD facilities.

(a) Establishment of rates. CMS establishes prospective payment
rates for ESRD facilities using the following methodology:
(1) For dialysis services furnished prior to January 1, 2009, the
methodology differentiates between hospital-based and independent ESRD
facilities;
(2) For dialysis services furnished on or after January 1, 2009--
(i) The composite rate paid to hospital-based facilities for
dialysis services shall be the same as the composite rate paid for such
services furnished by independent renal dialysis facilities.
(ii) When applying the geographic index to hospital-based
facilities, the labor share shall be based on the labor share otherwise
applied for renal dialysis facilities.
* * * * *
(c) Determination of hospital-based facility. A determination under
this paragraph (c) is an initial determination under Sec. 498.3 of
this chapter. CMS determines that a facility is hospital-based if the--
* * * * *

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
21. The authority citation for part 414 continues to read as follows:

Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).

Subpart B--Physicians and Other Practitioners

0
22. Section 414.22 is amended by revising paragraphs (b)(5)(i)(A) and
(B) to read as follows:

Sec. 414.22 Relative value units (RVUs).

* * * * *
(b) * * *
(5) * * *
(i) * * *
(A) Facility practice expense RVUs. The facility PE RVUs apply to
services furnished to patients in the hospital, skilled nursing
facility, community mental health center, or in an ambulatory surgical
center.
(B) Nonfacility practice expense RVUs. The nonfacility PE RVUs
apply to services performed in a physician's office, a patient's home,
a nursing facility, or a facility or institution other than a hospital
or skilled nursing facility, community mental health center, or ASC.
* * * * *
0
23. Section 414.50 is amended by--
0
A. Revising the section heading as set forth below.
0
B. Revising paragraph (a).
The revisions read as follows:

Sec. 414.50 Physician or other supplier billing for diagnostic tests
performed or interpreted by a physician who does not share a practice
with the billing physician or other supplier.

(a) General rules. (1) For services covered under section
1861(s)(3) of the Act and paid for under part 414 of this chapter
(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 technical component (TC) or professional
component (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 as described in
Sec. 413.17 of this chapter) and the diagnostic test is performed by a
physician who does not share a practice with 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:
(i) The performing supplier's net charge to the billing physician
or other supplier. For purposes of this paragraph (a)(1) only, with
respect to the TC, the performing supplier is the physician who
supervised the TC, and with respect to the PC, the performing supplier
is the physician who performed the PC.
(ii) The billing physician or other supplier's actual charge.
(iii) The fee schedule amount for the test that would be allowed if
the performing supplier billed directly.
(2) The following requirements are applicable for purposes of
paragraph (a)(1) of this section:
(i) The net charge must be determined without regard to any charge
that is intended to reflect the cost of equipment or space leased to
the performing supplier by or through the billing physician or other
supplier.
(ii) A performing physician shares a practice with the billing
physician or other supplier if he or she furnishes substantially all
(which, for purposes of this section, means ``at least 75 percent'') of
his or her professional services through such billing physician or
other supplier. The ``substantially

[[Page 69936]]

all'' requirement will be satisfied if, at the time the billing
physician or other supplier submits a claim for a service furnished by
the performing physician, the billing physician or other supplier has a
reasonable belief that:
(A) For the 12 months prior to and including the month in which the
service was performed, the performing physician furnished substantially
all of his or her professional services through the billing physician
or other supplier; or
(B) The performing physician will furnish substantially all of his
or her professional services through the billing physician or other
supplier for the next 12 months (including the month in which the
service is performed).
(iii) A physician will be deemed to share a practice with the
billing physician or other supplier with respect to the performance of
the TC or PC of a diagnostic test if the physician is an owner,
employee or independent contractor of the billing physician or other
supplier and the TC or PC is performed in the office of the billing
physician or other supplier. The ``office of the billing physician or
other supplier'' is any medical office space, regardless of number of
locations, in which the ordering physician or other ordering supplier
regularly furnishes patient care, and includes space where the billing
physician or other supplier furnishes diagnostic testing, if the space
is located in the same building (as defined in Sec. 411.351) in which
the ordering physician or other ordering supplier regularly furnishes
patient care. With respect to a billing physician or other supplier
that is a physician organization (as defined in Sec. 411.351 of this
chapter), the ``office of the billing physician or other supplier'' is
space in which the ordering physician provides substantially the full
range of patient care services that the ordering physician provides
generally. The performance of the TC includes both the conducting of
the TC as well as the supervision of the TC.
* * * * *

0
24. Section 414.65 is amended by revising paragraph (a)(1) to read as
follows:

Sec. 414.65 Payment for telehealth services.

(a) * * *
(1) The Medicare payment amount for office or other outpatient
visits, consultation, individual psychotherapy, psychiatric diagnostic
interview examination, pharmacologic management, end-stage renal
disease related services included in the monthly capitation payment
(except for one visit per month to examine the access site), and
individual medical nutrition therapy furnished via an interactive
telecommunications system is equal to the current fee schedule amount
applicable for the service of the physician or practitioner. The
Medicare payment amount for follow-up inpatient telehealth
consultations furnished via an interactive telecommunications system is
equal to the current fee schedule amount applicable to subsequent
hospital care provided by a physician or practitioner.
* * * * *

0
25. Section 414.67 is amended by adding paragraph (d) to read as
follows:

Sec. 414.67 Incentive payments for Health Professional Shortage
Areas.

* * * * *
(d) HPSA bonuses are payable for services furnished by physicians
in areas designated as geographic HPSAs as of December 31 of the prior
year. Physicians furnishing services in areas that are designated as
geographic HPSAs prior to the beginning of the year but not included on
the published list of zip codes for which automated HPSA bonus payments
are made should use the AQ modifier to receive the HPSA bonus payment.

