[Federal Register Volume 74, Number 132 (Monday, July 13, 2009)]
[Proposed Rules]
[Pages 33520-33825]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-15835]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 410, 411, 414, et al.



Medicare Program; Payment Policies Under the Physician Fee Schedule and 
Other Revisions to Part B for CY 2010; Proposed Rule

Federal Register / Vol. 74 , No. 132 / Monday, July 13, 2009 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 411, 414, 415, and 485

[CMS-1413-P]
RIN 0938-AP40


Medicare Program; Payment Policies Under the Physician Fee 
Schedule and Other Revisions to Part B for CY 2010

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would address proposed changes to Medicare 
Part B payment policy. We are proposing these changes to ensure that 
our payment systems are updated to reflect changes in medical practice 
and the relative value of services. This proposed rule discusses: 
Refinements to resource-based work, practice expense and malpractice 
relative value units (RVUs); geographic practice cost indices (GPCIs); 
telehealth services; several coding issues; physician fee schedule 
update for CY 2010; payment for covered part B outpatient drugs and 
biologicals; the competitive acquisition program (CAP); payment for 
renal dialysis services; the chiropractic services demonstration; 
comprehensive outpatient rehabilitation facilities; physician self-
referral; the ambulance fee schedule; the clinical laboratory fee 
schedule; durable medical equipment, prosthetics, orthotics, and 
supplies (DMEPOS); and certain provisions of the Medicare Improvements 
for Patients and Providers Act of 2008. (See the Table of contents for 
a listing of the specific issues.)

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on Monday, August 
31, 2009.

ADDRESSES: In commenting, please refer to file code CMS-1413-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    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-1413-P, P.O. Box 8013, 
Baltimore, MD 21244-8013.

    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1413-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.

    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.

FOR FURTHER INFORMATION CONTACT: 
Rick Ensor, (410) 786-5617, for issues related to practice expense 
methodology.
Craig Dobyski, (410) 786-4584, for issues related to geographic 
practice cost indices.
Esther Markowitz, (410) 786-4595, for issues related to telehealth 
services.
Ken Marsalek, (410) 786-4502, for issues related to the physician 
practice information survey and the multiple procedure payment 
reduction.
Cathleen Scally, (410) 786-5714, for issues related to the initial 
preventive physical examination or consultation services.
Regina Walker-Wren, (410) 786-9160, for issues related to the phasing 
out of the outpatient mental health treatment limitation.
Diane Stern, (410) 786-1133, for issues related to the physician 
quality reporting initiative and incentives for e-prescribing.
Lisa Grabert, (410) 786-6827, for issues related to the Physician 
Resource Use Feedback Program.
Colleen Bruce, (410) 786-5529, for issues related to value-based 
purchasing.
Sandra Bastinelli, (410) 786-3630, for issues related to the 
implementation of accreditation standards.
Jim Menas, (410) 786-4507, for issues related to teaching anesthesia 
services.
Sarah McClain, (410) 786-2994, for issues related to the coverage of 
cardiac rehabilitation services.
Dorothy Shannon, (410) 786-3396, for issues related to payment for 
cardiac rehabilitation services.
Roya Lofti, (410) 786-4072, for issues related to the coverage of 
pulmonary rehabilitation.
Jamie Hermansen, (410) 786-2064, for issues related to kidney disease 
patient education programs.
Terri Harris, (410) 786-6830 for issues related to payment for kidney 
disease patient education.
Henry Richter, (410) 786-4562, or Lisa Hubbard, (410) 786-5472, for 
issues related to renal dialysis provisions and payments for end-stage 
renal disease facilities.
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.
Pauline Lapin, (410) 786-6883, for issues related to the chiropractic 
services demonstration budget neutrality issue.
Monique Howard, (410) 786-3869, for issues related to CORF conditions 
of coverage.
Roechel Kujawa, (410) 786-9111, for issues related to ambulance 
services.
Anne Tayloe Hauswald, (410) 786-4546, for clinical laboratory issues.
Troy Barsky, (410) 786-8873, or Roy Albert, (410) 786-1872, for issues 
related to physician self-referral.
Michelle Peterman, (410) 786-2591, or Iffat Fatima, (410) 786-6709 for 
issues related to the grandfathering

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provisions of the durable medical equipment, prosthetics, orthotics, 
and supplies (DMEPOS) Competitive Acquisition Program.
Ralph Goldberg, (410) 786-4870, or Heidi Edmunds, (410) 786-1781, for 
issues related to the damages process caused by the termination of 
contracts awarded in 2008 under the DMEPOS Competitive Bidding program.
Diane Milstead, (410) 786-3355, or Gaysha Brooks, (410) 786-9649, for 
all other issues.

SUPPLEMENTARY INFORMATION:
    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 V. of this 
proposed rule.

I. Background
    A. Development of the Relative Value System
    1. Work RVUs
    2. Practice Expense Relative Value Units (PE RVUs)
    3. Resource-Based Malpractice RVUs
    4. Refinements to the RVUs
    5. Adjustments to RVUs Are Budget Neutral
    B. Components of the Fee Schedule Payment Amounts
    C. Most Recent Changes to Fee Schedule
II. Provisions of the Proposed Regulation
    A. Resource-Based Practice Expense (PE) Relative Value Units 
(RVUs)
    1. Current Methodology
    a. Data Sources for Calculating Practice Expense
    b. Allocation of PE to Services
    c. Facility and Nonfacility Costs
    d. Services With Technical Components (TCs) and Professional 
Components (PCs)
    e. Transition Period
    f. PE RVU Methodology
    2. PE Proposals for CY 2010
    a. SMS and Supplemental Survey Background
    b. Physician Practice Information Survey (PPIS)
    c. Equipment Utilization Rate
    d. Miscellaneous PE Issues
    e. AMA RUC PE Recommendations for Direct PE Inputs
    B. Geographic Practice Cost Indices (GPCIs): Locality Discussion
    1. Update--Expiration of 1.0 Work GPCI Floor
    2. Payment Localities
    C. Malpractice RVUs
    1. Background
    2. Proposed Methodology for the Revision of Resource-Based 
Malpractice RVUs
    D. Medicare Telehealth Services
    1. Requests for Adding Services to the List of Medicare 
Telehealth Services
    2. Submitted Requests for Addition to the List of Telehealth 
Services
    E. Specific Coding Issues Related to Physician Fee Schedule
    1. Canalith Repositioning
    2. Payment for an Initial Preventive Physical Examination (IPPE)
    3. Audiology Codes: Policy Clarification of Existing CPT Codes
    4. Consultation Services
    F. Potentially Misvalued Codes Under the Physician Fee Schedule
    1. Valuing Services Under the Physician Fee Schedule
    2. High Cost Supplies
    3. Review of Services Often Billed Together and the Possibility 
of Expanding the Multiple Procedure Payment Reduction (MPPR) to 
Additional Nonsurgical Services
    4. AMA RUC Review of Potentially Misvalued Services
    a. Site of Service Anomalies
    b. ``23-Hour'' Stay
    5. Establishing Appropriate Relative Values for Physician Fee 
Schedule Services
    G. Issues Related to the Medicare Improvements for Patients and 
Providers Act of 2008 (MIPPA)
    1. Section 102: Elimination of Discriminatory Copayment Rates 
for Medicare Outpatient Psychiatric Services
    2. Section 131(b): Physician Payment, Efficiency, and Quality 
Improvements--Physician Quality Reporting Initiative (PQRI)
    3. Section 131(c): Physician Resource Use Measurement and 
Reporting Program
    4. Section 131(d): Plan for Transition to Value-Based Purchasing 
Program for Physicians and Other Practitioners
    5. Section 132: Incentives for Electronic Prescribing (E-
Prescribing)--The E-Prescibing Incentive Program
    6. Section 135: Implementation of Accreditation Standards for 
Suppliers Furnishing the Technical Component (TC) of Advanced 
Diagnostic Imaging Services
    7. Section 139: Improvements for Medicare Anesthesia Teaching 
Programs
    8. Section 144(a): Payment and Coverage Improvements for 
Patients With Chronic Obstructive Pulmonary Disease and Other 
Conditions--Cardiac Rehabilitation Services
    9. Section 144(a): Payment and Coverage Improvements for 
Patients With Chronic Obstructive Pulmonary Disease and Other 
Conditions--Pulmonary Rehabitation Services
    10. Section 152(b): Coverage of Kidney Disease Patient Education 
Services
    11. Section 153: Renal Dialysis Provisions
    12. Section 182(b): Revision of Definition of Medically-Accepted 
Indication for Drugs; Compendia for Determination of Medically-
Accepted Indications for Off-Label Uses of Drugs and Biologicals in 
an Anti-Cancer Chemotherapeutic Regimen
    H. Part B Drug Payment
    1. Average Sales Price (ASP) Issues
    2. Competitive Acquisition Program (CAP) Issues
    I. Provisions Related to Payment for Renal Dialysis Services 
Furnished by End-Stage Renal Disease (ESRD) Facilities
    J. Discussion of Chiropractic Services Demonstration
    1. Background
    2. Analysis of Demonstration
    3. Payment Adjustment
    K. Comprehensive Outpatient Rehabilitation Facilities (CORF) and 
Rehabilitation Agency Issues
    L. Ambulance Fee Schedule: Technical Correction to the Rural 
Adjustment Factor Regulations (414.610)
    M. Clinical Laboratory Fee Schedule: Signature on Requisition
    N. Physician Self-Referral
    1. General Background
    2. Physician Stand in the Shoes
    O. Durable Medical Equipment-Related Issues
    1. Damages to Suppliers Awarded a Contract Under the Acquisition 
of Certain Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies (Medicare DMEPOS Competitive Bidding Program) Caused by the 
Delay of the Program
    2. Notification to Beneficiaries for Suppliers Regarding 
Grandfathering
    P. Physician Fee Schedule Update for CY 2010
III. Collection of Information Requirements
IV. Response to Comments
V. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--Proposed Relative Value Units and Related Information 
Used in Determining Medicare Payments for CY 2010
Addendum C--[Reserved]
Addendum D--Proposed 2010 Geographic Adjustment Factors (GAFs)
Addendum E--Proposed 2010 Geographic Practice Cost Indices (GPCIs) 
by State and Medicare Locality

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Addendum F--Proposed CY 2010 ESRD Wage Index for Urban Areas Based 
on CBSA Labor Market Areas
Addendum G--Propsoed CY 2010 ESRD Wage Index Based on CBSA Labor 
Market Areas for Rural Areas

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:

AACVPR American Association of Cardiovascular and Pulmonary 
Rehabilitation
ACC American College of Cardiology
ACGME Accreditation Council on Graduate Medical Education
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
APA American Psychological Association
APTA American Physical Therapy 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
COPD Chronic obstructive pulmonary disease
CORF Comprehensive Outpatient Rehabilitation Facility
COS Cost of service
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)
CR Cardiac rehabilitation
CRNA Certified registered nurse anesthetist
CRP Canalith repositioning
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
DOQ Doctor's Office Quality
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 Erythropoietin
ESRD End-stage renal disease
FAX Facsimile
FDA Food and Drug Administration (HHS)
FEV Forced expiratory volume
FFS Fee-for-service
FR Federal Register
FVC Forced expiratory vital capacity (liters)
GAF Geographic adjustment factor
GAO General Accountability Office
GEM Generating Medicare [Physician Quality Performance Measurement 
Results]
GFR Glomerular filtration rate
GPO Group purchasing organization
GPCI Geographic practice cost index
HAC Hospital-acquired conditions
HBAI Health and behavior assessment and intervention
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HDRT High dose radiation therapy
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
HITECH Health Information Technology for Economic and Clinical 
Health Act (Title IV of Division B of the Recovery Act, together 
with Title XIII of Division A of the Recovery Act)
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)
ICD International Classification of Diseases
IACS Individuals Access to CMS Systems
ICF Intermediate care facilities
ICR Intensive cardiac rehabilitation
ICR Information collection requirement
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IMRT Intensity-Modulated Radiation Therapy
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IRS Internal Revenue Service
ISO Insurance services office
IVD Ischemic Vascular Disease
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
JRCERT Joint Review Committee on Education in Radiologic Technology
JUA Joint underwriting association
KDE Kidney disease education
MA Medicare Advantage
MA-PD Medicare Advantage-Prescription Drug Plans
MCMP Medicare Care Management Performance
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
NCH National Claims History
NCPDP National Council for Prescription Drug Programs
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NF Nursing facility
NISTA National Institute of Standards and Technology Act
NP Nurse practitioner
NPDB National Practitioner Data Bank
NPI National Provider Identifier

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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
OPPS Outpatient prospective payment system
OSA Obstructive Sleep Apnea
OSCAR Online Survey and Certification and Reporting
P4P Pay for performance
PA Physician assistant
PBM Pharmacy benefit manager
PC Professional component
PCF Patient compensation fund
PCI Percutaneous coronary intervention
PDE Prescription drug event
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
PGP [Medicare] Physician Group Practice
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
PPIS Physician Practice Information Survey
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
PTCA Percutaneous transluminal coronary angioplasty
RA Radiology assistant
Recovery Act American Recovery and Reinvestment Act (Pub. L. 111-5)
ResDAC Research Data Assistance Center
RFA Regulatory Flexibility Act
RIA Regulatory impact analysis
RN Registered nurse
RNAC Reasonable net acquisition cost
RPA Radiology practitioner assistant
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)
TTO Transtracheal oxygen
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, with appropriate adjustment of the conversion factor (CF), in a 
manner to assure that fee schedule amounts for anesthesia services are 
consistent with those for other services of comparable value. We 
established a separate CF for anesthesia services, and we continue to 
utilize time units as a factor in determining payment for these 
services. As a result, there is a separate payment methodology for 
anesthesia services.
    We establish physician work RVUs for new and revised codes based on 
our review of recommendations received from the American Medical 
Association's (AMA) Specialty Society Relative Value Update Committee 
(RUC).
2. Practice Expense Relative Value Units (PE RVUs)
    Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 
103-432), enacted on October 31, 1994, amended section 
1848(c)(2)(C)(ii) of the Act and required us to develop resource-based 
PE RVUs for each physician's service beginning in 1998. We were to 
consider general categories of expenses (such as office rent and wages 
of personnel, but excluding malpractice expenses) comprising PEs.
    Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay 
implementation of the resource-based PE RVU system until January 1, 
1999. In addition, section 4505(b) of the BBA provided for a 4-year 
transition period from charge-based PE RVUs to resource-based RVUs.
    We established the resource-based PE RVUs for each physicians' 
service in a final rule, published November 2, 1998 (63 FR 58814), 
effective for services furnished in 1999. Based on the requirement to 
transition to a resource-based system for PE over a 4-year period, 
resource-based PE RVUs did not become fully effective until 2002.
    This resource-based system was based on two significant sources of 
actual PE data: The Clinical Practice Expert Panel (CPEP) data; and the 
AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were 
collected from panels of physicians, practice administrators, and 
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

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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 the Calendar Year (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.
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. (Note: In section II.A.2. of 
this proposed rule, we are proposing to use new survey data under the 
PE methodology.)
    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). 
(Note: In section II.C. of this proposed rule, we are proposing to 
update the malpractice RVUs with the use of new data.)
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 2009 PFS final rule with comment period (73 
FR 69730), as required by section 133(b) of the Medicare Improvements 
for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), the 
separate budget neutrality (BN) adjustor resulting from the third 5-
Year Review of physician work RVUs is being applied to the CF beginning 
with CY 2009 rather than the work RVUs.

B. Components of the Fee Schedule Payment Amounts

    To calculate the payment for every physicians' 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 expense in an 
area compared to the national average costs for each component.
    RVUs are converted to dollar amounts through the application of a 
CF, which is calculated by CMS' Office of the Actuary (OACT).
    The formula for calculating the Medicare fee schedule payment 
amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work 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 2009 PFS final rule with comment period (73 FR 69726) 
implemented changes to the PFS and other Medicare Part B payment 
policies finalized the CY 2008 interim RVUs and implemented interim 
RVUs for new and revised codes for CY 2009 to ensure that our payment 
systems are updated to reflect changes in medical practice and the 
relative value of services.
    The CY 2009 PFS final rule with comment period also addressed other 
policies, as well as certain provisions of the MIPPA.
    As required by the statute, and based on section 131 of the MIPPA, 
the CY 2009 PFS final rule with comment period also announced that the 
PFS update is 1.1 percent for CY 2009, the initial estimate for the 
sustainable growth rate for CY 2009 is 7.4 percent, and the conversion 
factor (CF) for CY 2009 is $36.0666.

II. Provisions of the Proposed Regulation

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

[[Page 33525]]

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 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 Five-Year Review of Work Relative Value Units 
Under the PFS and Proposed Changes to the Practice Expense Methodology 
proposed notice (71 FR 37242) and the CY 2007 PFS final rule with 
comment period (71 FR 69629).

    Note: In section II.A.1 of this proposed rule, we discuss the 
current methodology used for calculating PE. In section II.A.2. of 
this proposed rule, which contains PE proposals for CY 2010, we are 
proposing to use data from the AMA Physician Practice Information 
Survey (PPIS) in place of the AMA's SMS survey data and supplemental 
survey data that is currently used in the PE methodology.

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.

[[Page 33526]]

The inputs identified were the quantity and type of nonphysician labor, 
medical supplies, and medical equipment. The CPEP data has been 
regularly updated by various RUC committees on PE.
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 greater of either the clinical labor costs or the physician 
work RVUs. For calculation of the 2010 PE RVUs, we use the 2008 
procedure-specific utilization data crosswalked to 2010 services. To 
arrive at the indirect PE costs--
     We apply a specialty-specific indirect percentage factor 
to the direct expenses to recognize the varying proportion that 
indirect costs represent of total costs by specialty. For a given 
service, the specific indirect percentage factor to apply to the direct 
costs for the purpose of the indirect allocation is calculated as the 
weighted average of the ratio of the indirect to direct costs (based on 
the survey data) for the specialties that furnish the service. For 
example, if a service is furnished by a single specialty with indirect 
PEs that were 75 percent of total PEs, the indirect percentage factor 
to apply to the direct costs for the purposes of the indirect 
allocation would be (0.75/0.25) = 3.0. The indirect percentage factor 
is then applied to the service level adjusted indirect PE allocators.
     We use the specialty-specific PE/HR from the SMS survey 
data, as well as the supplemental surveys for cardiothoracic surgery, 
vascular surgery, physical and occupational therapy, independent 
laboratories, allergy/immunology, cardiology, dermatology, radiology, 
gastroenterology, IDTFs, radiation oncology, and urology. (Note: For 
radiation oncology, the data represent the combined survey data from 
the American Society for Therapeutic Radiology and Oncology (ASTRO) and 
the Association of Freestanding Radiation Oncology Centers (AFROC)). As 
discussed in the CY 2008 PFS final rule with comment period (72 FR 
66233), the PE/HR survey data for radiology is weighted by practice 
size. We incorporate this PE/HR into the calculation of indirect costs 
using an index which reflects the relationship between each specialty's 
indirect scaling factor and the overall indirect scaling factor for the 
entire PFS. For example, if a specialty had an indirect practice cost 
index of 2.00, this specialty would have an indirect scaling factor 
that was twice the overall average indirect scaling factor. If a 
specialty had an indirect practice cost index of 0.50, this specialty 
would have an indirect scaling factor that was half the overall average 
indirect scaling factor.
     When the clinical labor portion of the direct PE RVU is 
greater than the physician work RVU for a particular service, the 
indirect costs are allocated based upon the direct costs and the 
clinical labor costs. For example, if a service has no physician work 
and 1.10 direct PE RVUs, and the clinical labor portion of the direct 
PE RVUs is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65 
clinical labor portions of the direct PE RVUs to allocate the indirect 
PE for that service.
c. Facility and 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), the change to the PE methodology was implemented over a 4-
year period. In CY 2010, the transition period is concluded and PE RVUs 
will be calculated based entirely on the current methodology.
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

[[Page 33527]]

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.
     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 the 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 ratesetting purposes, but 
all specialties are included for purposes of calculating the final BN 
adjustment. (See ``Specialties excluded from ratesetting calculation'' 
below in this section.)
(v) Setup File Information
     Specialties excluded from ratesetting 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

[[Page 33528]]

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 
proposed rule.
(vi) Equipment cost per minute
    The equipment cost per minute is calculated as:

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

Where:

minutes per year = maximum minutes per year if usage were continuous 
(that is, usage = 1); 150,000 minutes.
usage = equipment utilization assumption; 0.9 for certain equipment 
(see section II.A.2. of this proposed rule) and 0.5. for others.
price = price of the particular piece of equipment.
interest rate = 0.11.
life of equipment = useful life of the particular piece of 
equipment.
maintenance = factor for maintenance; 0.05.

    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 CY 2009 PFS final rule with comment 
period.

BILLING CODE 4120-01-P

[[Page 33529]]

[GRAPHIC] [TIFF OMITTED] TP13JY09.139


[[Page 33530]]


BILLING CODE 4120-01-C

    Note: Proposed PE RVU in Table 1, row 27, may not match Addendum 
B due to rounding.
    * The direct adj = [current PE RVUs * CF * avg dir pct] / [sum 
direct inputs] = [Step 2] / [Step 3]
    ** The indirect adj = [current PE RVUs * avg ind pct] / [sum of 
ind allocators] = [Step 9] / [Step 10]
2. PE Proposals for CY 2010
a. SMS and Supplemental Survey Background
    Currently, we use PE/HR obtained from the SMS surveys from 1995-
1999. For several specialties that collected additional PE/HR data 
through a more recent supplemental survey, we accepted and incorporated 
these data in developing current PE/HR values.
    While the SMS survey was not specifically designed for the purpose 
of establishing PE RVUs, we found these data to be the best available 
at the time. The SMS was a multi-specialty survey effort conducted 
using a consistent survey instrument and method across specialties. The 
survey sample was randomly drawn from the AMA Physician Masterfile to 
ensure national representativeness. The AMA discontinued the SMS survey 
in 1999.
    As required by the BBRA, we also established a process by which 
specialty groups could submit supplemental PE data. In the May 3, 2000 
interim final rule entitled, Medicare Program; Criteria for Submitting 
Supplemental Practice Expense Survey Data, (65 FR 25664), we 
established criteria for acceptance of supplemental data. The criteria 
were modified in the CY 2001 and CY 2003 PFS final rules with comment 
period (65 FR 65380 and 67 FR 79971, respectively). We currently use 
supplemental survey data for the following specialties: Cardiology; 
dermatology; gastroenterology; radiology; cardiothoracic surgery; 
vascular surgery; physical and occupational therapy; independent 
laboratories; allergy/immunology; independent diagnostic testing 
facilities (IDTFs); radiation oncology; medical oncology; and urology.
    Because the SMS data and the supplemental survey data are from 
different time periods, we have historically inflated them by the MEI 
to help put them on as comparable a time basis as we can when 
calculating the PE RVUs. This MEI proxy has been necessary in the past 
due to the lack of contemporaneous, consistently collected, and 
comprehensive multispecialty survey data.
b. Physician Practice Information Survey (PPIS)
    The AMA has conducted a new survey, the PPIS, which was expanded 
(relative to the SMS) to include nonphysician practitioners (NPPs) paid 
under the PFS. The PPIS, administered in CY 2007 and CY 2008, was 
designed to update the specialty-specific PE/HR data used to develop PE 
RVUs.
    The AMA and our contractor, The Lewin Group (Lewin), analyzed the 
PPIS data and calculated the PE/HR for physician and nonphysician 
specialties, respectively. The AMA's summary worksheets and Lewin's 
final report are available on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/. (See AMA PPIS Worksheets 1-3 and Lewin Group Final 
Report PPIS.) Table 2 shows the current indirect PE/HR based on SMS and 
supplemental surveys, the PPIS indirect PE/HR, and the indirect cost 
percentages of total costs.

                                Table 2--Indirect PE/HR and Indirect Percentages
                                               [Current and PPIS]
----------------------------------------------------------------------------------------------------------------
                                 Current        PPIS
          Specialty              indirect     indirect     Current        PPIS           Current crosswalk
                                  PE/HR        PE/HR     indirect  %  indirect  %
----------------------------------------------------------------------------------------------------------------
All Physicians...............       $59.04       $86.36           67           74
Allergy and Immunology.......       153.29       162.68           62           67
Anesthesiology...............        19.76        29.37           56           82
Audiology....................        59.04        72.17           67           85  All Physicians.
Cardiology...................       131.02        88.04           56           65
Cardiothoracic Surgery.......        61.75        67.83           68           83
Chiropractor.................        49.60        65.33           69           86  Internal Medicine.
Clinical Laboratory (Billing         66.46        71.01           37           37
 Independently) *.
Clinical Psychology..........        29.07        20.07           90           93  Psychiatry.
Clinical Social Work.........        29.07        17.80           90           97  Psychiatry.
Colon & Rectal Surgery.......        53.93        90.85           77           80
Dermatology..................       158.49       184.62           70           70
Emergency Medicine...........        36.85        38.36           88           94
Endocrinology................        49.60        84.39           69           73
Family Medicine..............        52.79        90.15           62           76
Gastroenterology.............       101.30        96.78           70           75
General Practice.............        52.79        78.59           62           69
General Surgery..............        53.93        82.74           77           82
Geriatrics...................        49.60        54.14           69           74
Hand Surgery.................        98.56       148.78           72           77
Independent Diagnostic              466.16       501.45           50           50
 Testing Facilities *.
Internal Medicine............        49.60        84.03           69           76
Interventional Pain Medicine.        59.04       156.79           67           70
Interventional Radiology.....       118.48        82.55           58           81
Medical Oncology.............       141.84       129.94           59           56
Nephrology...................        49.60        66.00           69           80
Neurology....................        66.05       110.39           74           87
Neurosurgery.................        89.64       115.76           86           87
Nuclear Medicine.............       118.48        39.80           58           77
Obstetrics/Gynecology........        69.74        99.32           67           67
Ophthalmology................       103.28       170.08           65           70
Optometry....................        59.04        88.02           67           77  All Physicians.
Oral Surgery (Dentist only)..        96.01       173.19           71           65  Otolaryngology.

[[Page 33531]]

 
Orthopaedic Surgery..........        98.56       131.40           72           81
Osteopathic Manipulative             59.04        53.93           67           93
 Therapy.
Otolaryngology...............        96.01       141.53           71           75
Pain Medicine................        59.04       122.41           67           70
Pathology....................        59.80        74.98           70           74
Pediatrics...................        51.52        76.27           62           69
Physical Medicine and                84.92       110.13           71           84
 Rehabilitation.
Physical Therapy.............        35.17        57.26           65           84
Plastic Surgery..............        99.32       134.82           67           74
Podiatry.....................        59.04        74.76           67           82  All Physicians.
Psychiatry...................        29.07        30.09           90           94
Pulmonary Disease............        44.63        55.26           76           74
Radiation Oncology (Hospital        114.00       126.66           50           56
 Based & Freestanding).
Radiology....................       118.48        95.60           58           71
Registered Dieticians........        59.04        18.45           67           84  All Physicians.
Rheumatology.................        84.92        98.08           71           67
Urology......................       119.57        97.02           69           73
Vascular Surgery.............        60.10        83.98           63          73
----------------------------------------------------------------------------------------------------------------
\*\ Did not participate in PPIS. Data based on Supplemental Survey.

    The PPIS is a multispecialty, nationally representative, PE survey 
of both physician and NPPs using a consistent survey instrument and 
methods highly consistent with those used for the SMS and the 
supplemental surveys. The PPIS has gathered information from 3,656 
respondents across 51 physician specialty and health care professional 
groups. We believe the PPIS is the most comprehensive source of PE 
survey information available to date.
    As noted, the BBRA required us to establish criteria for accepting 
supplemental survey data. Since the supplemental surveys were specific 
to individual specialties and not part of a comprehensive 
multispecialty survey, we had required certain precision levels be met 
in order to ensure that the supplemental data was sufficiently valid, 
and to be accepted for use in the development of the PE RVUs. Because 
the PPIS is a contemporaneous, consistently collected, and 
comprehensive multispecialty survey, we do not believe similar 
precision requirements are necessary and are not proposing to establish 
them for the use of the PPIS data.
    For physician specialties, the survey responses were adjusted for 
non-response bias. Non-response bias is the bias that results when the 
characteristics of survey respondents differ in meaningful ways, such 
as in the mix of practice sizes, from the general population. The non-
response adjustment was developed based on a comparison of practice 
size and other characteristic information between the PPIS survey 
respondents and data from the AMA Masterfile (for physician 
specialties) or information from specialty societies (for non-physician 
specialties). For six specialties (that is, chiropractors, clinical 
social workers, nuclear medicine, osteopathic manipulative therapy, 
physical therapy, and registered dietians) such an adjustment was not 
possible due to a lack of available characteristic data. The AMA and 
Lewin have indicated that the non-response weighting has only a small 
impact on PE/HR values.
    Under our current policy, various specialties without SMS or 
supplemental survey data have been crosswalked to other similar 
specialties to obtain a proxy PE/HR. For specialties that were part of 
the PPIS for which we currently use a crosswalked PE/HR, we are 
proposing instead to use the PPIS-based PE/HR. We are proposing to 
continue current crosswalks for specialties that did not participate in 
PPIS.
    Supplemental survey data on independent labs, from the College of 
American Pathologists, was implemented for payments in CY 2005. 
Supplemental survey data from the National Coalition of Quality 
Diagnostic Imaging Services (NCQDIS), representing IDTFs, was blended 
with supplementary survey data from the American College of Radiology 
(ACR) and implemented for payments in CY 2007. Neither IDTFs nor 
Independent Labs participated in PPIS. Therefore, we are proposing to 
continue using the current PE/HR that was developed using their 
supplemental survey data.
    We are not proposing to use the PPIS data for reproductive 
endocrinology, sleep medicine, and spine surgery since these 
specialties are not separately recognized by Medicare and we do not 
know how to blend this data with the Medicare recognized specialty 
data. We seek comment on this issue.
    We are not proposing changes to the manner in which the PE/HR data 
are used in the current PE RVU methodology. We are merely proposing to 
update the PE/HR data itself based on the new survey. We propose to 
utilize the PE/HR developed using PPIS data for all Medicare recognized 
specialties that participated in the PPIS for payments effective 
January 1, 2010. The impact of using the new PPIS-based PE/HR is 
discussed in the Regulatory Impact Analysis in section V. of this 
proposed rule.
c. Equipment Utilization Rate
    As part of the PE methodology associated with the allocation of 
equipment costs for calculating PE RVUs, we have adopted an equipment 
usage assumption of 50 percent. Most recently, we included a discussion 
in the CY 2008 PFS proposed rule on this equipment usage assumption (72 
FR 38132). We noted that if the assumed equipment usage percentage is 
set too high, the result would be an insufficient allowance at the 
service level for the practice costs associated with equipment. If the 
assumed equipment usage percentage is set too low, the result would be 
an excessive allowance for the practice costs of equipment at the 
service level. We acknowledged that

[[Page 33532]]

the current 50 percent usage assumption does not capture the actual 
usage rates for all equipment, but stated that we did not believe that 
we had strong empirical evidence to justify any alternative approaches.
    The commenters' recommendations about making adjustments to the 50 
percent utilization rate assumption varied. Certain commenters 
recommended we do nothing until stronger empirical evidence is 
available, while other commenters recommended a decrease in the 
utilization assumption, and some commenters recommended an increase in 
the utilization assumption. The particular changes recommended in the 
utilization assumption were, in most cases, directly related to a 
specific code.
    In the CY 2008 PFS final rule with comment period (72 FR 66232), we 
agreed with commenters that the equipment utilization rate should 
continue to be examined for accuracy. We reiterated our commitment to 
continue to work with interested parties on this issue. We indicated 
that we would continue to monitor the appropriateness of the equipment 
utilization assumption, and evaluate whether changes should be proposed 
in light of the data available.
    Since the publication of the CY 2008 PFS final rule with comment 
period, MedPAC addressed this issue again in its March 2009 Report to 
Congress (see http://www.medpac.gov/documents/Mar09_EntireReport.pdf). 
In part of its discussion, MedPAC stated:

    ``In 2006, the Commission sponsored a survey by NORC of imaging 
providers in six markets, which found that MRI and CT machines are 
used much more than the 25 hours per week that CMS assumes (Table 
2B-6). According to data from this survey, MRI scanners are used 52 
hours per week, on average (median of 46 hours), and CT machines are 
operated 42 hours per week, on average (median of 40 hours) (NORC 
2006).\32\ Although the survey results are not nationally 
representative, they are representative of imaging providers in the 
six markets included in the survey. We also analyzed data from a 
2007 survey of CT providers by IMV, a market research firm (IMV 
Medical Information Division 2008). IMV data are widely used in the 
industry and have also appeared in published studies (Baker et al. 
2008, Baker and Atlas 2004). Using IMV's data on 803 nonhospital CT 
providers (imaging centers, clinics, and physician offices), we 
calculated that the average provider uses its CT scanner 50 hours 
per week, which is twice the number CMS assumes.\33\ The IMV survey 
also found that nonhospital providers increased the average number 
of procedures per CT machine by 31 percent from 2003 to 2007, which 
indicates that providers either used their machines more hours per 
day or performed more scans per hour (IMV Medical Information 
Division 2008).'' (p. 108)

    We believe the studies cited by MedPAC strongly suggest that our 
current usage rate assumption is significantly understated, especially 
with respect to the types of high cost equipment that were the subject 
of the studies. Our current 50 percent utilization rate translates into 
about 25 hours per week out of a 50 hour work week. The median value of 
46 hours for MRIs from the first study cited by MedPAC is equivalent to 
a utilization rate of 92 percent on a 50-hour week. For CT scanners, 
averaging the value from the first study of 40 hours per week and the 
value from the second study of 50 hours per week yields 45 hours and is 
equivalent to a 90 percent utilization rate on a 50 hour work week. We 
believe the studies cited by MedPAC suggest what we have long 
suspected, that physicians and suppliers would not typically make huge 
capital investments in equipment that would only be utilized 50 percent 
of the time. All of the equipment cited in the MedPAC studies is priced 
over $1 million. Therefore, we are proposing to change the equipment 
usage assumption from the current 50 percent usage rate to a 90 percent 
usage rate for equipment priced over $1 million. We will continue to 
explore data sources regarding the utilization rates of equipment 
priced at less than $1 million dollars, but are not proposing a change 
in the usage rate for this less expensive equipment at this time.
    As MedPAC indicated in its report, we do not believe this proposal 
would create access issues in rural areas. MedPAC noted,

    ``According to our analysis of data from the American Hospital 
Association's 2006 AHA annual survey of hospitals, 95% of rural 
hospitals provide CT services in their community (AHA 2007). 
Therefore, if rural areas do not have physician offices or 
freestanding centers with MRI and CT machines, most of these 
communities have access to such services through a hospital.'' (p. 
110)

    However, we welcome any additional analyses regarding access 
issues, and, as in our CY 2008 and CY 2009 rulemaking, we welcome 
additional empirical data relating to equipment utilization rates. Our 
understanding is that the PPIS survey did not produce information that 
can inform the utilization rate discussion, but we invite comments on 
this or other data sources.
d. Miscellaneous PE Issues
    As we have discussed in the past rulemaking (see the CY 2008 PFS 
final rule with comment period (72 FR 66236) and the CY 2007 PFS final 
rule with comment period (71 FR 69647)), we continue to have concerns 
about the issue of PE RVUs for services which are utilized 24 hours a 
day/7 days a week, such as certain monitoring systems. For example, the 
PE equipment methodology was not developed with this type of 24/7 
equipment in mind. We are continuing to analyze the issue of PEs for 
services which are utilized 24 hours a day/7 days a week to identify 
any modifications to our methodology that would address the specific 
``constant use'' issues associated with these services. Services that 
are currently contractor priced in CY 2009 would remain contractor 
priced in CY 2010. Any proposed changes will be communicated through 
future rulemaking.
    We also received comments regarding the PE direct cost inputs (for 
example, supply costs and the useful life of the renewable sources) 
related to several high dose radiation therapy (HDRT) and placement CPT 
codes. Based on our review of these codes and comments received, we are 
requesting that the AMA RUC consider these CPT codes for additional 
review.
e. AMA RUC Recommendations for Direct PE Inputs
    The AMA RUC provided recommendations for PE inputs for the codes 
listed in Table 3.

             Table 3--Codes With AMA RUC PE Recommendations
------------------------------------------------------------------------
         CPT \1\ code                          Description
------------------------------------------------------------------------
37183.........................  Remove hepatic shunt (tips).
47382.........................  Percut ablate liver rf.
50200.........................  Biopsy of kidney.
55873.........................  Cryoablate prostate.
93025.........................  Microvolt t-wave assess.
------------------------------------------------------------------------
\1\ CPT codes and descriptions are Copyright 2009 American Medical
  Association.

We are in agreement with the AMA RUC recommendations for the direct PE 
inputs for the codes listed in Table 3 and propose to adopt these for 
CY 2010.

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

1. Update--Expiration of 1.0 Work GPCI Floor
    Section 1848(e)(1)(A) of the Act requires us to develop separate 
Geographic Practice Cost Indices (GPCIs) to measure resource cost 
differences among localities compared to the national average for each 
of the three fee schedule components (that is, work, PE and 
malpractice). While requiring that the PE and malpractice GPCIs reflect 
the full relative cost differences, section 1848(e)(1)(A)(iii) of

[[Page 33533]]

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 2009 
PFS final rule with comment period (73 FR 69740), the CY 2009 
adjustment to the GPCIs reflected the fully implemented fifth 
comprehensive GPCI update. We also noted that section 134 of the MIPPA 
extended the 1.000 work GPCI floor from July 1, 2008, through December 
31, 2009. (Note: The 1.000 work GPCI floor was enacted and implemented 
for CY 2006, and, prior to enactment of the MIPPA, was set to expire on 
June 30, 2008.) Additionally, section 1848(e)(1)(G) of the Act, as 
amended by section 134(b) of the MIPPA, set a permanent 1.5 work GPCI 
floor in Alaska for services furnished beginning January 1, 2009. 
Therefore, as required by the MIPPA, beginning on January 1, 2010, the 
1.000 work GPCI floor will be removed. However, the 1.500 work GPCI 
floor for Alaska will remain in place. See Addenda D and E of this 
proposed rule for the GPCIs and summarized geographic adjustment 
factors (GAFs), respectively.
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 (this is, work, PE, and 
malpractice). Payments under the PFS are based on the relative 
resources involved in furnishing physicians' services, and are adjusted 
for differences in relative resource costs among payment localities 
using the GPCIs. As a result, PFS payments vary between localities.
    The current PFS locality structure was developed and implemented in 
1997. There are currently 89 localities including 37 higher-cost areas; 
16 Rest of State areas (comprising the remaining counties not located 
in a higher-cost area within a State); 34 Statewide areas; and Puerto 
Rico and the Virgin Islands which are designated as ``territory-wide'' 
localities. The development of the current locality structure is 
described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and 
the subsequent final rule (61 FR 59494).
    As we have frequently noted, any changes to the locality 
configuration must be made in a budget neutral manner. Therefore, any 
change 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 in order 
to demonstrate consensus for the change among the professionals whose 
payments would be affected (with some increasing and some decreasing). 
However, we have recognized that, over time, changes in demographics or 
local economic conditions may lead us to conduct a more comprehensive 
examination of existing payment localities.
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 and final rule with comment period, we 
described three potential options for changing the payment localities 
in California (72 FR 38139 and 72 FR 66245, respectively).
    After reviewing the comments on these options, we decided not to 
proceed with implementing any of them at that time. We explained that 
there was no consensus among the California medical community as to 
which, if any, of the options would be most acceptable. We also 
received suggestions from the Medicare Payment Advisory Commission 
(MedPAC) for developing changes in payment localities for the entire 
country and other States expressed interest in having their payment 
localities reconfigured as well. In addition, other commenters wanted 
us to consider a national reconfiguration of localities rather than 
just making changes one State at a time. Because of the divergent views 
expressed in comments, we explained in the CY 2008 PFS final rule with 
comment period that we intended to conduct a thorough analysis of 
potential approaches to reconfiguring localities and would address this 
issue again in future rulemaking.
Interim Study of Alternative Payment Localities Under the PFS
    As a follow-up to the CY 2008 PFS final rule with comment period, 
we contracted with Acumen, LLC (Acumen), to conduct a preliminary study 
of several options for revising the payment localities on a nationwide 
basis. The contractor's interim report was posted on the CMS Web site 
on August 21, 2008, and we requested comments from the public. The 
report entitled, ``Review of Alternative GPCI Payment Locality 
Structures,'' is still accessible from the CMS PFS Web page under the 
heading ``Interim Study of Alternative Payment Localities under the 
PFS.'' The report may also be accessed directly from the following 
link: http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage. We accepted comments on the interim report through 
November 3, 2008. The alternative locality configurations discussed in 
the report are described briefly below in this section.
Option 1: CMS Core Based Statistical Area (CBSA) Payment Locality 
Configuration
    This option uses the Office of Management and Budget (OMB's) 
Metropolitan Statistical Area (MSA) designations for the payment 
locality configuration. MSAs would be considered as urban CBSAs. 
Micropolitan Areas (as defined by OMB) and rural areas would be 
considered as non-urban (rest of State) CBSAs. This approach would be 
consistent with the inpatient hospital prospective payment system 
(IPPS) pre-reclassification CBSA assignments and with the geographic 
payment adjustments used in other Medicare payment systems. This option 
would increase the number of localities from 89 to 439.
Option 2: Separate High Cost Counties From Existing Localities 
(Separate Counties)
    Under this approach, higher cost counties are removed from their 
existing locality structure and they would each be placed into their 
own locality. This option would increase the number of localities from 
89 to 214 using a 5 percent GAF differential to separate high cost 
counties.
Option 3: Separate MSAs From Statewide Localities (Separate MSAs)
    This option begins with Statewide localities and creates separate 
localities for higher cost MSAs (rather than removing higher cost 
counties from their existing locality as described in option 2). This 
option would increase the number of localities from 89 to 130 using a 5 
percent GAF differential to separate high cost MSAs.

[[Page 33534]]

Option 4: Group Counties Within a State Into Locality Tiers Based on 
Costs (Statewide Tiers)
    This option creates tiers of counties (within each State) that may 
or may not be contiguous but share similar practice costs. This option 
would increase the number of localities from 89 to 140 using a 5 
percent GAF differential to group similar counties into Statewide 
tiers.
    Additionally, as discussed in the interim locality study report, 
our contractor, Acumen, applied a ``smoothing'' adjustment to the 
current PFS locality structure, as well as to each of the alternative 
locality configurations (except option 4: Statewide Tiers). The 
``smoothing'' adjustment was applied to mitigate large payment 
differences (or payment ``cliffs'') between adjacent counties. Since 
large payment differences between adjacent counties could influence a 
physician's decision on a practice location (and possibly impact access 
to care), the ``smoothing'' adjustment was applied to ensure that GAF 
differences between adjacent counties do not exceed 10 percent. (For 
more information on the ``smoothing'' adjustment see the interim 
locality study report on the PFS Web page via the link provided above.)
b. Summary of Public Comments on Interim Locality Study Report
    In the CY 2009 PFS proposed rule (73 FR 38514), we encouraged 
interested parties to submit comments on the options presented both in 
the proposed rule and in the interim report posted on our Web site. We 
also requested comments and suggestions on other potential alternative 
locality configurations (in addition to the options described in the 
report). Additionally, we requested comments on the administrative and 
operational issues associated with the various options under 
consideration. We also emphasized that we would not be proposing any 
changes to the current PFS locality structure for CY 2009 and that we 
would provide extensive opportunities for public comment before 
proposing any change. The following is a summary of the comments 
received on the alternative locality options discussed in the CY 2009 
PFS proposed rule and interim locality study report.
(1) Introduction and General Support for Change
    We received approximately 200 comments on the CY 2009 PFS proposed 
rule and locality study report from various specialty groups, medical 
societies, State medical associations, individual practitioners, and 
beneficiaries. Commenters generally commended us for acknowledging the 
need to reconfigure PFS payment localities and expressed support for 
our study of alternative locality configurations. Many commenters urged 
us to expedite changes to the current locality structure in order to 
accurately reflect the geographic cost differences of operating a 
medical practice. For example, the Connecticut State Medical Society 
commented that the current locality configuration contributes to 
medical access issues and problems with recruitment and retention of 
practitioners (with an emphasis on access to primary care).
    Another commenter stated that Ohio's Statewide locality 
configuration needs to be changed because a Statewide locality 
designation does not account for the (presumably higher) cost of 
operating a medical practice in northern Ohio. The commenter also 
objected to the agency's approach to requests for changes to the 
current locality structure (which includes an assessment of support for 
the changes by the medical community, including the relevant State 
medical associations). The commenter believes the State medical 
association does not represent all of the physicians in Ohio.
    Another commenter stated that a change in the PFS locality 
structure is long overdue. The commenter stated that San Diego County 
is the most underpaid area in the nation and that grouping that county 
with the Rest of California locality is erroneous. Moreover, several 
commenters stated that a timely reassessment is needed and urged us to 
update the locality structure every 3 years. Two commenters believe 
that previous studies completed on the PFS locality structure by 
MedPAC, GAO, Urban Institute, as well as the current study by Acumen, 
support immediate reform to the current PFS locality structure.
    We received many comments from hospitals and physicians located in 
Frederick County Maryland (which is currently grouped with the Rest of 
Maryland locality). The commenters support each of the alternative 
locality configurations we presented because each option results in PFS 
payment increases for services furnished in Frederick County. The 
commenters stated that Frederick County is considered a `bedroom 
community' for the DC/Northern Virginia area, has experienced the 
highest growth rate in the State, and noted that the cost of living has 
increased significantly. Additionally, the commenters noted that the 
last economic census aligns costs in Frederick County with those in 
Montgomery County (whose doctors receive higher payment amounts) and 
that Frederick County competes with physician practices in Montgomery 
County for professional staff. Moreover, the commenters believe that 
because of inadequate PFS payment amounts, access to care is becoming a 
problem and emergency room visits are on the rise.
(2) Cautious Approach
    Some commenters requested that we take a cautious approach to 
reconfiguring the locality structure. For instance, the Texas Medical 
Association stated that because of the redistributive impact that 
results from any locality reconfiguration, CMS should avoid making 
large scale changes at one time. Additionally, another commenter stated 
that ``stakeholders'' should be given a long advance notification 
period (at least 2 full calendar years) prior to the effective date of 
any changes to the PFS locality configuration. The commenter also 
stated that the current locality structure should remain in place (for 
each locality) unless the need for revision is strongly substantiated 
because of a change in practice cost patterns. A specialty society 
expressed support for postponing any adjustments for at least 1 year to 
allow for more discussion between CMS and ``stakeholders''.
(3) Guiding Principles
    We received several comments from California that suggested a set 
of goals for reforming the PFS payment locality structure. The goals 
suggested by the commenters are as follows:
     Improve payment accuracy (as compared to the current 
locality structure);
     Move towards MSA-based localities;
     Mitigate payment reductions to rural California areas (and 
therefore minimize corresponding negative impact on access to care in 
California); and
     Promote administrative simplification by aligning 
physician and hospital payment localities.
    The California Medical Association (CMA) urged us to apply a 
consistent methodology across all payment localities and requested that 
any revision to the localities include a ``formula driven'' mechanism 
that can be applied repeatedly to future revisions. A California county 
medical society stated that more specific objectives for reforming PFS 
payment localities should be developed. For example, the commenter 
suggested that

[[Page 33535]]

payment reductions for practitioners should not exceed 1.5 percent in 
any given year, GAF differentials between adjacent localities should 
not exceed 10 percent, and that contiguous localities with less than a 
1 percent difference in their GAF's should be combined into a single 
locality.
(4) Comments on the Studied Alternative Locality Options
    We received many comments on the options for reconfiguring PFS 
payment localities presented in the interim locality study report. One 
commenter stated that option 1 (the CMS CBSA locality configuration) is 
the best option because it provides the greatest payment accuracy. The 
same commenter also stated that using CBSAs as the PFS locality 
definition would be similar to other Medicare payment systems (for 
example, the IPPS). Therefore, the commenter believed that geographic 
payment adjustments for physicians and hospitals would be consistent 
for a given geographic area. The CMA and a California county medical 
society stated that although option 1 would provide the greatest 
payment accuracy, it would also lead to significant payment reductions 
for many counties. Those same commenters expressed concern with the 
negative impact of transitioning directly to the CMS CBSA locality 
configuration. If adopted, the commenters suggested that the CMS CBSA 
locality configuration be implemented in stages over several years. The 
Texas Medical Association echoed this concern and urged us not to adopt 
option 1 unless we employ a hold harmless floor along with ``material'' 
increases in the conversion factor.
    The Texas Medical Association also stated that option 2 (Separate 
High Cost Counties from Existing Localities) results in less 
significant payment reductions to rural practitioners, as compared to 
the reductions seen under option 1 (CMS CBSA) and option 4 (Statewide 
Tiers). However, the commenter did not support option 2 because it 
would create different localities within major urban areas and, 
therefore, provide incentives for ``border-crossing,'' (in other words, 
incentives for physicians to move their medical practice to an adjacent 
urbanized county to obtain a higher payment amount). Additionally, the 
Texas Medical Association stated that option 2 increases administrative 
complexity due to the additional number of localities and the need to 
reallocate source data into smaller (county level) areas. The CMA also 
stated that option 2 results in less significant payment reductions (as 
compared to the other options). However, the CMA stated that option 2 
continues to produce inaccurate payments because it applies MSA-based 
data to county-based localities.
    Many commenters from the State of California expressed support for 
option 3 (Separate High Cost MSAs from Statewide Localities) because 
the commenters believed it would improve payment accuracy (over the 
current locality configuration) and at the same time mitigate the 
payment reductions to rural areas that would occur under option 1 (CMS 
CBSA) and option 4 (Statewide Tiers). The CMA explained that selecting 
an MSA-based locality approach would provide consistency with the 
hospital payment system and enable physicians to better compete with 
hospitals for the local work force. For example, the commenters stated 
that hospitals located in the Santa Cruz MSA are some of the highest 
paid in the nation. However, under the PFS locality structure, Santa 
Cruz County is grouped with the Rest of California locality, which is 
the lowest paid PFS locality in the State.
    The Texas Medical Association suggested that we adopt option 3 
because it minimizes payment reductions to lower cost rural areas. For 
example, since option 3 results in the fewest payment localities (as 
compared to the other alternative locality configurations), it reduces 
the redistribution effects of separating higher cost areas from rural 
``rest of State'' areas. The commenter also stated that option 3 
(Separate MSAs) matches payment with the underlying data better than 
option 2 (Separate Counties) and option 4 (Statewide Tiers). Some 
commenters expressed their belief that MSAs are better basic locality 
units than counties because the cost data is more reliably derived 
directly from MSAs (instead of counties). Several commenters who 
supported the adoption of an MSA-based PFS locality structure suggested 
that option 3 could be used as a transition to the CMS CBSA locality 
configuration (option 1).
    With regard to option 4 (Statewide Tiers), the Texas Medical 
Association stated that the Statewide Tiers locality configuration 
creates payment areas that are poorly aligned with the underlying data 
and results in unacceptable payment decreases to small urban and rural 
areas. The Florida Medical Association explained that many localities 
have experienced a shift in population and economic development since 
the last PFS locality reconfiguration. The commenter stated that 
counties with similar costs should be grouped together in the same 
locality regardless of geographic location and that the Statewide cost 
tier locality structure (option 4) would accomplish this objective. The 
CMA stated that under option 4, counties are not geographically 
contiguous and noted that the counties grouped together in a locality 
may not be related to one another economically. The commenter suggested 
that noncontiguous counties may experience more frequent economic 
changes than contiguous counties. The commenter expressed concern that 
option 4 would need to be updated more frequently and therefore 
payments to physicians will fluctuate more often. A California county 
medical society stated that option 4 creates payment errors for 
counties in seven California localities that currently have accurate 
payments. The Connecticut State Medical Society stated that New Haven 
County would experience an increase under option 4.
(5) Smoothing Adjustment
    Many commenters from the State of California did not support the 
concept of ``smoothing'' because it would require payment reductions 
for higher cost counties to offset the increases given to lower cost 
counties (in order to achieve budget neutrality). Additionally, the 
same commenters stated that physicians in ``smoothed'' counties benefit 
financially from the smoothing adjustment solely because they are 
located adjacent to high cost areas. They also stated that a 
``smoothing'' adjustment would be complex to administer, and difficult 
to understand. The CMA, a California county medical society, and 
another commenter from California stated that a ``smoothing'' 
adjustment would require a change in the statute and that current 
Medicare statute requires GPCIs to reflect the relative costs 
differences among localities for work, PE, and malpractice expense. 
Another commenter recommended that we study the extent to which a 
``smoothing'' adjustment can be used as a temporary measure; in order 
to phase-in significant changes in payment levels resulting from a PFS 
locality reconfiguration.
(6) Other Alternative Options
    A few commenters submitted suggestions on other potential 
alternative PFS locality configurations in addition to those discussed 
in the interim report. For example, one medical clinic suggested a 
``market-based'' approach instead of the current ``cost-based'' 
methodology. Under this approach, PFS payment would be geographically 
adjusted based on the ratio of Medicare participating

[[Page 33536]]

physicians to Medicare beneficiaries. The commenter suggested that 
payment amounts should be increased in geographic areas with a low 
physician to Medicare beneficiary ratio (for example, 1 physician for 
every 3,000 beneficiaries) and decreased in areas with a higher ratio 
(for example, 1 physician for every 200 beneficiaries). The commenter 
stated that ``this process could be used to bring physician to patient 
ratios in the United States to equilibrium.''
    The CMA and a California county medical society suggested 
variations of option 2 (Separate Counties) with the intention of 
reducing the number of localities that would result under this option. 
The commenters suggested adopting a ``basic locality unit'' (for 
example, MSA) instead of a county when removing areas from an existing 
locality. For example, if 5 counties are removed from a ``Rest of 
State'' locality, and included within the same MSA, the 5 counties 
would be grouped into a single new locality rather than 5 separate new 
localities. The commenter also suggested that if removed counties are 
contiguous and have similar costs (even if not part of same MSA); they 
should be consolidated into one new locality instead of separate 
localities. The commenters stated that either of these variations would 
reduce the number of new localities created under option 2.
    Additionally, the CMA and a California county medical society 
suggested a variation of option 4 (Statewide Tiers). The commenters 
stated that fixed cost tiers be established for each State using .05 
GAF increments which would lock in the upper and lower GAF values for 
each cost tier. Under this approach, the fixed cost tiers would not 
change based on updates to the GPCIs; however, a county could be moved 
to a lower (or higher) cost tier without the need to define new tiers 
for the entire state.
(7) Redistribution of Payment
    Many commenters acknowledged that a significant redistribution of 
payments would occur under each alternative locality configuration 
option and requested that we minimize the payment discrepancy between 
urban and rural areas to ensure continued access to services. 
Additionally several commenters stated that any changes to the locality 
configuration should not be unfair to rural practitioners. One 
specialty college noted that any new locality configuration must be 
budget neutral, resulting in a shift of resources from one geographic 
area to another. The commenter expressed concern that the requirement 
for budget neutrality may help physicians who practice in certain 
geographic areas, but will be costly to others. As such, the commenters 
stated that each alternative PFS locality option could create problems 
for medical access in areas where payments are reduced. As a method to 
minimize payment reduction, a few commenters requested that we continue 
the application of the 1.0 work GPCI floor.
    The AMA stated that any proposal to reconfigure PFS payment 
localities should not necessitate budget-neutral payment 
redistributions. The commenter expressed the concern raised by other 
commenters that some localities would receive payment increases under 
some options while other localities would experience significant 
payment reductions to offset these increases. The commenters requested 
that if new locality definitions are proposed, new funding should be 
provided to increase payments in localities that are found to be 
underpaid. The commenters also stated that budget neutral 
redistributions would only exacerbate an already flawed and under-
funded Medicare PFS. The AMA suggested that States with a Statewide 
locality should be given the option of remaining a Statewide locality 
and that CMS should continue its policy of allowing any State the 
option of converting to a Statewide locality at the request of the 
State Medical Association.
    The Iowa Medical Society stated that Medicare PFS payment levels in 
Iowa are among the lowest in the country and that the four alternative 
locality configurations all appear to further reduce payments to State 
physicians. As such, they requested that Iowa remain a Statewide 
locality under any nationwide locality change.
    Because of the redistribution effect of any locality 
reconfiguration, some commenters did not find any of the potential 
alternative locality configurations preferable to the current payment 
locality structure. For example, one physician academy stated that all 
four of the alternative locality scenarios result in disproportionately 
lower GAFs for non-MSA counties. Therefore, the commenter encouraged us 
to maintain the current locality structure until we identify an 
alternative that decreases the number of payment localities and 
supports practitioners in rural and underserved areas. The commenter 
also expressed support for a locality reconfiguration that minimizes 
the number of payment localities; does not exceed the current number of 
89 localities and eliminates geographic payment adjustments (except 
those designed to encourage physicians to practice in underserved 
areas). Furthermore, the Florida Medical Association urged us to work 
with Congress to remove the application of budget neutrality when 
making changes to the PFS payment locality structure. The commenter 
suggested that we use the current GCPI values as a ``floor'' to ensure 
that future updates to the localities will not result in payment 
reductions.
(8) Methodology
    The CMA and a California county medical society commended the 
contractor, Acumen, for the accuracy of its calculations, modeling of 
the options, and observations. However, they recommended a change in 
the iterative methodology used to develop option 2 and option 3. The 
commenters stated that the threshold for removing high cost counties 
from existing localities (option 2) and removing high cost MSAs from 
Statewide localities (option 3) should be equal to or greater than 5 
percent (not just greater than 5 percent) with no rounding up for GAF 
differences below 5 percent. Additionally, with regard to option 2, the 
commenters recommended that counties with identical GAFs to the county 
being considered for a new locality should not be included in the 
calculation of the ``Rest of Locality'' GAF (which is used for 
comparison to the higher cost county).
    Additionally, the commenters objected to the methodology used for 
the ``smoothing'' adjustment. The commenters believe that a new 
locality created by smoothing should not have a significantly lower GAF 
than it would if the county was a single locality. For example, the 
commenters noted that San Diego County (which is currently included in 
the Rest of California locality) has a county-level GAF of 1.056. 
However, when the smoothing adjustment is applied to the current 
locality configuration, the GAF for San Diego is 1.018.
    One research institute questioned why high cost counties were 
separated from existing localities (option 2) and high cost MSAs were 
separated from Statewide localities (option 3); instead of separating 
low cost counties and low cost MSAs. The commenter stated that the CMS 
CBSA methodology is not designed to be sensitive enough to detect 
significant geographic differences in physician compensation and PE. 
The commenter questioned whether compensation and PE costs are 
correlated directly with population density.

[[Page 33537]]

Clarification on Methodology Used To Develop Alternative Locality 
Configurations Discussed in the Interim Report
    With regard to the iterative methodology used for option 2 and 
option 3, the contractor, Acumen, analyzed these alternative locality 
configurations based on its understanding of the MedPAC ideas. A 
threshold of greater than 5 percent was used to separate high cost 
counties from existing localities (option 2) and to separate high cost 
MSAs from Statewide localities (option 3). Additionally, the contractor 
compared just one county (or MSA) at a time against the weighted 
average GAF of all the lower-ranked counties in the Medicare locality. 
Counties with the same GAF were not treated as a group. In ranking 
counties by GAF, the contractor used physician work RVUs to break 
``ties.'' In other words, when two counties in a Medicare locality had 
the same GAF, the county with the higher physician work RVU was ranked 
as if it had the higher GAF. Keeping counties with identical GAFs 
together would be another possible strategy for developing alternative 
PFS payment localities. The high cost counties and MSAs were removed in 
the iterative process to reflect ongoing concerns regarding individual 
high cost counties (usually in ``rest of state'' areas) where the GAF 
is significantly higher than the norm for the locality. Removing low 
cost counties would isolate very low cost areas leading to further 
reductions in PFS payment levels for physicians and practitioners in 
these counties.
    With regard to the sensitivity of the CBSA methodology and whether 
compensation and PE cost are correlated directly to population density; 
the CBSA methodology has three types of areas: MSAs, Metropolitan 
Divisions within MSAs, and non-MSA areas. None of these definitions 
involve population density per se, although MSAs must include core 
areas with populations of 50,000 or greater. Given that the CBSA 
methodology has more regions than the other alternative locality 
configurations, it could potentially draw on more detailed levels of 
data than the other options, and therefore, result in a more precise 
reflection of geographic cost differences.
(9) Suggested Additional Topics for Review
    One commenter stated that the interim locality study report should 
have addressed how a change in payment locality structure might impact 
a physician's choice regarding practice location and Medicare 
beneficiary access to physician services.
    The CMA and a California county medical society stated that the 
interim locality study should have included a discussion of payment 
accuracy under the current locality structure and under each potential 
locality configuration. The commenters stated that a discussion of the 
potential negative impact under a particular option without a 
discussion of the accuracy of payment for each option is misleading. 
Additionally, they suggested adding a discussion of potential methods 
to mitigate payment reductions.
(10) Administrative and Operational Issues
    We received few comments on administrative and operational issues 
related to making changes to the PFS payment locality structure. Some 
commenters stated that a locality revision would impose a minimal 
amount of additional administrative burden. However, the commenters did 
not specify whose administrative burden they were assessing. One 
commenter stated that implementing the CMS CBSA locality configuration 
(option 1) would be a significant administrative burden. Additionally, 
one health care plan explained that many Medicare Advantage Plans are 
based on Medicare fees in specific localities. As such, any fee 
schedule locality revision would be a large scale and costly 
administrative undertaking for managed care plans as well as for 
``traditional'' Medicare.
(11) Underlying Data
    We also received comments on the data used to develop GPCI values. 
Although we appreciate these comments, the focus of the interim 
locality study was not intended to be a review of the underlying data 
sources used to develop GPCI values. As discussed earlier, the interim 
locality study was a review of potential approaches for redefining the 
Medicare PFS payment localities.
Response to Comments
    We would like to thank the public for the many thoughtful comments 
on the interim locality study report entitled, ``Review of Alternative 
GPCI Payment Locality Structures''. As noted by the commenters and 
reflected in the report, significant payment redistribution would occur 
if a nationwide change in the PFS locality configuration were 
undertaken. All four of the potential alternative payment locality 
configurations reviewed in the report would increase the number of 
localities and separate higher cost, typically urban areas from lower 
cost, typically rural ``Rest of State'' areas. In general, payments to 
urban areas would increase while rural areas would see a decrease in 
payment under each of the options studied because they would no longer 
be grouped with higher cost ``urbanized'' areas. We intend to review 
the suggestions made by the commenters and consider the impact of each 
of the potential alternative locality configurations. We will also 
explore whether alternative underlying data sources are available 
nationwide. A final report will be posted to the CMS Web site after 
further review of the studied alternative locality approaches.
    We are not proposing changes in the PFS locality structure at this 
time. As explained in the CY 2009 PFS final rule with comment period, 
in the event we decide to make a specific proposal for changing the 
locality configuration, we would provide extensive opportunities for 
public input (for example, town hall meetings or open door forums, as 
well as opportunities for public comments afforded by the rulemaking 
process).

C. Malpractice Relative Value Units (RVUs)

1. Background
    Section 1848(c) of the Act requires that each service paid under 
the PFS be comprised of three components: work, PE, and malpractice. 
From 1992 to 1999, malpractice RVUs were charge-based, using weighted 
specialty-specific malpractice expense percentages and 1991 average 
allowed charges. Malpractice RVUs for new codes after 1991 were 
extrapolated from similar existing codes or as a percentage of the 
corresponding work RVU. Section 4505(f) of the BBA required us to 
implement resource-based malpractice RVUs for services furnished 
beginning in 2000. Initial implementation of resource-based malpractice 
RVUs occurred in 2000. The statute also requires that we review, and if 
necessary adjust, RVUs no less often than every 5 years. The first 
review and update of resource based malpractice RVUs was addressed in 
the CY 2005 PFS final rule (69 FR 66263). Minor modifications to the 
methodology were addressed in the CY 2006 PFS final rule (70 FR 70153). 
In this current rule, we are proposing to implement the second review 
and update of malpractice RVUs.

[[Page 33538]]

2. Proposed Methodology for the Revision of Resource-Based Malpractice 
RVUs
    The proposed malpractice RVUs were developed by Acumen, LLC 
(Acumen) under contract to us.
    The methodology used in calculating the proposed second review and 
update of resource-based malpractice RVUs largely parallels the process 
used in the CY 2005 update. The calculation requires information on 
malpractice premiums, linked to the physician work conducted by 
different specialties that furnish Medicare services. Because 
malpractice costs vary by State and specialty, the malpractice premium 
information must be weighted geographically and across specialties. 
Accordingly, the proposed malpractice expense RVUs are based upon three 
data sources:
     Actual CY 2006 and CY 2007 malpractice premium data.
     CY 2008 Medicare payment data on allowed services and 
charges.
     CY 2008 Geographic adjustment data for malpractice 
premiums.
    Similar to the previous update of the resource-based malpractice 
expense RVUs, we are proposing to revise the RVUs using specialty-
specific malpractice premium data because they represent the actual 
malpractice expense to the physician. In addition, malpractice premium 
data are widely available through State Departments of Insurance. We 
propose to use actual CY 2006 and CY 2007 malpractice premium data 
because they are the most current data available (CY 2008 malpractice 
premium data were not consistently available during the data collection 
process). Accounting for market shares, three fourths of all included 
rate filings were implemented in CY 2006 and CY 2007. The remaining 
rate filings were implemented in CY 2003 through CY 2005 but still 
effective in CY 2006 and CY 2007. Carriers submit rate filings to their 
State Departments of Insurance listing the premiums and other features 
of their coverage. The rate filings include an effective date, which is 
the date the premiums go into effect. Some States require premium 
changes to be approved before their effective date; others just require 
the rate filings to be submitted. We try to capture at least 2 
companies and at least 50 percent of the market share, starting with 
the largest carriers in a State.
    The primary determinants of malpractice liability costs continue to 
be physician specialty, level of surgical involvement, and the 
physician's malpractice history. We collected malpractice premium data 
from 49 States and the District of Columbia for all physician 
specialties represented by major insurance providers. Rate filings were 
not available through Departments of Insurance in Mississippi or Puerto 
Rico. Premiums were for $1 million/$3 million, mature, claims-made 
policies (policies covering claims made, rather than services furnished 
during the policy term). A $1 million/$3 million liability limit policy 
means that the most that would be paid on any claim is $1 million and 
that the most that the policy would pay for several claims over the 
timeframe of the policy is $3 million. We collected data from 
commercial and physician-owned insurers and from joint underwriting 
associations (JUAs). A JUA is a State government-administered risk 
pooling insurance arrangement in areas where commercial insurers have 
left the market. Adjustments were made to reflect mandatory surcharges 
for patient compensation funds (PCFs) (funds to pay for any claim 
beyond the statutory amount, thereby limiting an individual physician's 
liability in cases of a large suit) in States where PCF participation 
is mandatory. We sought to collect premium data representing at least 
50 percent of physician malpractice premiums paid in each State as 
identified by State Departments of Insurance and by the National 
Association of Insurance Commissioners (NAIC).
    Rather than select the top 20 physician specialties as when the 
malpractice RVU were originally established and updated, we included 
premium information for all physician and surgeon specialties and risk 
classifications available in the collected rate filings. Most insurance 
companies provided crosswalks from insurance services office (ISO) 
codes to named specialties; we matched these crosswalks to CMS 
specialty codes. We also preserved information obtained regarding 
surgery classes, which are categorizations that affect premium rates. 
For example, many insurance companies grouped general practice 
physicians into nonsurgical, minor-surgical and major-surgical classes, 
each with different malpractice premiums. Some companies provided 
additional surgical subclasses; for example, distinguishing general 
practice physicians that conducted obstetric procedures, which further 
impacted malpractice rates. We standardized this information to CMS 
specialty codes.
    We could not identify malpractice premium rates through typical 
malpractice rate filings for some physician specialties, nonphysician 
practitioners (NPPs), and other entities (for example, independent 
diagnostic testing facilities (IDTFs)) paid under the PFS. In the 
absence of available premium data for these specialties and entities, 
we took a number of steps.
    We collected data from one of the largest association program 
insurance brokers and administrators in the United States providing 
malpractice insurance to medical physicists. We incorporated the data 
into the calculation of the proposed update to the malpractice RVUs for 
TC services. (See section II.C.3 of this proposed rule for a discussion 
of this issue.)
    We also crosswalked 13 specialties for which there was not 
significant collected data available (those in less than 35 States' 
malpractice premium rate filings) to similar specialties and risk 
classes. The unassigned specialties and the specialty to which we are 
proposing to assign them are shown in Table 4. The remaining four 
specialties were dropped, meaning they were not included in the 
weighted averages for calculating the malpractice RVUs.

    Note: While we were able to collect data on many more 
specialties on this survey than under the previous one, these four 
specialties were also dropped under the previous version of the 
survey because of a lack of available data. This left 44 
specialties, representing 90 percent of Medicare services, for which 
we used the malpractice premium data to develop risk factors.


                       Table 4--Crosswalk of Specialties to Similar Physician Specialties
----------------------------------------------------------------------------------------------------------------
                                                          Crosswalk
       Spec. code                Specialty name        specialty code             Crosswalk specialty
----------------------------------------------------------------------------------------------------------------
09......................  Interventional Pain                      72  Pain Management.
                           Management.
19......................  Oral Surgery...............              03  Allergy Immunology*.
35......................  Chiropractic...............              03  Allergy Immunology*.
62......................  Psychologist...............              03  Allergy Immunology*.
65......................  Physical Therapist.........              03  Allergy Immunology*.

[[Page 33539]]

 
67......................  Occupational Therapist.....              03  Allergy Immunology*.
68......................  Clinical Psychologist......              03  Allergy Immunology*.
79......................  Addiction Medicine.........              03  Allergy Immunology*.
85......................  Maxillofacial Surgery......              03  Allergy Immunology*.
86......................  Neuropsychiatry............              26  Psychiatry.
91......................  Surgical Oncology..........              02  General Surgery.
94......................  Interventional Radiology...              30  Diagnostic Radiology.
98......................  Gynecological/Oncology.....              90  Medical Oncology.
99......................  Unknown Physician Specialty              01  General Practice.
----------------------------------------------------------------------------------------------------------------
* Lowest Physician Specialty.

    The methodology presented in this proposed rule conceptually 
follows the specialty-weighted approach used in the CY 2000 and CY 2005 
PFS final rules with comment period (63 FR 59383 and 69 FR 66263, 
respectively) and incorporates the minor modifications discussed in the 
CY 2006 final rule with comment period (70 FR 70153). We revised the 
current specialty-weighted approach to accommodate additional data 
gathered during the malpractice premium data collection. The specialty-
weighted approach bases the malpractice RVUs upon a weighted average of 
the risk factors of all specialties furnishing a given service. This 
approach ensures that all specialties furnishing a given service are 
accounted for in the calculation of the final malpractice RVUs. Our 
proposed methodology is as follows:
    (1) Compute a preliminary national average premium for each 
specialty. Insurance rating area malpractice premiums for each 
specialty were mapped to the county level. The specialty premium for 
each county is then multiplied by the total county RVUs (as defined by 
Medicare claims data), which had been divided by the malpractice GPCI 
applicable to each county to standardize the relative values for 
geographic variations. If the malpractice RVUs were not normalized for 
geographic variation, the locality cost differences (as reflected by 
the GPCIs) would be counted twice. The product of the malpractice 
premiums and standardized RVUs is then summed across counties for each 
specialty. This calculation is then divided by the total RVUs for all 
counties, for each specialty, to yield a national average premium for 
each specialty.
    (2) Determine which risk class(es) to use within each specialty. 
Many specialties had premium rates that differed for major surgery, 
minor surgery, and no surgery. These surgery classes are designed to 
reflect differences in risk of professional liability and the cost of 
malpractice claims if they occur. The same concept applies to 
procedures; some procedures carry greater liability risks. Accordingly, 
we identified major, minor, nonsurgical, and obstetric procedures among 
all Medicare procedures by established indicators (Global Surgery 
Flags). Table 5 shows the surgery class definitions used in the 
proposed methodology.

                                   Table 5--Surgery Classes by Procedure Code
----------------------------------------------------------------------------------------------------------------
              Surgery class                       CPT code range                   Global surgery flag
----------------------------------------------------------------------------------------------------------------
Major Surgery (Maj)......................  10000-69999.................  90 Day.
Minor Surgery (Min)......................  10000-69999.................  All Other.
Obstetrics (OB)..........................  59000-59899.................  N/A.
No Surgery (NS)..........................  All other CPT Codes.........  N/A.
----------------------------------------------------------------------------------------------------------------

    To account for the presence of surgery classes in the malpractice 
premium data and the task of mapping these premiums to procedures, we 
sought to calculate distinct risk factors for major, minor, and 
nonsurgical procedures, as well as a comparable approach for obstetric 
premiums and procedures. However, the availability of data by surgery 
class varied across specialties. In light of the complexity of the 
surgery class data, we evaluated both the frequency with which rate 
class data were reported and a preliminary set of normed national 
average premiums, calculated for all classes reported in the data. 
Because no single approach accurately addressed the risk weights and 
value differences of various specialty/procedure combinations, we 
developed five strategies for handling the surgical classes and 
defining specialties. These strategies are summarized in Table 6.
    (a) Substantial Data for Each Class: For 13 out of 44 specialties, 
we determined that there was sufficient data for each surgical class, 
as well as sufficient differences in rates between classes, to use the 
surgical class data as the basis for risk factors by surgical class.
    (b) Major Surgery Dominates: These 8 surgical specialties typically 
had rate filings that specified major surgery as the predominate rate 
reported. Filings that distinguished minor surgery or nonsurgical were 
relatively rare. For most of these surgical specialties, we did not 
have ``unspecified'' rate filings. When we had ``unspecified'' rate 
filings, the unspecified category was sometimes above and sometimes 
below the major surgery rate. For these cases, we assigned the premium 
for major surgery to all procedures conducted by this specialty. (In 
practice, the major surgery procedures dominate the services actually 
furnished.)
    (c) Little or No Data for Major Surgery: For five other 
specialties, specific premiums for major surgery were uncommon, but 
most States had rate filings that represented minor surgery or 
nonsurgical coverage. These five specialties had unspecified rates that 
were less common than the minor surgery-nonsurgery distinction and the 
nonsurgery rates. Therefore, for these five specialties we assigned the 
minor surgery rate filings for both major surgery and minor surgery 
procedures, and the nonsurgery filings for nonsurgical procedures.

[[Page 33540]]

    (d) Unspecified Dominates: Many malpractice rate filings did not 
specify surgery classes for some specialties; we refer to these 
instances as unspecified malpractice rates. In only two cases, we 
choose the unspecified premium as the premium information to use for 
the specialty. For both of these specialties, fewer than 20 States had 
rate filings that distinguished by surgical classes, while more than 40 
had general rate filings for the specialty.
    (e) Blend All Available: For the last 16 specialties, there was 
wide variation across the State filings in terms of whether or not 
surgical classes were reported and which categories were reported. 
Because there was no clear strategy for these remaining specialties, we 
blended the rate information we collected into one general premium rate 
and applied that rate for all three premiums (major, minor and 
nonsurgical). For these specialties, we developed a weighted average 
``blended'' premium at the national level, according to the percentage 
of physician work RVUs correlated with the surgery classes within each 
specialty.

  Table 6--Summary of Approaches To Defining Premiums by Surgical Class
------------------------------------------------------------------------
               Situation                         Specialty codes
------------------------------------------------------------------------
1. Substantial Data for Each Class (13)  01 (non-OB), 04, 06, 07.
                                         08 (non-OB), 10, 13, 18.
                                         16 (non-OB), 38, 39, 46, 93.
2. Major Surgery Dominates (8).........  02, 14, 20, 24, 28, 33, 77, 78.
3. Little or No Data for Major Surgery   11, 22, 37, 44, 82.
 (5).
4. Unspecified Dominates (2)...........  05, 72.
5. Blend All Available (16)............  03, 25, 26, 29, 30, 34, 36, 40,
                                          48, 66, 71, 81, 83, 84, 90,
                                          92.
------------------------------------------------------------------------

    For rarely-billed Medicare procedures, we did not apply the 5 
percent threshold for inclusion of services or specialties as utilized 
in previous MP RVU updates. Rather, we are proposing to use the risk 
factor of the dominant specialty by services for each procedure for 
which the number of allowed services is less than 100. This approach 
reflects the risk factors of the specialty that most frequently 
furnishes these low volume procedures.
    (3) Calculate a risk factor for each specialty. Differences among 
specialties in malpractice premiums are a direct reflection of the 
malpractice risk associated with the services furnished by a given 
specialty. The relative differences in national average premiums 
between various specialties can be expressed as a specialty risk 
factor. These risk factors are an index calculated by dividing the 
national average premium for each specialty by the national average 
premium for the specialty with the lowest average premium, allergy/
immunology. Table 7 shows the risk factors by specialty and surgery 
class.

                              Table 7--Risk Factors by Specialty and Surgery Class
----------------------------------------------------------------------------------------------------------------
                                                                               Minor-surgical    Major-surgical
        Medicare code                 Medicare name         Non-surgical  RF         RF                RF
----------------------------------------------------------------------------------------------------------------
1............................  General Practice...........              1.50              2.26              3.56
2............................  General Surgery............              5.87              5.87              5.87
3............................  Allergy Immunology.........              1.00              1.00              1.00
4............................  Otolaryngology.............              1.44              2.37              3.55
5............................  Anesthesiology.............              2.22              2.22              2.22
6............................  Cardiology.................              1.87              2.65              6.09
7............................  Dermatology................              1.14              2.06              3.96
8............................  Family Practice............              1.57              2.23              3.79
10...........................  Gastroenterology...........              2.03              2.48              4.09
11...........................  Internal Medicine..........              1.72              2.52              2.52
13...........................  Neurology..................              2.20              2.90             10.28
14...........................  Neurosurgery...............              9.94              9.94              9.94
16...........................  Obstetrics Gynecology......              1.67              2.37              4.64
18...........................  Ophthalmology..............              1.07              1.68              1.90
19...........................  Oral Surgery...............              1.00              1.00              1.00
20...........................  Orthopedic Surgery.........              5.46              5.46              5.46
22...........................  Pathology..................              1.74              2.26              2.26
24...........................  Plastic and Reconstructive               5.51              5.51              5.51
                                Surgery.
25...........................  Physical Medicine and                    1.14              1.14              1.14
                                Rehabilitation.
26...........................  Psychiatry.................              1.22              1.22              1.22
28...........................  Colorectal Surgery.........              3.99              3.99              3.99
29...........................  Pulmonary Disease..........              2.08              2.08              2.08
30...........................  Diagnostic Radiology.......              2.62              2.62              2.62
33...........................  Thoracic Surgery...........              6.51              6.51              6.51
34...........................  Urology....................              2.64              2.64              2.64
35...........................  Chiropractic...............              1.00              1.00              1.00
36...........................  Nuclear Medicine...........              1.55              1.55              1.55
37...........................  Pediatric Medicine.........              1.49              2.41              2.41
38...........................  Geriatric Medicine.........              1.43              2.23              4.22
39...........................  Nephrology.................              1.61              2.27              4.17
40...........................  Hand Surgery...............              3.49              3.49              3.49
44...........................  Infectious Disease.........              2.09              2.52              2.52
46...........................  Endocrinology..............              1.51              2.23              4.46

[[Page 33541]]

 
48...........................  Podiatry...................              1.98              1.98              1.98
62...........................  Psychologist...............              1.00              1.00              1.00
65...........................  Physical Therapist.........              1.00              1.00              1.00
66...........................  Rheumatology...............              1.56              1.56              1.56
67...........................  Occupational Therapist.....              1.00              1.00              1.00
68...........................  Clinical Psychologist......              1.00              1.00              1.00
71...........................  Registered Dietitian/                    1.54              1.54              1.54
                                Nutrition Professional.
72...........................  Pain Management............              2.21              2.21              2.21
77...........................  Vascular Surgery...........              6.50              6.50              6.50
78...........................  Cardiac Surgery............              6.89              6.89              6.89
79...........................  Addiction Medicine.........              1.00              1.00              1.00
81...........................  Critical Care                            2.15              2.15              2.15
                                (Intensivists).
82...........................  Hematology.................              1.59              2.03              2.03
83...........................  Hematology/Oncology........              1.72              1.72              1.72
84...........................  Preventive Medicine........              1.16              1.16              1.16
85...........................  Maxillofacial Surgery......              1.00              1.00              1.00
86...........................  Neuropsychiatry............              1.22              1.22              1.22
90...........................  Medical Oncology...........              1.76              1.76              1.76
91...........................  Surgical Oncology..........              5.87              5.87              5.87
92...........................  Radiation Oncology.........              2.30              2.30              2.30
93...........................  Emergency Medicine.........              2.29              3.77              4.87
94...........................  Interventional Radiology...              2.62              2.62              2.62
98...........................  Gynecological/Oncology.....              1.76              1.76              1.76
99...........................  Unknown Physician Specialty              1.50              2.26              3.56
----------------------------------------------------------------------------------------------------------------

    One complication in the calculation of specialty risk factors is 
technical component (TC) data. Many procedures are comprised of 
professional components (PC) and TCs. These components are referred to 
as global procedures when billed together. The TC represents the cost 
of equipment, supplies, and technician/staff salaries involved in 
furnishing a procedure, such as the taking of an x-ray by a technician. 
The PC represents the portion of a service that is furnished by a 
physician such as the interpretation of an x-ray by the physician. The 
distinction is important because PCs and TCs have different associated 
risk factors and face different malpractice insurance costs. The 
previous update of the malpractice RVUs did not update the TCs due to 
the lack of available malpractice premium data for entities providing 
TC services. In the past, we were unable to obtain data concerning 
malpractice costs associated with the TC, so we based the malpractice 
RVUs for TC services and the TC portion of global services on 
historical allowed charges.
    We have had ongoing discussions with the AMA RUC and various 
specialty societies about this issue. In the CY 2008 PFS proposed rule 
(72 FR 38143), we noted that the Professional Liability Insurance (PLI) 
workgroup, a subset of the AMA RUC brought to our attention the fact 
that there are approximately 600 services that have TC malpractice RVUs 
that are greater than the PC malpractice RVUs. The PLI workgroup 
requested that we make changes to these malpractice RVUs and suggested 
that it is illogical for the malpractice RVUs for the TC of a service 
to be higher than the malpractice RVUs for the PC.
    We responded that we would like to develop a resource-based 
methodology for the technical portion of these malpractice RVUs; but 
that we did not have data to support such a change. We asked for 
information about whether, and if so, how 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 entities 
that furnish these technical services.
    In the CY 2009 PFS proposed rule (73 FR 38515), we stated that the 
issue of assigning malpractice 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 
malpractice RVUs for these codes. We indicated that as part of our work 
to update the malpractice RVUs in CY 2010, we would instruct our 
contractor to research available data sources for the malpractice 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 were available, we would instruct the 
contractor to gather the data so we will be ready to implement revised 
malpractice RVUs for the TC of these codes in conjunction with the 
update of malpractice RVUs for the PCs in CY 2010.
    In the CY 2009 PFS final rule (73 FR 69741), we again responded to 
comments on this issue. We noted that one commenter provided us with 
the name of a company that provides liability insurance to imaging 
facilities. We stated that we planned to share the information with our 
contractor and that if premium data could be identified; it would be 
incorporated into the malpractice RVU update. Our contractor, Acumen 
LLC, contacted the company suggested by the commenter and obtained 
medical physicist malpractice premium data from one of the largest 
association program insurance brokers and administrators in the United 
States providing this type of malpractice insurance. The premium data 
indicate that medical physicists have very low malpractice premiums 
relative to physicians.
    Medical physicists are involved in complex services such as 
Intensity-Modulated Radiation Therapy (IMRT). IMRT is an advanced mode 
of radiotherapy that utilizes computer-controlled x-ray accelerators to 
deliver radiation doses to a malignant tumor. Based on the complexity 
of these services, we believe that medical

[[Page 33542]]

physicists would pay one of the highest malpractice premium rates of 
the entities furnishing TC services and that using their data as a 
proxy (in the absence of actual premium data) to develop malpractice 
RVUs for TC services would be more realistic than our current approach 
for these entities. Moreover, we believe it is unlikely that actual 
malpractice premium rates for these entities would exceed those for 
medical physicists. Therefore, based on this new data collection, we 
are proposing to use the medical physicists' premium data as a proxy 
for the malpractice premiums paid by entities providing TC services. We 
believe that the use of this data will better reflect the level of 
malpractice premiums paid by entities providing TC services than the 
current charge-based malpractice RVUs or crosswalks to the malpractice 
premium data of physician specialties.
    As we have done in the past, we continue to encourage public 
commenters to submit or identify alternative data that we might use for 
the purpose of establishing malpractice RVUs.
    (4) Calculate malpractice RVUs for each code. Resource-based 
malpractice RVUs were calculated for each procedure. The first step was 
to identify the percentage of services furnished by each specialty for 
each respective procedure code. This percentage was then multiplied by 
each respective specialty's risk factor as calculated in Step 3. The 
products for all specialties for the procedure were then added 
together, yielding a specialty-weighted malpractice RVU reflecting the 
weighted malpractice costs across all specialties for that procedure. 
This sum was then multiplied by the procedure's work RVUs to account 
for differences in risk-of-service.
    Certain codes have no physician work RVUs. The overwhelming 
majority of these codes are the TCs of diagnostic tests, such as x-rays 
and cardiac catheterization, which have a distinctly separate TC (the 
taking of an x-ray by a technician) and PC (the interpretation of the 
x-ray by a physician). Examples of other codes with no work RVUs are 
audiology tests and injections. These services are usually furnished by 
NPPs, in this example, audiologists and nurses, respectively. In many 
cases, the NPP or entity furnishing the TC is distinct and separate 
from the physician ordering and interpreting the test. We believe it is 
appropriate for the malpractice RVUs assigned to TCs to be based on the 
malpractice costs of the NPP or entity, not the professional liability 
of the physician.
    Our proposed methodology, however, would result in zero malpractice 
RVUs for codes with no physician work, since we propose the use of 
physician work RVUs to adjust for risk-of-service. We believe that zero 
malpractice RVUs for reasons other than rounding would be inappropriate 
because NPPs and entities such as IDTFs also have malpractice 
liability.
    Note that the earlier discussion above in ``(3) Calculate a risk 
factor for each specialty'' addressed the proposed use of the medical 
physicist premium data to develop a TC risk factor. This TC risk factor 
is used in (3), as noted above, along with the global risk factor to 
calculate a PC risk factor. Once the global and PC risk factors are 
calculated, they are used here in step (4) to calculate the global and 
PC malpractice RVUs. Once we have calculated the global and PC 
malpractice RVUs, we propose to address the lack of work RVUs for TC 
services by setting the TC malpractice RVUs equal to the difference 
between the global malpractice RVUs and PC malpractice RVUs.
    (5) Rescale for budget neutrality. The statute requires that 
changes to fee schedule RVUs be budget neutral. The current resource-
based malpractice RVUs and the proposed resource-based malpractice RVUs 
were constructed using entirely different malpractice premium data. 
Thus, the last step is to adjust for budget neutrality by rescaling the 
proposed malpractice RVUs so that the total proposed resource-based 
malpractice RVUs equal the total current resource-based malpractice 
RVUs.
    We are requesting comments on our proposed methodology for updating 
the malpractice RVUs. We are especially interested in comments on our 
proposed process for revising the malpractice RVUs of the TC of codes 
with no physician work. Additionally, we intend to post the Acumen 
report, ``Interim Report on Malpractice RVUs for the CY 2010 Medicare 
Physician Fee Schedule Proposed Rule'' on the CMS Web site in 
conjunction with publication of this proposed.

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 requires 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 
requested and existing telehealth services for the roles of, and 
interactions among, the beneficiary, the physician (or other 
practitioner) at the distant site and, if necessary, the telepresenter. 
We also look for similarities in the telecommunications system used to 
deliver the proposed service, for example, the use of interactive audio 
and video equipment.
     Category #2: Services that are not similar to the current 
list of telehealth services. Our review of these requests includes an 
assessment of whether the use of a telecommunications system to deliver 
the service produces similar diagnostic findings or therapeutic 
interventions as compared with the face-to-face ``hands on'' delivery 
of the same service. Requesters 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; neurobehavioral status exam; and follow-up inpatient 
telehealth consultations.
    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 2008 are considered 
for the CY 2010 proposed rule. Each request for adding a service to the 
list of Medicare telehealth

[[Page 33543]]

services must include any supporting documentation you wish us to 
consider as we review the request. Because we use the annual PFS 
rulemaking process as a vehicle for making changes to the list of 
Medicare telehealth services, requesters 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 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 requests in CY 2008 to add the following services as 
Medicare telehealth services effective for CY 2010: (1) Health and 
behavior assessment and intervention (HBAI) procedures; and (2) nursing 
facility services. In addition, we received a number of requests to add 
services that we considered previously and did not approve as Medicare 
telehealth services in previous PFS rules. These requested services 
include critical care services; initial and subsequent hospital care; 
group medical nutrition therapy; diabetes self-management training; 
speech and language pathology services; and physical and occupational 
therapy services. The following is a discussion of these requests.
a. Health and Behavior Assessment and Intervention (HBAI)
    The American Psychological Association (APA) submitted a request to 
add HBAI services (as described by HCPCS codes 96150 through 96154) to 
the list of approved telehealth services. The APA asks us to evaluate 
and approve HBAI services as Category 1 service because they 
are comparable to the psychotherapy services currently approved for 
telehealth.
CMS Review
    To determine whether to assign a request to Category 1, we 
look for similarities between the service that is being considered for 
addition and the existing telehealth services in the roles of, and 
interactions among, the beneficiary, the physician (or other 
practitioner) at the distant site and, if necessary, the telepresenter.
    Clinical psychologists furnish HBAI services to beneficiaries to 
help them manage or improve their behavior in response to physical 
problems. Elements of HBAI services typically include interviewing, 
observing, and counseling beneficiaries to help them modify their 
behavior. These elements are also common to the office psychiatry 
services currently approved for telehealth. We believe the interaction 
between a practitioner and a beneficiary receiving individual HBAI 
services (as described by HCPCS codes 96150 through 96152) is similar 
to the assessment and counseling elements of the individual office 
psychiatry services currently approved for telehealth. Therefore, we 
are proposing to revise Sec.  410.78 and Sec.  414.65 to include 
individual HBAI services as Medicare telehealth services.
    With regard to group HBAI (as described by HCPCS code 96153) or 
family-with-patient HBAI (as described by HCPCS code 96154), we note 
that no group services are currently approved as Medicare telehealth 
services. Group counseling services have a different interactive 
dynamic between the physician or practitioner and his or her patients 
as compared to individual services. No other group counseling or other 
group services are approved as telehealth services. Since the 
interactive dynamic for group HBAI services is not similar to that for 
individual HBAI services or any other approved telehealth services, we 
do not believe that group HBAI or family-with-patient HBAI services are 
properly considered as Category 1 requests. To be considered 
as a Category 1 request, a service must be similar to the 
current list of Medicare telehealth services. (See 70 FR 45787 and 
70157, and 73 FR 38516 and 69743).
    Since the interactive dynamic between practitioner and patient for 
group HBAI and family-with-patient HBAI is not similar to that for 
office psychiatry services or any other service currently approved for 
telehealth, we believe that group HBAI and family-with-patient HBAI 
must be evaluated as Category 2 services. Because we consider 
group HBAI and family-with-patient HBAI to be Category 2 
services, we need to evaluate whether these are services for which 
telehealth can be an adequate substitute for a face-to-face encounter. 
The requester did not submit evidence suggesting that the use of a 
telecommunications system to deliver these services would produce 
similar diagnostic findings or therapeutic interventions as compared to 
the face-to-face delivery of these services. As such, we do not propose 
to add group HBAI (as described by HCPCS code 96153) or family-with-
patient HBAI (as described by HCPCS code 96154) to the list of approved 
telehealth services.
b. Nursing Facility Services
    In 2005, we received a request to add the following nursing 
facility services 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 (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 add to the list of available telehealth originating 
sites in CY 2007. At that time, skilled nursing facilities (SNFs) were 
not defined in the statute as originating sites (71 FR 69657).
    However, section 149 of the MIPPA added 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.
    In the CY 2009 PFS final rule with comment period, we noted that 
section 149 of the MIPPA did not add any services to the list of 
Medicare telehealth services. In the CY 2009 PFS final rule with 
comment period, we also responded to the ATA's comment suggesting that 
we add nursing facility care codes to the list of telehealth services 
for CY 2009, as requested in 2005. In our response, we noted that when 
we received the 2005 request to consider the addition of nursing 
facility care services for telehealth for CY 2007, we did not include a 
full review of these codes in either the CY 2007 PFS proposed rule or 
final rule with comment period since we believed it was not relevant to 
add the nursing facility services codes when the SNFs in which these 
services would be furnished were not eligible originating sites. In the 
CY 2009 PFS final rule with comment period, we responded that we 
believe it would be more appropriate to consider the addition of 
nursing facility care services for telehealth through our existing 
process, including full notice and comment procedures. We committed to 
revisiting the 2005 request to add the nursing facility codes in the CY 
2010 PFS proposed rule, and we noted that we would accept additional 
information in support of the 2005 request if we received the 
information prior to December 31, 2008 (73 FR 69747).
    Subsequent to publication of the CY 2009 PFS final rule with 
comment period, the ATA submitted an amended request to add subsequent 
nursing facility care; nursing facility discharge

[[Page 33544]]

services; and other nursing facility services to the list of approved 
telehealth services. The Center for Telehealth and e-Health Law 
submitted a request to add the same nursing facility services and 
indicated its support of ATA's request. We also received a request from 
the Marshfield Clinic to add the same services requested by the ATA, 
plus the initial nursing facility care services. The requesters drew 
analogies to the evaluation and management (E/M) services currently 
approved for telehealth, and they provided evidence in support of their 
belief that the use of telehealth could be a reasonable surrogate for 
the face-to-face delivery of this type of care.
CMS Review
    The procedure codes included in these requests are used to report 
E/M services furnished onsite to patients in nursing facilities. In the 
context of these codes, ``nursing facility'' describes SNFs, NFs, 
intermediate care facilities, and psychiatric residential treatment 
centers.
    Medicare telehealth services can only be furnished to beneficiaries 
located at an originating site authorized by law. A SNF (as defined in 
section 1819(a) of the Act) is the only type of nursing facility that 
can also be considered an originating site for telehealth services. 
Therefore, our review of these services focuses on the potential impact 
of adding these services when furnished via telehealth to a Medicare 
beneficiary located in a SNF.
Federally-Mandated Visits in Skilled Nursing Facilities
    In describing our assessment, we first describe the service 
requirements of a Medicare SNF stay. In response to concerns about 
inadequate care provided to residents of nursing homes, the Omnibus 
Budget Reconciliation Act of 1987 (OBRA '87) (Pub. L. 100-203) included 
extensive revisions to the requirements for Medicare and Medicaid 
certified nursing homes. These provisions were designed to 
significantly improve the quality of life and the quality of care 
provided to residents of nursing homes, and were a high priority for 
the Department of Health and Human Services.
    Specific requirements for assuring the quality of care that SNFs 
must meet to participate in Medicare are specified in section 1819 of 
the Act. In addition, section 1819(d)(4)(B) of the Act provides that 
``[a] skilled nursing facility must meet such other requirements 
relating to the health, safety, and well-being of residents or relating 
to the physical facilities thereof as the Secretary may find 
necessary.'' The provisions of 42 CFR Part 483 codify the requirements 
set forth in the statute that long term care facilities are obligated 
to meet in order to participate in the Medicare and/or Medicaid 
program.
    Section 1819(b)(6)(A) of the Act requires that the medical care of 
every SNF resident must be provided under the supervision of a 
physician. The requirements contained in Sec.  483.40 include a 
prescribed visit schedule and specify that the physician must perform 
the initial visit personally. Section 483.40(c) requires that the 
resident of a SNF must be seen by a physician at least once every 30 
days for the first 90 days after admission, and at least once every 60 
days thereafter. As we indicated in the preamble to the February 2, 
1989 final rule (54 FR 5341), and again in response to comments in the 
September 26, 1991 final rule (56 FR 48826), the wording of the 
regulation states that the resident ``must be seen'' by the physician 
and requires an actual, face-to-face contact. Except for certain stated 
exceptions, all required physician visits must be made personally by 
the physician. Section 483.40(e)(2) requires that when personal 
performance of a particular task by a physician is specified in the 
regulations, performance of that task cannot be delegated to anyone 
else. Section 483.40(c)(4) requires that the physician must perform the 
initial visit personally, and Sec.  483.40(c)(5), allows the physician 
the option of alternating with a qualified NPP (that is, physician 
assistant, nurse practitioner, or clinical nurse specialist) in making 
the subsequent required visits. These regulations ensure that at least 
a minimal degree of personal contact between physician or qualified NPP 
and resident is maintained, both at the point of admission to the 
facility and periodically during the course of the resident's stay (54 
FR 5342).
    In the CY 2009 PFS final rule with comment period (73 FR 69747), we 
noted 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. The OBRA '87 and 
other long-term care legislation enacted since then require a SNF to 
care for its residents ``in such a manner and in such an environment as 
will promote maintenance or enhancement of the quality of life of each 
resident'' as specified in section 1819(b)(1)(A) of the Act. We believe 
that a minimum number of periodic, comprehensive, hands-on examinations 
of a resident by a physician or a qualified NPP are necessary to ensure 
that the resident receives quality care. We believe that the complexity 
of care required by many residents of SNFs warrants at least a minimal 
degree of direct personal contact between physicians or qualified NPPs 
and SNF residents. Therefore, we believe that these Federally-mandated 
visits should be conducted in-person, and not as telehealth services, 
in order to provide direct personal contact between the resident and 
the physician or qualified NPP.
    In the MMA, the Congress recognized the importance of furnishing 
the Federally-mandated visits in person, rather than via telehealth. 
Section 418 of the MMA required the Secretary to submit a Report to 
Congress evaluating the use of telehealth in SNFs. If the Secretary 
determined that it was advisable to permit a SNF to be an originating 
site for telehealth services, the MMA provided the Secretary with the 
authority to expand telehealth originating sites to include SNFs. SNFs 
were permitted to be added as originating sites only if the Secretary 
could establish a mechanism to ensure that telehealth does not serve as 
a substitute for in-person visits furnished by a physician, or for in-
person visits furnished by a physician assistant, nurse practitioner, 
or clinical nurse specialist.
    On November 9, 2007, the Secretary provided to Congress the report 
specified under section 418 of the MMA, entitled, ``Permitting Skilled 
Nursing Facilities to be Originating Telehealth Sites.'' Overall, the 
Report noted that evidence concerning the net impact of allowing SNFs 
to be originating telehealth sites was not conclusive and further 
analysis was needed. With respect to Federally-mandated visits in SNFs, 
the Report stated that the Secretary could use its authority to add 
services to and delete services from the list of Medicare telehealth 
services as a mechanism to ensure that Federally-mandated visits are 
not furnished as a Medicare telehealth service by not adding these 
visits to the lists of Medicare telehealth services.
    In consideration of the history of the OBRA '87, 42 CFR part 483, 
and Congressional concern expressed in section 418 of the MMA, we do 
not propose to add any procedure codes that are used exclusively to 
describe E/M services that fulfill Federal requirements for personal 
visits under Sec.  483.40. We are proposing to revise Sec.  410.78 to 
restrict physicians and practitioners from using telehealth to furnish 
the physician visits required under Sec.  483.40(c).

[[Page 33545]]

    In the following sections, we will separately review the use of 
telehealth for each of the subcategories of nursing facility services 
included in these requests. In these discussions, we will also indicate 
which of these subcategories are used to describe E/M services that 
fulfill Federal requirements for personal visits under Sec.  483.40.
Initial Nursing Facility Care
    The initial nursing facility care procedure codes (as described by 
HCPCS codes 99304 through 99306) are used to report the initial E/M 
visit in a SNF or NF that fulfills Federally-mandated requirements 
under Sec.  483.40(c). For survey and certification requirements, this 
initial visit must occur no later than 30 days after admission. In a 
SNF, a physician must furnish the initial visit.
    One of the requesters noted that once the patient is transferred to 
the SNF, it might be days until a physician can see a resident in-
person. The requester believes a higher quality of care would be 
provided if the initial nursing facility service can be done in an 
expeditious manner--via telehealth--rather than delayed until the 
physician is on site.
    As noted above, we are not proposing to add any procedure codes 
that are used exclusively to describe E/M services that fulfill Federal 
requirements for personal visits under Sec.  483.40. We believe that 
these Federally-mandated visits should be conducted in-person because 
this will ensure at least a minimal degree of direct personal contact 
between physicians or qualified NPPs and residents. Further, we believe 
it is particularly important that the Federally-mandated initial visit 
should be conducted in-person because this will ensure that the 
physician can comprehensively assess the resident's condition upon 
admission to the SNF through a thorough hands-on examination. We 
believe that even if the initial visit is delayed for a few days, it is 
necessary for the resident of a SNF to have a face-to-face visit with 
the physician who is developing a plan of care. Under section 
1819(b)(2) of the Act, a SNF must provide services to attain or 
maintain the highest practicable physical, mental, and psychosocial 
well-being of each resident. We believe that furnishing the initial 
visit in a face-to-face encounter, and not via telehealth, is necessary 
to assure quality care. As such, we are not proposing to add the 
initial nursing facility care services (as described by HCPCS codes 
99304 through 99306) to the list of approved telehealth services.
Subsequent Nursing Facility Care
    The subsequent nursing facility care procedure codes (as described 
by HCPCS codes 99307 through 99310) are used to report either a 
Federally-mandated periodic visit under Sec.  483.40(c), or any E/M 
visit, prior to and after the initial physician visit, that is 
reasonable and medically necessary to meet the medical needs of the 
individual resident.
    The long-term care regulations at Sec.  483.40 require periodic 
physician visits for residents of SNFs (and NFs) at least once every 30 
days for the first 90 days after admission and at least once every 60 
days thereafter. After the initial visit, Federally-mandated periodic 
visits in SNFs may, at the option of the physician, alternate between 
personal visits by the physician and visits by a qualified NPP (who is 
under the supervision of a physician, and meets the other requirements 
specified at Sec.  483.40(e)). As noted above, we are not proposing to 
allow the use of telehealth to furnish these Federally-mandated 
personal visits. We believe that these Federally-mandated periodic 
visits should be conducted in-person because this will ensure at least 
a minimal degree of direct personal contact between physicians or 
qualified NPPs and residents. Under section 1819(b)(2) of the Act, a 
SNF must provide services to attain or maintain the highest practicable 
physical, mental, and psychosocial well-being of each resident. We 
believe that furnishing the periodic personal visits in face-to-face 
encounters, and not via telehealth, is necessary to assure quality 
care.
    We considered the possibility of approving subsequent nursing 
facility care for telehealth with specific limitations, for example, 
approving subsequent nursing facility care for telehealth only when the 
codes are used for medically necessary E/M visits that are in addition 
to Federally mandated periodic personal visits. In past years, we did 
not add hospital E/M visits to the list of Medicare approved telehealth 
services because of our concern regarding the use of telehealth for the 
ongoing E/M of a high-acuity hospital inpatient. (See 69 FR 47511, 69 
FR 66276, 72 FR 38144, 72 FR 66250, 73 FR 38517, and 73 FR 69745.) Many 
residents of SNFs require medically complex care, and we have similar 
concerns about allowing physicians or NPPs to furnish E/M visits via 
telehealth to residents of SNFs.
    Because the complexity of care required by many residents of SNFs 
may be significantly greater than the complexity of care generally 
associated with patients receiving the office visits approved for 
telehealth, we do not consider E/M visits furnished to residents of 
SNFs similar to the office visits on the current list of Medicare 
telehealth services. Therefore, we believe the use of subsequent 
nursing facility care for medically necessary E/M visits that are in 
addition to Federally mandated periodic personal visits must be 
evaluated as a Category 2 service.
    Because we consider subsequent nursing facility care to be a 
Category 2 request, we evaluate whether these are services for 
which telehealth can be an adequate substitute for a face-to-face 
encounter. The requesters submitted supporting documentation intended 
to suggest that the use of telehealth could be a reasonable surrogate 
for the face-to-face delivery of this type of care.
    One study assessed the impact of videoconferencing (as opposed to 
communication by telephone without video) on nighttime, on-call medical 
decision-making in the nursing home. The comparison of 
videoconferencing with telephonic communication of information by 
nurses does not provide a comparative analysis demonstrating that E/M 
visits furnished via telehealth to residents of SNFs is equivalent to 
the face-to-face delivery of such services. As such, this study was not 
relevant to this review.
    Another study assessed the value of a monitoring system in reducing 
falls and injuries in non-acute late-evening and nighttime situations 
in a nursing home setting. The monitoring system described in this 
study was comprised of sensors to alert caregivers via a silent pager 
when a high-risk resident exits his or her bed, bedroom, or bathroom. 
This allows caregivers to aid the resident and potentially reduce 
falls. The technologies utilized in this study do not correspond with 
our definitions of telehealth as specified in Sec.  410.78. In 
addition, this type of resident monitoring is performed typically by 
nursing staff and is not an E/M visit. As such, this study was not 
relevant to this review.
    A third study presented the savings achieved through avoiding 
transport to emergency departments and physicians' offices by 
furnishing visits via telehealth to residents in nursing facilities. 
The study did not provide any comparative analysis of the services 
furnished via telehealth with those furnished in person.
    A fourth study evaluated the impact of telemedicine as a decision 
aid for residents of long-term care SNFs with chronic wounds. The 
patients selected for this study were alert and

[[Page 33546]]

intellectually interactive. The study concluded that furnishing a 
telehealth consultation prior to a face-to-face consultation increased 
the level of patient comfort with care-related decisions made during 
the face-to-face consultation. The control group did not receive an 
equivalent intermediate consultation face-to-face that could be 
compared to the services furnished to the test group. We acknowledge 
the study's findings that the intermediate telehealth consultation was 
a useful decision aid, but we do not consider this a comparative 
analysis between delivery of the same type of care via telehealth 
versus face-to-face.
    We received a pilot study evaluating the usefulness of E/M services 
furnished via telehealth for making routine medical decisions in the 
nursing home. The nursing home residents were evaluated over 
videoconferencing and then evaluated immediately afterward by the same 
clinician in person. On a scale of 1 to 5 (1 being the least ill), the 
clinicians assessed the illness level of these residents at 3 or below, 
with the illness level for over 65 percent of the encounters assessed 
at ``1.'' Videoconferencing without a face-to-face examination was 
sufficient for making medical decisions in most cases studied in this 
pilot, although face-to-face examinations were preferred. Clinicians 
generated orders in 30 percent of these paired encounters, with a 
predominance of orders generated after, rather than before, the face-
to-face examination. The study also noted that even when nursing home 
residents were alert, they had limited participation in the 
telemedicine interactions and were not as involved in making informed 
medical decisions with their clinicians, compared to face-to-face 
encounters. The study suggests that remote examination by video might 
serve as a substitute for some routine visits, if interspersed with 
face-to-face examinations. The study concluded that videoconferencing 
is feasible for making routine medical decisions in the nursing home.
    We appreciate the comparative analysis provided by this study. 
However, we note that this study focused on the usefulness of 
telehealth for routine decision-making in the nursing home, and the 
reported illness levels of the residents in these sample encounters was 
relatively low to moderate. We do not consider these findings 
persuasive that telehealth can, more generally, be an adequate 
substitute for the face-to-face delivery of E/M visits to residents of 
SNFs who might require more medically complex care.
    We considered the possibility of approving the use of telehealth to 
furnish E/M visits to residents of SNFs who do not require medically 
complex care or approving subsequent nursing facility care for 
telehealth only for medically necessary E/M visits with straightforward 
or low complexity medical decision-making (as described by HCPCS codes 
99307 and 99308). Although this last pilot study concluded that 
videoconferencing is feasible for making routine medical decisions in 
the nursing home, we are concerned with the study's finding that 
residents with low to moderate levels of reported illness had limited 
participation in the telemedicine interactions and less involvement in 
making informed medical decisions with their clinicians, compared to 
face-to-face encounters. Under section 1819(c)(1)(A) of the Act, a SNF 
must protect and promote the rights of each resident, including the 
right to be fully informed in advance of any changes in care or 
treatment that may affect the resident's well-being, and (except with 
respect to a resident adjudged incompetent) to participate in planning 
care and treatment or changes in care or treatment. Under Sec.  
483.10(b)(3), a resident has the right to be fully informed in language 
that he or she can understand of his or her total health status, 
including but not limited to his or her medical condition. If the use 
of telehealth does not elicit from residents with low to moderate 
reported illness adequate participation in making informed medical 
decisions with their clinicians when compared to face-to-face 
encounters, we believe that telehealth is not an adequate substitute 
for the face-to-face delivery of E/M visits to any residents of SNFs.
    After reviewing these studies, we do not have sufficient 
comparative analysis or other compelling evidence to demonstrate that 
furnishing E/M visits via telehealth to residents of SNFs is an 
adequate substitute for the face-to-face encounter between the 
practitioner and the resident, especially in cases where the resident 
requires medically complex care. Therefore, we are not proposing to add 
subsequent nursing facility care services (as described by HCPCS codes 
99307 through 99310) to the list of approved telehealth services.
Nursing Facility Discharge Day Management
    The nursing facility discharge day management codes (as described 
by HCPCS codes 99315 and 99316) are used to report an E/M visit that 
prepares a resident for discharge from a nursing facility. We note that 
there is no Medicare Part B requirement to furnish and bill an E/M 
visit in preparation for a resident's discharge from a SNF. However, if 
a physician or qualified NPP bills a Nursing Facility Discharge 
Services code, we believe that a face-to-face encounter will better 
insure that the resident is prepared for discharge, as we do not have 
evidence that nursing facility discharge services via telehealth is 
adequately equivalent to face-to-face provision. As such, we are not 
proposing to add the nursing facility discharge day management services 
(as described by HCPCS codes 99315 and 99316) to the list of approved 
telehealth services.
Other Nursing Facility Service
    In 2006, CPT added a procedure code for Other Nursing Facility 
Service (CPT code 99318) to describe an annual nursing facility 
assessment. An annual assessment is not one of the required visits 
under the long-term care regulations at Sec.  483.40. For Medicare 
purposes, this code can be used in lieu of a Subsequent Nursing 
Facility Care code to report a Federally-mandated periodic personal 
visit furnished under Sec.  483.40(c). An annual assessment visit 
billed using CPT code 99318 does not represent a distinct benefit 
service for Medicare Part B physician services, and it cannot be billed 
in addition to the required number of Federally-mandated periodic 
personal visits. Under Medicare Part B, we cover this procedure code if 
the visit fully meets the CPT code 99318 requirements for an annual 
nursing facility assessment and if such an annual assessment falls on 
the 60-day mandated visit cycle. We are not proposing to add the other 
nursing facility care services (as described by HCPCS code 99318) to 
the list of approved telehealth services because this code is payable 
by Medicare only if the visit is substituted for a Federally-mandated 
visit under Sec.  483.40(c). As explained above, we believe all of the 
Federally-mandated periodic visits must be conducted in person.
Follow-up Inpatient Consultations
    Prior to 2006, follow-up inpatient consultations (as described by 
CPT codes 99261 through 99263) were approved telehealth services. In 
2006, the CPT Editorial Panel of the American Medical Association (AMA) 
deleted the codes for follow-up inpatient consultations. In the 
hospital setting, the AMA advised practitioners to bill for services 
that would previously have been billed as follow-up inpatient 
consultations using the procedure codes for subsequent hospital care 
(as described by CPT codes 99231 through 99233). In the nursing 
facility setting,

[[Page 33547]]

the AMA advised practitioners to bill for these services using the 
procedure codes for subsequent nursing facility care (as described by 
CPT codes 99307 through 99310).
    In the CY 2008 PFS proposed rule (72 FR 38144) and subsequent final 
rule with comment period (72 FR 66250), we discussed a request from the 
ATA to add subsequent hospital care to the list of approved telehealth 
services. Because there was no method for practitioners to bill for 
follow-up consultations delivered via telehealth to hospital 
inpatients, the ATA requested that we add the subsequent hospital care 
codes to the list of Medicare approved telehealth services. We 
expressed our concern that subsequent hospital care codes describe a 
broader range of services than follow-up consultations, including some 
services that may not be appropriate to be furnished via telehealth. We 
committed to continue evaluating the issues.
    In the CY 2009 PFS proposed rule (73 FR 38517), we proposed to 
create a new series of HCPCS codes for follow-up inpatient telehealth 
consultations. In the CY 2009 PFS final rule with comment period (73 FR 
69745), we finalized our proposal to create follow-up inpatient 
telehealth consultation codes (as described by HCPCS codes G0406 
through G0408) and added these G-codes to the list of Medicare 
telehealth services. These 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. (See the CMS Internet-Only Medicare Benefit 
Policy Manual, Pub. 100-02, Chapter 15, Section 270.2.1 and the 
Medicare Claims Processing Manual, Pub. 100-04, Chapter 12, Section 
190.3.1 for the current definition of follow-up inpatient telehealth 
consultations.)
    We note that if the former codes for follow-up consultations (as 
described by CPT codes 99261 through 99263) still existed, these 
procedure codes would also be available to practitioners to submit 
claims to their Medicare contractors for payment of follow-up 
consultations provided via telehealth to patients located in SNFs. 
Although we did not receive a public request to add follow-up inpatient 
consultations for patients in SNFs to the list of approved Medicare 
telehealth services, we recognize a similar need to establish a method 
for practitioners to furnish and bill for follow-up consultations 
delivered via telehealth to patients in SNFs.
    We considered the possibility of approving subsequent nursing 
facility care for telehealth with specific limitations, for example, 
approving subsequent nursing facility care for telehealth only when the 
codes are used for follow-up consultations. However, as discussed 
above, we do not believe it would be appropriate for E/M visits to be 
furnished via telehealth to treat residents of SNFs requiring medically 
complex care. We are concerned that it could be difficult to implement 
sufficient controls and monitoring to ensure that the use of the 
subsequent nursing facility care codes for telehealth is limited to the 
delivery of services that were formerly described as follow-up 
inpatient consultations.
    We considered creating new G-codes to enable practitioners to bill 
for the services that were formerly described as follow-up inpatient 
telehealth consultations when furnished to residents of SNFs. We 
examined the feasibility of creating such codes to parallel the 
subsequent nursing facility care services, which are the codes 
currently used to bill these follow-up consultations in a face-to-face 
encounter. We found that the elements of the four levels of subsequent 
nursing facility care did not correspond to the three levels of the 
deleted CPT codes previously used for follow-up inpatient 
consultations. We believe that it would be administratively simpler to 
utilize the three existing codes for follow-up inpatient telehealth 
consultations rather than add additional G-codes. The use of the same 
``follow-up inpatient telehealth consultation'' G-codes for services 
furnished in both hospital inpatient and SNF settings would also 
correspond to the use of the previous CPT codes for services furnished 
to hospital inpatients and residents of SNFs.
    For CY 2010, we are proposing to revise Sec.  410.78 to specify 
that the G-codes for follow-up inpatient telehealth consultations (as 
described by HCPCS codes G0406 through G0408) include follow-up 
telehealth consultations furnished to beneficiaries in hospitals and 
SNFs. The HCPCS codes will clearly designate these services as follow-
up consultations provided via telehealth, and not subsequent nursing 
facility care used for E/M visits. Utilization of these codes for 
patients in SNFs will facilitate payment for these services, as well as 
enable us to monitor whether the codes are used appropriately.
    As described in the CMS Internet-Only Medicare Benefit Policy 
Manual, Pub. 100-02, Chapter 15, Section 270.2.1 and the Medicare 
Claims Processing Manual, Pub. 100-04, Chapter 12, Section 190.3.1, 
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.
    Consistent with our policy for follow-up telehealth consultations 
furnished to hospital inpatients, in order to bill and receive payment 
for these services, physicians and 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 follow-up inpatient telehealth consultation 
codes, the distant site physician or 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, Section 190.6.1 for 
instructions for submission of interactive telehealth claims.)
    In the case of Federal telemedicine demonstration programs 
conducted in Alaska or Hawaii, store and forward technologies may be 
used as a substitute for an interactive telecommunications system. 
Covered store and forward telehealth services are billed with the 
``GQ'' modifier, ``via asynchronous telecommunications system.'' By 
using the ``GQ'' modifier, the distant site physician or 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, Section 190.6.2 for instructions for submission of 
telehealth store and forward claims.)

[[Page 33548]]

c. Critical Care Services
    In the CY 2009 PFS proposed rule (73 FR 38517), we reviewed a 
request submitted by the University of Pittsburgh Medical Center (UPMC) 
to add critical care services (as described by HCPCS codes 99291 and 
99292) to the list of approved telehealth services. UPMC drew analogies 
to the E/M consultation services currently approved for telehealth and 
described how it uses telehealth to give stroke patients timely access 
to consultative input from highly specialized physicians who are not 
available to furnish services face-to-face.
    In the CY 2009 PFS final rule with comment period (73 FR 69744), we 
did not add critical care services to the list of approved telehealth 
services. This request was not considered as a category 1 
request because, as we stated, we believe that remote critical care 
services are a different service than the telehealth delivery of 
critical care (as described by HCPCS codes 99291 and 99292). We stated 
that 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, and we did not add critical care services to the list of Medicare 
approved telehealth services. We noted that this decision does not 
preclude physicians from providing telehealth consultations to 
critically ill patients.
    Following publication of the CY 2009 PFS final rule with comment 
period, Philips Healthcare, the maker of a remote critical care system, 
submitted an expanded request to add critical care services to the list 
of Medicare approved telehealth services. The Philips Healthcare 
request stated that critical care services can be approved as a 
Category 1 service based on their similarity to the inpatient 
consultation services currently approved for telehealth. The requester 
noted that many of the components of critical care are similar to a 
high-level inpatient consultation service, which is currently approved 
for telehealth. Common components include obtaining a patient history, 
conducting an examination, and engaging in complex medical decision-
making for patients who may be severely ill. Because we classified 
critical care as a Category 2 service last year, Philips also 
submitted evidence to support its belief that the use of telehealth 
could be a reasonable surrogate for the face-to-face delivery of this 
type of care.
CMS Review
    To determine whether to assign a request to Category 1, we 
look for similarities between the service that is being considered for 
addition and existing telehealth services for the roles of, and 
interactions among, the beneficiary, the physician (or other 
practitioner) at the distant site and, if necessary, the telepresenter. 
In this case, we look for such similarities between critical care and 
inpatient consultations and other similar services on the current list 
of approved Medicare telehealth services. Critical care (as described 
by HCPCS codes 99291 and 99292) is the direct delivery by a physician 
of medical care for a critically ill or critically injured patient. It 
involves high complexity decision-making to assess, manipulate, and 
support vital system function(s) to treat single or multiple vital 
organ system failure and/or to prevent further life-threatening 
deterioration of the patient's condition. Within the current standards 
of practice, we believe critical care services require the physical 
presence of the physician rendering the critical care services. We also 
note that a number of hands-on interventions (for example, gastric 
intubation and vascular access procedures), when furnished on the day a 
physician bills for critical care, are included in the critical care 
service and are not reported separately. Inpatient consultations 
generally do not include hands-on interventions. Because we believe 
that critical care services (as described by HCPCS codes 99291 and 
99292) require the physical presence of a physician who is available to 
furnish any necessary hands-on interventions, 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.
    In order to evaluate critical care services as a Category 
2 service, we need to determine whether these are services for 
which telehealth can be an adequate substitute for a face-to-face 
encounter. In CPT 2009, the AMA defined remote critical care services 
tracking codes (codes 0188T through 0189T) with cross-references to 
critical care services (HCPCS codes 99291 through 99292). CPT directs 
that only one physician may report either critical care services or 
remote critical care services for the same period. The requester cites 
this as evidence that the AMA considers the two services equivalent, 
and that critical care should be approved as a Category 2 
service. We do not consider the CPT coding guidance persuasive evidence 
that remote critical care is the telehealth delivery of critical care, 
as defined by HCPCS codes 99291 and 99292. We believe that if the AMA 
valued the two services equally, they would not have created separate 
tracking codes for remote critical care services.
    As we noted in the CY 2009 PFS final rule with comment period, 
consistent with the AMA's creation of tracking codes, we believe that 
remote critical care services are different from the telehealth 
delivery of critical care services (as described by HCPCS codes 99291 
and 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.
    The requester also submitted studies which conclude that remote 
critical care services furnished by intensivists improve mortality 
rates, decrease length of stay, reduce per patient costs, and improve 
compliance with best practices, thereby improving patient outcomes. 
These studies are similar to the ones we received and reviewed from the 
CY 2009 PFS proposed rule. We maintain that remote critical care 
services are not the telehealth delivery of critical care services (as 
described by HCPCS codes 99291 and 99292). Therefore, we do not find 
the new studies submitted with the CY 2010 request persuasive that 
telehealth can be an adequate substitute for the face-to-face delivery 
of critical care services (as described by HCPCS codes 99291 and 
99292).
    We continue to believe that remote critical care services are 
different services than the telehealth delivery of critical care (as 
described by HCPCS codes 99291 and 99292). As such, we are not 
proposing to add critical care services (as described by HCPCS codes 
99291 and 99292) to the list of approved telehealth services. We 
reiterate that our decision not to add critical care services to the 
list of approved telehealth services does not preclude physicians from 
furnishing telehealth consultations to critically ill patients.
d. Other Requests
    We received a number of requests to add services that we reviewed 
and did not approve in previous PFS Rules. The following are brief 
summaries and references to previous discussions regarding our 
decisions not to add these procedure codes to the list of Medicare 
approved telehealth services. As explained further below, we are not 
reconsidering these previous decisions.

[[Page 33549]]

Initial and Subsequent Hospital Care
    We received a request to add initial hospital care (as described by 
HCPCS codes 99221 through 99223) and subsequent hospital care (as 
described by HCPCS codes 99231 through 99233) to the list of approved 
telehealth services. In response to previous requests, we did not add 
initial or subsequent hospital care to the list of approved telehealth 
services because of our concern regarding the use of telehealth for the 
ongoing E/M of a high-acuity hospital inpatient. (See 69 FR 47510 and 
66276, 72 FR 38144 and 66250, and 73 FR 38517 and 69745.) We did not 
receive any new information with this request that would alter our 
previous decisions. Therefore, we are not proposing to add initial 
hospital care (as described by HCPCS codes 99221 through 99223) or 
subsequent hospital care (as described by HCPCS codes 99231 through 
99233) to the list of approved telehealth services.
Group Medical Nutrition Therapy Services
    We received a request to add group medical nutrition therapy (MNT) 
services (as described by HCPCS codes G0271 and 97804) to the list of 
approved telehealth services. In response to a previous request, we did 
not add group MNT to the list of approved telehealth services because 
we believe that group services are not appropriately delivered through 
telehealth. (See 70 FR 45787 and 70157.) We did not receive any new 
information with this request that would alter our previous decision. 
Therefore, we are not proposing to add group MNT (as described by HCPCS 
codes G0271 and 97804) to the list of approved telehealth services.
Diabetes Self-Management Training (DSMT)
    We received a request to add diabetes self-management training 
(DSMT) (as described by HCPCS codes G0108 and G0109) to the list of 
approved telehealth services. In response to previous requests, we did 
not add DSMT to the list of approved telehealth services because of the 
statutory requirement that DSMT include teaching beneficiaries to self-
administer injectable drugs. Furthermore, DSMT is often performed in 
group settings and we believe that group services are not appropriately 
delivered through telehealth. (See 70 FR 45787 and 70157, and 73 FR 
38516 and 69743.) We did not receive any new information with this 
request that would alter our previous decisions. Therefore, we are not 
proposing to add DSMT (as described by HCPCS codes G0108 and G0109) to 
the list of approved telehealth services.
Speech and Language Pathology Services
    We received a request to add various speech and language pathology 
services to the list of approved telehealth services. Speech-language 
pathologists are not permitted under current law to furnish and receive 
payment for Medicare telehealth services. Therefore, we do not propose 
to add any speech and language pathology services to the list of 
Medicare telehealth services. (For further discussion, see 69 FR 47512 
and 66276, and 71 FR 48995 and 69657.)
Physical and Occupational Therapy Services
    We received a request to add various physical and occupational 
therapy services to the list of approved telehealth services. Physical 
and occupational therapists are not permitted under current law to 
furnish and receive payment for Medicare telehealth services. 
Therefore, we are not proposing to add any physical and occupational 
therapy services to the list of approved telehealth services. (For 
further discussion, see 71 FR 48995 and 69657.)

E. Coding Issues

1. Canalith Repositioning
    In 2008, the CPT Editorial Panel created a new code for canalith 
repositioning (CRP). This procedure is a treatment for vertigo which 
involves therapeutic maneuvering of the patient's body and head in 
order to use the force of gravity to redeposit the calcium crystal 
debris in the semicircular canal system.
    In the CY 2009 PFS final rule with comment period (73 FR 69896), 
new CPT code 95992, Canalith repositioning procedure(s) (eg, Epley 
maneuver, Semont maneuver), per day, was assigned the bundled status 
indicator (B). We explained that this procedure previously was billed 
as part of an evaluation and management (E/M) service or under a number 
of CPT codes, including CPT code 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. We also 
explained that because neurologists and therapists are the predominant 
providers of this service to Medicare patients (each at 22 percent), it 
was assigned as a ``sometimes therapy'' service under the therapy code 
abstract file.
    We received comments on this issue from the American Physical 
Therapy Association (APTA), as well as other organizations expressing 
opposition to our decision to bundle the new code. Commenters stated 
that they believe that our decision to bundle CPT code 95992 is flawed 
since physical therapists are unable to bill E/M services. The 
commenter also stated that therapists would be precluded from using 
another code for billing for this service because CPT correct coding 
instructions require that the provider/supplier select the procedure 
that most accurately defines the service provided. Commenters also 
expressed concern that this could impact beneficiary access to this 
service.
    Based upon the commenters' feedback, we realized that we had failed 
to address how therapists would bill for the service since they cannot 
bill E/M services. In order to address this situation so that access to 
this service would not be impacted, we included language in a change 
request (CR) (the quarterly update CR for April) and also released a 
MedLearn article informing PTs to continue using one of the more 
generally defined ``always therapy'' CPT codes (97112) as a temporary 
measure. See http://www.cms.hhs.gov/transmittals/downloads/R1691CP.pdf 
and http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM6397.pdf.
    In response to the concerns raised and upon additional review of 
this issue for CY 2010, we are proposing to change the status indicator 
from B (Bundled) to I (Invalid). We propose that physicians would 
continue to be paid for CRP as a part of an E/M service. Physical 
therapists would continue to use one of the more generally defined 
``always therapy'' CPT codes (97112). We believe that this will enable 
beneficiaries to continue to receive this service while at the same 
time it will address our concerns about the potential for duplicate 
billing for this service to the extent that this service is paid as a 
part of an E/M service. As a result of this proposal, CPT code 95992 
would be removed as a ``sometimes'' therapy code from the therapy code 
list.
2. Payment for an Initial Preventive Physical Examination (IPPE)
    Beginning January 1, 2010, we propose to increase the payment for 
an initial preventive physical examination (IPPE) furnished face-to-
face with the patient and billed with HCPCS code G0402, Initial 
preventive physical examination; face-to-face visit, services

[[Page 33550]]

limited to new beneficiary during the first 12 months of Medicare 
enrollment. The IPPE service includes a broad array of components and 
focuses on primary care, health promotion, and disease prevention.
    Section 101(b) of the MIPPA changed the IPPE benefit by adding to 
the IPPE visit the measurement of an individual's body mass index and, 
upon an individual's consent, end-of-life planning. Section 101(b) of 
the MIPPA also removed the screening electrocardiogram (EKG) as a 
mandatory service of the IPPE.
    In order to implement this MIPPA provision, in the CY 2009 PFS 
final rule with comment period (73 FR 69870), we created HCPCS code 
G0402 as a new HCPCS code and retained, on an interim basis, the work 
RVUs of 1.34 assigned to HCPCS code G0344, the code that was previously 
used to bill for the IPPE. While we did not believe the revisions to 
the IPPE required by MIPPA impacted the work RVUs associated with this 
service, we solicited public comments on this issue, as well as 
suggested valuations of this service to reflect resources involved in 
furnishing the service.
    We received comments from several medical groups representing 
primary care physicians and geriatricians, as well as comments from the 
American Medical Association concerning this issue. The commenters 
stated that the IPPE service was undervalued prior to the addition of 
components by the MIPPA. Commenters also stated that the current level 
of work RVUs would discourage delivery of appropriate end-of-life 
planning with the beneficiary. One commenter suggested the work 
associated with HCPCS code G0402 for the IPPE, as described in statute, 
is captured in existing CPT code 99387, Preventive Medicine Service, 
new patient, Initial comprehensive preventive medicine, 65 years and 
older. (This code is not paid under the PFS.) The work RVUs for this 
CPT code are 2.06.
    Based on a review of the comments and upon further evaluation of 
the component services of the IPPE, we believe the services, in the 
context of work and intensity, contained in HCPCS code G0402 are most 
equivalent to those services contained in CPT code 99204, Evaluation 
and management new patient, office or other outpatient visit, and 
propose increasing the work RVUs for HCPCS code G0402 to 2.30 effective 
for services furnished beginning on January 1, 2010.
3. Audiology Codes: Policy Clarification of Existing CPT Codes
    In the CY 2009 PFS final rule with comment period (73 FR 69890), we 
noted that the RUC reviewed and recommended work RVUs for 6 audiology 
codes with which we agreed (that is, CPT codes 92620, 92621, 92625, 
92626, 92627, and 92640). We also noted that in the Medicare program, 
audiology services are provided under the diagnostic test benefit and 
that some of the work descriptors for these services include 
``counseling,'' ``potential for remediation,'' and ``establishment of 
interventional goals.'' We noted that we do not believe these aspects 
fit within the diagnostic test benefit, and therefore, we solicited 
comment on this issue.
    Since audiology services fall under the diagnostic test benefit, 
aspects of services that are therapeutic or management activities are 
not payable to audiologists. This distinction is of particular 
importance since CPT codes 92620, 92621, 92626, 92627, and 92640 are 
``timed'' codes, that is, these codes are billed based on the actual 
time spent furnishing the service. In response to our request, the 
society that represents speech language pathologists, audiologists, and 
speech and language scientists, provided the following comments.
    Comment: With respect to the term ``counseling,'' the commenter 
stated that ``counseling'' as used in the intraservice work description 
for CPT code 92640, Diagnostic analysis with programming of auditory 
brainstem implant, per hour, is used in the context of informational 
rather than personal counseling. In this instance the counseling 
provides information and guidance to the patient on what to expect 
relative to the service (application of the electrical stimulation). 
This counseling is an integral part of the diagnostic procedure and not 
a means of providing therapy or active treatment.
    Response: We appreciate the comments related to counseling by the 
specialty society, but are not persuaded that counseling is an integral 
part of a diagnostic test. Although we understand that test results are 
sometimes conveyed to the patient during or at the conclusion of a 
diagnostic test, counseling the patient about how to compensate for a 
hearing loss is part of a therapeutic service. As such, therapeutic 
and/or management of disease process counseling are not part of the 
diagnostic test benefit and time attributable to such activities is not 
payable to audiologists under the Medicare program.
    Comment: With respect to the term ``potential for remediation,'' 
which is found as part of the intraservice work descriptor for CPT code 
92625, Assessment of tinnitus (includes pitch, loudness matching, and 
masking), the commenter states that the procedure evaluates the 
frequency and intensity characteristics of the perceived tinnitus in 
addition to measuring how the tinnitus responds to a masking noise. The 
response to masking noise is diagnostic information that audiologists 
and physicians refer to as the ``potential for remediation.'' This 
assessment is thus a part of a complete diagnostic workup and is not a 
treatment or therapeutic service.
    Response: The intraservice work for this service includes informing 
the patient of the outcome of the evaluation and the potential for 
remediation. As noted above, although we understand that test results 
are sometimes conveyed to the patient during or at the conclusion of a 
diagnostic test, discussing therapeutic options and/or providing 
therapy or management based on test results are not part of a 
diagnostic test. Discussing the potential for remediation does not 
appear to be part of a diagnostic test. While this service can involve 
a small amount of nondiagnostic work, CPT code 92625 is not a timed 
code and the bulk of the work described in the code appears to be 
diagnostic in nature.
    Comment: With respect to the term ``establishment of interventional 
goals,'' this phrase is found in the intraservice work description of 
CPT code 92626, Evaluation of auditory rehabilitation status; first 
hour. The commenter states that this procedure focuses on diagnostic 
information relative to the patient's ability to use residual hearing 
with a hearing aid, a cochlear implant, or with no electronic device. 
The intervention goals may take a variety of forms, such as the 
following: Meeting audiological criteria for cochlear implantation; a 
recommendation to continue use of hearing aids (that is, not a cochlear 
implant candidate); and the need to coordinate with a speech-language 
pathologist for auditory training. This provides the physician with a 
complete diagnostic evaluation of the patient's residual hearing 
status. There is no element of therapy or treatment associated with 
this service.
    Response: Diagnostic testing usually does not involve the 
establishment of interventional goals. The test report usually contains 
test findings and may suggest additional tests. While we appreciate the 
comments of the specialty society, we are not persuaded that 
establishing interventional goals is

[[Page 33551]]

part of a diagnostic test under Medicare. The establishment of 
interventional goals is clearly a function of therapeutic management. 
As such, establishment of goals is not part of the diagnostic test 
benefit and time attributable to such activity is not payable to an 
audiologist under the Medicare program.
    We appreciate the comments we received on this issue. We want to 
emphasize that therapeutic and/or management activities associated with 
these audiology tests are not payable to audiologists because of the 
benefit category under which these tests are covered. We may also issue 
instructions to contractors to monitor these services to prevent 
inappropriate payments.
4. Consultation Services
a. Background
    The current physician visit and consultation codes were developed 
by the American Medical Association (AMA) Current Procedural 
Terminology (CPT) Editorial Panel in November 1990. A consultation 
service is an evaluation and management (E/M) service furnished to 
evaluate and possibly treat a patient's problem(s). It can involve an 
opinion, advice, recommendation, suggestion, direction, or counsel from 
a physician or qualified NPP at the request of another physician or 
appropriate source. (See the Internet-Only Medicare Claims Processing 
Manual, Pub. 100-04, chapter 12, Sec.  30.6.10A for more information.) 
A consultation service must be documented and a written report given to 
the requesting professional. Currently, consultation services are 
predominantly billed by specialty physicians. Primary care physicians 
infrequently furnish these services.
    The required documentation supports the accuracy and medical 
necessity of a consultation service that is requested and provided. 
Medicare pays for a consultation service when the request and report 
are documented as a consultation service, regardless of whether 
treatment is initiated during the consultation evaluation service. (See 
the Internet-Only Medicare Claims Processing Manual, Pub. 100-04, 
chapter 12, Sec.  30.6.10B.) A consultation request between 
professionals may be done orally by telephone, face-to-face, or by 
written prescription brought from one professional to another by the 
patient. The request must be documented in the medical record.
    In the Physician Fee Schedule Final Rule issued June 5, 1991, (56 
FR 25828) we stated that the agency's goal for the development of the 
new visit and consultation codes was that they meet two criteria: (1) 
They should be used reliably and consistently by all physicians and 
carriers; that is, the same service should be coded the same way by 
different physicians; and (2) they should be defined in a way that 
enables us to properly crosswalk the new codes to the relative values 
for the Harvard vignettes so valid RVUs for work are assigned to the 
new codes.
    Based on requests from the physician community to clarify our 
consultation payment policy and to provide consultation examples, we 
convened an internal workgroup of medical officers within CMS (then 
called the Health Care Financing Administration, or HCFA) and revised 
the payment policy instructions in August 1999 in the Medicare Claims 
Processing Manual (at Sec.  30.6.10 as cited above). We provided 
examples of consultation services and examples of clinical scenarios 
that did not satisfy Medicare criteria for consultation services. 
Without explicit instructions for every possible clinical scenario 
outlined in national policy instructions or in AMA coding definitions 
or coding instructions, the local policy interpretations by Medicare 
contractors were not universally equivalent or acceptable to the 
physician community and resulted in denials in different localities. 
Some Medicare contractors would consider a consultation service with 
treatment to be an initial visit rather than a consultation thus 
resulting in a denial for the billed consultation. We clarified in the 
1999 revision that Medicare would pay for a consultation whether 
treatment was initiated at the consultation visit or not. The physician 
community has stated that terms such as referral, transfer and 
consultation, used interchangeably by physicians in clinical settings, 
confuse the actual meaning of a consultation service and that 
interpretation of these words varies greatly among members of that 
community as some label a transfer as a referral and others label a 
consultation as a referral. Although we clarified the terms referral 
and consultation in the 1999 revision, there was disagreement with our 
policy by physicians in the health care community and by AMA CPT staff. 
We provided our documentation guidance so physicians would be in 
compliance with our payment policy. The consultation definition in the 
AMA CPT simply stated that the consultant's opinion or other 
information must be communicated to the requesting physician.
    Additional manual revisions in both January and September 2001 (at 
Sec.  30.6.10 as cited above) clarified that NPPs can both request and 
furnish consultation services within their scope of practice and 
licensure requirements. We continued to explain our documentation 
requirements to the physician community through our Medicare 
contractors and in our discussions with the AMA CPT staff. Under our 
current policy and in the AMA CPT definition, a consultation service 
must have a request from another physician or other professional and be 
followed by a report to the requesting professional. The AMA CPT 
definition does not state the request must be written in the requesting 
physician's medical record. However, we require the request to be 
documented in the requesting physician's plan of care in the medical 
record as a condition for Medicare payment. The E/M documentation 
guidelines which apply to all E/M visits or consultations (http://www.cms.hhs.gov/MLNEdWebGuide/25_EMDOC.asp) clearly state that when 
referrals are made, consultations are requested, or advice is sought, 
the medical record should indicate to whom and where the referral or 
consultation is made or from whom the advice is requested. Our Medicare 
contractors are responsible for reviewing and paying consultation 
claims when submitted. When there is a question that triggers a review 
of a consultation service, our Medicare contractors will look at both 
the requesting physician's medical record (where the request should be 
noted) and the consultant's medical record where the consultation is 
reported and at the report generated for the requesting physician. 
Medicare contractors do not look for evidence of documentation on every 
claim, only when there is a concern raised during random sampling or 
during a specific audit performed by a contractor. The AMA CPT coding 
manual, which is not a payment manual, does not specify these 
requirements, and, therefore, as we understand it, many physicians do 
not agree with the CMS policy.
    In March 2006, the Office of the Inspector General (OIG) published 
a report entitled, ``Consultations in Medicare: Coding and 
Reimbursement'' (OEI-09-02-00030). The purpose of the report was to 
assess whether Medicare's payments for consultation services were 
appropriate. While the OIG study was being conducted, we continued our 
ongoing discussions with the AMA CPT staff for potential changes to the 
consultation definition and guidance in CPT. The findings in the OIG 
report (based on claims paid by Medicare in 2001) indicated that 
Medicare allowed

[[Page 33552]]

approximately $1.1 billion more in 2001 than it should have for 
services that were billed as consultations. Approximately 75 percent of 
services paid as consultations did not meet all applicable program 
requirements (per the Medicare instructions) resulting in improper 
payments. The majority of these errors (47 percent of the claims 
reviewed) were billed as the wrong type or level of consultation. The 
second most frequent error was for services that did not meet the 
definition of a consultation (19 percent of the claims reviewed). The 
third category of improperly paid claims was a lack of appropriate 
documentation (9 percent of the claims reviewed). The OIG recommended 
that CMS, through our Medicare contractors, should educate physicians 
and other health care practitioners about Medicare criteria and proper 
billing for all types and levels of consultations with emphasis on the 
highest levels and follow-up inpatient consultation services.
    We agreed with the OIG findings that additional education would 
help physicians understand the differences in the requirements for a 
consultation service from those for other E/M services. With each 
additional revision from 1999 until the OIG study began, we continually 
educated physicians through the guidance provided by our Medicare 
contractors. However, there remained discrepancies with unclear and 
ambiguous terms and instructions in the AMA CPT consultation coding 
definition, transfer of care and documentation, and the feedback from 
the physician community indicated they disagreed with Medicare 
guidance.
    Prior to the official publication of the OIG report, we issued a 
Medlearn Matters article, effective January 2006, to educate the 
physician community about requirements and proper billing for all types 
and levels of consultation services as requested by the OIG in their 
report. The Medlearn Matters article reflected the manual changes we 
made in 2006 and the AMA CPT coding changes as noted below.
    Our consultation policy revisions continued as a work-in-progress 
over several years as disagreements were raised by the physician 
community. We continued to work with AMA CPT coding staff in an attempt 
to have improved guidance for consultation services in the CPT coding 
definition. In looking at physician claims data (for example, the low 
usage of confirmatory consultation services) and in response to 
concerns from the physician community regarding how to correctly use 
the follow-up consultation codes, the AMA CPT Editorial Panel chose to 
delete some of the consultation codes for 2006. The Follow-Up Inpatient 
Consultation codes (CPT codes 99261 through 99263) and the Confirmatory 
Consultation codes (CPT codes 99271 through 99275) were deleted. During 
our ongoing discussions, the AMA CPT staff, maintained that physicians 
did not fully understand the use of these codes and historically 
submitted them inappropriately for payment as was reflected in the OIG 
study.
    We issued a manual revision in the Medicare Claims Processing 
Manual (at Sec.  30.6.10 as cited above) simultaneously with the 
publication of AMA CPT 2006 coding changes removing the follow-up 
consultation codes, and instructed physicians to use the existing 
subsequent hospital care code(s) and subsequent nursing facility care 
codes for visits following a consultation service. The confirmatory 
consultation codes (which were typically used for second opinions) were 
also removed and we instructed physicians to use the existing E/M codes 
for a second opinion service. We further clarified the documentation 
requirements by making it easier to document a request for a 
consultation service from another physician and to submit a 
consultation report to the requesting professional. Again, physicians 
stated that a consultant has no control over what a requesting or 
referring physician writes in a medical record, and that they should 
not be penalized for the behavior of others. However, our consultation 
policy instructions apply to all physicians, whether they request a 
consultation or furnish a consultation. As noted above, documentation 
by both the requesting physician and the physician who furnishes the 
consultation, is required under the E/M documentation guidelines. The 
E/M documentation guidelines have been in use since 1995. In our 
discussions with the AMA CPT staff and physician groups, and national 
physician open door conference calls, we have emphasized that the 
requesting physician medical record is not reviewed unless there is a 
specific audit or random sampling performed. The physician furnishing 
the consultation service should document in the medical record from 
whom a request is received.
    We continue to hear from the AMA and from specific national 
physician specialty representatives that physicians are dissatisfied 
with Medicare documentation requirements and guidance that distinguish 
a consultation service from other E/M services such as transfer of 
care. CPT has not clarified transfer of care. Therefore, many physician 
groups disagree with our requirements for documentation of transfer of 
care. Interpretation differs from one physician to another as to 
whether transfer of care should be reported as an initial E/M service 
or as a consultation service.
    Despite our efforts, the physician community disagrees with 
Medicare interpretation and guidance for documentation of transfer of 
care and consultation. The existing consultation coding definition in 
the AMA CPT definition remains ambiguous and confusing for certain 
clinical scenarios and without a clear definition of transfer of care. 
The CPT consultation codes are used by physicians and qualified NPPs to 
identify their services for Medicare payment. There is an absence of 
any guidance in the AMA CPT consultation coding definition that 
distinguishes a transfer of care service (when a new patient visit is 
billed) from a consultation service (when a consultation service is 
billed). Medicare does provide guidance although there is disagreement 
with our policy from AMA CPT staff and some members of the physician 
community. Because of the disparity between AMA coding guidance and 
Medicare policy some physicians state they have difficulty in choosing 
the appropriate code to bill. The payment for both inpatient 
consultation and office/outpatient consultation services is higher than 
for initial hospital care and new patient office/outpatient visits. 
However, the associated physician work is clinically similar. Many 
physicians contend that there is more work involved with a new patient 
visit than a consultation service because of the post work involvement 
with a new patient. The payment for a consultation service has been set 
higher than for initial visits because a written report must be made to 
the requesting professional. However, all medically necessary Medicare 
services require documentation in some form in a patient's medical 
record. Over the past several years, some physicians have asked CMS to 
recognize the provision of the consultation report via a different form 
of communication in lieu of a written letter report to the requesting 
physician so as to lessen any paperwork burden on physicians. We have 
eased the consultation reporting requirements by lessening the required 
level of formality and permitting the report to be made in any written 
form of communication, (including submission of a copy of the 
evaluation examination taken directly from the medical record and 
submitted without a letter format) as long as the identity of the 
physician who furnished the consultation is

[[Page 33553]]

evident. Although preparation and submission of the consultant's report 
is no longer the major defining aspect of consultation services, the 
higher payment has remained. (See the Internet-Only Medicare Claims 
Processing Manual, Pub. 100-04, chapter 12, Sec.  30.6.10 F.)
    Both AMA CPT coding rules and Medicare Part B payment policy have 
always required that there is only one admitting physician of record 
for a particular patient in the hospital or nursing facility setting. 
(AMA CPT 2009, Hospital Inpatient Services, Initial Hospital Care, 
p.12) This physician has been the only one permitted to bill the 
initial hospital care codes or initial nursing facility codes. All 
other physicians must bill either the subsequent hospital care codes, 
subsequent nursing facility care codes or consultation codes. (See the 
Internet-Only Medicare Claims Processing Manual, Pub. 100-04, chapter 
12, Sec.  30.6.9.1 G.)
    Beginning January 1, 2008, we ceased to recognize office/outpatient 
consultation CPT codes for payment of hospital outpatient visits (72 FR 
66790 through 66795). Instead, we instructed hospitals to bill a new or 
established patient visit CPT code, as appropriate to the particular 
patient, for all hospital outpatient visits. Regardless of all of our 
efforts to educate physicians on Medicare guidance for documentation, 
transfer of care, and consultation policy, disagreement in the 
physician community prevails.
b. Proposal
    Beginning January 1, 2010, we propose to budget neutrally eliminate 
the use of all consultation codes (inpatient and office/outpatient 
codes for various places of service except for telehealth consultation 
G-codes) by increasing the work RVUs for new and established office 
visits, increasing the work RVUs for initial hospital and initial 
nursing facility visits, and incorporating the increased use of these 
visits into our PE and malpractice RVU calculations.
    We note that section 1834(m) of the Act includes ``professional 
consultations'' (including the initial inpatient consultation codes 
``as subsequently modified by the Secretary'') in the definition of 
telehealth services. We recognize that consultations furnished via 
telehealth can facilitate the provision of certain services and/or 
medical expertise that might not otherwise be available to a patient 
located at an originating site. Therefore, for CY 2010, if we finalize 
our proposed policy to eliminate consultations from the PFS, then we 
propose to create HCPCS codes specific to the telehealth delivery of 
initial inpatient consultations. The purpose of these codes would be 
solely to preserve the ability for practitioners to provide and bill 
for initial inpatient consultations delivered via telehealth. These 
codes are intended for use by practitioners when furnishing services 
that meet Medicare requirements relating to coverage and payment for 
telehealth services. Practitioners would use these codes to submit 
claims to their Medicare contractors for payment of initial inpatient 
consultations provided via telehealth. The new HCPCS codes would be 
limited to the range of services included in the scope of the CPT codes 
for initial inpatient consultations, and the descriptions would be 
modified to limit the use of such services for telehealth. The HCPCS 
codes would clearly designate these as initial inpatient consultations 
provided via telehealth, and not initial hospital care or initial 
nursing facility care used for inpatient visits. Utilization of these 
codes would allow us to provide payment for these services, as well as 
enable us to monitor whether the codes are used appropriately.
    If we create HCPCS G-codes specific to the telehealth delivery of 
initial inpatient consultations, then we also propose to crosswalk the 
RVUs for these services from the RVUs for initial hospital care (as 
described by CPT codes 99221 through 99223). 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 
initial inpatient consultations in a face-to-face encounter to hospital 
inpatients must continue to utilize initial hospital care codes (as 
described by CPT codes 99221 through 99223), we believe it is 
appropriate to set the RVUs for the proposed inpatient telehealth 
consultation G-codes at the same level as for the initial hospital care 
codes.
    We considered creating separate G-codes to enable practitioners to 
bill initial inpatient telehealth consultations when furnished to 
residents of SNFs and crosswalking the RVUs to initial nursing facility 
care (as described by CPT codes 99304 through 99306). For the sake of 
administrative simplicity, if we create HCPCS G-codes specific to the 
telehealth delivery of initial inpatient consultations, they will be 
defined in Sec.  410.78 and in our manuals as appropriate for use to 
deliver care to beneficiaries in hospitals or skilled nursing 
facilities. If we adopt this proposal, then we will make corresponding 
changes to our regulations at Sec.  410.78 and Sec.  414.65. In 
addition, we will add the definition of these codes to the CMS 
Internet-Only Medicare Benefit Policy Manual, Pub. 100-02, Chapter 15, 
Section 270 and the Medicare Claims Processing Manual, Pub. 100-04, 
Chapter 12, Section 190.
    Outside the context of telehealth services, physicians will bill an 
initial hospital care or initial nursing facility care code for their 
first visit during a patient's admission to the hospital or nursing 
facility in lieu of the consultation codes these physicians may have 
previously reported. The initial visit in a skilled nursing facility 
and nursing facility must be furnished by a physician except as 
otherwise permitted as specified in Sec.  483.40(c)(4). In the nursing 
facility setting, an NPP who is enrolled in the Medicare program, and 
who is not employed by the facility, may perform the initial visit when 
the State law permits this. (See this exception in the Internet-Only 
Medicare Claims Processing Manual, Pub. 100-04, chapter 12, Sec.  
30.6.13A). An NPP, who is enrolled in the Medicare program is permitted 
to report the initial hospital care visit or new patient office visit, 
as appropriate, under current Medicare policy. Because of an existing 
CPT coding rule and current Medicare payment policy regarding the 
admitting physician, we will create a modifier to identify the 
admitting physician of record for hospital inpatient and nursing 
facility admissions. For operational purposes, this modifier will 
distinguish the admitting physician of record who oversees the 
patient's care from other physicians who may be furnishing specialty 
care. The admitting physician of record will be required to append the 
specific modifier to the initial hospital care or initial nursing 
facility care code which will identify him or her as the admitting 
physician of record who is overseeing the patient's care. Subsequent 
care visits by all physicians and qualified NPPs will be reported as 
subsequent hospital care codes and subsequent nursing facility care 
codes.
    We believe the rationale for a differential payment for a 
consultation service is no longer supported because documentation 
requirements are now similar across all E/M services. To be consistent 
with OPPS policy, as noted above, we will pay only new and established 
office or other clinic visits under the PFS.
    This proposed change would be implemented in a budget neutral

[[Page 33554]]

manner, meaning it would not increase or decrease PFS expenditures. We 
would make this change budget neutral for the work RVUs by increasing 
the work RVUs for new and established office visits by approximately 6 
percent to reflect the elimination of the office consultation codes and 
the work RVUs for initial hospital and facility visits by approximately 
2 percent to reflect the elimination of the facility consultation 
codes. We have crosswalked the utilization for the office consultation 
codes into the office visits and the utilization of the hospital and 
facility consultation codes into the initial hospital and facility 
visits. This change would be made budget neutral in the PE and 
malpractice RVU methodologies through the use of the new work RVUs and 
the crosswalked utilization. The PE and malpractice RVU methodologies 
are described elsewhere in this proposed rule.
    We are soliciting comments on the proposal, described more fully 
above, to eliminate payment for all consultation services codes under 
the PFS and to allow all physicians to bill, in lieu of a consultation 
service code, an initial hospital care visit or initial nursing 
facility care visit for their first visit during a patient's admission 
to the hospital or nursing facility. Additionally, we are soliciting 
comments on the proposal to create HCPCS G-codes to identify the 
telehealth delivery of initial inpatient consultations.

F. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the Physician Fee Schedule
    The American Medical Association's (AMA) Relative Value System 
Update Committee (RUC) provides recommendations to CMS for the 
valuation of new and revised codes, as well as codes identified as 
misvalued. On an ongoing basis, the AMA RUC's Practice Expense (PE) 
Subcommittee reviews direct PE (clinical staff, medical supplies, 
medical equipment) for individual services and examines the many broad 
and methodological issues relating to the development of PE relative 
value units (RVUs).
    To address concerns expressed by stakeholders with regard to the 
process we use to price services paid under the PFS, the AMA RUC 
created the Five-Year Review Identification Workgroup. As we stated in 
the CY 2009 PFS proposed rule (73 FR 38582), 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. The 
IWPUT is derived from components of the ``building-block'' approach, as 
described in the CY 2007 PFS proposed rule (71 FR 37172), and is used 
as a measure of service intensity. There were 204 services identified 
as misvalued last year and we plan to continue working with the AMA RUC 
to identify additional codes that are potentially misvalued. In the CY 
2009 PFS proposed rule (73 FR 38586), we also listed approaches for the 
AMA RUC to utilize, namely, the review of the fastest growing procedure 
codes, review of Harvard-valued codes, and review of PE RVUs.
    We plan to address the AMA RUC's recommendations from the February 
and April 2009 meetings for codes with site of service anomalies in the 
CY 2010 PFS final rule with comment period in a manner consistent with 
the way we address other AMA RUC recommendations. Specifically, we 
complete our own review of the AMA RUC recommendations; and then in the 
PFS final rule with comment period, we describe the AMA RUC's 
recommendations, indicate whether or not we accept them, and provide a 
rationale for our decision. The values for these services will be 
published as interim values for the next calendar year.
    We believe that there are additional steps we can take to help 
address the issue of potentially misvalued services. In the CY 2009 PFS 
proposed rule, we identified approaches to address this issue including 
reviewing services often billed together and the possibility of 
expanding the multiple procedure payment reduction (MPPR) to additional 
nonsurgical procedures and the update of high cost supplies.
2. High Cost Supplies
    In the CY 2009 PFS proposed rule (73 FR 38582), we proposed a 
process to update the prices associated with high cost supplies over 
$150 every 2 years. We explained that we would need the cooperation of 
the medical community in obtaining typical prices in the marketplace. 
We also outlined examples of acceptable documentation. Although we 
received many thoughtful comments on the proposed process for updating 
high-cost supplies, as stated in the CY 2009 PFS final rule with 
comment period (73 FR 69882), we are continuing to examine alternatives 
on the best way to obtain accurate pricing information and will propose 
a revised process in future rulemaking.
3. Review of Services Often Billed Together and the Possibility of 
Expanding the Multiple Procedure Payment Reduction (MPPR) to Additional 
Nonsurgical Procedures
    In the CY 2009 PFS final rule with comment period (73 FR 69882), we 
stated that we plan to perform a data analysis of nonsurgical CPT codes 
that are often billed together. This would identify whether there are 
inequities in PFS payments that are a result of variations between 
services in the comprehensiveness of the codes used to report the 
services, or in the payment policies applied to each (for example, 
global surgery and MPPRs). The rationale for the MPPR is that certain 
clinical labor activities, supplies, and equipment are not 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.
    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. Additionally, the Medicare Payment Advisory Committee (MedPAC) 
requested that we consider duplicative physician work, as well as PE, 
in any expansion of the MPPR.
    We plan to analyze codes furnished together more than 75 percent of 
the time, excluding E/M codes. We will analyze both physician work and 
PE inputs. If duplications are found, we will consider whether an MPPR 
or bundling of services is most appropriate. Any proposed changes will 
be made through rulemaking and be subject to public comment at a later 
date.
4. AMA RUC Review of Potentially Misvalued Codes
a. Site of Service Anomalies
    The AMA RUC created the Five-Year Review Identification Workgroup 
to respond to concerns expressed by the MedPAC, the Congress, and other 
stakeholders regarding accurate pricing under the PFS. The workgroup 
identified potentially misvalued codes through several vehicles. For 
example, the workgroup focused on codes for which there have been 
shifts in the site of service (site of service anomalies), codes with a 
high intra-service work per unit of time (IWPUT), and codes that were 
high volume. There were 204 potentially misvalued services

[[Page 33555]]

identified in 2008 (see the CY 2009 PFS final rule with comment period 
(73 FR 69883)). These codes were reviewed by the AMA RUC and 
recommendations were submitted to CMS in 2008.
    In the CY 2009 PFS final rule with comment period (73 FR 69883), we 
noted that although we would accept the AMA RUC valuation for these 
site of service anomaly codes for 2009, we recognized that many of them 
included deletion or modification of certain inputs such as hospital 
days, office visits, service times, and discharge day management 
services in the global period. We also indicated that we had concerns 
about the methodology used by the AMA RUC to review these services 
which may have resulted in removal of hospital days and deletion or 
reallocation of office visits without extraction of the associated RVUs 
from the valuation of the code. However, we stated that we believed the 
AMA RUC-recommended valuations were still a better representation of 
the resources used to furnish these services than the current ones. We 
also stated that we would continue to examine these codes and would 
consider whether it would be appropriate to propose additional changes 
in future rulemaking.
    After further review of these codes, we believe it would be 
appropriate to propose further changes to several of the codes where 
the valuation has been adjusted to reflect changes in the site of 
service. Specifically, we are proposing changes to codes for which the 
AMA RUC review process deleted or reallocated pre-service and post 
service times, hospital days, office visits, and discharge day 
management services without the extraction of the associated RVUs.
    We believe the AMA RUC-recommended values do not reflect the 
extraction of the RVUs associated with deleted or reallocated pre-
service and post-service times, hospital days, office visits, and 
discharge day management services. Therefore, we have recalculated the 
work RVUs based upon the AMA RUC-recommended inputs (that is, changes 
in pre-service and post-service times and associated E/M services). The 
proposed work RVUs for each CPT code shown in Table 8 were recalculated 
using the pre-AMA RUC review work RVUs as a starting point, and 
adjusting them for the addition or extraction of pre-service and post-
service times, inpatient hospital days, discharge day management 
services and outpatient visits as recommended by the AMA RUC. We used 
the following methodology:
    1. For each CPT code noted in Table 8, we separated out each 
component (that is, pre-service time, intra-service time, post-service 
time, inpatient hospital day, discharge day management services, and 
outpatient visits) that comprised the entire work RVUs for the service.
    2. We calculated the incremental difference between the pre-service 
and post-service time from before and after the AMA RUC review, and 
multiplied that difference by an IWPUT intensity factor of 0.0224, 
which is a constant in the IWPUT equation. For example, if the pre-
service time prior to the AMA RUC review was 75 minutes and, following 
its review, the AMA RUC recommended an increase in pre-service time to 
85 minutes, we multiplied the difference (10 minutes) by 0.0224 to 
determine the RVUs associated with the increase in pre-service time, 
and then added that number of RVUs to the pre-AMA RUC evaluation work 
RVU.
    3. We then added or removed the work RVUs associated with the 
extraction or reallocation of each inpatient hospital day, outpatient 
visit or discharge day management service as appropriate. For example, 
assume that prior to the AMA RUC review a code was assigned:
     1 inpatient hospital day (currently billed using CPT code 
99231 and assigned 0.76 work RVUs);
     1 discharge day management service (currently billed using 
CPT code 99238 and assigned 1.28 work RVUs); and
     2 outpatient visits (currently billed using 99212 and 
assigned 0.45 work RVUs).
    After the AMA RUC review, the inpatient hospital day and discharge 
day management service were removed. To account for the removal of 
these services, we would have subtracted 0.76 work RVUs (represents the 
removal of the work RVUs for 1 inpatient hospital day) and 1.28 work 
RVUs (represents the removal of the work RVUs for 1 discharge day 
management service) from the pre-AMA RUC review work RVUs in order to 
develop the CMS proposed work RVUs.
    The methodology discussed above was used for each code noted in 
Table 8 and reflects the extraction of the RVUs associated with deleted 
or reallocated hospital days, office visits, discharge day management 
services, and pre-service and post-service times based upon the AMA RUC 
recommendations.

                                     Table 8: CY 2010 CMS Proposed Work RVUs
----------------------------------------------------------------------------------------------------------------
                                                                                   2009 AMA RUC      2010 CMS
          CPT code \1\                      Descriptor              Pre-AMA RUC     recommended    proposed work
                                                                  eval. work RVU     work RVU           RVU
----------------------------------------------------------------------------------------------------------------
21025...........................  Excision of bone, lower jaw...           11.07            9.87            7.23
23415...........................  Release of shoulder ligament..           10.09            9.07           10.64
25116...........................  Remove wrist/forearm lesion...            7.38            7.38            4.83
42440...........................  Excise submaxillary gland.....            7.05            7.05            6.88
52341...........................  Cysto w/ureter stricture tx...            6.11            5.35            5.20
52342...........................  Cysto w/up stricture tx.......            6.61            5.85            5.63
52343...........................  Cysto w/renal stricture tx....            7.31            6.55            6.55
52344...........................  Cysto/uretero, stricture tx...            7.81            7.05            6.83
52345...........................  Cysto/uretero w/up stricture..            8.31            7.55            8.51
52346...........................  Cystouretero w/renal strict...            9.34            8.58            9.02
52400...........................  Cystouretero w/congen repr....           10.06            8.66            8.25
52500...........................  Revision of bladder neck......            9.39            7.99            8.49
52640...........................  Relieve bladder contracture...            6.89            4.73            4.28
53445...........................  Insert uro/ves nck sphincter..           15.21           15.21           17.02
54410...........................  Remove/replace penis prosth...           16.48           15.00           16.01
54530...........................  Removal of testis.............            9.31            8.35            8.65
57287...........................  Revise/remove sling repair....           11.49           10.97           10.36
62263...........................  Epidural lysis mult sessions..            6.41            6.41            6.04
62350...........................  Implant spinal canal cath.....            8.04            6.00            1.29

[[Page 33556]]

 
63650...........................  Implant neuroelectrodes.......            7.57            7.15            4.18
63685...........................  Insrt/redo spine n generator..            7.87            6.00            4.27
64708...........................  Revise arm/leg nerve..........            6.22            6.22            7.36
64831...........................  Repair of digit nerve.........           10.23            9.00            9.74
65285...........................  Repair of eye wound...........           14.43           14.43          14.43
----------------------------------------------------------------------------------------------------------------
\1\ All CPT codes copyright 2008 American Medical Association.

    Using the methodology described above, the adjustments to work RVUs 
for CPT codes 62355, 62360, 62361, 62362, and 62365 would result in 
negative valuation: 62355 = -1.96; 62360 = -2.31; 62361 = -2.42; 62362 
= -2.46; and 62365 = -1.88. For these codes, we are requesting that the 
AMA RUC re-review the entire family of associated codes and in the 
interim will maintain the AMA RUC recommended values until a 
methodology is developed to address codes that result in negative 
valuation when the methodology described above is utilized.
    In addition to the proposed revisions to the AMA RUC-recommended 
RVUs described above, we encourage the AMA RUC to utilize the building 
block methodology as described in the CY 2007 PFS proposed rule (71 FR 
37172) in the future when revaluing codes with site of service 
anomalies. We recognize that the AMA RUC looks at families of codes and 
may assign RVUs based on a particular code ranking within the family. 
However, the relative value scale requires each service to be valued 
based on the resources used in furnishing the service.
    We are also seeking public comment on alternative methodologies 
that could be utilized to establish work RVUs for codes that would have 
a negative valuation under the methodology we used for the proposed 
revisions to the AMA RUC-recommended values described above.
b. ``23-Hour'' Stay
    For services that are performed in the outpatient setting and 
require a hospital stay of less than 24 hours, we consider this an 
outpatient service and recognize the additional time associated with 
the patient evaluation and assessment in the post-service period. We 
are requesting that the AMA RUC include the additional minutes in their 
recommendations to CMS. We do not believe the current minutes assigned 
in the post-service period accurately reflects the total time required 
for evaluation and assessment of the patient. We believe the use of E/M 
codes for services rendered in the post-service period for procedures 
requiring less than a 24-hour hospital stay would result in overpayment 
for pre-service and intraservice work that would not be provided. 
Therefore, we will not allow an additional E/M service to be billed for 
care furnished during the post procedure period when care is furnished 
for an outpatient service requiring less than a 24-hour hospital stay.
5. Establishing Appropriate Relative Values for Physician Fee Schedule 
Services
    In MedPAC's March 2006 Report to Congress, MedPAC made a number of 
recommendations to improve the review of the relative values for PFS 
services. Since that time, we have taken significant action to improve 
the accuracy of the RVUs. As MedPAC noted in its recent March 2009 
Report to Congress, ``CMS and the AMA RUC have taken several steps to 
improve the review process'' in the intervening years since those 
initial recommendations. Many of our efforts to improve the accuracy of 
RVUs have also resulted in substantial increases in the payments for 
primary care services, which was one of the motivations for MedPAC's 
recommendations.
     We completed the most recent Five-Year Review of work 
RVUs, resulting in an increase in over 25 percent to the work RVUs for 
primary care services.
     We significantly revised the methodology for determining 
PE RVUs, resulting in more than a 5 percent increase for primary care 
services.
     We improved our processes for identifying potentially 
misvalued services by engaging in an ongoing review that includes 
screens for rapidly growing services and services with substantial 
shifts in site of service. We also identified approaches to address the 
issue of potentially misvalued services including reviewing services 
often billed together and the possibility of expanding the multiple 
procedure payment reduction (MPPR) to additional nonsurgical procedures 
and the update of high cost supplies.
     As discussed elsewhere in this proposed rule, we are 
proposing a number of improvements to the calculation and establishment 
of the work, PE, and malpractice RVUs that would result in overall 
payment increases to primary care specialties of between 6 percent and 
8 percent in CY 2010. These changes include a 6 percent increase in the 
work RVUs for office visits as a result of our proposal regarding 
consultation services; our proposed use of more accurate specialty-
specific survey data on physician practice costs; our proposal to 
revise the utilization rate assumption for certain equipment; and our 
proposed use of updated and expanded malpractice premium data in the 
calculation of the malpractice RVUs.
    MedPAC has in the past also recommended the establishment of a 
group panel of experts separate from the AMA RUC to review RVUs. This 
original March 2006 recommendation was summarized in its March 2008 
Report to Congress:

    ``We also recommended that CMS establish a group of experts, 
separate from the AMA RUC, to help the agency conduct these and 
other activities. This recommendation was intended not to supplant 
the AMA RUC but to augment it. To that end, the panel should include 
members who do not directly benefit from changes to Medicare's 
payment rates, such as experts in medical economics and technology 
diffusion and physicians who are employed by managed care 
organizations and academic medical centers.''

    The idea of a group of experts separate from the AMA RUC, to help 
the agency improve the review of relative values raises a number of 
issues. We seek broad public input on the following questions and other 
aspects of such an approach:
     How could input from a group of experts best be 
incorporated into existing processes of rulemaking and agency receipt 
of AMA RUC recommendations?
     What specifically would be the roles of a group of experts 
(for example,

[[Page 33557]]

identify potentially misvalued services, provide recommendations on 
valuation of specified services, review AMA RUC recommendations 
selected by the Secretary, etc.)?
     What should be the composition of a group of experts? How 
could such a group provide expertise on services that clinician group 
members do not furnish?
     How would such a group relate to the AMA RUC and existing 
Secretarial advisory panels such as the Practicing Physician Advisory 
Committee?
    Also of interest are comments on the resources required to 
establish and maintain such a group. As MedPAC noted in its March 2006 
Report with respect to the group of experts ``we recognize that these 
recommendations will increase demands on CMS and urge the Congress to 
provide the agency with the financial resources and administrative 
flexibility needed to undertake them.''
    We welcome comments on these topics, as well as others of interest 
to the stakeholder community. We will consider these comments as we 
consider the establishment of a group of experts to assist us in our 
ongoing reviews of the PFS RVUs.

G. Issues Related to the Medicare Improvements for Patients and 
Providers Act of 2008 (MIPPA)

    This section addresses certain provisions of the Medicare 
Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 
110-275). We are proposing to revise our policies and regulations as 
described below in order to conform them to the statutory amendments.
1. Section 102: Elimination of Discriminatory Copayment Rates for 
Medicare Outpatient Psychiatric Services
    Prior to the enactment of the MIPPA, section 1833(c) of the Act 
provided that for expenses incurred in any calendar year in connection 
with the treatment of mental, psychoneurotic, and personality disorders 
of an individual who is not an inpatient of a hospital, only 62\1/2\ 
percent of such expenses are considered to be incurred under Medicare 
Part B when determining the amount of payment and application of the 
Part B deductible in any calendar year. This provision is known as the 
outpatient mental health treatment limitation (the limitation), and has 
resulted in Medicare paying only 50 percent of the approved amount for 
outpatient mental health treatment, rather than the 80 percent that is 
paid for most other outpatient services.
    Section 102 of the MIPPA amends the statute to phase out the 
limitation on recognition of expenses incurred for outpatient mental 
health treatment, which will result in an increase in the Medicare Part 
B payment for outpatient mental health services to 80 percent by CY 
2014. When this section is fully implemented in 2014, Medicare will pay 
for outpatient mental health services at the same level as other Part B 
services. For CY 2010, section 102 of the MIPPA provides that Medicare 
will recognize 68\3/4\ percent of expenses incurred for outpatient 
mental health treatment, which translates to a payment of 55 percent of 
the Medicare-approved amount. Section 102 of the MIPPA specifies that 
the phase out of the limitation will be implemented as shown in Table 9 
(provided that the patient has satisfied his or her deductible).

                               Table 9--Implementation of Section 102 of the MIPPA
----------------------------------------------------------------------------------------------------------------
                                                                    Recognized
                                                                     incurred      Patient pays    Medicare pays
                          Calendar year                            expenses (in    (in percent)    (in percent)
                                                                     percent)
----------------------------------------------------------------------------------------------------------------
CY 2009 and prior calendar years................................           62.50              50              50
CY 2010 and CY 2011.............................................           68.75              45              55
CY 2012.........................................................           75.00              40              60
CY 2013.........................................................           81.25              35              65
CY 2014.........................................................          100.00              20              80
----------------------------------------------------------------------------------------------------------------

    At present, Sec.  410.155(c) of the regulations includes examples 
to illustrate application of the current limitation. We are proposing 
to remove these examples from our regulations and, instead, to provide 
examples in this proposed rule, in our manual, and under provider 
education materials as needed. The following examples illustrate the 
application of the limitation in various circumstances as it is 
gradually reduced under section 102 of the MIPPA. We note that although 
we have used the CY 2009 Part B deductible of $135 for purposes of the 
examples below, the actual deductible amount for CY 2010 and future 
years will be subject to change.

    Example #1: In 2010, a clinical psychologist submits a claim for 
$200 for outpatient treatment of a patient's mental disorder. The 
Medicare-approved amount is $180. Since clinical psychologists must 
accept assignment, the patient is not liable for the $20 in excess 
charges. The patient previously satisfied the $135 annual Part B 
deductible. The limitation reduces the amount of incurred expenses 
to 68\3/4\ percent of the approved amount. Medicare pays 80 percent 
of the remaining incurred expenses. The Medicare payment and patient 
liability are computed as shown in Table 10.

                  Table 10--Example 1--CY 2010
------------------------------------------------------------------------
 
------------------------------------------------------------------------
1. Actual charges.......................................         $200.00
2. Medicare-approved amount.............................          180.00
3. Medicare incurred expenses (0.6875 x line 2) *.......          123.75
4. Unmet deductible.....................................            0.00
5. Remainder after subtracting deductible (line 3 minus           123.75
 line 4)................................................
6. Medicare payment (0.80 x line 5).....................           99.00
7. Patient liability (line 2 minus line 6)..............          81.00
------------------------------------------------------------------------
* The recognized incurred expenses for 2010 are 68\3/4\ percent.


[[Page 33558]]

    Example #2: In 2012, a clinical social worker submits a claim 
for $135 for outpatient treatment of a patient's mental disorder. 
The Medicare-approved amount is $120. Since clinical social workers 
must accept assignment, the patient is not liable for the $15 in 
excess charges. The limitation reduces the amount of incurred 
expenses to 75 percent of the approved amount. The patient 
previously satisfied $70 of the $135 annual Part B deductible, 
leaving $65 unmet (see Table 11).

                  Table 11--Example 2--CY 2012
------------------------------------------------------------------------
 
------------------------------------------------------------------------
1. Actual charges.......................................         $135.00
2. Medicare-approved amount.............................          120.00
3. Medicare incurred expenses (0.75 x line 2) *.........           90.00
4. Unmet deductible.....................................           65.00
5. Remainder after subtracting deductible (line 3 minus            25.00
 line 4)................................................
6. Medicare payment (0.80 x line 5).....................           20.00
7. Patient liability (line 2 minus line 6)..............         100.00
------------------------------------------------------------------------
* The recognized incurred expenses for CY 2012 are 75 percent.

    Example #3: In CY 2013, a physician who does not accept 
assignment submits a claim for $780 for services in connection with 
the treatment of a mental disorder that did not require inpatient 
hospitalization. The Medicare-approved amount is $750. Because the 
physician does not accept assignment, the patient is liable for the 
$30 in excess charges. The patient has not satisfied any of the $135 
Part B annual deductible (see Table 12).

                  Table 12--Example 3--CY 2013
------------------------------------------------------------------------
 
------------------------------------------------------------------------
1. Actual charges.......................................         $780.00
2. Medicare-approved amount.............................          750.00
3. Medicare incurred expenses (0.8125 x line 2) *.......          609.38
4. Unmet deductible.....................................          135.00
5. Remainder after subtracting deductible (line 3 minus           474.38
 line 4)................................................
6. Medicare payment (0.80 x line 5).....................          379.50
7. Patient liability (line 1 minus line 6)..............         400.50
------------------------------------------------------------------------
* The recognized incurred expenses for CY 2013 are 81\1/4\ percent.

    Example #4: A patient's Part B expenses during CY 2014 are for a 
physician's services in connection with the treatment of a mental 
disorder that initially required inpatient hospitalization, with 
subsequent physician services furnished on an outpatient basis. The 
patient has not satisfied any of the $135 Part B deductible. The 
physician accepts assignment and submits a claim for $780. The 
Medicare-approved amount is $750. Since the limitation will be 
completely phased out as of January 1, 2014, the entire $750 
Medicare-approved amount is recognized as the total incurred 
expenses because such expenses are no longer reduced. Also, there is 
no longer any distinction between mental health services the patient 
receives as an inpatient or outpatient (see Table 13).

                  Table 13--Example 4--CY 2014
------------------------------------------------------------------------
 
------------------------------------------------------------------------
1. Actual charges.......................................         $780.00
2. Medicare-approved amount.............................          750.00
3. Medicare incurred expenses (1.00 x line 2) *.........          750.00
4. Unmet deductible.....................................          135.00
5. Remainder after subtracting deductible (line 3 minus           615.00
 line 4)................................................
6. Medicare payment (0.80 x line 5).....................          492.00
7. Beneficiary liability (line 2 minus line 6)..........         258.00
------------------------------------------------------------------------
* The recognized incurred expenses for CY 2014 are 100 percent.

    Section 102 of the MIPPA did not make any other changes to the 
outpatient mental health treatment limitation. Therefore, other aspects 
of the limitation will remain unchanged during the transition period 
between CYs 2010 and 2014. The limitation will continue to be applied 
as it has been in accordance with our regulation at Sec.  410.155(b) 
which specifies that the limitation applies to outpatient treatment of 
a mental, psychoneurotic, or personality disorder, identified under the 
International Classification of Diseases (ICD) diagnosis code range 
290-319. We use the place of service code, and the procedure code to 
identify services to which the limitation applies.
    Additionally, we are proposing to make technical corrections to 
Sec.  410.155(b)(2) in order to update and clarify the services to 
which the limitation does not apply. Our proposed technical changes are 
as follows:
     Under Sec.  410.155(b)(2)(ii), revise the regulation to 
specify the HCPCS code, M0064 (or any successor code), that represents 
the statutory exception to the limitation for brief office visits for 
the sole purpose of monitoring or changing drug prescriptions used in 
mental health treatment.
     At Sec.  410.155(b)(2)(iv), we are proposing to revise the 
regulation to add neuropsychological tests and diagnostic psychological 
tests to the examples of diagnostic services that are not subject to 
the limitation when performed to establish a diagnosis.
     Under Sec.  410.155(b)(2)(v), we are proposing to revise 
the regulation to specify the CPT code 90862 (or any successor code) 
that represents pharmacologic management services to which the 
limitation does not apply when furnished to treat a patient who is 
diagnosed with Alzheimer's disease or a related disorder.