Subpart D--Payment for Durable Medical Equipment and Prosthetic and
Orthotic Devices

0
26. Section 414.210 is amended by--
0
A. Revising paragraphs (e)(1) and (2).
0
B. Removing paragraph (e)(3).
0
C. Redesignating paragraphs (e)(4) and (e)(5) as paragraphs (e)(3) and
(e)(4), respectively.
0
D. Revising newly redesignated paragraphs (e)(3)(ii), (e)(3)(iii), and
(e)(4).
The revisions read as follows:

Sec. 414.210 General payment rules.

* * * * *
(e) * * *
(1) General rule. Except as provided in paragraph (e)(3) of this
section, the carrier pays the reasonable and necessary charges for
maintenance and servicing of beneficiary-owned equipment. Reasonable
and necessary charges are those made for parts and labor not otherwise
covered under a manufacturer's or supplier's warranty. Payment is made
for replacement parts in a lump sum based on the carrier's
consideration of the item. The carrier establishes a reasonable fee for
labor associated with repairing, maintaining, and servicing the item.
Payment is not made for maintenance and servicing of a rented item
other than the maintenance and servicing fee for oxygen equipment
described in paragraph (e)(2) of this section or for other durable
medical equipment as described in Sec. 414.229(e).
(2) Maintenance and servicing payment for 2009 for certain oxygen
equipment furnished after the 36-month rental period. The carrier makes
a maintenance and servicing payment for oxygen equipment other than
liquid and gaseous equipment (stationary and portable) as follows:
(i) For the first 6-month period following the date on which the
36-month rental period ends, in accordance with Sec. 414.226(a)(1), no
payments are made.
(ii) During each succeeding 6-month period, payment may be made for
30 minutes of labor for general maintenance and servicing of the
equipment in the beneficiary's home.
(3) Exception to Maintenance and Servicing Payments. For items
purchased on or after June 1, 1989, no payment is made under the
provisions of paragraph (e)(1) of this section for the maintenance and
servicing of:
(i) Items requiring frequent and substantial servicing, as defined
in Sec. 414.222(a);
(ii) Capped rental items, as defined in Sec. 414.229(a), that are
not beneficiary-owned in accordance with Sec. 414.229(d), Sec.
414.229(f)(2), or Sec. 414.229(h); and
(iii) Capped rental items, as defined in Sec. 414.229(a), that are
not beneficiary-owned in Sec. 414.229(d), Sec. 414.229(f)(2), or
Sec. 414.229(h); and
(iv) Oxygen equipment, as described in Sec. 414.226.
(4) Supplier replacement of beneficiary-owned equipment based on
accumulated repair costs. A supplier that transfers title to a capped
rental item to a beneficiary in accordance with Sec. 414.229(f)(2) is
responsible for furnishing replacement equipment at no cost to the
beneficiary or to the Medicare program if the carrier determines that
the item furnished by the supplier will not last for the entire
reasonable useful lifetime established for the equipment in accordance
with Sec. 414.210(f)(1). In making this determination, the carrier may
consider whether the accumulated costs of repair exceed 60 percent of
the cost to replace the item.
* * * * *

0
27. Section 414.226 is amended by revising paragraphs (d)(3), (d)(4),
(f), (g)(1) introductory text, (g)(2) introductory text and (g)(3) and
by removing paragraph (g)(4) to read as follows:

[[Page 69937]]

Sec. 414.226 Oxygen and oxygen equipment.

* * * * *
(d) * * *
(3) The fee schedule amount for items described in paragraph
(c)(1)(iv) of this section is paid when the beneficiary--
(i) Owns stationary oxygen equipment that requires delivery of
gaseous or liquid oxygen contents; or
(ii) Rents stationary oxygen equipment that requires delivery of
gaseous or liquid oxygen contents after the period of continuous use of
36 months described in paragraph (a)(1) of this section.
(4) The fee schedule amount for items described in paragraph
(c)(1)(v) of this section is paid when the beneficiary--
(i) Owns portable oxygen equipment described in (c)(1)(ii) of this
section;
(ii) Rents portable oxygen equipment described in paragraph
(c)(1)(ii) of this section during the period of continuous use of 36
months described in paragraph (a)(1) of this section and does not rent
stationary oxygen equipment; or
(iii) Rents portable oxygen equipment described in paragraph
(c)(1)(ii) of this section after the period of continuous use of 36
months described in paragraph (a)(1) of this section.
* * * * *
(f) Furnishing oxygen and oxygen equipment after the 36-month
rental cap. (1) The supplier that furnishes oxygen equipment for the
36th continuous month during which payment is made under this section
must--
(i) Continue to furnish the equipment during any period of medical
need for the remainder of the reasonable useful lifetime established
for the equipment in accordance with Sec. 414.210(f)(1); or
(ii) Arrange for furnishing the oxygen equipment with another
supplier if the beneficiary relocates to an area that is outside the
normal service area of the supplier that initially furnished the
equipment.
(2) The supplier that furnishes liquid or gaseous oxygen equipment
(stationary or portable) for the 36th continuous month during which
payment is made under this section must--
(i) Continue to furnish the oxygen contents necessary for the
effective use of the liquid or gaseous equipment during any period of
medical need for the remainder of the reasonable useful lifetime
established for the equipment in accordance with Sec. 414.210(f)(1);
or
(ii) Arrange for furnishing the oxygen contents with another
supplier if the beneficiary relocates to an area that is outside the
normal service area of the supplier that initially furnished the
equipment.
(g) * * *
(1) The supplier that furnishes oxygen equipment for the first
month during which payment is made under this section must continue to
furnish the equipment for the entire 36-month period of continuous use,
unless medical necessity ends or--
* * * * *
(2) Oxygen equipment furnished under this section may not be
replaced by the supplier prior to the expiration of the reasonable
useful lifetime established for the equipment in accordance with Sec.
414.210(f)(1) unless:
* * * * *
(3) Before furnishing oxygen equipment, the supplier must disclose
to the beneficiary its intentions regarding whether it will accept
assignment of all monthly rental claims for the duration of the rental
period. A supplier's intentions could be expressed in the form of a
written agreement between the supplier and the beneficiary.
0
28. Section 414.228 is amended by adding paragraph (c) to read as
follows:

Sec. 414.228 Prosthetic and orthotic devices.