[[Page 33559]]

    Finally, we are proposing to add a new paragraph (c) to Sec.  
410.155 that provides a basic formula for computing the limitation 
during the phase-out period from CY 2010 through CY 2013, as well as 
after the limitation is fully removed from CY 2014 onward.
2. Section 131: Physician Payment, Efficiency, and Quality 
Improvements--Physician Quality Reporting Initiative (PQRI)
a. Program Background and Statutory Authority
    The Physician Quality Reporting Initiative (PQRI) is a voluntary 
reporting program that provides an incentive payment to eligible 
professionals who satisfactorily report data on quality measures for 
covered professional services during a specified reporting period. 
Under section 1848(k)(3)(B) of the Act, the term ``eligible 
professional'' means any of the following: (1) A physician; (2) A 
practitioner described in section 1842(b)(18)(C); (3) A physical or 
occupational therapist or a qualified speech-language pathologist; (4) 
A qualified audiologist. The PQRI was first implemented in 2007 as a 
result of section 101 of Division B of the Tax Relief and Health Care 
Act of 2006--the Medicare Improvements and Extension Act of 2006 (Pub. 
L. 109-432) (MIEA-TRHCA), which was enacted on December 20, 2006. The 
PQRI was extended and further enhanced as a result of the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173) (MMSEA), 
which was enacted on December 29, 2007, and the MIPPA, which was 
enacted on July 15, 2008. Changes to the PQRI as a result of these 
laws, as well as information about the PQRI in 2007, 2008, and 2009 are 
discussed in detail in the CY 2008 PFS proposed rule (72 FR 38196 
through 38204), CY 2008 PFS final rule with comment period (72 FR 66336 
through 66353), CY 2009 PFS proposed rule (73 FR 38558 through 38575), 
and CY 2009 PFS final rule with comment period (73 FR 69817 through 
69847). In addition, detailed information about the PQRI is available 
on the CMS Web site at http://www.cms.hhs.gov/PQRI.
b. Incentive Payments for the 2010 PQRI
    For 2010, section 1848(m)(1)(B) of the Act authorizes the Secretary 
to provide an incentive payment equal to 2.0 percent of the estimated 
total allowed charges (based on claims submitted not later than 2 
months after the end of the reporting period) for all covered 
professional services furnished during the reporting period for 2010. 
Although PQRI incentive payments are only authorized through 2010 under 
section 1848(m)(1)(A) of the Act, section 1848(k)(2)(C) of the Act 
provides for the use of consensus-based quality measures for the PQRI 
for 2010 and subsequent years.
    The PQRI incentive payment amount is calculated using estimated 
allowed charges for all covered professional services furnished under 
the PFS, not just those charges associated with the reported quality 
measures. ``Allowed charges'' refers to total charges, including the 
beneficiary deductible and coinsurance, and is not limited to the 80 
percent paid by Medicare or the portion covered by Medicare where 
Medicare is secondary payer. Amounts billed above the PFS amounts for 
assigned and non-assigned claims will not be included in the 
calculation of the incentive payment amount. In addition, since, by 
definition under section 1848(k)(3)(A)) of the Act, ``covered 
professional services'' are limited to services for which payment is 
made under, or is based on, the PFS and which are furnished by an 
eligible professional, other Part B services and items that may be 
billed by eligible professionals but are not paid under or based upon 
the Medicare Part B PFS are not included in the calculation of the 
incentive payment amount.
    Under section 1848(m)(6)(C) of the Act, the ``reporting period'' 
for the 2008 through 2011 PQRI is defined to be the entire year, but 
the Secretary is authorized 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.''
    We are also required by section 1848(m)(5)(F) of the Act to 
establish alternative criteria for satisfactorily reporting and 
alternative reporting periods for registry-based reporting and for 
reporting measures groups. Therefore, eligible professionals who meet 
the proposed alternative criteria for satisfactorily reporting for 
registry-based reporting and for reporting measures groups for the 
proposed 2010 alternative reporting periods for registry-based 
reporting and for reporting measures groups would also be eligible to 
earn an incentive payment equal to 2.0 percent of the estimated total 
Medicare Part B PFS allowed charges for all covered professional 
services furnished by the eligible professional during the proposed 
alternative reporting periods for 2010 PQRI registry-based reporting or 
for reporting measures groups.
    The proposed PQRI reporting options for an individual eligible 
professional seeking to qualify for a 2010 PQRI incentive payment (that 
is, the proposed PQRI reporting mechanisms, proposed reporting periods, 
and proposed criteria for satisfactory reporting, including the 
proposed alternative reporting periods and alternative criteria for 
satisfactorily reporting for registry-based reporting and for reporting 
measures groups) are addressed in sections II.G.2.c. through II.G.2.f. 
of this proposed rule. The proposed 2010 PQRI quality measures and 
proposed 2010 PQRI measures groups are discussed in section II.G.2.i. 
of this proposed rule.
    Prior to 2010, the PQRI was an incentive program in which 
determination of whether an eligible professional satisfactorily 
reported quality data was made at the individual professional level, 
based on the National Provider Identifier (NPI). Although the incentive 
payments were made to the practice(s) represented by the Tax 
Identification Number (TIN) to which payments are made for the 
individual professional's services, there were no incentive payments 
made to the group practice based on a determination that the group 
practice, as a whole, satisfactorily reported PQRI quality measures 
data. To the extent individuals (based on the individuals' NPIs) 
satisfactorily reported data on PQRI quality measures that were 
associated with more than one practice or TIN, the determination of 
whether an eligible professional satisfactorily reported PQRI quality 
measures data was made for each unique TIN/NPI combination. Therefore, 
the incentive payment amount was calculated for each unique TIN/NPI 
combination and payment was made to the holder of the applicable TIN.
    However, section 1848(m)(3)(C)(i) of the Act requires that by 
January 1, 2010, the Secretary 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 for covered professional services for a 
reporting period, if, in lieu of reporting measures under subsection 
(k)(2)(C), 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. Therefore, beginning with the 2010 PQRI, 
group practices who satisfactorily submit data on quality measures also 
would be eligible to earn an incentive payment equal to 2.0 percent of 
the

[[Page 33560]]

estimated total allowed charges for all covered professional services 
furnished by the group practice during the applicable reporting period. 
As required by section 1848(m)(3)(C)(iii) of the Act, payments to a 
group practice by reason of the process described above shall be in 
lieu of the PQRI incentive payments that would otherwise be made to 
eligible professionals in the group practice for satisfactorily 
submitting data on quality measures. Therefore, an individual eligible 
professional who is participating in the group practice reporting 
option as a member of a group practice would not be able to separately 
earn a PQRI incentive payment as an individual eligible professional.
    The process proposed to be used to determine whether a group 
practice satisfactorily submits data on quality measures for the 2010 
PQRI is described in section II.G.2.g. of this proposed rule. The 
proposed measures on which a group practice would need to report in 
order to be treated as satisfactorily submitting data on quality 
measures for the 2010 PQRI are discussed in section II.G.2.j. of this 
proposed rule.
c. Proposed 2010 Reporting Periods for Individual Eligible 
Professionals
    As we indicated above, section 1848(m)(6)(C) of the Act defines 
``reporting period'' for 2010 to be the entire year. Section 
1848(m)(6)(C)(ii) of the Act, however, 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. To be 
consistent with section 1848(m)(6)(C) of the Act and with prior years, 
we propose the 2010 PQRI reporting period for the reporting of 
individual PQRI quality measures through claims or a qualified 
electronic health record (EHR) (see section II.G.2.d. of this proposed 
rule for discussion of proposed 2010 PQRI reporting mechanisms) will be 
the entire year (that is, January 1, 2010 through December 31, 2010).
    We also considered exercising our authority to revise the reporting 
period for claims-based reporting of individual measures by proposing 
to add an alternative reporting period beginning July 1, 2010 for 
claims-based reporting of individual measures. Doing so would make the 
reporting periods for claims-based reporting of individual measures 
consistent with the alternative reporting periods for reporting 
measures groups and for registry-based reporting that have been in 
place since the 2008 PQRI. This would allow an eligible professional to 
earn a PQRI incentive payment equal to 2.0 percent of his or her 
estimated allowed charges for covered professional services furnished 
for the last half of 2010 if he or she satisfactorily reports data on 
individual PQRI quality measures through claims during the last half of 
2010. We received input from a few stakeholders in support of a partial 
year reporting period for claims-based reporting of individual measures 
to give more eligible professionals the opportunity to begin reporting 
later in the year. Other stakeholders recommended that we offer the 
same reporting periods for all reporting mechanisms. We agree that 
having the same reporting periods for all reporting mechanisms may be 
less complex. We also agree that the addition of a 6-month reporting 
period may facilitate participation in PQRI for certain eligible 
professionals. However, we do not believe that making a 6-month 
reporting period available would serve to enhance the validity of 
results on measures reported or to maximize scientific validity as 
required under section 1848(m)(6)(C)(ii) of the Act. In addition, given 
our desire to transition from the use of the claims-based reporting 
mechanism as the primary reporting mechanism for clinical quality 
measures for PQRI after 2010 to rely more heavily on registry-based 
reporting (see section II.G.2.d. of this proposed rule for further 
discussion), we do not believe it appropriate to add a new 6-month 
reporting period for claims-based reporting of individual measures. 
Given the fact that we seek to lessen reliance on the claims-based 
reporting mechanism for the PQRI after 2010, we believe the cost of 
adding a 6-month reporting period for claims-based reporting of 
individual measures outweighs any added flexibility that eligible 
professionals may receive in the short-term.
    Nevertheless, we invite comments on the decision to not propose a 
6-month reporting period for claims-based reporting of individual PQRI 
quality measures.
    In addition, section 1848(m)(5)(F) of the Act requires, for 2008 
and subsequent years, the Secretary to establish alternative reporting 
periods for reporting groups of measures and for registry-based 
reporting. To satisfy the requirements of section 1848(m)(5)(F) of the 
Act and to maintain program stability, we propose to retain the 2 
alternative reporting periods from the 2008 and 2009 PQRI for reporting 
measures groups and for registry-based reporting: (1) The entire year; 
and (2) a 6-month reporting period beginning July 1. Therefore, for 
2010, the proposed alternative reporting periods for reporting measures 
groups and for registry-based reporting are: (1) January 1, 2010 
through December 31, 2010; and (2) July 1, 2010 through December 31, 
2010. We note that the 6-month reporting period, beginning July 1, 
2010, is proposed to be available for reporting on measures groups and 
for reporting using the registry-based reporting mechanism only. For an 
eligible professional who satisfactorily reports measures groups or 
through the registry-based reporting mechanism for the 6-month 
reporting period, the eligible professional would qualify to earn a 
PQRI incentive payment equal to 2.0 percent of his or her total 
estimated allowed charges for covered professional services furnished 
between July 1, 2010 and December 31, 2010 only. The incentive payment 
would not be calculated based on the eligible professional's charges 
for covered professional services for the entire year.
d. Proposed 2010 PQRI Reporting Mechanisms for Individual Eligible 
Professionals
    When the PQRI was first implemented in 2007, there was only 1 
reporting mechanism available to submit data on PQRI quality measures. 
For the 2007 PQRI, the only way that eligible professionals could 
submit data on PQRI quality measures was by reporting the appropriate 
quality data codes on their Medicare Part B claims (claims-based 
reporting). For the 2008 PQRI, we added a second reporting mechanism as 
required by section 1848(k)(4) of the Act, so that eligible 
professionals could submit data on PQRI quality measures to a qualified 
PQRI registry and request the registry to submit PQRI quality measures 
results and numerator and denominator data on the 2008 PQRI quality 
measures or measures groups on their behalf (registry-based reporting). 
For the 2009 PQRI, we retained the 2 reporting mechanisms used in the 
2008 PQRI (that is, claims-based reporting and registry-based 
reporting) for reporting individual PQRI quality measures and for 
reporting measures groups.
    To promote the adoption of EHRs, we also conducted limited testing 
of a third reporting mechanism for the 2008 PQRI, which was the 
submission of clinical quality data extracted from an EHR, or the EHR-
based reporting mechanism. No incentive payment was available to those 
eligible professionals who participated in testing the EHR-based 
reporting mechanism. In the CY 2009 PFS proposed rule (73 FR 38564 
through 38565), we described our plans to test the submission of 
clinical quality

[[Page 33561]]

data extracted from qualified EHR products for five 2008 PQRI measures 
and proposed to accept PQRI data from EHRs and to pay PQRI incentive 
payments based on that submission for a limited subset of the proposed 
2009 PQRI quality measures. However, as described in the CY 2009 PFS 
final rule with comment period (73 FR 69830), we did not finalize our 
proposal to allow eligible professionals to submit clinical quality 
data extracted from EHRs for purposes of receiving a PQRI incentive 
payment for 2009. Since the 2008 EHR testing process was not complete 
at the time of publication of the CY 2009 PFS final rule, we instead 
opted to continue to test the submission of clinical quality data 
extracted from EHRs in 2009 and provide no incentive payment to those 
eligible professionals participating in testing the EHR-based reporting 
mechanism in 2009.
    For the 2010 PQRI, we are proposing to retain the claims-based 
reporting mechanism and the registry-based reporting mechanism. In 
addition, we are again proposing for the 2010 PQRI to accept PQRI 
quality measures data extracted from a qualified EHR product for a 
limited subset of the proposed 2010 PQRI quality measures, as 
identified in Table 20, contingent upon the successful completion of 
our 2009 EHR data submission testing process and a determination based 
on that testing process that accepting data from EHRs on quality 
measures for the 2010 PQRI is practical and feasible. We will make the 
determination as to whether accepting data from EHRs on quality 
measures is practical and feasible for the 2010 PQRI prior to 
publication of the CY 2010 PFS final rule with comment period. We will 
indicate in the CY 2010 PFS final rule with comment period whether we 
intend to finalize this proposal. If we finalize this proposal, then, 
unlike in prior years, an eligible professional would be able to earn a 
PQRI incentive payment through the EHR-based reporting mechanism in 
2010.
    We seek to offer more reporting mechanisms because we recognize 
that 1 mode of quality reporting does not suit all practices and our 
experience with the registry-based reporting mechanism thus far has 
been favorable. While the availability of multiple reporting mechanisms 
should increase opportunities for eligible professionals to 
satisfactorily report quality data for the PQRI, we also recognize that 
there are a number of limitations associated with claims-based 
reporting. On one hand, claims submission is available to nearly all 
eligible professionals. On the other hand, submission of quality data 
on claims has certain drawbacks since the claims processing system was 
developed for billing purposes and not for the submission of quality 
data. As we noted in the CY 2009 PFS final rule with comment period (73 
FR 69833), for example, measures with complex specifications, such as 
those that require multiple diagnosis codes are not as conducive to 
claims-based reporting and may be associated with a greater number of 
invalidly reported quality data codes. Similarly, when multiple 
measures share the same codes it may be difficult to determine which 
measure(s) the eligible professional intended to report through claims.
    We believe that EHR-based reporting is a viable option for 
overcoming the limitations associated with claims-based reporting of 
quality measures. Therefore, we propose to add an EHR-based reporting 
mechanism for the 2010 PQRI in order to promote the adoption and use of 
EHRs and to provide both eligible professionals and CMS experience on 
EHR-based quality reporting.
    Furthermore, on February 17, 2009, the President signed into law 
the American Recovery and Reinvestment Act (the Recovery Act) (Pub. L. 
111-5). Section 4101(a) of the Health Information Technology for 
Economic and Clinical Health (HITECH) Act (Title IV of Division B of 
the Recovery Act, together with Title XIII of Division A of the 
Recovery Act), which amends section 1848 of the Act to add new 
subsection (o), authorizes incentive payments under Medicare for 
certain eligible professionals who are ``meaningful EHR users'' 
beginning in 2011. However, the provisions in this proposed rule do not 
implement any HITECH Act statutory provisions. While our efforts to 
encourage the adoption and use of EHRs through testing EHR-based data 
submission in the 2008 and 2009 PQRI and our proposal to add an EHR-
based reporting mechanism for the purpose of receiving a PQRI incentive 
payment for the 2010 PQRI could potentially provide invaluable 
experience and serve as a foundation for establishing the capacity for 
eligible professionals to send, and for CMS to receive, data on quality 
measures via EHRs, the provisions of the HITECH Act will be implemented 
in future notice and comment rulemaking.
    In summary, we propose that for 2010, an eligible professional may 
choose to report data on PQRI quality measures through claims, to a 
qualified registry (for the qualification requirements for registries, 
see section II.G.2.i.(4) of this proposed rule), or through a qualified 
EHR product (for the qualification requirements for EHR vendors and 
their products, see section II.G.2.i.(5) of this proposed rule). 
Depending on which PQRI individual quality measures or measures groups 
an eligible professional selects, however, one or more of the proposed 
reporting mechanisms may not be available for reporting a particular 
2010 PQRI individual quality measure or measures group. The proposed 
2010 reporting mechanisms through which each proposed 2010 PQRI 
individual quality measure and measures group could be reported is 
identified in Tables 14 through 15. We invite comments on the proposed 
reporting mechanisms for the 2010 PQRI, including our proposal to add 
an EHR-based reporting mechanism to the 2010 PQRI, contingent upon the 
successful completion of our 2009 EHR data submission testing process 
and a determination that accepting data from EHRs on quality measures 
for the 2010 PQRI is practical and feasible.
    While we propose to retain the claims-based reporting mechanism for 
2010, we note that we are considering significantly limiting the 
claims-based mechanism of reporting clinical quality measures for the 
PQRI after 2010. This would be contingent upon there being an adequate 
number and variety of registries available and/or EHR reporting 
options. Potentially, we would retain claims-based reporting in years 
after 2010 principally for the reporting of structural measures, such 
as Measure 124 Health Information Technology (HIT): Adoption/
Use of Electronic Health Records (EHR), and circumstances where claims-
based reporting is the only available mechanism for certain categories 
of eligible professionals to report on PQRI quality measures.
    Reducing our reliance on the claims-based reporting mechanism after 
2010 will allow us and eligible professionals to devote available 
resources to maximizing the potential of registries and EHRs for 
quality measurement reporting. Both mechanisms hold the promise of more 
sophisticated and timely reporting on clinical quality measures. 
Clinical data registries allow the collection of more detailed data, 
including outcomes, without the necessity of a single submission 
contemporaneously with claims billing, which overcomes some of the 
limitations of the claims-based reporting mechanism. Registries can 
also provide feedback and quality improvement information based on 
reported data. Finally, clinical data registries can also receive data 
from EHRs, and therefore, serve as an alternative means to reporting 
clinical quality data extracted

[[Page 33562]]

from an EHR. As we continue to qualify additional registries, we 
believe that there will be a sufficient number of qualified PQRI 
registries by 2011 to make it possible to reduce or even discontinue 
the claims-based reporting mechanism for most measures after 2010. We 
invite comments on our intent to lessen our reliance on the claims-
based reporting mechanism for the PQRI beyond 2010.
    Regardless of the reporting mechanism chosen by an eligible 
professional, there is no requirement for the eligible professional to 
sign up or register to participate in the PQRI. However, there may be 
some requirements for participation through a specific reporting 
mechanism that are unique to that particular reporting mechanism. In 
addition to the criteria for satisfactory reporting of individual 
measures and measures groups described in sections II.G.2.e. and 
II.G.2.f., respectively, of this proposed rule, eligible professionals 
must ensure that they meet all requirements for their chosen reporting 
mechanism.
(1) Requirements for Individual Eligible Professionals Who Choose the 
Claims-Based Reporting Mechanism
    For eligible professionals who choose to participate in the PQRI by 
submitting data on individual quality measures or measures groups 
through the claims-based reporting mechanism, the only requirement 
associated with claims-based reporting that we are proposing apart from 
the proposed criteria for satisfactory reporting of individual measures 
and measures described below in sections II.G.2.e. and II.G.2.f., 
respectively, of this proposed rule, is the submission of the 
appropriate PQRI quality data codes on the professionals' Medicare Part 
B claims. An eligible professional would be permitted to submit the 
quality data codes for the eligible professional's selected individual 
PQRI quality measures or measures group at any time during the 2010 
reporting period. Please note, however, that as required by section 
1848(m)(1)(A) of the Act, all claims for services furnished between 
January 1, 2010 and December 31, 2010 must be processed by no later 
than February 28, 2011 to be included in the 2010 PQRI analysis.
(2) Requirements for Individual Eligible Professionals Who Choose the 
Registry-Based Reporting Mechanism
    In order to report quality measures results and numerator and 
denominator data on the 2010 PQRI individual quality measures or 
measures group through a qualified clinical registry, we propose that 
eligible professionals would need to enter into and maintain an 
appropriate legal arrangement with a qualified 2010 PQRI registry. Such 
arrangements would provide for the registry's receipt of patient-
specific data from the eligible professional and the registry's 
disclosure of quality measures results and numerator and denominator 
data on PQRI quality measures or measures groups on behalf of the 
eligible professional to CMS. 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.'' The ``data 
submission vendors'' would have the requisite legal authority to 
provide clinical quality measures results and numerator and denominator 
data on individual quality measures or measures groups on behalf of the 
eligible professional for the PQRI. The registry, acting as a data 
submission vendor, would submit registry-derived measures information 
to the CMS designated database for the PQRI, using a CMS-specified 
record layout. The record layout will be provided to the registry by 
CMS.
    To maintain compliance with applicable statutes and regulations, 
our program and its data system must maintain compliance with the HIPAA 
requirements for requesting, processing, storing, and transmitting 
data. Eligible professionals that conduct HIPAA covered transactions 
also must maintain compliance with the HIPAA requirements.
    Eligible professionals choosing to participate in PQRI by 
submitting quality measures results and numerator and denominator data 
on PQRI individual quality measures or measures groups through the 
registry-based reporting mechanism for 2010 would need to select a 
qualified PQRI registry and submit information on PQRI individual 
quality measures or measures groups to the selected registry in the 
form and manner and by the deadline specified by the registry.
    The process and requirements that we propose to use to determine 
whether a registry is qualified to submit quality measures results and 
numerator and denominator data on PQRI quality measures or measures 
groups on an eligible professional's behalf in 2010 are described in 
section II.G.2.d. of this proposed rule. We will post on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov a list of 
qualified registries for the 2010 PQRI, including the registry name, 
contact information, and the 2010 measure(s) and/or measures group(s) 
for which the registry is qualified and intends to report. We propose 
to post the names of 2010 PQRI qualified registries in 2 phases. In 
either event, even though a registry is listed as ``qualified,'' we 
cannot guarantee or assume responsibility for the registry's successful 
submission of PQRI quality measures results and numerator and 
denominate data on PQRI quality measures or measures groups on behalf 
of eligible professionals.
    In the first phase, we anticipate that by December 31, 2009, we 
will be able to, at minimum, post a list of those registries qualified 
for the 2010 PQRI based on: (1) Being a qualified registry for the 2008 
and 2009 PQRI that successfully submitted 2008 PQRI quality measures 
results and numerator and denominator data on the quality measures; (2) 
having received a letter indicating their continued interest in being a 
PQRI registry for 2010; and (3) the registry's compliance with the 2010 
PQRI registry requirements. By posting this first list of qualified 
registries for the 2010 PQRI, we seek to make available the names of 
registries that can be qualified at the start of the 2010 reporting 
period. We do this to accommodate requests we have received from 
eligible professionals who wish to avoid claims-based reporting pending 
knowing whether a particular registry is qualified for the 2010 PQRI.
    In the second phase, we anticipate to complete posting of the list 
of qualified 2010 registries as soon as we have completed vetting the 
registries interested in participating in the 2010 PQRI and identified 
the qualified registries for the 2010 PQRI, which we anticipate will be 
completed by no later than Summer 2010. An eligible professional's 
ability to report PQRI quality measures results and numerator and 
denominator data on PQRI quality measures or measures groups using the 
registry-based reporting mechanism should not be impacted by the 
complete list of qualified registries for the 2010 PQRI being made 
available after the start of the reporting period. First, registries 
will not begin submitting eligible professionals' PQRI quality measures 
results and numerator and denominator data on the quality measures or 
measures groups to CMS until 2011. Second, if an eligible professional 
decides that he or she is no longer interested in submitting quality 
measures results and numerator and denominator data on PQRI individual 
quality measures or measures group through the registry-based reporting 
mechanism after the complete list of qualified registries becomes 
available, this does not preclude the eligible

[[Page 33563]]

professional from attempting to meet the criteria for satisfactory 
reporting through another 2010 PQRI reporting mechanism.
    In addition to meeting the above proposed requirements specific to 
registry-based reporting, eligible professionals who choose to 
participate in PQRI through the registry-based reporting mechanism 
would need to meet the relevant criteria proposed for satisfactory 
reporting of individual measures or measures groups that all eligible 
professionals must meet in order to qualify to earn a 2010 PQRI 
incentive payment. The criteria for satisfactory reporting of 
individual measures and measures groups are described in sections 
II.G.2.e. and II.G.2.f., respectively, of this proposed rule.
(3) Requirements for Individual Eligible Professionals Who Choose the 
EHR-Based Reporting Mechanism
    For eligible professionals who choose to participate in the 2010 
PQRI by submitting data on individual quality measures through the EHR-
based reporting mechanism, the only proposed requirements associated 
with EHR-based reporting other than meeting the criteria for 
satisfactory reporting of individual measures described in section 
II.G.2.e. of this proposed rule are to: (1) Select a qualified EHR 
product and (2) submit clinical quality data extracted from the EHR to 
a CMS clinical data warehouse. Provided that our 2009 EHR data 
submission testing process is successful, we propose to begin accepting 
submission of clinical quality data extracted from ``qualified'' EHRs 
on January 1, 2010, or as soon thereafter as is technically feasible. 
We propose that eligible professionals will have until March 31, 2011 
to complete data submission through qualified EHRs for services 
furnished during the 2010 PQRI reporting period. The process that was 
used to determine whether an EHR vendor and its EHR product(s) are 
qualified to submit clinical quality data extracted from EHRs for the 
2010 PQRI is described in section II.G.2.d.5. of this proposed rule.
    The specifications for the electronic transmission of the proposed 
2010 PQRI measures identified in Table 20 (section II.G.2.i.(4) of this 
proposed rule) as being under consideration for EHR-based reporting in 
2010 will be posted on a public Web site when available. We will 
announce the availability and exact location of these specifications 
through familiar CMS communications channels, including the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/PQRI. The posting 
of specifications for the electronic transmission of any particular 
measure prior to publication of the final rule does not signify that 
the measure will necessarily be selected for the 2010 PQRI measure set, 
nor that EHR-based reporting will be accepted for that measure even if 
it may otherwise be included in the 2010 PQRI. However, by posting the 
specifications for electronic transmission of these measures, we seek 
to allow sufficient time for EHR vendors to adapt their products to 
support EHR-based capture and submission of data for these measures 
prior to the start of any 2010 PQRI reporting periods.
    We do not propose any option to report measures groups through EHR-
based reporting on services furnished during 2010. Because EHR-based 
reporting to CMS of data on quality measures would be new to PQRI for 
2010, we propose to make available only the criteria applicable to 
reporting of individual PQRI measures.
    We cannot assume responsibility for the successful submission of 
data from eligible professionals' EHRs. Any eligible professional who 
chooses to submit PQRI data extracted from an EHR should contact the 
EHR product's vendor to determine if the product is qualified and has 
been updated to facilitate PQRI quality measures data submission. Such 
professionals also should begin attempting submission promptly after we 
announce that the clinical data warehouse is ready to accept 2010 PQRI 
quality measures data through the EHR mechanism in order to assure the 
professional has a reasonable period of time to work with his or her 
EHR and/or its vendor to correct any problems that may complicate or 
preclude successful quality measures data submission through that EHR. 
As we indicated above, data submission for the 2010 PQRI would need to 
be completed by March 31, 2011.
(4) Qualification Requirements for Registries
    In order to be ``qualified'' to submit quality measures results and 
numerator and denominator data on PQRI quality measures and measures 
groups on behalf of eligible professionals pursuing incentive payment 
for the 2008 and 2009 PQRI, we required registries to complete a self-
nomination process and to meet certain technical and other 
requirements. For the 2009 PQRI, registries that were ``qualified'' for 
2008 did not need to be ``re-qualified'' for 2009 unless they were 
unsuccessful at submitting 2008 PQRI data (that is, failed to submit 
2008 PQRI data per the 2008 PQRI registry requirements). Registries 
that were ``qualified'' for 2008 and wished to continue to participate 
in 2009 were only required to communicate their desire to continue 
participation for 2009 by submitting a letter to CMS indicating their 
continued interest in being a PQRI registry for 2009 and their 
compliance with the 2009 PQRI registry requirements by March 31, 2009.
    For the 2010 PQRI, we are again proposing to require a self-
nomination process for registries wishing to submit 2010 PQRI quality 
measures or measures groups on behalf of eligible professionals for 
services furnished during the applicable reporting periods in 2010. 
Similar to the 2008 and 2009 PQRI registry self-nomination process, the 
proposed registry self-nomination process for the 2010 PQRI would be 
based on a registry meeting specific technical and other requirements.
    In order to be consistent with the registry requirements from prior 
program years, we propose that the 2010 registry requirements be 
substantially the same as for 2008 and 2009. Specifically, to be 
considered a qualified registry for purposes of submitting individual 
quality measures and measures groups on behalf of eligible 
professionals who choose to report using this reporting mechanism under 
the 2010 PQRI, we propose that a registry would need to:
     Be in existence as of January 1, 2009.
     Be able to collect all needed data elements and calculate 
results for at least 3 measures in the 2010 PQRI program (according to 
the posted 2010 PQRI Measure Specifications).
     Be able to calculate and submit measure-level reporting 
rates by TIN/NPI;
     Be able to calculate and submit, by TIN/NPI, a performance 
rate (that is, the percentage of a defined population who receive a 
particular process of care or achieve a particular outcome) for each 
measure on which the TIN/NPI reports;
     Be able to separate out and report on Medicare Part B FFS 
patients;
     Provide the name of the registry;
     Provide the reporting period start date the registry will 
cover;
     Provide the reporting period end date the registry will 
cover;
     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);

[[Page 33564]]

     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. We expect that this CMS-specified record layout will be 
substantially the same as for the 2008 and 2009 PQRI. This layout will 
be provided to registries in 2010;
     Comply with a CMS-specified secure method for data 
submission, such as submitting its data in an XML file through an 
Individuals Access to CMS Systems (IACS) user account;
     Submit an acceptable ``validation strategy'' to CMS by 
March 31, 2010. A validation strategy ascertains whether eligible 
professionals have submitted accurately and on at least the minimum 
number (80 percent) of their eligible patients, visits, procedures, or 
episodes for a given measure. Acceptable validation strategies often 
include such provisions as the registry being able to conduct random 
sampling of their participants' data, but may also be based on other 
credible means 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 Business Associate agreement 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 
holder of an NPI whose data are 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 be obtained at the time the 
eligible professional signs up with the registry to submit PQRI quality 
measures data to the registry and must meet any applicable laws, 
regulations, and contractual business associate agreements;
     Provide CMS access (if requested) to review the Medicare 
beneficiary data on which 2010 PQRI registry-based submissions are 
founded;
     Provide the reporting option (reporting period and 
reporting criteria) that the eligible professional has satisfied or 
chosen; and
     Provide CMS a signed, written attestation statement via 
mail or e-mail which states that the quality measure results and 
numerator and denominator data provided to CMS are accurate and 
complete.
    With respect to the submission of 2010 measure results and 
numerator and denominator data on measures groups, we propose to retain 
the following registry requirements from the 2009 PQRI:
     Indicate the reporting period chosen for each eligible 
professional who chooses to submit data on measures groups;
     Base reported information on measures groups only on 
patients to whom services were furnished during the 12-month reporting 
period of January through December 2010 or the 6-month reporting period 
of July 2010 through December 2010;
     Agree that the registry's data may be inspected by CMS 
under our oversight authority if non-Medicare patients are included in 
the patient sample;
     Be able to report data on all of the measures in a given 
measures group and on either 30 patients from January 1 through 
December 31, 2010 (note this patient sample 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 15 
patients during the January 1, 2010 through December 31, 2010 reporting 
period or a minimum of 8 patients during the July 1, 2010 through 
December 31, 2010 reporting period) (see criteria for satisfactory 
reporting of measures groups described in section II.G.2.f. of this 
proposed rule for further information); and
     Be able to report the number of Medicare FFS patients and 
the number of Medicare Advantage patients that are included in the 
patient sample for a given measures group.
    In addition to the above requirements, we propose the following new 
requirements for registries for the 2010 PQRI:
     Registries must have at least 25 participants;
     Registries must provide at least 1 feedback report per 
year to participating eligible professionals;
     Registries must not be owned and managed by an individual 
locally-owned single-specialty group (in other words, single-specialty 
practices with only 1 practice location or solo practitioner practices 
would be prohibited from self-nominating to become a qualified PQRI 
registry);
     Registries must participate in ongoing 2010 PQRI mandatory 
support conference calls hosted by CMS (approximately 1 call per 
month);
     Registries must provide a flow and XML of a measure's 
calculation process for each measure type that the registry intends to 
calculate; and
     Registries must use PQRI measure specifications to 
calculate reporting or performance unless otherwise stated.
    These proposed new requirements are intended to improve the 
registry-based reporting mechanism by taking advantage of some of the 
registries' existing quality improvement functions, maximizing the 
registry's ability to successfully submit eligible professionals' 
quality measure results and numerator and denominator data on PQRI 
individual quality measures or measures groups to CMS, and discouraging 
small physician offices or an individual eligible professional from 
self-nominating to become a qualified registry. We are concerned that 
an individual eligible professional or a small practice does not have 
the resources or capabilities to successfully submit quality measures 
results and numerator and denominator data on PQRI individual measures 
or measures groups through the registry data submission process.
    We propose to post the final 2010 PQRI registry requirements, 
including the exact date by which registries that wish to qualify for 
2010 must submit a self-nomination letter and instructions for 
submitting the self-nomination letter, on the PQRI section of the CMS 
Web site at http://www.cms.hhs.gov/PQRI by November 15, 2009. We 
anticipate that new registries that wish to self-nominate for 2010 will 
be required to do so by January 31, 2010.
    Similar to the 2009 PQRI, we propose that registries that were 
``qualified'' for 2009 and wish to continue to participate in 2010 
would not need to be ``re-qualified'' for 2010 unless they are 
unsuccessful at submitting 2009 PQRI data (that is, fail to submit 2009 
PQRI data per the 2009 PQRI registry requirements). We further propose 
that registries that were ``qualified'' for 2009, were successful in 
submitting 2009 PQRI data, and wish to continue to participate in 2010 
would need to indicate their desire to continue participation for 2010 
by submitting a letter to CMS indicating their continued interest in 
being a PQRI registry for 2010 and their compliance with the 2010 PQRI 
registry requirements by no later than October 31, 2009. Instructions 
regarding the procedures for submitting this letter will be provided to 
qualified 2009 PQRI registries on the 2009 PQRI registry support 
conference calls.
    If a qualified 2009 PQRI registry fails to submit 2009 PQRI data 
per the 2009 PQRI registry requirements, we propose

[[Page 33565]]

the registry would be considered unsuccessful at submitting 2009 PQRI 
data and would need to go through the full self-nomination process 
again to participate in the 2010 PQRI. By March 31, 2010, registries 
that are unsuccessful submitting quality measures results and numerator 
and denominator data for 2009 would need to be able to meet the 2010 
PQRI registry requirements and go through the full vetting process 
again.
    Finally, as discussed further under section II.G.5.c.(1) of this 
proposed rule, we propose that the above registry requirements would 
apply not only for the purpose of a registry qualifying to report 2010 
PQRI quality measure results and numerator and denominator data on PQRI 
individual quality measures or measures groups, but also for the 
purpose of a registry qualifying to submit the proposed electronic 
prescribing measure for the 2010 E-Prescribing Incentive Program.
(5) Qualification Requirements for EHR Vendors and Their Products
    In the CY 2009 PFS final rule with comment period (73 FR 69830), we 
announced our intent to qualify EHR vendors and their specific products 
to submit quality data extracted from their EHR products to the CMS 
clinical 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. We stated that we anticipate 
posting on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI, by December 31, 2008, 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. We also stated that qualifying 
EHR vendors ahead of actual data submission will facilitate the live 
data submission process.
    On December 31, 2008, the ``Requirements for Electronic Health 
Record (EHR) Vendors to Participate in the 2009 PQRI EHR Testing 
Program,'' was posted on the Reporting page of the PQRI section of the 
CMS Web site at http://www.cms.hhs.gov/PQRI/20_Reporting.asp#TopOfPage, which described the EHR vendor requirements 
and the EHR vendor self-nomination process.
    The vendor's EHR system must be updated according to the Draft 2009 
EHR specifications posted on the QualityNet Web site at http://www.qualitynet.org in order for an EHR vendor and its product to 
qualify to submit test information on 2009 PQRI measures, and for 
possible EHR data submission for future PQRI reporting years. In 
addition, the 2009 PQRI EHR test-vendors must meet the following 
requirements:
     Be able to collect and transmit all required data elements 
according to the 2009 EHR Specifications.
     Be able to separate out and report on Medicare Part B FFS 
patients only.
     Be able to include TIN/NPI information submitted with an 
eligible professional's quality data.
     Be able to transmit this data in the CMS-approved format.
     Comply with a secure method for data submission.
     Enter into and maintain with its participating 
professionals an appropriate legal arrangement that provides for the 
EHR vendor to receive patient-specific data from the eligible 
professional, as well as the EHR vendor's disclosure of protected 
health information on behalf of eligible professionals who wish to 
participate in the 2009 PQRI EHR test program.
     Obtain and keep on file signed documentation that each NPI 
whose data is submitted to the EHR vendor has authorized the EHR vendor 
to submit patient data to CMS for the purpose of PQRI testing. This 
documentation must meet the standards of applicable law, regulations, 
and contractual or business associate agreements.
    As described in the ``Requirements for Electronic Health Record 
(EHR) Vendors to Participate in the 2009 PQRI EHR Testing Program,'' 
which is posted on the Reporting page of the PQRI section of the CMS 
Web site at http://www.cms.hhs.gov/PQRI/20_Reporting.asp#TopOfPage, 
EHR vendors who wish to qualify to participate in the 2009 PQRI EHR 
test program were required to submit a self-nomination letter 
requesting inclusion in the 2009 EHR testing process by February 13, 
2009. All nominees would then go through a vetting process. Those 
nominees passing this vetting process would be asked to submit test 
data (that is, mock-up data) or to submit live test data from some of 
their clients (users) with their permission. Vendors who successfully 
submit their test data would also need to be able to adapt their system 
to any changes in the measure specifications that may arise due to 
Healthcare Information Technology Standards Panel (HITSP) or 
Certification Commission for Healthcare Information Technology (CCHIT) 
adoption of quality measure data reporting criteria.
    It is expected that the process for qualifying self-nominated EHR 
vendors may conclude in 2009. At the conclusion of this process, we 
propose that those EHR products that meet all of the EHR vendor 
requirements will be listed on the PQRI section of the CMS Web site at 
http://www.cms.hhs.gov/PQRI as a ``qualified'' EHR product (that is, 
the name of the vendor software product and the version that is 
qualified), which indicates that the product's users may submit quality 
data to CMS (either directly from their system or through the vendor--
which is yet to be determined) for the 2010 PQRI, if and when, EHR 
submission is included in the 2010 PQRI as a PQRI reporting mechanism.
    As discussed further under section II.G.5.c.(1) of this proposed 
rule, we propose that the above EHR vendor requirements would apply not 
only for the purpose of a vendor's EHR product being qualified for the 
purpose of the product's users being able to submit data extracted from 
the EHR for the 2010 PQRI, but also for the purpose of a vendor's EHR 
product being qualified for the purpose of the product's users being 
able to electronically submit data extracted from the EHR for the 
electronic prescribing measure for the 2010 E-Prescribing Incentive 
Program.
    During 2010, we expect to use the self-nomination process described 
in the ``Requirements for Electronic Health Record (EHR) Vendors to 
Participate in the 2009 PQRI EHR Testing Program'' posted on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/PQRI/20_Reporting.asp#TopOfPage, to qualify additional EHR vendors and their 
EHR products to submit quality data extracted from their EHR products 
to the CMS clinical quality data warehouse for program years after 
2010. We anticipate that the requirements will be similar to those used 
to qualify EHR products for the 2009 PQRI EHR testing, but they may be 
modified based on the results of our 2009 EHR testing. At the 
conclusion of this process, sometime in late 2010, those EHR products 
that meet all of the EHR vendor requirements will be listed on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/PQRI as a 
``qualified'' EHR product, which indicates that the product's users may 
submit quality data to CMS (either directly from their system or 
through the vendor--which is yet to be determined) for the 2011 PQRI or 
subsequent years, if and when, EHR submission is included as a PQRI 
reporting mechanism for years after 2010.
e. Proposed Criteria for Satisfactory Reporting of Individual Quality 
Measures for Individual Eligible Professionals
    Under section 1848(m)(3)(A) of the Act, the criteria for 
satisfactorily

[[Page 33566]]

submitting data on individual quality measures through claims-based 
reporting require the reporting of at least 3 applicable measures in at 
least 80 percent of the cases in which the measure is reportable. If 
fewer than 3 measures are applicable to the services of the 
professional, the professional may meet the criteria by reporting on 
all applicable measures (that is, 1 to 2 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.
    In prior program years, when we were required, under section 
1848(m)(5)(F) of the Act, to establish alternative criteria for 
satisfactorily reporting using the registry-based reporting mechanism, 
we decided that the criteria for registry-based reporting of individual 
measures should be consistent with the criteria for claims-based 
reporting of individual measures. Thus, we adopted the same criteria 
for satisfactory reporting of individual measures through registry-
based reporting as the criteria for satisfactory reporting of 
individual measures through claims-based reporting except that an 
eligible professional could choose to report through the registry-based 
reporting mechanism only if there are at least 3 PQRI quality measures 
applicable to the services of the professional. For the 2008 or 2009 
PQRI, eligible professionals could not satisfactorily report PQRI 
measures through the registry-based reporting mechanism by reporting on 
fewer than 3 measures.
    For years after 2009, section 1848(m)(3)(D) of the Act authorizes 
the Secretary, in consultation with stakeholders and experts, to revise 
the criteria for satisfactorily reporting data on quality measures. 
Based on this authority and the input we have received from 
stakeholders via the invitation to submit suggestions for the 2010 PQRI 
reporting options posted on the PQRI section of the CMS Web site at 
http://www.cms.hhs.gov/PQRI in April 2009, we propose 3 criteria for 
satisfactory reporting of individual PQRI quality measures for 2010. In 
an effort to continue to be consistent with the criteria of 
satisfactory reporting used in prior PQRI program years, we propose to 
retain the following 2 criteria with respect to satisfactorily 
reporting data on individual quality measures in circumstances where 3 
or more individual quality measures apply to the services furnished by 
an eligible professional:
     Report on at least 3 2010 PQRI measures (unless fewer than 
3 2010 PQRI measures apply to the services furnished by the eligible 
professional); and
     Report each measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    These criteria would apply to all proposed 2010 PQRI reporting 
mechanisms available for reporting individual PQRI quality measures 
(that is, claims-based reporting, registry-based reporting, and EHR-
based reporting).
    If an eligible professional has fewer than 3 PQRI measures that 
apply to the professional's services, then the professional would be 
able to meet the criteria for satisfactorily reporting data on 
individual quality measures by meeting the following 2 proposed 
criteria:
     Reporting on all measures that apply to the services 
furnished by the professional (that is 1 to 2 measures); and
     Reporting each measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    We propose that, as in previous years, these criteria for 
satisfactorily reporting data on fewer than 3 individual quality 
measures would be available for the claims-based reporting mechanism 
only. An eligible professional who has fewer than 3 PQRI measures that 
apply to the professional's services would not be able to meet the 
criteria for satisfactory reporting by reporting on all applicable 
measures (that is, 1 or 2 measures) through the registry-based 
reporting mechanism.
    While we have received input from several stakeholders requesting 
that we permit an eligible professional to report fewer than 3 measures 
through the registry-based reporting mechanism if fewer than 3 measures 
apply to him or her, doing so would be inefficient. First, in addition 
to needing to analyze the data submitted to us by the registry, we 
would have to analyze the claims data to ensure that no additional 
measures are applicable to the eligible professional, much like what we 
do under the Measure Applicability Validation process for claims-based 
reporting. Second, we would also have to analyze the claims data to 
ensure that the eligible professional had not attempted to report 
additional measures through claims. For these reasons, we are not 
proposing to permit eligible professionals who choose the registry-
based or EHR-based reporting mechanism to report on individual quality 
measures to report on fewer than 3 measures if only 1 or 2 measures 
apply to the services they furnish.
    Based on the previously stated assumption that a measure applies to 
the eligible professional if an eligible professional submits quality 
data codes for a particular measure, we propose that an eligible 
professional who reports on fewer than 3 measures through the claims-
based reporting mechanism in 2010 may be subject to the Measure 
Applicability Validation process, which allows us to determine whether 
an eligible professional should have reported quality data codes for 
additional measures. This process was applied in the 2007 and 2008 
PQRI. When an eligible professional reports on fewer than 3 measures, 
we propose to review whether there are other closely related measures 
(such as those that share a common diagnosis or those that are 
representative of services typically provided by a particular type of 
professional). If an eligible professional who reports on fewer than 3 
measures in 2010 reports on a measure that is part of an identified 
cluster of closely related measures and did not report on any other 
measure that is part of that identified cluster of closely related 
measures, then the professional would not qualify to receive a 2010 
PQRI incentive payment. Additional information on the Measure 
Applicability Validation process can be found on the Analysis and 
Payment page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
    In addition to the above criteria related to the number of measures 
on which an eligible professional would be required to report and the 
frequency of reporting, we propose a third criterion for satisfactory 
reporting of individual measures. Based on our authority to revise the 
criteria for satisfactory reporting under section 1848(m)(3)(D) of the 
Act, we propose that an eligible professional also be required to 
report data on at least one individual measure on a minimum number of 
Medicare Part B FFS patients seen during the reporting period, as 
detailed below. Establishing a minimum patient sample size requirement 
would enhance the scientific validity of eligible professionals' 
performance results and encourage eligible professionals to select to 
report only measures that are representative of the types of services 
they typically provide in their practice. If, for example, an eligible 
professional selects 3 patient-level measures (that is, measures in 
which the required

[[Page 33567]]

reporting frequency is a minimum of once per reporting period per 
individual eligible professional) where only one of his or her Medicare 
Part B FFS patients are eligible for the measures and there is no 
minimum patient sample size requirement, then the eligible professional 
currently could qualify to earn a PQRI incentive payment by reporting 
PQRI quality measures data only 3 times during the entire reporting 
period. We believe that information on such a small sample of cases 
would be insufficient to do any meaningful analysis of the eligible 
professional's performance on the reported measure. We also believe 
that a minimum patient sample size requirement would prevent an 
eligible professional from purposely selecting measures that apply to 
only a few of their patients.
    Regardless of the reporting mechanism chosen by the eligible 
professional, we propose that the minimum patient sample size for 
reporting individual quality measures be 15 Medicare Part B FFS 
patients for the 12-month reporting period. An eligible professional 
would need to meet this minimum patient sample size requirement for at 
least one measure on which the eligible professional chooses to report. 
This proposed number is based on our experience with the 2007 PQRI and 
the limited information we have available regarding the 2008 PQRI 
reporting experience. For the 2007 PQRI measures, where the only 
reporting period was a 6-month reporting period beginning July 1, 2007, 
the median number of instances in which an eligible professional could 
have reported a 2007 PQRI measure was, on average, 9 eligible instances 
per measure. If we assume that the number of eligible instances for the 
first half of 2007 were similar to the number of eligible instances in 
the second half of 2007, then we can assume that the median number of 
eligible instances was an average of 18 instances per measure for the 
entire year. Preliminary information from the 2008 PQRI, based on data 
through September 2008, indicate that the median number of instances in 
which an eligible professional could have reported a 2008 PQRI measure 
was, on average, 18 eligible instances per measure. Since eligible 
professionals are not required to report a measure for all eligible 
cases, we based the proposed minimum patient sample size threshold on 
80 percent of 18 eligible instances, which is 14.4.
    Similarly, for the 6-month reporting period (available for 
registry-based reporting only), we propose that the minimum patient 
sample size for reporting on individual quality measures be 8 Medicare 
Part B FFS patients seen during the 6-month reporting period. An 
eligible professional would need to meet this minimum patient sample 
size requirement for at least one measure on which the eligible 
professional chooses to report. We welcome comments on the proposal to 
add a minimum patient sample size criterion to the criteria for 
satisfactory reporting of data on individual quality measures. In 
addition, we invite comments on the specific thresholds proposed for 
the 12-month reporting period (available for claims-based, registry-
based, and EHR-based reporting) and for the 6-month reporting period 
(available for registry-based reporting only) for reporting individual 
quality measures.
    The proposed 2010 criteria for satisfactory reporting of data on 
individual PQRI quality measures are summarized in Table 14 and are 
arranged by reporting mechanism and reporting period.

   Table 14--Proposed 2010 Criteria for Satisfactory Reporting of Data on Individual PQRI Quality Measures, by
                                    Reporting Mechanism and Reporting Period
----------------------------------------------------------------------------------------------------------------
         Reporting  mechanism                      Reporting criteria                    Reporting period
----------------------------------------------------------------------------------------------------------------
Claims-based reporting................   Report at least 3 PQRI           January 1, 2010-December 31,
                                         measures, or 1-2 measures if less than    2010.
                                         3 measures apply to the eligible
                                         professional;
                                         Report each measure for at
                                         least 80% of the eligible
                                         professional's Medicare Part B FFS
                                         patients seen during the reporting
                                         period to whom the measure applies; and
                                         Report at least 1 PQRI measure
                                         on at least 15 Medicare Part B FFS
                                         patients seen during the reporting
                                         period to which the measure applies.
Registry-based reporting..............   Report at least 3 PQRI           January 1, 2010-December 31,
                                         measures;                                 2010.
                                         Report each measure for at
                                         least 80% of the eligible
                                         professional's Medicare Part B FFS
                                         patients seen during the reporting
                                         period to whom the measure applies; and.
                                         Report at least 1 PQRI measure
                                         on at least 15 Medicare Part B FFS
                                         patients seen during the reporting
                                         period to which the measure applies.
Registry-based reporting..............   Report at least 3 PQRI           July 1, 2010-December 31,
                                         measures;                                 2010.
                                         Report each measure for at
                                         least 80% of the eligible
                                         professional's Medicare Part B FFS
                                         patients seen during the reporting
                                         period to whom the measure applies; and.
                                         Report at least 1 PQRI measure
                                         on at least 8 Medicare Part B FFS
                                         patients seen during the reporting
                                         period to which the measure applies.
EHR-based reporting...................   Report at least 3 PQRI           January 1, 2010-December 31,
                                         measures;                                 2010.
                                         Report each measure for at
                                         least 80% of the eligible
                                         professional's Medicare Part B FFS
                                         patients seen during the reporting
                                         period to whom the measure applies; and.
                                         Report at least 1 PQRI measure
                                         on at least 15 Medicare Part B FFS
                                         patients seen during the reporting
                                         period to which the measure applies.
----------------------------------------------------------------------------------------------------------------


[[Page 33568]]

    As illustrated in Table 14, there are a total of 4 proposed 
reporting options, or ways in which an eligible professional may meet 
the criteria for satisfactory reporting on individual quality measures 
for the 2010 PQRI. Each reporting option consists of the criteria for 
satisfactorily reporting such data and results on individual quality 
measures relevant to a given reporting mechanism and reporting period. 
While eligible professionals may potentially qualify as satisfactorily 
reporting individual quality measures under more than one of the 
proposed reporting criteria, proposed reporting mechanisms, and/or for 
more than one proposed reporting period, only one incentive payment 
would be made to an eligible professional based on the longest 
reporting period for which the eligible professional satisfactorily 
reports.
f. Proposed Criteria for Satisfactory Reporting Measures Groups for 
Individual Eligible Professionals
    As described above, section 1848(m)(5)(F) of the Act requires that, 
for 2008 and subsequent years, the Secretary establish alternative 
reporting periods and alternative criteria for satisfactorily reporting 
groups of measures. In establishing these alternatives in prior years, 
we have labeled these groups of measures ``measures groups.'' We have 
previously defined ``measures groups'' as a subset of four or more 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.
    In the 2008 and 2009 PQRI, measures groups were reportable through 
claims-based or registry-based reporting. For the 2008 and 2009 PQRI, 
there were 2 basic sets of criteria for satisfactory reporting measures 
groups through claims-based or registry-based reporting: (1) The 
reporting of at least 1 measures group for at least 80 percent of 
patients to whom the measures group applies during the reporting 
period; or (2) the reporting of at least 1 measures group for a 
specified number of consecutive patients to whom the measures group 
applies during the reporting period. For registry-based reporting in 
the 2008 and 2009 PQRI, we allowed eligible professionals to include 
some non-Medicare Part B FFS patients in the consecutive patient sample 
under the second set of criteria. For registry-based reporting quality 
measures results and numerator and denominator data on measures groups 
in 2009, we also added to the first set of criteria a requirement to 
report the measures group on a minimum number of patients commensurate 
with the reporting period duration.
    For the 2010 PQRI, we again propose 2 basic sets of criteria for 
satisfactory reporting on measures group. Both sets of criteria would 
apply to the claims-based and registry-based reporting mechanism. As 
discussed in section II.G.2.d.(3) of this proposed rule, we are not 
proposing to make the EHR-based reporting mechanism available for 
reporting on measures groups in 2010.
    The first set of proposed criteria, which we propose to make 
available for either the 12-month or 6-month reporting period in 2010, 
would be consistent with the 2009 criteria for satisfactory reporting 
of measures groups through registry-based reporting, which require the 
reporting of at least 1 measures group for at least 80 percent of 
patients to whom the measures group applies during the applicable 
reporting period (with reporting required on a minimum number of 
Medicare Part B FFS patients commensurate with the reporting period 
duration). In the 2009 PQRI, there was a requirement under these 
criteria to report each measures group on at least 30 Medicare Part B 
FFS patients for the 12-month reporting period and at least 15 Medicare 
Part B FFS patients for the 6-month reporting period for registry-based 
reporting of measures groups. For the 2010 PQRI, we propose to revise 
the requirement by making these criteria applicable to both registry-
based and claims-based reporting and to change the number of Medicare 
Part B FFS patients on which an eligible professional would be required 
to report a measures group. We propose to require an eligible 
professional who chooses to report on measures groups based on 
reporting on 80 percent of applicable patients to report on a minimum 
of 15 Medicare Part B FFS patients for the 12-month reporting period 
and a minimum of 8 Medicare Part B FFS patients for the 6-month 
reporting period, regardless of whether the eligible professional 
chooses to report the measures group through claims-based reporting or 
registry-based reporting. We propose to revise the required minimum 
sample size to make the proposed 2010 criteria for satisfactory 
reporting of measures groups consistent with the proposed 2010 criteria 
for satisfactory reporting of individual measures. We invite comments 
on our proposal to make the criteria for satisfactory reporting of 
measures groups more consistent with those proposed for reporting 
individual measures. We especially would be interested in comments with 
respect to our proposal to revise the minimum sample size requirement 
related to satisfactory reporting on measures group through the 
registry-based reporting mechanism so that the criteria for 
satisfactory reporting of measures groups, regardless of reporting 
mechanism, would be identical to those proposed for reporting 
individual measures.
    The second set of proposed criteria, which we propose to make 
available for the 12-month reporting period only, would be based on 
reporting on a measures group on a specified minimum number of 
patients. The second set of criteria would require reporting on at 
least 1 measures group for at least 30 patients seen between January 1, 
2010 and December 31, 2010 to whom the measures group applies. Unlike 
the 2009 PQRI, which required that eligible professionals report on 
consecutive patients (that is, patients seen in order, by date of 
service), the 30 patients on which an eligible professional would need 
to report a measures group for 2010 would not need to be consecutive 
patients. The eligible professional would be able to report on any 30 
patients seen during the reporting period to which the measures group 
applies. We propose to remove the requirement to report on patients 
seen consecutively by date of service because our preliminary analysis 
of the 2008 PQRI claims-based reporting experience through September 
2008 suggests that this requirement is difficult for professionals to 
apply accurately to meet the criteria for satisfactory reporting of 
measures groups. In addition, the questions we receive from eligible 
professionals indicate that many eligible professionals are not clear 
on how to determine which patients are ``consecutive'' and should be 
included in the patient sample. We believe that any adverse effect on 
the reliability or validity of the quality information received as a 
result of the removal of the requirement to report on patients seen 
consecutively and allowing eligible professionals to report on any 30 
patients would be minimal. When eligible professionals report measures 
groups, they are required to report on multiple measures for a given 
clinical condition or focus, which makes it harder for them to 
selectively choose patients in an attempt to improve their performance 
results. We invite comments on our proposal to allow eligible 
professionals to report on measures groups on any 30 patients rather 
than a consecutive patient sample.
    As in previous years, we propose that for 2010, the patients, for 
claims-based

[[Page 33569]]

reporting, would be limited to Medicare Part B FFS patients. We receive 
claims on Medicare patients only. For registry-based reporting, 
however, we propose that the patients could include some, but not be 
exclusively, non-Medicare Part B FFS patients.
    The proposed 2010 criteria for satisfactory reporting on measures 
groups are summarized in Table 15, which is arranged by reporting 
mechanism and reporting period.

   Table 15--Proposed 2010 Criteria for Satisfactory Reporting on Measures Groups, by Reporting Mechanism and
                                                Reporting Period
----------------------------------------------------------------------------------------------------------------
       Reporting mechanism                            Reporting criteria                      Reporting period
----------------------------------------------------------------------------------------------------------------
Claims-based reporting...........   Report at least 1 PQRI measures group;          January 1, 2010-
                                                                                             December 31, 2010.
                                    Report each measures group for at least 30
                                    Medicare Part B FFS patients.
Claims-based reporting...........   Report at least 1 PQRI measures group;          January 1, 2010-
                                                                                             December 31, 2010.
                                    Report each measures group for at least 80% of
                                    the eligible professional's Medicare Part B FFS
                                    patients seen during the reporting period to whom the
                                    measures group applies; and
                                    Report each measures group on at least 15
                                    Medicare Part B FFS patients seen during the reporting
                                    period to which the measures group applies.
Claims-based reporting...........   Report at least 1 PQRI measures group;          July 1, 2010-
                                                                                             December 31, 2010.
                                    Report each measures group for at least 80% of  January 1, 2010-
                                    the eligible professional's Medicare Part B FFS          December 31, 2010.
                                    patients seen during the reporting period to whom the
                                    measures group applies; and
                                    Report each measures group on at least 8
                                    Medicare Part B FFS patients seen during the reporting
                                    period to which the measures group applies.
Registry-based reporting.........   Report at least 1 PQRI measures group;          January 1, 2010-
                                                                                             December 31, 2010.
                                    Report each measures group for at least 30
                                    patients. Patients may include, but may not be
                                    exclusively, non-Medicare Part B FFS patients.
Registry-based reporting.........   Report at least 1 PQRI measures group;          January 1, 2010-
                                                                                             December 31, 2010.
                                    Report each measures group for at least 80% of
                                    the eligible professional's Medicare Part B FFS
                                    patients seen during the reporting period to whom the
                                    measures group applies; and
                                    Report each measures group on at least 15
                                    Medicare Part B FFS patients seen during the reporting
                                    period to which the measures group applies.
Registry-based reporting.........   Report at least 1 PQRI measures group;          July 1, 2010-
                                                                                             December 31, 2010.
                                    Report each measures group for at least 80 %
                                    of the eligible professional's Medicare Part B FFS
                                    patients seen during the reporting period to whom the
                                    measures group applies; and
                                    Report each measures group on at least 8
                                    Medicare Part B FFS patients seen during the reporting
                                    period to which the measures group applies.
----------------------------------------------------------------------------------------------------------------

    As illustrated in Table 15, there are a total of 6 proposed 
reporting options, or ways in which an eligible professional may meet 
the proposed criteria for satisfactory reporting of measures groups for 
the 2010 PQRI. Each reporting option consists of the criteria for 
satisfactory reporting relevant to a given reporting mechanism and 
reporting period. As stated previously, while eligible professionals 
may potentially qualify as satisfactorily reporting on measures groups 
under more than one of the proposed reporting criteria, proposed 
reporting mechanisms, and/or for more than one proposed reporting 
period, only one incentive payment would be made to an eligible 
professional based on the longest reporting period for which the 
eligible professional satisfactorily reports.
g. Proposed Reporting Option for Satisfactory Reporting on Quality 
Measures by Group Practices
    As stated previously, section 1848(m)(3)(C)(i) of the Act requires 
the Secretary to establish and have in place a process by January 1, 
2010 under which eligible professionals in a group practice (as defined 
by the Secretary) shall be treated as satisfactorily submitting data on 
quality measures under PQRI if, in lieu of reporting measures under 
PQRI, 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)(ii) of the Act requires that this 
process provide for the use of a statistical sampling model to submit 
data on measures, such as the model used under the Medicare Physician 
Group Practice (PGP) demonstration project under section 1866A of the 
Act.
    In addition, payments to a group practice under section 1848(m) of 
the Act by reason of the process proposed herein shall be in lieu of 
the PQRI incentive payments that would otherwise be made to eligible 
professionals in the group practice for satisfactorily submitting data 
on quality measures (that is, prohibits double payments). Therefore, in 
addition to making incentive payments for 2010 to group practices based 
on separately analyzing whether the individual eligible professionals 
within the group practice (that is, for each TIN/NPI combination) 
satisfactorily reported on PQRI quality measures, we will begin making 
incentive payments to group practices based on the determination that 
the group practice, as a whole (that is, for the TIN), satisfactorily 
reports on

[[Page 33570]]

PQRI quality measures for 2010. In addition, an individual eligible 
professional who is affiliated with a group practice participating in 
the group practice reporting option that satisfactorily reports under 
the proposed group practice reporting option would not be eligible to 
earn a separate PQRI incentive payment for 2010 on the basis of his or 
her satisfactorily reporting PQRI quality measures data at the 
individual level.
    (1) Definition of ``Group Practice''
    As stated above, section 1848(m)(3)(C)(i) of the Act authorizes the 
Secretary to define ``group practice.'' For purposes of determining 
whether a group practice satisfactorily submits PQRI quality measures 
data, we propose that a ``group practice'' would consist of a physician 
group practice, as defined by a TIN, with at least 200 or more 
individual eligible professionals (or, as identified by NPIs) who have 
reassigned their billing rights to the TIN.
    Generally, our intent is to build on an existing quality reporting 
program that group practices may already be familiar with by modeling 
the PQRI group practice reporting option after the PGP demonstration. 
Since the PGP demonstration is a demonstration program for large group 
practices, one of the requirements for group practices participating in 
the PGP demonstration is for each practice to have 200 or more members. 
To be consistent with the PGP demonstration, we also propose to limit 
initial implementation of the PQRI group practice reporting option for 
2010 to similar large group practices. As we gain more experience with 
the group practice reporting option, we may consider lowering the group 
size threshold in the future. We invite comments on the proposed 
definition of ``group practice'' and our proposal to limit initial 
implementation of the PQRI group practice reporting option in 2010 to 
practices with 200 or more individual eligible professionals.
    In order to participate in the 2010 PQRI through the group practice 
reporting option, we propose to require group practices to complete a 
self-nomination process and to meet certain technical and other 
requirements. Group practices interested in participating in the 2010 
PQRI through the group practice reporting option would be required to 
submit a self-nomination letter to CMS or a CMS designee requesting to 
participate in the 2010 PQRI group practice reporting option. We 
propose that each group practice would be required to meet the 
following requirements:
     Have an active Individuals Access to CMS Systems (IACS) 
user account;
     Provide CMS or a CMS designee with the group practice's 
TIN and the NPI numbers and names of all eligible professionals who 
will be participating as part of the group practice (that is, all 
individual NPI numbers associated with the group practice's TIN). This 
information must be provided in an electronic format specified by CMS, 
such as in an Excel spreadsheet; and
     Agree to have the group practice's PQRI quality 
measurement performance rates for each measure publicly reported by 
posting of the results on a CMS Web site.
    We propose to post the final participation requirements for group 
practices, including the exact date by which group practices that wish 
to participate in the 2010 PQRI through the group practice reporting 
option must submit a self-nomination letter and other instructions for 
submitting the self-nomination letter, on the PQRI section of the CMS 
Web site at http://www.cms.hhs.gov/PQRI by November 15, 2009. We 
anticipate that group practices that wish to self-nominate for 2010 
will be required to do so by the end of the first quarter of 2010, but 
not later than the end of the second quarter of 2010. Upon receipt of 
the self-nomination letters we will assess whether the participation 
requirements proposed above have been met by each self-nominated group 
practice.
(2) Process for Physician Group Practices To Participate as Group 
Practices and Criteria for Satisfactory Reporting Data on Quality 
Measures by Group Practices
    For physician groups selected to participate in the PQRI group 
practice reporting option for 2010, we propose the reporting period 
would be the 12-month reporting period beginning January 1, 2010. We 
propose that group practices would be required to submit information on 
these measures using a data collection tool based on the data 
collection tool used in CMS' Medicare Care Management Performance 
(MCMP) demonstration and the quality measurement and reporting methods 
used in CMS' PGP demonstration. We propose that physician groups 
selected to participate in the 2010 PQRI through the group practice 
reporting option would be required to report on a common set of 26 NQF-
endorsed quality measures that are based on measures currently used in 
the MCMP and/or PGP demonstration and that target high-cost chronic 
conditions and preventive care. These quality measures are identified 
in Table 34. Additional information on the MCMP and PGP demonstrations 
is posted on the Medicare Demonstrations section of the CMS Web site at 
http://www.cms.hhs.gov/DemoProjectsEvalRpts/MD/list.asp#TopOfPage. 
Although our proposed process for physician groups to participate in 
PQRI as a group practice incorporates some characteristics and methods 
from the PGP demonstration and the MCMP demonstration, the PQRI group 
practice reporting option will be a separate program with its own 
specifications and methodology from the PGP and MCMP demonstration 
programs.
    The proposed quality measures identified in Table 34 are based on a 
subset of the Doctor's Office Quality (DOQ) quality measures set 
developed and specified under the direction of CMS and which are used 
in the PGP and/or MCMP demonstration programs. Contributors to the 
development of the DOQ measure set included the American Medical 
Association's Physician Consortium for Performance Improvement (AMA-
PCPI), the American College of Cardiology (ACC), the American Heart 
Association (AHA), the National Diabetes Quality Improvement Alliance, 
the National Committee for Quality Assurance (NCQA), and the Veterans 
Health Administration (VA) and, in most instances, overlap with 
proposed 2010 PQRI measures. These quality measures are grouped into 
four disease modules: diabetes; heart failure; coronary artery disease; 
and preventive care services.
    As part of the data submission process, we propose that, beginning 
in 2011, each group practice would be required to report quality 
measures with respect to services furnished during the 2010 reporting 
period (that is, January 1, 2010 through December 31, 2010) on an 
assigned sample of Medicare beneficiaries. We propose to analyze the 
January 1, 2010 through October 29, 2010 (that is, the last business 
day of October 2010) National Claims History (NCH) file to assign 
Medicare beneficiaries to each physician group practice using the same 
patient assignment methodology used in the PGP demonstration. Assigned 
beneficiaries are limited to those Medicare FFS beneficiaries with 
Medicare Parts A and B for whom Medicare is the primary payer. Assigned 
beneficiaries do not include Medicare Advantage enrollees. Essentially, 
a beneficiary would be assigned to the physician group that provides 
the plurality of a beneficiary's office or other outpatient E/M allowed 
charges (based on Medicare Part B claims submitted for the beneficiary 
for dates of services between January 1, 2010 and October 29, 2010). 
Beneficiaries with

[[Page 33571]]

only 1 visit to the group practice between January 1, 2010 and October 
29, 2010 would be eliminated from the group practice's assigned patient 
sample. Once the beneficiary assignment has been made for each 
physician group, each physician group would be required to report the 
quality measures on a random sample of the assigned beneficiaries per 
disease module or preventive care measure. For each disease module or 
preventive care measure, the physician group would be required to 
report information on the assigned patients in the order in which they 
appear in the group's sample (that is, consecutively). In the fourth 
quarter of 2010, we would pull a random sample of assigned 
beneficiaries for each disease module or preventive care measure and 
provide the sample to the physician group consistent with the methods 
used in the PGP demonstration. Identical to the sampling method used in 
the PGP demonstration, the random sample must consist of at least 411 
assigned beneficiaries. If the pool of eligible assigned beneficiaries 
is less than 411, then the group practice must report on 100 percent of 
the assigned beneficiaries to participate in the group practice 
reporting option.
    We propose a unique reporting mechanism for the group practice 
reporting option that would not be available to individual eligible 
professionals participating in the 2010 PQRI. We propose that each 
physician group selected to participate in the group practice reporting 
option would have access to a database (that is, a data collection 
tool) that would include the assigned beneficiary sample and the 
quality measures. This data collection tool was originally developed 
for use in the PGP demonstration, updated for use in the MCMP 
demonstration, and would be updated as needed for use in the PQRI. The 
assigned beneficiaries' demographic and utilization information would 
be prepopulated based on claims data. We anticipate being able to 
provide the selected physician groups with access to this prepopulated 
database by the fourth quarter of 2010. The physician group would be 
required to populate the remaining data fields necessary for capturing 
quality measure information on each of the assigned beneficiaries. 
Numerators for each of the quality measures would include all 
beneficiaries in the denominator population who also satisfy the 
quality performance criteria for that measure. Denominators for each 
quality measure would include a sample of the assigned beneficiaries 
who meet the eligibility criteria for that quality measure module or 
preventive care measure.
    We invite comments on our proposal to adopt the PGP demonstration's 
quality measurement and reporting methods for the PQRI group practice 
reporting option. We specifically request comments on the proposed 
patient assignment methodology and our proposal to use a data 
collection tool based on the one used in the MCMP demonstration as the 
reporting mechanism for physician groups selected to participate in the 
PQRI group practice reporting option.
    We propose 2 criteria for satisfactory reporting of quality 
measures by a physician group. First, the physician group would be 
required to report completely on all of the proposed modules and 
measures listed in Table 34. Second, the physician group would be 
required to report on the first 411 consecutively assigned Medicare 
beneficiaries per disease module or preventive care measure. This is 
identical to the reporting criteria used in the PGP demonstration. By 
building on an existing demonstration program that large group 
practices may already have experience with, we hope to minimize burden 
on both group practices and CMS. The sample that we pull for and 
provide to each physician group would include more than the 411 
assigned beneficiaries (the sample would include an over sample of 
approximately 50 percent). More beneficiaries are provided in the 
sample than the group practice is required to report on in order to 
account for beneficiaries included in the sample who cannot be 
confirmed with the diagnosis for a particular disease module or whose 
medical information may not be able to be located within the physician 
group's systems.
h. Statutory Requirements and Other Considerations for Measures 
Proposed for Inclusion in the 2010 PQRI
(1) Statutory Requirements for Measures Proposed for Inclusion in the 
2010 PQRI
    As a result of section 131(b) of the MIPPA, the statutory 
requirements with respect to the use of quality measures for the 2010 
PQRI are different from the statutory requirements for previous program 
years. For the 2007 PQRI, section 1848(k)(2)(A)(i) of the Act required 
the Secretary to generally select the quality measures identified as 
2007 physician quality measures under the Physician Voluntary Reporting 
Program. For the 2008 and 2009 PQRI, section 1848(k)(2)(B) of the Act 
required that the quality measures be measures that have been adopted 
or endorsed by a consensus organization (such as the National Quality 
Forum or AQA), that include measures that have been submitted by a 
physician specialty, and that the Secretary identifies as having used a 
consensus-based process for developing such measures. For purposes of 
reporting data on quality measures for covered professional services 
furnished during 2010 and subsequent years for the PQRI, subject to the 
exception noted below, section 1848(k)(2)(C)(i) of the Act, as added by 
MIPPA, requires that the quality measures shall be such measures 
selected by the Secretary from measures that have been endorsed by the 
entity with a contract with the Secretary under subsection 1890(a) of 
the Act, as added by section 183 of the MIPPA. On January 14, 2009, the 
U.S. Department of Health and Human Services awarded the contract 
required under section 1890(a) of the Act to the National Quality Forum 
(NQF).
    In the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the NQF, however, section 1848(k)(2)(C)(ii) of 
the Act authorizes the Secretary to specify a measure that is not so 
endorsed as long as due consideration is given to measures that have 
been endorsed or adopted by a consensus organization identified by the 
Secretary, such as the AQA alliance. In light of these statutory 
requirements, we believe that, except in certain specified 
circumstances, each proposed 2010 PQRI quality measure would need to be 
endorsed by the NQF by July 1, 2009. In those circumstances in which a 
feasible and practical measure has not been endorsed by the NQF, we 
believe that all other proposed 2010 PQRI quality measures would need 
to have at least been adopted by the AQA or another organization with 
comparable consensus-organization characteristics. However, in January 
2009, the AQA announced that it will no longer be adopting measures and 
we are not aware of any other organizations with consensus-organization 
characteristics (see 73 FR 38565 through 38566 for discussion of the 
considerations applied in determining whether an entity is a consensus 
organization). Therefore, our policy with respect to identifying 
exceptions under section 1848(k)(2)(C)(ii) of the Act would be to give 
due consideration to measures that have been endorsed by the NQF. As a 
result, in reviewing measures for possible inclusion in the 2010 PQRI 
quality measure set, we propose that any new quality measures proposed 
for the 2010 PQRI must be NQF-endorsed

[[Page 33572]]

by July 1, 2009, while any proposed 2010 PQRI quality measures selected 
from the 2009 PQRI quality measure set would need to have been adopted 
by the AQA as of January 31, 2009, if the measure still is not endorsed 
by the NQF by July 1, 2009.
    In addition, section 1848(k)(2)(D) of the Act requires that for 
each 2010 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.'' Measure developers generally include a public 
comment phase in their measure development process. 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. For example, information on the 
measure development process employed by us when CMS or a CMS contractor 
is the measure developer is available in the ``Measures Management 
System Blueprint'' found on the CMS Web site at http://www.cms.hhs.gov/apps/QMIS/mmsBlueprint.asp.
    Eligible professionals also have the opportunity to provide input 
on a measure as the measure is being vetted through the NQF consensus 
endorsement process (and previously, the AQA consensus adoption 
process). In particular, the NQF employs a public comment period for 
measures vetted through its consensus endorsement process (and 
previously, for the AQA, its consensus adoption process).
    Finally, eligible professionals have an opportunity to provide 
input on the measures proposed for inclusion in the 2010 PQRI through 
this proposed rule, which provides a 60-day comment period. 
Accordingly, with regard to the 2010 PQRI, we believe we have satisfied 
this requirement in multiple ways.
(2) Other Considerations for Measures Proposed for Inclusion in the 
2010 PQRI
    Consistent with the statutory requirements described in section 
II.G.2.h.(1) of this proposed rule, we propose to apply the following 
considerations with respect to the selection of 2009 PQRI quality 
measures proposed for inclusion in the 2010 PQRI quality measure set:
     Where some 2009 PQRI quality measures have been endorsed 
by the NQF and others have not, those 2009 PQRI quality measures that 
have been specifically considered by NQF for possible endorsement, but 
NQF has declined to endorse it, are not proposed for inclusion in the 
2010 PQRI quality measure set (that is, we propose to retire the 
measure for 2010).
     In circumstances where no NQF-endorsed measure is 
available, we propose to exercise the exception under section 
1848(k)(2)(C)(ii) of the Act. Under these circumstances, a 2009 PQRI 
quality measure that previously (that is, prior to January 31, 2009) 
has been adopted by the AQA would meet the requirements under the Act 
and we propose that it would be appropriate for eligible professionals 
to use the measure to submit quality measures data and/or quality 
measures results and numerator and denominator data on quality 
measures, as appropriate.
     Although we do not propose to include any 2009 PQRI 
measures that have not been endorsed by the NQF or adopted by the AQA 
in the final 2010 PQRI quality measure set, we acknowledge that section 
1848(k)(C)(ii) of the Act provides an exception to the requirement that 
the Secretary select measures that have been endorsed by the entity 
with a contract under section 1890(a) of the Act (that is, the NQF) as 
long as an area or medical topic for which a feasible and practical 
NQF-endorsed measure is not available has been identified and due 
consideration has been given to measures that have been endorsed by the 
NQF and/or, prior to January 31, 2009, adopted by the AQA.
     The statutory requirements under section 1848(k)(2)(C) of 
the Act, subject to the exception noted above, require only that the 
measures be selected from measures that have been endorsed by the 
entity with a contract with the Secretary under section 1890(a) (that 
is, the NQF) and are silent with respect to how the measures that are 
submitted to the NQF for endorsement were developed. The basic steps 
for developing measures applicable to physicians and other eligible 
professionals prior to submission of the measures for endorsement may 
be carried out by a variety of different organizations. We do not 
believe there needs to be any special restrictions on the type or make 
up of the organizations carrying out this basic development of 
physician measures, such as restricting the initial development to 
physician-controlled organizations. Any such restriction would unduly 
limit the basic development of quality measures and the scope and 
utility of measures that may be considered for endorsement as voluntary 
consensus standards.
     2009 PQRI measures that were part of the 2007 and/or 2008 
PQRI in which the 2007 and 2008 PQRI analytics indicate a lack of 
significant reporting and usage were not considered for inclusion in 
the 2010 PQRI.
    In addition to reviewing the 2009 PQRI measures and previously 
retired measures, for purposes of developing the proposed 2010 PQRI 
measures, we have reviewed and considered measure suggestions including 
comments received in response to the CY 2009 PFS proposed rule and 
final rule with comment period. Additionally, suggestions and input 
received through other venues, such as an invitation for measures 
suggestions posted on the PQRI section of the CMS Web site in February 
2009 were also reviewed and considered for purposes of our development 
of the list of proposed 2010 PQRI quality measures.
    With respect to the selection of new measures (that is, measures 
that have never been selected as part of a PQRI quality measure set for 
2009 or any prior year), we propose to apply the following 
considerations, which include many of the same considerations applied 
to the selection of 2009 PQRI quality measures for proposed inclusion 
in the 2010 PQRI quality measure set described above:
     High Impact on Healthcare.
     Measures that are high impact and support CMS and HHS 
priorities for improved quality and efficiency of care for Medicare 
beneficiaries. These current and long term priority topics include: 
Prevention; chronic conditions; high cost and high volume conditions; 
elimination of health disparities; healthcare-associated infections and 
other conditions; improved care coordination; improved efficiency; 
improved patient and family experience of care; improved end-of-life/
palliative care; effective management of acute and chronic episodes of 
care; reduced unwarranted geographic variation in quality and 
efficiency; and adoption and use of interoperable HIT.
     Measures that are included in, or facilitate alignment 
with, other Medicare, Medicaid, and CHIP programs in furtherance of 
overarching healthcare goals.
     NQF Endorsement.
    + Measures must be NQF-endorsed by July 1, 2009 in order to be 
considered for inclusion in the 2010 PQRI quality measure set.
    + Although we do not propose to include any new measures that are 
not endorsed by the NQF by July 1, 2009 in the final 2010 PQRI quality 
measure set, we acknowledge that section (k)(2)(C)(ii) of the Act 
provides an exception to the requirement that the Secretary select 
measures that have been endorsed by the entity with a contract under 
section 1890(a) of the Act (that is, the NQF). As

[[Page 33573]]

long as an area or medical topic for which a feasible and practical 
NQF-endorsed measure is not available has been identified and due 
consideration has been given to measures that have been adopted by the 
AQA or other consensus organization identified by Secretary.
    + The statutory requirements under section 1848(k)(2)(C) of the 
Act, subject to the exception noted above, require only that the 
measures be selected from measures that have been endorsed by the 
entity with a contract with the Secretary under section 1890(a) (that 
is, the NQF) and are silent with respect to how the measures that are 
submitted to the NQF for endorsement were developed. The basic steps 
for developing measures applicable to physicians and other eligible 
professionals prior to submission of the measures for endorsement may 
be carried out by a variety of different organizations. We do not 
believe there needs to be any special restrictions on the type or make 
up of the organizations carrying out this basic development of 
physician measures, such as restricting the initial development to 
physician-controlled organizations. Any such restriction would unduly 
limit the basic development of quality measures and the scope and 
utility of measures that may be considered for endorsement as voluntary 
consensus standards. The requirements under section 1848(k)(2)(C) of 
the Act pertain only to the selection of measures and not to the 
development of measures.
     Address Gaps in PQRI Measure Set.
    + Measures that increase the scope of applicability of the PQRI 
measures to services furnished to Medicare beneficiaries and expand 
opportunities for eligible professionals to participate in PQRI. We 
seek to achieve broad ability to assess the quality of care furnished 
to Medicare beneficiaries, and ultimately to compare performance among 
professionals. We seek to increase the circumstances where eligible 
professionals have at least 3 measures applicable to their practice and 
measures that help expand the number of measures groups with at least 
four measures in a group.
     Measures of various aspects of clinical quality including 
outcome measures, where appropriate and feasible, process measures, 
structural measures, efficiency measures, and measures of patient 
experience of care.
    Other considerations that we propose to apply to the selection of 
measures for 2010, regardless of whether the measure is a 2009 PQRI 
measure or not, are:
     Measures that are functional, which is to say measures 
that can be technically implemented within the capacity of the CMS 
infrastructure for data collection, analysis, and calculation of 
reporting and performance rates. This leads to preference for measures 
that reflect readiness for implementation, such as those that are 
currently in the 2009 PQRI program or have been through testing. The 
purpose of measure testing is to reveal the measure's strengths and 
weaknesses so that the limitations can be addressed and the measure 
refined and strengthened prior to implementation. For new measures, 
preference is given to those that can be most efficiently implemented 
for data collection and submission. Therefore, any measures that have 
been found to be technically impractical to report because they are 
analytically challenging due to any number of factors, including those 
that are claims-based, have not been included in the 2010 PQRI. For 
example, in some cases, we have proposed to replace existing 2009 PQRI 
measures with updated and improved measures that are less technically 
challenging to report.
     For some measures that are useful, but where data 
submission is not feasible through all otherwise available PQRI 
reporting mechanisms, a measure may be included for reporting solely 
through specific reporting mechanism(s) in which its submission is 
feasible. For example, we are proposing to limit reporting of some 
measures that previously were available for claims-based reporting and 
registry-based reporting to registry-based reporting only because they 
were technically challenging to report and/or analyze through the 
claims-based reporting mechanism. For further discussion of the 
proposed reporting mechanisms, see section II.G.2.d. of this proposed 
rule.
    We also reviewed 33 measures that have been retired from the PQRI 
in previous years using the considerations for selecting proposed 
measures for the 2010 PQRI discussed above. None were found to be 
eligible for inclusion in the 2010 PQRI quality measure set because 
they did not meet the criteria described above.
    We welcome comments on the implication of including or excluding 
any given measure or measures proposed herein in the final 2010 PQRI 
quality measure set and on our approach in selecting measures. We 
recognize that some commenters may also wish to recommend additional 
measures for inclusion in the 2010 PQRI measures that we have not 
herein proposed. While we welcome all constructive comments and 
suggestions, and may consider such recommended measures for inclusion 
in future measure sets for PQRI and/or other programs to which such 
measures may be relevant, we will not be able to consider such 
additional measures for inclusion in the 2010 measure set.
    As discussed above, section 1848(k)(2)(D) of the Act requires that 
the public have the opportunity to provide input during the selection 
of measures. We also are required by other applicable statutes to 
provide opportunity for public comment on provisions of policy or 
regulation that are established via notice and comment rulemaking. 
Measures that were not included in this proposed rule for inclusion in 
the 2010 PQRI that are recommended to CMS via comments on this proposed 
rule have not been placed before the public with opportunity for the 
public to comment on the selection of those measures within the 
rulemaking process. Even when measures have been published in the 
Federal Register, but in other contexts and not specifically proposed 
as PQRI measures, such publication does not provide true opportunity 
for public comment on those measures' potential inclusion in PQRI. 
Thus, such additional measures recommended for selection for the 2010 
PQRI via comments on this proposed rule cannot be included in the 2010 
measure set. However, as discussed above, we will consider comments and 
recommendations for measures, which may not be applicable to the final 
set of 2010 PQRI measures, for purposes of identifying measures for 
possible use in future years' PQRI or other initiatives to which those 
measures may be pertinent.
    In addition, as in prior years, we note that we do not use notice 
and comment rulemaking as a means to update or modify measure 
specifications. Quality measures that have completed the consensus 
process have a designated party (usually, 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. Therefore, comments requesting changes to 
a specific proposed PQRI measure's title, definition, and detailed 
specifications or coding should be directed to the measure developer 
identified in Tables 16 through 34. Contact information for the 2009 
PQRI measure developers is listed in the ``2009 PQRI Quality Measures 
List,'' which is available on the PQRI section of the CMS Web site at 
http://www.cms.hhs.gov/PQRI.

[[Page 33574]]

i. Proposed 2010 PQRI Quality Measures for Individual Eligible 
Professionals
    As stated previously, individual eligible professionals have the 
choice of reporting PQRI quality measures data on either individual 
quality measures or on measures groups.
    Consistent with the statutory requirements for measures included in 
the 2010 PQRI and other considerations for identifying proposed 2010 
quality measures discussed in section II.G.2.h.(1) and II.G.2.h.(2), 
respectively, of this proposed rule, the individual quality measures 
identified for use in the 2010 PQRI will be selected from those we 
propose in this rule and will be finalized as of the date the CY 2010 
PFS final rule with comment period goes on display at the Office of the 
Federal Register. No changes (that is, additions or deletions of 
measures) will be made after publication of the CY 2010 PFS final rule 
with comment period. However, as was the case for 2008 and 2009, we may 
make modifications or refinements, such as revisions to measures titles 
and code additions, corrections, or revisions to the detailed 
specifications for the 2010 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 2010 
measures specifications for individual quality measures 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 2010 PQRI measures on the PQRI section of the 
CMS Web site by November 15, 2009 and will, in no event, publish these 
specifications later than December 31, 2009. The detailed 
specifications will include instructions for reporting and identify the 
circumstances in which each measure is applicable.
    For 2010, we are proposing that final PQRI quality measures will be 
selected from 153 of the 2009 PQRI measures and 149 measure suggestions 
received in response to the February 2009 invitation to submit 
suggestions for measures and measures groups for possible inclusion in 
the 2010 PQRI (that is, the ``Call for 2010 Measure Suggestions''). We 
propose to include a total of 168 measures (this includes both 
individual measures and measures that are part of a proposed 2010 
measures group) on which individual eligible professionals can report 
for the 2010 PQRI. The individual PQRI quality measures proposed for 
the 2010 PQRI are listed in Tables 17 through 20 and fall into four 
broad categories as set forth below in this section. The four 
categories are the following:
    (1) Proposed 2010 Individual Quality Measures Selected From the 
2009 PQRI Quality Measures Set Available for Claims-based Reporting and 
Registry-Based Reporting;
    (2) Proposed 2010 Individual Quality Measures Selected From the 
2009 PQRI Quality Measures Set Available for Registry-based Reporting 
Only;
    (3) New Individual Quality Measures Proposed for 2010; and
    (4) Proposed 2010 Measures Available for EHR-based Reporting.
    In addition, we propose 13 measures groups for 2010. The measures 
proposed for inclusion in each of the proposed 2010 measures groups are 
listed in Tables 21 through 33.
    (1) Proposed 2010 Individual Quality Measures Selected From the 
2009 PQRI Quality Measures Set Available for Claims-based Reporting and 
Registry-based Reporting
    After careful consideration of 2009 PQRI measures, we propose to 
retire 7 measures because they did not meet one or more of the 
considerations for selection of proposed 2010 measures discussed in 
section II.G.2.h. of this proposed rule. The measures, including their 
Measure Number and Measure Title, and the specific reason(s) we are 
using as the basis for our proposal to retire the measures are 
identified in Table 16.

 Table 16--2009 PQRI Quality Measures Not Proposed for Inclusion in the
                                2010 PQRI
------------------------------------------------------------------------
     Measure no.            Measure title         Reason for retirement
------------------------------------------------------------------------
11..................  Stroke and Stroke         Analytically challenging
                       Rehabilitation: Carotid   / Replaced with another
                       Imagining Reporting.      measure.
34..................  Stroke and Stroke         Analytically challenging
                       Rehabilitation: Tissue    / Replaced with another
                       Plasminogen Activator.    measure.
94..................  Otitis Media with         Lack of significant
                       Effusion (OME):           reporting.
                       Diagnostic Evaluation.
95..................  Otitis Media with         Lack of significant
                       Effusion (OME): Hearing   reporting.
                       Test.
143.................  Oncology: Medical and     Analytically
                       Radiation--Pain           challenging.
                       Intensity Quantified.
144.................  Oncology: Medical and     Analytically
                       Radiation--Plan of Care   challenging.
                       for Pain.
152.................  Coronary Artery Disease   Declined for NQF
                       (CAD): Lipid Profile in   Endorsement.
                       Patients with CAD.
------------------------------------------------------------------------

    We propose to include in the 2010 PQRI quality measure set 116 of 
the 2009 PQRI measures, which would be available for either claims-
based reporting or registry-based reporting as individual quality 
measures. We note that one of these proposed measures, Measure 
46 Medication Reconciliation: Reconciliation After Discharge 
from an Inpatient Facility, is reportable through the registry-based 
reporting mechanism only in the 2009 PQRI. However, for the 2010 PQRI, 
we propose to make this measure available for either claims-based 
reporting or registry-based reporting. For the 2009 PQRI, registries 
have reported difficulty capturing the required information since the 
measure requires the inpatient discharge to be correlated to the 
outpatient visit. Therefore, for the 2010 PQRI we propose to make this 
measure available for both claims-based and registry-based reporting.
    These 116 proposed measures do not include any measures that are 
proposed to be included as part of the 2010 Back Pain measures group. 
Similar to the 2009 PQRI, we propose that any 2010 PQRI measure that is 
included in the Back Pain measures group would not be reportable as 
individual measures through claims-based reporting or registry-based 
reporting.
    The 116 individual 2009 PQRI measures proposed for inclusion in the 
2010 PQRI quality measure set as individual quality measures for either 
claims-based reporting or registry-based reporting are listed by their 
Measure Number and Title in Table 17, along with the name of the 
measure's developer/owner, their NQF endorsement status as of May 1, 
2009, and their AQA adoption status as of January 31, 2009. 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 to identify a different

[[Page 33575]]

measure, even if the original measure to which the number was assigned 
is subsequently retired from the PQRI measure set. A description of the 
proposed measures listed in Table 17 can be found in the ``2009 PQRI 
Quality Measures List,'' which is available on the Measures and Codes 
page of the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI.
    The 2009 measures that are proposed to be available for registry-
based reporting only for the 2010 PQRI are discussed and identified in 
section II.G.2.i.(2) of this proposed rule.

  Table 17--Proposed 2010 Measures Selected From the 2009 PQRI Quality Measure Set Available for Either Claims-
                                   Based Reporting or Registry-Based Reporting
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
     Measure No.         Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
1...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Hemoglobin A1c
                       Poor Control in
                       Diabetes Mellitus.
2...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Low Density
                       Lipoprotein (LDL-
                       C) Control in
                       Diabetes Mellitus.
3...................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       High Blood
                       Pressure Control
                       in Diabetes
                       Mellitus.
6...................  Coronary Artery      Yes.....................  Yes....................  AMA-PCPI.
                       Disease (CAD):
                       Oral Antiplatelet
                       Therapy Perscribed
                       for Patients with
                       CAD.
9...................  Major Depressive     Yes.....................  Yes....................  NCQA.
                       Disorder (MDD):
                       Antidepressant
                       Medication During
                       Acute Phase for
                       Patients with MDD.
10..................  Stroke and Stroke    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Rehabilitation:
                       Computed
                       Tomography (CT) or
                       Magnetic Resonance
                       Imaging (MRI)
                       Reports.
12..................  Primary Open Angle   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Glaucoma (POAG):
                       Optic Nerve
                       Evaluation.
14..................  Age-Related macular  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Degeneration
                       (AMD): Dilated
                       Macular
                       Examination.
18..................  Diabetic             Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Retinopathy:
                       Documentation of
                       Presence or
                       Absence of Macular
                       Edema and Level of
                       Severity of
                       Retinopathy.
19..................  Diabetic             Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Retinopathy:
                       Communication with
                       the Physician
                       Managing On-going
                       Diabetes Care.
20..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Timing of
                       Antibiotic
                       Prophylaxis--Order
                       ing Physician.
21..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Selection of
                       Prophylactic
                       Antibiotic--First
                       OR Second
                       Generation
                       Cephalosporin.
22..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Discontinuation of
                       Prophylactic
                       Antibiotics (Non-
                       Cardiac
                       Procedures).
23..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Venous
                       Thromboembolism
                       (VTE) Prophylaxis
                       (When Indicated in
                       ALL Patients).
24..................  Osteoporosis:        Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Communication with
                       the Physician
                       Managing On-going
                       Care Post Fracture.
28..................  Aspirin at Arrival   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       for Acute
                       Myocardial
                       Infarction (AMI).
30..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Timing of
                       Prophylactic
                       Antibiotics--Admin
                       istering Physician.
31..................  Stroke and Stroke    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Rehabilitation:
                       Deep Vein
                       Thrombosis
                       Prophylaxis (DVT)
                       for Ischemic
                       Stroke or
                       Intracranial
                       Hemorrhage.
32..................  Stroke and Stroke    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Rehabilitation:
                       Discharged on
                       Antiplatelet
                       Therapy.
35..................  Stroke and Stroke    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Rehabilitation:
                       Screening for
                       Dysphagia.
36..................  Stroke and Stroke    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Rehabilitation:
                       Consideration for
                       Rehabilitation
                       Services.
39..................  Screening or         Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Therapy for
                       Osteoporosis for
                       Women Aged 65
                       Years and Older.
40..................  Osteoporosis:        Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Management
                       Following Fracture.
41..................  Osteoporosis:        Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pharmacologic
                       Therapy.
43..................  Coronary Artery      Yes.....................  Yes....................  Society of
                       Bypass Graft                                                            Thoracic Surgeons
                       (CABG): Use of                                                          (STS).
                       Internal Mammary
                       Artery (IMA) in
                       Patients with
                       Isolated CABG
                       Surgery.

[[Page 33576]]

 
44..................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG):
                       Preoperative Beta-
                       Blocker in
                       Patients with
                       Isolated CABG
                       Surgery.
45..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Discontinuation of
                       Prophylactic
                       Antiobitics
                       (Cardiac
                       Procedures).
46..................  Medication           Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Reconciliation:
                       Reconciliation
                       After Discharge
                       from an Inpatient
                       Facility.
47..................  Advance Care Plan..  Yes.....................  Yes....................  AMA-PCPI/NCQA.
48..................  Urinary              Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Incontinence:
                       Assessment of
                       Presence or
                       Absence of Urinary
                       Incontinence in
                       Women Aged 6 Years
                       and Older.
49..................  Urinary              Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Incontinence:
                       Characterization
                       of Urinary
                       Incontinence in
                       Women Aged 65
                       Years and Older.
50..................  Urinary              Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Incontinence: Plan
                       of Care for
                       Urinary
                       Incontinence in
                       Women Aged 65
                       Years and Older.
51..................  Chronic Obstructive  Yes.....................  No.....................  AMA-PCPI.
                       Pulmonary Disease
                       (COPD): Spirometry
                       Evaluation.
52..................  Chronic Obstructive  Yes.....................  No.....................  AMA-PCPI.
                       Pulmonary Disease
                       (COPD):
                       Bronchodilator
                       Therapy.
53..................  Asthma:              Yes.....................  Yes....................  AMA-PCPI.
                       Pharmacologic
                       Therapy.
54..................  12-Lead              Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Electrocardiogram
                       (ECG) Performed
                       for Non-Traumatic
                       Chest Pain.
55..................  12-Lead              Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Electrocardiogram
                       (ECG) Performed
                       for Syncope.
56..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Vital Signs.
57..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Assessment of
                       Oxygen Saturation.
58..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Assessment of
                       Mental Status.
59..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Empiric Antibiotic.
64..................  Asthma: Asthma       Yes.....................  Yes....................  AMA-PCPI.
                       Assessment.
65..................  Treatment for        Yes.....................  Yes....................  NCQA.
                       Children with
                       Upper Respiratory
                       Infection (URI):
                       Avoidance of
                       Inappropriate Use.
66..................  Appropriate Testing  Yes.....................  Yes....................  NCQA.
                       for Children with
                       Pharyngitis.
67..................  Myelodysplastic      Yes.....................  Yes....................  AMA-PCPI/American
                       Syndrome (MDS) and                                                      Society of
                       Acute Leukemias:                                                        Hematology (ASH).
                       Baseline
                       Cytogenetic
                       Testing Performed
                       on Bone Marrow.
68..................  Myelodysplastic      Yes.....................  Yes....................  AMA-PCPI/ASH.
                       Syndrome (MDS):
                       Documentation of
                       Iron Stores in
                       Patients Receiving
                       Erythropoietin
                       Therapy.
69..................  Multiple Myeloma:    Yes.....................  Yes....................  AMA-PCPI/ASH.
                       Treatment with
                       Bisphosphonates.
70..................  Chronic Lymphocytic  Yes.....................  Yes....................  AMA-PCPI/ASH.
                       Leukemia (CLL):
                       Baseline Flow
                       Cytometry.
71..................  Breast Cancer:       Yes.....................  Yes....................  AMA-PCPI/American
                       Hormonal Therapy                                                        Society of
                       for Stage IC-IIIC                                                       Clinical Oncology
                       Estrogen Receptor/                                                      (ASCO)/National
                       Progesterone                                                            Comprehensive
                       Receptor (ER/PR)                                                        Cancer Network
                       Positive Breast                                                         (NCCN).
                       Cancer.
72..................  Colon Cancer:        Yes.....................  Yes....................  AMA-PCPI/ASCO/
                       Chemotherapy for                                                        NCCN.
                       Stage III Colon
                       Cancer Patients.
76..................  Prevention of        Yes.....................  Yes....................  AMA-PCPI.
                       Catheter-Related
                       Bloodstream
                       Infections
                       (CRBSI): Central
                       Venous Catheter
                       (CVC) Insertion
                       Protocol.
79..................  End Stage Renal      Yes.....................  Yes....................  AMA-PCPI.
                       Disease (ESRD):
                       Influenza
                       Immunization with
                       Patients in ESRD.
84..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Ribonucleic Acid
                       (RNA) Testing
                       Before Initiating
                       Treatment.
85..................  Hepatitis C: HCV     Yes.....................  Yes....................  AMA-PCPI.
                       Genotype Testing
                       Prior to Treatment.
86..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Antiviral
                       Treatment
                       Prescribed.
87..................  Hepatitis C: HCV     Yes.....................  Yes....................  AMA-PCPI.
                       Ribonucleic Acid
                       (RNA) Testing at
                       Week 12 of
                       Treatment.
89..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Counseling
                       Regarding Risk of
                       Alcohol
                       Consumption.

[[Page 33577]]

 
90..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Counseling
                       Regarding Use of
                       Contraception
                       Prior to Antiviral
                       Therapy.
91..................  Acute Otitis         No......................  Yes....................  AMA-PCPI.
                       Externa (ACE):
                       Topical Therapy.
92..................  Acute Otitis         No......................  Yes....................  AMA-PCPI.
                       Externa (ACE):
                       Pain Assessment.
93..................  Acute Otitis         No......................  Yes....................  AMA-PCPI.
                       Externa (ACE):
                       Systemic
                       Antimicrobial
                       Therapy--Avoidance
                       of Inappropriate
                       Use.
99..................  Breast Cancer        Yes.....................  Yes....................  AMA-PCPI/College
                       Resection                                                               of American
                       Pathology                                                               Pathologists
                       Reporting: pT                                                           (CAP).
                       Category (Primary
                       Tumor) and pN
                       Category (Regional
                       Lymph Nodes) with
                       Histologic Grade.
100.................  Colorectal Cancer    Yes.....................  Yes....................  AMA-PCPI/CAP.
                       Resection
                       Pathology
                       Reporting: pT
                       Category (Primary
                       Tumor) and pN
                       Category (Regional
                       Lymph Nodes) with
                       Histologic Grace.
102.................  Prostate Cancer:     Yes.....................  Yes....................  AMA-PCPI.
                       Avoidance of
                       Overuse of Bone
                       Scan for Staging
                       Low-Risk Prostate
                       Cancer Patients.
104.................  Prostate Cancer:     Yes.....................  Yes....................  AMA-PCPI.
                       Adjuvant Hormonal
                       Therapy for High-
                       Risk Prostate
                       Cancer Patients.
105.................  Prostate Cancer:     Yes.....................  Yes....................  AMA-PCPI.
                       Three-Dimensional
                       (3D) Radiotherapy.
106.................  Major Depressive     Yes.....................  No.....................  AMA-PCPI.
                       Disorder (MDD):
                       Diagnostic
                       Evaluation.
107.................  Major Depressive     Yes.....................  No.....................  AMA-PCPI.
                       Disorder (MDD):
                       Suicide Risk
                       Assessment.
108.................  Rheumatoid           Yes.....................  No.....................  NCQA.
                       Arthritis (RA):
                       Disease Modifying
                       Anti-Rheumatic
                       Drug (DMARD)
                       Therapy.
109.................  Osteoarthritis:      Yes.....................  No.....................  AMA-PCPI.
                       Function and Pain
                       Assessment.
110.................  Preventive Care and  Yes.....................  No.....................  AMA-PCPI.
                       Screening:
                       Influenza
                       Immunization for
                       Patients >=50
                       Years Old.
111.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Pneumonia
                       Vaccination for
                       Patients 65 Years
                       and Older.
112.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Screening
                       Mammography.
113.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Colorectal Cancer
                       Screening.
114.................  Preventive Care and  Yes.....................  Yes....................  AMA-PCPI.
                       Screening: Inquiry
                       Regarding Tobacco
                       Use.
115.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Advising Smokers
                       to Quit.
116.................  Antibiotic           Yes.....................  No.....................  NCQA.
                       Treatment for
                       Adults with Acute
                       Bronchitis:
                       Avoidance of
                       Inappropriate Use.
117.................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Dilated Eye Exam
                       in Diabetic
                       Patient.
119.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Urine Screening
                       for Microalbumin
                       or Medical
                       Attention for
                       Nephropathy in
                       Diabetic Patients.
121.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Laboratory Testing
                       (Calcium,
                       Phosphorous,
                       Intact Parathyroid
                       Hormone (iPTH) and
                       Lipid Profile).
122.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Blood Pressure
                       Management.
123.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Plan of Care--
                       Elevated
                       Hemoglobin for
                       Patients Receiving
                       Erythropoiesis-
                       Stimulating Agents
                       (ESA).
124.................  Health Information   Yes.....................  Yes....................  CMS/Quality
                       Technology (HIT):                                                       Insights of
                       Adoption/Use of                                                         Pennsylvania
                       Electronic Health                                                       (QIP).
                       Records (EHR).

[[Page 33578]]

 
126.................  Diabetes Mellitus:   Yes.....................  Yes....................  American Podiatric
                       Diabetic Foot and                                                       Medical
                       Ankle Care,                                                             Association
                       Peripheral                                                              (APMA).
                       Neuropathy--Neurol
                       ogical Evaluation.
127.................  Diabetes Mellitus:   Yes.....................  Yes....................  APMA.
                       Diabetic Foot and
                       Ankle Care, Ulcer
                       Prevention--Evalua
                       tion of Footwear.
128.................  Preventive Care and  Yes.....................  Yes....................  CMS/QIP.
                       Screening: Body
                       Mass Index (BMI)
                       Screening and
                       Follow-Up.
130.................  Documentation and    Yes.....................  Yes....................  CMS/QIP.
                       Verification of
                       Current
                       Medications in the
                       Medical Record.
131.................  Pain Assessment      Yes.....................  Yes....................  CMS/QIP.
                       Prior to
                       Initiation of
                       Patient Therapy
                       and Follow-Up.
134.................  Screening for        Yes.....................  Yes....................  CMS/QIP.
                       Clinical
                       Depression and
                       Follow-Up Plan.
135.................  Chronic Kidney       Yes.....................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Influenza
                       Immunization.
140.................  Age-Related Macular  No......................  Yes....................  AMA-PCPI/NCQA.
                       Degeneration
                       (AMD): Counseling
                       on Antioxidant
                       Supplement.
142.................  Osteoarthritis       Yes.....................  Yes....................  AMA-PCPI.
                       (OA): Assessment
                       for Use of Anti-
                       Inflammatory or
                       Analgesic Over-the-
                       Counter (OTC)
                       Medications.
145.................  Radiology: Exposure  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Time Reported for
                       Procedures Using
                       Fluoroscopy.
146.................  Radiology:           Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Inappropriate Use
                       of ``Probably
                       Benign''
                       Assessment
                       Category in
                       Mammography
                       Screening.
147.................  Nuclear Medicine:    Yes.....................  Yes....................  AMA-PCPI.
                       Correlation with
                       Existing Imaging
                       Studies for All
                       Patients
                       Undergoing Bone
                       Scintigraphy.
153.................  Chronic Kidney       Yes.....................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Referral for
                       Arteriovenous (AV)
                       Fistula.
154.................  Falls: Risk          No......................  Yes....................  AMA-PCPI/NCQA.
                       Assessment.
155.................  Falls: Plan of Care  No......................  Yes....................  AMA-PCPI/NCQA.
156.................  Oncology: Radiation  Yes.....................  Yes....................  AMA-PCPI.
                       Dose Limits to
                       Normal Tissues.
157.................  Thoracic Surgery:    Yes.....................  Yes....................  STS.
                       Recording of
                       Clinical Stage for
                       Lung Cancer and
                       Esophageal Cancer
                       Resection.
158.................  Endarterectomy: Use  Yes.....................  No.....................  Society of
                       of Patch During                                                         Vascular Surgeons
                       Conventional                                                            (SVS).
                       Endarterectomy.
163.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Foot Exam.
172.................  Hemodialysis         Yes.....................  No.....................  SVS.
                       Vascular Access
                       Decision-Making by
                       Surgeon to
                       Maximize Placement
                       of Autogenous
                       Arterial Venous
                       (AV) Fistula.
173.................  Preventive Care and  No......................  Yes....................  AMA-PCPI.
                       Screening:
                       Unhealthy Alcohol
                       Use--Screening.
175.................  Pediatric End Stage  No......................  Yes....................  AMA-PCPI.
                       Renal Disease
                       (ESRD): Influenza
                       Immunization.
176.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Tuberculosis
                       Screening.
177.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Periodic
                       Assessment of
                       Disease Activity.
178.................  Rhuematoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Functional Status
                       Assessment.
179.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Assessment and
                       Classification of
                       Disease Prognosis.
180.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Glucocorticoid
                       Management.
181.................  Elder Maltreatment   No......................  Yes....................  CMS/QIP.
                       Screen and Follow-
                       Up Plan.
182.................  Functional Outcome   No......................  Yes....................  CMS/QIP.
                       Assessment in
                       Chiropractic Care.
183.................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Hepatitis A
                       Vaccination in
                       Patients with HCV.
184.................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Hepatatis B
                       Vaccination in
                       Patients with HCV.

[[Page 33579]]

 
185.................  Endoscopy & Polyp    No......................  Yes....................  AMA-PCPI/NCQA.
                       Surveillance:
                       Colonoscopy
                       Interval for
                       Patients with a
                       History of
                       Adenomatous
                       Polyps--Avoidance
                       of Inappropriate
                       Use.
186.................  Wound Care: Use of   No......................  Yes....................  AMA-PCPI/NCQA.
                       Compression System
                       in Patients with
                       Venous Ulcers.
----------------------------------------------------------------------------------------------------------------

    Please note that detailed measure specifications for 2009 
individual PQRI quality measures may have been updated or modified 
during the NQF endorsement process or for other reasons prior to 2010. 
The 2010 PQRI quality measure specifications for any given individual 
quality measure may, therefore, be different from specifications for 
the same quality measure used for 2009. Specifications for all 2010 
individual PQRI quality measures, whether or not included in the 2009 
PQRI program, must be obtained from the specifications document for 
2010 individual PQRI quality measures, which will be available on the 
PQRI section of the CMS Web site on or before December 31, 2009.
(2) Proposed 2010 Individual Quality Measures Selected From the 2009 
PQRI Quality Measures Set Available for Registry-Based Reporting Only
    In the 2008 PQRI, all 2008 PQRI quality measures were reportable 
through either claims-based reporting or registry-based reporting. In 
the CY 2009 PFS final rule with comment period (73 FR 69833), we noted 
that some measures are not as conducive to claims-based reporting and 
indicated that 18 of the 2009 PQRI quality measures are not currently 
reportable through claims-based reporting due to their complexity. 
Instead, these 18 measures must be reported through a qualified PQRI 
registry for the 2009 PQRI. We referred to these measures as 
``registry-only'' measures. As discussed further in section II.G.2.d. 
of this proposed rule, registry-based reporting overcomes some of the 
limitations of claims-based reporting.
    For the 2010 PQRI, we again propose to include registry-only 
individual measures. For 2010, we propose to select 26 registry-only 
individual measures from the 2009 PQRI.
    As we noted previously, 1 measure (measure 46) that was a 
registry-only measure for the 2009 PQRI is now proposed to be available 
for either claims-based reporting or registry-based reporting in the 
2010 PQRI. Therefore, this measure is not included among these 26 
proposed registry-only individual measures. These 26 proposed measures 
do include 9 measures that are available for either claims-based 
reporting or registry-based reporting in the 2009 PQRI and are now 
proposed to be included in the 2010 PQRI as registry-only measures. We 
are proposing to make more 2009 measures registry-only to relieve some 
analytical difficulties encountered during the 2009 PQRI.
    Although we are designating certain measures as registry-only 
measures, we cannot guarantee that there will be a registry qualified 
to submit each registry-only measure for 2010. We rely on registries to 
self-nominate and identify the types of measures for which they would 
like to be qualified to submit quality measures results and numerator 
and denominator data on quality measures. If no registry self-nominates 
to submit measure results and numerator and denominator data on a 
particular type of measure for 2010, then an eligible professional 
would not be able to report that particular measure type. We invite 
comments on our proposal to increase the number of registry-only 
measures for the 2010 PQRI.
    The Measure Number and Measure Title for these proposed registry-
only measures are listed in Table 18 along with the name of each 
measure's developer, the measure's NQF endorsement status as of May 1, 
2009, and the measure's AQA adoption status as of January 31, 2009. A 
description of the proposed measures listed in Table 18 can be found in 
the ``2009 PQRI Quality Measures List,'' which is available on the 
Measures and Codes page of the PQRI section of the CMS Web site at 
http://www.cms.hhs.gov/PQRI. Measures that were available for either 
claims-based reporting or registry-based reporting in the 2009 PQRI but 
are proposed to be available for registry-based reporting only in the 
2010 PQRI are identified by an asterisk (*) in Table 18.

  Table 18--Proposed 2010 Measures Selected From the 2009 PQRI Quality Measure Set Available for Registry-Based
                                                 Reporting Only
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
     Measure No.         Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
5...................  Heart Failure:       Yes.....................  Yes....................  AMA-PCPI.
                       Angiotensin-
                       Converting Enzyme
                       (ACE) Inhibitor or
                       Angiotensin
                       Receptor Blocker
                       (ARB) Therapy for
                       Left Ventricular
                       Systolic
                       Dysfunction
                       (LVSD)*.
7...................  Coronary Artery      Yes.....................  Yes....................  AMA-PCPI.
                       Disease (CAD):
                       Beta-Blocker
                       Therapy for CAD
                       Patients with
                       Prior Myocardial
                       Infarction (MI).
8...................  Heart Failure: Beta- Yes.....................  Yes....................  AMA-PCPI.
                       Blocker Therapy
                       for Left
                       Ventricular
                       Systolic
                       Dysfunction
                       (LVSD)*.

[[Page 33580]]

 
 33.................  Stroke and Stroke    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Rehabilitation:
                       Anticoagulant
                       Therapy Prescribed
                       for Atrial
                       Fibrillation at
                       Discharge.
81..................  End Stage Renal      Yes.....................  Yes....................  AMA-PCPI.
                       Disease (ESRD):
                       Plan of Care for
                       Inadequate
                       Hemodialysis in
                       ESRD Patients.
82..................  End Stage Renal      Yes.....................  Yes....................  AMA-PCPI.
                       Disease (ESRD):
                       Plan of Care for
                       Inadequate
                       Peritoneal
                       Dialysis.
83..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Testing for
                       Chronic Hepatitis
                       C--Confirmation of
                       Hepatitis C
                       Viremia*.
118.................  Coronary Artery      Yes.....................  No.....................  AMA-PCPI.
                       Disease (CAD):
                       Angiotensin-
                       Converting Enzyme
                       (ACE) Inhibitor or
                       Angiotensin
                       Receptor Blocker
                       (ARB) Therapy for
                       Patients with CAD
                       and Diabetes and/
                       or Left
                       Ventricular
                       Systolic
                       Dysfunction
                       (LSVD)*.
136.................  Melanoma: Follow-Up  No......................  Yes....................  AMA-PCPI/NCQA.
                       Aspects of Care*.
137.................  Melanoma:            No......................  Yes....................  AMA-PCPI/NCQA.
                       Continuity of
                       Care--Recall
                       System*.
138.................  Melanoma:            No......................  Yes....................  AMA-PCPI/NCQA.
                       Coordination of
                       Care*.
139.................  Cataracts:           No......................  Yes....................  AMA-PCPI/NCQA.
                       Comprehensive
                       Preoperative
                       Assessment for
                       Cataract Surgery
                       with Intraocular
                       Lens (IOL)
                       Placement*.
141.................  Primary Open-Angle   No......................  Yes....................  AMA-PCPI/NCQA.
                       Glaucoma (POAG):
                       Reduction of
                       Intraocular
                       Pressure (IOP) by
                       15% OR
                       Documentation of a
                       Plan of Care*.
159.................  HIV/AIDS: CD4+ Cell  Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Count or CD4+
                       Percentage.
160.................  HIV/AIDS:            Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Pneumocystis
                       Jiroveci Pneumonia
                       (PCP) Prophylaxis.
161.................  HIV/AIDS:            Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Adolescent and
                       Adult Patients
                       with HIV/AIDS Who
                       Are Prescribed
                       Potent
                       Antiretroviral
                       Therapy.
162.................  HIV/AIDS: HIV RNA    Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Control After Six
                       Months of Potent
                       Antiretroviral
                       Therapy.
164.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Prolonged
                       Intubation
                       (Ventilation).
165.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Deep
                       Sternal Wound
                       Infection Rate.
166.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Stroke/
                       Cerebrovascular
                       Accident (CVA).
167.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG):
                       Postoperative
                       Renal
                       Insufficiency.
168.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Surgical
                       Re-exploration.
169.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG):
                       Antiplatelet
                       Medications at
                       Discharge.
170.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Beta-
                       Blockers
                       Administered at
                       Discharge.
171.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Lipid
                       Management and
                       Counseling.
174.................  Pediatric End Stage  No......................  Yes....................  AMA-PCPI.
                       Renal Disease
                       (ESRD): Plan of
                       Care for
                       Inadequate
                       Hemodialysis.
----------------------------------------------------------------------------------------------------------------
* Individual 2009 PQRI measures that were available for both claims-based and registry-based reporting but
  proposed to be available for registry-based reporting only for the 2010 PQRI.

    Please note that detailed measure specifications for 2009 PQRI 
quality measures may have been updated or modified during the NQF 
endorsement process or for other reasons prior to 2010. Therefore, the 
2010 PQRI quality measure specifications for any given quality measure 
may be different from specifications for the same quality measure used 
for 2009. Specifications for all 2010 individual PQRI quality measures, 
whether or not included in the 2009 PQRI program, must be obtained from 
the specifications document for 2010 individual PQRI quality measures, 
which will be available on the PQRI section of the CMS Web site on or 
before December 31, 2009.
(3) New Individual Quality Measures Proposed for 2010
    We propose to include in the 2010 PQRI quality measure set 22 
measures that were not included in the 2009 PQRI quality measures 
provided that each

[[Page 33581]]

measure obtains NQF endorsement by July 1, 2009 and its detailed 
specifications are completed and ready for implementation in PQRI by 
August 15, 2009. Besides having NQF endorsement, the development of a 
measure is considered complete for the purposes of the 2010 PQRI if by 
August 15, 2009--(1) The final, detailed specifications for use in data 
collection for PQRI have been completed and are ready for 
implementation, and (2) all of the Category II Current Procedural 
Terminology (CPT II) codes required for the measure have been 
established and will be effective for CMS claims data submission on or 
before January 1, 2010. The titles of these proposed additional, or 
new, measures are listed in Table 19 along with the name of the measure 
developer and the proposed reporting mechanism (that is, whether the 
measure is proposed to be reportable using claims, registries, or 
both). For these 22 proposed measures, a PQRI Measure Number will be 
assigned to a measure if and when the measure is included in the final 
set of 2010 PQRI measures.
    Due to the complexity of their measure specifications, we propose 
that 16 of these 22 measures would be available as registry-only 
measures for the 2010 PQRI. We do not believe that these 16 measures 
are conducive to the claims-based reporting mechanism. The remaining 6 
measures would be available for reporting through either claims-based 
reporting or registry-based reporting.

                           Table 19--New Individual Quality Measures Proposed for 2010
----------------------------------------------------------------------------------------------------------------
                               NQF  endorsement
        Measure title           status as  of 5/  AQA adoption status      Measure       Reporting  mechanism(s)
                                     1/09           as of  1/31/09        developer
----------------------------------------------------------------------------------------------------------------
Thrombolytic Therapy           Yes.............  No..................  American Heart   Registry.
 Administered.                                                          Association
                                                                        (AHA)/American
                                                                        Stroke
                                                                        Association
                                                                        (ASA).
Referral for Otologic          Pending NQF       No..................  Audiology        Claims, Registry.
 Evaluation for Patients with   review.                                 Quality
 Visible Congenital or                                                  Consortium
 Traumatic Deformity of the                                             (AQC).
 Ear.
Referral for Otologic          Pending NQF       No..................  AQC............  Claims, Registry.
 Evaluation for Patients with   review.
 History of Active Drainage
 from the Ear within the
 Previous 90 days.
Referral for Otologic          Pending NQF       No..................  AQC............  Claims, Registry.
 Evaluation for Patients with   review.
 a History of Sudden or
 Rapidly Progressive Hearing
 Loss within the Previous 90
 days.
Cataracts: 20/40 or Better     Pending NQF       Yes.................  American         Registry.
 Visual Acuity within 90 days   review.                                 Academy of
 Following Cataract Surgery.                                            Ophthalmology
                                                                        (AAO)/AMA-PCPI/
                                                                        NCQA.
Cataracts: Complications       Pending NQF       Yes.................  AAO/AMA-PCPI/    Registry.
 within 30 Days Following       review.                                 NCQA.
 Cataract Surgery Requiring
 Additional Surgical
 Procedures.
Perioperative Temperature      Yes.............  Yes.................  AMA-PCPI.......  Claims, Registry.
 Management.
Cancer Stage Documented......  Yes.............  Yes.................  AMA-PCPI.......  Claims, Registry.
Stenosis Measurement in        Yes.............  Yes.................  American         Claims, Registry.
 Carotid Imaging Studies.                                               College of
                                                                        Radiology
                                                                        (ACR)/AMA-PCPI/
                                                                        NCQA.
Coronary Artery Disease        Yes.............  No..................  ACC/AHA/AMA-     Registry.
 (CAD): Symptom and Activity                                            PCPI.
 Assessment.
Coronary Artery Disease        Yes.............  No..................  ACC/AHA/AMA-     Registry.
 (CAD): Drug Therapy for                                                PCPI.
 Lowering LDL-Cholesterol.
Heart Failure (HF): Left       Yes.............  No..................  ACC/AHA/AMA-     Registry.
 Ventricular Function                                                   PCPI.
 Assessment.
Heart Failure (HF): Patient    Yes.............  No..................  ACC/AHA/AMA-     Registry.
 Education.                                                             PCPI.
Heart Failure (HF): Warfarin   Yes.............  No..................  ACC/AHA/AMA-     Registry.
 Therapy Patients with Atrial                                           PCPI.
 Fibrillation.
Blood Pressure Management:     Yes.............  No..................  NCQA...........  Registry.
 Control.
Complete Lipid Profile.......  Yes.............  No..................  NCQA...........  Registry.
Cholesterol Count............  Yes.............  No..................  NCQA...........  Registry.
Use of Aspirin or Another      Yes.............  No..................  NCQA...........  Registry.
 Anti-Thrombotic.
HIV/AIDS: Sexually             Yes.............  No..................  AMA-PCPI/NCQA..  Registry.
 Transmitted Diseases--
 Chlamydia and Gonorrhea
 Screenings.
HIV/AIDS: Screening for High   Yes.............  No..................  AMA-PCPI/NCQA..  Registry.
 Risk Sexual Behaviors.
HIV/AIDS: Screening for        Yes.............  No..................  AMA-PCPI/NCQA..  Registry.
 Injection Drug Use.
HIV/AIDS: Sexually             Yes.............  No..................  AMA-PCPI/NCQA..  Registry.
 Transmitted Diseases--
 Syphilis Screening.
----------------------------------------------------------------------------------------------------------------


[[Page 33582]]

(4) Proposed 2010 Individual Quality Measures Available for EHR-Based 
Reporting
    As discussed in section II.G.2.d.(3) of this proposed rule, we 
propose to accept PQRI data from EHRs for a limited subset of the 
proposed 2010 PQRI quality measures, contingent upon the successful 
completion of our 2009 EHR data submission testing process and a 
determination that accepting data from EHRs on quality measures for the 
2010 PQRI is practical and feasible. The 10 proposed 2010 PQRI quality 
measures on which we propose to accept clinical quality data extracted 
from EHRs are identified in Table 20. We propose to make these measures 
available for electronic submission via an EHR because these measures 
target preventive care or common chronic conditions. In addition, 4 of 
these proposed measures overlap with measures used in the Medicare 
Quality Improvement Organization program's 9th Statement of Work. 
Finally, it is much less burdensome for an eligible professional to 
report Measure 124, which assesses adoption and use of EHRs, 
through an EHR than through claims.

                       Table 20--Proposed 2010 Measures Available for EHR-based Reporting
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
1...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA
                       Hemoglobin A1c
                       Poor Control in
                       Diabetes Mellitus.
2...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA
                       Low Density
                       Lipoprotein (LDL-
                       C) Control in
                       Diabetes Mellitus.
3...................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA
                       High Blood
                       Pressure Control
                       in Diabetes
                       Mellitus.
5...................  Heart Failure:       Yes.....................  Yes....................  AMA-PCPI
                       Angiotensin-
                       Converting Enzyme
                       (ACE) Inhibitor or
                       Angiotensin
                       Receptor Blocker
                       (ARB) Therapy for
                       Left Ventricular
                       Systolic
                       Dysfunction (LVSD).
7...................  Coronary Artery      Yes.....................  Yes....................  AMA-PCPI
                       Disease (CAD):
                       Beta-Blocker
                       Therapy for CAD
                       Patients with
                       Prior Myocardial
                       Infarction (MI).
110.................  Preventive Care and  Yes.....................  No.....................  AMA-PCPI
                       Screening:
                       Influenza
                       Immunization for
                       Patients >= 50
                       Years Old.
111.................  Preventive Care and  Yes.....................  Yes....................  NCQA
                       Screening:
                       Pneumonia
                       Vaccination for
                       Patients 65 Years
                       and Older.
112.................  Preventive Care and  Yes.....................  Yes....................  NCQA
                       Screening:
                       Screening
                       Mammography.
113.................  Preventive Care and  Yes.....................  Yes....................  NCQA
                       Screening:
                       Colorectal Cancer
                       Screening.
124.................  Health Information   Yes.....................  Yes....................  CMS/QIP
                       Technology (HIT):
                       Adoption/Use of
                       Electronic Health
                       Records (EHR).
----------------------------------------------------------------------------------------------------------------

(5) Measures Proposed for Inclusion in 2010 Measures Groups
    We propose to retain the 7 2009 PQRI measures groups for the 2010 
PQRI: (1) Diabetes Mellitus; (2) CKD; (3) Preventive Care; (4) CABG; 
(5) Rheumatoid Arthritis; (6) Perioperative Care; and (7) Back Pain. 
These measures groups were selected for inclusion in the 2010 PQRI 
because they each contain at least 4 PQRI quality measures that share a 
common denominator definition.
    Except for the CABG measures group, all 2009 measures groups are 
reportable either through claims-based reporting or registry-based 
reporting. The CABG measures group, for the 2009 PQRI, is reportable 
through the registry-based reporting mechanism only since some measures 
included in the 2009 CABG measures group are registry-only individual 
PQRI measures. For this reason, we propose the CABG measures group 
would be reportable through the registry-based reporting mechanism only 
for 2010 while the remaining 6 2009 PQRI measures groups would be 
reportable through either claims-based reporting or registry-based 
reporting for the 2010 PQRI.
    Except for the measures included in the Back Pain measures group, 
the measures included in a 2009 PQRI measures group are reportable 
either as individual measures or as part of a measures group. As stated 
in the CY 2009 PFS final rule with comment period (73 FR 69843 through 
69844), 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. For this reason, for the 
2010 PQRI, we propose that except for the measures included in the Back 
Pain measures group, the measures included in a 2009 PQRI measures 
group that we propose to carry forward for the 2010 PQRI would be 
reportable either as individual measures or as part of a measures 
group.
    The measures proposed for inclusion in the 2010 measures groups 
that are based on the measures groups from 2009 are identified in 
Tables 21 through 27. Some measures proposed for inclusion in some of 
these measures groups for 2010 were not included in the measures groups 
in 2009. The 2009 measures proposed for inclusion in a 2010 measures 
group that were not included in the measures group for 2009 are 
identified with an asterisk (*).
    As with measures group reporting in the 2008 and 2009 PQRI, we 
propose that each eligible professional electing to report a group of 
measures for 2010 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.G.2.f. of 
this proposed rule). The individual measures included in the final 2010 
PQRI measures groups will be limited to

[[Page 33583]]

those measures which will be identified in the CY 2010 PFS final rule 
with comment period as final 2010 PQRI measures

                      Table 21--Measures Proposed for 2010 Diabetes Mellitus Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
1...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Hemoglobin A1c
                       Poor Control in
                       Diabetes Mellitus.
2...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Low Density
                       Lipoprotein (LDL-
                       C) Control in
                       Diabetes Mellitus.
3...................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       High Blood
                       Pressure Control
                       in Diabetes
                       Mellitus.
117.................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Dilated Eye Exam
                       in Diabetic
                       Patient.
119.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Urine Screening
                       for Microalbumin
                       or Medical
                       Attention for
                       Nephropathy in
                       Diabetic Patients.
163.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Foot Exam *.
----------------------------------------------------------------------------------------------------------------
* This 2009 PQRI measure was not part of this measures group for 2009, but is proposed for inclusion in this
  measures group for 2010.


                             Table 22--Measures Proposed for 2010 CKD Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
121.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Laboratory Testing
                       (Calcium,
                       Phosphorus, Intact
                       Parathyroid
                       Hormone (iPTH) and
                       Lipid Profile).
122.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Blood Pressure
                       Management.
123.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Plan of Care--
                       Elevated
                       Hemoglobin for
                       Patients Receiving
                       Erythropoiesis-
                       Stimulating Agents
                       (ESA).
135.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Influenza
                       Immunization.
153.................  Chronic Kidney       No......................  Yes....................  AMA-PCPI.
                       Disease (CKD):
                       Referral for
                       Arteriovenous (AV)
                       Fistula.
----------------------------------------------------------------------------------------------------------------


                       Table 23--Measures Proposed for 2010 Preventive Care Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
39..................  Screening or         Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Therapy for
                       Osteoporosis for
                       Women Aged 65
                       Years and Older.
48..................  Urinary              Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Incontinence:
                       Assessment of
                       Presence or
                       Absence of Urinary
                       Incontinence in
                       Women Aged 65
                       Years and Older.
110.................  Preventive Care and  Yes.....................  No.....................  AMA-PCPI.
                       Screening:
                       Influenza
                       Immunization for
                       Patients >= 50
                       Years Old.
111.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Pneumonia
                       Vaccination for
                       Patients 65 Years
                       and Older.
112.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Screening
                       Mammography.
113.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Colorectal Cancer
                       Screening.
114.................  Preventive Care and  Yes.....................  Yes....................  AMA-PCPI.
                       Screening: Inquiry
                       Regarding Tobacco
                       Use.
115.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Advising Smokers
                       to Quit.
128.................  Preventive Care and  Yes.....................  Yes....................  CMS/QIP.
                       Screening: Body
                       Mass Index (BMI)
                       Screening and
                       Follow-Up.
173.................  Preventive Care and  No......................  Yes....................  AMA-PCPI.
                       Screening:
                       Unhealthy Alcohol
                       Use--Screening *.
----------------------------------------------------------------------------------------------------------------
* This 2009 PQRI measure was not part of this measures group for 2009, but is proposed for inclusion in this
  measures group for 2010.


[[Page 33584]]


                           Table 24--Measures Proposed for 2010 CABG Measures Group +
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
43..................  Coronary Artery      Yes.....................  Yes....................  Society of
                       Bypass Graft                                                            Thoracic Surgeons
                       (CABG): Use of                                                          (STS).
                       Internal Mammary
                       Artery (IMA) in
                       Patients with
                       Isolated CABG
                       Surgery.
44..................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG):
                       Preoperative Beta-
                       Blocker in
                       Patients with
                       Isolated CABG
                       Surgery.
164.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Prolonged
                       Intubation
                       (Ventilation).
165.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Deep
                       Sternal Wound
                       Infection Rate.
166.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Stroke/
                       Cerebrovascular
                       Accident (CVA).
167.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG):
                       Postoperative
                       Renal
                       Insufficiency.
168.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Surgical
                       Re-exploration.
169.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG):
                       Antiplatelet
                       Medications at
                       Discharge.
170.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Beta-
                       Blockers
                       Administered at
                       Discharge.
171.................  Coronary Artery      Yes.....................  Yes....................  STS.
                       Bypass Graft
                       (CABG): Lipid
                       Management and
                       Counseling.
----------------------------------------------------------------------------------------------------------------
+ This measures group is proposed to be reportable through registry-based reporting only.


                    Table 25--Measures Proposed for 2010 Rheumatoid Arthritis Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
108.................  Rheumatoid           Yes.....................  No.....................  NCQA.
                       Arthritis (RA):
                       Disease Modifying
                       Anti-Rheumatic
                       Drug (DMARD)
                       Therapy.
176.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Tuberculosis
                       Screening.
177.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Periodic
                       Assessment of
                       Disease Activity.
178.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Functional Status
                       Assessment.
179.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Assessment and
                       Classification of
                       Disease Prognosis.
180.................  Rheumatoid           No......................  Yes....................  AMA-PCPI/NCQA.
                       Arthritis (RA):
                       Glucocorticoid
                       Management.
----------------------------------------------------------------------------------------------------------------


                     Table 26--Measures Proposed for 2010 Perioperative Care Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
20..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Timing of
                       Antibiotic
                       Prophylaxis--Order
                       ing Physician.
21..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Selection of
                       Prophylactic
                       Antibiotic--First
                       OR Second
                       Generation
                       Cephalosporin.
22..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Discontinuation of
                       Prophylactic
                       Antibiotics (Non-
                       Cardiac
                       Procedures).
23..................  Perioperative Care:  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Venous
                       Thromboembolism
                       (VTE) Prophylaxis
                       (When Indicated in
                       ALL Patients).
----------------------------------------------------------------------------------------------------------------


[[Page 33585]]


                          Table 27--Measures Proposed for 2010 Back Pain Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09               of 1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
148.................  Back Pain: Initial   Yes.....................  Yes....................  NCQA.
                       Visit.
149.................  Back Pain: Physical  Yes.....................  Yes....................  NCQA.
                       Exam.
150.................  Back Pain: Advice    Yes.....................  Yes....................  NCQA.
                       for Normal
                       Activities.
151.................  Back Pain: Advice    Yes.....................  Yes....................  NCQA.
                       Against Bed Rest.
----------------------------------------------------------------------------------------------------------------

    In addition to the 7 measures groups that we propose to retain from 
the 2009 PQRI, we propose 6 new measures groups for the 2010 PQRI, for 
a total of 13 CY 2010 measures groups. The 6 new measures groups 
proposed for the 2010 PQRI are: (1) Coronary Artery Disease (CAD); (2) 
Heart Failure (HF); (3) Ischemic Vascular Disease (IVD); (4) Hepatitis 
C; (5) Human Immunodeficiency Virus (HIV)/Acquired Immune Deficiency 
Syndrome (AIDS); and (6) Community Acquired Pneumonia (CAP). Many of 
the 6 new measures groups proposed for 2010 contain proposed new 
registry-only measures, which would make them reportable through 
registry-based reporting only. Therefore, only 8 proposed 2010 measures 
groups would be reportable through either claims-based reporting or 
registry-based reporting: Diabetes Mellitus; CKD; Preventive Care; 
Perioperative Care; Rheumatoid Arthritis; Back Pain; Hepatitis C; and 
Community Acquired Pneumonia. We invite comments on our proposal to 
limit claims-based reporting of measures groups in 2010.
    New measures groups are proposed for the 2010 PQRI in order to 
address gaps in quality reporting and are those that have a high impact 
on HHS and CMS priority topics for improved quality and efficiency for 
Medicare beneficiaries (such as prevention, chronic conditions, high 
cost/high volume conditions, improved care coordination, improved 
efficiency, improved patient and family experience of care, and 
effective management of acute and chronic episodes of care). Groups 
were identified in topical areas where: (1) 4 or more proposed 2010 
measures are available; (2) the measures are NQF endorsed; and (3) they 
address a gap in quality reporting. The measures proposed for inclusion 
in these new 2010 measures groups are identified in Tables 28 through 
33.
    Some measures proposed for inclusion in these 6 measures group are 
current 2009 individual PQRI measures. The title of each such measure 
is preceded with its PQRI Measure Number in Tables 28 through 33. As 
stated previously, 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 (in other words, those 
preceded by ``TBD'') in Tables 28 through 33 have never been part of a 
PQRI measure set until being proposed now. A number will be assigned to 
such measures if we include them in the final set of 2010 PQRI measures 
groups.

                            Table 28--Measures Proposed for 2010 CAD Measures Group +
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
6...................  Coronary Artery      Yes.....................  Yes....................  AMA-PCPI.
                       Disease (CAD):
                       Oral Antiplatelet
                       Therapy Prescribed
                       for Patients with
                       CAD.
114.................  Preventive Care and  Yes.....................  Yes....................  AMA-PCPI.
                       Screening: Inquiry
                       Regarding Tobacco
                       Use.
115.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Advising Smokers
                       to Quit.
TBD.................  Coronary Artery      Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Disease (CAD):
                       Symptom and
                       Activity
                       Assessment.
TBD.................  Coronary Artery      Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Disease (CAD):
                       Drug Therapy for
                       Lowering LDL-
                       Cholesterol.
----------------------------------------------------------------------------------------------------------------
+ This measures group is proposed to be reportable through registry-based reporting only.


                            Table 29--Measures Proposed for 2010 HF Measures Group +
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
5...................  Heart Failure:       Yes.....................  Yes....................  AMA-PCPI.
                       Angiotensin-
                       Converting Enzyme
                       (ACE) Inhibitor or
                       Angiotensin
                       Receptor Blocker
                       (ARB) Therapy for
                       Left Ventricular
                       Systolic
                       Dysfunction (LVSD).
8...................  Heart Failure: Beta- Yes.....................  Yes....................  AMA-PCPI.
                       Blocker Therapy
                       for Left
                       Ventricular
                       Systolic
                       Dysfunction (LVSD).
114.................  Preventive Care and  Yes.....................  Yes....................  AMA-PCPI.
                       Screening: Inquiry
                       Regarding Tobacco
                       Use.
115.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Advising Smokers
                       to Quit.

[[Page 33586]]

 
TBD.................  Heart Failure (HF):  Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Left Ventricular
                       Function
                       Assessment.
TBD.................  Heart Failure (HF):  Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Patient Education.
TBD.................  Heart Failure (HF):  Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Warfarin Therapy
                       Patients with
                       Atrial
                       Fibrillation.
----------------------------------------------------------------------------------------------------------------
+ This measures group is proposed to be reportable through registry-based reporting only.


                            Table 30--Measures Proposed for 2010 IVD Measures Group +
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
   Measure number        Measure title           as of 5/1/09              of  1/31/09         Measure Developer
----------------------------------------------------------------------------------------------------------------
114.................  Preventive Care and  Yes.....................  Yes....................  AMA-PCPI.
                       Screening: Inquiry
                       Regarding Tobacco
                       Use.
115.................  Preventive Care and  Yes.....................  Yes....................  NCQA.
                       Screening:
                       Advising Smokers
                       to Quit.
TBD.................  Blood Pressure       Yes.....................  No.....................  NCQA.
                       Management:
                       Control.
TBD.................  Complete Lipid       Yes.....................  No.....................  NCQA.
                       Profile.
TBD.................  Cholesterol Control  Yes.....................  No.....................  NCQA.
TBD.................  Use of Aspirin or    Yes.....................  No.....................  NCQA.
                       Another Anti-
                       Thrombotic.
----------------------------------------------------------------------------------------------------------------
+ This measures group is proposed to be reportable through registry-based reporting only.


                         Table 31--Measures Proposed for 2010 Hepatitis C Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
     Measure No.         Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
84..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Ribonucleic Acid
                       (RNA) Testing
                       Before Initiating
                       Treatment.
85..................  Hepatitis C: HCV     Yes.....................  Yes....................  AMA-PCPI.
                       Genotype Testing
                       Prior to Treatment.
86..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Antiviral
                       Treatment
                       Prescribed.
87..................  Hepatitis C: HCV     Yes.....................  Yes....................  AMA-PCPI.
                       Ribonucleic Acid
                       (RNA) Testing at
                       Week 12 of
                       Treatment.
89..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Counseling
                       Regarding Risk of
                       Alcohol
                       Consumption.
90..................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Counseling
                       Regarding Use of
                       Contraception
                       Prior to Antiviral
                       Therapy.
183.................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Hepatitis A
                       Vaccination in
                       Patients with HCV.
184.................  Hepatitis C:         Yes.....................  Yes....................  AMA-PCPI.
                       Hepatitis B
                       Vaccination in
                       Patients with HCV.
----------------------------------------------------------------------------------------------------------------


                         Table 32--Measures Proposed for 2010 HIV/AIDS Measures Group +
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
     Measure No.         Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
159.................  HIV/AIDS: CD4+ Cell  Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Count or CD4+
                       Percentage.
160.................  HIV/AIDS:            Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Pneumocystis
                       Jiroveci Pneumonia
                       (PCP) Prophylaxis.
161.................  HIV/AIDS:            Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Adolescent and
                       Adult Patients
                       with HIV/AIDS Who
                       Are Prescribed
                       Potent
                       Antiretroviral
                       Therapy.
162.................  HIV/AIDS: HIV RNA    Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Control After Six
                       Months of Potent
                       Antiretroviral
                       Therapy.
TBD.................  HIV/AIDS: Sexually   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Transmitted
                       Diseases--Chlamydi
                       a and Gonorrhea
                       Screenings.
TBD.................  HIV/AIDS: Screening  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       for High Risk
                       Sexual Behaviors.
TBD.................  HIV/AIDS: Screening  Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       for Injection Drug
                       Use.

[[Page 33587]]

 
TBD.................  HIV/AIDS: Sexually   Yes.....................  No.....................  AMA-PCPI/NCQA.
                       Transmitted
                       Diseases--Syphilis
                       Screening.
----------------------------------------------------------------------------------------------------------------
+ This measures group is proposed to be reportable through registry-based reporting only.


                Table 33--Measures Proposed for 2010 Community-Acquired Pneumonia Measures Group
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
     Measure No.         Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
56..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Vital Signs.
57..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Assessment of
                       Oxygen Saturation.
58..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Assessment of
                       Mental Status.
59..................  Community-Acquired   Yes.....................  Yes....................  AMA-PCPI/NCQA.
                       Pneumonia (CAP):
                       Empiric Antibiotic.
----------------------------------------------------------------------------------------------------------------

    We note that the specifications for measures groups do 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 2010 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.
    Additionally, the detailed measure specifications and instructions 
for submitting data on those proposed 2010 measures groups that were 
also included as 2009 PQRI measures groups may be updated or modified 
prior to 2010. Therefore, the 2010 PQRI measure specifications for any 
given measures group could be different from specifications and 
submission instructions for the same measures group used for 2009. 
These measure specification changes do not materially impact the 
intended meaning of the measures or the strength of the measures.
(6) Request for Public Comment on Measure Suggestions for Future PQRI 
Quality Measure Sets
    As stated above, on February 1, 2009, we posted a ``Call for 2010 
PQRI Measure Suggestions'' on the PQRI section of the CMS Web site at 
http://www.cms.hhs.gov/PQRI. The ``Call for 2010 PQRI Measure 
Suggestions'' invited the public to submit suggestions for individual 
quality measures and measures groups (that is, suggestions for new 
measures groups and/or suggestions for the composition of existing 
measures groups) for consideration for possible inclusion in the 
proposed set of quality measure for use in the 2010 PQRI. To facilitate 
our evaluation of the suggested measures, we asked individuals or 
organizations submitting suggestions to provide us with the following 
information:
     Requestor contact information, such as name and title, 
organization/practice name, phone number and e-mail address;
     Measure title;
     Measure description;
     Measure owner/developer;
     NQF endorsement status, including the date of endorsement 
or anticipated endorsement (if not NQF-endorsed) and type of 
endorsement (for example, time-limited endorsement);
     AQA adoption status, including date of AQA adoption or 
anticipated AQA adoption;
     Preferred PQRI reporting option for the suggested 
measure(s) (that is, claims, registry, registry-only, measures group, 
measures group only, EHRs); and
     The measure specifications.
    In lieu of posting a call for 2011 PQRI measure suggestions on the 
PQRI section of the CMS Web site in 2010, we invite commenters to 
submit suggestions for individual quality measures and measures groups 
(that is, suggestions for new measures groups and/or suggestions for 
the composition of proposed 2010 measures groups) for consideration for 
possible inclusion in the proposed set of quality measures for use in 
the 2011 PQRI. When submitting suggestions for future PQRI quality 
measure sets as part of the comment period for this proposed rule, 
commenters should submit all the information requested above for the 
``Call for 2010 PQRI Measure Suggestions.''
    Please note that suggesting individual measures or measures for a 
new or proposed measures group does not mean that the measure(s) will 
be included in the proposed or final sets of measures of any proposed 
or final rules that address the 2011 PQRI. We will determine what 
individual measures and measures group(s) to include in the proposed 
set of quality measures, and after a period of public comment, we will 
make the final determination with regard to the final set of quality 
measures for the 2011 PQRI.
j. Proposed 2010 PQRI Quality Measures for Physician Groups Selected to 
Participate in the Group Practice Reporting Option
    As discussed in section II.G.2.g. of this proposed rule, we propose 
that physician groups selected to participate in the 2010 PQRI group 
practice reporting option would be required to report on 26 measures. 
These measures are NQF-endorsed measures currently collected as part of 
the PGP and/or MCMP demonstrations and are identified in Table 34. To 
the extent that a measure is an existing PQRI measure, the Measure 
Title is preceded by the measure's PQRI Measure Number. If there is no 
number in the Measure Number column of the table, then the

[[Page 33588]]

measure is not an existing PQRI measure and will be added to the 2010 
PQRI for purposes of the group practice reporting option.

 Table 34--Measures Proposed for Physician Groups Participating in the 2010 PQRI Group Practice Reporting Option
----------------------------------------------------------------------------------------------------------------
                                            NQF endorsement status    AQA adoption status as
     Measure No.         Measure title           as of 5/1/09              of  1/31/09         Measure developer
----------------------------------------------------------------------------------------------------------------
1...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Hemoglobin A1c
                       Poor Control.
2...................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Low Density
                       Lipoprotein
                       Control.
3...................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       High Blood
                       Pressure Control.
5...................  Heart Failure: ACE   Yes.....................  Yes....................  AMA-PCPI.
                       Inhibitor or ARB
                       Therapy for LVSD.
6...................  Coronary Artery      Yes.....................  Yes....................  AMA-PCPI.
                       Disease: Oral Anti-
                       platelet Therapy.
7...................  Coronary Artery      Yes.....................  Yes....................  AMA-PCPI.
                       Disease:Beta-
                       blocker Therapy
                       for CAD Patients
                       with Prior MI.
8...................  Heart Failure: Beta- Yes.....................  Yes....................  AMA-PCPI.
                       blocker Therapy
                       for LVSD.
110.................  Preventive Care:     Yes.....................  No.....................  AMA-PCPI.
                       Influenza
                       Vaccination for
                       Patients > 50
                       years.
111.................  Preventive Care:     Yes.....................  Yes....................  NCQA.
                       Pneumonia
                       Vaccination for
                       Patients 65+ years.
112.................  Preventive Care:     Yes.....................  Yes....................  NCQA.
                       Screening
                       Mammography.
113.................  Preventive Care:     Yes.....................  Yes....................  NCQA/AMA-PCPI.
                       Screening
                       Colorectal Cancer.
117.................  Diabetes Mellitus:   Yes.....................  Yes....................  NCQA.
                       Dilated Eye Exam.
118.................  Coronary Artery      Yes.....................  No.....................  AMA-PCPI.
                       Disease: ACE/ARB
                       for Patients with
                       CAD and Diabetes
                       and/or LVSD.
119.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Urine Screening
                       for Microalbumin
                       or Medical
                       Attention for
                       Nephropathy.
163.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Foot Exam.
TBD.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Hemoglobin A1c
                       Testing.
TBD.................  Diabetes Mellitus:   Yes.....................  No.....................  NCQA.
                       Lipid Profile.
TBD.................  Heart Failure: Left  Yes.....................  Yes....................  CMS.
                       Ventricular
                       Function Testing.
TBD.................  Heart Failure: Left  Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Ventricular
                       Function
                       Assessment.
TBD.................  Heart Failure:       Yes.....................  No.....................  ACC/AHA/AMA-PCPI.
                       Weight Measurement.
TBD.................  Heart Failure:       Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Patient Education.
TBD.................  Heart Failure:       Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Warfarin Therapy
                       for Patients with
                       Atrial
                       Fibrillation.
TBD.................  Coronary Artery      Yes.....................  Yes....................  ACC/AHA/AMA-PCPI.
                       Disease: Drug
                       Therapy for
                       Lowering LDL-
                       Cholesterol.
TBD.................  Preventive Care:     Yes.....................  No.....................  ACC/AHA/AMA-PCPI.
                       Blood Pressure
                       Management.
TBD.................  Hypertension: Blood  Yes.....................  No.....................  CMS/NCQA.
                       Pressure Control.
TBD.................  Hypertension: Plan   Yes.....................  No.....................  ACC/AHA/AMA-PCPI.
                       of Care.
----------------------------------------------------------------------------------------------------------------

k. Public Reporting of PQRI Data
    Section 1848(m)(5)(G) of the Act, as added by the MIPPA, 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 in section II.G.5. of this proposed rule. In 
accordance with section 1848(m)(5)(G) of the Act, we indicated in the 
CY 2009 PFS final rule with comment period (73 FR 69846 through 69847) 
our intent, in 2010, to enhance the current Physician and Other Health 
Care Professionals directory at http://www.medicare.gov with the names 
of eligible professionals that satisfactorily submit quality data for 
the 2009 PQRI. In December 2008, we listed, by State, the names of 
eligible professionals who participated in the 2007 PQRI on the 
Physician and Other Health Care Professionals Directory.
    As required by section 1848(m)(5)(G) of the Act, we intend to make 
public the names of eligible professionals and group practices that 
satisfactorily submit quality data for the 2010 PQRI on the Physician 
and Other Health Care Professionals Directory. We anticipate that the 
names of individual eligible professionals and group practices that 
satisfactorily submit quality data for the 2010 PQRI will be available 
in 2011 after the 2010 incentive payments are paid.
    For purposes of publicly reporting the names of eligible 
professionals, on the Physician and Other Health Care Professionals 
Directory, we propose to post the names of eligible professionals who: 
(1) Submit data on the 2010 PQRI quality measures through one of the

[[Page 33589]]

reporting mechanisms available for the 2010 PQRI; (2) meet one of the 
proposed satisfactory reporting criteria of individual measures or 
measures groups for the 2010 PQRI described above in section II.G.2.e. 
and II.G.2.f., respectively of this proposed rule; and (3) qualify to 
earn a PQRI incentive payment for covered professional services 
furnished during the applicable 2010 PQRI reporting period.
    Similarly, for purposes of publicly reporting the names of group 
practices, on the Physician and Other Health Care Professionals 
Directory, we propose to post the names of group practices who: (1) 
Submit data on the 2010 PQRI quality measures through the proposed 
group practice reporting option described in section II.G.2.g. of this 
proposed rule; (2) meet the proposed criteria for satisfactory 
reporting under the group practice reporting option; and (3) qualify to 
earn a PQRI incentive payment for covered professional services 
furnished during the applicable 2010 PQRI reporting period for group 
practices.
    In addition to posting the information required by section 
1848(m)(5)(G) of the Act, for those group practices that are selected 
to participate in PQRI under the group practice reporting option, we 
also propose to make the group practices' PQRI performance rates 
publicly available, for each of the measures. As we stated in the CY 
2009 PFS proposed rule (73 FR 38574 through 38575), it is our goal to 
make the quality of care for services furnished to Medicare 
beneficiaries publicly available by making physician quality measure 
performance rates, either at the individual practitioner level or 
physician group level, publicly available. While we currently have Web 
pages at http://www.medicare.gov for the public reporting of 
performance results on standardized quality measures for hospitals 
(Hospital Compare), dialysis facilities (Dialysis Facility Compare), 
nursing homes (Nursing Home Compare), and home health facilities (Home 
Health Compare), we do not have a similar Compare Web site for 
information on the quality of care for services furnished by physicians 
and other professionals to Medicare beneficiaries.
    Public reporting of group practices' PQRI performance results at 
the group practice level would allow us to move toward our goal of 
making information on physician performance publicly available. We 
believe that the way we have proposed to design the group practice 
reporting option (see section II.G.2.g. of this proposed rule) 
facilitates public reporting of the groups' performance results. Group 
practices participating in the group practice reporting option would 
have already agreed in advance to have their performance results 
publicly reported. All groups participating in the group practice 
reporting option would be reporting on identical measures, which 
facilitate comparison of the results across groups. In addition, as a 
result of the proposed reporting criteria, no performance results would 
be calculated based on small denominator sizes. Finally, because we 
intend to modify the data collection tool will provide each group 
practice with numerator, denominator, and performance rates for each 
measure at the time of tool submission, the group practice will have 
had an opportunity to review their performance results before they are 
made public.
    In making performance rates for group practices publicly available, 
we will attribute the group practice's performance to the entire group. 
We will not post information with respect to the performance of 
individual physicians or other eligible professionals associated with 
the group. However, we may identify the individual eligible 
professionals who were associated with the group during the reporting 
period. We invite comments regarding our proposal to publicly report 
group practices' PQRI performance results.
3. Section 131(c): Physician Resource Use Measurement and Reporting 
Program
a. Statutory Authority
    As required under section 1848(n) of the Act, as added by section 
131(c) of the MIPPA, we established and implemented 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. Section 1848(n) of the Act authorizes us, as we 
determine appropriate, to include information on the quality of care 
furnished to Medicare beneficiaries by the physician (or group of 
physicians) in the reports. Although we initially called this effort 
the Physician Resource Use Feedback Program, we are renaming this 
initiative the ``Physician Resource Use Measurement and Reporting 
Program'' (hereinafter referred to as ``Program'').
b. Background
    As we stated in the CY 2009 PFS final rule with comment period (73 
FR 69866), the Program would consist of multiple phases. We included a 
summary of the activities of phase I of the Program in the CY 2009 PFS 
final rule with comment period (73 FR 69866 through 69869). In addition 
to discussing phase I of the Program, we also highlighted the 
activities of several other initiatives, including Medicare Value-Based 
Purchasing (VBP) programs and demonstrations and related activities 
undertaken by the MedPAC and the Government Accountability Office 
(GAO). We refer readers to the CY 2009 PFS final rule with comment 
period (73 FR 69866 through 69869) for a detailed discussion of these 
activities.
    In the CY 2009 PFS final rule with comment period (73 FR 69866 
through 69869), we finalized, on an interim basis, the following 
parameters for phase I of the Program: (1) Use of both per capita and 
episode of care methodologies for resource use measurement; (2) cost of 
service category analysis (for example, imaging services or inpatient 
admissions); (3) use of 4 calendar years of claims data; (4) focus on 
high cost and/or high volume conditions; (5) reporting to physician 
specialties relevant to the selected focal conditions; (6) focus on 
physicians practicing in certain geographic areas, and (7) low, median, 
and high cost benchmarks. We intend to finalize these parameters in the 
CY 2010 PFS final rule with comment period.
c. Summary of Comments From the CY 2009 PFS Final Rule With Comment 
Period
    Section 1848(n)(1)(B) of the Act requires that the Program measures 
resources based on the following: (1) An episode basis; (2) a per 
capita basis; or (3) both an episode and a per capita basis. We 
solicited public comments on the use of each of these measurement 
methodologies (73 FR 69868).
    Comment: Commenters were in favor of using both the per capita and 
the per episode measurement methodologies.
    Response: We agree with commenters that both the per capita and per 
episode methodologies are appropriate measures of cost for the Program. 
Each methodology offers distinct advantages. For a further discussion 
regarding the advantages, we refer readers to CMS' Medicare Resource 
Use Measurement Plan Web site at http://www.cms.hhs.gov/QualityInitiativesGenInfo/downloads/ResourceUse_Roadmap_OEA_1-15_508.pdf. We intend to finalize both

[[Page 33590]]

methodologies as options for use in future phases of the Program in the 
CY 2010 PFS final rule with comment period.
    In phase I of the Program, we included cost of service (COS) 
category information from aggregated Medicare FFS claims data. We 
solicited public comment on which COS categories are most meaningful 
and actionable (73 FR 69868).
    Comment: Commenters were overwhelmingly in favor of including E/M 
services and imaging services as meaningful and actionable COS 
categories. Further, commenters supported including laboratory 
services, outpatient services, procedures, and post-acute services as 
COS categories. No commenters raised specific categories that should be 
excluded.
    Response: We appreciate the comments in support of the COS category 
analysis. We intend to finalize the option to include information on 
all of these COS categories in future phases of the Program in the CY 
2010 PFS final rule with comment period.
    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 used Medicare FFS claims data from CY 2004 through CY 2007. 
We solicited public comment on this approach (73 FR 69868).
    Comment: The majority of commenters stated that 3 calendar years of 
data is sufficient for calculating resource use measures. Further, 
commenters emphasized, to the extent practicable, CMS should use the 
most recent three years of data available for the Program.
    Response: We agree with commenters that 3 years of Medicare FFS 
claims data are sufficient for calculating resource use measures. We 
intend to finalize the use of the most recent 3 years of data available 
for the Program in the CY 2010 PFS final rule with comment period.
    Under section 1848(n)(4)(B) of the Act, the Secretary may focus the 
Program as appropriate, including focusing on physicians who treat 
conditions that are high cost, high volume, or both. We finalized on an 
interim basis for phase I of the Program, the following conditions: (1) 
Congestive heart failure; (2) chronic obstructive pulmonary disease; 
(3) prostate cancer; (4) cholecystitis; (5) coronary artery disease 
with acute myocardial infarction; (6) hip fracture; (7) community-
acquired pneumonia; and (8) urinary tract infection (73 FR 69868). We 
solicited public comments on the use of these high cost/high volume 
conditions (73 FR 69868).
    Comment: Commenters strongly supported these conditions as 
appropriate for measuring the resources furnished to Medicare 
beneficiaries. In addition, several commenters suggested that we 
include diabetes among the priority conditions for the Program.
    Response: We agree with commenters that diabetes is an important 
condition to capture in the Program. We intend to finalize the option 
to include: (1) Congestive heart failure; (2) chronic obstructive 
pulmonary disease; (3) prostate cancer; (4) cholecystitis; (5) coronary 
artery disease with acute myocardial infarction; (6) hip fracture; (7) 
community-acquired pneumonia; (8) urinary tract infection; and (9) 
diabetes, in the Program in the CY 2010 PFS final rule with comment 
period.
    Under section 1848(n)(4)(A) of the Act, we are permitted to focus 
reporting on physician specialties that account for a certain 
percentage of spending for physicians' services. Based on the high cost 
and high volume conditions selected above, we included the following 
physician specialties in phase I of the Program: General internal 
medicine, family practice, gastroenterology, cardiology, general 
surgery, infectious disease, neurology, orthopedic surgery, physical 
medicine and rehabilitation, pulmonology, and urology (73 FR 69868). We 
solicited public comments on the inclusion of these physician 
specialties (73 FR 69868).
    Comment: Commenters supported including all of the physician 
specialties listed above as appropriate for measurement and reporting 
based on the selected conditions.
    Response: We agree with commenters that the physician specialties 
listed above should be included in the Program. We intend to finalize 
the option to include these physician specialties in the Program in the 
CY 2010 PFS final rule with comment period.
    Section 1848(n)(4)(D) of the Act permits us to focus the Program on 
physicians practicing in certain geographic areas. In the CY 2009 PFS 
final rule with comment period (73 FR 69866 through 69869) we 
referenced two geographic sites (Baltimore, MD and Boston, MA) for 
phase I of the Program, which we generally selected based on close 
proximity to the CMS central office and due to high per capita Medicare 
costs, respectively. Since the final rule was published, we have also 
mailed reports to physicians in the following sites:
     Greenville, SC;
     Indianapolis, IN;
     Northern New Jersey;
     Orange County, CA;
     Seattle, WA;
     Syracuse, NY;
     Boston, MA;
     Cleveland, OH;
     East Lansing, MI;
     Little Rock, AR;
     Miami, FL; and
     Phoenix, AZ.
    Comment: Commenters were in favor of including a limited number of 
sites representing a wide range of geographic locations to facilitate a 
phased implementation. No commenters submitted specific areas that 
should be excluded.
    Response: We appreciate the comments in support of including a 
limited number of sites. We intend to continue to include the 
geographic sites listed above, and identify a limited number of new 
locations, in the Program in the CY 2010 PFS final rule with comment 
period.
    Section 1848(n)(4)(C) of the Act also permits us to focus the 
program on physicians who use a high amount of resources compared to 
other physicians. The resource use reports disseminated in phase I of 
the Program defined peer groups of physicians by focusing on one 
condition, one specialty, and one of the geographic locations mentioned 
above. Within each peer group, the resource use reports indicated 
whether the physician fell over the 90th percentile (high cost 
benchmark), below the 10th percentile (low cost benchmark), or over the 
50th percentile (median cost benchmark). We solicited public comments 
on which cost benchmarks make the resource use reports meaningful, 
actionable, and fair (73 FR 69869).
    Comment: Commenters supported the use of high, median, and low cost 
benchmarks because the benchmarks highlight useful cost categories 
within a given peer group.
    Response: We agree with commenters that the high, median, and low 
cost benchmarks are appropriate. We intend to finalize these cost 
benchmarks as options to include in the Program in the CY 2010 PFS 
final rule with comment period.
    Comment: A few commenters expressed support for including small 
geographic areas for benchmarking.
    Response: Though we recognize that a small geographic benchmark may 
capture a more homogenous beneficiary population for comparison, 
smaller sample sizes may adversely affect the statistical precision of 
the comparison. A larger sample captured through broader geographic 
benchmarks makes

[[Page 33591]]

it less likely that physicians will be erroneously identified as high 
or low cost outliers.
    In addition to commenting on specific statutory parameters, 
commenters also provided feedback on other general topics. Those 
comments and responses are included below.
    Comment: A few commenters mentioned the use of proprietary 
commercial episode grouper software as a barrier to transparency within 
the Program. These commenters indicated that in order to understand and 
validate the resource use reports, physicians would need additional 
information about how the proprietary commercial software allocated 
costs to episodes.
    Response: One of the primary goals of CMS' VBP initiatives is to 
implement performance-based incentive payment programs with transparent 
methodologies. We note that the Program is currently limited under 
section 1848(n)(1)(A) of the Act to confidential reporting. Use of 
physician resource use information for other purposes, such as payment 
or public reporting, would likely require a higher level of 
transparency than confidential reporting.
    We note that we have previously discussed the use of proprietary 
products for payment purposes in previous rules published in the 
Federal Register. For example, we discussed the use of a proprietary 
product prior to implementation of the MS-DRGs in the FY 2007 IPPS 
final rule (72 FR 47171).
    We recognize the efforts of episode grouper vendors toward improved 
transparency. For more information on episode groupers that is publicly 
available, we refer readers to the following Web sites: http://www.ingenix.com/ThoughtLeadership/ETG/EtgRegistration/ and http://www.thomsonreuters.com/business_units/healthcare/.
    We are soliciting public comment on the use of proprietary products 
to measure episodes of the care in the Program.
    Comment: Some commenters expressed that the best method for 
dissemination of resource use reports is paper copies distributed via 
the mail. Others favored an electronic mechanism for dissemination. 
Some commenters expressed that resource use reports should be made 
available in both paper format and electronically.
    Response: For phase I of the Program, we disseminated reports in 
paper form via mail. We agree with commenters that electronic 
dissemination would also be desirable. Pending resource availability, 
we will consider this suggestion in a future phase of the Program.
d. Phase I of the Program
    As indicated above, the Program consists of multiple phases. Under 
this approach, each phase of the Program will inform future phases of 
the Program. We refer readers to the CY 2009 PFS final rule with 
comment period (73 FR 69866 through 69869) for a description of phase I 
Program activities. Using the parameters that were finalized on an 
interim basis, we have disseminated approximately 230 resource use 
reports to physicians in each of the 12 geographic regions listed above 
in this section. We refer readers to the following Web site to review a 
de-identified sample of the resource use reports disseminated to 
physicians: http://rurinfo.mathematica-mpr.com/. We are soliciting 
public comment on the design and elements of the sample resource use 
report used in phase I of the Program. We are particularly interested 
in receiving comment on the usefulness of the cost of service category 
drill-down analysis included on pages 10, 16, 20, 24, 28, 32, and 36 of 
the sample resource use report. These comments will inform future 
phases of the Program.

e. Phase II of the Program

    For phase II, we are proposing to expand the Program in ways that 
will make the information more meaningful and actionable for 
physicians. We are proposing to add reporting to groups of physicians 
recognizing that physicians practice in various arrangements. Group 
level reporting provides a mechanism for addressing sample size issues 
that arise when individual physicians have too few Medicare 
beneficiaries with specific conditions to generate statistically 
significant reports. We are also proposing to add quality measurement 
information as context for interpreting comparative resource use. These 
proposals are addressed in greater detail below in this section.
    Phase I of the Program focused on providing confidential feedback 
on resource use measures to individual physicians. Section 
1848(n)(1)(A) of the Act states that the Secretary may also provide 
confidential feedback reports to groups of physicians. Many physicians 
practice in groups. Recognizing groups of physicians within the Program 
is consistent with other CMS VBP initiatives and demonstrations under 
the Medicare program.
    We are proposing to provide reports to groups of physicians, in 
addition to providing reports to individual physicians, for the 
Program. In December 2008, CMS posted an Issues Paper on the 
Development of a Transition to a Medicare Physician Value-Based 
Purchasing Program for Physician and Other Professional Services.\1\ 
The Issues paper describes cost of care measurement, the focus of Phase 
I of this Program, as one of the central tenets of Physician Value-
Based Purchasing (see section II.G.4. of this proposed rule). Further, 
the Issues Paper referenced possible groups of physicians under 
consideration including: (1) Formally established single or multi-
specialty group practices; (2) physicians practicing in defined 
geographic regions; and (3) physicians practicing within facilities or 
larger systems of care. We are soliciting public comments on the 
appropriateness of resource use measurement and reporting for these and 
other groups of physicians.
---------------------------------------------------------------------------

    \1\ http://www.cms.hhs.gov/PhysicianFeeSched/downloads/PhysicianVBP-Plan-Issues-Pape.pdf.s
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    Phase I of the Program focused on providing confidential feedback 
on resource use measures. Section 1848(n)(1)(A) of the Act states that 
the Secretary may also include information on quality of care furnished 
to Medicare beneficiaries by the physician. Providing physicians with 
feedback on both quality and cost of care better captures the value of 
the care provided. Including quality measures in the Program is 
consistent with the direction for other CMS VBP initiatives.
    We are proposing the use of quality measures, in addition to 
resource use measures, for the Program. Possible sources of quality 
measures include the Physician Quality Reporting Initiative (PQRI) (see 
section II.G.2. of this proposed rule) and the Generating Medicare 
Physician Quality Performance Measurement Results (referred to as GEM) 
Project.\2\ We refer readers to the Issues Paper, mentioned above,\3\ 
for additional discussion on how CMS would use quality measures in this 
Program and for Physician Value-Based Purchasing (see section II.G.4. 
of this proposed rule). We are soliciting public comments on the use of 
PQRI, GEM, and other broader aggregate quality measures to be used to 
capture value for the groups proposed above in the Physician Resource 
Use Measurement and Reporting Program.
---------------------------------------------------------------------------

    \2\ http://www.cms.hhs.gov/GEM/.
    \3\ http://www.cms.hhs.gov/PhysicianFeeSched/downloads/PhysicianVBP-Plan-Issues-Pape.pdf.

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[[Page 33592]]

4. Section 131(d): Plan for Transition to Value-Based Purchasing 
Program for Physicians and Other Practitioners
a. Background
    Value-based purchasing uses payment incentives and transparency to 
increase the value of care by rewarding providers for higher quality 
and more efficient services and for publicly reporting performance 
information. Section 131(d) of the MIPPA requires the Secretary to 
develop a plan to transition to a value-based purchasing (VBP) program 
for Medicare payment for covered professional services made under, or 
based on, the PFS. Section 131(d) of the MIPPA also states that by May 
1, 2010, the Secretary shall submit a report to the Congress, 
containing the plan, together with recommendations for such legislation 
and administrative action as the Secretary determines appropriate. The 
Secretary, through the Physician and Other Health Professional VBP 
(PVBP) Workgroup, submitted a progress letter to Congress on January 8, 
2009 detailing the progress made on the VBP plan for physicians and 
other professionals.
    Currently, Medicare health professional payments are based on 
quantity of services and procedures provided, without recognition of 
quality or efficiency. Under various authorities, we have pursued the 
implementation of building blocks to support the establishment of a VBP 
program for health professionals. These include initiatives in the 
following major topic areas: Quality and efficiency measurement and 
reporting, approaches for aligning incentives with providing higher 
quality care instead of higher volume of care, care coordination, 
prevention, and health information technology (HIT). The following is a 
list of examples of the initiatives specifically relevant to physicians 
and other health professionals:
     Pay for reporting of quality measurement data instituted 
under the Physician Quality Reporting Initiative (PQRI);
     Resource use reports comparing overall costs, as well as 
costs for treatment across episodes of care, as part of, as required by 
the Physician Resource Use Feedback Program (See section II.G.3. of 
this proposed rule); and
     Demonstration projects, including the Physician Group 
Practice demonstration of a shared savings model, gainsharing 
demonstrations, medical home and other care coordination and disease 
management demonstrations, and the Acute Care Episodes demonstration of 
a bundled payment model.
    We are fully committed to implementing VBP incentives to drive 
quality improvement and greater efficiency for services furnished to 
Medicare beneficiaries.
b. Approach to Plan Development
    We have created an internal cross-component team, the PVBP 
Workgroup, to lead development of the PVBP Plan. Four Subgroups were 
established to address the major sections of the Plan: Measures; 
incentives; data strategy and infrastructure; and public reporting. The 
PVBP Workgroup was tasked with reviewing the state-of-the-art in 
performance-based payment for physicians, including relevant Medicare 
programs and demonstrations and private sector initiatives; preparing 
an Issues Paper to present program objectives and design principles; 
engaging stakeholders and obtaining input on program design; and 
developing the PVBP Plan and Report to Congress. A similar approach was 
used in the development of the CMS Hospital VBP Plan.
    To guide the planning process, the PVBP Workgroup adopted the 
following goal to improve Medicare beneficiary health outcomes and 
experience of care by using payment incentives and transparency to 
encourage higher quality, more efficient professional services. In 
pursuit of this goal, the Workgroup has defined the following 
objectives:
     Promote evidence-based medicine through measurement, 
payment incentives, and transparency.
     Reduce fragmentation and duplication through 
accountability across settings, alignment of measures and incentives 
across settings, better care coordination for smoother transitions, and 
attention to episodes of care.
     Encourage effective management of chronic disease by 
improving early detection and prevention, focusing on preventable 
hospital readmissions, and emphasizing the importance of advanced care 
planning and appropriate end-of-life care.
     Accelerate the adoption of effective, interoperable HIT, 
including clinical registries, e-prescribing, and electronic health 
records.
     Empower consumers to make value-based health care choices 
and encourage health professionals to improve the value of care by 
disseminating actionable performance information.
    The goal and objectives were captured in an Issues Paper that was 
posted on the CMS Web site on November 24, 2008, in preparation for the 
December 9, 2008 Listening Session which was held at CMS headquarters. 
The Issues Paper included questions seeking public input on key design 
considerations. The Issues Paper is available on the CMS Web site at 
http://www.cms.hhs.gov/PhysicianFeeSched/downloads/PhysicianVBP-Plan-Issues-Paper.pdf. Nearly 500 stakeholders participated in the day-long 
Listening Session. We received both verbal and written comments that 
are informing the design of the PVBP Plan.
c. Stakeholder Input From the Listening Session
    Both at the Listening Session, and in written comments received 
following the Session, we obtained input from a wide range of diverse 
stakeholders. A large portion of the comments were received from 
physician and other professional specialty societies. Commenters also 
included consumer advocates, health care consulting firms, and health 
IT vendors, and individual practicing physicians.
(1) Overarching Issues
    Commenters generally affirmed the goal and objectives presented in 
the Issues Paper. Commenters encouraged the consideration of new 
payment approaches that cut across settings of care to align Medicare 
Part A and Part B payment incentives. Many commenters stated that the 
current Medicare payment system for health professionals is flawed in 
that it fails to align incentives for high-value care across providers 
and settings and that this cannot be fixed solely by a VBP program. 
Commenters agreed with the Issues Paper assumption that the Plan will 
need to contain more than one approach to accommodate different 
practice arrangements. Several commenters praised the attention given 
in the Issues Paper to addressing disparities and pointed out the 
necessity of adequate risk adjustment and proper use of measures, 
incentives, and program evaluation to protect vulnerable populations. 
Commenters also urged careful attention to the operational transition 
from the current payment system to VBP to minimize care delivery 
disruptions.
(2) Measurement
    Commenters emphasized the importance of aligning measures across 
payment settings and applying measures consistently across payers. Many 
commenters stressed the need for valid, reliable, nationally-recognized 
measures, particularly in the areas of outcomes, care coordination, 
patient

[[Page 33593]]

experience, and the effective use of HIT. Adequate risk adjustment was 
raised as a paramount issue for outcomes and resource use measures. 
Regarding resource use measures, several commenters noted that quality 
and cost measures should be reported together and that CMS should get 
experience with confidential feedback reporting of resource use before 
using the information for incentives or public reporting (See section 
II.G.3. of this proposed rule). A few commenters suggested avoidable 
readmission rates as a good measure of both cost and quality of care. 
Commenters emphasized the importance of CMS working with health 
professionals on the selection of quality and cost measures.
    Commenters generally agreed with the Issues Paper assumption that 
the Plan should address multiple levels of accountability, including 
individual health professionals, care teams, group practices, and 
accountable care entities. A few commenters mentioned that performance 
measurement at the regional level could help address regional 
variation. Consumer advocates made strong arguments for individual 
accountability, while noting that care delivery is ultimately a team 
effort. Others noted that measurement is more difficult at the 
individual level and that accountability at more aggregated levels 
could support promising payment models like bundled payment, 
gainsharing, and shared savings.
(3) Incentives
    Commenters noted that incentive payments should be large enough to 
be meaningful, be made timely, and at least cover the cost of 
participating in the program. Commenters encouraged us to coordinate 
the incentives, as well as measures, with other payers. Many commenters 
stated that incentives should reward both improvement and attainment, 
and not be based on a ranking system that rewards only high attainers; 
instead, all who perform above a certain prospective benchmark should 
earn the incentive. Several commenters indicated that use of incentives 
could be an effective way to promote the use of effective HIT. Most 
commenters agreed that more than one incentive structure would be 
necessary to address different practice arrangements and to focus 
effort on specific objectives (for example, care coordination).
(4) Data Strategy and Infrastructure
    Commenters emphasized that the administrative burden of data 
exchange, for both health professionals and CMS, should be minimized. 
Several commenters noted that clinical data registries and direct 
reporting from electronic health records were superior approaches to 
claims-based reporting for gathering clinical data. Commenters 
indicated that feedback on performance should be timely and detailed 
enough to be actionable. Commenters also asked for the opportunity to 
review and appeal the accuracy of their performance assessments prior 
to use of that information for payment incentives or public reporting.
(5) Public Reporting
    Consumer advocates highlighted the importance of transparency while 
professional associations urged caution to assure that publicly 
reported information not be inaccurate or misleading for consumers. 
Several commenters noted that public reporting should address multiple 
levels of accountability, including individual health professionals, 
the care delivery team, group practices, and at the regional level. All 
agreed that publicly reported information should be user-friendly.
d. Next Steps in Plan Development
    Building on input from the Listening Session on the Issues Paper 
topics, the PVBP Workgroup has begun to develop potential 
recommendations for inclusion in the Report to Congress. The first step 
is to design various approaches for performance-based payment that will 
address the planning goal and objectives for different practice 
arrangements. This design process will include identifying appropriate 
measures and incentive structures, considering the necessary data 
infrastructure, and addressing public reporting options. Consideration 
will be given to approaches that:
    (1) Overlay the current PFS, such as differential fee schedule 
payments based on measured performance or for providing a medical home;
    (2) Address multiple levels of accountability, including individual 
health professionals, as well as larger teams or organizations; and
    (3) Promote more integrated care through shared savings models and 
bundled payment arrangements.
    We are seeking further public comment on the development of the 
PVBP plan and Report to Congress. Comments already submitted by 
participating in person at the December 9, 2008 Listening Session or as 
written comments following the Session, do not need to be resubmitted. 
At this time, we are soliciting original comments that were not 
previously submitted. Particularly, we are interested in the comments 
further discussing the issues of the appropriate level of 
accountability (for example, group practice, individual, region), and 
appropriate data submission mechanisms. The PVBP Workgroup will use 
public comment to inform its development of the Plan and Report to 
Congress.
5. Section 132: Incentives for Electronic Prescribing (E-Prescribing)--
The E-Prescribing Incentive Program
a. Program Background and Statutory Authority
    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.
    As discussed in the CY 2009 PFS final rule with comment period (73 
FR 69847), there are many potential advantages to e-prescribing. Yet, 
there has been limited adoption and use of electronic prescribing by 
physicians and other professionals who prescribe medications. It is 
estimated that only 12 percent of office-based prescribers currently 
use e-prescribing (Surescripts. ``National Progress Report on E-
Prescribing.'' Welcome to the E-Prescribing Resource Center. 2008. 
Surescripts. 15 May 2009. http://www.surescripts.com/downloads/NPR/national-progress-report.pdf).
    As described in the CY 2009 PFS final rule with comment period (73 
FR 69847 through 69848), the MMA and the creation of the Medicare 
Prescription Drug Benefit Program (Part D) promoted the use of e-
prescribing by requiring the adoption of uniform standards for the 
Medicare Part D electronic prescribing (``e-prescribing'') program. As 
required by section 1860D-4(e) of the Act, ``foundation standards'' 
were adopted on November 7, 2005 (70 FR 67568) and additional Part D e-
prescribing standards were adopted on April 7, 2008, and were 
implemented April 1, 2009 (73 FR 18918). Section 1848(m) of the Act, as 
amended by section 132 of the MIPPA, further promotes the use of e-
prescribing by authorizing incentive payments to eligible professionals 
or group practices who are ``successful electronic prescribers.'' This 
E-Prescribing Incentive Program is expected to encourage significant 
expansion of the use of e-prescribing by

[[Page 33594]]

authorizing a combination of financial incentives and payment 
adjustment and is separate from, and in addition to, any incentive 
payment that eligible professionals may earn through the PQRI program 
discussed in section II.G.2. of this proposed rule. Eligible 
professionals do not have to participate in PQRI to participate in the 
E-Prescribing Incentive Program (and vice versa).
    For 2010, which is the second year of the E-Prescribing Incentive 
Program, the Secretary is authorized to provide successful e-
prescribers, as defined in section 1848(m)(3)(B) of the Act and further 
discussed below in this section, an incentive payment equal to 2.0 
percent of the total estimated (based on claims submitted not later 
than 2 months after the end of the reporting period) allowed charges 
for all covered professional services furnished during the 2010 
reporting period. Covered professional services are defined under the 
statute to be services for which payment is made under, or is based on, 
the PFS and which are furnished by an eligible professional. The 
applicable electronic prescribing percent (2 percent) authorized for 
the 2010 E-Prescribing Incentive Program is the same as that authorized 
for the 2009 E-Prescribing Incentive Program.
    Subject to section 1848(m)(2)(D) of the Act, as added by section 
4101(f)(2)(B) of the HITECH Act (Title IV of Division B of the Recovery 
Act, together with Title XIII of Division A of the Recovery Act) (Pub. 
L. 111-5), which was enacted on February 17, 2009, the incentive 
payments for successful electronic prescribers for future years are 
authorized under section 1848(b)(2)(C) of the Act as follows:
     1.0 percent for 2011.
     1.0 percent for 2012.
     0.5 percent for 2013.
    Section 1848(m)(2)(D) of the Act, as added by section 4001(f)(2)(B) 
of the Recovery Act, specifies a limitation to the e-prescribing 
incentive in relation to whether the EHR incentive authorized by the 
Recovery Act is earned. Section 1848(m)(2)(D) of the Act specifically 
provides that the e-prescribing incentive does not apply to an eligible 
professional (or group practice), if, for the EHR reporting period, the 
eligible professional (or group practice) earns an incentive payment 
under the new Health Information Technology (HIT) incentive program 
authorized by the Recovery Act for eligible professionals who are 
meaningful EHR users. The new HIT incentive program for meaningful EHR 
users begins in 2011. Therefore, beginning in 2011, eligible 
professionals who earn an incentive under the new HIT incentive program 
for meaningful EHR users, with respect to a certified EHR technology 
that has e-prescribing capabilities, would not be eligible to earn a 
separate incentive payment for being a successful electronic prescriber 
under the E-prescribing Incentive Program.
    In addition, under section 1848(a)(5)(A) of the Act, as added by 
section 132(b) of the MIPPA and amended by section 4001(f)(1) of the 
Recovery Act, a PFS payment adjustment applies beginning in 2012 to 
those who are not successful electronic prescribers. Specifically, for 
2012, 2013, and 2014, 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 schedule 
amount that would otherwise apply by:
     1.0 percent for 2012.
     1.5 percent for 2013.
     2.0 percent for 2014.
    We note that the criteria for determination of successful 
electronic prescriber proposed herein may not necessarily be the 
criteria that will be used to determine the applicability of the 
payment adjustment in the future. Policy considerations underlying the 
application of the incentive payment are not necessarily the same as 
those in applying a payment adjustment. In general, we believe that an 
incentive should be broadly available to encourage the widest possible 
adoption of e-prescribing, even for low volume prescribers. On the 
other hand, a payment adjustment should be applied primarily to assure 
that those who have a large volume of prescribing do so electronically, 
without penalizing those for whom the adoption and use of an e-
prescribing system may be impractical given the low volume of 
prescribing. We will discuss the application of the payment adjustment 
in future notice and comment rulemaking, but prior to the beginning of 
the reporting period that will be used to determine the applicability 
of the payment adjustment.
    Under section 1848(m)(6)(A) of the Act, the definition of 
``eligible professional'' for purposes of eligibility for the E-
Prescribing Incentive Program is identical to the definition of 
``eligible professional'' for the 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 qualified audiologists. However, for purposes of the 
E-prescribing Incentive Program, eligibility is further restricted by 
scope of practice to those professionals who have prescribing 
authority. Detailed information about the types of professionals that 
are eligible to participate in the E-Prescribing Incentive Program is 
available on the ``Eligible Professionals'' page of the E-Prescribing 
Incentive Program section of the CMS Web site at http://www.cms.hhs.gov/ERXIncentive.
    Similar to the PQRI, the E-Prescribing Incentive Program, in 2009, 
is an incentive program in which determination of whether an eligible 
professional is a successful electronic prescriber will be made at the 
individual professional level, based on the NPI. Inasmuch as some 
individuals (identified by NPIs) may be associated with more than one 
practice or TIN, the determination of whether an eligible professional 
is a successful electronic prescriber will be made to the holder of 
each unique TIN/NPI combination. Then, payment will be made to the 
applicable holder of the TIN. For 2010, the determination of whether an 
eligible professional is a successful electronic prescriber will 
continue to be made for each unique TIN/NPI combination. However, 
section 1848(m)(3)(C) of the Act requires the Secretary by January 1, 
2010 to establish and have in place a process under which eligible 
professionals in a group practice (as defined by the Secretary) shall 
be treated as meeting the requirements for submitting data on 
electronic prescribing quality measures for covered professional 
services for a reporting period (or, for purposes of the payment 
adjustment under section 1848(a)(5) of the Act, for a reporting period 
for a year) if, in lieu of reporting the electronic prescribing 
measure, 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. Therefore, in addition to making incentive 
payments for 2010 to group practices based on separately analyzing 
whether the individual eligible professionals within the group practice 
are successful electronic prescribers, we will also begin making 
incentive payments to group practices based on the determination that 
the group practice, as a whole, is a successful electronic prescriber.
b. The Proposed 2010 Reporting Period for the E-Prescribing Incentive 
Program
    Section 1848(m)(6)(C)(i)(II) of the Act defines ``reporting 
period'' for the 2010

[[Page 33595]]

E-Prescribing Incentive Program to be the entire year. Section 
1848(m)(6)(C)(ii) of the Act, as added by the MIPPA, however, 
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. We 
propose the 2010 E-Prescribing Incentive Program reporting period will 
be the entire year (January 1, 2010-December 31, 2010). We believe that 
keeping the 2010 E-Prescribing Incentive Program reporting period 
consistent with the 2009 E-Prescribing Incentive Program reporting 
period will help to maintain program stability and be less confusing 
for eligible professionals.
    Successful electronic prescribers would be eligible to receive an 
incentive payment equal to 2.0 percent of the total estimated allowed 
charges (based on claims submitted by no later than February 28, 2011) 
for all covered professional services furnished January 1, 2010 through 
December 31, 2010.
c. Proposed Criteria for Determination of Successful E-Prescriber for 
Eligible Professionals
    Under section 1848(m)(3)(B) of the Act, 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 1 of 2 possible criteria. One criterion, under section 
1848(m)(3)(B)(ii) of the Act, is based on the eligible professional's 
reporting, in at least 50 percent of the reportable cases, on any e-
prescribing quality measures that have been established under the 
physician reporting system under subsection 1848(k) (which, as noted 
previously, we have named ``PQRI'' for ease of reference) and are 
applicable to services furnished by the eligible professional during a 
reporting period. The second criterion, under section 
1848(m)(3)(B)(iii) of the Act, is based on the electronic submission by 
the eligible professional of a sufficient number (as determined by the 
Secretary) of prescriptions under Part D during the reporting period. 
If the Secretary decides to use the latter standard, then, in 
accordance with section 1848(m)(3)(B)(iv) of the Act, the Secretary is 
authorized to use Part D drug claims data to assess whether a 
``sufficient'' number of prescriptions has been submitted by eligible 
professionals. However, under section 1848(m)(3)(B)(i) of the Act, if 
the standard based on a sufficient number (as determined by the 
Secretary) of electronic Part D prescriptions is applied for a 
particular reporting period, then the standard based on the reporting 
on e-prescribing measures would no longer apply.
    For 2009, as described in the CY 2009 PFS final rule with comment 
period (73 FR 69847 through 69852), we required eligible professionals 
to report on the e-prescribing measure that had been previously used in 
the 2008 PQRI. For 2010, we propose to continue to require eligible 
professionals to report on the electronic prescribing measure used in 
the 2009 E-Prescribing Incentive Program to determine whether an 
eligible professional is a successful e-prescriber, but we propose to 
use modified reporting criteria.
    As we stated in the CY 2009 PFS final rule with comment period (73 
FR 69848), we intend to consider the use of a certain number of Part D 
prescribing events as the basis for the incentive payment in future 
years. However, we do not believe that it is feasible to move to this 
substitute requirement in 2010. The accuracy and completeness of the 
Part D data with respect to whether a prescription was submitted 
electronically is unknown. Information on whether a prescription was 
submitted electronically by an individual eligible professional will 
not be collected on the Part D claims, or prescription drug event (PDE) 
data, until 2010. Also, prescription drug plan sponsors were not 
required to send PDE data with an individual prescriber's NPI until 
April 1, 2009. We currently have no information on the accuracy and 
completeness of the NPI data that is submitted with the PDE data. The 
NPI is needed in order for us to be able to link an eligible 
professional's PDE data to his or her Medicare Part B claims to 
calculate the incentive payment amount. During 2010, we expect to 
evaluate the adequacy of Part D data to determine the feasibility of 
its use for determining whether an eligible professional qualifies as a 
successful e-prescriber in future years.
(1) Reporting the Electronic Prescribing Measure
    For 2009, we limited the reporting mechanism for the electronic 
prescribing measure to claims-based reporting. For 2010, we propose 3 
reporting mechanisms for individual eligible professionals. First, we 
propose to retain the claims-based reporting mechanism that is used in 
the 2009 E-Prescribing Incentive Program. In addition, similar to the 
PQRI, for the E-prescribing Incentive Program, we propose to implement 
a registry-based reporting mechanism and, depending on whether we 
finalize the proposed EHR-based reporting mechanism for PQRI, we are 
also proposing that an EHR-based reporting mechanism be available for 
the electronic prescribing measure. In other words, eligible 
professionals would be able to choose whether to submit data on the 
electronic prescribing measure through claims, a qualified registry, or 
a qualified EHR product. As we stated in our discussion of the proposed 
PQRI reporting mechanisms for 2010 in section II.G.2.d. of this 
proposed rule, we recognize that one mode of quality reporting does not 
suit all practices. Similar to the PQRI, we believe that having 
multiple reporting mechanisms for the reporting of the electronic 
prescribing measure should increase opportunities for eligible 
professionals to successfully report the electronic prescribing 
measure. We invite comments on our proposal to provide alternatives to 
the claims-based reporting mechanism for reporting the electronic 
prescribing measure.
    We propose that only registries qualified to submit quality measure 
results and numerator and denominator data on quality measures on 
behalf of eligible professionals for the 2010 PQRI would be qualified 
to submit measure results and numerator and denominator data on the 
electronic prescribing measure on behalf of eligible professionals for 
the 2010 E-Prescribing Incentive Program. We note that not all 
registries qualified to submit quality measure results and numerator 
and denominator data on quality measures on behalf of eligible 
professionals for the 2010 PQRI would be qualified to submit quality 
measure results and numerator and denominator data on the e-prescribing 
measure. PQRI qualified registries will be qualified to submit specific 
types of measures. The electronic prescribing measure is reportable by 
an eligible professional any time he or she bills for one of the 
procedure codes for Part B services included in the measure's 
denominator. Some registries who self-nominate to become a qualified 
registry for PQRI may not choose to self-nominate to become a qualified 
registry for submitting measures that require reporting at each 
eligible visit. Registries will need to indicate their desire to 
qualify to submit measure results and numerator and denominator data on 
the electronic prescribing measure for the 2010 E-Prescribing Incentive 
Program at the time that they submit their self-nomination letter for 
the 2010 PQRI. The self-nomination process and

[[Page 33596]]

requirements for registries for the PQRI, which also would apply to the 
registries for the 2010 E-Prescribing Incentive Program, are discussed 
in section II.G.2.d.(4) of this proposed rule. We will post a list of 
qualified registries for the 2010 E-Prescribing Incentive Program on 
the E-Prescribing Incentive Program section of the CMS Web site at 
http://www.cms.hhs.gov/ERXIncentive when we post the list of qualified 
registries for the 2010 PQRI on the PQRI section of the CMS Web site.
    Similarly, we propose that only EHR products ``qualified'' to 
potentially be able to submit clinical quality data extracted from the 
EHR to CMS for the 2010 PQRI would be considered ``qualified'' for the 
purpose of an eligible professional potentially being able to submit 
data on the electronic prescribing measure for the 2010 E-Prescribing 
Incentive Program. The self-nomination process and requirements for EHR 
vendors for the PQRI, which also would apply to the EHR vendors for the 
2010 E-Prescribing Incentive Program are discussed in section 
II.G.2.d.(5) of this proposed rule. EHR vendors will need to indicate 
their desire to have one or more of their EHR products qualified for 
the purpose of an eligible professional potentially being able to 
submit data on the electronic prescribing measure for the 2010 E-
Prescribing Incentive Program at the time that they submit their self-
nomination letter for the 2010 PQRI. If we finalize the EHR-based 
reporting mechanism for the 2010 PQRI, we will post a list of qualified 
EHR vendors and their products (including the version that is 
qualified) for the 2010 E-Prescribing Incentive Program, on the E-
Prescribing Incentive Program section of the CMS Web site at http://www.cms.hhs.gov/ERXIncentive when we post the list of qualified EHR 
products for the 2010 PQRI on the PQRI section of the CMS Web site. We 
welcome comments on our proposal to limit the registries and EHR 
products qualified to submit the electronic prescribing measure for the 
2010 E-Prescribing Incentive Program to those that are qualified 
registries and EHR products, respectively, for the 2010 PQRI.
(2) The Reporting Denominator for the Electronic Prescribing Measure
    The electronic prescribing measure, similar to the PQRI measures, 
has 2 basic elements. These include: (1) A reporting denominator that 
defines the circumstances when the measure is reportable; and (2) a 
reporting numerator.
    The denominator for the electronic prescribing measure consists of 
specific billing codes for professional services. The measure becomes 
reportable when any one of these procedure codes is billed by an 
eligible professional as Part B covered professional services. For 
2009, the codes included in the measure's denominator were codes that 
are typically billed for services in the office or outpatient setting 
furnished by physicians or other eligible professionals. There are no 
diagnosis codes or age/gender requirements in order to be included in 
the measure's denominator (that is, reporting of the e-prescribing 
measure is not further limited to certain ages or a specific gender). 
However, as discussed further under section II.G.5.c.(5) of this 
proposed rule, 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 the procedure 
codes for Part B covered professional services included in the 
measure's denominator will have no occasion to report the electronic 
prescribing measure.
    Currently, the denominator codes for the electronic prescribing 
measure consist of the following CPT and G-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; G0101; G0108; G0109.
    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, however, we may modify the codes making up 
the denominator of the electronic prescribing measure. As such, we 
propose, in response to public comments received, to expand the scope 
of the denominator codes for 2010 to professional services outside the 
professional office and outpatient setting, such as professional 
services furnished in skilled nursing facilities or the home care 
setting. We propose to add the following CPT codes to the denominator 
of the electronic prescribing measure for 2010: 99304; 99305; 99306; 
99307; 99308; 99309; 99310; 99315; 99316; 99341; 99342; 99343; 99344; 
99345; 99347; 99348; 99349; 99350; and 90862. The proposed expansion of 
the electronic prescribing measure denominator is expected to provide 
more eligible professionals the opportunity to report the measure, and 
thus, provide more opportunities for eligible professionals to 
participate in the E-Prescribing Incentive Program. We invite comments 
on the proposed changes to codes identified for the electronic 
prescribing measure denominator.
    By December 31, 2009, we will post the final specifications of the 
measure on the ``E-Prescribing Measure'' page of the E-Prescribing 
Incentive Program section of the CMS Web site at http://www.cms.hhs.gov/ERXIncentive.
(3) Qualified Electronic Prescribing System--Required Functionalities 
and Part D E-Prescribing Standards
    To report the electronic prescribing measure in 2010, we propose 
that the eligible professional must report 1 of 3 ``G'' codes, as will 
be discussed below. However, in reporting any of the G-codes and 
thereby qualifying for the incentive payment for e-prescribing in 2010, 
the professional must have and regularly use a ``qualified'' electronic 
prescribing system as defined in the electronic prescribing measure 
specifications. If the professional does not have general access to an 
e-prescribing system in the practice setting, there is nothing to 
report. 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 the measure, 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 situations including potentially inappropriate 
dose or route of administration of a drug, drug-drug interactions, 
allergy concerns, or warnings and cautions). This functionality must be 
enabled.
    (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 2010 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).