* * * * *
(c) Payment for therapeutic shoes. The payment rules specified in
paragraphs (a) and (b) of this section are applicable to custom molded
and extra depth shoes, modifications, and inserts (therapeutic shoes)
furnished after December 31, 2004.

0
29. Section 414.230 is amended by adding paragraph (h) to read as
follows:

Sec. 414.230 Determining a period of continuous use.

* * * * *
(h) Oxygen equipment furnished after the 36-month rental period. A
new period of continuous use does not begin under any circumstance in
the case of oxygen equipment furnished after the 36-month rental period
in accordance with Sec. 414.226(f) until the end of the reasonable
useful lifetime established for such equipment in accordance with Sec.
414.210(f).

Subpart H--Fee Schedule for Ambulance Services

0
30. Section 414.610 is amended by--
0
A. Revising paragraph (c)(1) introductory text.
0
B. Adding new paragraph (h).
The revision and addition read as follows:

Sec. 414.610 Basis of payment.

* * * * *
(c) * * *
(1) Ground ambulance service levels. (i) The CF is multiplied by
the applicable RVUs for each level of service to produce a service-
level base rate. For services furnished during the period July 1, 2004
through December 31, 2006, ambulance services originating in urban
areas (both base rate and mileage) are paid based on a rate that is one
percent higher than otherwise is applicable under this section, and
ambulance services originating in rural areas (both base rate and
mileage) are paid based on a rate that is two percent higher than
otherwise is applicable under this section. For services furnished
during the period July 1, 2008 through December 31, 2009, ambulance
services originating in urban areas (both base rate and mileage) are
paid based on a rate that is 2 percent higher than otherwise is
applicable under this section, and ambulance services originating in
rural areas (both base rate and mileage) are paid based on a rate that
is three percent higher than otherwise is applicable under this
section.
(ii) The service-level base rate is then adjusted by the GAF.
Compare this amount to the actual charge. The lesser of the actual
charge or the GAF adjusted base rate amount is added to the lesser of
the actual mileage charges or the payment rate per mile, multiplied by
the number of miles that the beneficiary was transported. When
applicable, the appropriate RAF is applied to the ground mileage rate
to determine the appropriate payment rates. The RVU scale for the
ambulance fee schedule is as follows:
* * * * *
(h) Treatment of certain areas for payment for air ambulance
services. Any area that was designated as a rural area for purposes of
making payments under the ambulance fee schedule for air ambulance
services furnished on December 31, 2006, must be treated as a rural
area for purposes of making payments under the ambulance fee schedule
for air ambulance services furnished during the period July 1, 2008
through December 31, 2009.

Subpart K--Payment for Drugs and Biologicals Under Part B

0
31. Section 414.904 is amended by revising paragraphs (b)(2), (c)(2),
(d)(3), and (e)(1)(i) to read as follows:

Sec. 414.904 Average sales price as the basis for payment.

* * * * *
(b) * * *
(2) Calculation of the average sales price. (i) For dates of
service before April 1, 2008, the average sales price is determined
by--

[[Page 69938]]

(A) Computing the sum of the products (for each National Drug Code
assigned to the drug products) of the manufacturer's average sales
price and the total number of units sold; and
(B) Dividing that sum by the sum of the total number of units sold
for all NDCs assigned to the drug products.
(ii) For dates of service on or after April 1, 2008, the average
sales price is determined by--
(A) Computing the sum of the products (for each National Drug Code
assigned to such drug products) of the manufacturer's average sales
price, determined by the Secretary without dividing such price by the
total number of billing units for the National Drug Code for the
billing and payment code and the total number of units sold; and
(B) Dividing the sum determined under clause (A) by the sum of the
products (for each National Drug Code assigned to such drug products)
of the total number of units sold and the total number of billing units
for the National Drug Code for the billing and payment code.
(iii) For purposes of this subsection and subsection (c), the term
billing unit means the identifiable quantity associated with a billing
and payment code, as established by CMS.
(c) * * *
(2) Calculation of the average sales price. (i) For dates of
service before April 1, 2008, the average sales price is determined
by--
(A) Computing the sum of the products (for each National Drug Code
assigned to the drug product) of the manufacturer's average sales price
and the total number of units sold; and
(B) Dividing that sum by the sum of the total number of units sold
for all NDCs assigned to the drug product.
(ii) For dates of service on or after April 1, 2008, the average
sales price is determined by--
(A) Computing the sum of the products (for each National Drug Code
assigned to such drug products) of the manufacturer's average sales
price, determined by the Secretary without dividing such price by the
total number of billing units for the National Drug Code for the
billing and payment code and the total number of units sold; and
(B) Dividing the sum determined under clause (A) by the sum of the
products (for each National Drug Code assigned to such drug products)
of the total number of units sold and the total number of billing units
for the National Drug Code for the billing and payment code.
(d) * * *
(3) Widely available market price and average manufacturer price.
If the Inspector General finds that the average sales price exceeds the
widely available market price or the average manufacturer price by 5
percent or more in CYs 2005, 2006, 2007, 2008 and 2009, the payment
limit in the quarter following the transmittal of this information to
the Secretary is the lesser of the widely available market price or 103
percent of the average manufacturer price.
(e) * * *
(1) * * *
(i) Treatment of Certain Drugs. Beginning with April 1, 2008, the
payment amount for--
(A) Each single source drug or biological described in section
1842(o)(1)(G) that is treated as a multiple source drug because of the
application of section 1847A(c)(6)(C)(ii) is the lower of--
(1) The payment amount that would be determined for such drug or
biological applying section 1847A(c)(6)(C)(ii); or
(2) The payment amount that would have been determined for such
drug or biological if section 1847A(c)(6)(C)(ii) were not applied.
(B) A multiple source drug described in section 1842(o)(1)(G)
(excluding a drug or biological that is treated as a multiple source
drug because of the application of section 1847A(c)(6)(C)(ii)) is the
lower of--
(1) The payment amount that would be determined for such drug or
biological taking into account the application of section
1847A(c)(6)(C)(ii); or
(2) The payment amount that would have been determined for such
drug or biological if section 1847A(c)(6)(C)(ii) were not applied.
* * * * *

PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS,
SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN
CERTAIN SETTINGS

0
32. The authority citation for part 415 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart C--Part B Carrier Payments for Physician Services to
Beneficiaries in Providers

Sec. 415.130 [Amended]

0
33. In Sec. 415.130(d), the phrase ``December 31, 2007'' is removed
and the phrase ``December 31, 2009'' is added in its place.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
34. The authority citation for part 423 continues to read as follows:

Authority: Sections 1102, 1106, 1860D-1 through 1860D-42, and
1871 of the Social Security Act (42 U.S.C. 1302, 1306, 1395w-101
through 1395w-152, and 1395hh).

0
35. Section 423.160 is amended by revising paragraph (a)(3)(i) to read
as follows:

Sec. 423.160 Standards for electronic prescribing.

(a) * * *
(3) * * *
(i) Until January 1, 2012, entities transmitting prescriptions or
prescription-related information by means of computer-generated
facsimile are exempt from the requirement to use the NCPDP SCRIPT
Standard adopted by this section in transmitting such prescriptions or
prescription-related information. After January 1, 2012, entities
transmitting prescriptions or prescription-related information must
utilize the NCPSP SCRIPT standard in all instances other than
temporary/transient network transmission failures.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
36. The authority citation for part 424 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).

Subpart C--Claims for Payment

0
37. Section 424.36 is amended by revising paragraphs (a), (b)(6)
introductory text, and (b)(6)(ii)(C)(2) to read as follows:

Sec. 424.36 Signature requirements.

(a) General rule. The beneficiary's own signature is required on
the claim unless the beneficiary has died or the provisions of
paragraphs (b), (c), or (d) of this section apply. For purposes of this
section, ``the claim'' includes the actual claim form or such other
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.
(b) * * *
(6) An ambulance provider or supplier with respect to emergency or
nonemergency ambulance transport

[[Page 69939]]

services, if the following conditions and documentation requirements
are met.
* * * * *
(ii) * * *
(C) * * *
(2) The requested information from a representative of the hospital
or facility using a secondary form of verification obtained at a later
date, but prior to submitting the claim to Medicare for payment.
Secondary forms of verification include a copy of any of the following:
(i) The signed patient care/trip report;
(ii) The facility or hospital registration/admission sheet;
(iii) The patient medical record;
(iv) The facility or hospital log; or
(v) Other internal facility or hospital records.
* * * * *

0
38. Section 424.44 is amended by--
0
A. Revising the introductory text of paragraph (a).
0
B. Adding paragraph (e).
The revision and addition read as follows:

Sec. 424.44 Time limits for filing claims.

(a) Basic Limits. Except as provided in paragraph (b) and (e) of
this section, the claim must be delivered to the intermediary or
carrier as appropriate:
* * * * *
(e) Exceptions. Any claims filed by the following suppliers with
Medicare billing privileges whose time limits for filing claims are
linked to their enrollment status and are governed under Sec. 424.516,
Sec. 424.520, and Sec. 424.521 of this subpart:
(1) Physician or nonphysician organizations.
(2) Physicians.
(3) Nonphysician practitioners.
(4) Independent diagnostic testing facilities.

Subpart D--To Whom Payment Is Ordinarily Made

0
39. Section 424.57 is amended by--
0
A. Amending paragraph (a) by adding the definitions of ``Affiliate'',
``Attended facility-based polysomnogram'', ``Continuous positive airway
pressure (CPAP)'' device, and ``Sleep test'' in alphabetical order.
0
B. Adding new paragraph (f).
The additions read as follows:

Sec. 424.57 Special payment rules for items furnished by DMEPOS
suppliers and issuance of DMEPOS supplier billing privileges.

(a) * * *
Affiliate means a person or organization that is related to another
person or organization through a compensation arrangement or ownership.
Attended facility-based polysomnogram means a comprehensive
diagnostic sleep test including at least electroencephalography,
electro-oculography, electromyography, heart rate or
electrocardiography, airflow, breathing effort, and arterial oxygen
saturation furnished in a sleep laboratory facility in which a
technologist supervises the recording during sleep time and has the
ability to intervene if needed.
* * * * *
Continuous positive airway pressure (CPAP) device means a machine
that introduces air into the breathing passages at pressures high
enough to overcome obstructions in the airway in order to improve
airflow. The airway pressure delivered into the upper airway is
continuous during both inspiration and expiration.
* * * * *
Sleep test means an attended or unattended diagnostic test for a
sleep disorder whether performed in or out of a sleep laboratory. The
`provider of the sleep test' is the individual or entity that directly
or indirectly administers and/or interprets the sleep test and/or
furnishes the sleep test device used to administer the sleep test.
* * * * *
(f) Payment prohibition. No Medicare payment will be made to the
supplier of a CPAP device if that supplier, or its affiliate, is
directly or indirectly the provider of the sleep test used to diagnose
the beneficiary with obstructive sleep apnea. This prohibition does not
apply if the sleep test is an attended facility-based polysomnogram.

Subpart P--Requirements for Establishing and Maintaining Medicare
Billing Privileges

0
40. Section 424.502 is amended by adding the definitions ``Final
adverse action'' and ``Physician or nonphysician practitioner
organization'' in alphabetical order to read as follows:

Sec. 424.502 Definitions.