[[Page 33597]]

    Part D E-Prescribing Standards. Section 1848(m)(3)(B)(v) of the 
Act, to the extent practicable, in determining whether an eligible 
professional is a successful e-prescriber, ``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 Part D standards for electronic prescribing systems establish 
which electronic standards Part D sponsors, providers, and dispensers 
must use when they electronically transmit prescriptions and certain 
prescription related information for Part D covered drugs that are 
prescribed for Part D eligible individuals. To be a qualified 
electronic prescribing system under the E-prescribing Incentive 
Program, 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. Additional Part D e-prescribing standards 
were implemented April 1, 2009. These latest Part D e-prescribing 
standards, and those that had previously been adopted, 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, the electronic 
prescribing measure 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 the 
electronic prescribing measure, 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 Sec.  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 for communicating formulary 
and benefits information between prescribers and plans.
    (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 the plan and prescribers.
    (3) 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 
the plan and dispensers.
    There are, however, Part D e-prescribing standards that are in 
effect for functionalities that are not commonly utilized at this time. 
Such functionalities are not currently required for a ``qualified'' 
system under the electronic prescribing measure. One example is Rx Fill 
Notification, which is discussed in the Part D e-prescribing final rule 
(73 FR 18918, 18926). For purposes of the 2010 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, we propose that 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; only that the system be a ``qualified'' system 
having the functionalities described above based on Part D e-
prescribing standards.
(4) The Reporting Numerator for the Electronic Prescribing Measure
    Currently, to report for an applicable case where 1 of the 
denominator codes is billed for Part B services, an eligible 
professional must report one of 3 G-codes specified in the electronic 
prescribing measure. Currently, the G-codes are the following:
     One G-code is used to report that all prescriptions in 
connection with the visit billed were electronically prescribed 
(G8443);
     Another G-code indicates that no prescriptions were 
generated during the visit (G8445); 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 (G8446).
    However, for 2010, we propose to modify the first G-code (G8443) to 
indicate that at least 1 prescription in connection with the visit 
billed was electronically prescribed. In addition, we propose to 
eliminate the 2 remaining G-codes from the measure's numerator: G8445; 
and G8446. We believe these modifications to the electronic prescribing 
measure will simplify reporting of the measure because the measure will 
only be reportable when an eligible professional has electronically 
prescribed. We invite comments on the proposed modifications to the 
electronic prescribing measure numerator.
    The e-prescribing quality measure would not apply unless an 
eligible professional furnishes services indicated by one of the codes 
included in the measure's denominator. Therefore, for claims-based 
reporting, for example, it is not necessary for an eligible 
professional to report G-codes for the electronic prescribing measure 
on claims not containing one of the denominator codes. However, if 
reporting a G-code, the G-code data submission will only be considered 
valid if it appears on the same Part B claim containing one of the e-
prescribing quality measure's denominator codes.

[[Page 33598]]

(5) Criteria for Successful Reporting of the Electronic Prescribing 
Measure
    As discussed above, section 1848(m)(3)(B)(ii) of the Act specifies 
that an eligible professional shall be treated as a successful 
electronic prescriber for a reporting period based on the eligible 
professional's reporting of the electronic prescribing measure in at 
least 50 percent of applicable cases. However, section 1848(m)(3)(D) of 
the Act permits the Secretary in consultation with stakeholders and 
experts to revise the criteria for submitting data on electronic 
prescribing measures under section 1848(3)(B)(ii) of the Act for years 
after 2009. Therefore, we propose to revise the criteria for submitting 
data on the electronic prescribing measure. For 2010, rather than 
requiring that the electronic prescribing measure be reported for a 
certain proportion of reportable cases, we propose to make the 
determination of whether an eligible professional is a successful 
electronic prescriber based on a count of the number of times an 
eligible professional reports that at least one prescription created 
during the encounter was generated using a qualified e-prescribing 
system (that is, reports the modified G8443 code). We believe that 
modifying the criteria for submitting the electronic prescribing 
measure in this manner will bring us closer to our stated intention to 
transition to using a certain number of electronic Part D prescribing 
events as the basis for the incentive payment in future years. In 
proposing to revise the criteria for successful reporting of the 
electronic prescribing measure in this manner, we also assume that once 
an eligible professional has invested in an e-prescribing system, 
integrated the use of the e-prescribing system into the practice's work 
flows, and has used the system to some extent, he or she is likely to 
continue to use the e-prescribing system for most of the prescriptions 
he or she generates.
    Preliminary data from the 2008 PQRI through September 2008 indicate 
that half of the eligible professionals who were eligible to report the 
electronic prescribing measure under the 2008 PQRI (measure 
125) had 132 or more instances in which they were eligible to 
report the measure, with a maximum of 12,655 reporting instances. 
Therefore, in order to successfully report the measure under the 2009 
criteria for successful e-prescribing (that is, reporting the measure 
for at least 50 percent of applicable cases), half of eligible 
professionals would have had to report measure 125 66 times or 
more (that is, 50 percent of 132 reporting instances), with a maximum 
of 6,328 times (that is, 50 percent of 12,655 reporting instances). For 
structural measures such as the electronic prescribing measure, once an 
eligible professional has demonstrated that he or she has integrated 
use of an e-prescribing system into his or her practice's work flow, 
requiring the eligible professional to continue to report the measure 
represents an administrative burden with little added benefit to the 
reliability and validity of the data being reported. In contrast, for 
clinical quality measures, the reliability and validity of the 
performance rates depends on the adequacy of the sample. Therefore, we 
propose that an eligible professional would be required to report that 
at least 1 prescription for a Medicare Part B FFS patient created 
during an encounter that is represented by 1 of the codes in the 
denominator of the electronic prescribing measure was generated using a 
qualified e-prescribing system for at least 25 times during the 2010 
reporting period.
    The proposed minimum reporting threshold of 25 is based on the 
notion that an eligible professional would need to e-prescribe, on 
average, for approximately 2 Medicare Part B FFS patient encounters per 
month during the reporting period in order to be considered a 
successful e-prescriber. The proposed reporting threshold of 25 also 
takes into consideration that prescriptions are not generated with 
every Medicare Part B FFS patient encounter and some prescriptions, 
such as narcotics, cannot be prescribed electronically.
    We welcome comments on the proposed criteria for determination of 
successful electronic prescriber. We are particularly interested in 
comments related to the following:
     Our proposal to change the criteria for determining 
whether an eligible professional is a successful e-prescriber from 
requiring reporting of the electronic prescribing measure in 50 percent 
of applicable cases to a count of the number of times the eligible 
professional electronically prescribed; and
     The proposed threshold number of 25 times in which an 
eligible professional would be required to report that he or she 
electronically prescribed during the reporting period.
d. Determination of the 2010 Incentive Payment Amount for Individual 
Eligible Professionals Who Are Successful E-Prescribers
    Section 1848(m)(2)(B) of the Act imposes a limitation on the E-
prescribing incentive payment. The Secretary is authorized to choose 1 
of 2 possible criteria for the limitation. The first criterion, under 
section 1848(m)(2)(B)(i) of the Act, is based upon whether the Medicare 
Part B allowed charges for covered professional services to which the 
electronic prescribing quality measure applies are less than 10 percent 
of the total Part B allowed charges for all covered professional 
services furnished by the eligible professional during the reporting 
period. The second criterion, under section 1848(m)(2)(B)(ii) of the 
Act, is based on whether the eligible professional submits (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). If the Secretary 
decides to use the latter criterion, then, in accordance with section 
1848(m)(2)(B) of the Act, the criterion based on the reporting on 
electronic prescribing measures would no longer apply. The statutory 
limitation also applies to the future application of the payment 
adjustment.
    As discussed above, for 2010, we propose to make the determination 
of whether an eligible professional is a ``successful e-prescriber'' 
based on submission of the electronic prescribing measure. As a result, 
we propose to apply the criterion under section 1848(m)(2)(B)(i) for 
the limitation for the 2010 E-Prescribing Incentive Program. Therefore, 
in determining whether an eligible professional will receive an e-
prescribing incentive payment for 2010, we would determine whether the 
10 percent threshold is met based on the claims submitted by the 
eligible professional at the TIN/NPI level. This calculation is 
expected to take place in the first quarter of 2011 and would be 
performed by dividing the individual's total 2010 allowed charges for 
all such covered professional services submitted for the measure's 
HCPCS codes by the individual's total allowed charges for all covered 
professional services (as assessed at the TIN/NPI level). If the result 
is 10 percent or more, then the statutory limitation will not apply and 
a successful e-prescriber would earn the e-prescribing incentive 
payment. If the result is less than 10 percent, then the statutory 
limitation will apply and the eligible professional would not earn an 
e-prescribing incentive payment--even if he or she electronically 
prescribes and reports G8443 at least 25 times for those eligible cases 
that occur during the 2010 reporting period. Although an individual 
eligible professional may

[[Page 33599]]

decide to conduct his or her own assessment of how likely this 
statutory limitation is expected to apply to him or her before deciding 
whether or not to report the electronic prescribing measure, an 
individual eligible professional may report the electronic prescribing 
measure without regard to the statutory limitation for the incentive 
payment.
e. Proposed Reporting Option for Satisfactory Reporting of the E-
Prescribing Measure by Group Practices
    As discussed previously, section 1848(m)(3)(C)(i) 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 meeting the requirements 
for submitting data on electronic prescribing quality measures for 
covered professional services for a reporting period (or, for purposes 
of the payment adjustment under subsection (a)(5), for a reporting 
period for a year) if, in lieu of reporting the electronic prescribing 
measure, 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)(ii) of the Act requires that the process 
established under section 1848(m)(3)(C)(i) of the Act provide 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 
under section 1866A of the Act. In addition, section 1848(m)(3)(C)(iii) 
of the Act specifies that payments to a group practice by reason of the 
process established under section 1848(m)(3)(C)(ii) of the Act shall be 
in lieu of the payments that would otherwise be made under this 
subsection to eligible professionals in the group practice for being a 
successful e-prescriber. Therefore, while we will be making incentive 
payments to group practices based on the determination that the group 
practice, as a whole, is a successful e-prescriber for 2010, an 
individual eligible professional who is affiliated with a group 
practice participating in the group practice reporting option that 
successfully meets the proposed requirements for group practices would 
not be eligible to earn a separate e-prescribing incentive payment for 
2010 on the basis of his or her successfully reporting the electronic 
prescribing measure at the individual level.
(1) Definition of ``Group Practice''
    As stated above, section 1848(m)(3)(C)(i) of the Act authorizes the 
Secretary to define ``group practice.'' For purposes of determining 
whether a group practice is a successful e-prescriber, we propose that 
a ``group practice'' would consist of a physician group practice, as 
defined by a TIN, with at least 200 or more individual eligible 
professionals (or, NPIs) who have reassigned their billing rights to 
the TIN to be consistent with definition of ``group practice'' proposed 
for the PQRI group practice reporting option.
    However, we propose to limit the group practices eligible to 
participate in the 2010 E-Prescribing Incentive Program through the 
group practice reporting option to those group practices selected to 
participate in the PQRI group practice reporting option. At this time, 
we would like to limit the number of groups participating in the group 
practice reporting option until we get further experience with the 
group practice reporting option. Therefore, unlike individual eligible 
professionals who are not required to participate in the PQRI to be 
eligible to earn an e-prescribing incentive and vice versa, group 
practices would be required to participate in both PQRI and the E-
Prescribing Incentive Program. As discussed in section II.G.2.g. of 
this proposed rule, group practices interested in participating in the 
2010 PQRI through the group practice reporting option would be required 
to submit a self-nomination letter to CMS or a CMS designee requesting 
to participate in the 2010 PQRI group practice reporting option. 
Instructions for submitting the self-nomination letter will be posted 
on the PQRI section of the CMS Web site by November 15, 2009. In 
addition to meeting the eligibility requirements proposed in section 
II.G.2.g.(1) of this proposed rule, a group practice would also have to 
indicate how they intend to report the electronic prescribing measure 
(that is, which proposed reporting mechanism the group practice intends 
to use) for purposes of participating in the 2010 E-Prescribing 
Incentive Program group practice reporting option.
(2) Process for Group Practices to Participate as Group Practices and 
Criteria for Successful Reporting of the E-Prescribing Measure by Group 
Practices
    For group practices selected to participate in the e-prescribing 
group practice reporting option for 2010, we propose the reporting 
period would be January 1, 2010 to December 31, 2010.
    We propose that physician groups selected to participate in the 
2010 E-Prescribing Incentive Program through the group practice 
reporting option would be able to choose to report the electronic 
prescribing measure through the claims-based, the registry-based, or, 
contingent upon us finalizing this reporting mechanism for the 2010 
PQRI, the EHR-based reporting mechanism. As we proposed for individual 
eligible professionals, only registries and EHR products qualified to 
participate in the 2010 PQRI would be qualified for purposes of the 
2010 e-prescribing group practice reporting option.
    In order for a group practice to be considered a successful e-
prescriber, we propose the group practice would have to report that at 
least 1 prescription during an encounter was generated using a 
qualified e-prescribing system in at least 2,500 instances during the 
reporting period.
    In the absence of information about the composition of the group 
practices that may wish to participate in the E-Prescribing Incentive 
Program through the group practice reporting option rather than as 
individual eligible professionals, we assumed that the average group 
practice consists of 200 eligible professionals and that as many as 
half of the members of an average group practice do not furnish the 
services represented by the electronic prescribing measure's 
denominator codes, and thus, would not have an opportunity to report 
the electronic prescribing measure. Second, to be consistent with the 
proposed reporting criteria for individual eligible professionals, we 
also believe that each eligible professional in a group practice should 
be required to report that at least 1 prescription generated during an 
encounter that is represented by 1 of the electronic prescribing 
measure's denominator codes was generated electronically at least 25 
times. Thus, for a group of 200 eligible professionals, we could 
extrapolate from our assumption that only half of the eligible 
professionals in an average practice of 200 eligible professionals 
would have the opportunity to report the electronic prescribing measure 
per group practice, the total number of reporting instances for the 100 
remaining eligible professionals would be 2,500. We invite comments on 
the proposed criteria for determining whether a group practice is a 
successful e-prescriber. We also invite feedback on our underlying 
assumptions.
    Section 1848(m)(2)(B) of the Act specifies that the limitation on 
the applicability of the e-prescribing incentive discussed in section 
II.G.5.d.

[[Page 33600]]

of this proposed rule applies to group practices as well as individual 
eligible professionals. Therefore, in determining whether a group 
practice will receive an e-prescribing incentive payment for 2010 by 
meeting the proposed reporting criteria described above, we would 
determine whether the 10 percent threshold is met based on the claims 
submitted by the group practice. This calculation is expected to take 
place in the first quarter of 2011 and would be determined by dividing 
the group practice's total 2010 allowed charges for all covered 
professional services submitted for the measure's HCPCS codes by the 
group practice's total Medicare Part B allowed charges for all covered 
professional services. If the result is 10 percent or more, then the 
statutory limitation will not apply and a group practice that is 
determined to be a successful e-prescriber would qualify to earn the e-
prescribing incentive payment. If the result is less than 10 percent, 
then the statutory limitation will apply and the group practice would 
not qualify to earn the e-prescribing incentive payment.
f. Public Reporting of Names of Successful E-Prescribers
    As discussed in section II.G.2.k. of this proposed rule, section 
1848(m)(5)(G) of the Act 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 submit 
data on quality measures for the PQRI and the names of the eligible 
professionals (or group practices) who are successful e-prescribers. In 
accordance with section 1848(m)(5)(G) of the Act, we indicated in the 
CY 2009 PFS final rule with comment period (73 FR 69851 through 69852) 
our intent, in 2010, to post the names of eligible professionals who 
are successful e-prescribers for the 2009 E-Prescribing Incentive 
Program at http://www.medicare.gov.
    As required by section 1848(m)(5)(G) of the Act, we propose to make 
public the names of eligible professionals and group practices who are 
successful electronic prescribers for the 2010 E-Prescribing Incentive 
Program on the Physician and Other Health Care Professionals Directory. 
The names of individual eligible professionals and group practices who 
are successful electronic prescribers for the 2010 E-Prescribing 
Incentive Program will be available in 2011 after the 2010 incentive 
payments are paid.
    For purposes of publicly reporting the names of individual eligible 
professionals on the Physician and Other Health Care Professionals 
Directory, we propose to post the names of individual eligible 
professionals: (1) Whose 2010 PFS allowed charges make up at least 10 
percent of the eligible professional's Medicare Part B charges for 
2010; (2) who report that at least 1 prescription generated during an 
encounter included in the electronic prescribing measure denominator 
was generated electronically (that is, who reported the G8443 code) at 
least 25 times during the 2010 reporting period; and (3) who receive an 
e-prescribing incentive payment for covered professional services 
furnished January 1, 2010 through December 31, 2010. Since the PQRI and 
the E-Prescribing Incentive Program are two separate incentive programs 
and individual eligible professionals are not required to participate 
in both programs to earn an incentive under either program, it is 
possible for an eligible professional who participates in both 
incentive programs to be listed both as an individual eligible 
professional who satisfactorily submits data on quality measures for 
the PQRI and a successful electronic prescriber if he or she meets the 
criteria for both incentive programs.
    For purposes of publicly reporting the names of group practices on 
the Physician and Other Health Care Professionals Directory, we propose 
to post the names of group practices who: (1) Report that at least 1 
prescription generated during an encounter included in the electronic 
prescribing measure denominator was generated electronically (that is, 
who reported the G8443 code) at least 2500 times during the 2010 
reporting period; and (2) receive an e-prescribing incentive payment 
for covered professional services furnished January 1, 2010 through 
December 31, 2010. Although group practices would be required to 
participate in both programs to earn an incentive under either program, 
the criteria for satisfactory reporting of PQRI measures for group 
practices are different from the criteria for successful reporting of 
the electronic prescribing measure by group practices. Therefore, it is 
possible for a group practice to be listed as a group practice that 
satisfactorily submits data on quality measures for the PQRI but not as 
a successful electronic prescriber or vice versa.
6. Section 135: Implementation of Accreditation Standards for Suppliers 
Furnishing the Technical Component (TC) of Advanced Diagnostic Imaging 
Services
    Section 1834(e) of the Act, as added by section 135(a) of the 
MIPPA, requires that beginning January 1, 2012, Medicare payment may 
only be made for the technical component (TC) of advanced diagnostic 
imaging services for which payment is made under the fee schedule 
established in section 1848(b) of the Act to a supplier who is 
accredited by an accreditation organization designated by the 
Secretary.
a. Accreditation Requirement
    This proposed rule would set forth the criteria for designating 
organizations to accredit suppliers furnishing the technical component 
(TC) of advanced diagnostic imaging services as specified in section 
1834(c) of the Act. In addition, it would set forth the required 
procedures to ensure that the criteria used by an accreditation 
organization meet minimum standards for each imaging modality. These 
statutory requirements would be codified in Sec.  414.68 of the payment 
rules for physicians and other practitioners.
    The CMS-designated accreditation organization would apply standards 
that set qualifications for medical personnel who are not physicians 
but who furnish the TC. The standards would describe the qualifications 
and responsibilities of medical directors and supervising physicians 
including the following: Recognizing whether a particular medical 
director or supervising physician received training in advanced imaging 
services in a residency program; and has attained, through experience, 
the necessary expertise to be a medical director or supervising 
physician; has completed any continuing medical education courses 
related to advanced imaging services; or has met such other standards 
as the Secretary determines appropriate. In addition, the standards 
would require suppliers to: (1) Establish and maintain a quality 
control program to ensure the technical quality of diagnostic images 
produced by the supplier; (2) ensure the equipment used meets 
performance specifications; and (3) ensure safety of personnel. While 
the statute authorizes the Secretary to establish as criteria for 
accreditation any other standards or procedures the Secretary 
determines appropriate, we are not proposing to establish other 
standards or procedures at this time.
    We expect to publish a notice to solicit applications from entities 
for the purposes of becoming a designated accreditation organization 
the same day that this proposed rule's subsequent final rule is issued, 
on or before November 1, 2009. Due to the tight timeframe, we expect to 
meet the January 1, 2010 statutory deadline in

[[Page 33601]]

order to designate organizations to accredit suppliers furnishing the 
TC of advanced diagnostic imaging services by waiving the 60-day delay 
in the imaging accreditation provisions of the final rule.
b. Accreditation for Suppliers
    Section 1834(e) of the Act requires the Secretary to designate and 
approve accreditation organizations to accredit suppliers of the TC of 
advanced diagnostic imaging services. To promote consistency in 
accrediting providers and suppliers throughout the Medicare program, we 
are proposing to use existing procedures for the application, 
selection, and oversight of accreditation organizations detailed at 42 
CFR part 488, subparts A and D and apply them to organizations 
accrediting suppliers of the TC of advanced diagnostic imaging 
services. We are proposing modifications to the existing part 488 
requirements to meet the specialized needs of the advanced imaging 
industry. These modifications will require an independent accreditation 
organization applying for approval as a designated accreditation 
organization to include in their application:
     A detailed description of how the organization's 
accreditation criteria satisfy the statutory standards at section 
1834(e)(3) of the Act, specifically:
    + Qualifications of medical personnel who are not physicians and 
who furnish the TC of advanced diagnostic imaging services;
    + Qualifications and responsibilities of medical directors and 
supervising physicians, such as training in advanced diagnostic imaging 
services in a residency program, expertise obtained through experience, 
or continuing medical education courses;
    + Procedures to ensure the safety of persons who furnish the TC of 
advanced diagnostic imaging services and individuals to whom such 
services are furnished;
    + Procedures to ensure the reliability, clarity, and accuracy of 
the technical quality of diagnostic images produced by the supplier.
     An agreement to conform accreditation requirements to any 
changes in Medicare statutory requirements in section 1834(e) of the 
Act.
     Information to demonstrate the accreditation 
organization's knowledge and experience in the advanced diagnostic 
imaging arena.
     The organization's proposed fees for accreditation for 
each modality in which the organization intends to offer accreditation 
and any plans for reducing the burden and cost of accreditation to 
small and rural suppliers.
     Any specific documentation requirements and attestations 
requested by CMS as a condition of designation under this part.
    If, after review of an accreditation organization's submission of 
information, we determine that additional information is necessary to 
make a determination for approval or denial of the accreditation 
organization's application to be designated as an accreditation 
organization for suppliers of the TC of advanced diagnostic imaging 
services, the organization will be notified and afforded an opportunity 
to provide the additional information. We may visit the organization's 
offices to verify representations made by the organization in its 
application, including, but not limited to, review of documents and 
interviews with the organization's staff. The accreditation 
organization will receive a formal notice from CMS stating whether the 
request for designation has been approved or denied. If approval was 
denied, the notice will include the basis for denial and outline the 
reconsideration procedures. We will make every effort to issue a final 
decision no more than 30 calendar days from the time the completed 
reapplication is received by CMS. An accreditation organization may 
withdraw its application for designation under section 1834(e) of the 
Act at any time before the formal notice of approval is received. An 
accreditation organization that has been notified that its request for 
designation has been denied may request reconsideration in accordance 
with Sec.  488.201 through Sec.  488.211 in Subpart D. Any 
accreditation organization whose request for designation has been 
denied may resubmit its application if the organization (1) revises its 
accreditation program to address the rationale for denial of its 
previous request; (2) provides reasonable assurance that its accredited 
companies meet applicable Medicare requirements; and (3) resubmits the 
application in its entirety. If an accreditation organization has 
requested a reconsideration of our determination that its request for 
designation under section 1834(e) of the Act is denied, it may not 
submit a new application for the type of modality that is at issue in 
the reconsideration until the reconsideration is final.
    A panel will evaluate all proposals from accreditation 
organizations seeking designation under section 1834(e) of the Act 
using existing CMS survey and certification processes as established in 
Sec.  488.4.
c. Payment Rules for Suppliers of the TC of Advanced Diagnostic Imaging 
Services (Sec.  414.68)
    We would specify in Sec.  414.68 the statutory requirement of 
section 1834(e) of the Act that all suppliers of the TC of advanced 
diagnostic imaging services be accredited by a CMS-designated 
accreditation organization by January 1, 2012 for payments made under 
the fee schedule established under section 1848(b). In Sec.  414.68(a), 
we are proposing to define the following:
     ``Accredited supplier'' as a supplier that has been 
accredited by a CMS-approved accreditation organization.
     ``Advanced Diagnostic Imaging Services'' as diagnostic 
magnetic resonance imaging, computed tomography, nuclear medicine, and 
positron emission tomography. We are not proposing at this time to 
include other diagnostic imaging services in this definition under 
section 1834(e)(1)(B)(ii) of the Act.
     ``CMS-approved accreditation organization'' as an 
independent accreditation organization designated by CMS to perform the 
accreditation function established in section 1834(e) of the Act.
d. Ongoing Responsibilities of CMS-Approved Accreditation Organizations
    We are proposing to require a CMS-approved accreditation 
organization to perform the following activities on an ongoing basis. 
Provide to CMS in written form and on an ongoing basis all of the 
following:
     Copies of all accreditation surveys of specific suppliers 
along with any survey-related information that we may require 
(including corrective action plans and summaries of CMS requirements 
that were not met).
     Notice of all accreditation decisions.
     Notice of all complaints related to suppliers of the TC of 
advanced diagnostic imaging service.
     Information about any suppliers of the TC of advanced 
diagnostic imaging service for which the accrediting organization has 
denied the supplier's accreditation status.
     Notice of any proposed changes in its accreditation 
standards or requirements or survey process. If the organization 
implemented the changes before or without CMS approval, we could 
withdraw approval of the accreditation organization.
     Permit its surveyors to serve as witnesses if CMS takes an 
adverse action based on accreditation findings.
     Provide CMS with written notice of any deficiencies and 
adverse actions

[[Page 33602]]

implemented by the CMS-approved accreditation organization against an 
accredited supplier of the TC of advanced diagnostic imaging within 2 
days of identifying such deficiencies, if the deficiencies pose 
immediate jeopardy to a beneficiary or to the general public.
     Provide written notice of the withdrawal to all accredited 
suppliers within 10 days of CMS' notice to withdraw approval of the 
accreditation organization.
     Provide, on an annual basis, summary data specified by CMS 
that are related to the past year's accreditation activities and 
trends.
e. Continuing CMS Oversight of CMS-Approved Accreditation Organizations
    We are proposing to add Sec.  414.68 to establish specific criteria 
and procedures for continuing oversight and for withdrawing approval of 
an approved accreditation organization.
(1) Validation Audits
    We are proposing to audit the accredited organizations in order to 
validate the survey accreditation process of approved accreditation 
organizations in the TC of advanced imaging. The audits would be 
conducted on a representative sample of suppliers who have been 
accredited by a particular accrediting organization or in response to 
allegations of supplier noncompliance with the standards. When 
conducted on a representative sample basis, we are proposing that the 
audit would be comprehensive and address all of the standards or would 
focus on a specific standard in issue. When conducted in response to an 
allegation, we will specify that the CMS team or our contractor would 
audit for any standard that we determined was related to the 
allegations. We are proposing to require a supplier selected for a 
validation audit to authorize the validation audit to occur and 
authorize the CMS team or our contractor to monitor the correction of 
any deficiencies found through the validation audit. If a supplier 
selected for a validation audit failed to comply with the requirements 
at Sec.  414.68, the supplier would no longer meet the Medicare 
requirements and, under this proposal, the supplier's accreditation for 
the TC of the advanced medical imaging would be revoked.
    We are proposing that a CMS team or our contractor would conduct an 
audit of an accredited organization, examine the results of the 
accreditation organization's own survey procedure onsite, or observe 
the accreditation organization's survey, in order to validate the 
organization's accreditation process. At the conclusion of the review, 
we would identify any accreditation programs for which validation audit 
results indicated the following:
     A 10 percent rate of disparity between findings by the 
accreditation organization and findings by CMS or our contractor on 
standards that did not constitute immediate jeopardy to patient health 
and safety if not met;
     Any disparity between findings by the accreditation 
organization and findings by CMS or our contractor on standards that 
constituted immediate jeopardy to patient health and safety if not met; 
or
     There were widespread or systemic problems in the 
organization's accreditation process such that the accreditation no 
longer provided assurance that suppliers met or exceeded the Medicare 
requirements, irrespective of the rate of disparity.
(2) Notice of Intent To Withdraw Approval for Designating Authority
    If a validation audit, onsite observation, or our concerns with the 
ethical conduct (that impacts the health and safety of the beneficiary) 
of an accreditation organization suggest that the accreditation 
organization is not meeting the requirements of proposed Sec.  414.68, 
we would provide the organization written notice of its intent to 
withdraw approval of the accreditation organization's designating 
authority.
(3) Withdrawal of Approval for Designating Authority
    We are proposing to withdraw approval of an accreditation 
organization at any time if we determine that:
     Accreditation by the organization no longer provides 
sufficient assurance that the suppliers of the TC of advanced imaging 
meet the requirements of section 1834(e) of the Act and the failure to 
meet those requirements could pose an immediate jeopardy to the health 
and safety of Medicare beneficiaries;
     Constitutes a significant hazard to the public health; or
     The accreditation organization failed to meet its 
obligations for application and reapplication procedures.
(4) Reconsideration
    We are proposing to implement requirements under part 488 without 
substantive changes as the requirements have been utilized for the 
health care providers covered under part 488 since 1992. We are 
proposing that an accreditation organization dissatisfied with a 
determination that its accreditation requirements did not provide or do 
not continue to provide reasonable assurance that the suppliers 
accredited by the accreditation organization met the applicable 
standards would be entitled to a reconsideration. We are also proposing 
to reconsider any determination to deny, remove, or not renew the 
approval of the designating authority to accreditation organizations if 
the accreditation organization filed a written request for 
reconsideration through its authorized officials or through its legal 
representative.
    We are proposing to require the accreditation organization to file 
the request within 30 calendar days of the receipt of CMS notice of an 
adverse determination or non-renewal. We propose to require the request 
for reconsideration to specify the findings or issues with which the 
accreditation organization disagreed and the reasons for the 
disagreement. A requestor could withdraw its request for 
reconsideration at any time before the issuance of a reconsideration 
determination. In response to a request for reconsideration, we would 
provide the accrediting organization the opportunity for an informal 
hearing that would be conducted by a hearing officer appointed by the 
CMS Administrator and provide the accrediting organization the 
opportunity to present, in writing and in person, evidence or 
documentation to refute the determination to deny approval, or to 
withdraw or not renew its designating authority.
    We would provide written notice of the time and place of the 
informal hearing at least 10 business days before the scheduled date. 
The informal reconsideration hearing would be open to CMS and the 
organization requesting the reconsideration, including authorized 
representatives, technical advisors (individuals with knowledge of the 
facts of the case or presenting interpretation of the facts), and legal 
counsel. The hearing would be conducted by the hearing officer who 
would receive testimony and documents related to the proposed action. 
Testimony and other evidence could be accepted by the hearing officer. 
However, it would be inadmissible under the usual rules of court 
procedures. The hearing officer would not have the authority to compel 
by subpoena the production of witnesses, papers, or other evidence. 
Within 45 calendar days of the close of the hearing, the hearing 
officer would

[[Page 33603]]

present the findings and recommendations to the accrediting 
organization that requested the reconsideration. The written report of 
the hearing officer would include separate numbered findings of fact 
and the legal conclusions of the hearing officer. The hearing officer's 
decision would be final.
    We are interested in obtaining additional information on the role 
of radiology assistants (RA) and radiology practitioner assistants 
(RPA), including the level of physician supervision that would be 
appropriate when RAs and RPAs are involved in the performance of the TC 
of advanced medical imaging, whether the role varies by State, and 
related information. It would be particularly helpful for the commenter 
to identify specific clinical scenarios with associated CPT codes that 
would represent such services involving RAs and RPAs.
7. Section 139: Improvements for Medicare Anesthesia Teaching Programs
    Section 139 of the MIPPA establishes a ``special payment rule for 
teaching anesthesiologists'' and provides a directive to the Secretary 
regarding payments for the services of ``teaching certified registered 
nurse anesthetists'' (teaching CRNAs). It also specifies the periods 
when the teaching anesthesiologist must be present during the procedure 
in order to receive payment for the case at 100 percent of the fee 
schedule amount (the regular fee schedule rate). These provisions are 
effective for services furnished on or after January 1, 2010.
a. Teaching Anesthesiologists: Special Payment Rule
    The criteria for the payment of teaching anesthesiology services 
and the special rule for the teaching anesthesiologist are similar to 
the current criteria for payment of teaching surgeon services and the 
payment rule for the teaching surgeon involved in overlapping resident 
cases. Thus, there is a similarity in the payment rules for these 
physician specialties who work closely together.
(1) Payment for Anesthesia Services Furnished by a Physician
    If the physician, usually an anesthesiologist, is involved in 
furnishing anesthesia services to a patient, the services can be 
furnished under one of three different scenarios. The anesthesiologist 
may--
     Personally perform the anesthesia services alone;
     Be involved in the case as a teaching anesthesiologist 
with an anesthesia resident; or
     Provide medical direction of the performance of anesthesia 
services for two, three or four concurrent cases involving a qualified 
individual (who may be a CRNA, an anesthesiologist assistant (AA), an 
anesthesia resident, or a student nurse anesthetist under certain 
circumstances).
    Under the statute and CMS policy, if the anesthesiologist 
personally performs the anesthesia service alone or is involved in the 
case as a teaching anesthesiologist with an anesthesia resident, 
payment for the anesthesiologist's service is made at the regular fee 
schedule rate.
    If the anesthesiologist furnishes medical direction for two, three 
or four concurrent anesthesia procedures, then payment for the 
anesthesiologist's service is made, in accordance with section 
1848(a)(4)(B) of the Act, at 50 percent of the otherwise applicable fee 
schedule amount.
(2) Methodology for Payment of Anesthesia Services
    Payment for anesthesia services furnished by a physician is made 
under the PFS, under section 1848(b)(2)(B) of the Act. The methodology 
for the calculation of the allowable amount is unique to anesthesia 
service only. Payment is made on the basis of anesthesia base units and 
time units, calculated from the actual anesthesia time of the case, 
instead of on the basis of work, PE, and malpractice RVUs. Payment for 
anesthesia services is also based on the anesthesia CF instead of the 
general PFS CF.
(3) Section 139(a) of the MIPPA
    Section 139(a) of the MIPPA adds a new paragraph at section 
1848(a)(6) of the Act to establish a ``special payment rule for 
teaching anesthesiologists''. This provision allows payment to be made 
at the regular fee schedule rate for the teaching anesthesiologist's 
involvement in the training of residents in either a single anesthesia 
case or in two concurrent anesthesia cases furnished on or after 
January 1, 2010. We will refer to anesthesia cases involving the 
training of residents as ``resident cases'' below in this section.
(4) Discussion
    The Accreditation Council on Graduate Medical Education (ACGME) is 
a branch of the AMA, and it accredits allopathic residency programs. In 
order for a hospital to receive Medicare graduate medical education 
payments for its training programs, the residents must be in an 
``approved medical residency program'' Under Sec.  413.75(b), an 
approved medical residency program is one approved by one of the 
national organizations listed in Sec.  415.152. One of the national 
organizations is the ACGME.
    ACGME's policies and procedures require that each accredited 
residency program comply with the institutional requirements and the 
specialty program requirements. For approved anesthesia residency 
programs, ACGME requirements for faculty supervision and training of 
anesthesia residents specify that faculty members not direct anesthesia 
at more than two anesthetizing locations in the clinical setting. (See 
the ACGME Web site at http://www.acgme.org.)
    Consistent with this requirement, the American Society of 
Anesthesiologists (ASA) has advised us that, when providing services in 
two concurrent cases, a teaching anesthesiologist might be engaged in 
two concurrent anesthesia resident cases, or in two mixed concurrent 
cases, one a resident case and the other a CRNA or AA case.
    The statute applies the special payment rule for teaching 
anesthesiologists to the single resident case or two concurrent cases 
involving anesthesia residents as long as the teaching anesthesiologist 
meets the requirements in sections 1848(6)(A) and 1848(6)(B) of the 
Act. However, the statute does not directly address a single resident 
case that is concurrent to another case involving a CRNA, AA, or other 
qualified individual who can be medically directed. The issue is 
whether the medical direction payment rules apply to each of these 
cases or whether an alternative payment policy may apply.
    One option in implementing this provision would be to strictly 
limit the special payment rule for teaching anesthesiologists to the 
single resident case (which is not concurrent to any other case) or the 
two concurrent resident cases (which are not concurrent to any other 
cases). For the mixed concurrent case, we could continue to apply our 
current medical direction payment policy to both the resident case and 
the other concurrent case. This would represent a continuation of our 
current medical direction payment policy, and would be predicated on 
the assumption that this is consistent with Congressional intent since 
the medical direction payment provisions at section 1848(a)(4) of the 
Act were left largely unchanged by section 139(a) of the MIPPA.
    The other option would be to apply the special payment rule for 
teaching

[[Page 33604]]

anesthesiologists to the resident case when it is concurrent to a 
medically directed case, and to apply the medical direction payment 
policy to the medically directed case. While this represents a broader 
interpretation, it still limits the applicability of the special 
payment rule for teaching anesthesiologists to resident cases 
consistent with the terms of section 139 of the MIPPA.
    The special payment rule under section 1848(a)(6) of the Act 
clearly applies for two concurrent anesthesia resident cases. The ACGME 
requirements also allow the supervision of two concurrent cases, but 
are not specific regarding whether the requirements relate only to two 
resident cases, or also to mixed concurrent cases. However, both the 
statute and ACGME requirements seem amenable to a policy that would 
allow the special teaching payment rule to apply in mixed concurrent 
cases, that is, the single resident case that is concurrent to another 
case not involving a resident. Additionally, we are concerned that if 
we continued to apply the medical direction payment policy to mixed 
concurrent cases, then financial differences in payment policy might 
cause teaching anesthesiologists to make changes in the scheduling of 
mixed resident and CRNA cases. This might limit the utilization of 
CRNAs in certain scenarios.
    Accordingly, we are proposing to delete the current regulatory 
language at Sec.  414.46(e) (which is no longer relevant) and add new 
language to specify that the special payment rule for teaching 
anesthesiologists applies to resident cases under the following 
scenarios:
     The teaching anesthesiologist is involved in one resident 
case (which is not concurrent to any other anesthesia case);
     The teaching anesthesiologist is involved in each of two 
concurrent resident cases (which are not concurrent to any other 
anesthesia case); or
     The teaching anesthesiologist is involved in one resident 
case that is concurrent to another case paid under medical direction 
payment rules.
    Other than the application of the special payment rule for teaching 
anesthesiologists in the mixed concurrent case described above, we are 
not proposing any other revisions to our medical direction payment 
policies.
b. Teaching Anesthesiologists: Criteria for Payment
(1) Criteria for Payment of Teaching Anesthesiologists
    Currently, the teaching anesthesiologist can be paid at the regular 
fee schedule rate for his or her involvement in a single resident case. 
As specified in Sec.  415.178, the teaching anesthesiologist must be 
present with the anesthesia resident during all critical portions of 
the anesthesia procedure and be immediately available to furnish 
services during the entire procedure. Our manual instructions permit 
different physicians in the same anesthesia group to provide parts of 
the anesthesia service, and for the group to bill for the single 
anesthesia service. We refer to this practice as an ``anesthesia 
handoff.'' (See Medicare Claims Processing Manual 100-04, Chapter 12, 
Section 50 C.) Of course, the medical record must document those 
individual physicians who furnished the services.
    This manual instruction is not limited in scope to nonteaching 
hospitals. Thus, it is possible that teaching anesthesiologists have 
interpreted it to permit handoffs during resident cases.
    Our manual instructions state that for two overlapping surgeries, 
the teaching surgeon must be present during the critical or key 
portions of both operations (See Medicare Claims Processing Manual 100-
04, Chapter 12, Section 100.1.2). It is our understanding that teaching 
surgeons do not hand off to another teaching surgeon during a key or 
critical portion of the surgical resident case.
(2) Section 139(a)(2) of the MIPPA
    This section adds a new paragraph at section 1848(a)(6) of the Act 
which requires, in order for the special payment rule for teaching 
anesthesiologists to apply, that the teaching anesthesiologist is 
present during all critical or key portions of the anesthesia service 
or procedure and the teaching anesthesiologist (or another 
anesthesiologist with whom the teaching anesthesiologist has entered 
into an arrangement) is immediately available to furnish anesthesia 
services during the entire procedure. The new MIPPA provision regarding 
payment for services of a teaching anesthesiologist for two concurrent 
resident cases is similar to our current policy regarding payment for 
services of a teaching surgeon for two overlapping surgical resident 
cases.
(3) Discussion
    The ASA has informed us that teaching anesthesiologists who work in 
the same anesthesia group sometimes provide different parts of the key 
or critical portions of a single anesthesia procedure. This type of a 
handoff situation might occur within an anesthesia group practice when 
there is an anesthesia procedure of long duration, but would not be 
limited to that circumstance.
    From a quality standpoint, we do not believe multiple handoffs 
among teaching anesthesiologists during a case that involves the 
training of an anesthesia resident would be optimal. We do not have 
data on the extent to which anesthesia handoffs occur during resident 
or other cases, or whether quality of anesthesia care is affected. We 
note that section 1848(a)(6)(A) of the Act refers only to ``the'' 
teaching anesthesiologist, and requires that the teaching 
anesthesiologist be present during all critical or key portions of the 
service. However, section 1848(a)(6)(B) of the Act seems to contemplate 
some level of handoffs between teaching anesthesiologists, at least 
between those who have entered into an arrangement for such handoffs.
    One option would be to permit different anesthesiologists in the 
same anesthesia group practice to be considered ``the teaching 
physician'' for purposes of being present at the key or critical 
portions of the anesthesia case. (These physicians must have reassigned 
their benefits to the group practice in order for the group to bill.) 
Although this option would be less disruptive to the current anesthesia 
practice arrangements (as reported by the ASA), it would establish 
rules for teaching anesthesiologists that are different from those for 
teaching surgeons.
    Another option would be to require that, in order to meet the 
requirement of section 1848(a)(6)(A) of the Act, only one individual 
teaching anesthesiologist must be present during all of the key or 
critical portions of the procedure. However, another teaching 
anesthesiologist with whom ``the teaching anesthesiologist'' under 
subparagraph (A) has an arrangement could be immediately available to 
furnish services during a non-critical or non-key portion of the 
procedure in order to meet the requirement under subparagraph (B). We 
believe this is the most logical reading of the statute and would be 
consistent with the way the teaching surgeon payment policy is applied 
for overlapping surgical cases.
    In addition to explaining available options for implementing this 
provision, we are also soliciting specific comments on how the 
continuity of care and the quality of anesthesia care are preserved 
during handoffs. We are interested in whether there is an accepted 
maximum number of handoffs and whether there are any industry studies 
that have examined this issue. We would like to hear from anesthesia 
practices that do not use handoffs and what procedures they have 
implemented to achieve this

[[Page 33605]]

result. Finally, we would like to know what factors or variables are 
contributing to anesthesia handoffs and what short term adjustments can 
be made to affect these factors.
    Although we are interested in receiving comments on these topics, 
we are proposing to more narrowly interpret the law and require that 
only one individual teaching anesthesiologist be present during all of 
the key or critical portions of the anesthesia procedure. We are also 
proposing that another teaching anesthesiologist with whom the teaching 
anesthesiologist has an arrangement could be immediately available to 
furnish services during a non-critical or non-key portion of the 
procedure.
c. Teaching CRNAs
(1) Payment for Anesthesia Services Furnished by a CRNA
    Currently, a CRNA who provides anesthesia services while under the 
medical direction of an anesthesiologist is paid at 50 percent of the 
regular fee schedule rate as specified in section 1833(l)(4)(B)(iii) of 
the Act. A CRNA who provides anesthesia services without the medical 
direction of a physician is paid the regular fee schedule rate as 
specified in section 1833(l)(4)(A) of the Act.
(2) Payment for Anesthesia Services Furnished by a Teaching CRNA With a 
Student Nurse Anesthetist
    The legislation that created the CRNA fee schedule payment system 
(that is, section 9320 of the Omnibus Budget Reconciliation Act of 1986 
(Pub. L. 99-509)) did not address payment for services furnished by 
teaching CRNAs involved in the training of student nurse anesthetists.
    In the preamble to the CRNA fee schedule final rule published in 
the July 31, 1992 Federal Register (57 FR 33888), we stated that we 
would pay the teaching CRNA who is not medically directed by a 
physician at the regular fee schedule rate for his or her involvement 
in a single case with a student nurse anesthetist as long as he or she 
was present with the student throughout the anesthesia case. No payment 
would be made if the teaching CRNA divided his or her time between two 
concurrent cases involving student nurse anesthetists.
    In August 2002, based on the recommendations of the American 
Association of Nurse Anesthetists (AANA), we modified our policy to 
allow the teaching CRNA not medically directed by a physician to be 
paid a portion of the regular fee schedule rate for each of two 
concurrent cases involving student nurse anesthetists. If the teaching 
CRNA is present with the student nurse anesthetist during the pre- and 
post-anesthesia care for each of the cases involving student nurse 
anesthetists, the teaching CRNA can bill the full base units (comprised 
of pre- and post-anesthesia services not included in the anesthesia 
time units) for each case and the actual amount of anesthesia time per 
case. The resulting payment for each of these anesthesia cases is 
greater than 50 percent, but less than 100 percent, of the regular fee 
schedule amount because the full base units plus the actual anesthesia 
time units spent by the teaching CRNA in each of the two cases yields a 
payment that is greater than 50 percent of the regular fee schedule 
amount.
(3) Comparison of Payment Policies for Teaching CRNAs and Teaching 
Anesthesiologists
    For several years, the American Society of Anesthesiologists (ASA) 
requested that we revise our payment regulations to allow the teaching 
anesthesiologist to be paid the regular fee schedule amount for each of 
two concurrent resident cases. In the CY 2004 PFS final rule with 
comment period (68 FR 63224), we finalized a policy to permit the 
teaching anesthesiologist to be paid similarly to a teaching CRNA for 
each of two concurrent resident cases. This policy took effect for 
services furnished on or after January 1, 2004.
    Thus, the payment policy is the same for a teaching CRNA for each 
of two concurrent student nurse anesthetist cases, and for a teaching 
anesthesiologist for each of two concurrent resident cases. The policy 
is that the anesthesia provider is paid the full base units plus time 
units, based on the actual anesthesia time, relating to each of two 
concurrent cases.
(4) Payment Policy for an Anesthesiologist, or an Anesthesiologist and 
CRNA Jointly, With a Student Nurse Anesthetist
    Currently, there are circumstances where an anesthesiologist may be 
involved in the training of student nurse anesthetists in two 
concurrent anesthesia cases. These anesthesia cases are not paid under 
the teaching anesthesiologist payment policy, but are paid under the 
usual medical direction payment policy. Payment can be made for the 
physician's medical direction (that is, 50 percent of the regular fee 
schedule amount) for each of two concurrent cases.
    If an anesthesiologist is medically directing two concurrent cases 
involving student nurse anesthetists and a CRNA is also jointly 
involved with the two student nurse anesthetist cases, then the 
physician service, in each case, can be paid under the medical 
direction rules at 50 percent of the regular fee schedule. Payment for 
the CRNA services would also be made at the medically directed rate 
(that is, 50 percent of the regular fee schedule) for CRNA services, 
but the time units used to compute the anesthesia fee would be based on 
the actual time the CRNA is involved in each case.
(5) Section 139(b) of the MIPPA
    Section 139(b) of the MIPPA instructs the Secretary to make 
appropriate adjustments to Medicare teaching CRNA payment policy so 
that it--
     Is consistent with the adjustments made by the special 
payment rule for teaching anesthesiologists under section 139(a) of the 
MIPPA; and
     Maintains the existing payment differences between 
teaching anesthesiologists and teaching CRNAs.
    We are proposing to implement the first directive (under section 
139(b)(1) of the MIPPA) by establishing a new payment policy for 
teaching CRNAs that is similar to the special payment rule for teaching 
anesthesiologists, and to limit applicability of the rule to teaching 
CRNAs who are not medically directed. We are proposing to add a new 
regulation at Sec.  414.61 to explain the conditions under which the 
special payment rule will apply and the method for calculating the 
amount of payment for anesthesia services furnished on or after January 
1, 2010, by teaching CRNAs involved in the training of student nurse 
anesthetists. Under this proposal, we would pay the teaching CRNA at 
the regular fee schedule rate for each of two concurrent student nurse 
anesthetist cases. Our medical direction payment policy would continue 
to apply if both an anesthesiologist and a CRNA are involved in a 
student nurse anesthetist case that is concurrent to other anesthesia 
cases.
    We believe the second directive in section 139(b)(2) of the MIPPA 
will be satisfied as a result of these proposals. Section 139(b)(1) of 
the MIPPA instructs CMS to make appropriate adjustments to implement a 
payment policy for teaching CRNAs that is consistent with the special 
payment rule for teaching anesthesiologists. Section 139(b)(2) of the 
MIPPA instructs CMS to maintain the existing payment differences 
between teaching anesthesiologists and teaching CRNAs. There currently 
are no substantive differences in payment

[[Page 33606]]

between teaching anesthesiologists and teaching CRNAs, and there would 
continue to be no such differences under our proposed policies.
(6) Payment for Teaching CRNAs Involved in Anesthesia Cases With 
Student Nurse Anesthetists
    Under current policy, when a CRNA is involved in a single student 
nurse anesthetist case, the teaching CRNA must be present with the 
student throughout the case in order to be paid at the regular fee 
schedule rate. We are not proposing any change to this policy.
    When the teaching CRNA is involved in two concurrent student nurse 
anesthetist cases, payment is based on the amount of anesthesia time 
the teaching CRNA spends with the student in each case. For example, if 
the teaching CRNA spends 40 percent of his or her time in concurrent 
case 1 and 60 percent of his or her time in concurrent case 
2, and the total anesthesia time in both cases is 3 hours (or 
180 minutes), then we would currently pay as follows:
     Case 1: (Base units + (0.4 x 180/15)) x 
Anesthesia CF
     Case 2: (Base units + (0.6 x 180/15)) x 
Anesthesia CF
    The current payment policy has been predicated on paying the 
teaching CRNA for his or her actual time spent in the student nurse 
anesthetist case. We are now proposing to pay the teaching CRNA at the 
regular fee schedule rate for his or her involvement in two concurrent 
cases. If our goal is to minimize the effect of this change on teaching 
CRNAs' practice arrangements and time devoted to cases, then we would 
propose that the teaching CRNA continue to devote 100 percent of his or 
her time to the two concurrent cases. The teaching CRNA would decide 
how to allocate his or her time to optimize patient care in the two 
cases based on the complexity of the anesthesia case, the experience 
and skills of the student nurse anesthetist, the patient's health 
status, and other factors.
    An alternative to this policy would be to apply the same criteria 
for teaching CRNAs as we use in Sec.  415.178 with respect to teaching 
anesthesiologists. These criteria require the teaching anesthesiologist 
to be present during all critical or key portions of the anesthesia 
service. However, we believe these criteria are relevant and 
appropriate only for teaching anesthesiologists due to significant 
differences in experience, education and other qualifications between 
anesthesia residents and student nurse anesthetists. The anesthesia 
resident has completed medical school and is typically a licensed 
physician. In contrast, the student nurse anesthetist is an RN who 
usually has some clinical experience in ICU or critical care nursing 
prior to starting the CRNA training program. Thus, we believe the 
resident is more qualified through medical training and education than 
the student nurse anesthetist to provide elements of the anesthesia 
service without the immediate presence of the teaching 
anesthesiologist. Therefore, we propose to retain our current policy.
    We note that the Congress did not amend the statutory provisions 
relating to medical direction at section 1848(a)(4) of the Act. We do 
not believe the directives at section 139(b) of the MIPPA extend to 
other arrangements in which anesthesiologists alone or both 
anesthesiologists and CRNAs jointly supervise student nurse 
anesthetists during concurrent anesthesia cases. Therefore, we are not 
proposing any changes to our current payment policies for anesthesia 
services furnished under other circumstances. We are proposing that 
when an anesthesia provider (physician or CRNA) furnishes anesthesia 
services in concurrent cases under other circumstances, the current 
policies regarding medical direction will continue to apply.
8. Section 144(a): Payment and Coverage Improvements for Patients With 
Chronic Obstructive Pulmonary Disease and Other Conditions--Cardiac 
Rehabilitation Services
    Section 144(a) of the MIPPA amended Title XVIII of the Act, in 
pertinent part, to provide for coverage of cardiac rehabilitation (CR) 
and intensive cardiac rehabilitation (ICR) under Medicare Part B. The 
statute specifies certain conditions for these services, with coverage 
to begin on January 1, 2010. The addition of the new CR and ICR 
programs is designed to improve the health care of Medicare 
beneficiaries with cardiovascular disease. This proposed rule 
implements these MIPPA provisions in order to ensure services enhance 
the patient's clinical outcomes.
a. Background
    Intensive cardiac rehabilitation (ICR) is a relatively new practice 
that is also commonly referred to as a ``lifestyle modification'' 
program. These programs typically involve the same elements as general 
CR programs, but are furnished in highly structured environments in 
which sessions of the various components may be combined for longer 
periods of CR and also may be more rigorous.
b. Cardiac Rehabilitation Coverage Under Medicare
    One mechanism we use to establish coverage for certain items and 
services is the national coverage determination (NCD) process. An NCD 
is a determination by the Secretary with respect to whether or not a 
particular item or service is covered nationally under Title XVIII.
    Since 1982, Medicare has covered, under an NCD, cardiac 
rehabilitation for patients who experience stable angina, have had 
coronary artery bypass grafts, or have had an acute myocardial 
infarction within the past 12 months. The NCD is located in the 
Medicare NCD Manual (Pub. 100-03), section 20.10. Effective March 22, 
2006, we modified the NCD language to cover comprehensive cardiac 
rehabilitation programs for patients who experience one of the 
following:
     A documented diagnosis of acute myocardial infarction 
within the preceding 12 months.
     A coronary bypass surgery.
     Stable angina pectoris.
     A heart valve repair/replacement.
     A percutaneous transluminal coronary angioplasty (PTCA) or 
coronary stenting.
     A heart or heart-lung transplant.
    Comprehensive programs must include a medical evaluation, a program 
to modify cardiac risk factors, prescribed exercise, education, and 
counseling and may last for up to 36 sessions over 18 weeks or no more 
than 72 sessions over 36 weeks if determined appropriate by the local 
Medicare contractors. Facilities furnishing cardiac rehabilitation must 
have immediately available necessary cardio-pulmonary, emergency, 
diagnostic, and therapeutic life-saving equipment and be staffed with 
personnel necessary to conduct the program safely and effectively who 
are trained in advanced life support techniques and exercise therapy 
for coronary disease. The program must also be under the direct 
supervision of a physician. Until section 144(a) of the MIPPA is 
effective, ICR programs are covered under this NCD and are subject to 
the same coverage requirements.
    We are proposing to implement section 144(a) of the MIPPA and 
refine coverage for CR and ICR through this rulemaking process. When 
the rulemaking is completed, we will take the necessary steps to 
withdraw and/or modify the NCD.
c. Statutory Authority
    Section 144(a) of the MIPPA amended the Medicare Part B program by 
adding new sections 1861(s)(2)(CC) and

[[Page 33607]]

1861(s)(2)(DD) of the Act to include items and services furnished under 
a ``cardiac rehabilitation program'' and an ``intensive cardiac 
rehabilitation program,'' respectively. A cardiac rehabilitation 
program is defined in new section 1861(eee)(1) of the Act and an 
intensive cardiac rehabilitation program is defined in new section 
1861(eee)(4)(A) of the Act.
    A cardiac rehabilitation program is a physician-supervised program 
that furnishes the following: Physician-prescribed exercise; cardiac 
risk factor modification, including education, counseling, and 
behavioral intervention; psychosocial assessment; outcomes assessment; 
and other items or services as determined by the Secretary under 
certain conditions. These items and services must be furnished in a 
physician's office, in a hospital on an outpatient basis, or in other 
settings as determined appropriate by the Secretary. A physician must 
be immediately available and accessible for medical consultation and 
emergencies at all times items and services are being furnished in a CR 
program except when provided in a hospital setting where such 
availability is presumed. The items and services furnished by a CR 
program are individualized and set forth in written treatment plans 
that describe the patient's individual diagnosis; the type, amount, 
frequency, and duration of items and services furnished under the plan; 
and the goals set for the individual under the plan. These written 
plans must be established, reviewed, and signed by a physician every 30 
days.
    We are proposing that ICR programs must provide the same items and 
services under the same conditions as CR programs but must demonstrate, 
as shown in peer-reviewed published research, that they have 
accomplished one or more of the following: Positively affected the 
progression of coronary heart disease, or reduced the need for coronary 
bypass surgery, or reduced the need for percutaneous coronary 
interventions (PCIs). The peer-reviewed published research must also 
show that the ICR program has resulted in a statistically significant 
reduction in 5 or more measures from their levels before ICR services 
to their levels after receipt of such services. These measures include 
low density lipoprotein; triglycerides; body mass index; systolic blood 
pressure; diastolic blood pressure; or the need for cholesterol, blood 
pressure, and diabetes medications.
    Beneficiaries eligible for ICR must have experienced the following: 
An acute myocardial infarction within the preceding 12 months; a 
coronary bypass surgery; current stable angina pectoris; a heart valve 
repair or replacement; a PTCA or coronary stenting; or a heart or 
heart-lung transplant. Section 1861(eee)(4)(C) of the Act, as added by 
section 144(a)(1)(B) of the MIPPA, states that an ICR program may be 
provided in a series of 72, 1-hour sessions (as defined in section 
1848(b)(5) of the Act), up to 6 sessions per day, over a period of up 
to 18 weeks.
    The statute directs the Secretary to establish standards for the 
physician(s) supervising the ICR and/or CR programs to ensure that the 
physician has expertise in the management of individuals with cardiac 
pathophysiology and is licensed by the State in which the CR program 
(or ICR program) is offered. These standards ensure that the physician 
is responsible for the program and, in consultation with appropriate 
staff, is involved substantially in directing the progress of 
individuals in the program.
d. Proposals for Implementation
    We are proposing to create new Sec.  410.49, ``Cardiac 
Rehabilitation Program and Intensive Cardiac Rehabilitation Program: 
Conditions of Coverage.''
(1) Definitions
    In this section, we are proposing several definitions for the terms 
used with respect to the programs and services required by section 
144(a) of the MIPPA. These terms include the following:
     Cardiac rehabilitation program.
     Individualized treatment plan.
     Intensive cardiac rehabilitation.
     Physician.
     Physician-prescribed exercise
     Psychosocial assessment.
     Outcomes assessment.
(2) Covered Beneficiaries
    In Sec.  410.49, we are proposing to establish coverage for CR and 
ICR programs for beneficiaries who have experienced any of the 
following: An acute myocardial infarction within the preceding 12 
months; a coronary bypass surgery; current stable angina pectoris; a 
heart valve repair or replacement; a PTCA or coronary stenting; or a 
heart or heart-lung transplant. We are proposing to maintain and refine 
coverage of general CR programs for beneficiaries with these six 
conditions as originally established in Pub. 100-03, section 20.10 as 
this coverage was determined to be reasonable and necessary under 
section 1862(a)(1)(A) of the Act due to a high level of supporting 
clinical evidence. We are also proposing through this rulemaking to use 
the NCD process in the future to identify additional medical 
indications for patients who could obtain CR under Medicare Part B. 
While CR programs include certain mandatory services, the written plans 
are highly individualized, and we propose to allow some flexibility in 
the type, amount, frequency, and duration of services provided in each 
session. However, as supported by medical literature and statements of 
the American Heart Association (AHA) and the American Association of 
Cardiovascular and Pulmonary Rehabilitation (AACVPR),\4\ aerobic 
exercise training using the muscles of ambulation is a mandatory 
component of any CR or ICR program. We recommend both low- and high-
intensity exercise to produce optimal benefits, and suggest a 
combination of endurance, strengthening and stretching exercises. 
Patients in general CR programs must participate in a minimum of 2, 1-
hour CR sessions a week, and a maximum of 2, 1-hour sessions a day. 
Patients in ICR programs may participate in up to 6, 1-hour sessions 
per day not to exceed 72, 1-hour sessions over an 18-week period. By a 
1-hour session, we mean that each session must last a minimum of 60 
minutes. Each day CR or ICR items and services are provided to a 
patient, aerobic exercises along with other exercises must be included 
(that is, a patient must exercise aerobically every day he or she 
attends a CR or ICR session). Exercise may include the use of 
treadmills, bicycles, light weights or other equipment, and should be 
intended to improve cardiovascular function, strength, endurance, and 
flexibility.
---------------------------------------------------------------------------

    \4\ Balady G, Williams M, Ades P, et al. Core Components of 
Cardiac Rehabilitation/Secondary Prevention Programs: 2007 Update. A 
Scientific Statement From the American Heart Association Exercise, 
Cardiac Rehabilitation, and Prevention Committee, the Council on 
Clinical Cardiology; the Councils on Cardiovascular Nursing, 
Epidemiology and Prevention, and Nutrition, Physical Activity, and 
Metabolism; and the American Association of Cardiovascular and 
Pulmonary Rehabilitation. Journal of Cardiopulmonary Rehabilitation 
and Prevention 2007;27:121-129.
---------------------------------------------------------------------------

    Section 144(a) of the MIPPA requires CR and ICR programs to furnish 
items and services including ``cardiac risk factor modification.'' This 
includes education, counseling, and behavioral intervention to the 
extent these services are closely related to the individual's care and 
treatment and tailored to patients' individual needs. We are proposing 
that patients must be provided with the information and tools to 
improve their overall cardiovascular health. Items and services 
furnished as part of the risk factor modification component should be 
highly

[[Page 33608]]

individualized as multiple risk factors contribute to poor 
cardiovascular health. For example, these items and services may 
include smoking cessation counseling or referral, nutritional education 
and meal planning, stress management, prescription drug education and 
management information, disease history education in order to foster a 
better understanding of disease origins and disease symptomatology, and 
any other education, counseling and behavioral intervention deemed 
appropriate in each patient's individualized treatment plan.
    The MIPPA provisions require a psychosocial assessment as part of 
the CR and ICR programs defined above. We are proposing that the 
initial assessment by program staff evaluate aspects of the 
individual's family and home situation that may affect their treatment, 
and consider at the outset if referrals to support groups, community 
and/or home care services are necessary. Prior to each 30-day review of 
the individualized treatment plan, the supervising physician or program 
staff will conduct an evaluation of the individual's response to, and 
rate of progress under, the treatment plan and make recommendations to 
the physician as necessary. While the individualized treatment plan 
discussed below will assist in ensuring that patients begin CR with a 
program tailored to their needs, a periodic re-evaluation is necessary 
to ensure that their psychosocial needs are in fact being met.
    The MIPPA provisions also require that CR and ICR programs include 
outcomes assessment. Professional groups, such as the AHA and AACVPR, 
recognize a number of relevant patient outcomes that may be expected to 
accrue from the various components of cardiac rehabilitation.\5\ We 
propose to define outcomes assessment as an evaluation of the patient's 
progress in the program using assessments from the commencement and 
conclusion of CR and ICR programs that are based upon patient centered 
outcomes. Patient centered outcomes must be measured at the beginning 
of the CR program, prior to each 30-day review of the individualized 
treatment plan, and at the end of the CR program. All assessments are 
considered part of the CR program and, as such, are conducted in the 
appropriate settings and not billed separately. These measures should 
include resting and exercising heart rate, resting and exercising 
systolic and diastolic blood pressure, weight, BMI, amount and dosage 
of medications required, self-reported quality of life, and behavioral 
measures (for example, smoking cessation, increased activity levels, 
change in exercise levels during CR). As CR programs must be highly 
individualized, alternate or additional measures may be appropriate. 
Patients' individualized treatment plans should be altered accordingly 
with changes and/or progress in each of the outcome measurements. 
Programs may also develop performance standards which measure the 
overall quality of the program, by assessing the group as a whole.
---------------------------------------------------------------------------

    \5\ Balady G, Williams M, Ades P, et al. Core Components of 
Cardiac Rehabilitation/Secondary Prevention Programs: 2007 Update. A 
Scientific Statement From the American Heart Association Exercise, 
Cardiac Rehabilitation, and Prevention Committee, the Council on 
Clinical Cardiology; the Councils on Cardiovascular Nursing, 
Epidemiology and Prevention, and Nutrition, Physical Activity, and 
Metabolism; and the American Association of Cardiovascular and 
Pulmonary Rehabilitation. Journal of Cardiopulmonary Rehabilitation 
and Prevention 2007;27:121-129.
---------------------------------------------------------------------------

    The MIPPA provisions require that CR services be provided under 
written individualized treatment plans. As CR programs are highly 
individualized, we propose that the physician define and set the 
parameters, including the individual's diagnosis, the types of services 
appropriate, and the treatment goals. The MIPPA provisions require the 
physician to establish the written individualized treatment plan and 
conduct subsequent reviews every 30 days. This plan may initially be 
developed by the referring physician or the CR physician. If the plan 
is developed by the referring physician who is not the CR physician, 
the CR physician must also review and sign the plan prior to initiation 
of CR. Direct physician contact is not always required to meet the 30-
day review standards, but might be necessary depending upon specific 
patient factors. Regardless, CR staff must provide both outcome and 
psychosocial assessments to the supervising physician prior to the 30-
day deadline and the physician must evaluate the information provided 
by the CR staff. The CR staff may make recommendations for 
modifications to the program, but the physician will still modify the 
plan as needed, and review and sign the plan. The MIPPA provisions 
require written specificity relating to the type, amount, frequency, 
and duration of the items and services furnished under the individual's 
plan. As CR patients have had or may develop disabling cardiovascular 
disease, they require individual attention and assessments that address 
their individualized needs and meet realistic individualized goals 
through a specifically designed treatment plan. The individualized 
treatment plan should specify the combination of services necessary to 
address the patient's needs, as identified through the initial 
assessment and based upon changes in the patient's condition. It must 
include measurable and expected outcomes and estimated timetables to 
achieve these outcomes. The outcomes specified in the individualized 
treatment plan should be consistent with current evidence-based 
professionally-accepted clinical practice standards such as those 
identified by the AHA and AACVPR.
    The MIPPA provisions also authorize the Secretary to include other 
mandatory items and services within the scope of the CR program under 
certain conditions. We are not proposing to require any other items and 
services at the present time. If the Secretary determines that the 
addition of any other items and services is appropriate, additions will 
be made and implemented through future rulemaking.
    Section 144(a) of the MIPPA provides for coverage of CR and ICR 
services in various settings which include a physician's office, a 
hospital on an outpatient basis or other settings determined 
appropriate by the Secretary. We are not proposing to cover CR or ICR 
in other settings at this time. If the Secretary determines that the 
addition of settings is appropriate, additions will be made through 
rulemaking. All settings should have all equipment and staff necessary, 
consistent with cardiac rehabilitation professional society 
recommendations, to provide statutorily-mandated items and services.
    Section 144 of the MIPPA includes requirements for immediate and 
ongoing physician availability and accessibility for both medical 
consultations and medical emergencies at all times items and services 
are being furnished under the program. Professional groups such as the 
AHA and AACVPR recognize the need to provide appropriate patient 
supervision and, where appropriate, monitoring. We are proposing that 
such availability be met through existing definitions for direct 
physician supervision in physician offices and hospital outpatient 
departments at Sec.  410.26(a)(2) (defined through cross reference to 
Sec.  410.32(b)(3)(ii)) and Sec.  410.27(f), respectively. Direct 
supervision, as defined in the regulations, is consistent with the 
language of the MIPPA because the physician must be present and 
immediately available where the services are being furnished. The 
physician must also be able to furnish

[[Page 33609]]

assistance and direction throughout the performance of the services, 
which would include medical consultations and medical emergencies.
    For CR and ICR services provided in physicians' offices and other 
Part B settings paid under the PFS, the physician must be present in 
the office suite and immediately available to furnish assistance and 
direction throughout the performance of the service or procedure in 
accordance with the Sec.  410.26(b)(5). This does not mean that the 
physician must be in the room when the service or procedure is 
performed. For CR and ICR services provided to hospital outpatients, 
direct physician supervision is the standard set forth in the April 7, 
2000 OPPS final rule with comment period (68 FR 18524 through 18526) 
for supervision of hospital outpatient therapeutic services covered and 
paid by Medicare in hospitals and provider-based departments of 
hospitals. We currently define and specify the requirement for direct 
supervision for services furnished in provider-based departments of 
hospitals at Sec.  410.27(f). For this purpose, the physician must be 
on the premises of the location (meaning the provider-based department) 
and immediately available to furnish assistance and direction 
throughout the performance of the procedure. This does not mean that 
the physician must be present in the room when the procedure is 
furnished. If we were to propose future changes to the physician office 
or hospital outpatient policies for direct physician supervision, we 
would provide our assessment of the implications of those proposals for 
the supervision of cardiac rehabilitation services at that time.
    The MIPPA provisions state that in the case of items and services 
furnished under such a program in a hospital, physician availability 
shall be presumed. As we have stated in the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68702 through 68704), the longstanding 
presumption relating to direct physician supervision for hospital 
outpatient services means that direct physician supervision is the 
standard for supervision of hospital outpatient therapeutic services 
covered and paid by Medicare in hospitals and provider-based 
departments of hospitals, and we expect that hospitals are providing 
services in accordance with this standard.
    New section 1861(eee)(4) of the Act requires ICR programs, to be 
qualified for Medicare coverage, to meet several standards. To become 
qualified, an ICR program must demonstrate through peer-reviewed, 
published research that it has accomplished one or more of the 
following: (1) Positively affected the progression of coronary heart 
disease; (2) reduced the need for coronary bypass surgery; or (3) 
reduced the need for percutaneous coronary interventions (PCIs). A 
qualified ICR program must also demonstrate through peer-reviewed 
published research that the ICR program accomplished a statistically 
significant reduction for patients in 5 or more specific measures from 
the individual's levels before ICR services to their levels after 
receipt of such services. These measures include: (1) Low density 
lipoproteins; (2) triglycerides; (3) body mass index; (4) systolic 
blood pressure; (5) diastolic blood pressure; and (6) the need for 
cholesterol, blood pressure, and diabetes medications. To ensure that 
ICR programs in fact meet these standards, we are proposing that 
programs intending to operate as ICR programs apply to CMS to receive 
designation as qualified ICR programs. Only designated programs would 
then be eligible for Medicare coverage and would be required to undergo 
regular re-evaluation to maintain such status. We are requesting public 
comments on establishing an annual re-evaluation process.
    We are proposing that programs may apply to CMS to be designated 
qualified programs to provide ICR. To meet this designation, programs 
must submit to CMS detailed literature describing the program and the 
precise manner in which the program meets MIPPA provisions. Each 
program must also submit peer-reviewed, published research specific to 
the actual program applying for approval. The research must clearly 
demonstrate that the program under examination accomplishes at least 
the minimum outcomes as defined above. We are proposing, based on our 
general rulemaking authority that each ICR program must submit a 
detailed description of the items and services available to ICR 
patients and the capabilities of the facility in which the program 
takes place as well as the responsibilities of program staff. All 
materials shall be submitted to: Director, Coverage and Analysis Group, 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Mail 
Stop C1-09-06, Baltimore, Maryland 21244.
    Following CMS review, ICR programs will either be notified of any 
missing information or inadequacies in their submissions (so they may 
resubmit in the future) or be notified of CMS designation as an ICR 
program. Designated programs will be identified in a list of ICR 
programs posted on the CMS Web site and in the Federal Register. We are 
proposing that all designated programs must demonstrate continued 
compliance with MIPPA standards every year in order to maintain 
qualified status.
    We are proposing that for an ICR program to maintain its 
designation by CMS as a qualified ICR program, the program must submit 
specific outcomes assessment information. Programs shall submit 
information for all patients who initiated and completed the full ICR 
program during the initial year-long CMS designation. For each patient, 
programs must identify the following: (1) The medical condition 
qualifying the patient for eligibility to participate in ICR; (2) the 
patient's improvement in coronary heart disease, reduced need for 
coronary bypass surgery, and/or reduced need for PCIs; and (3) the 
levels of the 5 or more measures identified above at the beginning and 
end of the program. Programs must also submit average beginning and 
ending levels of at least those 5 measures for the program as a whole. 
If any changes are made to the ICR program during the initial year-long 
CMS designation, such changes must be documented and submitted with the 
outcomes assessment information. Programs will have 30 days to submit 
this information to CMS following the end of the initial approval 
period. In the month following receipt, we will review the submitted 
information and determine whether the program continues to meet the 
payment standards. We believe that re-evaluations of designated 
programs will assist CMS in ensuring that programs continue to 
demonstrate the outcome measures identified for initial designation. We 
are requesting public comments on annual program re-evaluations 
requirements, the required information for re-evaluation proposed above 
and if an administrative appeals process should be established for ICR 
programs that no longer meet outcomes standards. We are also asking for 
public comments on the time period for re-evaluations of ICR programs.
    Section 144(a)(1)(B) of the MIPPA requires CR and ICR programs to 
be physician-supervised. In addition, section 144(a)(5) of the MIPPA 
requires the Secretary to establish standards to ensure that the 
physician, who has the appropriate expertise in the management of 
individuals with cardiac pathophysiology and is licensed to practice 
medicine in the State in which the CR or ICR program is offered, is 
responsible for the CR or ICR program. We propose to identify this 
physician who oversees or supervises the CR and ICR program in its 
entirety as the Medical Director. As required by

[[Page 33610]]

144(a)(5), we are proposing that the Medical Director must have 
training and proficiency in cardiovascular disease management and 
exercise training of heart disease patients. We also propose that the 
Medical Director, in consultation with other staff, must be involved 
substantially in directing the progress of individuals in the program. 
We are expressly seeking public comments on the precise level of 
expertise that is necessary for the Medical Director.
    As discussed above, section 144(a)(2)(B) of MIPAA requires that a 
physician must be immediately available and accessible for medical 
consultations and medical emergencies at all times items and services 
are being furnished under the program. For purposes of this proposed 
rule we are identifying this physician as the supervising physician 
(that is, the physician that must be immediately available to furnish 
assistance and direction throughout the performance of CR and ICR 
services); we believe this physician also requires expertise in cardiac 
pathophysiology resulting from training or experience in cardiovascular 
disease management and exercise training of heart disease patients. 
This includes a physician billing Medicare Part B for providing 
services directly to a patient during a CR or ICR session. We are 
proposing standards for these physicians based on our general 
rulemaking authority which include expertise in the management of 
individuals with cardiac pathophysiology and licensure to practice 
medicine in the State in which the CR or ICR program is offered. We are 
expressly inviting public comments about the precise level of expertise 
that is necessary.
    Please note that the program Medical Director may fulfill both 
roles of Medical Director and supervising physician (of individual CR 
and ICR services furnished to patients) provided that the requirements 
for direct physician supervision as required in Sec. Sec.  410.26 and 
410.27 are met when CR or ICR items and services are furnished, as 
discussed above.
    We are requesting public comments regarding whether specific 
training and expertise standards are needed for the cardiac 
rehabilitation staff.
    Section 1861(eee)(4)(C) of the Act provides for coverage of ICR 
programs that are provided in a series of 72 1-hour sessions (as 
defined in section 1848(b)(5) of the Act), up to 6 sessions per day, 
over a period of up to 18 weeks. Specific provisions for the number, 
duration, and time period for general CR programs are not identified in 
the MIPPA; however we propose to maintain, with slight refinements, 
coverage requirements previously established in Pub. L. 100-03, section 
20.10 through this rulemaking process. For eligible beneficiaries, 
general CR is provided for up to 36 1-hour sessions, up to 2 sessions 
per day with no fewer than 2 sessions per week, over up to 18 weeks, 
with contractor discretion to expand these limitations to not exceed 72 
sessions for 36 weeks. This is based on section 1862(a)(1)(A) of the 
Act and our general rulemaking authority. By 1-hour session, we mean 
that each session must last a minimum of 60 minutes.
e. Coding and Payment
(1) CR Payment
    Currently, the following CPT codes are used for CR services 
described in section 144(a) of the MIPPA: CPT code 93797, Physician 
services for outpatient cardiac rehabilitation; without continuous ECG 
monitoring (per session); and CPT code 93798, Physician services for 
outpatient cardiac rehabilitation; with continuous ECG monitoring (per 
session). We are not proposing to revise these codes under the PFS 
because the CR program authorized by the existing NCD is essentially 
the same as that included in the MIPPA.
(2) ICR Payment
    The statute requires that the hospital Outpatient Prospective 
Payment System (OPPS) payment amount for CR services be substituted for 
ICR under the PFS, specifically the payment for CPT codes 93797 and 
93798 or any succeeding HCPCS codes for CR. We are proposing to create 
two new HCPCS codes for ICR services. These codes may only be billed by 
ICR programs that have been approved by CMS. The proposed codes are as 
follows:
     GXX28, Intensive cardiac rehabilitation; with or without 
continuous ECG monitoring with exercise, per session.
     GXX29, Intensive cardiac rehabilitation; with or without 
continuous ECG monitoring; without exercise, per session.
    These HCPCS codes will be recognized under the PFS and the OPPS. 
Under the OPPS the existing CR HCPCS codes, CPT codes 93797 and 93798, 
are assigned to APC 0095 (Cardiac Rehabilitation) for CY 2009. Because 
the payment under the PFS for the two proposed ICR G-codes is required 
to be the same as the payment for CR services under OPPS, we are 
proposing to pay the same amount as will be established through 
rulemaking for CY 2010. The proposed OPPS payment amount for CR 
services will be announced in the CY 2010 OPPS/ASC proposed rule. We 
are proposing that this amount will be adjusted for the appropriate 
locality by applying the GPCI under the PFS. The CY 2010 proposed APC 
assignments and payment rates for these two ICR G-codes will be 
published in the CY 2010 OPPS/ASC proposed rule. The proposed payment 
rate for the associated APC(s) will be included in Addendum A to the CY 
2010 OPPS/ASC proposed rule.
    We note that when a CR/ICR service is furnished in a hospital 
outpatient department, a physician cannot bill the Medicare contractor 
for CR/ICR unless the physician personally performs the CR/ICR service. 
To personally perform the CR/ICR service, the physician would provide 
direct care to a single patient for the entire session of CR/ICR that 
is being reported. In this case, the hospital would report the CR/ICR 
service and be paid the OPPS payment for the facility services 
associated with the CR/ICR session and the physician would report and 
be paid the PFS amount for the CR/ICR service. A physician cannot bill 
under the PFS for CR/ICR services furnished in a hospital for which the 
physician furnishes only supervision or for services furnished in part 
by others. If the physician furnishes no direct CR/ICR services for a 
given session or on a given day or provides direct CR/ICR services for 
less than the full session, then only the hospital would report the CR/
ICR services and these services would be paid under the OPPS.
9. Section 144(a): Payment and Coverage Improvements for Patients With 
Chronic Obstructive Pulmonary Disease and Other Conditions--Pulmonary 
Rehabilitation Services
    Section 144 of the MIPPA amended Title XVIII of the Act to provide 
for coverage of pulmonary rehabilitation (PR) under Part B, under 
certain conditions, for services furnished on or after January 1, 2010. 
This proposed rule would implement the new Medicare pulmonary 
rehabilitation program and establish the requirements for providing 
such services to Medicare beneficiaries with a diagnosis of moderate to 
severe chronic obstructive pulmonary disease (COPD). COPD is not only 
one of the more common of the diseases in the category of chronic 
respiratory diseases, it is one of the more severely debilitating, 
characterized by chronic bronchitis and emphysema. Other diseases and 
conditions in this category include persistent asthma, bronchiectasis, 
primary pulmonary hypertension, obesity-related respiratory

[[Page 33611]]

disease, and ventilator dependency. This rule provides direction in 
implementing the MIPPA in order to ensure services are covered and 
enhance the patient's clinical outcomes.
a. Background
    A PR program is typically a multidisciplinary program of care for 
patients with chronic respiratory impairment that is individually 
tailored and designed to optimize physical and social performance and 
autonomy. The main goal of an individualized PR training program is to 
empower and facilitate the individuals' ability to exercise 
independently; exercise is the cornerstone of the PR program. Exercise 
is combined with other training and support mechanisms necessary to 
integrate prevention and encourage long-term adherence to the treatment 
plan. The appropriate PR program will train and motivate the patient to 
his or her maximum potential in self-care, and improve his or her 
overall quality of life.
b. Provisions of Section 144 of the MIPPA
    In pertinent part, section 144 of the MIPPA amended section 
1861(s)(2) of the Act to add a new subparagraph (CC) establishing 
coverage of items and services furnished under a ``pulmonary 
rehabilitation program.'' Pulmonary rehabilitation program is defined 
in new subsection (fff)(1) to mean a physician supervised program that 
furnishes several specific items and services. These include all of the 
following:
     Physician-prescribed exercise.
     Education or training (to the extent that the education 
and training is closely and clearly related to the individual's care 
and treatment and is tailored to such individual's needs).
     Psychosocial assessment.
     Outcomes assessment.
     Other items and services determined by the Secretary to be 
appropriate under certain conditions.
    These components are to be provided in physicians' offices, 
hospital outpatient settings, and other settings determined appropriate 
by the Secretary. A physician must be immediately available and 
accessible for medical consultation and medical emergencies at all 
times when PR items and services are being furnished under the program. 
The individual's treatment is furnished under a written treatment plan 
that is developed by the physician for each beneficiary participating 
in a PR program. A physician must establish and review the plan and it 
must be signed by the physician every 30 days. This plan must include 
the individual's diagnosis, the scope of services to be provided in 
terms of type, amount, frequency and duration, and the goals set for 
the individual. To be covered and paid by Medicare, the PR program must 
provide all of the specified mandatory items and services. With respect 
to the Secretary's authority to require additional items and services, 
we are not proposing any additional services at the present time; 
however, we may propose additional items and services in the future.
c. Proposals
    Under section 144 of the MIPPA, we are proposing to create a new 
Sec.  410.47, ``Pulmonary Rehabilitation Program: Conditions for 
Coverage'' under Part B to add the PR program as a Medicare-covered 
service. The new section 1861(fff) of the Act outlines the mandatory 
components of a PR program. In accordance with this new section, any 
facility providing a PR program must meet all of the requirements 
outlined herein. The MIPPA provides for coverage of PR services in two 
specific settings (physician's office, hospital outpatient) and 
authorized the agency to consider the addition of other settings. We 
are not proposing any other settings at the present time.
    The PR provisions defined by section 144 of the MIPPA are effective 
January 1, 2010.
(1) Definitions
    We are proposing the following definitions for the programs and 
services required by MIPPA as related to PR provisions.
     Individualized treatment plan: A written plan which 
describes the individual's diagnosis; the type, amount, frequency and 
duration of the items and services to be furnished under the plan, 
including specifics related to the individual's particular needs for 
education and training; and the goals set for the individual under the 
plan.
     Outcomes assessment: A physician's evaluation of the 
patient's progress as it relates to his or her rehabilitation. The 
outcomes assessment is in writing and includes the following: (1) Pre- 
and post-assessments, based on patient-centered outcomes which are 
conducted by the physician at the beginning of the program and at the 
end of the program; and (2) objective clinical measures of exercise 
performance and self-reported measures of shortness of breath and 
behavior.
     Physician: A doctor of medicine or osteopathy as defined 
in section 1861(r)(1) of the Act.
     Physician-prescribed exercise: Physical activity, 
including aerobic exercise, prescribed and supervised by a physician 
that improves or maintains an individual's pulmonary functional level.
     Psychosocial assessment: A written evaluation of an 
individual's mental and emotional functioning as it relates to the 
individual's rehabilitation or respiratory condition.
    This includes: (1) An assessment of those aspects of an 
individual's family and home situation that affect the individual's 
rehabilitation treatment; and (2) a psychosocial evaluation of the 
individual's response to and rate of progress under the treatment plan.
     Pulmonary rehabilitation: A short term physician-
supervised program for COPD and certain other chronic respiratory 
diseases designed to optimize physical and social performance and 
autonomy.
(2) Coverage
    We are proposing that Medicare Part B would cover PR for 
beneficiaries with moderate to severe COPD when ordered by the 
physician treating chronic respiratory diseases. A comprehensive PR 
program may be adapted for any person with chronic respiratory disease. 
The medical literature describes conditions associated with the 
possible need for PR including COPD, obesity-related respiratory 
disease, lung cancer, and neuromuscular diseases. However, the benefits 
of a PR program most strongly support its use for patients with 
moderate to severe COPD.
(a) Definition of Moderate to Severe COPD
    Moderate to severe COPD is defined as GOLD classification II and 
III. The GOLD classification utilizes indices that measure airflow 
limitation and lung hyperinflation to determine severity of COPD. 
Specifically, the measurement of Forced Expiratory Volume (FEV) in the 
first second divided by the Forced Expiratory Vital Capacity (liters) 
(FEV1/FVC) gives a clinically useful index of airflow limitation. In 
other words, the volume of air exhaled that can be forced out in one 
second after taking a deep breath divided by the maximum volume of air 
exhaled as rapidly, forcefully and completely as possible from the 
point of maximum inhalation equals a numerical value used to grade COPD 
severity. Moderate and severe COPD are defined as:
     GOLD classification II (Moderate COPD)) is defined as 
FEV1/FVC<70 percent and FEV1 >=30 percent to <80 percent predicted with 
or without chronic symptoms (Cough, sputum production, dyspnea).
     GOLD classification III (Severe COPD) is defined as FEV1/
FVC < 70

[[Page 33612]]

percent and FEV1 < 30 percent predicted or FEV1 < 50 percent predicted 
plus respiratory failure or clinical signs of right heart failure.
    Section 144 of the MIPPA does not specify the medical conditions 
for which coverage and payment are authorized for a PR program, other 
than a reference in the title to ``chronic obstructive pulmonary 
disease and other conditions''. Although the spectrum of possible 
conditions for which PR may be covered is broad, the medical guidelines 
most strongly supported the benefits of a PR program for individuals 
with moderate to severe COPD. The major national and international 
respiratory organizations (that is, ATS/ERS, the American College of 
Chest Physicians (AACP) jointly with the American Association of 
Cardiovascular and Pulmonary Rehabilitation (AACVPR), and Global 
Initiative for Chronic Obstructive Lung Disease) have recommended PR as 
the standard of care in the treatment of moderate to severe chronic 
obstructive pulmonary disease represented by GOLD classification II or 
III. Because there is not data to substantiate significantly improved 
outcomes for any other medical conditions, we are proposing to allow 
moderate to severe COPD as the only covered condition. We propose to 
consider expanding coverage to patients with other medical conditions, 
should evidence support these additional uses. We would propose in our 
regulations to use the national coverage determination process to 
consider expanding coverage of PR for other chronic respiratory.
(b) Use of the NCD Process
    We are proposing to use the national coverage determination process 
as authorized by section 1871(1) of the Act, to consider expanding 
coverage to items and services furnished by PR programs. The NCD 
process is open and transparent and provides an opportunity for public 
comments. Moreover, the NCD process affords CMS the ability to conduct 
a timely assessment of recent clinical evidence through a flexible and 
transparent process. It allows us to make uniform nationwide coverage 
determinations for items and services in a more flexible manner than 
rulemaking. In most circumstances, the NCD process is required to be 
completed within 9 to 12 months of the time that we accept a formal 
request for an NCD on a particular service. The NCD process will 
maximize the clinical benefit of PR for beneficiaries, and permit more 
rapid changes in response to emerging clinical evidence.
(3) Physician-Prescribed Exercise
    Since the determination of the optimal time spent on each of the 
specific components within a PR program is highly individualized under 
the written plan of care, we are proposing to give the program medical 
director considerable flexibility. However, aerobic exercise is widely 
considered the cornerstone of pulmonary rehabilitation, and practice 
guidelines in the medical literature suggest exercise training of the 
muscles of ambulation as an essential component of a PR program. Each 
session must include some physician-prescribed aerobic exercise. We 
recommend both low- and high-intensity exercise to produce clinical 
benefits. It is suggested that exercise sessions involving a 
combination of endurance and strength training (to increase muscle 
strength and muscle mass) be conducted at least twice per week to 
achieve physiological benefits. Exercise may include use of treadmills, 
bicycles or other equipment, and should provide increased pulmonary 
function, strength, endurance, and flexibility.
(4) Education or Training Under the PR Program
    Section 144 requires that education or training must meet the 
statutory requirements that mandate that it must be closely and clearly 
related to the individual's care and treatment, as well as meeting the 
specific needs of the individual. As part of the written individualized 
treatment plan the physician should evaluate and include only that 
education and training which addresses the needs particular to the 
patient that will further their independence in activities of daily 
living. The training and education prescribed should assist patients in 
learning to adapt to their limitations and improve the quality of their 
lives. Patients with COPD often use respiratory therapy modalities and 
equipment to aid their breathing. Education and training should be 
provided as necessary to ensure proper use and compliance with the 
physician's prescription. Instruction should include proper use, care, 
and cleaning of home respiratory equipment. Examples of equipment for 
which instruction would be appropriate include nebulizers/compressors, 
transtracheal oxygen (TTO), peak flow meters, and oxygen-conserving 
devices. Current medical literature provides for education as an 
integral component of pulmonary rehabilitation. The supervising 
physician must ensure the education or training helps further the 
primary objective of understanding and self-management of the chronic 
respiratory disease, specifically focused on COPD, including 
educational information on prevention and treatment of exacerbations. 
Examples of training sessions include those on respiratory techniques 
for physical energy conservation, work simplification, and relaxation 
techniques. Skills training and education also encourage behavioral 
changes by the patient, which can lead to improved health and long-term 
adherence. For example, brief smoking cessation counseling, as 
appropriate and respiratory problem management, should be included. 
Other topics for education may include the proper use of medications 
and nutrition counseling.
(5) Psychosocial Assessment
    Section 144 of the MIPPA requires a psychosocial assessment as part 
of the PR program; we propose that it should be a written assessment. 
The initial assessment by program staff will evaluate aspects of the 
individual's family and home situation that may affect his or her 
treatment, and consider at the outset if referrals to support groups, 
community and/or home care services are necessary. Individual 
psychological considerations will also be addressed. For example, 
smoking is well known to be a cause of COPD. Depression and anxiety are 
commonly reported concerns for this patient population. Psychosocial 
intervention could help facilitate behavioral changes, such as smoking 
cessation, as well as assist with managing symptoms such as dyspnea. 
The assessment should include a written evaluation of the patient's 
need, as appropriate, for depression management, stress reduction, 
relaxation techniques, and strategies for coping with lung disease. 
This proposed rule does not propose any changes to the existing NCD 
(210.4) for ``Smoking and Tobacco-Use Cessation Counseling.''
    The psychosocial assessment should include thorough screening and 
evaluation of the individual's lifestyle and other behaviors. Prior to 
each 30-day review of the individualized treatment plan, the program 
staff will conduct an evaluation of the individual's response to, and 
rate of progress under, the treatment plan and make recommendations to 
the physician as necessary. While the individualized treatment plan 
discussed below will assure that patients begin PR with a program 
tailored to their needs, periodic re-evaluations are necessary to 
ensure that their psychosocial needs are in fact being met.

[[Page 33613]]

(6) Outcomes Assessment
    Section 144 of the MIPPA also requires that the PR program include 
outcomes assessment. In this proposed rule, we define outcomes 
assessment as an objective clinical measure of the effectiveness of the 
PR program for the individual patient. Patient-centered outcomes should 
be measured at the beginning of the PR program, prior to each 30-day 
review of the individualized treatment plan, and no later than at the 
end of the PR program. All such assessments are considered part of the 
PR program and as such are conducted in the appropriate settings and 
may not be billed separately. These measures should include clinical 
measures such as a 6-minute walk, weight, exercise performance, self-
reported dyspnea (exertional and with daily activities), behavioral 
measures (supplemental oxygen use, smoking status), and a quality-of-
life assessment. Some of the common program outcome measures examined 
in PR are functional exercise capacity, survival, and ADLs.
(7) Individualized Treatment Plan
    Section 144 of the MIPPA requires that the physician develop, sign, 
and review an individualized treatment plan. In recognizing that PR 
programs are inherently highly individualized, we are proposing that 
the physician shall define and set the parameters, including types, 
amount, frequency and duration of the services, and goals, for the 
individual's treatment plan that include each of the four component 
services within the maximum duration of the program. The MIPPA requires 
the physician to establish the written individualized treatment plan at 
the start of the program and conduct subsequent reviews every 30 days. 
This plan may initially be developed by the referring physician or the 
PR physician. If the plan is developed by the referring physician who 
is not the PR physician, the PR physician must also review and sign the 
plan prior to initiation of PR. We would expect the supervising 
physician to have initial direct contact with the individual prior to 
subsequent treatment by auxiliary personnel. We would also expect at 
least one direct contact with the beneficiary in each 30-day period. 
Regardless, PR staff must provide both outcome and psychosocial 
assessments to the responsible physician prior to the 30-day deadline. 
Even if the PR staff makes recommendations for modifications to the 
program the physician will still be responsible for modifying the plan 
as needed, and reviewing and signing the plan prior to implementation 
for the individual. The MIPPA also requires written specificity 
relating to the type, amount, frequency and duration of items, and 
services furnished to the individual. Patients with chronic respiratory 
disease require individual attention, and assessments which address 
individualized needs must be designed to meet realistic individual 
goals. Therefore, the individualized plan of care should specify the 
mix of services necessary to address the patient's needs, as identified 
through the initial assessment, and based upon changes in the patient's 
condition. Further, it must include measurable and expected outcomes 
and estimated timetables to achieve these outcomes. The outcomes 
specified in the patient plan of care should be consistent with current 
evidence-based professionally-accepted clinical practice standards.
(8) Settings
    In the MIPPA, the Congress has identified 2 appropriate settings 
for pulmonary rehabilitation, and also authorized the agency to provide 
additional settings for the PR program. We considered whether these new 
requirements should extend to CORFs, which are governed by different 
statutory provisions in section 1861(cc) of the Act. Given the 
differences in the statutory language, we do not propose extending the 
PR program requirements to CORFs. Individuals requiring PR program 
services have a chronic respiratory disease and are in need of 
supervised aerobic exercise, not physical therapy. Conversely, in the 
CORF setting physical therapy is the cornerstone component and a 
mandatory service, while exercise is not. Thus, the PR program is for 
an inherently different patient population, and allows for the first 
time, payment for exercise for COPD patients. Therefore, we propose not 
to include the CORF as a setting for a PR program. The respiratory 
therapy services performed in a CORF are part of a CORF program of 
services and not part of a PR program. We would consider the inclusion 
of additional settings through future rulemaking.
    Both physician offices and outpatient settings must meet the 
standards as defined in the rule for safety and emergency care. These 
include both the immediate availability of the physician during the PR 
program and certain equipment requirements. In order to ensure proper 
safeguards in the statutorily-prescribed settings, the setting must 
have the cardio-pulmonary, emergency diagnostic and therapeutic 
equipment accepted as medically necessary by the medical community for 
emergency treatment related to a chronic respiratory disease condition. 
Some examples of this equipment are oxygen, defibrillators, and cardio-
pulmonary resuscitation equipment. The setting must have all equipment 
and staff necessary to provide all of the statutorily-mandated items 
and services. We would expect that any additional settings which may be 
added through future rulemaking would similarly need to meet all of the 
aforementioned requirements.
(9) Physician Supervision
    Section 144 of the MIPPA includes requirements for immediate and 
ongoing physician availability and accessibility for both medical 
consultations and medical emergencies at all times items and services 
are being furnished under the program. We are proposing to define such 
availability in accordance with existing definitions for direct 
physician supervision in physician offices and hospital outpatient 
departments at Sec.  410.26(a)(2) (defined through cross reference to 
Sec.  410.32(b)(3)(ii)) and Sec.  410.27(f), respectively. Direct 
supervision, as defined in the regulations, is consistent with the 
language of the MIPPA because a physician must be present and 
immediately available where the services are being furnished. A 
physician must also be able to furnish assistance and direction 
throughout the performance of the services, which would include medical 
consultations and medical emergencies.
    For PR services furnished in physicians' offices and other Part B 
settings paid under the PFS, this means that the physician must be 
present in the office suite and immediately available to furnish 
assistance and direction throughout the performance of the service or 
procedure in accordance with Sec.  410.26(b)(5). It does not mean that 
the physician must be in the room when the service or procedure is 
performed. For PR services provided to hospital outpatients, direct 
physician supervision is the standard set forth in the April 7, 2000 
OPPS final rule with comment period (68 FR 18524 through 18526) for 
supervision of hospital outpatient therapeutic services covered and 
paid by Medicare in hospitals and provider-based departments of 
hospitals. We currently define and specify the requirement for direct 
supervision for services provided in provider-based departments of 
hospitals at Sec.  410.27(f). For this purpose, the physician must be 
on the premises of the location (meaning the provider-based department) 
and immediately available to furnish assistance and

[[Page 33614]]

direction throughout the performance of the procedure. This does not 
mean that the physician must be present in the room when the procedure 
is performed. If we were to propose future changes to the physician 
office or hospital outpatient policies for direct physician 
supervision, we would provide our assessment of the implications of 
those proposals for the supervision of pulmonary rehabilitation 
services at that time.
    The MIPAA provisions state that in the case of items and services 
furnished under such a program in a hospital, physician availability 
shall be presumed. As we have stated in the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68702 through 68704), the longstanding 
presumption of direct physician supervision for hospital outpatient 
services means that direct physician supervision is the standard and we 
expect that hospitals are providing services in accordance with this 
standard.
(10) Physician Standards
    The MIPPA authorizes the Secretary to establish standards to ensure 
that only a physician with expertise in the management of individuals 
with respiratory pathophysiology and who is licensed by the State where 
the PR program is offered shall be responsible for the program and 
direct the individual's progress. We propose to identify the physician 
who oversees or supervises the PR program in its entirety as the 
program medical director, and this may be the same physician providing, 
and billing for, the PR services. We are proposing that the program 
medical director must have training and proficiency in chronic 
respiratory disease management and exercise training of chronic 
respiratory disease patients. We further propose that the standards for 
program oversight shall include substantial involvement in the 
monitoring and direction of the patients' progress, and by implication, 
the staff that assists in furnishing the services. As part of his or 
her responsibility and accountability for the program, the program 
medical director will be expected to retain all records and 
documentation for each beneficiary which are ordinarily compiled in 
their clinical practice. We propose that the substantiation of the 
program medical director's expertise in respiratory pathophysiology 
would correlate to experience in the provision of care for individuals 
with chronic respiratory diseases. For purposes of referral for PR 
services, we are proposing to use the definition of ``physician'' 
specified in section 1861(r)(1) of the Act which defines ``physician'' 
as ``a doctor of medicine or osteopathy legally authorized to practice 
medicine and surgery by the State in which he or she performs such 
function or action (including a physician within the meaning of section 
1101(a)(7) of the Act).'' We also propose that a supervising physician 
must be immediately available and accessible for emergencies and 
consultations.
(11) Sessions
    Currently, PR is conducted with a widely varying number of 
sessions. We are unaware of any data that specifies an exact number of 
sessions that should be included in a PR program. However, published 
professional guidelines generally recommend ranges, typically 2 or 3 
sessions per week over a period of 12 to 18 weeks for maximum 
physiological benefits. This equates to a range of approximately 24 to 
54 sessions in total; the mean is 39 sessions. Since the primary goal 
of PR is to facilitate and encourage independent exercise at home, we 
believe coverage of 36 sessions in the facility setting is appropriate. 
Further, the current NCD (20.10) for cardiac rehabilitation allows for 
initial coverage of up to 36 sessions. Since the goals and objectives 
of these two programs are similar with respect to the patients' ability 
to achieve self-management of their diseases, we believe those limits 
are appropriate here. Therefore, we are proposing to allow up to 36 
sessions for services provided in connection with a PR program. 
Patients should generally receive 2 to 3 sessions per week, which are a 
minimum of 60 minutes each. We propose to allow no more than one 
session per day, since these beneficiaries have significant respiratory 
compromise and would not typically be capable of doing more than one 
aerobic exercise session. We are especially interested in comments 
regarding the proposed optimal number of sessions, while acknowledging 
that each individual has a different degree of need.
(12) Other Items and Services
    The MIPPA allows the inclusion of additional items and services as 
required elements of a PR program, under certain specific conditions. 
We are not proposing any additional items and services at the present 
time. We may consider the addition of other items and services through 
future rulemaking.
d. Coding
    We are proposing to create one HCPCS code to describe and to bill 
for the services of a PR program as specified in section 144(a) of the 
MIPPA, GXX30, Pulmonary rehabilitation, including aerobic exercise 
(includes monitoring), per session per day. This G-code is to be billed 
when the patient performs physician-prescribed aerobic exercises that 
are targeted to improve the patient's physical functioning and may also 
include the other aspects of pulmonary rehabilitation, such as 
education and training. Because the physician's role in the PR program 
is defined in a similar manner to that in the cardiac rehabilitation 
program, we believe that the physician work component should be 
analogous to that of CPT code 93797, cardiac rehab without telemetry. 
Therefore we are proposing work RVUs of 0.18 RVUs for this new G-code. 
Using this same reference code, we are proposing that the malpractice 
RVUs be 0.01 RVUs.
    To establish the PE RVU payment for the proposed new PR G-code, we 
reviewed the PE inputs of similar services, particularly those of the 
respiratory therapy HCPCS codes, G0237 and G0238, as well as the 
cardiac rehabilitation codes, CPT codes 93797 and 93798. Given the 
various individuals, acting under the supervision of a physician, can 
make up the PR multidisciplinary team, we believe that the clinical 
labor for the PR G-code can be best represented by the following labor 
types taken from the PE database: The nurse ``blend'' (RN/LPN/MTA), the 
respiratory therapist (RT), the social worker/psychologist and the 
medical/technical assistant--which we selected to represent various 
specialists involved in furnishing this service; these are valued at 
$0.37, $0.42, $0.45, and $0.26 per minute, respectively. Using an 
average of these values, $0.375 per minute, we are proposing to use the 
nurse blend labor type found in the cardiac rehabilitation CPT codes, 
at $0.37 per minute, as the typical value for the PR clinical labor and 
assigning 28 minutes of clinical labor time for the new PR G-code based 
on the various components of the proposed PR program.
    For the equipment PE inputs, we reviewed the direct PE inputs for 
similar existing codes and are proposing a pulse oximeter (with 
printer), a 1-channel ECG, and a treadmill. Since no typical supplies 
were listed for similar existing codes in the PE database, we have not 
proposed any specific supplies for this proposed new G-code.
10. Section 152(b): Coverage of Kidney Disease Patient Education 
Services
    Section 152(b) of the MIPPA provides for coverage of kidney disease 
education (KDE) services for patients. The

[[Page 33615]]

following is an outline of our proposals to implement the statutory 
amendments.
a. Background
The kidneys have several life-sustaining functions. Waste and excess 
fluid is removed by the kidney through filtration and the concentration 
of salt and minerals in the blood is maintained. Additionally, the 
kidneys help regulate blood pressure, are involved in the process of 
red blood cell production, and are needed for bone health. When kidneys 
are damaged, these functions are impaired.
    Kidney damage can occur for a variety of reasons and may develop 
quickly (acute renal failure) or slowly. By definition, chronic kidney 
disease (CKD) is kidney damage for 3 months or longer, regardless of 
the cause of kidney damage. CKD typically evolves over a long period of 
time and patients may not have symptoms until significant, possibly 
irreversible, damage has been done. Complications can develop from 
kidneys that do not function properly, such as high blood pressure, 
anemia, and weak bones.
    When CKD progresses, it may lead to kidney failure, which requires 
artificial means to perform kidney functions (that is, dialysis) or a 
kidney transplant to maintain life. There are tests to help detect 
kidney disease. Currently, the most important measurement of kidney 
function is called glomerular filtration rate (GFR) and is a measure of 
how quickly blood is filtered through the kidney's filter, which is 
called the glomeruli.
    Patients can be classified into 5 stages based on their GFR, with 
Stage 1 having kidney damage with normal or increased GFR to stage 5 
with kidney failure, also called end-stage renal disease (ESRD). Once 
patients with CKD are identified, treatment is available to help 
prevent complications of decreased kidney function, slow the 
progression of kidney disease, and reduce the risk of other diseases 
such as heart disease.
    While predicting the timing of progression from stage IV CKD to 
kidney failure is difficult due to the lack of data, anticipatory 
objective information for the stage IV CKD patient is critical for 
management of comorbidities, prevention of uremic complications, and 
informed decision-making about renal replacement options and their 
respective benefits and risks. Collins notes from United States Renal 
Data System (USRDS) data from 2007 that ``despite the large number of 
patients with varying stages of CKD, only approximately 100,000 reach 
end-stage renal disease (ESRD) annually in the United States.'' \6\ CKD 
primarily affects the elderly and commonly coexists with other chronic 
diseases including hypertension, diabetes, and cardiovascular disease. 
Consequently, the risk of mortality and morbidity are increased 
substantially with advancing CKD stages.
---------------------------------------------------------------------------

    \6\ Collins AJ, et al. ``Who Should be Targeted for CKD 
Screening? Impact of Diabetes, Hypertension, and Cardiovascular 
Disease.'' American Journal of Kidney Diseases, Vol 53, No 3, Suppl 
3 (March), 2009: pg. S71.
---------------------------------------------------------------------------

    Individuals with CKD may benefit from educational interventions due 
to the large amount of medical information that could affect patient 
outcomes including the increasing emphasis on self-care and patients' 
desire for informed, autonomous decision-making. There is evidence that 
many pre-dialysis patients lack knowledge about their condition and may 
develop a sense of despair regarding their condition. Pre-dialysis 
education can help patients achieve better understanding of their 
illness, dialysis modality options, and may help delay the need for 
dialysis. Education interventions should be patient-centered, encourage 
collaboration, offer support to the patient, and be delivered 
consistently.
b. Statutory Authority
    Section 152(b) of the MIPPA amended section 1861(s)(2) of the Act 
by adding a new subparagraph (EE) ``kidney disease education services'' 
as a Medicare-covered benefit under Part B. This new benefit is 
available for Medicare beneficiaries diagnosed with Stage IV CKD, who 
in accordance with accepted clinical guidelines identified by the 
Secretary, will require dialysis or a kidney transplant. KDE services 
will be designed to provide comprehensive information regarding:
     The management of comorbidities, including delaying the 
need for dialysis;
     Prevention of uremic complications;
     Options for renal replacement therapy (including 
hemodialysis and peritoneal dialysis, at home and in-center, as well as 
vascular access options and transplantation);
     Ensuring that the beneficiary has the opportunity to 
actively participate in his or her choice of therapy; and
     Tailored to meet the needs of the beneficiary involved.
c. Public Meetings
    Section 1861(ggg)(3), as added by section 152(b) of the MIPPA, 
requires that the Secretary set standards for the content of the KDE 
services after consulting with various stakeholders, who to the extent 
possible, had not received industry funding from a drug or biological 
manufacturer or dialysis facility. On November 6, 2008, and December 
16, 2008, we held two feedback sessions to solicit stakeholder comments 
regarding the implementation of section 152(b) of the MIPPA. Both 
feedback sessions were open to the public. In addition to the feedback 
sessions, we conducted an internal review of the available medical 
evidence, literature, and currently available CKD patient education 
programs. Transcripts from both events are available on the CMS Web 
site at http://www.cms.hhs.gov/CoverageGenInfo/08_CKD.asp#TopOfPage.
(1) The November 6, 2008 Feedback Session
    The first feedback session was conducted as a Special Open Door 
Forum (ODF) at the CMS Headquarters on November 6, 2008. Approximately 
200 people, representing approximately 70 organizations, participated 
via teleconference.
    The majority of stakeholders cited the National Kidney Foundation 
Disease Outcomes Quality Initiative (NKF KDOQI) guidelines that define 
Stage IV CKD as a GFR measurement of 15-29 ml/min/1.73m\2\, for 
purposes of classification and evaluation of CKD. Stakeholders 
recommended a variety of modalities for providing education services. 
One-on-one sessions between the educator and the patient were 
recommended to facilitate comprehension of the information. 
Stakeholders indicated that diagnoses of CKD can be devastating for 
some patients and patient outbursts, crying, and other disruptions can 
derail the educational process for large groups. Since all patients do 
not have the same learning styles or need for information, one 
stakeholder recommended that each individual be assessed by the 
treating physician or nonphysician practitioner (NPP) under the 
supervision of the treating physician for their learning needs and 
style preferences before or upon referral for KDE services.
    Some stakeholders suggested that group education sessions would be 
appropriate and beneficial for patients, but did not comment 
specifically on the applicability to the Medicare population. 
Stakeholders reported that within existing programs, patients were 
going through a shared experience and group sessions helped facilitate 
discussion. Other stakeholders recommended that initial education 
sessions be performed in a group setting, with one-on-one follow-up 
sessions. We received recommendations

[[Page 33616]]

regarding session length from 15 minutes to 2 hours, or as long as 
deemed necessary by the educator or the patient.
    Some stakeholders recommended against using the Web or telemedicine 
since these modalities may not be appropriate or facilitate effective 
comprehension of material in older adults. Other stakeholders indicated 
that we needed to keep in mind that a patient's uremia may impair 
comprehension of the materials, that these patients are sick, and that 
the elderly often need to have information provided in a simplistic, 
repetitive manner.
    Regarding the clinically appropriate topics and content standards 
for KDE services, various stakeholders indicated that the following 
information should be included in the curriculum:
     Basic overview of kidney functions and CKD 
pathophysiology.
     Survival rates based on choice of treatment or if the 
patient declines treatment.
     Quality of life and psychosocial adjustments.
     Structured, unbiased, uniform information about all renal 
replacement modalities, with no appropriateness assumptions presented 
by the educator.
     The right to decline treatment.
     Evidence-based content.
     Prolonging remaining kidney function.
     Patient participation in management of kidney disease.
     Sexuality and fertility issues.
     Transplant options.
     Smoking cessation.
     Medication compliance.
     Financial support and insurance coverage.
     Diet and exercise.
     Vocational rehabilitation.
     Treatment and management of comorbidities.
(2) The December 16, 2008 Feedback Session
    On December 16, 2008, the second feedback session was hosted at the 
Agency for Healthcare Research and Quality (AHRQ). Approximately 60 
people representing approximately 40 organizations participated. In 
preparing for this meeting, we researched and developed a list of 
approximately 30 experts and educators that are currently providing 
kidney disease education to individuals or treating patients with CKD, 
only 10 of which were able to participate. To accommodate those 
stakeholders that were unable to attend the AHRQ stakeholders meeting, 
we accepted additional feedback at the following e-mail address: 
CKDEducation@cms.hhs.gov.
    We asked each meeting attendee to fill out a disclosure statement 
that described any industry funding he or she had received from a drug/
biological manufacturer or dialysis facilities, since the MIPPA 
requested that we consult with various stakeholders, to the extent 
possible, that had not received such industry funding. The majority of 
the meeting participants or the organizations represented had received 
industry funding with few exceptions.
    When asked about the accepted clinical criteria for classifying 
someone with Stage IV CKD, most stakeholders stated that Stage IV CKD 
is best defined as an individual with an estimated GFR of between 15 
and 29 or 30 ml/min/1.73m\2\. One stakeholder suggested that to 
decrease variability between creatinine methodologies, they recommended 
using a laboratory that traces its serum creatinine technique to IDMS 
(Isotope dilution mass spectrometry reference measurement procedure). 
This stakeholder also indicated that the MDRD (modification of diet in 
renal disease) study equation has been slightly modified to account for 
labs that are traceable to IDMS.
    We asked the stakeholders to report on the different modalities of 
education that would be appropriate for kidney disease patient 
education. One stakeholder indicated that considerations need to be 
made regarding the educational needs of different communities and 
cultures. Several stakeholders indicated that face-to-face or group 
sessions are the preferred modalities for providing education services. 
One stakeholder indicated that groups larger than 20 may make it harder 
for all participants to ask questions. Stakeholders recommended that we 
allow flexibility to balance the needs of individual CKD patients that 
have varying degrees of need for information and education. Several 
stakeholders indicated that curriculum content should include 
information regarding all renal replacement therapy options (including 
no treatment), vascular access options, available support services, and 
management of co-morbidities including diabetes, blood pressure 
management, bone disease, and mineral metabolism.
    Stakeholders recommended numerous frequency and duration 
combinations. One stakeholder recommended a variety of combinations of 
six 1-hour classroom group sessions including one session per week 
(over a 6-week period); six sessions over a weekend (3 sessions on 
Saturday; 3 sessions on Sunday); or all 6 sessions on 1 day during a 
weekend. This stakeholder also recommended that sessions should be 
standardized so that an individual can take sessions when they are 
offered to meet their scheduling needs. Stakeholders recommended 
sessions that lasted between 15 minutes and 2.5 hours. One stakeholder 
indicated that pre- and post-assessments should be included as part of 
the education programs.
    When asked what factors in existing education programs have led to 
the best patient outcomes, we received a variety of responses such as 
varying the training format, providing information repetitively, and 
presenting information at the appropriate reading level for the 
audience. Stakeholders recommended that all aspects of the education 
services be provided in an objective and neutral manner, not skewing 
the information toward one or more renal replacement therapy 
modalities.
d. Implementation
    Consistent with section 1861(ggg) of the Act, we are proposing to 
amend 42 CFR part 410 to add new Sec.  410.48 for KDE services as a 
Medicare Part B benefit.
(1) Definitions (proposed Sec.  410.48(a))
    As related to the implementation of section 1861(ggg) of the Act, 
we are proposing the following definitions in Sec.  410.48:
     Kidney Disease Patient Education Services: Consistent with 
section 1861(ggg)(1) of the Act, we are proposing to define Kidney 
Disease Patient Education Services as face-to-face educational services 
provided to patients with Stage IV CKD. We are proposing that the 
services be provided in a face-to-face manner based on stakeholder 
feedback received during the consultation meetings and our general 
rulemaking authority. Face-to-face education is consistent with 
sections 1861(ggg)(C)(ii) and (iii) of the Act, which provide that the 
services should be designed to ensure that the beneficiary has the 
opportunity to actively participate in the choice of therapy, and that 
the services be designed to be tailored to meet the needs of the 
beneficiary involved.
    Some stakeholders recommended that sessions be conducted face-to-
face due to varying patient literacy levels. Other stakeholders 
recommended against using Web-based education resources since the 
elderly may not be as comfortable with or lack access to the Internet. 
In light of these considerations, we believe that face-to-face 
education services are the most appropriate means for providing these 
services.
     Physician: For purposes of KDE services, a physician will 
be defined using the definition in section 1861(r)(1)

[[Page 33617]]

of the Act; it defines ``physician'' as ``a doctor of medicine or 
osteopathy legally authorized to practice medicine and surgery by the 
State in which he or she performs such function or action (including a 
physician within the meaning of section 1101(a)(7) [of the Act].''
     Qualified Person: Consistent with section 1861(ggg)(2)(A) 
of the Act, for purposes of KDE services, we are proposing to define a 
``qualified person'' as a physician (as defined in section 1861(r)(1) 
of the Act); a physician assistant, nurse practitioner, or clinical 
nurse specialist (as defined in section 1861(aa)(5) of the Act, and 
implemented in Sec.  410.74, Sec.  410.75, and Sec.  410.76 of this 
subpart). A provider of services located in a rural area is also 
included in the statute's definition of a qualified person. Section 
1861(u) of the Act defines ``provider of services'' to be ``a hospital, 
critical access hospital, skilled nursing facility, comprehensive 
outpatient rehabilitation facility, home health agency, hospice program 
or, for purposes of sections 1814(g) and section 1835(e) [of the Act], 
a fund''. We are proposing to define a ``qualified person'' to include 
a provider of services located in a rural area and would include each 
of these healthcare entities except for a ``fund.''
    We do not believe that it would be appropriate to recognize a fund 
described by sections 1814(g) and 1835(e) of the Act as a ``qualified 
person''. These funds are defined as providers of services only for the 
limited purpose of paying for the services of faculty physicians when 
they furnish certain services under the authority of sections 1814(g) 
and 1835(e) of the Act. These funds are not licensed as hospitals; they 
do not bill Medicare and do not receive payment. Moreover, these funds 
do not comply with Medicare conditions of participation and do not have 
provider agreements with Medicare. Because we do not believe that it 
would be appropriate to include ``funds'' in the definition of a 
``qualified person'' for purposes of the KDE benefit, we are proposing 
to exclude funds described by sections 1814(g) and section 1835(e) of 
the Act from our definition of a provider of services located in a 
rural area as defined in section 1886(d)(2)(D) of the Act.
    In order for a provider of services to be a ``qualified person,'' 
the entity must be located in a rural area. We are proposing to include 
in the definition of a ``qualified person'', only those hospitals, 
critical access hospitals (CAHs), skilled nursing facilities (SNFs), 
comprehensive outpatient rehabilitation facilities (CORFs), home health 
agencies (HHAs), and hospice programs that are located in a rural area 
under section 1886(d)(2)(D) of the Act (as defined in our regulations 
at Sec.  412.64(b)(ii)(C)) and to include hospitals and CAHs that are 
reclassified from urban to rural status pursuant to section 
1886(d)(8)(E) of the Act, as defined in Sec.  412.103. Specifically, 
Sec.  412.64(b)(ii)(C) defines ``rural'' to mean any area outside an 
urban area, which Sec.  412.64(b)(ii)(A) defines as a metropolitan 
statistical area (MSA) as defined by the President's Office of 
Management and Budget (OMB). Therefore, we believe that a hospital, 
CAH, SNF, CORF, HHA, or hospice program that is not physically located 
in an MSA should be considered ``rural'' for this benefit.
    Section 1886(d)(8)(E) of the Act, implemented in Sec.  412.103, 
requires us to treat hospitals that meet specified criteria as 
geographically rural under section 1886(d)(2)(D) of the Act even though 
they are physically located in an MSA. Because the statute identifies 
these hospitals as rural, we believe that it is appropriate to consider 
these hospitals a qualified person for purposes of the KDE benefit. The 
Conditions of Participation for CAHs in Sec.  485.610 also include a 
provision to allow a hospital located in an urban area to reclassify as 
rural for purposes of becoming a CAH through section 1886(d)(8)(E) of 
the Act, as defined in Sec.  412.103. Because a hospital or CAH 
specified under section 1886(d)(8)(E) of the Act is treated as being 
located in a rural area under section 1886(d)(2)(D) of the Act, we are 
proposing to recognize those hospitals or CAHs as a ``qualified 
person'' for purposes of the KDE benefit.
     Renal Dialysis Facility: The Congress has provided in 
section 1861(ggg)(2)(B) of the Act that a ``renal dialysis facility'' 
may not be a ``qualified person.'' We are defining this term, 
consistent with Sec.  405.2102 of this title, as ``a unit which is 
approved to furnish dialysis service(s) directly to ESRD patients.''
     Stage IV Chronic Kidney Disease: Section 1861(ggg)(1)(A) 
of the Act states that KDE services shall be furnished to beneficiaries 
diagnosed with Stage IV CKD, who according to accepted clinical 
guidelines identified by the Secretary, will require dialysis or a 
kidney transplant. Based on stakeholder feedback, we are proposing to 
define Stage IV CKD as kidney damage with a severe decrease in GFR 
quantitatively defined by a GFR value of 15-29 ml/min/1.73 m\2\, using 
the Modification of Diet in Renal Disease (MDRD) Study formula.\7\ 
Because there are currently no agreed upon accepted clinical guidelines 
that describe the stage IV patients who would eventually require 
dialysis or a kidney transplant, we are proposing to cover all stage IV 
patients.
---------------------------------------------------------------------------

    \7\ Levey, A.S., Greene, T., Kusek, J., and Beck, G.A. J Am Soc 
Nephrol. 2000. 11: p. 155A.; Levey, A.S., Bosch, J.P., Lewis, J.B., 
Greene, T., Rogers, N., and Roth, D. Ann Intern Med. 1999 Mar 16; 
130(6):461-70.
---------------------------------------------------------------------------

    During both the November 6, 2008, and the December 16, 2008 
feedback sessions, the majority of stakeholders indicated that Stage IV 
CKD is currently determined as kidney damage with a severe decrease in 
the estimated GFR value (15 to 29 mL/min/1.73 m\2\). While there 
appeared to be agreement among the stakeholders regarding the estimated 
GFR values for the diagnosis of Stage IV CKD, some stakeholders 
indicated that only using the estimated GFR value to determine the 
severity of a beneficiary's CKD may be insufficient. To decrease 
variability between creatinine methodologies, stakeholders recommended 
using a laboratory that traces its serum creatinine technique to IDMS 
and that the MDRD study equation has been slightly modified to account 
for labs that are traceable to IDMS.
(2) Covered Beneficiaries (Proposed Sec.  410.48(b))
    Consistent with section 1861(ggg)(1)(A) of the Act, we are 
proposing that KDE services be furnished to beneficiaries with Stage IV 
CKD based on the definition of Stage IV CKD defined in proposed Sec.  
410.48(a), and have been referred for such services by the physician 
managing the beneficiary's kidney condition.
(3) Standards for Qualified Persons and Exclusions (Proposed Sec.  
410.48(c))
    We are proposing to require that a qualified person be able to 
properly receive Medicare payment under 42 CFR part 424 (Conditions for 
Medicare Payment). In Sec.  410.48(c), we are proposing to establish 
exclusions from the term ``qualified person.'' Consistent with section 
1861(ggg)(2)(B) of the Act, we specifically exclude a hospital, CAH, 
SNF, CORF, HHA, or hospice that is physically located outside of a 
rural area under Sec.  412.64(b)(ii)(C), except for a hospital or CAH 
that is treated as being located in a rural area under Sec.  412.103. 
In addition, consistent with section 1861(ggg)(2)(B) of the Act, a 
renal dialysis facility is not a qualified person.
    While we are not proposing specific education, experience, 
training, and/or certification requirements at this time,

[[Page 33618]]

we are specifically seeking public comments on the appropriate level of 
education, experience, training, and/or certification appropriate for a 
qualified person to effectively provide KDE services and may provide 
such provisions in the final issuance of this rule or in future 
rulemaking. Factors to consider include specific education and 
expertise regarding the topic and ability to explain these areas for 
the purpose of patient education:
     General kidney physiology and test results that would be 
associated with CKD.
     Psychological impact of the disease on the beneficiary, 
and impact on family, social life, work, and finances.
     The management of comorbidities (such as cardiovascular 
disease, diabetes, hypertension, anemia, bone disease, and impairments 
in functioning) common in persons diagnosed with CKD.
     Renal replacement therapeutic options, treatment 
modalities and settings, and advantages and disadvantages of each 
treatment option.
     Diet, fluid restrictions, and medication usage to include 
side effects and informed decisionmaking.
     Encouragement of patient active participation in 
decisionmaking and the ability to tailor educational needs to the 
individual beneficiary.
     Other areas of health deemed important to patients with 
CKD.
(4) Standards for Content of Kidney Disease Patient Education Services 
(Proposed Sec.  410.48(d))
    We believe that patient education needs vary by severity of the 
disease, the age of the patient, the patient's comorbid conditions and 
disabilities, the patient's primary language and culture, and desire to 
learn more about the disease and treatment options. Education services 
are more effective if the services are tailored to meet an individual 
beneficiary's needs. We are proposing that KDE services include the 
content as specified in proposed Sec.  410.48(d). According to an 
article by Paula Ormandy \8\ in the Journal of Renal Care, patients are 
most interested in receiving information on the following topics, which 
was echoed by many stakeholders during the feedback sessions.
---------------------------------------------------------------------------

    \8\ Ormandy, P., ``Information Topics Important to Chronic 
Kidney Disease Patients: A Systematic Review.'' Journal of Renal 
Care 34(1), 19-27, 2008.
---------------------------------------------------------------------------

     Basic information regarding CKD, how the kidneys work, 
what happens when the kidneys fail, and the permanence of the disease.
     Survival rates with and without renal replacement therapy 
and survival rates if the patient refused treatment for their CKD.
     The need for kidney transplantation.
     Unbiased information about renal replacement therapy (RRT) 
options including advantages and disadvantages for all modalities.
     Adequate information regarding why some RRT options were 
not viable for a patient.
     How different RRT options affected the patient's co-morbid 
conditions.
     Effect of RRT choices on lifestyle, such as treatment 
flexibility and treatment session length.
     Whether a patient will need assistance based on RRT 
modality choice and training requirements for helpers.
     The right to refuse treatment.
     Effects of the disease, and the subsequent treatment, on 
the patient's physical appearance.
     Patient recognition of the symptoms that would empower the 
patient with the knowledge to seek help.
     Disease and treatment complications related to renal 
replacement therapy such as hypertension, catheter migration, 
temporary/permanent loss of dialysis access, and risk of infection at 
the access sight.
     How to control and manage consequences of complications 
and symptoms (for example: treatment for itchy skin or insomnia).
     The ability to travel and organize holidays depending on 
RRT choice.
     Maintenance of social relationships, activities, and 
commitments.
     How the disease and RRT may affect the patient's ability 
to continue working.
     Available support services.
     Medication management, including side effects and risks 
related to non-compliance to prescribed medication regimen.
(5) Session Specifications (Proposed Sec.  410.48(e))
    (a) Limitations on the number of sessions: Consistent with section 
1861(ggg)(4) of the Act, we will limit the number of KDE sessions to 
six (6).
    (b) Session Length: In the absence of supporting evidence for 
session length, we are proposing to define the session length as 60 
minutes which coincides with the session length of some programs in 
existence and is the approximate average of stakeholder suggested 
session lengths.
    (c) Individual and Group Session Format: Consistent with section 
1861(ggg)(C)(iii) of the Act, we are proposing that the qualified 
person tailor the design of the education services to meet the needs of 
the beneficiary based on whether the beneficiary needs more 
individualized education, would benefit more from a group environment, 
or a combination; and consider any communication accessibility needs 
based on disability, language and health literacy.
    During the feedback sessions, we received a variety of 
recommendations regarding how education services should be provided, 
including a combination of group sessions, one-on-one sessions, and 
multi-media presentations. Stakeholders recommended that one-on-one 
sessions, between the beneficiary and the educator, facilitated quicker 
comprehension of the education materials than group sessions, and 
provided the best opportunity to tailor the sessions to meet the 
patient's needs. Other stakeholders indicated that group sessions 
provide patients with the benefit of responses to questions posed by 
different group participants.
    Medical services, generally speaking, are provided to beneficiaries 
on an individual basis. Beneficiaries can also benefit from the 
interaction in a group setting. We believe that the beneficiary, in 
consultation with the referring physician, will be able to best 
determine the education services modality that most effectively meets 
his or her needs.
(6) Outcomes Assessment
    The intent of the education services is for the beneficiary to take 
the information he or she has learned during the educational sessions 
in order to facilitate active participation by the beneficiary in the 
healthcare decisionmaking process with the physician managing his or 
her kidney condition. We believe that it is important that 
beneficiaries be assessed at the conclusion of the education sessions 
and are proposing that program assessments be used by the educators and 
CMS to assess the effectiveness of the education services, to help 
improve the programs for future participants, and better facilitate 
patient understanding of the material.
    During the AHRQ stakeholders meeting, various stakeholders 
indicated that it was important to monitor the effectiveness of the 
education services to improve the content and delivery of KDE services. 
Assessing the effectiveness of the KDE services through assessments can 
be an effective way of measuring how beneficiary needs are being met. 
Some existing education programs have pre- and post-education session 
assessments and are usually administered immediately

[[Page 33619]]

following the conclusion of the education sessions.
    We are proposing, based on stakeholder feedback and our general 
rulemaking authority, that qualified persons develop outcomes 
assessments and that each beneficiary be assessed during one of the 
education sessions. We are proposing that the outcomes assessment 
measure beneficiary knowledge about CKD and its treatment for the 
purpose, and as a contributor to, the beneficiary's ability to make 
informed decisions regarding their healthcare and treatment options.
    According to an article by Gerald Devins in the Journal of Clinical 
Epidemiology, an outcomes assessment or test should be able to 
``measure the adaptive value of ESRD-related knowledge as a contributor 
to psychosocial and physical well-being, * * * reliably and validly 
assess patient knowledge about ESRD and its treatment,'' * * * ``be 
easy to administer and score,'' and * * * ``require only basic reading 
skills.'' \9\
---------------------------------------------------------------------------

    \9\ Devins, G., et al. ``The Kidney Disease Questionnaire: A 
Test for Measuring Patient Knowledge about End-Stage Renal 
Disease.'' J Clin Epidemiol. Vol. 43, No. 3. pp. 297-307, 1990.
---------------------------------------------------------------------------

    After completing the KDE services, the beneficiary should be able 
to take the information learned and use it to make informed choices 
about their healthcare during future consultations with the physician 
managing the beneficiary's kidney condition. It is important that the 
assessments be tailored to the beneficiary's reading level and language 
if the assessment is not administered by the qualified person that 
provided the education services, and be made available to CMS in a 
summarized format upon request.
    We are specifically seeking public comments regarding the 
development and administration of the outcomes assessments. Factors to 
consider include:
     Specific topics that should be included as part of the 
assessment;
     Whether standardization of the outcomes assessment is 
feasible and/or should be considered;
     The applicability of any standardized assessments that may 
currently be in existence;
     The feasibility of providing both pre- and post-education 
assessments; and
     Methods for collecting assessments and disseminating best 
practices for KDE services.
e. Payment for KDE Services
    Section 152(b) of the MIPPA creates a new benefit category for KDE 
services. The MIPPA amends section 1848(j)(3) of the Act, which allows 
for payment of KDE services under the PFS. KDE services are covered 
when they are furnished by a qualified person as defined in proposed 
Sec.  410.48(a) and that meets the requirements of proposed Sec.  
410.48(c). We note that there is a possibility that a beneficiary may 
receive services from more than one ``qualified person''; however, 
payment should be made to only one qualified person on the same day for 
the same beneficiary.
    The ``incident to'' requirements for physician services at section 
1861(s)(2)(A) of the Act do not apply to KDE services because the MIPPA 
requirements are explicit, in that the education services must be 
provided by a qualified person, which is defined as a physician, nurse 
practitioner, clinical nurse specialist or physician assistant, and 
also includes a provider of services located in a rural area. In the 
past, we have taken the position that the ``incident to'' provision 
does not apply to the implementation of a new service with a distinct 
benefit category under the PFS. Therefore, the ``incident to'' 
requirements will not apply to KDE services.
    Rural health clinics (RHCs) do not meet the statutory definition of 
a provider of services (as defined in 1861(u) of the Act) and cannot be 
separately paid for furnishing KDE services.
    Section 1861(ggg)(4) of the Act limits the number of KDE services 
that a beneficiary may receive to six sessions. We are proposing to 
create two HCPCS codes, GXX26 (individual) and GXX27 (group), to 
describe and to bill for KDE services. The two G-codes consist of 1-
hour face-to-face KDE services for an individual or group. We are 
proposing to pay both GXX26 and GXX27 at the nonfacility rate. We are 
also proposing that GXX26 educational services related to the care of 
chronic kidney disease; individual per session will be crosswalked to 
CPT code 97802; and that GXX27, educational services related to the 
care of chronic kidney disease; group, per session will be crosswalked 
to CPT code 97804. The rationale for the proposed pricing of the G-
codes is based on the similarity of this service to medical nutrition 
therapy in the individual (97802) and group (97804) setting.
    In the CY 2010 OPPS/ASC proposed rule, we discuss our proposed 
payment for KDE to qualified persons who are hospitals, CAHs, SNFs, 
CORFs, HHAs, or hospices. Commenters should submit specific comments on 
our payment proposal for this benefit, including the method and amount 
of payment, for qualified hospitals, CAHs, SNFs, CORFs, HHAs, or 
hospices in response to the CY 2010 OPPS/ASC proposed rule. We will 
discuss our final payment policy for these qualified providers in the 
CY 2010 OPPS/ASC Final Rule.
f. Effective Date
    Medicare Part B coverage of outpatient kidney disease patient 
education services will be effective for services furnished on or after 
January 1, 2010.
11. Section 153: Renal Dialysis Provisions
    Section 153 of the MIPPA requires changes to ESRD facilities for 
ESRD services effective January 1, 2010. The following is a summary of 
these changes.
    Section 153(a)(1) of the MIPPA increases the current ESRD composite 
rate by 1.0 percent for services furnished on or after January 1, 2010. 
This also requires us to update the adjusted drug add-on. Since we 
compute the drug add-on adjustment as a percentage of the composite 
rate, the drug add-on percentage is decreased to account for the higher 
CY 2010 composite payment rate and results in a 15.0 percent drug add-
on adjustment for CY 2010. As a result, the drug add-on amount of 
$20.33 per treatment remains the same for CY 2010, which results in a 
15.0 percent increase to the base composite payment rate of $135.15. 
(See section II.I.6. of this proposed rule for further discussion.)
    The composite rate paid to hospital-based facilities will be the 
same as the composite rate paid to independent renal dialysis 
facilities for services furnished on or after January 1, 2010. 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.
    These MIPPA provisions are self-implementing and require no 
substantive exercise of discretion on the part of the Secretary. A 
detailed discussion of the MIPPA provisions can be found in section 
III. of the CY 2009 PFS final rule with comment period (73 FR 69881).

[[Page 33620]]

12. Section 182(b): Revision of Definition of Medically-Accepted 
Indication for Drugs; Compendia for Determination of Medically-Accepted 
Indications for Off-Label Uses of Drugs and Biologicals in an Anti-
cancer Chemotherapeutic Regimen
a. Background
(1) Process for Revising the List of Statutorily Named Compendia
    Generally, compendia are ``pharmacopeia providing information on 
drugs, their effectiveness, safety, toxicity, and dosing--are 
frequently used to determine whether a medication has a role in the 
treatment of a particular disease; these roles include both therapeutic 
uses approved by the U.S. Food and Drug Administration (FDA) and off-
label indications'' (Agency of Healthcare Research and Quality (AHRQ), 
Potential Conflict of Interest in the Production of Drug Compendia 
White Paper).\10\ Compendia are published by various institutions and 
by traditional reference book publishing houses.
---------------------------------------------------------------------------

    \10\ Agency for Healthcare Research and Quality. White Paper: 
Potential Conflict of Interest in the Production of Drug Compendia. 
(2009, April 27). Available online at http://www.cms.hhs.gov/mcd/viewtechassess.asp?from2=viewtechassess.asp&where=index&tid=64.
---------------------------------------------------------------------------

    Section 1861(t)(2)(B)(ii)(I) of the Act lists the following 
compendia as authoritative sources for use in the determination of a 
``medically-accepted indication'' of drugs and biologicals used off-
label in an anticancer chemotherapeutic regimen: American Medical 
Association Drug Evaluations (AMA-DE); United States Pharmacopoeia-Drug 
Information (USP-DI) or its successor publication; and American 
Hospital Formulary Service-Drug Information (AHFS-DI). Due to changes 
in the pharmaceutical reference industry, AHFS-DI is the only 
statutorily-named compendium that is currently in publication.
    In addition to these compendia, the statute provides an alternative 
method for identifying medically-accepted off-label uses of drugs and 
biologicals in an anti-cancer chemotherapeutic regimen. Section 
1861(t)(2)(B)(ii)(II) of the Act provides that local contractors may 
use ``supportive clinical evidence in peer-reviewed medical 
literature'' to make such determinations. Thus these medically-accepted 
uses could be identified even if there were no compendia recognized for 
this purpose. We discussed this in our response to comments in the CY 
2008 PFS final rule with comment period (72 FR 66305).
    Section 1861(t)(2)(B) of the Act provides the Secretary the 
authority to revise the list of compendia in section 
1861(t)(2)(B)(ii)(I) for determining medically-accepted indications for 
off-label use of drugs and biologicals in an anti-cancer 
chemotherapeutic regimen. Consequently, in Sec.  414.930, we 
established an annual process to revise the list and establish a 
definition of ``compendium'' in the CY 2008 PFS final rule with comment 
period (72 FR 66222, 66303 through 66306, and 66404).
    On March 30, 2006, the Medicare Evidence Development and Coverage 
Advisory Committee or MEDCAC (formerly the Medicare Coverage Advisory 
Committee (MCAC)) met in public session to advise CMS on the 
appropriate criteria for the recognition of compendia for the 
identification of medically-accepted indications of drugs and 
biologicals used in an anti-cancer therapy, and the degree to which the 
then listed and other available compendia displayed those criteria. The 
evidence the MEDCAC considered to derive its recommendations included a 
presentation of the technology assessment (TA) performed for AHRQ by 
staff of the Tufts-New England Medical Center (Tufts-NEMC) and Duke 
Evidence-based Practices Centers (EPCs), scheduled stakeholder 
presentations, as well as testimony from members of the public. As is 
customary, the MEDCAC panelists elicited additional information from 
the presenters and discussed the evidence in preparation for a formal 
vote. The MEDCAC recommended that the following criteria, referred to 
as ``desirable characteristics,'' should be used to recognize compendia 
for identification of medically-accepted indications of drugs and 
biologicals in anti-cancer therapy:
     Extensive breadth of listings.
     Quick processing from application for inclusion to 
listing.
     Detailed description of the evidence reviewed for every 
individual listing.
     Use of pre-specified published criteria for weighing 
evidence.
     Use of prescribed published process for making 
recommendations.
     Publicly transparent process for evaluating therapies.
     Explicit ``Not recommended'' listing when validated 
evidence is appropriate.
     Explicit listing and recommendations regarding therapies, 
including sequential use or combination in relation to other therapies.
     Explicit ``Equivocal'' listing when validated evidence is 
equivocal.
     Process for public identification and notification of 
potential conflicts of interests of the compendia's parent and sibling 
organizations, reviewers, and committee members, with an established 
procedure to manage recognized conflicts.
    We incorporated the MEDCAC recommended desirable characteristics 
into the compendia review process. All information on this MEDCAC 
meeting can be found on the CMS Web site at http://www.cms.hhs.gov/mcd/viewmcac.asp?where=index&mid=33.
    Although we did not rank these ten MEDCAC desirable 
characteristics, the MEDCAC desirable characteristics that addressed 
transparency and conflict of interest of compendia were considered to 
be of high priority (72 FR 66304 through 66305). In addition, we 
considered the need to enhance transparency in the compendia review 
process to preserve the integrity of the review process (72 FR 66222, 
66303 through 66306, and 66404).
    During the 2008 compendium review cycle, we considered requests 
regarding the following five compendia: The AMA-DE Compendium; National 
Comprehensive Cancer Network Drugs and Biologics (NCCN) Compendium; 
Thomson Micromedex DrugDex Compendium; Thomson Micromedex DrugPoints 
Compendium; and Clinical Pharmacology Compendium. Our decisions are 
posted on the CMS Web site at http://www.cms.hhs.gov/CoverageGenInfo/02_compendia.asp#TopOfPage. In summary, we issued the following 
decisions regarding those compendia requests:
     NCCN was added to the list of compendia.
     Thomson Micromedex DrugDex was added to the list of 
compendia.
     Clinical Pharmacology was added to the list of compendia.
     Thomson Micromedex DrugPoints was not added to the list of 
compendia.
     AMA-DE was removed from the list of compendia.
(2) MIPPA Requirement for Compendia
    Section 182(b) of the MIPPA amended section 1861(t)(2)(B) of the 
Act (42 U.S.C. 1395x(t)(2)(B)) by adding the sentence, ``On and after 
January 1, 2010, no compendia may be included on the list of compendia 
under this subparagraph unless the compendia has a publicly transparent 
process for evaluating therapies and for identifying potential 
conflicts of interests.'' There is a growing body of literature, 
including that from the Institute of Medicine (IOM),\11\ that discusses 
the conflict of interest between research funding and

[[Page 33621]]

research results. Some authors have stated that there is a conflict of 
interest if an entity has a financial, legal, or political interest 
that is counterproductive to the performance of their legal or ethical 
responsibilities.\12\ Although this widely discussed correlation 
depicts a classic representation of a financial conflict of interest, 
we believe nonfinancial conflicts of interests also deserve attention. 
Nonfinancial conflicts of interests have the potential to interfere 
with honest reporting, transparency and fair review of applications 
submitted to compendia publishers.\13\ Therefore, in light of such 
concerns, the existence of financial and nonfinancial conflicts of 
interests would threaten the impartiality of the recommendations made 
in the compendia. We believe that section 182(b) of the MIPPA, 
``Revision of definition of medically-accepted indication for drugs * * 
* Conflict of Interest'' is designed, in part, to address this issue in 
the compendia review process.
---------------------------------------------------------------------------

    \11\ Institute of Medicine. Conflict of Interest in Medical 
Research, Education, and Practice. Available online at http://www.nap.edu/catalog.php?record_id=12598.
    \12\ Resnik, D. (2007, April). Conflicts of Interest in 
Scientific Research Related to Regulation and Litigation. The 
Journal of Philosophy, Science & Law. 7:1-16.
    \13\ The PloS Medicine Editors. (2008, September). Making Sense 
of Non-Financial Competing Interests. PloS Medicine. 5(9):1299-1301, 
Retrieved March 19, 2009 from http://www.plosmedicine.org.
---------------------------------------------------------------------------

(3) Proposed Revisions of Compendia Standards
    We believe that the implementation of this statutory provision that 
compendia have a ``publicly transparent process for evaluating 
therapies and for identifying potential conflicts of interests'' is 
best accomplished by amending the current definition of a compendium at 
Sec.  414.930(a) to include the MIPPA requirements and by defining the 
key components of publicly transparent processes for evaluating 
therapies and for identifying potential conflicts of interests. In 
order to implement the MIPPA requirements concerning a publicly 
transparent process for evaluating therapies, we propose that a 
compendium could meet this standard by publishing materials used in its 
evaluation process on its Web site. This mode of publication provides 
broad contemporaneous public access to relevant materials. We believe 
that public access to such materials will increase transparency of the 
process used by compendia publishers for evaluating therapies and 
facilitate independent review of recommendations by interested parties. 
In addition, as discussed in the CY 2008 PFS final rule with comment 
period (72 FR 66305 through 66306), such disclosure may assist 
beneficiaries and their physicians in choosing among treatment options.
    As expressed in the February 14, 2008 letter from the U.S. Senate 
Committee on Finance to the CMS Acting Administrator Kerry Weems, 
``conflicts of interest have been proven in peer-reviewed studies to 
have a significant impact on scientific outcomes and medical care.'' 
\14\ Since compendia recommendations are generally dependent on 
evidence from peer-reviewed studies, we believe that conflicts of 
interests may arise from relationships between individuals who 
substantively participate, such as individuals who contribute more than 
a clerical role, in the development of compendia recommendations and 
the applicants (for example, the manufacturer or seller of the drug or 
biological being reviewed by the compendium) for the inclusion of drug 
or biological recommendations in compendia. These relationships may 
involve, for example, publishers of compendia and peer-reviewed 
journals, their editorial or advisory boards, drug manufacturers, 
physicians or providers that derive income from the prescribing or 
administration of drugs, researchers that have a personal or academic 
interest in the drug study, or others who may provide incentives to 
influence the prescribing behaviors of physicians.\15\ As illustrated 
in the AHRQ Potential Conflict of Interest in the Production of Drug 
Compendia White Paper, these potential financial and nonfinancial 
conflicts exist at the various stages of the evaluation process. The 
White Paper also describes compendia publication users (for example, 
the public, physicians, other caregivers, and public/private insurers) 
and the objectives of each user when referencing the compendia. 
Therefore, these potential financial and nonfinancial conflicts may be 
problematic for users of the compendia to rely on the validity of the 
compendia recommendations.\16\
---------------------------------------------------------------------------

    \14\ United States Senate Committee on Finance Correspondence. 
(2008, February 14). CMS Process and Actions Concerning Approval of 
Anti-Cancer Drug Compendia.
    \15\ The PloS Medicine Editors. (2008, September). Making Sense 
of Non-Financial Competing Interests. PloS Medicine. 5(9):1299-1301, 
Retrieved March 19, 2009 from http://www.plosmedicine.org.
    \16\ Agency for Healthcare Research and Quality. White Paper: 
Potential Conflict of Interest in the Production of Drug Compendia. 
(2009, April 27). Available online at http://www.cms.hhs.gov/mcd/viewtechassess.asp?from2=viewtechassess.asp&where=index&tid=64&.
---------------------------------------------------------------------------

    Section 182(b) of the MIPPA requires a publicly transparent process 
for: (1) Evaluating therapies, and (2) identifying potential conflicts 
of interests. In light of these provisions, we are proposing regulatory 
safeguards to require that the publicly transparent process for 
evaluating therapies and identifying potential conflicts of interests 
include disclosure of certain relevant information. All currently 
listed compendia will be required to comply with these provisions, as 
of January 1, 2010, to remain on the list of recognized compendia. We 
view compendia publishers as generally responsible for the integrity of 
their publications. Therefore, we urge currently listed compendia 
publishers to submit evidence demonstrating compliance with the MIPPA 
provisions that ``no compendia may be included on the list of 
compendia'' unless the compendium has a publicly transparent process 
for therapy evaluation and conflict of interest identification to CMS 
no later than December 31, 2009. In addition, any compendium that is 
the subject of a future request for inclusion on the list of recognized 
compendia will be required to comply with these provisions. We believe 
that the statute is clear that no compendium can be on the list if it 
does not fully meet the standard described in section 1861(t)(2)(B) of 
the Act, as revised by section 182(b) of the MIPPA.
b. Revisions to Sec.  414.930, ``Compendia for Determination of 
Medically-Accepted Indications for Off-Label Uses of Drugs and 
Biologicals in an Anti-Cancer Chemotherapeutic Regimen''
    We are proposing the following amendments to Sec.  414.930(a):
     To revise the definition of ``compendium'' by adding an 
additional requirement that a compendium have a publicly transparent 
process for evaluating therapies and for identifying potential 
conflicts of interests.
     To add the definition of ``publicly transparent process'' 
for evaluating therapies. We propose that assurance of a publicly 
transparent evaluation process is best achieved by establishing a 
process that provides for public disclosure of the evidence considered 
and the review of that evidence leading to the development of compendia 
recommendations.\17\ By providing for this disclosure, we hope to 
ensure validity in the use of compendia for identifying medically-
accepted uses of off-label treatments for purposed of section 
1861(t)(2)(B) of the Act. Thus, we believe that in the interest of 
providing a publicly transparent process

[[Page 33622]]

for evaluating therapies and maximizing that transparency, a compendium 
should publish the complete application for inclusion, exclusion, or 
deletion of a therapy including criteria used to evaluate the request, 
on its Web site. We believe that in accordance with that publicly 
transparent process, a compendium should similarly publish the names of 
the individuals who have substantively participated in the development 
of compendia recommendations, along with transcripts of meetings and 
records of votes. This provides an opportunity for the public to 
consider the process used by the compendia in evaluating a specific 
therapy and independently reach conclusions about the adequacy of the 
application in light of the compendium's final recommendation. We 
request comments on the requirement for publication of a transcript and 
the suitability of other alternatives such as minutes or other 
documents.
---------------------------------------------------------------------------

    \17\ Resnik, D. (2007, April). Conflicts of Interest in 
Scientific Research Related to Regulation and Litigation. The 
Journal of Philosophy, Science & Law. 7:1-16.
---------------------------------------------------------------------------

     To add a definition regarding a ``publicly transparent 
process for identifying potential conflicts of interests,'' and clarify 
the essential elements of such a process. We propose that a publicly 
transparent process for identifying potential conflicts of interests is 
best demonstrated by a process that requires public transparency 
regarding the competing financial and nonfinancial interests that may 
give rise to such conflicts. Thus, we believe that a compendium should 
have a process for disclosing by publication on its publicly accessible 
Web site, certain information regarding potential conflicts of 
interests associated with individuals who are responsible for the 
compendium's recommendations as well as their immediate family members 
(as defined in Sec.  411.351). A process for providing disclosure of 
interests by immediate family members is necessary because such 
interests could represent potentially competing financial conflicts 
that could influence the review and individuals responsible for the 
compendium's recommendations.\18\
---------------------------------------------------------------------------

    \18\ The PloS Medicine Editors. (2008, September). Making Sense 
of Non-Financial Competing Interests. PloS Medicine. 5(9):1299-1301, 
Retrieved March 19, 2009 from http://www.plosmedicine.org.
---------------------------------------------------------------------------

    We believe that the process for identifying potential conflicts of 
interests should include information regarding ownership and investment 
interests of those individuals who are responsible for the compendium's 
recommendation. Such information should include the names of those 
entities with which the individual has an ownership or investment 
relationship (similar to those relationships defined in Sec.  411.354), 
the nature and length of the relationships, other financial 
relationships that may derive fron either a direct or indirect 
relationship (similar to thise relationships identified in 42 CFR 
411.354, and the significance (for example, dollar value) of those 
relationships. By requiring a process for identification of such 
relationships, we are providing a process for the public to have access 
to information regarding potential conflicts of interests. We believe 
that information concerning the value of financial relationships is 
necessary because it would permit the public to assess the degree of 
influence that a relationship may have over an individual's decisions 
or judgments.\19\ We request comments on the suitability of this 
process or whether the compendia should prescribe its own process. In 
addition, we request comments specifically addressing whether 
information regarding immediate family members is necessary for 
conflict of interest determinations.
---------------------------------------------------------------------------

    \19\ Resnik, D. (2007, April). Conflicts of Interest in 
Scientific Research Related to Regulation and Litigation. The 
Journal of Philosophy, Science & Law. 7:1-16.
---------------------------------------------------------------------------

    We note that the publishers of the four compendia that are 
currently recognized for this purpose have already adopted conflict of 
interest disclosure policies that are similar to our proposal. Though 
there are individual differences among the publishers, we note that 
these policies commonly include publication on the compendia 
publisher's Web site of the name of the individuals that participate in 
the generation of the compendia recommendation and the entity with 
which there is a relationship, the nature of the relationship (for 
example, salary, ownership, grant support), and the value of the 
relationship. Some include this information as it relates to family 
members of the individual.
    Additional information with respect to the conflict of interest 
policies of those compendia we reviewed during the 2008 review cycle 
can be found on their Web sites. For the convenience of the reader we 
have listed below the Web sites where these policies may be found for 
each of the four currently recognized compendia.
     AHFS Drug Information: http://www.ahfsdruginformation.com/off_label/interest_disclosure.aspx.
     Thomson Micromedex DrugDex: http://www.micromedex.com/about_us/editorial/ed_ConflictofInterest.pdf.
     Gold Standard Clinical Pharmacology: http://www.goldstandard.com/editorial_conflict.html.
     The National Comprehensive Cancer Network: http://www.nccn.org/about/disclosure.asp?p=about.
    In general, certain disclosure policies of the compendia provide 
for public disclosure of individuals involved in the recommendation to 
ensure against the appearance of potential conflicts of interests. We 
believe that a publicly transparent process which provides for the 
identification of potential conflicts of interest protects the 
interests of the public, as well as those individuals who participate 
in the compendia process.
    Disclosures of conflicts of interests are triggered by the 
recommendation regarding the use of the drug or biological rather than 
by the application for the recommendation. Disclosures published in 
conjunction with compendia recommendation updates should remain 
publicly viewable for a reasonable period of time. Specifically, we 
believe that the disclosures remain available for a period of not less 
than 5 years. It is not uncommon that serious questions about the use 
of a drug do not arise until the drug has been used for several years. 
Thus the relevance of information regarding the development of 
compendia recommendations may not be recognized until several years 
after the clinical use in question. We believe that a period of 5 years 
is a reasonable balance between the burden of maintaining this 
information and the public's interest in timely access to this 
information. We welcome comments regarding whether or not a period of 
not less than 5 years is an adequate timeframe for this balance to 
occur.
    We recognize that some individuals may participate substantively in 
the development of more than one recommendation. For example, an 
individual might participate in the review of several drugs or 
biologicals for a single compendia publisher. We recognize that a 
single relationship may present a significant conflict of interest in 
some cases but not others. For example, a process for disclosure by the 
compendium publisher would be required if an individual whose only 
conflicted relationship arises from significant income related to the 
use of a particular drug for lung cancer substantively participated in 
the compendia review of that drug for lung cancer or for a competitor 
treatment for lung cancer. If that same individual substantively 
participated in the compendia review of a different drug for a 
different disease, the compendia publisher might determine that there 
is no conflict of interest to disclose.

[[Page 33623]]

    In Sec.  414.930(b)(1), we are revising the CMS process for listing 
compendia for determining medically-accepted uses of drugs and 
biologicals in anti-cancer treatment to include consideration of a 
compendium's meeting of the regulatory definitions. We are also 
proposing to renumber the subparagraphs of Sec.  414.930(b)(1) to 
accommodate this change.
    Current Sec.  414.930(b)(2) gives CMS the authority to generate an 
internal request to revise the list of compendia at any time.

H. Part B Drug Payment

1. Average Sales Price (ASP) Issues
a. Immunosuppressive Drugs Period of Eligibility
    Section 9335(c) of the Omnibus Budget Reconciliation Act of 1986 
(Pub. L. 99-509) (OBRA '86) added subparagraph (J) to section 
1861(s)(2) of the Act to define a benefit category for 
immunosuppressive drugs furnished to an individual who receives an 
organ transplant for which Medicare payment is made, for a period not 
to exceed 1 year after the transplant procedure. Coverage of these 
drugs under Medicare Part B began January 1, 1987.
    Section 13565 of the Omnibus Budget Reconciliation Act of 1993 (Pub 
L. 103-66) (OBRA '93) amended section 1861(s)(2)(J) of the Act to 
specify that the benefit category included immunosuppressive drugs 
furnished: During 1995, within 18 months after the date of the 
transplant procedure; during 1996, within 24 months after the date of 
the transplant procedure; during 1997, within 30 months after the date 
of the transplant procedure; and during any year after 1997, within 36 
months after the date of the transplant procedure. Beginning January 1, 
2000, section 227 of the Medicare, Medicaid and SCHIP Balanced Budget 
Refinement Act of 1999 (Pub. L. 106-113) (BBRA) extended the benefit 
period to eligible beneficiaries whose coverage for drugs used in 
immunosuppressive therapy expired during the calendar year.
    Section 113 of the Medicare, Medicaid and SCHIP Benefits 
Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA) revised 
section 1861(s)(2)(J) of the Act to eliminate the time limits for 
coverage of prescription drugs used in immunosuppressive therapy under 
the Medicare program. Effective with immunosuppressive drugs furnished 
to an individual who receives an organ transplant for which Medicare 
payment is made on or after December 21, 2000, there is no longer any 
time limit for Medicare benefits. Although the statutory benefit 
category no longer includes a time limit, our regulations at Sec.  
410.30(b) continue to reflect the time limits that applied previously. 
Therefore, we are proposing to make conforming changes to Sec.  
410.30(b) to remove the references to the time limits that applied 
under previous iterations of the statute. This technical change will 
reduce the potential for confusion about the scope of the benefit. We 
note that this proposal does not substantively affect Medicare coverage 
or benefits because it merely conforms the regulations text to the 
current benefit category, as specified in section 1861(s)(2)(J) of the 
Act. As noted above, under section 113 of the BIPA, immunosuppressive 
drugs have not been subject to a time limit since December 21, 2000.
b. WAMP/AMP Threshold
    Section 1847A(d)(1) of the Act states that ``the Inspector General 
of HHS shall conduct studies, which may include surveys to determine 
the widely available market prices (WAMP) of drugs and biologicals to 
which this section applies, as the Inspector General, in consultation 
with the Secretary, determines to be appropriate.'' Section 1847A(d)(2) 
of the Act states that, ``Based upon such studies and other data for 
drugs and biologicals, the Inspector General shall compare the ASP 
under this section for drugs and biologicals with--
     The widely available market price (WAMP) for these 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 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 is 
specified as 5 percent for CY 2005. For CY 2006 and subsequent years, 
section 1847A(d)(3)(B) of the Act establishes that the applicable 
threshold 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 2009, we specified an applicable 
threshold percentage of 5 percent for both the WAMP and AMP. We based 
this decision on the limited data available to support a change in the 
current threshold percentage.
    For CY 2010, we propose to specify an applicable threshold 
percentage of 5 percent for the WAMP and the AMP. At present, the OIG 
is continuing its comparisons of both the WAMP and the AMP. In April 
2008, we implemented a change in the weighting methodology for 
calculating ASP. Information on how recent changes to the calculation 
of the ASP may affect the comparison of ASP to WAMP or AMP is limited 
at this time. Since we do not have sufficient data that suggest another 
level is more appropriate, we believe that continuing the 5 percent 
applicable threshold percentage for both the WAMP and AMP is 
appropriate for CY 2010. Therefore, we are proposing to revise Sec.  
414.904(d)(3) to include the CY 2010 date.
    As we noted in the CY 2009 PFS final rule with comment period (73 
FR 69752), 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, including 
providers and 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. We welcome comments 
on our proposal to continue the applicable threshold at 5 percent for 
both the WAMP and AMP for CY 2010.
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, participating physicians agree to obtain all of the 
approximately 180 drugs on the CAP drug list from an approved CAP

[[Page 33624]]

vendor. The approved CAP 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 
participating CAP physician bills Medicare only for administering the 
drug to the beneficiary. The initial implementation of the CAP operated 
with a single CAP drug category from July 1, 2006 to December 31, 2008.
    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, after the publication of the proposed rule, we 
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 was put on hold, and CAP drugs 
have not been available from an approved CAP vendor for dates of 
service after December 31, 2008. Physicians who participated in the CAP 
have transitioned back into the Average Sales Price (ASP) method of 
acquiring part B drugs for dates of service after December 31, 2008.
    After the postponement was announced, we solicited public feedback 
on the CAP from participating physicians, potential vendors, and other 
interested parties. We solicited public comments on several issues, 
including, but not limited to the following: 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 participating 
physicians. We also hosted a CAP Open Door Forum (ODF) on December 3, 
2008, where participants had an opportunity to discuss the postponement 
and suggest changes to the program. We appreciate the comments that we 
have received.
    In the CY 2009 PFS final rule with comment period, we stated that 
we would review the public comments and consider implementing changes 
to the CAP before proceeding with another bid solicitation for approved 
CAP vendor contracts. Based on this information, in this proposed rule, 
we are addressing items that were not finalized in the CY 2009 PFS 
final rule with comment period, and making additional proposals for the 
CAP. Our approach seeks to better define certain aspects of the program 
based on our experience. We also seek to continue to increase 
participation by minimizing the administrative burden for physicians 
and vendors who choose to participate.
a. Frequency of Drug Payment Amount Updates
    As described in the July 6, 2005 IFC (70 FR 39070 through 39071) 
and Sec.  414.906(c), payment amounts for drugs furnished under the CAP 
are set through a competitive bidding process, and as described in 
Sec.  414.908(b), bids that exceed a composite bid threshold of 106 
percent of the weighted ASP for the drugs in the CAP category are not 
accepted. The CAP payment amounts that are calculated from successful 
bids are updated from the time of the bidding period to the payment 
year. During the 2006 through 2008 CAP contract period, the initial 
update calculation used the change in the Producer Price Index (PPI) 
for prescription preparations to account for the time period between 
the bidding and the period in which the payment amounts were to be in 
effect, which was the middle of the first year of the three year CAP 
contract period (70 FR 39074). Finally, as specified in Sec.  
414.906(c), CAP payment amounts are updated again during the second and 
third year of the contract period based on the approved CAP vendor's 
reported reasonable net acquisition costs (RNAC). The annual updates 
are limited by payment amounts described in section 1847A of the Act 
and codified in Sec.  414.906(c).
    Section 1847B(c)(7) of the Act gives the Secretary the discretion 
to establish an appropriate schedule for the approved CAP vendor's 
disclosure of RNAC information to us, provided that disclosure is not 
required more frequently than quarterly. In the July 6, 2005 IFC (70 FR 
39075 through 39076), we specified that each approved CAP vendor will 
disclose its RNAC for the drugs covered under the contract annually 
during the period of its contract and that we would calculate an annual 
payment adjustment based on this information. We specified an annual 
disclosure of RNAC because it imposes the minimal burden on approved 
CAP vendors. In 2005, some commenters suggested that more frequent 
updates would be desirable. Additional feedback about the CAP that was 
obtained after the program's postponement in 2008, as well as comments 
on previous rules, indicated that potential vendors would like the 
frequency of price adjustments to increase. Various commenters have 
suggested a quarterly price adjustment in order to parallel to the ASP 
process, to better match payment amounts with increases or decreases in 
drug costs, and to attract vendor interest. We believe that quarterly 
adjustments would also lower approved CAP vendors' financial risks 
because CAP payment amounts will be better able to keep up with 
unanticipated drug cost increases and would benefit the Medicare 
program by reacting to significant cost decreases more promptly.
    Quarterly price updates also will eliminate the PPI-based increase 
that currently occurs between the time bids are submitted and the first 
day of CAP claims processing. The application of the PPI-based payment 
adjustment described in the July 6, 2005 IFC (70 FR 39074) has resulted 
in situations where the ASP+6 percent payment amount has been exceeded 
during the first year of the 3-year approved CAP vendor contract. We do 
not believe that CAP payment amounts should exceed ASP+6 percent. In 
our discussion of bid ceilings in the July 6, 2005 IFC, we stated that 
the bid ceiling ``ensures that the CAP will be no more costly to the 
Medicare program than the alternative method of paying for drugs at 106 
percent of ASP. This ceiling is thus consistent with the possibility of 
realizing savings to the Medicare program. It would also serve to 
maintain a level of parity between the two systems, preventing a 
situation in which significant payment differentials might skew 
incentives and choices (70 FR 39070).'' For this reason, and to remain 
consistent with current regulation text at Sec.  414.906, we believe 
that all payment amounts calculated under the update process should be 
limited by the weighted payment amount established under section 1847A 
of the Act. We also believe that this approach will continue to provide 
for an ``appropriate price adjustment'' as required under section 
1847B(c)(7) of the Act by improving responsiveness to unexpected price

[[Page 33625]]

changes, and continuing a prudent limitation on the magnitude of 
payment amount adjustments.
    Our approach for implementing quarterly updates consistent with the 
ASP+6 percent limit on payment amounts would be based on composite bid 
price calculations, as described in the July 6, 2005 IFC (70 FR 39072 
through 39073). Additional details about the process are described in 
further detail in section II.H.2.f. of this proposed rule (Annual CAP 
Payment Amount Update Mechanism). Briefly stated, the ASP+6 percent 
limit would be applied by comparing the (weighted) composite update 
payment amount, calculated from participating approved CAP vendors' 
reasonable net acquisition cost data, to most recent available weighted 
ASP prices for the same drugs. If the composite drug update payment 
amount exceeds the weighted ASP+6 percent payment limit, the composite 
payment amount for that group of drugs would be reduced to equal the 
ASP+6 percent limit by applying an equal percent reduction to each drug 
in the group. By way of example only, if a quarter's composite update 
payment was calculated as +2.3 percent, based on the median of all 
participating approved CAP vendors' data, but the calculated weighted 
ASP+6 percent limit for that group of drugs was +2.1 percent, the 
payment amounts for all HCPCS codes in the composite group would be 
increased by 2.1 percent in order to account for reported increases to 
the vendor's acquisition cost, but not to exceed the ASP+6 percent 
limit. This means that a 2.1 percent increase would be applied to CAP 
payment amounts for all HCPCS codes that are in the composite drug list 
and are being supplied under the CAP by one or more approved CAP 
vendors. For HCPCS codes that are priced separately, each code 
available through the CAP will be compared to the most recent ASP+6 
percent limit for that code. CAP payment amounts for codes that exceed 
the ASP+6 percent limit will be reduced to ASP+6 percent. Each ``Not 
Otherwise Classified'' (NOC) drug described in Sec.  414.906(f)(2)(iv), 
would also be updated on an individual (rather than composite) basis.
    We are proposing to discontinue annual CAP payment amount updates 
and to implement quarterly CAP payment amount updates at Sec.  
414.906(c). Because of this proposed change, the special quarterly 
adjustments described at Sec.  414.906(c)(2) (for the introduction of 
new drugs, expiration of drug patents or availability of generic drugs, 
material shortages, or withdrawal of a drug from the market) will no 
longer be needed, so we propose deleting those provisions from the 
regulation, and instead adding details about the payment amount update 
process described in section II.H.2.f. of this proposed rule (Annual 
CAP Payment Amount Update Mechanism). A quarterly RNAC reporting and 
payment adjustment process would begin as soon as we entered into 
contracts with the approved CAP vendor(s); that is, beginning with the 
first quarter during which CAP claims are submitted under the contract. 
Thus, under this proposal, we would also eliminate the PPI-based 
adjustment for the time period between the time bids are submitted and 
the time claims processing begins under the contract, because that 
adjustment would no longer be necessary. We believe using one payment 
update process will be easier to administer and would minimize the 
potential for CAP payment amounts to exceed ASP+6 percent for the first 
contract year. In order to provide sufficient time for the calculation 
of payment amount updates, we are proposing that approved CAP vendors 
report quarterly RNAC data for drug purchased for use under the CAP 
during the previous quarter within 30 days of the close of that 
quarter. We have made corresponding changes to regulation text at Sec.  
414.906(c) and we welcome comments on these proposed changes.
b. Changes to the CAP Drug List
(1) CAP Drug List
    In the July 6, 2005 IFC, we responded to comments on our proposed 
approach for determining the CAP drug categories and how we select the 
specific drugs in the CAP drug list (70 FR 39026 through 39034). As 
stated in the CY 2006 PFS final rule with comment period (70 FR 70237), 
the CAP is intended to provide beneficiaries with access to Medicare 
Part B drugs and maintain physician flexibility when prescribing 
medications. Our approach incorporated drugs commonly administered by 
the range of physician specialties that bill for Part B drugs (70 FR 
39030) and resulted in a list of about 180 drugs that were available 
through the CAP during the CY 2006 through CY 2008 contract period. We 
also developed a number of methods by which an approved CAP vendor's 
CAP drug list could be changed (see Table 26 at 70 FR 70242).
    We believe that our general approach, to provide a wide variety of 
drugs to a variety of physicians over a large portion of the United 
States, is on target. Although we believe that the CAP is a means for 
physicians to minimize their drug inventory costs, we acknowledge that 
participation in the CAP cannot completely eliminate the need for 
participating CAP physicians to maintain at least a minimal drug 
inventory at the office. Many physicians who participate in Medicare 
also provide services to non-Medicare patients, and even physicians 
with a predominantly Medicare patient population may find it useful to 
keep a small stock of drugs on hand for unforeseen situations, such as 
emergencies and breakage.
    During the CAP postponement, we became aware that both 
participating CAP physicians and potential vendors supported narrowing 
the CAP drug list. Both agreed that low cost drugs should be removed 
from the CAP. Although these items were initially included in the CAP 
so that an approved CAP vendor would be in a position to supply many of 
the Part B drugs that an office might administer, CAP physicians and 
the vendor community have stated that the inclusion of these items in 
the CAP creates an accounting, tracking, and claims submission burden 
for some participants. Based on these comments, we believe that low-
cost, frequently utilized items, such as corticosteroid injections, 
could be removed from the list without significant impact on the CAP's 
utility to participating CAP physicians. Furthermore, it appears that 
physicians would be more interested in obtaining expensive products, 
such as biologicals, through the CAP. However, we are also mindful that 
narrowing the CAP drug list significantly also would decrease an 
approved CAP vendor's overall purchase volume, and we believe that this 
could limit the approved CAP vendor's ability to obtain volume-based 
discounts from the manufacturers or distributors from which it obtains 
drugs for use in the CAP. Creating a more tailored CAP drug category 
also could limit physician participation to one or several specialties, 
and may create a situation where sudden supply interruptions and 
unexpected changes to distribution channels could affect a greater 
proportion of drugs in the program than would be the case with a 
broader CAP drug category.
    Nevertheless, we are proposing to create a new CAP drug category 
for the next round of CAP contracting. Our approach is intended to 
address comments about the administrative burden of tracking and 
billing low cost/high volume items while maintaining access to a 
variety of high cost items. We are proposing to identify the new CAP 
drug category using the existing CAP drug category as a starting point.

[[Page 33626]]

The 2008 drug list was compiled based on Part B drug claims data, the 
identification of specialties that frequently administer drugs under 
Part B, and public comment during rulemaking in 2005 (70 FR 39026 
through 39033). We believe that using the 2008 CAP drug list as a 
starting point would maintain prescribing flexibility for a wide range 
of specialties and would also maintain access to a wide spectrum of 
drugs that have been utilized under the program previously. 
Furthermore, we do not believe it is necessary to develop a new 
approach because the 2008 CAP drug list was based on heavily utilized 
drugs in Medicare Part B physician practices; we believe that this 
approach is on target.
    We propose to amend our list based on CAP physician participation, 
claims data, and comments indicating that the list should be narrowed 
to higher cost items. First, we would ``filter'' the original CAP drug 
category (drugs furnished in 2006 through 2009) by the specialties that 
most frequently prescribe drugs under the CAP, and the highest dollar 
volume CAP drugs (top 20 percent of allowed charges) compiled from 2008 
claims data. This filtered list appears in Table 35, and we are 
proposing it as the starting point for the updated CAP drug category. A 
filtering process based on frequency of claims from a subset of 
physicians who might participate in the CAP cannot fully capture all 
drugs that may be used by certain specialties. In other words, the 
filtering steps described above narrow the CAP drug list based on 
physician specialties and dollar volume and do not necessarily preserve 
groups of drugs that certain prescribers may utilize, especially the 
less frequently utilized items in such groups. Therefore, we are also 
proposing to ``fill in'' groups of drugs with related items that do not 
appear on our list. We will consider ``filling in'' any drug or 
biological product that is physician-administered, has a reasonably 
high utilization in the Medicare population, is related to drugs 
already in the CAP (for example, because of similar clinical uses), and 
is otherwise appropriate for inclusion in the program.
    For example, we could consider adding a fourth hyaluronan 
viscosupplement to the drugs in Table 35, expanding the list of 
antibiotics, or antiemetics, or by adding a list of ``new'' and 
unweighted drugs as in 2006 by using simple claims data thresholds (70 
FR 70238). The concept of ``filling in'' drug groups is supported by 
feedback from former participating CAP physicians who suggested that 
certain categories of drugs, such as antibiotics, be more fully 
represented. We are seeking comments on specific drugs that should be 
added to the draft list in Table 35.
    We also are seeking comment on the method to assess whether a 
particular drug should be ``filled in'' so that it is included in the 
new, narrowed CAP drug category. For example, one process that we have 
considered and would like comment on is adding drugs from the 2009 
through 2011 CAP vendor bidding list that did not pass the 
``filtering'' step described above. The 180 item 2009 through 2011 
bidding list was used during the approved CAP vendor bidding for the 
2009-2011 contract, and includes CMS-approved items added to the 
original contract's bid list, as well as items approved for addition 
during the 2006-2008 contract period. (See the Downloads section at 
http://www.cms.hhs.gov/CompetitiveAcquisforBios/03a_vendorbackground.asp#TopOfPage). This list's weighting is based on 
claims volume data by HCPCS code units rather than dollar volume and 
provides a different perspective than a dollar volume sorting. We would 
add drugs from the 2009-2011 CAP Vendor bid list to the CAP drug 
category if the drug's weight is in the top 25 percent of the 2009-2011 
CAP vendor bidding list, indicating frequent claims submission, and if 
the drug's clinical uses are similar to a drug on the proposed list in 
Table 35. This method would result in the addition of a number of 
several commonly used antibiotics, two antiemetic) and several 
chemotherapeutic agents. Potential additions to our draft list 
identified by this method appear in Table 36. Although this method 
helps ``fill in'' the proposed CAP drug list, this method still does 
not fully capture less frequently used drugs, or newly approved drugs. 
We welcome comments on this method and alternative methods of filling 
this proposed list.
    In order to provide additional flexibility for participating CAP 
physicians and approved CAP vendors, and to allow for participants to 
further tailor the program to meet their needs, we are also proposing 
to add Sec.  414.906(f)(2)(v) to allow approved CAP vendors to submit a 
request to CMS to add drugs (or biologicals) to the list of drugs 
furnished by the requesting vendor if there is sufficient demand and if 
the drug has therapeutic uses that are similar to other drugs already 
available through the CAP. The request and approval process would 
follow the existing regulations at Sec.  414.906(f), and HCPCS code 
additions that are requested under this process would still be subject 
to CMS approval. This proposed process adds to the process for adding 
newly issued HCPCS codes under Sec.  414.906(f)(2)(iii) and newly 
approved drugs without HCPCS codes (NOC drugs)under Sec.  
414.906(f)(2)(iv). It is intended to facilitate more complete access to 
groups of drugs that may be used by certain specialties, and drugs used 
to treat certain disease states without having to rely on rigid 
definitions of classes of drugs that may not apply well to actual 
clinical practice across a large and diverse geographic area. We 
believe that this addition to the methods for changing an approved CAP 
vendor's drug list (see Table 26 in the November 21, 2006 final rule 
(70 FR 70242)) will add to the flexibility of the program. We welcome 
comments on our proposal to update the CAP drug list.

         Table 35--Draft CAP Drug List for Next Contract Period
------------------------------------------------------------------------
             Code                      Procedure code description
------------------------------------------------------------------------
J0129.........................  INJECTION, ABATACEPT, 10 MG
J0215.........................  INJECTION, ALEFACEPT, 0.5 MG
J0585.........................  BOTULINUM TOXIN TYPE A, PER UNIT
J0587.........................  BOTULINUM TOXIN TYPE B, PER 100 UNITS
J0696.........................  INJECTION, CEFTRIAXONE SODIUM, PER 250
                                 MG
J0878.........................  DAPTOMYCIN INJECTION, 1 MG
J0881.........................  INJECTION, DARBEPOETIN ALFA, 1 MCG (NON-
                                 ESRD USE)
J0885.........................  INJECTION, EPOETIN ALPHA, (FOR NON ESRD
                                 USE), PER 1000 UNITS
J0894.........................  INJECTION, DECITABINE, 1MG
J1440.........................  INJECTION, FILGRASTIM (G-CSF), 300 MCG
J1441.........................  INJECTION, FILGRASTIM (G-CSF), 480 MCG
J1740.........................  INJECTION, IBANDRONATE SODIUM, 1 MG

[[Page 33627]]

 
J1745.........................  INJECTION INFLIXIMAB, 10 MG
J2323.........................  INJECTION, NATALIZUMAB, 1 MG
J2353.........................  INJECTION, OCTREOTIDE, DEPOT FORM FOR
                                 INTRAMUSCULAR INJECTION, 1 MG
J2357.........................  OMALIZUMAB INJECTION, 5 MG
J2405.........................  INJECTION, ONDANSETRON HYDROCHLORIDE,
                                 PER 1 MG
J2469.........................  PALONOSETRON HCL, 25MCG
J2503.........................  PEGAPTANIB, 0.3MG
J2505.........................  INJECTION, PEGFILGRASTIM, 6 MG
J2778.........................  INJECTION, RANIBIZUMAB, 0.1 MG
J2794.........................  RISPERIDONE, LONG ACTING, 0.5MG
J3240.........................  INJECTION, THYROTROPIN ALPHA, 0.9 MG,
                                 PROVIDED IN 1.1 MG VIAL
J3315.........................  INJECTION, TRIPTORELIN PAMOATE, 3.75 MG
J3396.........................  INJECTION, VERTEPORFIN, 0.1 MG
J3487.........................  INJECTION, ZOLEDRONIC ACID, 1 MG
J3488.........................  INJECTION, ZOLEDRONIC ACID (RECLAST), 1
                                 MG
J7321.........................  HYALURONAN OR DERIVATIVE, HYALGAN OR
                                 SUPARTZ, FOR INTRA-ARTICULAR INJECTION,
                                 Per Dose
J7322.........................  HYALURONAN OR DERIVATIVE, SYNVISC, FOR
                                 INTRA-ARTICULAR INJECTION, PER DOSE
J7324.........................  HYALURONAN OR DERIVATIVE, ORTHOVISC, FOR
                                 INTRA-ARTICULAR INJECTION, PER DOSE
J9010.........................  ALEMTUZUMAB, 10 MG
J9035.........................  BEVACIZUMAB INJECTION, 10MG
J9041.........................  BORTEZOMIB INJECTION, 0.1MG
J9055.........................  CETUXIMAB INJECTION, 10MG
J9170.........................  DOCETAXEL, 20 MG
J9201.........................  GEMCITABINE HCL, 200 MG
J9206.........................  IRINOTECAN, 20 MG
J9263.........................  INJECTION, OXALIPLATIN, 0.5 MG
J9305.........................  PEMETREXED INJECTION, 10MG
J9310.........................  RITUXIMAB, 100 MG
J9355.........................  TRASTUZUMAB, 10 MG
------------------------------------------------------------------------


    Table 36--Potential Additions to the Draft CAP Drug List for Next
                   Contract Period (that is, Table 35)
------------------------------------------------------------------------
             Code                      Procedure code description
------------------------------------------------------------------------
J3370.........................  INJECTION, VANCOMYCIN HCL, 500 MG
J9264.........................  PACLITAXEL PROTEIN BOUND PARTICLES, 1MG
J0690.........................  INJECTION, CEFAZOLIN SODIUM, 500 MG
J1260.........................  INJECTION, DOLASETRON MESYLATE, 10 MG
J0692.........................  INJECTION, CEFEPIME HYDROCHLORIDE, 500
                                 MG
J1626.........................  INJECTION, GRANISETRON HYDROCHLORIDE,
                                 100 MCG
J0640.........................  INJECTION, LEUCOVORIN CALCIUM, PER 50 MG
J9265.........................  PACLITAXEL, 30 MG
J9190.........................  FLUOROURACIL, 500 MG
J9045.........................  CARBOPLATIN, 50 MG
J0290.........................  INJECTION, AMPICILLIN SODIUM, 500 MG
J9214.........................  INTERFERON, ALFA-2B, RECOMBINANT, 1
                                 MILLION UNITS
------------------------------------------------------------------------

2. Removing Drugs From the CAP list
    Although there are several methods under the CAP to add drugs to an 
approved CAP vendor's drug list, the current regulations do not specify 
a process for removing drugs from an approved CAP vendor's list. Our 
experience has shown that interruptions in availability can affect an 
approved CAP vendor's ability to supply CAP drugs during the course of 
a 3-year contract. For example, during the first contract period, we 
became aware of long-term and permanent drug unavailability, sometimes 
at the HCPCS level, due to removal of drugs from the market, or 
interruption of supply to an approved CAP vendor for reasons beyond the 
approved CAP vendor's control, such as changes to drug distribution 
methods, changes in agreements between manufacturers and distributors 
and/or pharmacies regarding who may purchase certain drugs, and direct 
distribution arrangements.
    In order to better respond to sudden, long-term changes in drug 
supply that are beyond the control of the approved CAP vendor, we are 
proposing to allow an approved CAP vendor to request the permanent 
removal from its CAP drug list of a HCPCS code for which no NDCs are 
available. Our proposal is intended to better manage situations where 
all NDCs from an entire HCPCS code unexpectedly become unavailable to 
an approved CAP vendor, and we would require the approved CAP vendor 
(1) to document the situation in writing, including the unavailability 
of all NDC codes in a HCPCS code that is supplied under the CAP, (2) to 
describe the reason for the unavailability and its anticipated 
duration, and (3) to attest that the unavailability is beyond the 
approved CAP vendor's control. Approval of the deletion would apply 
only to the approved CAP vendor or vendors that requested the deletion. 
Our proposal is not intended to be used frequently, or to permit an 
approved CAP vendor to remove a HCPCS code from its CAP drug list 
simply because it has become unprofitable to provide it--we believe the 
payment amount adjustment proposals discussed in sections II.H.2.a. and 
f. of this proposed rule would address that concern.