* * * * *
Final adverse action means one or more of the following actions:
(1) A Medicare-imposed revocation of any Medicare billing
privileges;
(2) Suspension or revocation of a license to provide health care by
any State licensing authority;
(3) Revocation or suspension by an accreditation organization;
(4) A conviction of a Federal or State felony offense (as defined
in Sec. 424.535(a)(3)(i)) within the last 10 years preceding
enrollment, revalidation, or re-enrollment; or
(5) An exclusion or debarment from participation in a Federal or
State health care program.
* * * * *
Physician or nonphysician practitioner organization means any
physician or nonphysician practitioner entity that enrolls in the
Medicare program as a sole proprietorship or organizational entity.

* * * * *

0
41. Section 424.516 is added to read as follows:

Sec. 424.516 Additional provider and supplier requirements for
enrolling and maintaining active enrollment status in the Medicare
program.

(a) Certifying compliance. CMS enrolls and maintains an active
enrollment status for a provider or supplier when that provider or
supplier certifies that it meets, and continues to meet, and CMS
verifies that it meets, and continues to meet, all of the following
requirements:
(1) Compliance with title XVIII of the Act and applicable Medicare
regulations.
(2) Compliance with Federal and State licensure, certification, and
regulatory requirements, as required, based on the type of services or
supplies the provider or supplier type will furnish and bill Medicare.
(3) Not employing or contracting with individuals or entities that
meet either of the following conditions:
(i) Excluded from participation in any Federal health care
programs, for the provision of items and services covered under the
programs, in violation of section 1128A(a)(6) of the Act.
(ii) Debarred by the General Services Administration (GSA) from any
other Executive Branch procurement or nonprocurement programs or
activities, in accordance with the Federal Acquisition and Streamlining
Act of 1994, and with the HHS Common Rule at 45 CFR part 76.
(b) Reporting requirements Independent Diagnostic Testing
Facilities (IDTFs). IDTF reporting requirements are specified in Sec.
410.33(g)(2) of this chapter.
(c) Reporting requirements DMEPOS suppliers. DMEPOS reporting
requirements are specified in Sec. 424.57(c)(2).
(d) Reporting requirements for physicians, nonphysician
practitioners, and physician and nonphysician practitioner
organizations. Physicians, nonphysician practitioners, and

[[Page 69940]]

physician and nonphysician practitioner organizations must report the
following reportable events to their Medicare contractor within the
specified timeframes:
(1) Within 30 days--
(i) A change of ownership;
(ii) Any adverse legal action; or
(iii) A change in practice location.
(2) All other changes in enrollment must be reported within 90
days.
(e) Reporting requirements for all other providers and suppliers.
Reporting requirements for all other providers and suppliers not
identified in paragraphs (a) through (d) of this section, must report
to CMS the following information within the specified timeframes:
(1) Within 30 days for a change of ownership, including changes in
authorized official(s) or delegated official(s);
(2) All other changes to enrollment must be reported within 90
days.
(f) Maintaining documentation. A provider or supplier is required
to maintain ordering and referring documentation, including the NPI,
received from a physician or eligible nonphysician practitioner for 7
years from the date of service. Physicians and nonphysician
practitioners are required to maintain written ordering and referring
documentation for 7 years from the date of service.

0
42. Section 424.517 is added to read as follows:

Sec. 424.517 Onsite review.

(a) CMS reserves the right, when deemed necessary, to perform
onsite review of a provider or supplier to verify that the enrollment
information submitted to CMS or its agents is accurate and to determine
compliance with Medicare enrollment requirements. Site visits for
enrollment purposes do not affect those site visits performed for
establishing compliance with conditions of participation. Based upon
the results of CMS's onsite review, the provider may be subject to
denial or revocation of Medicare billing privileges as specified in
Sec. 424.530 or Sec. 424.535 of this part.
(1) Medicare Part A providers. CMS determines, upon on-site review,
that the provider meets either of the following conditions:
(i) Is unable to furnish Medicare-covered items or services.
(ii) Has failed to satisfy any of the Medicare enrollment
requirements.
(2) Medicare Part B providers. CMS determines, upon review, that
the supplier meets any of the following conditions:
(i) Is unable to furnish Medicare-covered items or services.
(ii) Has failed to satisfy any or all of the Medicare enrollment
requirements.
(iii) Has failed to furnish Medicare covered items or services as
required by the statute or regulations.
(b) [Reserved]

0
43. Section 424.520 is revised to read as follows:

Sec. 424.520 Effective date of Medicare billing privileges.

(a) Surveyed, certified or accredited providers and suppliers. The
effective date for billing privileges for providers and suppliers
requiring State survey, certification or accreditation is specified in
Sec. 489.13 of this chapter. If a provider or supplier is seeking
accreditation from a CMS-approved accreditation organization, the
effective date is specified in Sec. 489.13(d).
(b) Independent Diagnostic Testing Facilities. The effective date
for billing privileges for IDTFs is specified in Sec. 410.33(i) of
this chapter.
(c) DMEPOS suppliers. The effective date for billing privileges for
DMEPOS suppliers is specified in Sec. 424.57(b) of this subpart and
section 1834(j)(1)(A) of the Act.
(d) Physicians, nonphysician practitioners, and physician and
nonphysician practitioner organizations. The effective date for billing
privileges for physicians, nonphysician practitioners, and physician
and nonphysician practitioner organizations is the later of the date of
filing of a Medicare enrollment application that was subsequently
approved by a Medicare contractor or the date an enrolled physician or
nonphysician practitioner first began furnishing services at a new
practice location.

0
44. Section 424.521 is added to read as follows:

Sec. 424.521 Request for payment by physicians, nonphysician
practitioners, physician or nonphysician organizations.