[[Page 33628]]

Furthermore, our proposal is also not intended to be used for managing 
short-term unavailability, or unavailability of a finite duration--we 
believe the existing drug substitution policy described in Sec.  
414.906(f) already addresses those concerns. We are proposing to add 
this process as Sec.  414.906(g) because those regulations currently 
provide for additions and substitutions to the CAP drug list, and would 
therefore require a written request to CMS, as well as CMS' approval.
    Participating CAP physicians who are affected by the deletion of a 
HCPCS code from an approved CAP vendor's drug list would have the 
option of remaining with their selected approved CAP vendor and using 
the ASP (buy and bill) methodology for obtaining the drug that has been 
deleted, or selecting another approved CAP vendor under the exigent 
circumstances provision at Sec.  414.908(a)(2). We believe that the 
deletion of an expensive and highly utilized CAP drug by one approved 
CAP vendor in the middle of a physician election period could cause 
hardship for a practice if it had to revert to the ASP methodology of 
acquiring and billing for that drug. Such a situation would constitute 
an exigent circumstance. Given CAP's goal of improving access to drugs, 
allowing the participating CAP physician to switch approved CAP vendors 
outside of a regular election period in this instance would be prudent. 
We welcome comments on our proposals.
c. Geographic Area Served by the CAP
    In the July 6, 2005 IFC (70 FR 39034 through 39036), we established 
a single, national competitive acquisition area for the initial stage 
of the CAP. This national distribution area included the 50 States, the 
District of Columbia, Puerto Rico, and U.S. territories. We recognized 
that designating a single national area might limit participation to 
those vendors that could compete to bid and supply drugs nationally, 
but we indicated this approach was a part of the phase-in plan for the 
CAP. We also discussed potential phase-in options for the future, 
stating that smaller areas might become a solution as the program 
expanded.
    According to the vendor community, certain areas of the United 
States (especially Alaska, Hawaii, and the Territories) currently 
present logistical challenges and are associated with high drug 
shipping costs. Moreover, physician participation in these areas has 
been low; in 2008, physicians from Alaska, Hawaii, and the Territories 
represented less than 2 percent of total participating CAP physicians. 
Temporarily limiting the geographic areas served by the CAP could help 
limit costs and risks for approved CAP vendors associated with shipping 
drugs to distant parts of the country. However, we believe that the CAP 
is intended to provide services to all Medicare physicians (including 
those in distant parts of the country), and therefore, we do not 
believe that a limitation on the geographic area in which the CAP is 
available should be permanent.
    Section 1847B(a)(1)(B) of the Act specifically requires the 
Secretary to phase-in the CAP with respect to the categories of drugs 
and biologicals in the program, in such a manner as the Secretary 
determines to be appropriate. We believe that this provision, 
particularly in conjunction with the statutory definition of a 
competitive acquisition area as ``an appropriate geographic region 
established by the Secretary'' provides broad authority for the 
Secretary to phase in the CAP with respect to the geographical areas in 
which the program would be implemented. As stated in the July 6, 2005 
IFC, we considered several factors when defining geographic areas for 
the CAP, including aspects of vendors and their distribution systems, 
such as current geographic service areas, the density of distribution 
centers, the distances drugs and biologicals are typically shipped, and 
costs associated with shipping and handling (70 FR 39035). Taking these 
factors into consideration again, and considering entities who have bid 
on, or expressed interest in bidding on approved CAP vendor contracts, 
we believe that it is appropriate to use the authority granted under 
the Statute to temporarily narrow the area served by the CAP during the 
program's re-implementation. We appreciate the logistical issues 
associated with shipping drugs to remote areas and the uncertainties 
associated with transportation costs that have been described by the 
potential vendor community; however, we are reluctant to significantly 
reduce the area served by the CAP because at some point, the approved 
CAP vendor's volume would be affected and the likelihood of obtaining 
volume based discounts would decrease.
    At this time, we are proposing to designate the CAP competitive 
acquisition area as the 48 contiguous States and the District of 
Columbia for the next round of CAP contracting. This change in the 
geographic area that is served by the CAP is meant as an interim 
measure under our phase-in authority and the statutory definition of a 
competitive acquisition area. We believe that omitting Alaska, Hawaii, 
and the Territories from the CAP competitive acquisition area at this 
time will balance the need to revise the CAP to attract more vendors 
with the need to offer the maximum number of physicians a meaningful 
opportunity to participate. We believe that this proposal will 
encourage potential vendors to participate in the CAP because it would 
temporarily omit areas associated with low physician participation, 
long shipping times, and high shipping costs. Furthermore, this measure 
is unlikely to significantly decrease CAP drug order volume relative to 
historical physician participation in the CAP. However, we are aware 
that our proposal temporarily eliminates the CAP option for physicians 
in the areas not included in this CAP competitive acquisition area. 
Therefore, we are not proposing this definition of the CAP geographical 
area as a permanent solution. We will continue to assess the CAP and 
update plans for phase in activity in future rulemaking efforts, 
including determining the circumstances under which CAP participation 
will be offered to physicians in Alaska, Hawaii, and the Territories. 
We will also continue to consider modifying the definition of 
competitive acquisition area on the basis of regions, States, or some 
smaller geographic area, which might expand the number of vendors that 
could bid to participate in the program (70 FR 39036). We welcome 
comments on our proposal.
d. CAP Drug Stock at the Physician's Office
    Our discussion about the CAP emergency restocking option in the 
July 6, 2005 IFC indicated that a participating CAP physician could not 
maintain a stock of an approved CAP vendor's drug in his or her 
inventory. This was done because we had reservations about potential 
program integrity and drug diversion issues (70 FR 39047).
    Since that time, we have gained operational experience with the CAP 
and a better understanding of the ordering and drug delivery process. 
We have also received additional public feedback about the different 
ways that the program could be refined. Further, our experience with 
the CAP indicates that our concerns over program integrity and drug 
diversion have not come to pass. For example, we have received no 
complaints and have no information indicating that diversion has been a 
concern. Also, we have not received any negative feedback from the 
vendor community indicating a concern about

[[Page 33629]]

storing CAP drugs in physicians' offices. Therefore, we believe at this 
time it is appropriate to consider allowing additional flexibility to 
encourage CAP participation.
    Our experience with the CAP, and our increased understanding about 
the options approved CAP vendors might have for furnishing drugs to a 
participating CAP physician's office also support considering 
additional flexibility in this area. For example, we are aware of 
electronic inventory control and charge capture devices that could be 
utilized in ways that conform to CAP regulations and are compliant with 
applicable State and Federal laws. Such devices utilize an electronic 
transaction based on a physician's order to track the administration of 
drugs from inventory to a specific patient and to document appropriate 
charges for the drug. We believe that such systems could fit into the 
current CAP framework when transactions in such systems are based on a 
physician's order, because such systems can track inventory, and can be 
used to capture patient charge data.
    For these reasons, we are seeking to clarify our requirements for 
the manner in which CAP drugs are supplied to participating CAP 
physicians. Specifically, we are proposing to allow approved CAP 
vendors to utilize electronic transactions to furnish CAP drugs from 
nominal quantities of approved CAP vendor-owned stock located at the 
physician's office in response to specific prescription orders and to 
capture charges related to such transactions. Our proposal is also 
intended to clarify that entities with alternative approaches to 
supplying drugs that utilize an electronic transaction are welcome to 
participate in the CAP bidding process. We believe that this will allow 
for additional flexibility and efficiency in the ordering and delivery 
of drugs within the program because it allows for more efficient 
shipping of approved CAP vendor-owned stock and provides the option of 
CAP participation for physicians who use or may choose to use such drug 
inventory management platforms. This proposal does not change our 
position that a participating CAP physician shall not take title to or 
pay for CAP drugs, nor does it alter the requirements for information 
that must be submitted with a prescription order under Section 
414.908(a) or the application of HIPAA to such data.
    Furthermore, our proposal does not affect the applicability of 
State licensing requirements for an approved CAP vendor. As stated in 
the July 6, 2005 IFC (70 FR 39066), either the approved CAP vendor, its 
subcontractor under the CAP, or both, must be licensed appropriately by 
each State to conduct its operations under the CAP. Therefore, if a 
State requires it, an approved CAP vendor would be required to be 
licensed as a pharmacy, as well as a distributor. We are not revising 
the requirements at Sec.  414.908(c) and Sec.  414.914(f)(9), and we 
note that sections 1847B(b)(6) and 1847B(b)(2)(B) of the Act continue 
to apply. In order to participate in the CAP successful bidders must 
continue to submit proof of pharmacy licensure, consistent with 
applicable State requirements.
    Also, this proposal would not modify our definition of ``emergency 
delivery'' or its corresponding requirements at Sec.  414.902. As we 
stated in our July 6, 2005 IFC, the intent of the 1-business-day 
timeframe for emergency deliveries is to address the participating CAP 
physician's need for more rapid delivery of drugs in certain clinical 
situations with the approved CAP vendor's ability to ship the drug and 
have it delivered promptly in a nationwide delivery area (70 FR 39045). 
The emergency delivery timeframe still applies in situations when CAP 
drugs are not available in the office for electronic delivery.
    Moreover, this proposal does not seek to change the CAP inventory 
requirements. CAP drugs belong to the approved CAP vendor, and as 
indicated in the July 6, 2005 IFC (70 FR 39048), participating CAP 
physicians are required to maintain a separate electronic or paper 
inventory for each CAP drug obtained. CAP drugs must be tracked 
separately in some way (for example, an electronic spreadsheet). CAP 
drugs do not have to be stored separately from a physician's own stock; 
that is, co-mingling of CAP drug with drug from a participating CAP 
physician's own private stock is acceptable as long as a record of 
approved CAP vendor-owned drug is kept in a manner that is consistent 
with Sec.  414.908(a)(3)(x) and the approved CAP vendor-owned drug can 
be accounted for, as needed.
    Also, this proposal does not affect the CAP emergency restocking 
requirements. Section 1847B(b)(5) of the Act and Sec.  414.906(e) 
provide criteria for the replacement of drugs taken from a 
participating CAP physician's inventory in the event of an emergency 
situation. When the emergency resupply criteria are met, a 
participating CAP physician can replace the drugs that were used from 
his or her own inventory by submitting a prescription order to the 
approved CAP vendor.
    Our proposal seeks to clarify the potential approaches that a 
bidder may use (separately or in combination) to supply drugs under the 
CAP. Our proposal does not seek to specify a particular approach that 
bidders must use in future responses to CAP bid solicitations or to 
strictly define the types of entities that could bid on CAP vendor 
contracts; for example, whether bidders must be pharmacies, drug 
distributors, or a hybrid of the two; whether bidders must utilize just 
in time shipping, or electronic inventory transactions to supply CAP 
drugs. We will consider approving bidders' approaches that are 
consistent with the statutory framework, applicable laws, and 
regulations. We welcome comments on this issue.
e. Exclusion of CAP Sales From ASP Calculations
    In response to the March 4, 2005 proposed rule, many commenters 
requested clarification about whether the prices determined under the 
CAP will be taken into account in computing the ASP under section 1847A 
of the Act. In the July 6, 2005 IFC, we responded that prices offered 
under the CAP must be included in ASP calculations (70 FR 39077). This 
was done because we initially believed that we did not have the 
statutory authority to exclude prices determined under the CAP from the 
computation of ASP under section 1847A of the Act. Section 1847A(c)(2) 
of the Act contains a specific list of sales that are exempt from the 
ASP calculation, and sales to approved CAP vendors operating under CAP 
are not included on that list (70 FR 39077). Comments received in 
response to the July 6, 2005 IFC opposed this policy (70 FR 70479).
    Ultimately, as stated in the November 21, 2005 IFC, we recognized 
commenters' concerns about the effect of including CAP prices in the 
calculation of ASP and agreed that the best outcome for both the ASP 
methodology and the CAP programs would be one in which prices under CAP 
did not affect payment amounts under the ASP methodology. In 
particular, we found compelling arguments from commenters about the 
separation of the ASP and CAP programs and that the two programs are 
intended to be alternatives to each other. Therefore, we excluded units 
of CAP drugs that are administered to beneficiaries by participating 
CAP physicians from the ASP calculation for the initial 3-year approved 
CAP vendor contract period (70 FR 70479). Accordingly, the definition 
of ``Unit'' at Sec.  414.802 was also revised to reflect this 
exclusion.
    In our August 18, 2006 interim final rule, we further addressed 
concerns

[[Page 33630]]

pertaining to our definition of Unit. We published a PRA notice 
regarding a proposed modification of the OMB-approved ASP information 
collection requirements (CMS Form 10110 (OMB  0938-0921) about 
the collection of the number of CAP units excluded from the ASP 
calculation. In response, a commenter expressed concern over 
manufacturers' reliance on approved CAP vendors for information about 
the number of units of CAP drugs that are administered to beneficiaries 
by participating CAP physicians (71 FR 48132). Since approved CAP 
vendors are the only entities with direct information on CAP units 
administered, the commenter believed that the requirement to exclude 
units of CAP drugs administered to beneficiaries by participating CAP 
physicians placed the manufacturer in the untenable position of 
reporting ASP and certifying reports of ASP based on second-hand 
information from approved CAP vendors. Further, the commenter noted 
that manufacturers may not have timely access to this information and 
that they could not independently confirm its accuracy (71 FR 48132). 
Additional feedback received as part of our ongoing work with 
manufacturers also indicated that they were concerned that they would 
have difficulty obtaining information from approved CAP vendors that 
would be necessary to accurately exclude administered CAP units from 
the ASP calculation (71 FR 48132).
    Therefore, we further revised the definition of unit to clarify 
that for the initial 3-year contract period under the CAP units of CAP 
drugs sold to an approved CAP vendor for use under the CAP would be 
excluded from the calculation of ASP (70 FR 48132).
    In the July 6, 2005 and August 18, 2006 IFCs, we stated that we 
would examine the effect of this exclusion and, if necessary, revisit 
our decision at the end of the initial 3-year period of the CAP (70 FR 
70480 and 71 FR 48132, respectively). Since then, operational 
experience has not indicated a reason for changing our policy of 
excluding CAP units sold to approved CAP vendors for use under the CAP 
from ASP calculations. Therefore, we are proposing to permanently 
exclude drugs supplied under the CAP from ASP calculations and make 
conforming changes to the definition of unit at Sec.  414.802. We 
believe that this proposal will continue to promote the separation and 
independence of the two drug payment models. We welcome comments on 
this proposal.
f. Annual CAP Payment Amount Update Mechanism
    In the July 6, 2005 IFC (70 FR 39076), we described a two-step 
process to calculate RNAC-based price adjustment if there is a change 
in the RNAC reported by a particular approved CAP vendor. We stated 
that ``we would adjust the bid price that the vendor originally 
submitted by the percentage change indicated in the cost information 
that the vendor disclosed. Next, we would recompute the single price 
for the drug as the median of all of these adjusted bid prices.'' The 
two-step process contemplated that there would be more than one 
approved CAP vendor at the time prices were to be adjusted and that all 
successful bidders would participate in the CAP.
    However, during the first round of CAP contracting, after offering 
more than one contract, we entered into a contract with only one 
successful bidder. Thus, during the 2008 price update calculation 
process, we developed an approach to account for the lack of RNAC data 
for bidders who chose not to participate in the CAP. In the CY 2009 PFS 
proposed rule, we stated that the approach we used to adjust prices for 
the 2008 contract year is consistent with Sec.  414.906(c) and with the 
July 6, 2005 IFC because it retains a two-step calculation based on the 
approved CAP vendor's RNAC, as well as the calculation of a median of 
adjusted bid prices.
    We also posted our approach on the Approved CAP Vendor page of the 
CMS CAP Web site at http://www.cms.hhs.gov/CompetitiveAcquisforBios/15_Approved_Vendor.asp. The percent change in RNAC for 2008 was 
calculated based on data supplied by the approved CAP vendor. This 
percent change in RNAC was used as a proxy for the percent change in 
RNAC for successful bidders that chose not to become approved CAP 
vendors.
    Then, in the CY 2009 PFS proposed rule (73 FR 38522 through 38523), 
we proposed to continue using this approach for future CAP payment 
amount updates where the number of approved CAP vendors is less than 
the number of successful bidders. We proposed that the average of the 
approved CAP vendor-supplied RNAC data would be used as a proxy for 
data from vendors who bid successfully but are not participating in the 
CAP. For example, if the payment amounts for the first year of a CAP 
contract are based on five successful bidders, but only four have 
signed contracts to supply drugs under the CAP (that is, there are four 
approved CAP vendors), only RNAC data collected from the four approved 
CAP vendors would be used to calculate the percent change in the RNAC. 
The average of the four approved CAP vendors' adjusted payment amounts 
would be used as a proxy for the RNAC of the successful bidder that is 
not participating in the CAP. The updated CAP payment amount would then 
be calculated as the median of the five data points (one data point for 
each approved CAP vendor's updated payment amount, and one data point 
calculated using the average of the approved CAP vendors' RNAC). 
Similarly, if there were five successful bidders but only three chose 
to become approved CAP vendors, the average of the three approved CAP 
vendors' RNAC would be the proxy for the RNAC of the two bidders who 
did not participate. The median of those five data points would become 
the updated CAP payment amount.
    Our approach in the CY 2009 PFS proposed rule was intended to 
provide us with a flexible method for updating CAP prices, to be 
consistent with our original policy as stated in the July 6, 2005 IFC, 
and to account for bidders or approved CAP vendors who are not 
participating in the program at the time the price updates are 
calculated. However, our approach was limited in scope because it was 
made during a contract period and during bidding for an upcoming 
contract and we did not want to make any significant changes to the CAP 
program which could affect contractual obligations. Furthermore, we 
received a comment in response to the CY 2009 PFS proposed rule that 
suggested the elimination of the proxy procedure so that payments would 
be based on actual data from participating vendors and would better 
reflect experience within the program. After additional consideration, 
we believe that it would be prudent to simplify and update our 2009 
proposal in order to account for successful bidders who choose not to 
participate in the CAP, possible changes in the number of approved CAP 
vendors over the life of a 3-year CAP contract, and to allow for 
flexibility in setting the frequency of payment amount adjustments as 
described in section a. above. We believe that our updated proposal is 
easier for the vendor community to understand and for us to implement. 
Furthermore, our revised proposal is not constrained by concerns about 
the impact of changes on an active contract.
    We are proposing to clarify that the RNAC-based adjustment 
calculations are intended to apply only to approved CAP vendors (not 
all bidders), and that the most recent CAP payment amount

[[Page 33631]]

(for example, the previous year's or the previous quarter's payment 
amount) will be the starting point for making the subsequent period's 
adjustment. Simply put, we are proposing to eliminate the use of proxy 
data for bidders that are no longer participating in the program. 
Instead, we propose to use RNAC data only from approved CAP vendors 
that are participating in the CAP at the time that an RNAC-based price 
update is being calculated. We are also clarifying that the starting 
point for the payment amount adjustment is the most recent payment 
amount. The percent change calculated from each participating approved 
CAP vendor's RNAC data will be applied to the most recent payment 
amount by recomputing the single price using the median of all 
participating vendors' adjusted prices.
    For example, if quarterly adjustments beginning at the start of 
claims processing approved CAP vendor's contract as described in 
section a. above are implemented, and the post bid period's CAP payment 
amounts are calculated based on five successful bids, but only four 
approved CAP vendors are participating when CAP claims processing 
begins, the RNAC-based payment amount adjustment for the first quarter 
of CAP claims would be based on RNAC data provided by the four approved 
CAP vendors that will be furnishing drugs under the CAP. The four 
approved CAP vendors would be required to submit a quarter of RNAC data 
within thirty days of the close of the quarter to which the data 
applied, prior to the beginning of CAP claims processing for the new 
contract. We would apply the percentage change in RNAC reported by each 
of the four approved CAP vendors to the CAP payment amounts calculated 
from successful bids, and the adjusted payment amount would be the 
median of those four adjusted amounts. Assuming that these four vendors 
are still furnishing drugs during the second quarter, calculations for 
the second quarter would apply the RNAC-based adjustment calculated 
from the four vendors' data to the first quarter's payment amount.
    This process would apply to the composite bid drug list as amended 
by rulemaking, meaning that a single weighted percent change in RNAC is 
calculated for all drugs in the composite bid list and that single 
percent change is applied to all drugs in the list. For drugs that are 
bid as separate line items, such as drugs that were included in 
addendum B of the 2006 bidding period (see 70 FR 39072 and updated as 
addendum G in 70 FR 70238) or for drugs that are added during a 
contract period, each HCPCS code will be adjusted as a separate line 
item. Such codes will not be included in the composite, weighted drug 
list. Our process will continue to assign a single payment amount to 
all approved CAP vendors that supply a given HCPCS code; we do not 
intend to have more than one payment amount for any HCPCS code under 
the CAP or for individual ``NOC'' drugs described in Sec.  
414.906(f)(2)(iv).
    This updated approach is flexible, and we believe it can 
accommodate a variety of scenarios, including a changing number of 
approved CAP vendors and changes to the frequency with which payment 
amount updates are made. It provides a straightforward and accurate 
clarification of the price adjustment mechanism described in regulation 
text. We believe that this proposal remains consistent with our 
original preamble language and with our CY 2009 PFS proposal, because 
it retains the two-step calculation using the percent change in RNAC. 
Finally, we believe that our approach will eliminate any perception 
that nonparticipating vendors can significantly affect CAP payment 
amount adjustments. We welcome comments on our proposal and 
corresponding regulation text changes at Sec.  414.906(c).
g. 2009 PFS Proposals
(1) Definition of a CAP Physician
    In the July 6, 2005 IFC, we stated that section 1847B of the Act 
most closely describes a system for the provision of and the payment 
for drugs provided incident to a physician's service (70 FR 39026). In 
the November 21, 2005 IFC (70 FR 70258), we stated that for the 
purposes of the CAP, a physician includes all practitioners that meet 
the definition of a ``physician'' in section 1861(r) of the Act. This 
definition includes doctors of medicine, osteopathy, dental surgery, 
dental medicine, podiatry, and optometry, as well as chiropractors. 
However, this definition does not include other health care 
professionals, such as nurse practitioners (NPs), clinical nurse 
specialists (CNSs), and other professions such as physician assistants 
(PAs) who may be able to legally prescribe medications and enroll in 
Medicare. Our 2005 CAP definition was not intended to exclude these 
practitioners who are appropriately billing Medicare for legally 
prescribed medications administered in a capacity that would be 
classified as incident to a physician's services if the medications 
were administered by a physician. We are concerned that the existing 
CAP definition of a physician is unnecessarily restrictive and could 
potentially affect access to the CAP for a small segment of providers 
that should be eligible for participation in the CAP in situations 
where they currently bill Medicare separately and appropriately.
    In the CY 2009 PFS proposed rule (73 FR 38523), we proposed to 
further clarify that, for the purposes of the CAP, the definition of a 
physician included all practitioners that meet the definition of a 
``physician'' in section 1861(r) of the Act, as well as practitioners 
(such as NPs, CNSs and PAs) described in section 1861(s)(2)(K) of the 
Act and other practitioners who legally prescribe drugs associated with 
services under section 1861(s) of the Act if those services and the 
associated drugs are covered when furnished incident to a physician's 
service. While we believed that most practitioners described in section 
1861(s)(2)(K) of the Act would bill under specific physician provider 
numbers, it was not our intent to exclude practitioners who are able to 
bill independently for drugs associated with services that are covered 
when provided by a physician and legally authorized to be performed.
    In response to our CY 2009 proposed rule, only a few commenters 
were concerned about the inclusion of inadequately trained 
practitioners and risks to patient safety under this expanded 
definition. Another commenter stated that this definition goes beyond 
the scope of the provisions in the MMA and the strict definition of 
``physician'' in the statute. However, the majority of comments 
supported this proposal.
    We did not receive any feedback during the CAP postponement that 
would lead us to reconsider this proposal. Therefore, we are again 
proposing to further clarify that, for the purposes of the CAP, the 
definition of a physician included all practitioners that meet the 
definition of a ``physician'' in section 1861(r) of the Act, as well as 
practitioners (such as NPs, CNSs and PAs) described in section 
1861(s)(2)(K) of the Act and other practitioners who legally prescribe 
drugs associated with services under section 1861(s) of the Act if 
those services and the associated drugs are covered when furnished 
incident to a physician's services.
    Our proposal is specific to the Part B Drug CAP and does not affect 
the definition of physician in section 1861(r) of the Act, or the 
definition of ``Medical and Other Health Services'' described in 
section 1861(s) of the Act. This proposal also does not seek to expand 
the scope of the CAP beyond

[[Page 33632]]

what has been described in previous rules, other than to clarify that a 
small number of providers who are enrolled in Medicare, and who legally 
prescribe drugs associated with services under section 1861(s) of the 
Act and can be paid by Medicare may elect to participate in the CAP if 
billing independently. In short, the CAP remains a program that 
provides Part B drugs furnished incident to a physician's services. We 
welcome additional comments on the proposal.
(2) Easing the Restriction on Physicians Transporting CAP Drugs
    Although section 1847B(b)(4)(E) of the Act provides for the 
shipment of CAP drugs to settings other than a participating CAP 
physician's office under certain conditions, in initially implementing 
the CAP, we did not propose to implement the CAP in alternative 
settings. We implemented the CAP with a restriction that CAP drugs be 
shipped directly to the participating CAP physician, as stated in Sec.  
414.906(a)(4), and that participating CAP physicians may not transport 
CAP drugs from one location to another, as stated in Sec.  
414.908(a)(3)(xii). However, we were aware that physicians may desire 
to administer drugs in alternative settings. Therefore, in the July 6, 
2005 IFC, we sought comment on how this could be accommodated under the 
CAP in a way that addresses the potential vendors' concerns about 
product integrity and damage to the approved CAP vendors' property (70 
FR 39048). We discussed comments submitted in response to the July 6, 
2005 IFC in the CY 2008 PFS proposed rule (72 FR 38158). We also 
requested comments in the CY 2008 PFS proposed rule (72 FR 38157) on 
the potential feasibility of easing the restriction on transporting CAP 
drugs where this is permitted by State law and other applicable laws 
and regulations. We responded to submitted comments in the CY 2008 PFS 
final rule with comment period (72 FR 66268).
    In the CY 2009 PFS proposed rule (70 FR 38523), we proposed to 
permit the transportation of CAP drug between a participating CAP 
physician's practice locations subject to voluntary agreements between 
the approved CAP vendor and the participating CAP physician. Because of 
the 2009 CAP postponement, we did not address this issue in the CY 2009 
PFS final rule. However, we did receive the following comments in 
response to our proposed rule on easing transportation restrictions in 
the CAP:
     Many commenters indicated that this change would increase 
program flexibility and facilitate patient treatment.
     Some commenters were supportive, but also raised concerns 
about drug integrity and liability, and requested that appropriate 
safeguards be in place before transportation restrictions were eased.
     Generally, commenters wanted CMS to explicitly delineate 
standards about voluntary agreements that address concerns about 
product integrity, liability, transportation procedures, and 
documentation. One commenter indicated that such standards should be 
developed through a separate rulemaking period to allow for public 
comment.
     Several commenters cited State pedigree laws as possible 
impediments to physician transport of drugs.
    We also requested and received feedback about the program during 
the 2009 postponement period. One member of the potential vendor 
community urged us to be mindful of increased legal liability for an 
approved CAP vendor if this policy were to be implemented, but also 
acknowledged that the proposal might substantially increase physician 
interest in the program.
    We continue to be mindful of the concerns expressed by the 
commenters, and have evaluated both the advantages and disadvantages of 
easing the restriction on transportation of CAP drugs. Thus, we are 
again proposing to permit transport of CAP drug between a participating 
CAP physician's practice locations subject to voluntary agreements 
between the approved CAP vendor and the participating CAP physician. As 
indicated in our CY 2009 PFS proposed rule, we continue to propose that 
such agreements must comply with all applicable State and Federal laws 
and regulations and product liability requirements, and be documented 
in writing.
    We would again like to reiterate the voluntary nature of these 
proposed agreements. Approved CAP vendors would not be required to 
offer and participating CAP physicians would not be required to accept 
such agreements when selecting an approved CAP vendor. An approved CAP 
vendor may not refuse to do business with a participating CAP physician 
because the participating CAP physician has declined to enter into such 
an agreement with the approved CAP vendor. Furthermore, we are not 
seeking to define which CAP drugs may be subject to the proposed 
voluntary agreements. In other words, each approved CAP vendor could 
specify which CAP drug(s) could be transported.
    However, our proposal continues to contain certain limitations. In 
previous rulemaking, we have described requirements for voluntary 
agreements between approved CAP vendors and participating CAP 
physicians. In the July 6, 2005 IFC (70 FR 39050) and the CY 2006 PFS 
final rule (70 FR 70251 through 70252), we stated that we will not 
dictate the breadth of use or the specific obligations contained in 
voluntary arrangements between approved CAP vendors and participating 
CAP physicians, other than to note that they must comply with 
applicable law and to prohibit approved CAP vendors from coercing 
participating CAP physicians into entering any of these arrangements. 
Parties to such arrangements must also ensure that the arrangements do 
not violate the physician self-referral (``Stark'') prohibition 
(section 1877 of the Act), the Federal anti-kickback statute (section 
1128B(b) of the Act), or any other Federal or State law or regulation 
governing billing or claims submission. We are proposing to apply these 
standards to any agreement for the transport of CAP drugs.
    We remain concerned about opportunities for disruption in the 
drug's chain of custody and appropriate storage and handling conditions 
that may ultimately affect patient care or increase the risk of drug 
theft or diversion. Therefore, in order to maintain safety and drug 
integrity in the CAP and to protect against the fraudulent diversion of 
CAP drugs, we are reproposing that any voluntary agreements between an 
approved CAP vendor and a participating CAP physician regarding the 
transportation of CAP drug must include requirements that drugs are not 
subjected to conditions that will jeopardize their integrity, 
stability, and/or sterility while being transported. We again welcome 
comments on these issues, including the identification of who may 
transport the drugs, how documentation of transportation activities 
could be accomplished, and how the oversight of such agreements will be 
carried out.
    In conclusion, we believe that this proposal to ease the 
restriction on transporting CAP drugs between a participating CAP 
physician's practice locations--when agreed upon by the participating 
CAP physician and the approved CAP vendor--will make the CAP more 
flexible and ultimately more appealing to participating CAP physicians. 
Additionally, we believe that this proposal will facilitate the 
participation of CAP physicians who

[[Page 33633]]

have office locations in rural areas and/or have satellite offices with 
limited hours. Moreover, we believe that this proposal will promote 
beneficiary care, particularly for beneficiaries who live in rural 
locations. Since participating CAP physicians would be able to 
transport CAP drugs to another office location in accordance with a 
voluntary agreement with their approved CAP vendor, beneficiaries would 
have more flexibility in scheduling the location of their appointments. 
We invite comments about this proposal.
(3) Dispute Resolution Process
    In the CY 2009 PFS proposed rule (73 FR 38524 through 38525), we 
discussed two changes to the CAP dispute resolution process. Section 
1847B(b)(2)(A)(ii)(II) of the Act requires an approved CAP vendor to 
have a grievance and appeals process for the resolution of disputes. In 
the July 6, 2005 IFC (70 FR 39054 through 39058), we described the 
process for the resolution of participating CAP physicians' drug 
quality and service complaints and approved CAP vendors' complaints 
regarding noncompliant participating CAP physicians. We encouraged 
participating CAP physicians, beneficiaries, and vendors to use 
informal communication as a first step to resolve service-related 
administration issues. However, we recognized that certain disputes 
would require a more structured approach, and therefore, we established 
processes under Sec.  414.916 and Sec.  414.917.
(i) Approved CAP Vendor's Status During the Reconsideration Process
    Section 414.917 outlines the dispute resolution process for 
participating CAP physicians. As discussed in the July 6, 2005 IFC (70 
FR 39057 through 39058), if a participating CAP physician finds an 
approved CAP vendor's service or the quality of a CAP drug supplied by 
the approved CAP vendor to be unsatisfactory, then the physician may 
address the issues first through the approved CAP vendor's grievance 
process, and second through an alternative dispute resolution process 
administered by the designated carrier and CMS. In turn, the designated 
carrier would gather information about the issue as outlined in Sec.  
414.917(b)(2) and make a recommendation to CMS on whether the approved 
CAP vendor has been meeting the service and quality obligations of its 
CAP contract. We would then review and act on that recommendation after 
gathering any necessary, additional information from the participating 
CAP physician and approved CAP vendor. If we suspend an approved CAP 
vendor's CAP contract for noncompliance or terminate the CAP contract 
in accordance with Sec.  414.914(a), the approved CAP vendor may 
request a reconsideration in accordance with Sec.  414.917(c).
    In the July 6, 2005 IFC (70 FR 39058), we indicated that the 
approved CAP vendor's participation in the CAP would be suspended while 
the approved CAP vendor's appeal of our decision is pending. This 
suspended status is also implied in Sec.  414.917(c)(9), which states 
that the ``approved CAP vendor may resume participation in CAP'' if the 
final reconsideration determination is favorable to the approved CAP 
vendor. In order to improve the clarity of our regulations, we proposed 
in the CY 2009 PFS proposed rule that the approved CAP vendor's 
contract will remain suspended during the reconsideration period in 
Sec.  414.917 (73 FR 38525). We believed that this proposed technical 
change is consistent with basic contracting concepts and with our 
current practices for the CAP. This proposal was not finalized due to 
the 2009 CAP postponement.
    Comments submitted in response to our CY 2009 PFS proposed rule 
supported this proposed clarification and we did not receive additional 
feedback about this issue after the CAP was postponed. Based on this 
and our continued need to improve the clarity of our regulations, we 
are reproposing that the approved CAP vendor's contract will remain 
suspended during the reconsideration period in Sec.  414.917. We invite 
additional comments regarding this proposed issue.
(ii) Termination of CAP Drug Shipments to Suspended CAP Physicians
    Section 414.916 provides a mechanism for approved CAP vendors to 
address noncompliance problems with participating CAP physicians. As 
stated at Sec.  414.916(a), ``Cases of an approved CAP vendor's 
dissatisfaction with denied drug claims are resolved through a 
voluntary alternative dispute resolution process delivered by the 
designated carrier, and a reconsideration process provided by CMS.'' 
Once the decision is made to suspend a participating CAP physician's 
CAP election agreement, the participating CAP physician will be 
suspended from the CAP as described in Sec.  414.916(b)(3).
    Physicians whose participation in the CAP has been suspended are 
not eligible to receive CAP drugs. This is implied in Sec.  
414.906(a)(4), which speaks of approved CAP vendors providing CAP drugs 
directly to ``[a] participating CAP physician.'' However, we believe 
that the clarity of our dispute resolution regulations would be 
improved if this drug delivery issue were stated explicitly. Therefore, 
in the CY 2009 PFS proposed rule, we proposed to revise Sec.  414.916 
to specify that approved CAP vendors shall not deliver CAP drugs to 
participating CAP physicians whose participation in the CAP has been 
suspended after an initial determination by CMS. Our proposal also 
applied to physicians engaged in the reconsideration process outlined 
in Sec.  414.916(c) and included a conforming change at Sec.  
414.914(f)(12). We believed that these changes were in accord with the 
underlying intent of Sec.  414.916, namely to provide a mechanism for 
approved CAP vendors to address noncompliance problems with 
participating CAP physicians, and we believe that these changes will 
increase the clarity of our regulations. We also noted that the 
participating CAP physicians who are suspended from participation in 
the CAP will be able to obtain drugs and bill for them under the ASP 
payment system provided they have not been excluded from participation 
in Medicare and/or their billing privileges have not been revoked.
    Comments submitted in response to the CY 2009 PFS proposed rule 
agreed with our proposal. Though we did not finalize this proposal due 
to the 2009 CAP postponement, we received no comments from the public 
in response to our request for feedback during the CAP 2009 
postponement. Based on positive public feedback and our continued 
belief that the clarity of our dispute resolution regulations would be 
improved by being explicit about this issue, we are reproposing to 
revise Sec.  414.916 to specify that approved CAP vendors shall not 
deliver CAP drugs to participating CAP physicians whose participation 
in the CAP has been suspended after an initial determination by CMS. 
This suspension in drug shipment would also apply to physicians engaged 
in the reconsideration process outlined in Sec.  414.916(c). We have 
also proposed a conforming change to Sec.  414.914(f)(12). Physicians 
who are suspended from participation in the CAP will be able to obtain 
drugs and bill for them under the ASP payment system provided they have 
not been excluded from participation in Medicare and/or their billing 
privileges have not been revoked. We welcome comments on this proposal.

[[Page 33634]]

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

    Since August 1, 1983, payment for dialysis services furnished by 
end-stage renal disease (ESRD) facilities has been based on a composite 
rate payment system that provides a fixed, prospectively determined 
amount per dialysis treatment, adjusted for geographic differences in 
area wage levels. In accordance with section 1881(b)(7) of the Act, 
separate composite rates were established for hospital-based and 
independent ESRD facilities. The composite rate is designed to cover a 
package of goods and services needed to furnish dialysis treatments 
that include, but not be limited to, certain routinely provided drugs, 
laboratory tests, supplies, and equipment. Unless specifically included 
in the composite rate, other injectable drugs and laboratory tests 
medically necessary for the care of the dialysis patient are separately 
billable. Effective on August 1, 1983, the base composite rates per 
treatment were $123 for independent ESRD facilities and $127 for 
hospital-based ESRD facilities. The Congress has enacted a number of 
adjustments to the composite rate since that time.
    Section 623 of the MMA amended section 1881 of the Act to require 
changes to the composite rate payment methodology, as well as to the 
pricing methodology for separately billable drugs and biologicals 
furnished by ESRD facilities. Section 1881(b)(12) of the Act, as added 
by section 623(d) of the MMA, requires the establishment of a basic 
case-mix adjusted composite payment system that includes services 
comprising the composite rate and an add-on to the composite rate 
component to account for the difference between current payments for 
separately billed drugs and the revised drug pricing specified in the 
statute. In addition, section 1881(b)(12) of the Act requires that the 
composite rate be adjusted for a number of patient characteristics 
(case-mix) and section 1881(b)(12)(D) of the Act gives the Secretary 
discretion to revise the wage indices and the urban and rural 
definitions used to develop them. Finally, section 1881(b)(12)(E) of 
the Act imposes a budget neutrality (BN) adjustment, so that aggregate 
payments under the basic case-mix adjusted composite payment system for 
CY 2005 equal the aggregate payments for the same period if section 
1881(b)(12) of the Act did not apply.
    Before January 1, 2005, payment to both independent and hospital-
based facilities for the anti-anemia drug, erythropoietin (EPO) was 
established under section 1881(b)(11) of the Act at $10.00 per 1,000 
units. For independent ESRD facilities, payment for all other 
separately billable drugs and biologicals is based on the lower of 
actual charges or 95 percent of the average wholesale price (AWP). 
Hospital-based ESRD facilities were paid based on the reasonable cost 
methodology for separately billed drugs and biologicals (other than 
EPO) furnished to dialysis patients. Changes to the payment methodology 
for separately billed ESRD drugs and biologicals that were established 
by the MMA affected payments in both CY 2005 and CY 2006.
1. CY 2005 Revisions
    In the CY 2005 PFS final rule with comment period (69 FR 66319 
through 66334), we implemented section 1881(b) of the Act, as amended 
by section 623 of the MMA, and revised payments to ESRD facilities. 
These revisions were effective January 1, 2005, and included an update 
of 1.6 percent to the composite rate component of the payment system; 
and a drug add-on adjustment of 8.7 percent to the composite rate to 
account for the difference between pre-MMA payments for separately 
billable drugs and payments based on revised drug pricing for 2005 
which used acquisition costs. Effective April 1, 2005, the CY 2005 PFS 
final rule with comment period also implemented case-mix adjustments to 
the composite rate for certain patient characteristics (that is, age, 
low body mass index, and body surface area).
    In addition, to implement section 1881(b)(13) of the Act, we 
revised payments for drugs billed separately by independent ESRD 
facilities, paying for the top 10 ESRD drugs based on acquisition costs 
(as determined by the OIG) and for other separately billed drugs at the 
average sales price +6 percent (hereafter referred to as ASP+6 
percent). Hospital-based ESRD providers continued to receive cost-based 
payments for all separately billable drugs and biologicals except for 
EPO which was paid based on average acquisition cost.
2. CY 2006 Revisions
    In the CY 2006 PFS final rule with comment period (70 FR 70161), we 
implemented additional revisions to payments to ESRD facilities under 
section 623 of the MMA. For CY 2006, we further revised the drug 
payment methodology applicable to drugs furnished by ESRD facilities. 
All separately billed drugs and biologicals furnished by both hospital-
based and independent ESRD facilities are now paid based on ASP+6 
percent.
    We recalculated the 2005 drug add-on adjustment to reflect the 
difference in payments between the pre-MMA AWP pricing and the revised 
pricing based on ASP+6 percent. The recalculation did not affect the 
actual add-on adjustment applied to payments in 2005, but provided an 
estimate of what the adjustment would have been had the 2006 payment 
methodology been in effect in CY 2005. The drug add-on adjustment was 
then updated to reflect the expected growth in expenditures for 
separately billable drugs in CY 2006.
    As of January 1, 2006, we also implemented a revised geographic 
adjustment authorized by section 1881(b)(12) of the Act. As part of 
that change, we--
     Revised the labor market areas to incorporate the Core-
Based Statistical Area (CBSA) designations established by the Office of 
Management and Budget (OMB);
     Eliminated the wage index ceiling and reduced the floor to 
0.8500; and
     Revised the labor portion of the composite rate to which 
the geographic adjustment is applied.
    We also provided a 4-year transition from the previous wage-
adjusted composite rates to the current wage-adjusted rates. For CY 
2006, 25 percent of the payment was based on the revised geographic 
adjustments, and the remaining 75 percent of payment was based on the 
old metropolitan statistical area-based (MSA-based) payments.
    In addition, section 5106 of the DRA provided for a 1.6 percent 
update to the composite rate component of the basic case-mix adjusted 
composite payment system, effective January 1, 2006. As a result, the 
base composite rate was increased to $130.40 for independent ESRD 
facilities and $134.53 for hospital-based providers. For 2006, the drug 
add-on adjustment (including the growth update) was 14.5 percent.
3. CY 2007 Updates In the CY 2007 PFS final rule with comment period 
(71 FR 69681), we implemented the following updates to the basic case-
mix adjusted composite payment system:
     An update to the wage index adjustments to reflect the 
latest hospital wage data, including a BN adjustment of 1.052818 to the 
wage index for CY 2007.
     A method to annually calculate the growth update to the 
drug add-on adjustment required by section 1881(b)(12) of the Act, as 
well as a growth update to the drug add-on adjustment of 0.5 percent 
for CY 2007. Therefore, effective January 1, 2007 the

[[Page 33635]]

drug add-on adjustment was increased to 15.1 percent.
    In addition, section 103 of the MIEA-TRHCA established a 1.6 
percent update to the composite rate portion of the payment system, 
effective April 1, 2007. As a result, the current base composite rate 
was $132.49 for independent facilities and $136.68 for hospital-based 
providers. Also, the effect of this increase in the composite rate 
portion of the payment system was a reduction in the drug add-on 
adjustment to 14.9 percent, effective April 1, 2007. Since the 
statutory increase only applied to the composite rate, an adjustment to 
the drug add-on percent was needed to maintain the drug add-on amount 
constant.
4. CY 2008 Updates
    In the CY 2008 PFS final rule with comment period (72 FR 66280), we 
implemented the following updates to the basic case-mix adjusted 
payment system:
     A growth update to the drug add-on adjustment of 0.5 
percent. As a result, the drug add-on adjustment to the composite 
payment rate increased from 14.9 percent to 15.5 percent.
     An update to the wage index adjustments to reflect the 
latest hospital wage data, including a wage index BN adjustment of 
1.055473 to the wage index for CY 2008.
    For CY 2008, consistent with the transition blends announced in the 
CY 2006 PFS final rule with comment period (70 FR 70170), we 
implemented the third year of the transition to the CBSA-based wage 
index. In addition, the wage index floor was reduced from 0.8000 to 
0.7500. After applying the wage index BN adjustment of 1.055473, the 
wage index floor was 0.7916.
5. CY 2009 Updates
    Subsequent to the July 7, 2008 publication of the CY 2009 PFS 
proposed rule, section 153 of the MIPPA mandated changes in ESRD 
payment including a 1 percent increase to the composite rate, effective 
for services furnished on or after January 1, 2009 and 2010 and before 
January 1, 2010.
    Specifically, section 153(a) of the MIPPA updated sections 
1881(b)(12)(G) and 1881(b)(12)(A) of the Act to revised payments to 
ESRD facilities. The revisions that were effective January 1, 2009, 
included the update of 1 percent to the composite rate component of the 
payment system noted above, and the establishment of a site neutral 
composite rate for both hospital-based and independent dialysis 
facilities that reflected the labor share based on the labor share 
otherwise applied to independent dialysis facilities. The labor share 
for both hospital-based and independent dialysis facilities was 53.711. 
In the CY 2009 final rule with comment period (73 69754 through 69761), 
we implemented the following updates to the basic case-mix adjusted 
composite payment system:
     As required by updated sections 1881(b)(12)(G) and 
1881(b)(12)(A) of the Act, we applied a 1 percent increase to the 
independent dialysis facility's CY 2008 composite rate of $132.49, 
which resulted in a CY 2009 base composite rate for both hospital-based 
and independent dialysis facilities of $133.81;
     A zero growth update to the drug add-on adjustment of 15.2 
percent to the composite rates for 2009 as required by section 
1881(b)(1)(F) of the Act (resulted in a $20.33 per treatment drug add-
on amount);
    Prior to MIPPA, the proposed drug add-on adjustment was 15.5 
percent. Since we compute the drug add-on adjustment as a percentage of 
the weighted average base composite rate, the effect of the one percent 
increase in the composite rate portion of the payment system, effective 
January 1, 2009, reduced the drug add-on adjustment from 15.5 to 15.2 
percent. Since the statutory increase only applied to the composite 
rate, this adjustment to the drug add-on percent was needed to ensure 
that the total drug add-on dollars remained constant.
     An update to the wage index adjustment to reflect the 
latest available wage data, including a wage index BN adjustment of 
1.056672 to the wage index for CY 2009;
     For CY 2009, the completion of the 4-year transition from 
the previous wage-adjusted composite rates to the CBSA wage-adjusted 
rates, where payment is based on 100 percent of the revised geographic 
adjustments; and
     A reduction of the wage index floor from 0.7500 to 0.7000. 
After applying the wage index BN adjustment of 1.056672, the wage index 
floor was 0.7397.
6. CY 2010 Proposals
    For CY 2010, we are proposing the following updates to the 
composite rate payment system:
     An update to the drug add-on adjustment to the composite 
rate, using a refined methodology for projecting growth in drug 
expenditures;
     An update to the wage index adjustment to reflect the 
latest available wage data, including a revised BN adjustment; and
     A reduction to the ESRD wage index floor from 0.7000 to 
0.6500.
    As stated above, section 1881(b)(12)(G)(iv) of the Act, as added by 
section 153(a)(1) of the MIPPA, increased the composite rate by 1.0 
percent for ESRD services furnished on or after January 1, 2010. The 
1.0 percent increases the current composite rate of $133.81 to $135.15 
for services furnished on or after January 1, 2010.
a. Proposed Update to the Drug Add-on Adjustment to the Composite Rate
    Section 623(d) of the MMA added section 1881(b)(12)(B)(ii) of the 
Act which requires establishing an add-on to the composite rate to 
account for changes in the drug payment methodology stemming from 
enactment of the MMA. Section 1881(b)(12)(C) of the Act provides that 
the drug add-on must reflect the difference in aggregate payments 
between the revised drug payment methodology for separately billable 
ESRD drugs and the AWP payment methodology. In 2005, we generally paid 
for ESRD drugs based on average acquisition costs. Thus the difference 
from AWP pricing was calculated using acquisition costs. However, in 
2006 when we moved to ASP pricing for ESRD drugs, we recalculated the 
difference from AWP pricing using ASP prices.
    In addition, section 1881(b)(12)(F) of the Act requires that, 
beginning in CY 2006, we establish an annual increase to the drug add-
on to reflect estimated growth in expenditures for separately billable 
drugs and biologicals furnished by ESRD facilities. This growth update 
applies only to the drug add-on portion of the case-mix adjusted 
payment system. The CY 2009 drug add-on adjustment to the composite 
rate was 15.2 percent. The drug add-on adjustment for CY 2009 reflected 
a zero increase. This computation is explained in detail below and in 
the CY 2009 PFS final rule with comment period (73 FR 69755 through 
69757).
(i) Estimating Growth in Expenditures for Drugs and Biologicals for CY 
2009
    Section 1881(b)(12)(F) of the Act specifies that the drug add-on 
increase must reflect ``the estimated growth in expenditures for drugs 
and biologicals (including erythropoietin) that are separately billable 
* * *'' By referring to ``expenditures'', we stated previously that we 
believe the statute contemplates that the update would account for both 
increases in drug prices, as well as increases in utilization of those 
drugs.
    In the CY 2007 PFS final rule with comment period (71 FR 69682), we 
established an interim methodology for annually estimating the growth 
in ESRD drugs and biological expenditures that

[[Page 33636]]

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 interim 
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.
    However, due to the declining ASP prices, we no longer believed 
that using the PPI as a proxy for pricing growth was appropriate. 
Accordingly, for CY 2009, we revised the interim methodology for 
estimating the growth in ESRD drug expenditures by using ASP pricing to 
estimate the price component of the update calculation. Due to the 
declining trend in ASP pricing and utilization, we calculated a 
decrease in the drug add-on adjustment, and applied a zero update to 
the drug add-on adjustment (73 FR 69755 through 69757).
(ii) Estimating Growth in Expenditures for Drugs and Biologicals in CY 
2010
    Since we now have 3 years of drug expenditure data based on ASP 
pricing, we have reevaluated our methodology for estimating growth in 
drug expenditures. We believe that 3 years of drug expenditure data 
based on ASP pricing is sufficient to project drug expenditure growth 
based on trend analysis. Therefore, for CY 2010, we are proposing to 
use trend analysis from drug expenditure data to update the per 
treatment drug add-on adjustment. In the CY 2008 PFS final rule with 
comment period, we stated that when we had 3 consecutive years of ASP-
based historical drug expenditure data, we intended to reevaluate our 
methodology for estimating growth in drug add-on adjustment (72 FR 
66281). We also stated that we expected 2010 would be the earliest we 
could consider using trend analysis to update the drug add-on 
adjustment (72 FR 66281).
    For CY 2010, we propose to estimate per patient growth in drug 
expenditures by removing growth in ESRD enrollment from growth in total 
drug expenditures.
    To estimate drug expenditure growth using trend analysis, we looked 
at the average annual growth in total drug expenditures between 2006 
and 2008. First we had to estimate the total drug expenditures for all 
ESRD facilities in CY 2008. For this proposed rule, we used the final 
CY 2006 and the final CY 2007 ESRD claims data and the latest available 
CY 2008 ESRD facility claims, updated through December 31, 2008 (that 
is, claims with dates of service from January 1 through December 31, 
2008, that were received, processed, paid, and passed to the National 
Claims History File as of December 31, 2008). For the CY 2010 PFS final 
rule, we plan to use additional updated CY 2008 claims with dates of 
service for the same timeframe. This updated CY 2008 data file will 
include claims received, processed, paid, and passed to the National 
Claims History File as of June 30, 2009.
    While the December 2008 update of CY 2008 claims used in this 
proposed rule is the most current available claims data, we recognize 
that it does not reflect a complete year, as claims with dates of 
service towards the end of the year have not all been processed. To 
more accurately estimate the update to the drug add-on, aggregate drug 
expenditures are required. Based on an analysis of the 2007 claims 
data, we inflated the CY 2008 drug expenditures to estimate the June 
30, 2009 update of the 2008 claims file. We used the relationship 
between the December 2007 and the June 2008 versions of 2007 claims to 
estimate the more complete 2008 claims that will be available in June 
2009 and applied that ratio to the 2008 claims data from the December 
2008 claims file. In previous years, we did this separately for EPO, 
the other top 10 Part B separately billable drugs, and the remaining 
separately billable drugs for independent and hospital-based ESRD 
facilities. All components were then combined to estimate aggregate CY 
2008 ESRD drug expenditures. However, we do not believe that creating 
this estimate using this level of detail (by separately estimating EPO, 
the other top 10 separately billable drugs, and the remaining 
separately billable drug for independent and hospital-based ESRD 
facilities and then combining these components) provides more accuracy. 
For this reason, we are making this adjustment in aggregate for all 
separately billable drugs for CY 2008 ESRD drug expenditures. The net 
adjustment to the CY 2008 claims data is an increase of 11.1 percent to 
the 2008 expenditure data. This adjustment allows us to more accurately 
compare the 2007 and 2008 drug expenditure data to estimate per patient 
growth. As stated earlier in this section, we plan to use additional 
updated CY 2008 claims in the CY 2010 PFS final rule with comment 
period. We also note that the top 11 drugs continue to represent 99.7 
percent of total expenditures in CY 2008 for separately billable drugs 
furnished to ESRD patients.
    Using the full-year 2008 drug expenditure figure, we calculated the 
average annual change in drug expenditures from 2006 through 2008. This 
average annual change showed a decrease of 2.2 percent for this 
timeframe. We propose to use this 2.2 percent decrease to project drug 
expenditures for both 2009 and 2010.
(iii) Estimating Per Patient Growth
    Once we had the projected growth in drug expenditures from 2009 to 
2010, we then removed growth in enrollment for the same time period 
from the expenditure growth, so that the residual reflects per patient 
expenditure growth, (which includes price and utilization combined) 
which is what we believe that section 1881(b)(12)(F) of the Act 
requires us to use to update the drug add-on adjustment. As we 
described in section II.I.6.a.(ii) of this proposed rule, we now have 3 
years of drug expenditure data based on ASP pricing, and for CY 2010 we 
are proposing to use trend analysis from this data to update the per 
treatment drug add-on adjustment. To calculate the per patient growth 
between CYs 2009 and 2010, we removed the enrollment component by using 
the estimated growth in enrollment data between CY 2009 and CY 2010. 
This was approximately 1.3 percent. To do this, we divided the total 
drug expenditure change between 2009 and 2010 (1.000-0.222 = 0.978) by 
enrollment growth of 1.3 percent (1.013) for the same timeframe. The 
result is a per patient growth factor equal to 0.965, (0.978/1.013 = 
0.965). Thus we are projecting a 3.5 percent decrease in per patient 
growth in drug expenditures between 2009 and 2010.
b. Applying the Proposed Growth Update to the Drug Add-On Adjustment
    In CY 2006, we applied the projected growth update percentage to 
the total amount of drug add-on dollars established for CY 2005 to 
establish a dollar amount for the CY 2006 growth update. In addition, 
we projected the growth in dialysis treatments for CY 2006 based on the 
projected growth in ESRD enrollment. We divided the projected total 
dollar amount of the CY 2006 growth by the projected growth in total 
dialysis treatments to develop the per treatment growth update amount. 
This growth update amount, combined with the CY 2005 per treatment drug 
add-on amount, resulted in an average drug add-on amount per treatment 
of $18.88 (or a 14.5 percent adjustment to the composite rate) for CY 
2006.
    In the CY 2007 PFS final rule with comment period (71 FR 69684), we 
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

[[Page 33637]]

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. In 
the CY 2009 PFS final rule with comment period (73 FR 69755 through 
69757), we applied a zero update to per treatment drug add-on amount 
which left it at $20.33. As discussed in detail below, for CY 2010, we 
are again proposing no update to the per treatment drug add-on amount 
of $20.33 established in CY 2008.
c. Proposed Update to the Drug Add-on Adjustment
    As discussed previously in this section, we estimate a 2.2 percent 
reduction in drug expenditures between CY 2009 and CY 2010. Combining 
this reduction with a 1.3 percent increase in enrollment, as described 
in section (a)(iii) above, we are projecting a 3.5 percent decrease in 
per patient growth of drug expenditures between CY 2009 and CY 2010. 
Therefore, we are projecting that the combined growth in per patient 
utilization and pricing for CY 2010 would result in a negative update 
equal to -3.5 percent. However, similar to last year and as indicated 
above, we are proposing a zero update to the drug add-on adjustment.
    We believe this approach is consistent with the language under 
section 1881(b)(12)(F) of the Act which states in part that ``the 
Secretary shall annually increase'' the drug add-on amount based on the 
growth in expenditures for separately billed ESRD drugs. Our 
understanding of the statute contemplates ``annually increase'' to mean 
a positive or zero update to the drug add-on. Therefore, we propose to 
apply a zero update, and to maintain the $20.33 per treatment drug add-
on amount for CY 2010. The current $20.33 per treatment drug add-on 
reflected a 15.2 percent drug add-on adjustment to the composite rate 
in effect for CY 2009. Given that the MIPPA mandates a 1 percent 
increase to the composite rate (effective January 1, 2010), however, as 
discussed earlier in this section, this results in a decrease in the CY 
2009 drug add-on adjustment of 15.2 to 15.0 to keep the drug add-on at 
$20.33. Therefore, we are proposing that the drug add-on adjustment to 
the composite rate for CY 2010 is 15.0 percent.
d. Proposed Update to the Geographic Adjustments to the Composite Rate
    Section 1881(b)(12)(D) of the Act, as amended by section 623(d) of 
the MMA, gives the Secretary the authority to revise the wage indexes 
previously applied to the ESRD composite rate. The purpose of the wage 
index is to adjust the composite rates for differing wage levels 
covering the areas in which ESRD facilities are located. The wage 
indexes are calculated for each urban and rural area. In the CY 2006 
PFS final rule with comment period (70 FR 70167), we announced our 
adoption of the OMB CBSA-based geographic area designations to develop 
revised urban/rural definitions and corresponding wage index values for 
purposes of calculating ESRD composite rates. In addition, we generally 
have followed wage index policies related to these definitions as used 
under the inpatient hospital prospective payment system (IPPS), but 
without regard to any approved geographic reclassification authorized 
under sections 1886(d)(8) and (d)(10) of the Act or other provisions 
that only apply to hospitals paid under the IPPS (70 FR 70167). For 
purposes of the ESRD wage index methodology, the hospital wage data we 
use is pre-classified, pre-floor hospital data and unadjusted for 
occupational mix.
e. Proposed 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. The 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.
f. Proposed 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 ESRD wage index values for CY 2010 were developed from FY 2006 wage 
and employment data obtained from the Medicare hospital cost reports. 
As we indicated, the ESRD wage index values are calculated without 
regard to geographic classifications authorized under sections 
1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data 
that is unadjusted for occupational mix. We propose to use the same 
methodology for CY 2010, with the exception that FY 2006 hospital data 
would be used to develop the CY 2010 wage index values. For a detailed 
description of the development of the proposed CY 2010 wage index 
values based on FY 2006 hospital data, see the FY 2010 IPPS proposed 
rule (74 FR 24145). Section III.G, of the preamble to the FY 2010 IPPS 
proposed rule, ``Method for Computing the Proposed FY 2010 Unadjusted 
Wage Index'', describes the cost report schedules, line items, data 
elements, adjustments, and wage index computations. The wage index data 
affecting the ESRD composite rate 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 2010 Proposed Rule Occupational Mix Adjusted and 
Unadjusted Average Hourly Wage and Pre-reclassified Wage Index by 
CBSA.''
    In the CY 2009 final rule with comment period (73 FR 69758 and 
69759), we indicated that the CY 2009 was the final year of the 
transition period and each ESRD facility's composite payment rate would 
be based entirely on its applicable CBSA-based wage index value.
g. Proposed Reduction to the ESRD Wage Index Floor
    In the CY 2009 PFS final rule with comment period, we stated our 
intention to continue to reassess the need for a wage index floor (73 
FR 63758). We also stated that a gradual reduction in the floor is 
needed to support continuing patient access to dialysis in areas that 
have low wage index values, especially in Puerto Rico where the wage 
index values are below the current wage index floor. For CY 2010, we 
are proposing to reduce the wage index floor from 0.70 to 0.65. We also 
anticipate that we may reduce the floor gradually until full 
implementation of the ESRD PPS required by section 1881(b)(14) of the 
Act.
h. Proposed 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

[[Page 33638]]

are no hospital wage data from which to calculate ESRD wage index 
values. The affected areas were rural Puerto Rico, and the urban area 
of Hinesville, GA (CBSA 25980), and rural Massachusetts. For CY 2006, 
CY 2007, CY 2008, and CY 2009, we calculated the ESRD wage index values 
for those areas as follows:
     For the urban area of Hinesville, GA, we calculated the CY 
2006, CY 2007, CY 2008, and CY 2009 wage index value based on the 
average wage index value for all urban areas within the State of 
Georgia.
     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. As discussed below, we adopted an alternative methodology 
for CYs 2008 and 2009.
     For rural Puerto Rico, because all geographic areas in 
Puerto Rico were subject to the wage index floor in CYs 2006 through 
2009, we applied the ESRD wage index floor to rural Puerto Rico as 
well. We note that there are currently no ESRD facilities located in 
rural Puerto Rico.
    For CY 2008, we adopted an alternative methodology for establishing 
a wage index value for rural Massachusetts and continued to apply this 
methodology in CY 2009. 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 CBSA 12700, Barnstable Town, MA and CBSA 
39300, Providence-New Bedford-Fall River, RI-MA. We are proposing to 
use the same methodology for CY 2010. Under this methodology, the CY 
2010 proposed wage index values for CBSA 12700 (Barnstable Town, MA--
1.2629) and CBSA 39300 (Providence-New Bedford-Fall River, RI-MA--
1.0792) averages results in an imputed proposed wage index value of 
1.1711 for rural Massachusetts in CY 2010.
    For rural Puerto Rico, for CY 2010, all areas in Puerto Rico that 
have a wage index are eligible for the proposed ESRD wage index floor 
of 0.65. Therefore, we propose to continue applying the proposed ESRD 
wage index floor of 0.65 to facilities that are located in rural Puerto 
Rico.
    For Hinesville-Fort Stewart, GA (CBSA 25980), which is an urban 
area without specific hospital wage data, we propose to apply the same 
methodology used to impute a wage index value that we used in CY 2009. 
Specifically, we utilize the average wage index value for all urban 
areas within the State of Georgia. That results in a proposed CY 2010 
wage index value of 0.9029 for the Hinesville-Fort Stewart GA CBSA.
    In the CY 2009 PFS final rule with comment period (73 FR 69759 
through 69760), 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 2010 and subsequent years. To date, no data 
from other sources, superior to that currently used in connection with 
the IPPS wage index has emerged. Therefore, for ESRD purposes, we 
continue to believe this is an appropriate policy.
    For CY 2010, we are proposing to use the FY 2010 wage index data 
(collected from cost reports submitted by hospital for cost reporting 
periods beginning FY 2006) to compute the ESRD composite payment rates 
effective beginning January 1, 2010.
i. Budget Neutrality Adjustment
    Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d) of 
the MMA, required 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. Given our application 
of the ESRD wage index, this means that aggregate payments to ESRD 
facilities in CY 2010 would 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 required by the MMA. As we are 
not proposing any changes to the case-mix measures for CY 2010, the 
current case-mix BN adjustment of 0.9116 would remain in effect for CY 
2010. As in CY 2009, for CY 2010, we propose to apply the wage-index BN 
adjustment factor of 1.057888 directly to the ESRD wage index values. 
Because the ESRD wage index is only applied to the labor-related 
portion of the composite rate, we computed the BN adjustment factor 
based on that proportion (53.711 percent).
    To compute the proposed CY 2010 wage index BN adjustment factor 
(1.057888), we used the FY 2006 pre-floor, pre-reclassified, non-
occupational mix-adjusted hospital data to compute the wage index 
values, 2008 outpatient claims (paid and processed as of December 31, 
2008), and geographic location information for each facility which may 
be found through Dialysis Facility Compare Web page on the CMS Web site 
at http://www.cms.hhs.gov/DialysisFacilityCompare/. The FY 2006 
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 2010 Proposed Rule Occupational Mix Adjusted and 
Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by 
CBSA.''
    Using treatment counts from the 2008 claims and facility-specific 
CY 2009 composite rates, we computed the estimated total dollar amount 
each ESRD provider would have received in CY 2009. The total of these 
payments became the target amount of expenditures for all ESRD 
facilities for CY 2010. Next, we computed the estimated dollar amount 
that would have been paid for the same ESRD facilities using the 
proposed ESRD wage index for CY 2010. The total of these payments 
became the new CY 2010 amount of wage-adjusted composite rate 
expenditures for all ESRD facilities. Section 153(a) of the MIPPA 
revised section 1881(b)(12)(G) of the Act and provided for an update of 
1 percent to the composite rate component of the payment system 
effective January 1, 2010. We note that when computing the new CY 2010 
amount, we did not include this 1 percent increase because the BN 
adjustment would negate the increase.
    After comparing these two dollar amounts (target amount divided by 
the new CY 2010 amount), we calculated an adjustment factor that, when 
multiplied by the applicable CY 2010 ESRD wage index value, would 
result in aggregate payments to ESRD facilities that would remain 
within the target amount of composite rate expenditures. When making 
this calculation, the ESRD wage index floor value of 0.6500 is applied 
whenever appropriate. The proposed wage BN adjustment factor is 
1.057888.
    To ensure BN, we also must apply the BN adjustment factor to the 
proposed

[[Page 33639]]

wage index floor of 0.6500 which results in a proposed adjusted wage 
index floor of 0.6876 (0.6500 x 1.057888) for CY 2010.
j. ESRD Wage Index Tables
    The CY 2010 ESRD wage index tables are located in Addenda F and G 
of this proposed rule.

J. Discussion of Chiropractic Services Demonstration

1. Background
    Section 651 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) requires the 
Secretary to evaluate the feasibility and advisability of expanding 
coverage for chiropractic services under Medicare. Under Medicare, 
coverage for chiropractic services is limited to manual manipulation of 
the spine to correct a subluxation described in section 1861(r)(5) of 
the Act. The demonstration expanded current Medicare coverage to 
include ``care for neuromusculoskeletal conditions typical among 
eligible beneficiaries and diagnostic and other services that a 
chiropractor is legally authorized to perform by the State or 
jurisdiction in which such treatment is provided.'' The 2-year 
demonstration was conducted in four geographically diverse sites, two 
rural and two urban regions, with each type including a Health 
Professional Shortage Area (HPSA). The two urban sites were 26 counties 
in Illinois and Scott County, Iowa, and 17 counties in Virginia. The 
two rural sites were the States of Maine and New Mexico. The 
demonstration, which ended on March 31, 2007, was required to be budget 
neutral as section 651(f)(1)(B) of the MMA requires the Secretary to 
ensure that ``the aggregate payments 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.''
    In the CY 2006, 2007, and 2008 PFS final rules with comment period 
(70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we included a 
discussion of the strategy that would be used to assess budget 
neutrality (BN) and how chiropractor fees would be adjusted should the 
demonstration result in costs higher than those that would occur in the 
absence of the demonstration. We stated we would assess BN by 
determining the change in costs based on a pre-post comparison of costs 
and the rate of change for specific diagnoses that are treated by 
chiropractors and physicians in the demonstration sites and control 
sites. We also stated we would not limit our analysis to reviewing only 
chiropractor claims because the costs of the expanded chiropractor 
services may have an impact on other Medicare costs. If the 
demonstration was not budget neutral, we anticipated making reductions 
in the CY 2010 and CY 2011 physician fee schedules. We proposed that if 
we determined that the adjustment for BN was greater than 2 percent of 
spending for the chiropractor fee schedule codes, we would implement 
the adjustment over a 2-year period. However, if the adjustment was 
less than 2 percent of spending under the chiropractor fee schedule 
codes, we would implement the adjustment over a 1-year period.
2. Analysis of Demonstration
    Brandeis University, the demonstration evaluator, used two 
approaches in examining BN. The ``All Neuromusculoskeletal Analysis 
(NMS)'' reflects an intent-to-treat approach whereby the utilization of 
all beneficiaries who received any Medicare covered services for 
neuromusculoskeletal conditions in the demonstration areas was 
examined. This method is potentially subject to large external forces 
because of its inclusion of all beneficiaries including those who did 
not use chiropractic services and who would not become users of 
chiropractic services even with expanded coverage for them. Therefore, 
a second analysis, termed the ``Chiropractic User Analysis'' was 
conducted to examine only the subset of beneficiaries who used 
chiropractic services for the treatment of their neuromusculoskeletal 
conditions. Both approaches use hierarchical linear modeling of costs 
over 3 years--1 year prior to the demonstration and the 2 years of the 
demonstration. We posted a report describing these analyses on CMS Web 
site at http://www.cms.hhs.gov/reports/downloads/MMA651_BudgetNeutrality.pdf.
    The results of both analyses indicate that the demonstration was 
not budget neutral. In the ``All NMS Analysis,'' which measured the 
costs of the demonstration on all beneficiaries who received services 
for a neuromusculoskeletal condition in the demonstration areas in 
comparison to beneficiaries with similar characteristics from similar 
geographic areas that did not participate in the demonstration, the 
total effect of the demonstration to Medicare was $114 million. In the 
``Chiropractic User Analysis,'' which measured the costs of the 
demonstration among beneficiaries who used expanded chiropractic 
services to treat a neuromusculoskeletal condition in the demonstration 
areas, in comparison to beneficiaries with similar characteristics who 
used chiropractic services as currently covered by Medicare to treat a 
neuromusculoskeletal condition from similar geographic areas that did 
not participate in the demonstration, the total effect of the 
demonstration to Medicare was $50 million.
    Both approaches to assessing BN have strengths and limitations. The 
``All NMS Analysis'' provides the broadest view of the Medicare 
population that would have been eligible for the demonstration's 
expanded coverage of chiropractic services. Because it includes all 
beneficiaries with neuromusculoskeletal conditions, it guards against 
validity threats of selection. However, this approach creates a large 
heterogeneous group which may only include a small proportion of 
chiropractic service users. Basing estimates of BN on such a large 
heterogeneous group increases the potential for changes in the use of 
services seldom affected by chiropractors to be falsely attributed to 
the demonstration, which could result in the costs of the demonstration 
appearing to be larger than they actually were.
    We believe the BN estimate should be based on the ``Chiropractic 
User Analysis'' because of its focus on users of chiropractic services 
rather than all Medicare beneficiaries with neuromusculoskeletal 
conditions, including those who did not use chiropractic services and 
who would not have become users of chiropractic services even with 
expanded coverage for them. Users of chiropractic services are most 
likely to have been affected by the expanded coverage provided by this 
demonstration. Cost increases and offsets, such as reductions in 
hospitalizations or other types of ambulatory care, are more likely to 
be observed in this group. Therefore, we are proposing to adjust the 
Medicare PFS for all chiropractors using the estimate provided in the 
``Chiropractic User Analysis.''
    The CMS Office of the Actuary (OACT) estimates chiropractic 
expenditures in CY 2010 to be approximately $487 million based on 
actual Medicare spending for chiropractic services for the most recent 
available year. Because the costs of this demonstration were higher 
than expected and we did not anticipate a reduction to the PFS of 
greater than 2 percent per year, we are proposing to recoup the $50 
million in expenditures from this demonstration over a 5-year period 
rather than over a 2-year period.

[[Page 33640]]

This approach reflects a change from our BN discussion in the CY 2006, 
2007, and 2008 PFS rules, which was described previously in this 
section. We would recoup $10 million each year through adjustments to 
the PFS for all chiropractors in CYs 2010 through 2014. We believe that 
spreading this adjustment over a longer period of time and in equal 
increments will minimize its potential negative impact on chiropractic 
practices.
3. Payment Adjustment
    To implement the required BN adjustment, we propose to reduce the 
payment amount under the PFS for the chiropractic CPT codes (that is, 
CPT codes 98940, 98941, and 98942). Payment under the PFS for these 
codes would be reduced by 2 percent. As stated in prior PFS rules, 
application of the BN adjustment would be specific to these three codes 
which represent the ``chiropractic fee schedule'' because they are the 
only chiropractic codes recognized under the PFS. We are proposing to 
reflect this reduction only in the payment files used by the Medicare 
contractors to process Medicare claims rather than through adjusting 
the RVUs. This would preserve the integrity of the PFS, particularly 
since many private payers also base payment on the RVUs. The RVUs 
published in Addendum B and posted on our Web site would not show this 
reduction but would be annotated to state that the reduction resulting 
from the chiropractic demonstration is not reflected in the RVUs.

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

    A Comprehensive Outpatient Rehabilitation Facility (CORF) is a 
Medicare provider that furnishes respiratory therapy services among 
other services. In Sec.  485.70, we set forth the personnel 
qualifications that must be satisfied by a CORF as a condition of 
participation under Sec.  485.58 and as a condition of coverage of CORF 
services, including personnel qualifications for respiratory therapists 
providing CORF respiratory therapy services.
    In the CY 2009 PFS proposed rule (73 FR 38502) and subsequent final 
rule with comment period (73 FR 69942), we revised the definition of a 
respiratory therapist under Sec.  485.70(j). The change in the 
definition of respiratory therapist was intended to ensure accuracy in 
reference to persons who are qualified to perform respiratory therapy 
and to ensure that language regarding these professionals is consistent 
with current industry requirements for education, training, and 
practice.
    Prior to its modification by the CY 2009 PFS final rule with 
comment period, Sec.  485.70(j) reflected the qualifications for 
``Certified Respiratory Therapists (CRTs)'' and ``Registered 
Respiratory Therapists (RRTs)'' as terms commonly used by the 
professional industry to identify persons furnishing respiratory 
therapy services.
    Since publication of the CY 2009 PFS final rule with comment, we 
have been informed by the industry that the changes made in the 
definition of respiratory therapist exclude a category of professional 
that has completed the requirements of a CRT, has completed a 
nationally accredited educational program that confers eligibility for 
the National Board for Respiratory Care (NBRC) registry exam for 
respiratory therapists (RTs), and is eligible to sit for the national 
registry examination administered by the National Board for Respiratory 
Care (NBRC), but has not yet passed the examination. These persons are 
referred to in the industry as Certified Respiratory Therapists (CRTs).
    Because it is our policy that Medicare payment is available for 
respiratory services provided to Medicare beneficiaries in a CORF only 
if provided by a respiratory therapist meeting the qualifications set 
forth in Sec.  485.70(j), payment is not available for respiratory 
services provided by CRTs in the CORF setting. We note that personnel 
qualifications for respiratory therapists previously set forth at Sec.  
485.70(j) prior to its modification by the CY 2009 PFS final rule with 
comment period did not exclude this category of personnel from the 
definition of respiratory therapist. We have also heard from CRTs and 
from CORFs that this change has limited the availability of respiratory 
therapy services to Medicare beneficiaries in certified CORFs, as many 
of these services were provided by CRTs. Thus, in modifying the 
definition of respiratory therapist in the CY 2009 PFS final rule with 
comment period, we may have inadvertently impacted access to 
respiratory therapy services for some Medicare beneficiaries.
    Thus, we are proposing to modify the definition of respiratory 
therapist and to clarify the terms that are used to identify those 
persons who furnish respiratory services in CORFs in Sec.  485.70(j) to 
include CRTs, that is those individuals who have completed a nationally 
accredited educational program for respiratory therapists and are 
eligible to sit for the national registry examination administered by 
the National Board for Respiratory Care (NBRC), but who have not yet 
passed the examination. The change in the definition we are proposing 
would permit CRTs to furnish respiratory therapy services to Medicare 
beneficiaries in the CORF setting.
    In this proposed rule, we intend to assure that persons who were 
qualified to furnish respiratory therapy services to patients in CORFs 
prior to the finalization of CY 2009 PFS final rule with comment period 
(73 FR 69942), will continue to qualify to furnish RT services to CORF 
patients under this proposed rule.
    We invite public comment on the proposed change to Sec.  485.70(j). 
We are also seeking comments from the industry regarding the difference 
in services furnished by the different levels of professionals who 
provide RT services in CORFs. We welcome such comments to be 
descriptive and both quantitative and qualitative in nature to the 
extent possible.

L. Ambulance Fee Schedule: Technical Correction to the Rural Adjustment 
Factor Regulations (Sec.  414.610)

    Section 1834(l)(9) of the Act provides that for ``ground ambulance 
services furnished on or after July 1, 2001, and before January 1, 
2004, for which transportation originates in a rural area * * * or in a 
rural census tract of a metropolitan statistical area * * * the fee 
schedule established under this subsection shall provide that, with 
respect to the payment rate for mileage for a trip above 17 miles, and 
up to 50 miles, the rate otherwise established shall be increased by 
not less than \1/2\ of the additional payment per mile established for 
the first 17 miles of such a trip originating in a rural area.'' Thus, 
the statute authorized a rural mileage bonus for miles 18 through 50 
for ground ambulance services furnished on or after July 1, 2001 and 
prior to January 1, 2004. This provision was implemented in Sec.  
414.610(c)(5)(i), but the regulation text does not currently specify 
the statutory time period during which this rural mileage bonus was 
effective. In the ``Medicare Program; Coverage and Payment of Ambulance 
Services; Inflation Update for CY 2004'' final rule with comment period 
(68 FR 67960, 67961), we acknowledged that we inadvertently omitted 
from the regulation text the time period during which this statutory 
adjustment was applicable, and stated we were ``revising Sec.  
414.610(c) to reflect that this bonus payment applies only for services 
furnished during the statutory period.'' Thus, in the ``Medicare 
Program; Coverage and Payment of Ambulance Services; Inflation Update 
for CY 2004'' final rule with comment period, we

[[Page 33641]]

revised the regulation to include the time period during which the 
adjustment is applicable (68 FR 67963). However, the revised language 
specifying the statutory time period was dropped inadvertently from the 
regulation text when Sec.  414.610(c)(5) was later republished in the 
``Medicare Program; Medicare Ambulance MMA Temporary Rate Increases 
Beginning July 1, 2004'' interim final rule (69 FR 40288, 40292).
    In this proposed rule, we are reinstating the language that was 
originally finalized in ``Medicare Program; Coverage and Payment of 
Ambulance Services; Inflation Update for CY 2004'' final rule with 
comment period (68 FR 67963) but then inadvertently omitted again when 
Sec.  414.610(c)(5) was later republished, so that Sec.  
414.610(c)(5)(i) correctly sets forth the statutory time period during 
which this rural mileage bonus was applicable. This revision to the 
regulation is a technical correction to conform the regulation to the 
statute. For further information, see program instruction, Transmittal 
AB-03-110; Date August 1, 2003; Change Request 2767 which was issued to 
inform contractors to discontinue paying such bonuses effective January 
1, 2004 in accordance with the statute.

M. Clinical Laboratory Fee Schedule: Signature on Requisition

    In the March 10, 2000 Federal Register, we published the ``Medicare 
Program; Negotiated Rulemaking: Coverage and Administrative Policies 
for Clinical Diagnostic Laboratory Services'' proposed rule (65 FR 
13082) announcing and soliciting comments on the results of our 
negotiated rulemaking committee tasked to establish national coverage 
and administrative policies for clinical diagnostic laboratory tests 
under Part B of Medicare. In our final rule published in the November 
23, 2001 Federal Register (66 FR 58788), we explained our policy on 
ordering clinical diagnostic laboratory services and amended Sec.  
410.32 to make our policy more explicit. Our regulation at Sec.  
410.32(a) included the requirement that ``[a]ll diagnostic x-ray tests, 
diagnostic laboratory tests, and other diagnostic tests must be ordered 
by the physician who is treating the beneficiary.'' In the November 23, 
2001 final rule, we added paragraph (d)(2) to Sec.  410.32 to require 
that the physician or qualified nonphysician practitioner (NPP) who 
orders the service must maintain documentation of medical necessity in 
the beneficiary's medical record (66 FR 58809). In the preamble 
discussions to the March 10, 2000 proposed rule and November 23, 2001 
final rule (65 FR 13089 and 66 FR 58802, respectively), we noted that 
``[w]hile the signature of a physician on a requisition is one way of 
documenting that the treating physician ordered the test, it is not the 
only permissible way of documenting that the test has been ordered.'' 
In those preambles, we described the policy of not requiring physician 
signatures on requisitions for clinical diagnostic laboratory tests, 
but implicitly left in place the existing requirements for a written 
order to be signed by the ordering physician or NPP for clinical 
diagnostic laboratory tests, as well as other types of diagnostic 
tests. We further stated in the preambles of the proposed and final 
rules that we would publish an instruction to Medicare contractors 
clarifying that the signature of the ordering physician is not required 
for Medicare purposes on a requisition for a clinical diagnostic 
laboratory test (65 FR 13089 and 66 FR 58802).
    On March 5, 2002, we published a program transmittal implementing 
the administrative policies set forth in the final rule, including the 
following instruction: ``Medicare does not require the signature of the 
ordering physician on a laboratory service requisition. While the 
signature of a physician on a requisition is one way of documenting 
that the treating physician ordered the service, it is not the only 
permissible way of documenting that the service has been ordered. For 
example, the physician may document the ordering of specific services 
in the patient's medical record.'' (Transmittal AB-02-030, Change 
Request 1998, dated March 5, 2002).
    On January 24, 2003, we published a program transmittal in order to 
manualize the March 5, 2002 Transmittal. (Transmittal 1787, Change 
Request 2410, dated January 24, 2003). The cover note to the 
transmittal states, ``Section 15021, Ordering Diagnostic Tests, 
manualizes Transmittal AB-02-030, dated March 5, 2002. In accordance 
with negotiated rulemaking for outpatient clinical diagnostic 
laboratory services, no signature is required for the ordering of such 
services or for physician pathology services.'' In the manual 
instructions in that transmittal in a note, we stated: ``No signature 
is required on orders for clinical diagnostic services paid on the 
basis of the physician fee schedule or for physician pathology 
services.'' The manual instructions did not explicitly reference 
clinical diagnostic laboratory tests as the cover note did. Rather, the 
transmittal seemed to extend the policy set forth in the Federal 
Register (that no signature is required on requisitions for clinical 
diagnostic laboratory tests paid under the Clinical Laboratory Fee 
Schedule) to also apply to clinical diagnostic tests paid on the basis 
of the PFS and physician pathology services. In addition, the manual 
instructions used the term ``order'' instead of ``requisition,'' which 
some members of the industry have asserted caused confusion.
    When we transitioned from paper manuals to the current electronic 
Internet Only Manual system, these manual instructions were 
inadvertently omitted from the new Benefit Policy Manual (BPM).
    In August 2008, we issued a program transmittal (Transmittal 94, 
Change Request 6100, dated August 29, 2008) to update the BPM to 
incorporate language that was previously contained in section 15021 of 
the Medicare Carriers Manual. The reissued language states, ``No 
signature is required on orders for clinical diagnostic tests paid on 
the basis of the clinical laboratory fee schedule, the physician fee 
schedule, or for physician pathology services.'' Based on further 
review, we have determined that there are no clinical laboratory tests 
paid under the PFS. After Transmittal 94 was published, we received 
numerous inquiries from laboratory, diagnostic testing, and hospital 
representatives who had questions about whether the provision applied 
to all diagnostic services, including x-rays, MRIs, and other 
nonclinical laboratory fee schedule diagnostic services.
    To resolve any existing confusion surrounding the implementation of 
the policy in 2001 and subsequent transmittals, we are restating and 
seeking public comments on our policy. We may further clarify our 
policy in the final rule, taking into consideration public comments. 
Our policy is that a physician's signature is not required on a 
requisition for clinical diagnostic laboratory tests paid on the basis 
of the Clinical Laboratory Fee Schedule; however, it must be evident, 
in accordance with our regulations at Sec.  410.32(d)(2) and (3), that 
the physician ordered the services. The policy that signatures are not 
required on requisitions applies to requisitions for clinical 
diagnostic laboratory tests paid under the Clinical Laboratory Fee 
Schedule.
    We note that we solicited and received comments on this signature 
requirement during the notice and comment period for the March 10, 2000 
proposed rule in the context of our proposal to add paragraph (d)(2)(i) 
to Sec.  410.32 to require that the practitioner who orders a 
diagnostic laboratory test

[[Page 33642]]

must maintain documentation of medical necessity in the beneficiary's 
medical record. The majority of comments supported the adoption of a 
policy that the signature of the practitioner on a requisition for a 
clinical diagnostic laboratory test paid under the Clinical Laboratory 
Fee Schedule is not the only way of documenting that the test has been 
ordered and, thus, should not be required provided such documentation 
exists in an alternate form.
    This policy regarding requisitions for clinical diagnostic 
laboratory tests does not supersede other applicable Medicare 
requirements (such as those related to hospital Conditions of 
Participation (CoPs)) which require the medical record to include an 
order signed by the physician who is treating the beneficiary. Nor do 
we believe that anything in our policy regarding signatures on 
requisitions for clinical diagnostic lab tests supersedes other 
requirements mandated by professional standards of practice or 
obligations regarding orders and medical records promulgated by 
Medicare, the Joint Commission, or State law; nor do we believe the 
policy would require providers to change their business practices. 
Because of the confusion surrounding the implementation of the policy 
in 2001 and subsequent transmittals, we invite the general public to 
comment on this policy and its impacts on operations.
    We also are restating and seeking public comment on our long-
standing policy consistent with the principle in Sec.  410.32(a) that a 
written order for diagnostic tests including those paid under the 
clinical laboratory fee schedule and those that are not paid under the 
clinical laboratory fee schedule (for example, that are paid under the 
PFS or under the OPPS), such as X-rays, MRIs, and the TC of physician 
pathology services, must be signed by the ordering physician or NPP. 
That is, the policy that signatures are not required on requisitions 
for clinical diagnostic laboratory tests paid based on the Clinical 
Laboratory Fee Schedule applies only to requisitions (as opposed to 
written orders).'' While there may be additional questions about the 
policy for physician pathology servicess, we are not addressing these 
issues in rulemaking at this time.
    Additionally, we welcome comments from the public about the 
distinction between an order and a requisition. We note that an 
``order'' as defined in our IOM, 100-02, Chapter 15, Section 80.6.1 is 
a communication from the treating physician/practitioner requesting 
that a diagnostic test be performed for a beneficiary. The order may 
conditionally request an additional diagnostic test for a particular 
beneficiary if the result of the initial diagnostic test ordered yields 
to a certain value determined by the treating physician/practitioner 
(for example, if test X is negative, then perform test Y). An order may 
be delivered via the following forms of communication:
     A written document signed by the treating physician/
practitioner, which is hand-delivered, mailed, or faxed to the testing 
facility.
     A telephone call by the treating physician/practitioner or 
his or her office to the testing facility; or
     An electronic mail, or other electronic means, by the 
treating physician/practitioner or his or her office to the testing 
facility.
    If the order is communicated via telephone, both the treating 
physician/practitioner, or his or her office, and the testing facility 
must document the telephone call in their respective copies of the 
beneficiary's medical records.
    A ``requisition'', conversely, as we understand it, is the actual 
paperwork, such as a form, which is provided to a clinical diagnostic 
laboratory that identifies the test or tests to be performed for a 
patient. It may contain patient information, ordering physician 
information, referring institution information, information about where 
to send reports, billing information, specimen information, shipping 
addresses for specimens or tissue samples, and checkboxes for test 
selection. We believe it is ministerial in nature, assisting labs with 
billing and handling of results, and serves as an administrative 
convenience to providers and patients. We believe that a written order, 
which may be part of the medical record, and the requisition are two 
different documents; although a requisition that is signed may serve as 
an order. We welcome comments from the public about the distinction 
between requisitions and orders.