(a) Physicians, nonphysician practitioners and physician and
nonphysician practitioner organizations may retrospectively bill for
services when a physician or nonphysician practitioner or a physician
or a nonphysician organization have met all program requirements,
including State licensure requirements, and services were provided at
the enrolled practice location for up to--
(1) 30 days prior to their effective date if circumstances
precluded enrollment in advance of providing services to Medicare
beneficiaries, or
(2) 90 days prior to their effective date if a Presidentially-
declared disaster under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act) precluded
enrollment in advance of providing services to Medicare beneficiaries.
(b) [Reserved]

0
45. Section 424.530 is amended by--
0
A. Revising the section heading as set forth below.
0
B. Adding paragraphs (a)(6) and (a)(7).
The revision and additions read as follows:

Sec. 424.530 Denial of enrollment in the Medicare program.

(a) * * *
(6) Overpayment. The current owner (as defined in Sec. 424.502),
physician or nonphysician practitioner has an existing overpayment at
the time of filing of an enrollment application.
(7) Payment suspension. The current owner (as defined in Sec.
424.502), physician or nonphysician practitioner has been placed under
a Medicare payment suspension as defined in Sec. 405.370 through Sec.
405.372 of this subchapter.
* * * * *

0
46. Section 424.535 is amended by--
0
A. Amending paragraph (a)(1) by removing the phrase ``billing
privileges.'' and adding in its place ``billing privileges, except for
those imposed under paragraphs (a)(2), (a)(3), or (a)(5) of this
section.
0
B. Adding paragraphs (a)(9), (a)(10), and (g).
0
C. Revising paragraph (f).
The additions and revision read as follows:

Sec. 424.535 Revocation of enrollment and billing privileges in the
Medicare program.

(a) * * *
(9) Failure to report. The provider or supplier did not comply with
the reporting requirements specified in Sec. 424.516(d)(1)(ii) and
(iii) of this subpart.
(10) Failure to document. The provider or supplier did not comply
with the documentation requirements specified in Sec. 424.516(f) of
this subpart.
* * * * *
(g) Effective date of revocation. 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 a
Federal exclusion or debarment, felony

[[Page 69941]]

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.
(h) Submission of claims for services furnished before revocation.
A physician organization, physician, nonphysician practitioner or
independent diagnostic testing facility must submit all claims for
items and services furnished within 60 calendar days of the effective
date of revocation.

0
47. Section 424.565 is added to read as follows:

Sec. 424.565 Overpayment.

A physician or nonphysician practitioner organization, physician or
nonphysician practitioner that does not comply with the reporting
requirements specified in Sec. 424.516(d)(1)(ii) and (iii) of this
subpart is assessed an overpayment back to the date of the final
adverse action or change in practice location. Overpayments are
processed in accordance with Part 405 Subpart C of this chapter.

PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS

0
48. The authority citation for part 485 continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395(hh)).

Subpart B--Conditions of Participation: Comprehensive Outpatient
Rehabilitation Facilities

0
49. Section 485.58 is amended by revising the introductory text and
paragraphs (a)(1)(i) and (e)(2) to read as follows:

Sec. 485.58 Condition of participation: Comprehensive rehabilitation
program.

The facility must provide a coordinated rehabilitation program that
includes, at a minimum, physicians' services, physical therapy
services, and social or psychological services. These services must be
furnished by personnel that meet the qualifications set forth in
Sec. Sec. 485.70 and 484.4 of this chapter and must be consistent with
the plan of treatment and the results of comprehensive patient
assessments.
(a) * * *
(1) * * *
(i) Provide, in accordance with accepted principles of medical
practice, medical direction, medical care services, consultation, and
medical supervision of nonphysician staff;
* * * * *
(e) * * *
(2) Exceptions. Physical therapy, occupational therapy, and speech-
language pathology services may be furnished away from the premises of
the CORF including the individual's home when payment is not otherwise
made under Title XVIII of the Act. In addition, a single home
environment evaluation is covered if there is a need to evaluate the
potential impact of the home environment on the rehabilitation goals.
The single home environment evaluation requires the presence of the
patient and the physical therapist, occupational therapist, or speech-
language pathologist, as appropriate.
* * * * *

0
50. Section 485.70 is amended by:
0
A. Revising paragraphs (c), (e), (j) introductory text, (j)(2) and
(j)(3).
0
B. Releting paragraph (k) and redesignating paragraphs (l) and (m) as
paragraphs (k) and (l) respectively.
The revisions read as follows:

Sec. 485.70 Personnel qualifications.

* * * * *
(c) An occupational therapist and an occupational therapy assistant
must meet the qualifications in Sec. 484.4 of this chapter.
* * * * *
(e) A physical therapist and a physical therapist assistant must
meet the qualifications in Sec. 484.4 of this chapter.
* * * * *
(j) A respiratory therapist must--
(1) * * *
(2) Have successfully completed a nationally--accredited
educational program that confers eligibility for the National Board for
Respiratory Care (NBRC) registry exams, and have passed the registry
examination administered by the NBRC, or
(3) Have equivalent training and experience as determined by the
National Board for Respiratory Care (NBRC) and passed the registry
examination administered by the NBRC.
* * * * *

Subpart F--Conditions of Participation: Critical Access Hospitals
(CAHs)

0
51. Section 485.635 is amended by revising paragraph (e) to read as
follows:

Sec. 485.635 Conditions of participation: Provision of services.

* * * * *
(e) Standard: Rehabilitation Therapy Services. Physical therapy,
occupational therapy, and speech-language pathology services furnished
at the CAH, if provided, are provided by staff qualified under State
law, and consistent with the requirements for therapy services in Sec.
409.17 of this subpart.

Subpart H--Conditions of Participation for Clinics, Rehabilitation
Agencies, and Public Health Agencies as Providers of Outpatient
Physical Therapy and Speech-Language Pathology Services

0
52. Section 485.703 is amended by--
0
A. Adding the definition of ``extension location'' in alphabetical
order.
0
B. Revising paragraph (2) of the definition of ``rehabilitation
agency.''
The addition and revision read as follows:

Sec. 485.703 Definitions.

* * * * *
Extension location. A location or site from which a rehabilitation
agency provides services within a portion of the total geographic area
served by the primary site. The extension location is part of the
rehabilitation agency. The extension location should be located
sufficiently 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.
* * * * *
Rehabilitation agency * * *
(2) Provides at least physical therapy or speech-language pathology
services.
* * * * *

0
53. Section 485.711 is amended by revising the introductory text and
paragraphs (b)(3) and (c) to read as follows:

Sec. 485.711 Condition of participation: Plan of care and physician
involvement.

For each patient in need of outpatient physical therapy or speech
pathology services, there is a written plan of care established and
periodically reviewed by a physician, or by a physical therapist or
speech pathologist respectively.
* * * * *
(b) * * *
(3) The plan of care and results of treatment are reviewed by the
physician or by the individual who established the plan at least as
often as the patient's condition requires, and the indicated action is
taken.
* * * * *
(c) Standard: Emergency care. The rehabilitation agency must
establish procedures to be followed by personnel

[[Page 69942]]

in an emergency, which cover immediate care of the patient, persons to
be notified, and reports to be prepared.

0
54. Section 485.717 is revised to read as follows:

Sec. 485.717 Condition of participation: Rehabilitation program.

This condition and standards apply only to a rehabilitation
agency's own patients, not to patients of hospitals, skilled nursing
facilities (SNFs), or Medicaid nursing facilities (NFs) to which the
agency furnishes services. The hospital, SNF, or NF is responsible for
ensuring that qualified staff furnish services for which they arrange
or contract for their patients. The rehabilitation agency provides
physical therapy and speech-language pathology services to all of its
patients who need them.
(a) Standard: Qualification of staff. The agency's therapy services
are furnished by qualified individuals as direct services and/or
services provided under contract.
(b) Standard: Arrangements for services. If services are provided
under contract, the contract must specify the term of the contract, the
manner of termination or renewal and provide that the agency retains
responsibility for the control and supervision of the services.

PART 486--CONDITIONS FOR COVERAGE OF SPECIALIZED SERVICES FURNISHED
BY SUPPLIERS

0
55. The authority citation for part 486 continues to read as follows:

Authority: Secs. 1102, 1138, and 1871 of the Social Security Act
(42 U.S.C. 1302, 1320b-8, and 1395hh) and section 371 of the Public
Health Service Act (42 U.S.C. 273).

Subpart C--Conditions for Coverage: Portable X-Ray Services

0
56. Section 486.104 is amended by--
0
A. Revising the introductory text of paragraph (a).
0
B. Revising paragraph (a)(1).
0
C. Adding paragraph (a)(4).
The revision and addition read as follows:

Sec. 486.104 Condition for coverage: Qualifications, orientation and
health of technical personnel.

* * * * *
(a) Standard-qualifications of technologists. All operators of the
portable X-ray equipment meet the requirements of paragraphs (a)(1),
(2), (3), or (4) of this section:
(1) Successful completion of a program of formal training in X-ray
technology in a school approved by the Joint Review Committee on
Education in Radiologic Technology (JRCERT), or have earned a
bachelor's or associate degree in radiologic technology from an
accredited college or university.
* * * * *
(4) For those whose training was completed prior to January 1,
1993, successful completion of a program of formal training in X-ray
technology in a school approved by the Council on Education of the
American Medical Association, or by the American Osteopathic
Association is acceptable.
* * * * *

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

0
57. The authority citation for part 489 continues to read as follows:

Authority: Secs. 1102, 1819, 1820(e), 1861, 1864(m), 1866, 1869,
and 1871 of the Social Security Act (42 U.S.C. 1302, 1395i-3, 1395x,
1395aa(m), 1395cc, 1395ff, and 1395hh).

Subpart B--Essentials of Provider Agreements

0
58. Section 489.20 is amended by--
0
A. Redesignating paragraphs (s)(12), (13), (14), and (15) as (s)(13),
(14), (15), and (16), respectively.
0
B. Adding new paragraph (s)(12).
The addition reads as follows:

Sec. 489.20 Basic commitments.

* * * * *
(s) * * *
(12) Services described in paragraphs (s)(1) through (6) of this
section when furnished via telehealth under section
1834(m)(4)(C)(ii)(VII) of the Act.
* * * * *

Authority: Catalog of Federal Domestic Assistance Program No.
93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program.

Dated: October 21, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: October 29, 2008.
Michael O. Leavitt,
Secretary.

Note: These addenda will not appear in the Code of Federal
Regulations.

Addendum A: Explanation and Use of Addenda B

The addenda on the following pages provide various data
pertaining to the Medicare fee schedule for physicians' services
furnished in 2009. Addendum B contains the RVUs for work, non-
facility PE, facility PE, and malpractice expense, and other
information for all services included in the PFS.
In previous years, we have listed many services in Addendum B
that are not paid under the PFS. To avoid publishing as many pages
of codes for these services, we are not including clinical
laboratory codes or the alphanumeric codes (Healthcare Common
Procedure Coding System (HCPCS) codes not included in CPT) not paid
under the PFS in Addendum B.
Addendum B contains the following information for each CPT code
and alphanumeric HCPCS code, except for: alphanumeric codes
beginning with B (enteral and parenteral therapy), E (durable
medical equipment), K (temporary codes for nonphysicians' services
or items), or L (orthotics); and codes for anesthesiology. Please
also note the following:
An ``NA'' in the ``Non-facility PE RVUs'' column of
Addendum B means that CMS has not developed a PE RVU in the non-
facility setting for the service because it is typically performed
in the hospital (for example, an open heart surgery is generally
performed in the hospital setting and not a physician's office). If
there is an ``NA'' in the non-facility PE RVU column, and the
contractor determines that this service can be performed in the non-
facility setting, the service will be paid at the facility PE RVU
rate.
Services that have an ``NA'' in the ``Facility PE
RVUs'' column of Addendum B are typically not paid using the PFS
when provided in a facility setting. These services (which include
``incident to'' services and the technical portion of diagnostic
tests) are generally paid under either the outpatient hospital
prospective payment system or bundled into the hospital inpatient
prospective payment system payment.
1. CPT/HCPCS code. This is the CPT or alphanumeric HCPCS number
for the service. Alphanumeric HCPCS codes are included at the end of
this addendum.
2. Modifier. A modifier is shown if there is a technical
component (modifier TC) and a professional component (PC) (modifier-
26) for the service. If there is a PC and a TC for the service,
Addendum B contains three entries for the code. A code for: the
global values (both professional and technical); modifier-26 (PC);
and, modifier TC. The global service is not designated by a
modifier, and physicians must bill using the code without a modifier
if the physician furnishes both the PC and the TC of the service.
Modifier-53 is shown for a discontinued procedure, for example a
colonoscopy that is not completed. There will be RVUs for a code
with this modifier.
3. Status indicator. This indicator shows whether the CPT/HCPCS
code is in the PFS and whether it is separately payable if the
service is covered.
A = Active code. These codes are separately payable under the
PFS if covered. There will be RVUs for codes with this status. The
presence of an ``A'' indicator does not mean that Medicare has made
a national coverage determination regarding the service. Carriers
remain responsible for coverage decisions in the absence of a
national Medicare policy.
B = Bundled code. Payments for covered services are always
bundled into payment for

[[Page 69943]]

other services not specified. If RVUs are shown, they are not used
for Medicare payment. If these services are covered, payment for
them is subsumed by the payment for the services to which they are
incident (an example is a telephone call from a hospital nurse
regarding care of a patient).
C = Carriers price the code. Carriers will establish RVUs and
payment amounts for these services, generally on an individual case
basis following review of documentation, such as an operative
report.
D* = Deleted/discontinued code.
E = Excluded from the PFS by regulation. These codes are for
items and services that CMS chose to exclude from the fee schedule
payment by regulation. No RVUs are shown, and no payment may be made
under the PFS for these codes. Payment for them, when covered,
continues under reasonable charge procedures.
F = Deleted/discontinued codes. (Code not subject to a 90-day
grace period.) These codes are deleted effective with the beginning
of the year and are never subject to a grace period. This indicator
is no longer effective beginning with the 2005 fee schedule as of
January 1, 2005.
G = Code not valid for Medicare purposes. Medicare uses another
code for reporting of, and payment for, these services. (Codes
subject to a 90-day grace period.) This indicator is no longer
effective with the 2005 PFS as of January 1, 2005.
H\*\ = Deleted modifier. For 2000 and later years, either the TC
or PC component shown for the code has been deleted and the deleted
component is shown in the database with the H status indicator.
I = Not valid for Medicare purposes. Medicare uses another code
for the reporting of, and the payment for these services. (Codes not
subject to a 90-day grace period.)
L = Local codes. Carriers will apply this status to all local
codes in effect on January 1, 1998 or subsequently approved by
central office for use. Carriers will complete the RVUs and payment
amounts for these codes.
M = Measurement codes, used for reporting purposes only. There
are no RVUs and no payment amounts for these codes. Medicare uses
them to aid with performance measurement. No separate payment is
made. These codes should be billed with a zero (($0.00) charge and
are denied) on the MPFSDB.
N = Non-covered service. These codes are noncovered services.
Medicare payment may not be made for these codes. If RVUs are shown,
they are not used for Medicare payment.
R = Restricted coverage. Special coverage instructions apply. If
the service is covered and no RVUs are shown, it is carrier-priced.
T = There are RVUs for these services, but they are only paid if
there are no other services payable under the PFS billed on the same
date by the same provider. If any other services payable under the
PFS are billed on the same date by the same provider, these services
are bundled into the service(s) for which payment is made.
X = Statutory exclusion. These codes represent an item or
service that is not within the statutory definition of ``physicians'
services'' for PFS payment purposes. No RVUs are shown for these
codes, and no payment may be made under the PFS. (Examples are
ambulance services and clinical diagnostic laboratory services.)
4. Description of code. This is an abbreviated version of the
narrative description of the code.
5. Physician work RVUs. These are the RVUs for the physician
work for this service in 2009.
6. Fully implemented non-facility practice expense RVUs. These
are the fully implemented resource-based PE RVUs for non-facility
settings.
7. Transitional non-facility practice expense RVUs. These are
the 2009 resource-based PE RVUs for non-facility settings.
8. Fully implemented facility practice expense RVUs. These are
the fully implemented resource-based PE RVUs for facility settings.
9. Transitional facility practice expense RVUs. These are the
2009 resource-based PE RVUs for facility settings.
10. Malpractice expense RVUs. These are the RVUs for the
malpractice expense for the service for 2009.
11. Global period. This indicator shows the number of days in
the global period for the code (0, 10, or 90 days). An explanation
of the alpha codes follows:
MMM = Code describes a service furnished in uncomplicated
maternity cases including antepartum care, delivery, and postpartum
care. The usual global surgical concept does not apply. See the 1999
Physicians' Current Procedural Terminology for specific definitions.
XXX = The global concept does not apply.
YYY = The global period is to be set by the carrier (for
example, unlisted surgery codes).
ZZZ = Code related to another service that is always included in
the global period of the other service. (Note: Physician work and PE
are associated with intra service time and in some instances in the
post service time.
\*\ Codes with these indicators had a 90-day grace period before
January 1, 2005.

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[FR Doc. E8-26213 Filed 10-30-08; 4:15 pm]
BILLING CODE 4120-01-P