N. Physician Self-Referral

1. General Background
    Section 1877 of the Act, also known as the physician self-referral 
law, prohibits the following: (1) A physician from making referrals for 
certain designated health services (``DHS'') payable by Medicare to an 
entity with which he or she (or an immediate family member) has a 
direct or indirect financial relationship (an ownership/investment 
interest or a compensation arrangement), unless an exception applies; 
and (2) The entity from presenting or causing a claim to be presented 
to Medicare (or billing another individual, entity, or third party 
payor) for those referred services. The statute establishes a number of 
exceptions and grants the Secretary the authority to create regulatory 
exceptions for financial relationships that pose no risk of program or 
patient abuse.
    Determining whether an entity furnishing DHS and a physician have a 
direct or indirect compensation arrangement is a key step in applying 
the statute because it affects which compensation exceptions may apply 
to the arrangement. Section 411.354(c) governs when a physician 
``stands in the shoes'' of his or her physician organization and may 
therefore, depending on the circumstances, have a direct, rather than 
an indirect, compensation arrangement with an entity furnishing DHS.
    Our proposal seeks to clarify one aspect of the physician stand in 
the shoes provisions at Sec.  411.354(c). Specifically, we are 
proposing to clarify the second sentence of Sec.  411.354(c)(3)(i) to 
provide that, ``[w]hen applying the exceptions in Sec.  411.355 and 
Sec.  411.357 to arrangements in which a physician stands in the shoes 
of his or her physician organization, the relevant referrals and other 
business generated ``between the parties' are referrals and other 
business generated between the entity furnishing DHS and the physician 
organization (including all members, employees, and independent 
contractor physicians).'' A detailed discussion of this proposed 
clarification may be found in section II.N.2.b. of this proposed rule.
2. Physician Stand in the Shoes
a. Background
    One of the first significant physician stand in the shoes 
provisions was finalized in the ``Medicare Program; Physicians' 
Referrals to Health Care Entities With Which They Have Financial 
Relationships (Phase II),'' interim final rule with comment period 
published in the March 26, 2004 Federal Register (69 FR 16054) (``Phase 
II''). In Phase II, we revised the definition of ``referring 
physician'' at Sec.  411.351 to clarify that a referring physician is 
treated as ``standing in the shoes'' of his or her professional 
corporation (69 FR 16058, 16060). Our revision to the definition of 
``referring physician'' clarified that it was not necessary to treat a 
referring physician as separate from his or her wholly-owned 
professional corporation. We noted that the revised regulations should 
make it simpler for physicians and others to evaluate their financial 
relationships and to apply exceptions

[[Page 33643]]

under section 1877 of the Act. We also solicited comments on whether to 
permit a physician to stand in the shoes of a group practice of which 
he or she is a member (69 FR 16060).
    We addressed certain provisions of section 1877 of the Act, 
including provisions relating to direct and indirect compensation 
arrangements, in the ``Medicare Program; Physicians' Referrals to 
Health Care Entities With Which They Have Financial Relationships 
(Phase III),'' final rule published in the September 5, 2007 Federal 
Register (72 FR 51012) (``Phase III''). Phase III extended the Phase II 
rule that treated referring physicians as standing in the shoes of 
their wholly-owned professional corporations only (72 FR 51026). 
Specifically, we amended Sec.  411.354(c) to add a provision under 
which all referring physicians will be treated as ``standing in the 
shoes'' of their physician organizations for purposes of applying the 
rules that describe direct and indirect compensation arrangements in 
Sec.  411.354 (72 FR 51026 through 51029). Phase III defined a 
``physician organization'' at Sec.  411.351 to be ``a physician 
(including a professional corporation of which the physician is the 
sole owner), a physician practice, or a group practice that complies 
with the requirements of Sec.  411.352.'' Under Phase III, when 
determining whether a direct or indirect compensation arrangement 
existed between a physician and an entity to which the physician refers 
Medicare patients for DHS, the referring physician would stand in the 
shoes of: (1) Another physician who employs the referring physician; 
(2) his or her wholly-owned professional corporation; (3) a physician 
practice (that is, a medical practice) that employs or contracts with 
the referring physician; or (4) a group practice of which the referring 
physician is a member or independent contractor. We specified in Sec.  
411.354(c)(3)(i) that a physician who stands in the shoes of his or her 
physician organization would be considered to have the same 
compensation arrangements (with the same parties and on the same terms) 
as the physician organization in whose shoes the referring physician 
stands. In addition, we specified in the second sentence of Sec.  
411.354(c)(3)(i) that ``[f]or purposes of applying the exceptions in 
Sec.  411.355 and Sec.  411.357 to arrangements in which a physician 
stands in the shoes of his or her physician organization, the `parties' 
to the arrangements are considered to be the entity furnishing DHS and 
the physician organization (including all members, employees, or 
independent contractor physicians).''
    The Phase III stand in the shoes rules were made in an effort to 
address two issues. First, industry representatives had asserted that 
resorting to the indirect compensation definition and exception added 
an unnecessary step when determining compliance with the physician 
self-referral prohibition. These representatives believed that it would 
be easier, more efficient, and consistent with the intent of the 
physician self-referral law to examine the relationship between the 
hospital and the group practice for compliance with a physician self-
referral exception. The representatives urged that a referring 
physician should stand in the shoes of his or her group practice, which 
acts on behalf of its physician members and contractors. Depending on 
the circumstances, this would enable the parties to analyze the 
arrangement between the entity furnishing DHS and the group practice 
(for example, a lease of office space, a personal service arrangement, 
or a fair market value compensation arrangement) to determine its 
compliance with one of the various direct compensation arrangement 
exceptions, rather than the indirect compensation arrangements 
exception at Sec.  411.357(p). We agreed and permitted a physician to 
stand in the shoes of his or her group practice, thereby permitting 
physicians and entities furnishing DHS to use a direct compensation 
arrangement exception in some circumstances.
    Second, we were informed that parties may have construed the 
definition of an indirect compensation arrangement too narrowly, 
resulting in erroneous determinations that some arrangements involving 
financial incentives for referring physicians would fall outside the 
ambit of the physician self-referral law. In particular, we were 
concerned that some arrangements between entities furnishing DHS and 
group practices were viewed as outside the application of the statute. 
The stand in the shoes provisions set forth in Phase III were designed 
to address this concern by treating compensation arrangements between 
entities furnishing DHS and group practices as if the arrangements were 
with the group's referring physicians.
    In response to concerns raised by some industry representatives, we 
published a final rule in the November 15, 2007 Federal Register (72 FR 
64161) delaying the date of applicability of the Phase III stand in the 
shoes provisions with respect to certain compensation arrangements 
involving physician organizations and academic medical centers or 
certain integrated 501(c)(3) health care systems, from December 4, 2007 
until December 4, 2008.
    We finalized revisions to Sec.  411.354(c)(1)(ii) to deem (so as to 
require) a physician who has an ownership or investment interest in a 
physician organization to stand in the shoes of that physician 
organization in the ``Medicare Program; Changes to the Hospital 
Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates; 
Payments for Graduate Medical Education in Certain Emergency 
Situations; Changes to Disclosure of Physician Ownership in Hospitals 
and Physician Self-Referral Rules; Updates to the Long-Term Care 
Prospective Payment System; Updates to Certain IPPS-Excluded Hospitals; 
and Collection of Information Regarding Financial Relationships Between 
Hospitals'' final rule (``FY 2009 IPPS final rule'') published in the 
August 19, 2008 Federal Register (73 FR 48434). Physicians with only a 
titular ownership interest (that is, physicians without the ability or 
right to receive the financial benefits of ownership or investment, 
including, but not limited to, the distribution of profits, dividends, 
proceeds of sale, or similar returns on investment) are not deemed to 
stand in the shoes of their physician organizations. We also added 
Sec.  411.354(c)(1)(iii) to permit (but not require) a titular owner 
and a physician who does not have an ownership or investment interest 
in a physician organization to stand in the shoes of his or her 
physician organization. This rule became effective October 1, 2008.
b. Proposed Clarification to Sec.  411.354(c)--Applying Exceptions in 
Sec.  411.355 and Sec.  411.357 to Arrangements in Which a Physician 
Stands in the Shoes of His or Her Physician Organization
    Section 411.354(c)(3)(i) addresses the application of the general 
exceptions to the referral prohibition related to both ownership/
investment and compensation (Sec.  411.355) and the exceptions to the 
referral prohibition related to compensation arrangements (Sec.  
411.357), to arrangements in which a physician stands in the shoes of 
his or her physician organization. Many of these exceptions require the 
arrangement to be in writing and signed by the parties and prohibit the 
compensation from taking into account the volume or value of referrals 
or other business generated by the referring physician.
    Under Sec.  411.354(c)(3)(i), a physician who stands in the shoes 
of his or her

[[Page 33644]]

physician organization is deemed to have the same compensation 
arrangements with the same parties and on the same terms as the 
physician organization. The second sentence of Sec.  411.354(c)(3)(i) 
provides that ``[f]or purposes of applying the exceptions in Sec.  
411.355 and Sec.  411.357 to arrangements in which a physician stands 
in the shoes of his or her physician organization, the `parties' to the 
arrangements are considered to be the entity furnishing DHS and the 
physician organization (including all members, employees, or 
independent contractor physicians).''
    After the publication of Phase III, some members of the industry 
questioned whether the second sentence of Sec.  411.354(c)(3)(i) 
defined the term ``parties'' everywhere it appears in the physician 
self-referral regulations, including the requirement in many exceptions 
that a compensation arrangement be in writing and ``signed by the 
parties.'' Specifically, these members believed it was necessary for 
everyone within a physician organization (that is, all members, 
employees, and independent contractor physicians) to sign a myriad of 
different arrangements with an entity furnishing DHS. This was not our 
intent. In January 2008, we posted a frequently asked question (FAQ) on 
our Web site to address this issue (see question 8885 at 
https://questions.cms.hhs.gov/cgi-bin/cmshhs.cfg/php/enduser/std_adp.php?p_faqid=8885.) In the FAQ, we explained that a physician who 
stands in the shoes of his or her physician organization need not 
become a signatory to a written agreement between the physician 
organization and an entity furnishing DHS because ``we consider a 
physician who is standing in the shoes of his or her physician 
organization to have signed the written agreement when the authorized 
signatory of the physician organization has signed the agreement.'' 
After the FY 2009 IPPS final rule, under which only physician owners 
are deemed to stand in the shoes of their physician organizations, some 
industry representatives questioned whether physicians who did not 
stand in the shoes remained ``parties'' under Sec.  411.354(c)(3)(i) 
and would therefore need to become signatories to any compensation 
arrangement that was required to be in writing and ``signed by the 
parties.''
    We are proposing to clarify the second sentence of Sec.  
411.354(c)(3)(i) to provide that, ``[w]hen applying the exceptions in 
Sec.  411.355 and Sec.  411.357 to arrangements in which a physician 
stands in the shoes of his or her physician organization, the relevant 
referrals and other business generated `between the parties' are 
referrals and other business generated between the entity furnishing 
DHS and the physician organization (including all members, employees, 
and independent contractor physicians).'' We believe this proposed 
language clarifies the regulation text and is consistent with our 
intent to minimize the potential for abuse without imposing undue 
burden on the provider community.
    Our proposed change clarifies that we are not defining the term 
``parties'' and should eliminate any possible public misconception that 
all physicians in a physician organization (whether or not they stand 
in the shoes of the physician organization) must sign the writing(s) 
memorializing a compensation arrangement between their physician 
organization and an entity furnishing DHS. Furthermore, we note that 
some members of the industry have erroneously applied the second 
sentence of Sec.  411.354(c)(3)(i) by analyzing whether the 
compensation takes into account the referrals between the entity 
furnishing DHS and the physician who stands in the shoes of the 
physician organization only, not the referrals of all members, 
employees, and independent contractor physicians in the physician 
organization. As we indicated in the Phase III final rule (72 FR at 
51028), the second sentence of Sec.  411.354(c)(3)(i) was intended to 
require (where applicable) an analysis of whether a compensation 
arrangement takes into account referrals or other business generated by 
the physician organization as a whole and not merely referrals or other 
business generated by the physicians who stand in its shoes. Thus, we 
reiterate that the relevant referrals and other business generated 
between the physician organization and the entity furnishing DHS are 
the referrals of all physicians in the physician organization 
(including all members, employees, and independent contractors), not 
simply the referrals made by each physician who stands in the shoes of 
the physician organization.
    We welcome public comments regarding alternative approaches to 
address this issue.

O. Durable Medical Equipment-Related Issues

1. Damages to Suppliers Awarded a Contract under the Acquisition of 
Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
(Medicare DMEPOS Competitive Bidding Program) Caused by the Delay of 
the Program
    Section 1847 of the Act, as amended by section 302(b)(1) of the 
MMA, requires the Secretary to establish and implement a Medicare 
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Competitive Bidding Program (DMEPOS CBP). On July 15, 2008, the MIPPA 
was enacted. Section 154 of the MIPPA amended section 1847 of the Act 
to make certain limited changes to the competitive bidding program, 
including adding a new subsection (a)(1)(D) to section 1847 of the Act. 
Section 1847(a)(1)(D) terminates retroactively the competitive bidding 
contracts that were awarded to suppliers in 2008 for the Round 1 of 
competitive bidding and prohibits payment based on such contracts. 
Section 154 of the MIPPA effectively reinstated payment for 
competitively bid items and services to the Medicare fee schedule 
amounts, as set forth in section 1834 of the Act and 42 CFR part 414, 
subpart D of our regulations.
    Section 1847(a)(1)(D)(i)(I) of the Act, as amended by the MIPPA, 
stipulates that to the extent any damages may be applicable as a result 
of the termination of contracts, payment is to be made from the Federal 
Supplementary Medical Insurance Trust Fund under section 1841 of the 
Act. Section 1847(a)(1)(D) of the Act also states that nothing in 
section 1847(a)(1)(D)(i)(I) of the Act, which includes the reference to 
damages, shall be construed to provide an independent cause of action 
or right to administrative or judicial review with the regard to the 
termination of the Round 1 contracts.
    For further discussion of the Competitive Bidding Program and the 
bid evaluation process, see the Medicare Program; Competitive 
Acquisition for Certain Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies (DMEPOS) and Other Issues final rule published 
in the April 10, 2007 Federal Register (72 FR 17992) and the Medicare 
Program; Changes to the Competitive Acquisition of Certain Durable 
Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) by 
Certain Provisions of the Medicare Improvements for Patients and 
Providers Act of 2008 (MIPPA) interim final rule with comment period 
(IFC)

[[Page 33645]]

published on January 16, 2009 Federal Register (74 FR 2873).
    In this proposed rule, we are proposing to add new Sec.  414.425 to 
establish a process to evaluate any claims for damages caused by the 
termination of contracts awarded in 2008 under the DMEPOS CBP that were 
terminated as a result of section 154(a)(1)(A)(iv) of the MIPPA.
    We offered contracts in March of 2008 to selected suppliers for the 
first round of the DMEPOS CBP. The contracts that were accepted were 
terminated by the MIPPA retroactive to June 30, 2008. We considered the 
terms of the contracts and other processes of the DMEPOS CBP as we 
developed this proposed process to determine, on a case-by-case basis, 
whether to award damages and, where applicable, the amount of damages 
to be awarded for the termination of these contracts.
    When considering whether to submit a claim for damages, suppliers 
may consider the following factors:
     Each contract stipulated that the contract is subject to 
any changes to the statute or regulations that affect the Medicare 
program.
     Each contract indicated CMS does not guarantee any amount 
of business or profits.
     Each contract stipulated that CMS shall not pay for any 
expenses incurred by the supplier for the work performed under the 
contract other than for payment of Medicare claims authorized under the 
contract.
     Upon termination of the contracts by the MIPPA, payments 
reverted to the CY 2008 fee schedule amount, which was on average 26 
percent higher than payment amounts under the DMEPOS CBP.
     We will review a supplier's estimated and historic 
capacity and any expansion plans that were submitted as part of a 
supplier's bid.
     We will review a supplier's action to meet its obligation 
to mitigate its damages.
     We listed the winning suppliers on the Medicare.gov Web 
site in the supplier locator tool; a supplier is allowed to keep any 
new customers they may have obtained because of being listed on the 
supplier locator tool.
     This list is not intended to suggest that there are not 
legitimate claims for damages. However, these are factors that a 
supplier may consider when deciding whether to submit a claim for 
damages.
    The provisions of this proposed rule outline the information that 
we are proposing suppliers provide when submitting claims for damages 
and the process that we will follow to review these claims. The 
information we propose to collect from suppliers is necessary for us to 
make a reasonable decision on whether damages are warranted and how 
much in damages should be awarded. We believe the process is not overly 
burdensome to those suppliers choosing to participate in this review 
process and will ensure a thorough review of a supplier's claim for 
damages.
    The proposed process to file a claim for damage claims includes the 
following provisions:
a. Eligibility To File a Claim
    Any aggrieved supplier that was awarded a contract in 2008 for the 
Round 1 DMEPOS CBP and believes it has suffered damages is eligible to 
submit a claim. The supplier must be able to demonstrate how its 
company was damaged. These damages must be substantiated and be as a 
direct result of the termination by MIPPA of their Round I DMEPOS CBP 
contract. Only a contract supplier, and not a subcontractor of a 
contract supplier, is eligible to submit a claim for damages.
b. Timeframes for Filing a Claim
    A completed claim, including all documentation described below in 
section II.O.1.c., must be filed within 90 days of the effective date 
of the finalization of these damages provisions, unless the 90th day is 
a weekend or Federal holiday. In that case, the last date to file a 
claim will be the day following the weekend or Federal holiday. The 
date of filing is the actual date of receipt by the CBIC of a completed 
claim from the supplier that includes all of the information required 
by this rule. We strongly urge claimants to use a tracking method such 
as with the United States Postal Service or a carrier that requires a 
return receipt that indicates the date on which the claim was 
delivered.
c. Information That Must Be Included in a Claim
    At a minimum, a claim should include all of the following:
     Supplier's name and bidding number.
     Supplier's current contact information (Name of authorized 
official, U.S. Post Office mailing address, phone number and e-mail 
address).
     A copy of the DMEPOS CBP Round I contract(s) the supplier 
signed with CMS.
     A detailed explanation of the damages incurred by the 
supplier. The explanation must document the supplier's damages through 
receipts and records that establish the claimant's damages directly 
related to meeting the terms of the DMEPOS CBP Round I contract.
     The supplier must also explain how it would be damaged if 
not reimbursed.
     A detailed explanation of the steps of all attempts to use 
for other purposes, return, or dispose of equipment or other assets 
purchased or rented for use in the Round I DMEPOS CBP contract 
performance.
    Damages claimed must be specifically related to carrying out the 
terms of the contract, and may include, but are not limited to, the 
following:
     Items or equipment purchased or rented.
     Additional employee costs.
     Additional inventory costs.
     Additional facility costs.
    The supplier must include a separate justification for any of these 
items for which it is claiming damages and explain how they were 
necessary in terms of meeting the requirements of the Round 1 DMEPOS 
CBP contract. This does not include expenses that would have occurred 
if the supplier had not been awarded a contract but only those expenses 
that were incurred for the Round 1 DMEPOS CBP contract performance. The 
claim must also detail steps taken by the supplier to mitigate damages 
that they may have incurred due to the contract termination.
d. Items That Will Not Be Considered in a Claim
    CMS will not award damages for the following:
     Cost of submitting a bid.
     Cost of preparing or submitting a claim for damages under 
this section.
     Fees or costs incurred for consulting or marketing.
     Cost of accreditation or licensure.
     Costs incurred before March 20, 2008.
     Costs incurred after July 14, 2008 except for costs 
incurred to mitigate damages.
     Any profits a supplier may have expected from performance 
of the contract.
     Costs that would have occurred without the supplier having 
been awarded a contract.
     Costs for items such as inventory, delivery vehicles, 
office space and equipment, personnel, which the supplier did not 
purchase specifically to perform the contract.
     Costs already recouped by use of personnel, material, 
supplies, or equipment in the supplier's business operations.
    We are not considering claims for expenses incurred prior to March 
20, 2008 including the purchase or rental of

[[Page 33646]]

items or equipment before that date, because a supplier would not have 
known that it was going to be offered a contract. We are not 
considering claims for most expenses incurred after July 14, 2008, 
including the purchase or rental of items or equipment, because this is 
the date on which MIPPA terminated all of the Round 1 contracts.
e. Filing a Claim
    Suppliers should submit claims, with all supporting documentation, 
with the CMS Competitive Bidding Implementation Contractor (CBIC) at 
the following address: CBIC; Bldg 200, Suite 400; 2743 Perimeter 
Parkway; Augusta, Georgia 30909. The authorized official for the 
supplier must certify the accuracy of the information on the claim and 
all supporting documentation. The authorized official is appointed by 
the supplier and has the legal authority granted by the supplier to 
submit the claim for damages. This person may be the supplier's general 
partner, chairman of the board, chief financial officer, chief 
executive officer, president, direct owner of the supplier 
organization, or must hold a position of similar status and authority 
within the supplier's organization. The CBIC will not accept electronic 
submissions of claims for damages.
f. Review of Claim
(1) Role of the CBIC
    The CBIC will conduct the first level of review and make 
recommendations to CMS, hereafter referred to as the Determining 
Authority regarding:
     Whether the claim is complete and was filed in a timely 
manner. The CBIC may seek further information from the claimant when 
making its recommendation. The CBIC may set a deadline for receipt of 
additional information.
     When the claim is incomplete or was not filed in a timely 
manner, the CBIC will make a recommendation to the Determining 
Authority not to process the claim further.
     Whether the government owes damages because of the MIPPA. 
The CBIC will include an explanation supporting its recommendation. The 
CBIC will recommend a reasonable amount of damages, if any, based on 
the claim submitted, including all accompanying documentation. The CBIC 
will consider the language of the contract, as well as both costs 
incurred and the contract supplier's attempts and actions to limit the 
damages.
(2) CMS' Role as the Determining Authority
    CMS is the Determining Authority because we are responsible for the 
final review and final determination regarding claims for damages.
     The Determining Authority shall review the recommendation 
of the CBIC.
     The Determining Authority may seek further information 
from the claimant or the CBIC in making a concurrence or non-
concurrence determination.
     The Determining Authority may set a deadline for receipt 
of additional information. A claimant's failure to respond timely may 
result in a denial of the claim.
     If the Determining Authority concurs with the CBIC 
recommendation, the Determining Authority shall submit a final signed 
decision to the CBIC and direct the CBIC to notify the claimant of the 
determination and the reasons for the final determination.
     If the Determining Authority nonconcurs with the CBIC 
recommendation, the Determining Authority may:
    + Write a determination granting (in whole or in part) a claim for 
damages or denying a claim in its entirety; or direct the CBIC to write 
said determination for the Determining Authority's signature.
    + Return the claim to the CBIC with further instructions.
     The Determining Authority's determination is final and 
binding; it is not subject to administrative or judicial review under 
section 1847(a)(1)(D) of the Act, as amended by section 154(a)(1) of 
the MIPPA.
g. Timeframe for Final Determinations
    Every effort will be made to make a final determination within 120 
days of initial receipt of the claim for damages by the CBIC or the 
receipt of additional information that was requested by the CBIC, 
whichever is later. In the case of more complex cases, or in the event 
of a large workload, a decision will be issued as soon as practicable.
h. Notification to Claimant of Damage Determination
    The CBIC shall mail the final determination to the claimant by 
certified mail return receipt requested. If CMS determines that money 
is due to a claimant, this notification will indicate when and how the 
money will be transmitted. If a monetary award is due, the supplier 
will be required to provide banking information for electronic deposit.
2. Notification to Beneficiaries for Suppliers Regarding Grandfathering
    Section 1847(a)(4) of the Act requires that in the case of covered 
durable medical equipment (DME) items for which payment is made on a 
rental basis under section 1834(a) of the Act, and in the case of 
oxygen for which payment is made under section 1834(a)(5) of the Act, 
the Secretary shall establish a ``grandfathering'' process under which 
rented DME items that were furnished prior to the start of the 
Competitive Bidding Program (CBP) may be continued to be rented to the 
beneficiary by a noncontract supplier. Agreements for those covered 
items and supplies that were rented by the supplier to the beneficiary 
before the start of a CBP may be continued, regardless of whether the 
existing supplier participates in the CBP.
    In the April 10, 2007 final rule (72 FR 17992), in Sec.  
414.408(j), we established the grandfathering process described below 
for rented DME and oxygen and oxygen equipment when these items are 
included under the Medicare DMEPOS CBP. A supplier that is furnishing 
DME or is furnishing oxygen or oxygen equipment on a rental basis to a 
beneficiary prior to the implementation of a CBP in the competitive 
bidding area (CBA) where the beneficiary maintains a permanent 
residence may elect to continue furnishing the item as a grandfathered 
supplier. This process only applies to suppliers that began furnishing 
the competitive bid items described above before the start of the CBP 
to beneficiaries who maintain a permanent residence in a CBA.
    In the case of the rented DME and oxygen and oxygen equipment 
identified in this section, we established in Sec.  414.408(j)(4) that 
Medicare beneficiaries have the choice of deciding whether they would 
like to continue receiving the rented item from a grandfathered 
supplier or if they would like to receive the item from a contract 
supplier.
    Suppliers that agree to be a grandfathered supplier for an item 
must agree to be a grandfathered supplier for all current beneficiaries 
who request to continue to rent that item from them. The beneficiary's 
decision to use a grandfathered supplier depends on the decision of the 
noncontract supplier that is currently renting the competitive bidding 
item to continue renting the item as a grandfathered supplier after the 
start of the CBP in accordance with the terms we have specified. The 
payment rules for grandfathered suppliers are specified in existing 
Sec.  414.408(j)(2).

[[Page 33647]]

    In addition, the beneficiary may elect, at any time, to transition 
from a noncontract supplier to a contract supplier. The contract 
supplier would be required to accept the beneficiary as a customer 
regardless of how many rental months had already been paid for the 
beneficiary to receive this item. If the grandfathered supplier is not 
willing to continue furnishing the item, a beneficiary must select a 
contract supplier to furnish the item in order to receive Medicare 
payment for that item. The grandfathered supplier is paid based on the 
payment rules outlined in the final rule on Competitive Bidding at 
Sec.  414.408(j).
    As a result of what we learned from Round 1 of the CBP, we are 
proposing changes to the ``grandfathering'' rules by establishing 
notification requirements for noncontract suppliers that are furnishing 
rented DME competitive bid items at the time a CBP begins to 
beneficiaries residing in a CBA. We are also proposing a new definition 
for a grandfathered item to include all rented item(s) in a competitive 
bidding product category that a supplier currently provides to its 
beneficiaries. Under the current regulation, suppliers may choose the 
items within a product category for which they want to become a 
grandfathered supplier. Under this proposed rule, a noncontract 
supplier would have to choose to be either a grandfathered supplier for 
all or for none of the rented DME items within a product category that 
the supplier currently provides.
    For further discussion of the CBP and the bid evaluation process, 
see the April 10, 2007 final rule and the January 16, 2009 interim 
final rule with comment period.
    We are proposing to revise the definition of ``grandfathered item'' 
in Sec.  414.402 so that the term would refer to all rented items 
within a competitive bid product category that the supplier currently 
rents to beneficiaries. In addition, we are proposing to redesignate 
the current Sec.  414.408(j)(5) as Sec.  414.408(j)(7) and add new 
Sec.  414.408(j)(5)and (j)(6). The new Sec.  414.408(j)(5)and (j)(6) 
will specify the notification requirements that apply to noncontract 
suppliers that are renting DME competitive bid items in a CBA at the 
time of implementation of the CBP.
a. Definition of a Grandfathered Item
    We are proposing to revise the definition of a ``grandfathered 
item'' in Sec.  414.402 to avoid confusion, on the part of 
beneficiaries, regarding rented DME items for which a noncontract 
supplier is willing or not willing to be a grandfathered supplier. 
Under the current regulations, a supplier may make separate choices 
regarding grandfathering for each individual HCPCS code. For example, a 
supplier may choose to be a grandfathered supplier for a particular 
type of walker within the product category instead of all of the 
walkers included in that product category that are furnished on rental 
basis.
    Under the revised definition, a noncontract supplier would have to 
choose to be either a grandfathered supplier for all or for none of the 
DME rented items within a product category that the supplier currently 
provides. We believe that it would be easier for beneficiaries to 
recognize which items a supplier is grandfathering or not 
grandfathering if the supplier's election concerning grandfathering was 
made by product category rather than making separate choices for each 
individual HCPCS code. In addition, this proposed revision would 
prevent suppliers from choosing to be a grandfathered supplier for only 
the more profitable items, which could disadvantage certain 
beneficiaries.
b. Notification of Beneficiaries and CMS by Suppliers That Choose To 
Become Grandfathered Suppliers
    We are proposing to add a new Sec.  414.408(j)(5) to require 
suppliers furnishing items to be included in a CBP that are eligible 
for grandfathering to notify beneficiaries in the CBA and CMS regarding 
their decision whether to become grandfathered suppliers.
    The notification requirements we are proposing will prohibit 
certain inappropriate practices of noncontract suppliers. These 
inappropriate practices include: (1) Suppliers attempting to receive 
additional monthly rental payments from Medicare by circumventing the 
grandfathering requirements; and (2) suppliers not formally notifying 
beneficiaries before picking up the rented item from the beneficiary's 
home. We are also proposing to require a notification process to 
protect beneficiaries and to ensure less confusion during the 
transition period prior to implementation of the CBP. The proposed 
requirements will help ensure that beneficiaries are contacted and 
informed about the grandfathering process and what choices they have 
concerning their choice of supplier. Moreover, the notice will help to 
ensure that beneficiaries do not have medically necessary DME equipment 
taken from them unexpectedly by a noncontract supplier.
(1) Notification of Beneficiaries by Suppliers That Choose to Become 
Grandfathered Suppliers
    We are proposing to add Sec.  414.408(j)(5)(i) which requires a 
noncontract supplier that elects to become a grandfathered supplier in 
a CBA to provide a written notification to each Medicare beneficiary in 
that CBA who is currently renting a grandfathered item from that 
supplier. The notification must state that the supplier is willing to 
continue to rent the grandfathered item(s) to the beneficiary as a 
grandfathered supplier. The notice must identify the DME grandfathered 
rented items for which the supplier will be a grandfathered supplier.
    To ensure that beneficiaries are sufficiently informed and prepared 
for competitive bidding changes that affect rented DME, we are 
proposing in Sec.  414.408(j)(5) to require that the notification of 
the beneficiary must meet the following requirements. The notification 
must:
     Be sent by the supplier to the beneficiary at least 30 
business days before the start date of the implementation of the CBP in 
the CBA in which the beneficiary resides. The 30-day notice is 
necessary to give the beneficiary sufficient time before the start of 
the CBP to consider whether to continue to use their current supplier. 
Suppliers will be given sufficient time to meet the 30-day notification 
requirement.
     Identify the grandfathered items that the supplier is 
willing to continue to rent to the beneficiary.
     Be in writing (for example, by letter or postcard) and the 
supplier must maintain proof of delivery.
     State that the supplier is offering to continue to furnish 
certain rented DME, oxygen and oxygen equipment, and supplies that the 
supplier is currently furnishing to the beneficiary (that is, before 
the start of the CBP) and is willing to continue to provide these items 
to the beneficiary for the remaining rental months.
     State that the beneficiary has the choice to continue to 
receive a grandfathered item(s) from the grandfathered supplier or may 
elect to receive the item(s) from a contract supplier after the end of 
the last month for which a rental payment is made to the noncontract 
supplier.
     Provide the supplier's telephone number and instruct the 
beneficiaries to call the supplier with questions regarding 
grandfathering and to notify the supplier of his or her election.
     State that the beneficiary can obtain information about 
the CBP by calling

[[Page 33648]]

1-800-MEDICARE or accessing http://www.medicare.gov on the Internet.
    In Sec.  414.408(j)(i)(B), we propose that the supplier should 
obtain an election from the beneficiary and maintain a record of its 
attempts to communicate with the beneficiary to obtain the 
beneficiary's election regarding grandfathering. We are also proposing 
that the supplier maintain a record of the beneficiary's choice, the 
date on which the choice was made, and how the beneficiary communicated 
his or her choice to the supplier. The 30-day notice to the beneficiary 
must be in writing to ensure that there is a record that the 
notification was made.
    We are proposing to add paragraphs Sec.  414.408(j)(5)(i)(C)(1) 
through (3) which state if the beneficiary chooses not to continue to 
receive a grandfathered item(s) from the noncontract supplier, the 
supplier must provide the beneficiary with 2 additional notices prior 
to picking up its equipment. These notices are described below as the 
10-Day Notification and the 2-Day Notification.
(i) 10-Day Notification
    Ten business days prior to picking up the item, the supplier should 
have direct contact (for example, a phone call) with the beneficiary or 
the beneficiary's caregiver and receive acknowledgement that the 
beneficiary understands their equipment will be picked up and that this 
should occur on the first anniversary date after the start of the CBP 
or another date agreed to by the beneficiary. The noncontract supplier 
must bill and will be paid for the furnishing of the equipment up to 
the first anniversary date after the start of the CBP and the new 
supplier cannot bill for furnishing the equipment prior to this 
anniversary date. This requirement still applies if a date other than 
the anniversary date is chosen.
    The beneficiary's anniversary date occurs every month on the date 
of the month on which the item was first delivered to the beneficiary 
by the current supplier. The anniversary date marks the date of every 
month on which a new monthly rental period begins. For example, using 
July 1 as the beginning date of the Medicare DMEPOS CBP:
     If a beneficiary's last anniversary date before the 
beginning of the CBP is June 29, the noncontract supplier must submit a 
claim for the rental month beginning June 29 and ending July 28. The 
noncontract supplier should not pick up the equipment prior to July 29. 
In this case, the noncontract supplier has been paid up to July 29 and 
therefore should pick up its equipment on July 29, and the contract 
supplier would deliver its equipment on July 29 and begin billing for 
the next month's rental as of that date.
     If a beneficiary's anniversary date is July 1, also the 
beginning date for the CBP, the noncontract supplier should not pick up 
the equipment before July 1 and should not submit a claim for the July 
rental period. The contract supplier should deliver the equipment to 
the beneficiary on July 1 and submit a claim for this month.
    When a DME supplier submits a monthly bill for capped rental DME 
items, the date of delivery (``from'' date) on the first claim must be 
the ``from'' or anniversary date on all subsequent claims for the item. 
For example, if the first claim for a wheelchair is dated September 15, 
all subsequent bills must be dated for the 15th of the following months 
(October 15, November 15, etc.). In cases where the anniversary date 
falls at the end of the month (for example, January 31) and a 
subsequent month does not have a day with the same date (for example, 
February), the final date in the calendar month (for example, February 
28) will be used.
(ii) 2-Day Notification
    Two business days prior to picking up the item, the supplier must 
contact the beneficiary by phone to remind the beneficiary of the date 
the supplier will pick up the item. This supplier should not pick up 
the item before the beneficiary's first anniversary date that occurs 
after the start of the CBP.
    There may be unusual circumstances that make it difficult to 
contact certain beneficiaries. However, we do not expect this to occur 
often because these suppliers have been submitting monthly rental 
claims for providing services to these beneficiaries. Therefore, the 
supplier should have an ongoing relationship with the beneficiary and 
be aware of how to contact them and any changes in their circumstances. 
However, under no circumstance should a supplier pick up a rented item 
prior to the supplier's receiving acknowledgement from the beneficiary 
that they are aware of the date on which the supplier is picking up the 
item and that arrangements have been made to have the item replaced on 
that date by a contract supplier. The pickup of the noncontract 
supplier's equipment and the delivery of the new contract supplier's 
equipment should occur on the same date. The pick up by the noncontract 
supplier and the delivery by the contract supplier should occur on the 
first rental anniversary date of the equipment that occurs after the 
start of the CBP. When a beneficiary chooses to switch to a new 
contract supplier, the current noncontract supplier and the new 
contract supplier must make arrangements that are suitable to the 
beneficiary. This provides some latitude, for the pickup and the 
delivery date but not in terms of billing. The new equipment cannot be 
billed for until the anniversary date and the old equipment cannot be 
taken from the beneficiary before the anniversary date.
c. Notification to CMS for Suppliers That Choose To Become 
Grandfathered
    We are proposing to add Sec.  414.408(j)(5)(ii) to state that 
suppliers that have chosen to become grandfathered suppliers must also 
notify CMS of that decision at least 30 business days before the start 
of the CBP. We believe that 30 business days is a reasonable period to 
allow us to compile a list of grandfathered suppliers and to answer 
questions about the availability of these suppliers. Unless the 
supplier notifies CMS consistent with this subsection, the supplier 
will not be considered a grandfathered supplier. Having a list of 
grandfathered suppliers is important to assist CMS in administering the 
grandfathering process. The list will be used to answer questions from 
beneficiaries concerning which suppliers have chosen the grandfathering 
option. The notification requirement will also help us to ensure that 
suppliers are not offering the grandfathering option to only a select 
number of beneficiaries. Also, having a list of suppliers that have 
chosen to be grandfathered suppliers will assist us in reviewing 
whether only noncontract suppliers that have elected to be 
grandfathered suppliers have received Medicare payment for rented 
competitive bid items in a CBA.
    The notice that a noncontract supplier must provide to CMS if it 
elects to become a grandfathered supplier must meet the following 
requirements:
     State that the supplier agrees to continue to furnish 
certain rented DME, oxygen and oxygen equipment that it is currently 
furnishing to beneficiaries (that is, before the start of the CBP) in a 
CBA and will continue to provide these grandfathered items to these 
beneficiaries for the remaining months of the rental period.
     Include all of the following: Name and address of the 
supplier; 6-digit NSC number of the supplier; and product category(s) 
by CBA for which the supplier is willing to be a grandfathered 
supplier.
     Suppliers with multiple locations must submit one 
notification for the company rather than for each individual location.

[[Page 33649]]

     State that the supplier agrees to meet all the terms and 
conditions applicable to grandfathered suppliers.
     Be provided by the supplier to CMS in writing at least 30 
business days before the start date of the implementation of a CBP.
d. Notifications of Beneficiaries by Suppliers That Choose Not To 
Become Grandfathered Suppliers
    We propose to clarify under Sec.  414.408(j)(6) that a noncontract 
supplier that elects not to become a grandfathered supplier is required 
to pick up the item it is currently renting to the beneficiary from the 
beneficiary's home after proper notice to the beneficiary. A 
noncontract supplier that decides not to become a grandfathered 
supplier does not have the option of leaving its equipment in the 
beneficiary's home. The noncontract supplier is responsible for picking 
up the item from the beneficiary.
    Proper notification by a supplier who chooses not to become a 
grandfathered supplier must include a 30-day, a 10-day, and a 2-day 
notice of its decision not to be a grandfathered supplier. These 
notifications must meet all of the requirements listed above for the 
30-day, 10-day and 2-day notices that must be sent by suppliers who 
decide to be grandfathered suppliers, except for the following 
differences for the 30-day notice.
     The 30-day notice must indicate the items for which the 
supplier has decided not to become a grandfathered supplier and 
indicate the date upon which the equipment will be picked up.
     It must state that the supplier will only continue to rent 
these competitively bid item(s) up to the beneficiary's first 
anniversary date, as defined in Sec.  414.408(j)(5), that occurs after 
the start of the Medicare DMEPOS CBP.
     It must also state that the beneficiary must select a 
contract supplier for Medicare to continue to pay for these items.
     It must state that the beneficiary can obtain information 
about the CBP by calling 1-800-MEDICARE or accessing http://www.medicare.gov on the Internet.
     It must also refer him or her to the supplier locator tool 
on http://www.medicare.gov.
    The supplier must also provide the beneficiary with the 10-day and 
the 2-day notices prior to picking up their equipment.
    When a beneficiary chooses to switch to a new contract supplier, 
the current noncontract supplier and the new contract supplier must 
make arrangements that are suitable to the beneficiary. This provides 
some latitude, but the new equipment may not be billed by the contract 
supplier until the first anniversary date following the start of the 
CBP. Also, the old equipment may not be taken from the beneficiary 
before proper arrangements are made and the date of service cannot 
occur before the anniversary date.
    As discussed above, under no circumstance should a supplier pick up 
the rented item prior to the supplier making an arrangement with the 
new contract supplier for the delivery of the new equipment at a time 
suitable to meet the beneficiary's medical needs. The noncontract 
supplier has been furnishing services to the beneficiary and receiving 
payments from the program. To ensure that the beneficiary has continued 
access to medically necessary equipment, the noncontract supplier is 
expected to assist the beneficiary in locating a contract supplier. The 
noncontract supplier should communicate with the beneficiary the 
urgency of arranging to have the new equipment delivered as soon as 
possible.

P. Physician Fee Schedule Update for CY 2010

    Since 1999, PFS rates have been updated under the sustainable 
growth rate (SGR) system. The general concept under the SGR system is 
that growth in total expenditures for physicians' services should be 
limited to sustainable levels. If expenditures exceed a statutorily 
determined percentage increase amount, the PFS update for the following 
year is reduced. If expenditures are less than the percentage increase 
amount, the PFS update is increased in the following year. There is a 
recognized tendency for physicians to increase the volume and intensity 
of their services over time. Incentives under SGR system were intended 
to encourage physicians to regulate their collective behavior in that 
regard in order to avoid decreases in future updates. The SGR is also a 
cumulative system. The update is adjusted based on a comparison of 
cumulative actual spending to target spending from a base period 
through the current year. Thus, if spending exceeds the target in a 
single year, the following year's update must be adjusted to reduce 
annual expenditures, as well as recoup the difference between target 
and actual spending in the prior year. Under a cumulative system, 
deviations between target and actual spending have the potential to 
result in significantly more payment rate adjustments when actual 
spending exceeds target spending even in a single year. \20\ Further, 
under a cumulative system, past increases in spending levels above the 
target will continue to affect future PFS updates until there have been 
sufficient adjustments to make target and actual spending equal.
---------------------------------------------------------------------------

    \20\ The adjustments to equate allowed and actual spending do 
not occur in a single year. The Balanced Budget Refinement Act of 
1999 specifies a formula that makes the adjustment to account for 
differences between target and actual spending over multiple years.
---------------------------------------------------------------------------

    Despite the intended incentives, actual spending under the SGR 
system has deviated significantly from target spending. In the CY 2004 
PFS final rule with comment period (68 FR 63248), we estimated CY 2003 
allowed expenditures at $71.7 billion and CY 2003 actual expenditures 
at $77.8 billion for a difference of $6.1 billion (or 8.5 percent of 
allowed spending). The cumulative difference between target and actual 
expenditures estimated at the time was $7.8 billion (that is, the $6.1 
billion plus an additional $1.7 billion for past differences between 
target and actual spending since the 1996/1997 base year not previously 
accounted for through adjustments to the PFS update). Under the 
statutory formula, CMS was required to announce a reduction in PFS 
rates of 4.5 percent for CY 2004:

    [T]he negative physician fee schedule update gives us no 
alternative to reducing physician fee schedule rates. Only Congress 
can change the law and avert a reduction in 2004 physician fee 
schedule rates. (68 FR 63239)

    On November 25, 2003, the Congress enacted the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173). The President signed the MMA into law on December 8, 
2003. Section 601 of MMA amended section 1848(d) of the Act to specify 
that the update to the single conversion factor (CF) for CYs 2004 and 
2005 shall not be less than 1.5 percent. Thus, instead of applying an 
update of -4.5 percent in 2004, we applied an increase of 1.5 percent 
to PFS rates. The Congress took similar actions to avert reductions to 
PFS rates for CYs 2006 through 2009. Because the legislation did not 
affect the computation of the levels of allowed and actual expenditures 
for these years, there is now a substantial difference between 
cumulative target and actual spending that must be accounted for 
through future reductions to PFS rates. In a March 1, 2009 letter from 
CMS to the MedPAC, we estimated the difference between cumulative 
target and actual spending from the 1996/1997 base year through 
December 2009 at $69.7 billion. We estimated the PFS update would be

[[Page 33650]]

-21.5 percent for CY 2010. As there are limits to how much PFS rates 
can be reduced in a single year and the estimated -21.5 percent PFS 
update will not fully account for the difference between target and 
actual spending, we are estimating further reductions of between 5 and 
6.5 percent for the next several years.
    Although the Congress has acted to avert reductions in the past 
several years, these projections have led us to reexamine 
administrative actions that the Secretary could take to lessen the 
potential for repeated further reductions in the PFS update. The 
Administration believes that the current Medicare physician payment 
system, while having served to limit spending to a degree, needs to be 
reformed to give physicians appropriate incentives to improve the 
quality and efficiency of the care provided to Medicare beneficiaries. 
As part of health care reform, the Administration supports 
comprehensive, but fiscally responsible, reforms to the physician 
payment formula. Consistent with this goal, the Administration 
announced in the FY 2010 President's Budget that it would explore the 
breadth of options available under current authority to facilitate such 
reforms, including an assessment of whether the cost of physician-
administered drugs should continue to be included in the payment 
formula.
    The statutory formula for calculating the update adjustment factor, 
which includes the SGR, was designed to establish reasonable limits on 
the growth of expenditures on physicians' services, and to provide 
incentives for physicians to keep the growth in expenditures within 
those limits. The SGR system was created by section 4503 of the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33). It replaced the 
predecessor system, the Medicare Volume Performance System (MVPS). 
However, the statutory definition of ``physicians' services'' for 
purposes of the SGR (section 1848(f)(4)(A) of the Act) is the same as 
that used for the MVPS (no longer in existence, but previously at 
section 1848(f)(5)(A) of the Act):

    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 
by a physician or in a physician's office.

Under the MVPS, we defined ``physicians' services'' to include 
physician-administered drugs. Therefore, we adopted the same regulatory 
definition at the outset of the SGR system:

    Because the scope of physicians' services covered by the SGR is 
the same as the scope of services that was covered by the Medicare 
volume performance standards, we are using the same definition of 
physicians' services for the SGR in this notice as we did for the 
Medicare volume performance standards. * * * (63 FR 59188)

    Physician-administered drugs are covered under section 
1861(s)(2)(A) of the Act as ``services and supplies (including drugs 
and biologicals which are not usually self-administered by the patient) 
furnished as an incident to a physician's professional services, of 
kinds which are commonly furnished in physicians' offices.'' Physician-
administered drugs are not paid for under the PFS (56 FR 25800). 
However, in identifying items and services to be included in the 
definition of ``physicians' services'' our ``practice has been to make 
adjustments to the SGR for medical and other health services * * * that 
meet the criterion of being ``commonly performed by a physician or in a 
physician's office'' (66 FR 55316). Because ``incident to'' drugs are 
commonly furnished in physicians' offices, we elected to continue to 
include them in the definition of ``physicians' services'' for the SGR. 
Similarly, clinical diagnostic laboratory tests, which are not paid for 
under the PFS, have always been included in the definition of 
``physicians' services'' for purposes of the SGR.
    Historically, growth in the cost of prescription drugs has far 
outpaced growth in the cost of other physicians' services. From the 1st 
quarter of 1997 through the 1st quarter of 2005, the average annual 
growth in Medicare spending on drugs included in the SGR was 22 percent 
compared to 6 percent for all services (including drugs) included in 
the SGR. As a result, since the inception of the SGR methodology, 
prescription drugs have accounted for an increasingly disproportionate 
amount of the growth in spending on physicians' services. At the time, 
we made the decision to include physician-administered drugs in the 
definition of ``physicians' services'' used to compute the SGR, these 
drugs represented a much smaller volume of Medicare spending than they 
have in subsequent years. In the CY 2003 PFS final rule with comment 
period, we estimated that drugs would represent 7.3 percent of 2001 SGR 
spending (67 FR 80031). In the CY 2006 PFS final rule with comment 
period, we estimated that drugs would represent 9.9 percent of 2004 SGR 
spending. In the CY 2007 PFS final rule with comment period, we stated 
that ``commenters noted that expenditures on these drugs increased from 
$1.8 billion in 1996, to $8.6 billion in 2004'' (71 FR 69755). These 
figures clearly demonstrate that spending on physician-administered 
drugs has been growing at much higher rates than spending for all other 
PFS services and has contributed significantly to the deviation between 
target and actual spending, as well as to the large projected 
reductions in future PFS updates. There could be many reasons for the 
disproportionate growth in expenditures for drugs--many of which we 
could not have anticipated when we decided to include drugs in the SGR. 
In the CY 2006 PFS final rule with comment period (70 FR 70307), we 
summarized public comments on the proposed rule that stated that growth 
in Medicare spending on drugs is driven primarily by the introduction 
of expensive new drugs to the Medicare population and extensive 
marketing (including direct-to-consumer advertising). Given the 
significant and disproportionate impact that the inclusion of drugs has 
had on the SGR system, we believe it would be appropriate to revise the 
definition of physicians' services for purposes of the SGR.
    As previously noted, the statutory definition of ``physicians' 
services'' for purposes of determining allowed expenditures and the SGR 
(section 1848(f)(4)(A) of the Act) states:

    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 
by a physician or in a physician's office.

The statute clarifies that the term ``physicians' services'' includes 
items and services ``specified by the Secretary.'' Therefore, we 
believe the statute provides the Secretary with clear discretion to 
decide whether physician-administered drugs should be included or 
excluded from the definition of ``physicians' services.'' As the 
statute affords the Secretary clear discretion, we are proposing, in 
anticipation of enactment of legislation to provide fundamental reforms 
to Medicare physician payments, to remove physician-administered drugs 
from the definition of ``physicians' services'' in section 
1848(f)(4)(A) of the Act for purposes of computing the SGR and levels 
of allowed expenditures and actual expenditures in all future years.
    Moreover, given the past effect of spending growth for physician-
administered drugs on future PFS updates, in order to effectuate fully 
the Secretary's policy decision to remove drugs from the definition of

[[Page 33651]]

``physicians' services'' in section 1848(f)(4)(A) of the Act, it is 
reasonable to remove drugs from the calculation of allowed and actual 
expenditures for all prior years.
    We note the term ``actual expenditures'' is not defined in the 
statute nor are there any statutory limitations on the Secretary's 
ability to recompute actual expenditures to reflect changes in the 
amount of actual expenditures. On several occasions, we have made 
revisions to the amount of actual expenditures to reflect new 
information regarding spending on physicians' services. For instance, 
in the CY 2002 PFS final rule with comment period (66 FR 55314), we 
indicated that a number of new procedures were inadvertently not 
included in the measurement of actual expenditures beginning in 1998. 
We determined that spending for these codes must be included in actual 
expenditures for historical, current, and future periods. Similarly, in 
the CY 2009 PFS final rule with comment period, we discovered that 
fifteen procedure codes were inadvertently omitted from the measurement 
of actual expenditures beginning in 1998 (73 FR 69902). Again, we 
stated that spending for these codes must be included in actual 
expenditures for historical, current, and future periods.
    Under section 1848(d)(3)(C)(i) of the Act, the level of allowed 
expenditures during the base year (April 1, 1996 through March 31, 
1997) is equal to the actual expenditures for this period. Thus, as 
there are no statutory restrictions on the Secretary's ability to 
recompute actual expenditures to remove the costs associated with 
physician-administered drugs, the Secretary also has authority to 
remove these drugs from the calculation of allowed expenditures during 
the base year. Allowed expenditures in a year are based on the allowed 
expenditures in the prior year, updated by the SGR as specified in 
section 1848(d)(3)(C)(ii) of the Act for FY 1998 through FY 2000, and 
section 1848(d)(4)(C)(iii) for all subsequent years. Thus, once the 
Secretary has revised the level of allowed expenditures during the base 
year (as is authorized under the statute), it is reasonable to carry 
this revision through into all subsequent years. As the statute affords 
the Secretary flexibility to remove drugs from the calculation of 
allowed expenditures retrospectively to the base year, we are proposing 
to remove drugs from the calculation of allowed and actual expenditures 
under sections 1848(d)(3)(C) and 1848(d)(4) of the Act retrospectively 
to the 1996/1997 base year in order to eliminate the disproportionate 
impact that the large past increases in the costs attributable to 
physician-administered drugs would otherwise have upon future PFS 
updates. Further, the proposal would remove drugs from the calculation 
of the SGR beginning with 2010.
    We note that the Secretary may choose not to finalize the proposal 
described above or may choose to modify the proposal in the final rule, 
consistent with rulemaking principles, in light of new policy 
developments, new information, or changed circumstances.
    We currently estimate that the statutory formula used to determine 
the physician update will result in a CY 2010 conversion factor of 
$28.3208 and a PFS update of -21.5 percent. Under this proposal, 
removing physician-administered drugs from allowed and actual 
expenditures for all prior years will not change the projected -21.5 
percent physician payment rate update for services furnished on or 
after January 1, 2010. This proposal would, however, reduce the past 
discrepancy between actual and target expenditures. As a result, it 
would reduce the number of years in which physicians are projected to 
experience a negative update. We note that this proposal does not mean 
that we are making any changes to PFS rates applicable in prior years. 
Rather, we are proposing to remove drugs from the calculation of 
allowed and actual expenditures since the 1996/1997 base year so that 
past year increases in drug spending would have no affect on the 
determination of future PFS rates.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):

A. ICRs Regarding Pulmonary Rehabilitation Program: Conditions for 
Coverage (Sec.  410.47)

    Section 410.47(c) lists the components of a pulmonary 
rehabilitation program. Specifically, Sec.  410.47(c)(3) through (c)(5) 
discuss psychosocial assessments, outcome assessments and 
individualized treatment plans, respectively, and the role of these 
tools in pulmonary rehabilitation programs. The burden associated with 
meeting the requirements for conducting psychosocial assessments, 
outcome assessments, and individualized treatment plans is the time and 
effort necessary for providers to document the necessary information in 
the patient record. While these requirements are subject to the PRA, we 
believe the associated burden is exempt as stated under 5 CFR 
1320.3(b)(2). Psychosocial assessments, outcome assessments and 
individualized treatment plans are routine tools used in pulmonary 
rehabilitation programs and the practice of using these tools is 
generally recognized as an industry standard as part of usual and 
customary business practices.

B. ICRs Regarding Kidney Disease Education Services (Sec.  410.48)

    Proposed Sec.  410.48(f) states qualified persons will develop 
outcomes assessments designed to:
     Measure beneficiary knowledge about chronic kidney disease 
(CKD) and its treatment;
     Assess program effectiveness of preparing the beneficiary 
to make informed decisions about their healthcare options related to 
CKD; and
     Assess program effectiveness in meeting the communication 
needs of underserved populations, including persons with disabilities, 
persons with limited English proficiency, and persons with health 
literacy needs.
    We are proposing that the assessment will be administered to the 
beneficiary during one of the kidney disease education (KDE) sessions 
prescribed by the referring physician. The assessments will be made 
available to CMS upon request.
    The burden associated with these requirements is the time and 
effort necessary to conduct an outcomes assessment, maintain record of 
the

[[Page 33652]]

assessment, and to make the documentation available to CMS upon 
request. At this time, CMS is not able to accurately quantify the 
burden because we cannot estimate the number of entities that must 
comply with these requirements. Additionally, we are trying to 
determine if the use and maintenance of outcome assessments in KDE 
services is a standard industry business practice. Our preliminary 
research gathered during a CMS Open Door Forum held on November 6, 2008 
and a stakeholders meeting hosted by the Agency for Healthcare Research 
and Quality (AHRQ) on December 16, 2008 indicates that outcome 
assessments are used by most but not all of the entities bound by the 
proposed requirements in Sec.  410.48. We welcome comments pertaining 
to this issue and will reevaluate all related PRA burden issues in the 
final rule stage of rulemaking.

C. ICRs Regarding Cardiac Rehabilitation Program and Intensive Cardiac 
Rehabilitation Program: Conditions of Coverage (Sec.  410.49)

    Proposed Sec.  410.49(b)(2) lists the required components of a 
cardiac rehabilitation program. Four of the five required components, 
including cardiac risk factor modification, psychosocial assessments, 
outcomes assessments and individualized treatment plans, impose 
information collection burdens. The burden associated with these 
requirements is the time and effort necessary to providers to customize 
each patient's cardiac risk modification program. Additionally, there 
is burden associated with conducting psychosocial assessments and 
outcome assessments and drafting individualized treatment plans. 
Although section 144(a) of the MIPPA sets forth these information 
collection requirements, we believe the associated information 
collection burden is exempt as stated under 5 CFR 1320.3(b)(2). 
Performing cardiac risk modification, psychosocial assessments, outcome 
assessments, and individualized treatment plans are routine tools used 
in cardiac rehabilitation programs. As stated earlier in the preamble 
of this proposed rule, intensive cardiac rehabilitation programs 
typically involve the same elements as general cardiac rehabilitation 
programs, but are furnished in highly structured environments in which 
sessions of the various components may be combined for longer periods 
of cardiac rehabilitation and also may be more rigorous. The ICRs and 
associated burden are generally recognized as an industry standard as 
part of usual and customary business practices.
    Proposed Sec.  410.49(c)(1) states that to be designated an 
intensive cardiac rehabilitation program, a program in an approved 
setting must apply for designation. To be designated as an intensive 
cardiac rehabilitation program, the program must demonstrate through 
peer-reviewed, published research that it accomplishes one or more of 
the requirements listed in Sec.  410.49(c)(1)(i) through (iv). As 
required by Sec.  410.49(c)(3), sites must demonstrate that patients 
enrolled continue to achieve beneficial outcomes by submitting outcomes 
data annually from the date of approval as an intensive cardiac 
rehabilitation site to ensure that intensive cardiac rehabilitation 
programs maintain the designated quality of rehabilitation.
    The burden associated with the requirements in Sec.  410.49(c) is 
the time and effort necessary for a program to demonstrate through 
peer-reviewed, published research that it accomplishes one or more of 
the requirements listed in Sec.  410.49(c)(1)(i) through (iv) and the 
time and effort necessary to annually submit outcomes data. At this 
time, CMS is not able to accurately quantify the burden because we 
cannot estimate the number of entities that will seek designation as 
intensive cardiac rehabilitation programs. We welcome comments 
pertaining to this issue and will reevaluate all related PRA burden 
issues in the final rule stage of rulemaking.

D. ICRs Regarding Imaging Accreditation (Sec.  414.68)

    Proposed Sec.  414.68(b) contains the application and reapplication 
procedures for accreditation organizations. Specifically, an 
independent accreditation organization applying for approval or 
reapproval of authority to survey suppliers for purposes of accrediting 
suppliers furnishing the technical component (TC) of advanced 
diagnostic imaging services must furnish CMS with all of the 
information listed in proposed Sec.  414.68(b)(1) through (14). The 
requirements include but are not limited to reporting, notification, 
documentation, and survey requirements.
    The burden associated with the proposed collection requirements in 
Sec.  414.68(b) is the time and effort necessary to develop, compile 
and submit the information listed in Sec.  414.68(b)(1) through (14). 
We believe that 3 entities will choose to comply with these 
requirements. We estimate that it will take each of the 3 entities, 80 
hours to submit a complete application for approval or reapproval 
authority to become an accrediting organization approved by CMS.
    Proposed Sec.  414.68(c) contains the information collection 
requirements pertaining to CMS approved accrediting organizations. An 
accrediting organization approved by CMS must undertake all of the 
activities listed in Sec.  414.68(c)(1) through (6). The burden 
associated with the proposed collection requirements in Sec.  414.68(c) 
is the time and effort necessary to develop, compile and submit the 
information listed in Sec.  414.68(c)(1) through (6). We believe that 3 
entities will choose to comply with these requirements. We estimate 
that it will take each of the 3 entities, 80 hours to submit the 
required information on an ongoing basis.
    Proposed Sec.  414.68(d)(1) states that CMS or its contractor may 
conduct an audit of an accredited supplier, examine the results of a 
CMS approved accreditation organization's survey of a supplier, or 
observe a CMS approved accreditation organization's onsite survey of a 
supplier, in order to validate the CMS approved accreditation 
organizations accreditation process. The burden associated with this 
requirement is the time and effort necessary for an accrediting 
organization to comply with the components of the validation audit. 
While this requirement is subject to the PRA, we believe the associated 
burden is exempt as stated in 5 CFR 1320.3(h)(6). The burden associated 
with a request for facts addressed to a single person, as defined in 5 
CFR 1320.3(j), is not subject to the PRA.
    As stated in proposed Sec.  414.68(e)(1), an accreditation 
organization dissatisfied with a determination that its accreditation 
requirements do not provide or do not continue to provide reasonable 
assurance that the suppliers accredited by the organization meet the 
applicable quality standards is entitled to a reconsideration. CMS 
reconsiders any determination to deny, remove, or not to renew the 
approval of deeming authority to an accreditation organization if the 
accrediting organization files a written request for reconsideration by 
its authorized officials or through its legal representative. The 
written request must be filed within 30 calendar days of the receipt of 
CMS' notice of an adverse determination or nonrenewal. In addition, the 
request must also specify the findings or issues with which the 
accreditation organization disagrees and the reasons for the 
disagreement.
    The burden associated with this requirement is the time and effort 
necessary for an accrediting organization to file develop and file 
written request for reconsideration.

[[Page 33653]]

While this requirement is subject to the PRA, the associated burden is 
exempt under 5 CFR 1320.4. The information in question is being 
collected as a result of an administrative action; accrediting 
organizations are submitting requests for reconsideration after 
receiving a notice of an adverse determination or nonrenewal.

E. ICRs Regarding Payment Rules (Sec.  414.408)

    Proposed Sec.  414.408(j)(5) contains the notification requirements 
for suppliers electing to become grandfathered suppliers. Specifically, 
Sec.  414.408(j)(5)(i) states that a noncontract supplier that elects 
to become a grandfathered supplier must provide a 30-day written 
notification to each Medicare beneficiary that resides in a competitive 
bidding area and is currently renting a competitively bid item from 
that supplier. The 30-day notification to the beneficiary must meet the 
requirements as listed in Sec.  414.408(j)(5)(i)(A) through (G).
    Subsequent to the initial 30-day notice to the beneficiary, as 
required by Sec.  414.408(j)(5)(ii), suppliers must also obtain and 
maintain a record of the beneficiary's election choice, the date the 
choice was made, and the manner through which the beneficiary 
communicated his or her choice. Additionally, Sec.  414.408(j)(5)(iii) 
states that if a beneficiary chooses not to continue to receive a 
grandfathered item(s) from his or her current supplier, the supplier 
must provide the beneficiary with two more notices prior to the 
supplier picking up its equipment. The supplier must provide a 10-day 
notification and a 2-day notification. These notification requirements 
must meet the criteria listed in Sec.  414.408(j)(5)(iii)(A) through 
(C).
    Section Sec.  414.408(j)(5)(iv) requires suppliers that elect to 
become grandfathered suppliers to provide a written notification to CMS 
of its election decision. The notification must meet the requirements 
as specified in Sec.  414.408(j)(5)(iv)(A) through (D).
    The burden associated with the information collection requirements 
contained in proposed Sec.  414.408(j)(5) is the time and effort 
necessary for a noncontract supplier to make the aforementioned 
notifications to both beneficiaries and CMS. We estimate that 1,305 
suppliers will elect to become grandfathered suppliers. Similarly, we 
estimate that each grandfathered supplier will need to make an average 
of 53 notifications based on an average of 52 beneficiaries per 
supplier and one notice to CMS. We estimate that it will take 2 hours 
to develop the notification to the beneficiary and 2 hours to develop 
the notification to CMS. Similarly, we estimate that each notification 
will take 15 minutes to send. The total estimated burden associated 
with each of the 1305 suppliers complying with the requirements in 
proposed Sec.  414.408(j)(5) is 17.25 hours per supplier for a total of 
22,511 hours.
    Proposed Sec.  414.408(j)(6) contains the information collection 
requirements pertaining to suppliers that choose not to become 
grandfathered suppliers. A noncontract supplier that elects not to 
become a grandfathered supplier is required to pick up the item it is 
currently renting to the beneficiary from the beneficiary's home after 
proper notification. Proper notification includes a 30-day, a 10-day, 
and a 2-day notice of the supplier's decision not to become a 
grandfathered supplier to its Medicare beneficiaries who are currently 
renting certain DME competitively bid item(s) and who reside in a CBA. 
These notifications must meet all of the requirements listed in 
proposed Sec.  414.408(j)(5)(i) and (ii) for the 30-day, 10-day and 2-
day notices that must be sent by suppliers who decide to be 
grandfathered suppliers. However, there are exceptions regarding the 
30-day notice for noncontract suppliers electing not to become 
grandfathered suppliers. The exceptions are listed in proposed Sec.  
414.408(j)(6)(iii)(A) through (C). In addition, suppliers must also 
comply with the criteria listed in proposed Sec.  414.408(j)(6)(iv).
    The burden associated with the proposed information collection 
requirements in Sec.  414.408(j)(6) is the time and effort necessary 
for a supplier to make the required notifications to beneficiaries. We 
estimate that 145 suppliers will not elect to become grandfathered 
suppliers. Similarly, we estimate that each nongrandfathered supplier 
will need to make an average of 156 notifications based on an average 
of 52 beneficiaries per supplier. We estimate that it will take 2 hours 
to develop the 30-day notification to the beneficiary and 15 minutes to 
send out each notification. The 10-day notification will take 
approximately 15 minutes and the 2-day will take approximately 15 
minutes. We estimate to send out all 3 notifications it will take a 
total of approximately 45 minutes. The total burden associated with the 
requirements in proposed Sec.  414.408(j)(6) is approximately 5,945 
hours.

F. ICRs Regarding Claims for Damages (Sec.  414.425)

    Proposed Sec.  414.425(a) states that any aggrieved supplier, 
including a member of a network that was awarded a contract for the 
Round 1 Durable Medical Prosthetics, Orthotics, and Supplies 
Competitive Bidding Program (DMEPOS CBP), may file a claim under this 
section for certain alleged damages arising out of MIPPA's termination 
of the Round 1 DMEPOS CBP contracts. Section 414.425(b) states that a 
completed claim, including all documentation, must be filed within 90 
days of the effective date of the final rule on damages, unless that 
day is a holiday or Sunday in which case it will revert to the next 
business day. Section 414.425(c) lists the required documentation for 
submitting a claim.
    The burden associated with this requirement is the time and effort 
necessary to gather required documentation as specified in Sec.  
414.425(c) and submit a claim for damages. This requirement is for a 
one-time process that will only impact those suppliers who were awarded 
a contract and were potentially damaged by the termination of their 
contracts by MIPPA. We awarded contracts to 329 suppliers. We expect 
that it will take approximately 3 hours for a supplier to gather the 
necessary documents and to file a claim. We anticipate that anywhere 
between 5 and 250 suppliers may submit a claim for damages.
    While this requirement is subject to the PRA, we believe the 
associated burden is exempt under 5 CFR 1320.4. The information in 
question is being collected as a result of an administrative action; 
suppliers are submitting claims for damages caused by the termination 
of contracts awarded in 2008 under the DMEPOS Competitive Bidding 
program that were terminated as a result of section 154(a)(1)(A)(iv) of 
the MIPPA.

G. ICRs Dispute Resolution and Process for Suspension or Termination of 
Approved CAP Contract and Termination of Physician Participation Under 
Exigent Circumstances (Sec.  414.917)

    As stated in proposed Sec.  414.97, an approved CAP vendor may 
appeal that termination by requesting a reconsideration. A 
determination must be made as to whether the approved CAP vendor has 
been meeting the service and quality obligations of its CAP contract. 
The approved CAP vendor's contract will remain suspended during the 
reconsideration process.

[[Page 33654]]

    The burden associated with this requirement is the time and effort 
necessary for a CAP vendor to request a reconsideration of the 
termination. While this requirement is subject to the PRA, we believe 
the associated burden is exempt under 5 CFR 1320.4. The burden 
associated with collecting information subsequent to an administrative 
action is not subject to the PRA.

H. ICRs Regarding Compendia for Determination of Medically-Accepted 
Indications for Off-Label Uses of Drugs and Biologicals in an Anti-
Cancer Chemotherapeutic Regimen (Sec.  414.930)

    As stated in the definition for a publicly transparent process for 
evaluating therapies in proposed Sec.  414.930(a), a compendium must 
make the following materials available to the public on its Web site, 
coincident with the compendium's publication of the related 
recommendation:
    (i) The application for inclusion of a therapy including criteria 
used to evaluate the request.
    (ii) A listing of all the evidentiary materials reviewed or 
considered by the compendium pursuant to the application.
    (iii) A listing of all individuals (and their affiliations and 
sources of financial support) who have substantively participated in 
the development of compendia recommendations.
    (iv) Transcripts of meetings and records of the votes, including 
abstentions, related to the therapeutic recommendation on the 
application.
    The definition for a publicly transparent process for identifying 
conflicts of interests in proposed Sec.  414.930(a), states that a 
compendium must make the following materials available to the public, 
coincident with the compendium's publication of the related 
recommendation:
    (i) Direct or indirect financial relationships that exist between 
individuals who have substantively participated in the development of 
compendia recommendations and the applicant (for example, the 
manufacturer or seller of the drug or biological being reviewed by the 
compendium). This may include compensation arrangements such as salary, 
grant, contract, or collaboration agreements between individuals who 
have substantively participated in the development of compendia 
recommendations.
    (ii) Ownership or investment interests of individuals who have 
substantively participated in the development of compendia 
recommendations and the applicant (for example, the manufacturer or 
seller of the drug or biological being reviewed by the compendium).
    The requirements in proposed Sec.  414.930(a) constitute third-
party disclosures. While third-party disclosures are subject to the 
PRA, we believe the associated burden is exempt under 5 CFR 
1320.3(c)(4). Less than 10 persons or entities within a 12-month period 
will be required to comply.

                          Table 37--Estimated Annual Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                                                    Burden per     Total annual
     Regulation section(s)       OMB control No.    Respondents      Responses       response         burden
                                                                                      (hours)         (hours)
----------------------------------------------------------------------------------------------------------------
Sec.   414.68(b)..............  0938-New........               3               3              80             240
Sec.   414.68(c)..............  0938-New........               3               3              80             240
Sec.   414.408(j)(5)..........  0938-New........            1305          69,165           17.25          22,511
Sec.   414.408(j)(6)..........  0938-New........             145          22,620              41           5,945
    Total.....................  ................  ..............  ..............  ..............          28,936
----------------------------------------------------------------------------------------------------------------

    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this proposed rule; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
[CMS-1413-P]; Fax: (202) 395-6974; or E-mail: OIRA_submission@omb.eop.gov.

Additional Information Collection Requirements

    This proposed rule imposes collection of information requirements 
as outlined in the regulation text and specified above. However, this 
proposed rule also makes reference to several associated information 
collections that are not discussed in the regulation text contained in 
this document. The following is a discussion of these information 
collections, some of which have already received OMB approval.

Part B Drug Payment

    The discussion of average sales price (ASP) issues in section 
II.H.1 of this proposed rule does not contain any new information 
collection requirements with respect to 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 ASP 
reporting requirements are set forth in section 1927(b) of the Act. 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. A revision of the 
currently approved information collection request is currently under 
review at OMB.

Competitive Acquisition Program (CAP)

    Section II.H.2. of this proposed rule discusses issues related to 
the competitive acquisition program for Part B drug payment. There are 
no new information collection requirements associated with the CAP; 
however, there are several previously approved information collection 
requests (ICR) associated with the CAP.

                      Table 38--OMB Control Numbers
------------------------------------------------------------------------
                                            OMB control     Expiration
            Program component                 number           date
------------------------------------------------------------------------
Medicare Part B Drug and Biological CAP.       0938-0954      06/30/2011

[[Page 33655]]

 
Medicare Part B Drug and Biological            0938-0955      08/31/2009
 Competitive Acquisition Program
 Applications \1\.......................
Competitive Acquisition Program (CAP)          0938-0987     12/31/2011
 for Medicare Part B Drugs: CAP
 Physician Election Agreement...........
------------------------------------------------------------------------
\1\ An extension of the currently approved ICR is currently in the
  middle of the mandatory 60-day Federal Register notice and comment
  period. The ICR will be submitted to OMB for review and approval prior
  to the expiration date.

Physician Quality Reporting Initiative (PQRI)

    Section II.G.2. of this proposed rule discusses the background of 
the PQRI, provides information about the measures proposed to be 
available to eligible professionals who choose to participate in the 
2010 PQRI, and the proposed criteria for satisfactory reporting in 
2010. Beginning on January 1, 2010, the Secretary is also required by 
section 1848(m)(3)(C) of the Act, to 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 under the PQRI.
    With respect to satisfactory submission of data on quality measures 
by eligible professionals, 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 2010, the eligible professional must meet one of 
the criteria for satisfactory reporting described in sections II.G.2.e. 
and II.G.2.f. of this proposed rule.
    For individual eligible professionals, 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 believe it is difficult 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.
    We believe the burden associated with participating in PQRI has 
declined for those familiar with the program and who have 
satisfactorily participated in the 2007 PQRI and/or the 2008 PQRI. 
However, because we anticipate even greater participation in the 2010 
PQRI, including participation by eligible professionals who are 
participating in PQRI for the first time in 2010, we will assign 3 
hours as the amount of time needed for eligible professionals to review 
the list of PQRI quality measures, identify the applicable measures for 
which they can report the necessary information, review the measure 
specifications for those measures applicable to the eligible 
professional, and incorporate the use of quality data codes for the 
measures on which the eligible professional plans to report into the 
office work flows. Information from the Physician Voluntary Reporting 
Program (PVRP), which was a predecessor to the PQRI, indicated an 
average labor cost of $50 per hour. To account for salary increases 
over time, we will use an average practice labor cost of $55 per hour 
in our estimates based on an assumption of an average annual increase 
of approximately 3 percent. Thus, we estimate the cost for an eligible 
professional to review the list of PQRI quality measures, identify the 
applicable measures for which they can report the necessary 
information, review the measure specifications for those measures 
applicable to the eligible professional, and incorporate the use of 
quality data codes for the measures on which the eligible professional 
plans to report into the office work flows to be approximately $165 per 
eligible professional ($55 per hour x 3 hours).
    We continue to 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 2010.
    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 2010. Information from the ``PQRI 2007 
Reporting Experience Report,'' which is available on the PQRI section 
of the CMS Web site at http://www.cms.hhs.gov/PQRI, indicates that 
nearly 110,000 unique TIN/NPI combinations attempted to submit PQRI 
quality measures data via claims for the 2007 PQRI. Therefore, for 
purposes of conducting a burden analysis for the 2010 PQRI, we will 
assume that all eligible professionals who attempted to participate in 
the 2007 PQRI will also attempt to participate in the 2010 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 continue to 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/

[[Page 33656]]

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 is reported. 
Since we propose to require eligible professionals to report at least 
one of their selected measures for at least 15 Medicare Part B FFS 
patients in order to satisfactorily report, then, for this burden 
analysis, we will assume that for each measure, the eligible 
professional reports the quality data codes on 15 cases. The actual 
number of cases on which an eligible professional would be required to 
report quality measures data will vary, however, with the eligible 
professional's patient population and the types of measures on which 
the eligible professional chooses to report (each measure's 
specifications includes a required reporting frequency).
    Based on the assumptions discussed above, we estimate the total 
annual burden per eligible professional associated with claims-based 
reporting to range from 191.25 minutes, or 3.2 hours [(0.25 minutes per 
measure x 3 measures x 15 cases per measure) + 3 hours] to 720 minutes, 
or 12 hours [(12 minutes per measure x 3 measures x 15 cases per 
measure) + 3 hours]. We estimate the total annual cost per eligible 
professional associated with claims-based reporting to range from 
$174.45 [($0.21 per measure x 3 measures x 15 cases per measure) + 
$165] to $617.70 [($10.06 per measure x 3 measures x 15 cases per 
measure) + $165].
    For registry-based reporting, there would be no additional burden 
for eligible professionals to report data to a registry as eligible 
professionals opting for registry-based reporting would more than 
likely 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 2010 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 in 2010 would need to complete a self-nomination 
process in order to be considered ``qualified'' to submit on behalf of 
eligible professionals unless the registry was qualified to submit on 
behalf of eligible professionals for the 2009 PQRI and did so 
successfully. We estimate that the proposed self-nomination process for 
qualifying additional registries to submit on behalf of eligible 
professionals for the 2010 PQRI involves approximately 1 hour per 
registry to draft the letter of intent for self-nomination. It is 
estimated that each self-nominated entity will also spend 2 hours for 
the interview with CMS officials and 2 hours for the development of a 
measure flow. However, the time it takes to complete the measure flow 
could vary depending on the registry's experience. Additionally, part 
of the self-nomination process involves the completion of an XML 
submission by the registry, which is estimated to take approximately 5 
hours, but may vary depending on the registry's experience. We estimate 
that the registry staff involved in the registry self-nomination 
process have an average labor cost of $50 per hour. Therefore, assuming 
the total burden hours per registry associated with the registry self-
nomination process is 10 hours, we estimate the total cost to a 
registry associated with the registry self-nomination process to be 
approximately $500 ($50 per hour x 10 hours per registry).
    The burden associated with the registry-based reporting 
requirements of this voluntary reporting initiative is the time and 
effort associated with the registry calculating quality measure results 
from the data submitted to the registry by its participants and 
submitting the quality measures results and numerator and denominator 
data on quality measures to CMS on behalf of their participants. The 
time needed for a registry to review the quality measures and other 
information, calculate the measures results, and submit the measures 
results and numerator and denominator data on the quality measures on 
their participants behalf is expected to vary along with the number of 
eligible professionals reporting data to the registry and the number of 
applicable measures. However, we believe that registries already 
perform many of these activities for their participants. The number of 
measures that the registry intends to report to CMS and how similar the 
registry's measures are to CMS' PQRI measures will determine the time 
burden to the registry.
    For EHR-based reporting, the eligible professional must review the 
quality measures on which we will be accepting PQRI data extracted from 
EHRs, select the appropriate quality measures, extract the necessary 
clinical data from his or her EHR, and submit the necessary data to the 
CMS-designated clinical data warehouse. Because this manner of 
reporting quality data to CMS would be new to PQRI for 2010 and 
participation in this reporting initiative is voluntary, we believe it 
is difficult to estimate with any degree of accuracy how many eligible 
professionals will opt to participate in the PQRI through the EHR 
mechanism in CY 2010. The time needed for an eligible professional to 
review the quality measures and other information, select measures 
applicable to his or her patients and the services he or she furnishes 
to them is expected to be similar for EHR-based reporting and claims-
based reporting (that is, 3 hours). Once the EHR is programmed by the 
vendor to allow data submission to CMS, the burden to the eligible 
professional associated with submission of data on PQRI quality 
measures should be minimal.
    An EHR vendor interested in having their product(s) be used by 
eligible professionals to submit quality measures results and numerator 
and denominator data on quality measures to CMS were required to 
complete a self-nomination process in order for the vendor's product(s) 
to be considered ``qualified'' for 2010. We are unable to accurately 
quantify the burden associated with the EHR self-nomination process as 
there is variation regarding the technical capabilities and experience 
among vendors. For purposes of this burden analysis, however, we 
estimate that the time required for an EHR vendor to complete the self-
nomination process will be similar to the time required for registries 
to self-nominate that is approximately 10 hours at $50 per hour for a 
total of $500 per EHR vendor ($50 per hour x 10 hours per EHR vendor).
    The burden associated with the EHR-based reporting requirements of 
this voluntary reporting initiative is the time and effort associated 
with the EHR vendor programming its EHR product(s) to extract the 
clinical data that the eligible professional needs to submit to CMS for 
purposes of reporting 2010 PQRI quality measures. The time needed for 
an EHR vendor to review the quality measures and other information

[[Page 33657]]

and program each qualified EHR product to enable eligible professionals 
to submit PQRI quality measures data to the CMS-designated clinical 
data warehouse will be dependent on the EHR vendor's familiarity with 
PQRI, the vendor's system capabilities, as well as the vendor's 
programming capabilities. Some vendors already have these necessary 
capabilities and for such vendors, we estimate the total burden hours 
to be 40 hours at a rate of $50 per hour for a total burden estimate of 
$2,000 ($50 per hour x 40 hours per vendor). However, given the 
variability in the capabilities of the vendors, we believe a more 
conservative estimate for those vendors with minimal experience would 
be approximately 200 hours at $50 per hour, for a total estimate of 
$10,000 per vendor ($50 per hour x 200 hours per EHR vendor).
    With respect to the proposed process for group practices to be 
treated as satisfactorily submitting quality measures data under the 
2010 PQRI discussed in section II.G.2. of this proposed rule, group 
practices interested in participating in the 2010 PQRI through the 
group practice reporting option would need to complete a self-
nomination process similar to the self-nomination process required of 
registries and EHR vendors. Therefore, we estimate that the proposed 
self-nomination process for the group practices for the 2010 PQRI 
involves approximately 2 hours per group practice to draft the letter 
of intent for self-nomination, gather the requested TIN and NPI 
information, and provide this requested information. It is estimated 
that each self-nominated entity will also spend 2 hours undergoing the 
vetting process with CMS officials. We assume that the group practice 
staff involved in the group practice self-nomination process have an 
average practice labor cost of $55 per hour. Therefore, assuming the 
total burden hours per group practice associated with the group 
practice self-nomination process is 4 hours, we estimate the total cost 
to a group practice associated with the group practice self-nomination 
process to be approximately $220 ($55 per hour x 4 hours per group 
practice).
    The burden associated with the group practice reporting 
requirements of this voluntary reporting initiative is the time and 
effort associated with the group practice submitting the quality 
measures data. For physician group practices, this would be the time 
associated with the physician group completing the proposed data 
collection tool. The information collection components of this data 
collection tool have been reviewed by OMB and are currently approved 
under OMB control number 0938-0941, with an expiration date of December 
31, 2011, for use in the Physician Group Practice, Medicare Care 
Management Performance (MCMP), and EHR demonstrations. Based on burden 
estimates for the PGP demonstration, which uses the same data 
submission methods as what we have proposed, we estimate the burden 
associated with a physician group completing the data collection tool 
would be approximately 79 hours per physician group. Therefore, we 
estimate the total annual burden hours per physician group would be 
approximately 83 hours (4 hours for self-nomination + 79 hours for data 
submission). Based on an average labor cost of $55 per physician group, 
we estimate the cost per physician group associated with participating 
in the proposed PQRI group practice reporting option would be $4,565 
($55 per hour x 83 hours per group practice).
    We invite comments on this burden analysis, including the 
underlying assumptions used in developing our estimates.

The Electronic Prescribing (E-Prescribing) Incentive Program

    We believe it is difficult to estimate with any degree of accuracy 
how many eligible professionals will opt to participate in the E-
Prescribing Incentive Program in CY 2010. Information from the ``PQRI 
2007 Reporting Experience Report,'' which is available on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/PQRI, indicates 
that nearly 110,000 unique TIN/NPI combinations attempted to submit 
PQRI quality measures data via claims for the 2007 PQRI. Therefore, for 
purposes of conducting a burden analysis for the 2010 E-Prescribing 
Incentive Program, we will assume that as many eligible professionals 
who attempted to participate in the 2007 PQRI will attempt to 
participate in the 2010 E-Prescribing Incentive Program. As such, we 
can estimate that nearly 110,000 unique TIN/NPI combinations will 
participate in the 2010 E-Prescribing Incentive Program.
    Section II.G.5. of this proposed rule discusses the background of 
the E-Prescribing Incentive Program. Section II.G.5.c. of this proposed 
rule provides information on how we propose eligible professionals can 
qualify to be considered a successful e-prescriber in 2010 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 e-
prescriber described in section II.G.5.c. of this proposed rule, they 
can qualify to receive an incentive payment for 2010.
    For the 2010 E-Prescribing Incentive Program, as discussed in 
section II.G.5. of this proposed rule, we propose that each eligible 
professional would need to report the G-code indicating that at least 
one prescription generated during an encounter was electronically 
submitted at least 25 instances during the reporting period. Similar to 
PQRI, this measure would be reportable through claims-based reporting, 
registry-based reporting, or through EHRs, if we finalize the proposed 
EHR-based reporting mechanism for PQRI.
    Similar to claims-based reporting for the PQRI, we estimate that 
the burden associated with the requirements of this new incentive 
program is the time and effort associated with eligible professionals 
determining whether the electronic prescribing quality measure applies 
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. We expect the ongoing costs 
associated with participation in the E-Prescribing Incentive Program to 
decline based on an eligible professional's familiarity with and 
understanding of the E-Prescribing Incentive Program, experience with 
participating in the E-Prescribing Incentive Program, and increased 
efforts by CMS and stakeholders to disseminate useful educational 
resources and best practices. 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 their office 
work flows. At an average cost of approximately $55 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 $55 ($55 per hour x 1 
hour).
    For claims-based reporting, 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

[[Page 33658]]

changes to the 837-P or CMS Form 1500 for CY 2010.
    Based on our experience with the PVRP described in section II.G.5. 
of this proposed rule, 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.
    Based on our proposed criteria for determination of whether an 
eligible professional is a successful e-prescriber, we estimate that 
each eligible professional would report the electronic prescribing 
measure in 25 instances during the reporting period.
    Therefore, we estimate the total annual burden per eligible 
professional who chooses to participate in the 2010 E-Prescribing 
Incentive Program through claims-based reporting of the electronic 
prescribing measure to be 104 minutes, or 1.73 hours [(1.75 minutes per 
measure x 1 measure x 25 cases per measure) + 1 hour]. The total 
estimated cost per eligible professional to report the electronic 
prescribing measure is estimated to be $77.50 [($0.90 per measure x 1 
measure x 25 cases per measure) + $55].
    Because registry-based reporting of the electronic prescribing 
measure to CMS would be new for 2010 and participation in this 
reporting initiative is voluntary, it is impossible to estimate with 
any degree of accuracy how many eligible professionals will opt to 
participate in the E-Prescribing Incentive Program through the 
registry-based reporting mechanism in CY 2010. We do not anticipate, 
however, any additional burden for eligible professionals to report 
data to a registry as eligible professionals opting for registry-based 
reporting would more than likely 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 2010 E-Prescribing 
Incentive Program. However, eligible professionals would need to 
authorize or instruct the registry to submit quality measures results 
and numerator and denominator data on the electronic prescribing 
measure 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 
the electronic prescribing measure to CMS on their behalf.
    Based on our proposal to consider only registries qualified to 
submit quality measures results and numerator and denominator data on 
quality measures to CMS on their participants' behalf for the 2010 PQRI 
to be qualified to submit results and numerator and denominator data on 
the electronic prescribing measure for the 2010 E-Prescribing Incentive 
Program, there would be no need for a registry to undergo a separate 
self-nomination process for the E-Prescribing Incentive Program and 
therefore, no additional burden associated with the registry self-
nomination process.
    The burden associated with the registry-based reporting 
requirements of this voluntary reporting initiative is the time and 
effort associated with the registry calculating results for the 
electronic prescribing measure from the data submitted to the registry 
by its participants and submitting the quality measures results and 
numerator and denominator data on the electronic prescribing quality 
measure to CMS on behalf of their participants. The time needed for a 
registry to review the electronic prescribing measure and other 
information, calculate the measure's results, and submit the measure's 
results and numerator and denominator data on the measure on their 
participants behalf is expected to vary along with the number of 
eligible professionals reporting data to whom the measure applies. 
However, we believe that registries already perform many of these 
activities for their participants. Since the E-Prescribing Incentive 
Program consists of only one measure, we believe that the burden 
associated with the registry reporting the measure's results and 
numerator and denominator to CMS on behalf of their participants would 
be minimal.
    For EHR-based reporting, the eligible professional must review the 
electronic prescribing measure, extract the necessary clinical data 
from his or her EHR, and submit the necessary data to the CMS-
designated clinical data warehouse. Because this manner of reporting 
quality data to CMS would be new for 2010 and participation in this 
reporting initiative is voluntary, it is impossible to estimate with 
any degree of accuracy how many eligible professionals will opt to 
participate in the E-Prescribing Incentive Program through the EHR-
based reporting mechanism in CY 2010. The time needed for an eligible 
professional to review the electronic prescribing measure and other 
information and determine whether the measure is applicable to his or 
her patients and the services he or she furnishes to them is expected 
to be similar for EHR-based reporting and claims-based reporting (that 
is, 1 hour). Once the EHR is programmed by the vendor to allow data 
submission to CMS, the burden to the eligible professional associated 
with submission of data on the electronic prescribing measure should be 
minimal.
    Based on our proposal to consider only EHR products qualified for 
the 2010 PQRI to be qualified for the 2010 E-Prescribing Incentive 
Program, there would be no need for EHR vendors to undergo a separate 
self-nomination process for the E-Prescribing Incentive Program and 
therefore, no additional burden associated with the self-nomination 
process.
    The burden associated with the EHR-based reporting requirements of 
this voluntary reporting initiative is the time and effort associated 
with the EHR vendor programming its EHR product(s) to extract the 
clinical data that the eligible professional needs to submit to CMS for 
purposes of reporting the 2010 electronic prescribing measure. The time 
needed for an EHR vendor to review the measure and other information 
and program each qualified EHR product to enable eligible professionals 
to submit data on the measure to the CMS-designated clinical data 
warehouse will be dependent on the EHR vendor's familiarity with the 
electronic prescribing measure, the vendor's system capabilities, as 
well as the vendor's programming capabilities. Since only EHR products 
qualified for the 2010 PQRI would be qualified for the 2010 E-
Prescribing Incentive Program and the E-Prescribing Incentive Program 
consists of only one measure, we believe that any burden associated 
with the EHR vendor to program its product(s) to enable eligible 
professionals to submit data on the electronic prescribing measure to 
the CMS-designated clinical data warehouse would be minimal.
    Finally, with respect to the proposed process for group practices 
to be treated as successful e-prescribers under the 2010 E-Prescribing 
Incentive Program discussed in section II.G.5. of this proposed rule, a 
group practice would be required to report the electronic prescribing 
measure in at least 2500 instances. Group practices have the same 
options as individual eligible professionals in terms of the form and 
manner for reporting the electronic prescribing measure (that is, group 
practices have the option of reporting the measure through claims, a 
qualified registry, or a qualified EHR product). The only difference 
between an individual eligible professional and group practice 
reporting of the

[[Page 33659]]

electronic prescribing measure is the number of times that a group 
practice is required to report the electronic prescribing measure. For 
group practices who are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and 
choose to do so through claims-based reporting of the electronic 
prescribing measure, we estimate the total annual burden to be 73.92 
hours [(1.75 minutes per measure x 1 measure x 2500 cases per measure) 
+ 1 hour]. The total estimated cost per group practice to report the 
electronic prescribing measure through claims-based reporting is 
estimated to be $2,305 [($0.90 per measure x 1 measure x 2500 cases per 
measure) + $55].
    For group practices who are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and 
choose to do so through registry-based reporting of the electronic 
prescribing measure, we do not anticipate any additional burden to 
report data to a registry as group practices opting for registry-based 
reporting would more than likely 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 2010 E-Prescribing 
Incentive Program. However, group practices would need to authorize or 
instruct the registry to submit quality measures results and numerator 
and denominator data on the electronic prescribing measure to CMS on 
their behalf. We estimate that the time and effort associated with this 
would be approximately 5 minutes for each group practice that wishes to 
authorize or instruct the registry to submit quality measures results 
and numerator and denominator data on the electronic prescribing 
measure to CMS on their behalf.
    For group practices who are selected to participate in the 2010 E-
Prescribing Incentive Program group practice reporting option and 
choose to do so through EHR-based reporting of the electronic 
prescribing measure, once the EHR is programmed by the vendor to allow 
data submission to CMS, the burden to the group practice associated 
with submission of data on the electronic prescribing measure should be 
minimal.
    In addition to the burden associated with group practices reporting 
the electronic prescribing measure, group practices would also be 
required to self-nominate in order to participate in the 2010 E-
Prescribing Incentive Program under the group practice reporting 
option. Since we propose to limit participation in the E-Prescribing 
Incentive Program group practice reporting option to those group 
practices selected to participate in the PQRI group practice reporting 
option, there would not be a separate group practice self-nomination 
process for the E-Prescribing Incentive Program and, thus, no 
additional burden.
    We invite comments on this burden analysis, including the 
underlying assumptions used in developing our burden estimates.

IV. 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.

V. Regulatory Impact Analysis

    We have examined the impacts 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 (Pub. L. 104-
4), Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Order 12866 (as amended by Executive Order 13258) 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). We estimate, as discussed below in this section, that 
the PFS provisions included in this proposed rule 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 
Review Act. Accordingly, we have prepared a Regulatory Impact Analysis 
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). The great majority of hospitals and most other health 
care providers and suppliers are small entities, either by being 
nonprofit organizations or by meeting the Small Business Administration 
(SBA) definition of a small business (having revenues of $7 million to 
$34.5 million in any 1 year) (for details see the SBA's Web site at 
http://sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (refer to the 620000 series).
    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 over 1 
million 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 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 (FFS) and $2.5 billion was for managed 
care.
    For purposes of the RFA, approximately 80 percent of clinical 
diagnostic laboratories are considered small businesses according to 
the SBA size standards.

[[Page 33660]]

    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 note 
that a considerable number of ESRD facilities are owned and operated by 
large dialysis organizations (LDOs) or regional chains, which would 
have total revenues more than $34.5 million in any year if revenues 
from all locations are combined. However, the claims data we use to 
estimate payments for this RFA and RIA does not identify which dialysis 
facilities are parts of an LDO, regional chain, or other type of 
ownership. Each individual dialysis facility has its own provider 
number and bills Medicare using this number. Therefore, we consider 
each ESRD to be a small entity for purposes of the RFA. We consider a 
substantial number of entities to be significantly affected if the 
proposed rule has an annual average impact on small entities of 3 to 5 
percent or more. The majority of ESRD facilities will experience 
impacts of less than 2 percent of total revenues. There are 929 
nonprofit ESRD facilities with a combined increase of 0.9 percent in 
overall payments relative to current overall payments. 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 and elsewhere in this proposed rule complies with the RFA 
requirements.
    Because we acknowledge that many of the affected entities are small 
entities, the analysis discussed throughout the preamble of this 
proposed rule constitutes our regulatory flexibility analysis for the 
remaining provisions and addresses comments received on these issues.
    In addition, 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. Any 
such regulatory impact analysis must conform to the provisions of 
section 603 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a metropolitan statistical area and has fewer than 100 beds. We do not 
believe this proposed rule has impact on significant operations of a 
substantial number of small rural hospitals because most dialysis 
facilities are freestanding. While there are 177 rural hospital-based 
dialysis facilities, we do not know how many of them are based at 
hospitals with fewer than 100 beds. However, overall, the 177 rural 
hospital-based dialysis facilities will experience an estimated 1.1 
percent increase in payments. As a result, this rule will not have a 
significant impact on small rural hospitals. Therefore, the Secretary 
has determined that this proposed rule will not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.
    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 2009, that 
threshold is approximately $133 million. This proposed rule will not 
mandate any requirements for State, local, or Tribal governments. 
Medicare beneficiaries are considered to be part of the private sector 
and as a result a more detailed discussion is presented on the Impact 
of Beneficiaries in section V. of this regulatory impact analysis.
    We have examined this proposed rule in accordance with Executive 
Order 13132 and have determined that this regulation would not have any 
substantial direct effect on State or local governments, preempt 
States, or otherwise have a Federalism implication.
    We have prepared the following analysis, which together with the 
information provided in the rest of this preamble, meets all assessment 
requirements. The analysis explains the rationale for and purposes of 
this proposed rule; details the costs and benefits of the rule; 
analyzes alternatives; and presents the measures we 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 proposed rule. We are unaware of any relevant Federal 
rules that duplicate, overlap, or conflict with this proposed rule. The 
relevant sections of this rule contain a description of significant 
alternatives if applicable.

A. RVU Impacts

1. Resource-Based Work PE and MP 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.
    Our estimates of changes in Medicare revenues for PFS services 
compare payment rates for CY 2009 with proposed payment rates for CY 
2010 using CY 2008 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 39. 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 39 shows only the payment impact on PFS services. The 
following is an explanation of the information represented in Table 39
     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 Proposed Work RVU changes for the CY 2010 PFS.
     Impact of Proposed PE RVU changes for the CY 2010 PFS.
     Impact of Proposed MP RVU changes for the CY 2010 PFS.
     Combined Impact of all Proposed Changes. The impact shown 
is a combined impact that incorporates all proposed changes to Work 
RVUs, PE RVUs, and MP RVUs, prior to the

[[Page 33661]]

application of the CY 2010 negative PFS CF update under the current 
statute.

       Table 39--CY 2010 Total Allowed Charge Impact for Work, Practice Expense, and Malpractice Changes *
----------------------------------------------------------------------------------------------------------------
                                                  Impact of work   Impact of PE    Impact of MP
            Specialty                 Allowed       RVU changes    RVU changes**    RVU changes      Combined
                                   charges (mil)        (%)             (%)             (%)         impact (%)
(A)                                          (B)  ..............             (C)             (D)             (E)
                                 -------------------------------------------------------------------------------
 1 TOTAL........................         $77,744               0               1               0               1
 2 ALLERGY/IMMUNOLOGY...........             171               0               0              -2              -3
 3 ANESTHESIOLOGY...............           1,713               0               5               1               6
 4 CARDIAC SURGERY..............             371              -1              -1               3              -2
 5 CARDIOLOGY...................           7,179               0             -10              -1             -11
 6 COLON AND RECTAL SURGERY.....             129              -1               5               1               5
 7 CRITICAL CARE................             221               0               3               1               3
 8 DERMATOLOGY..................           2,504               0               2               0               3
 9 EMERGENCY MEDICINE...........           2,395               0               2               0               2
10 ENDOCRINOLOGY................             370              -1               3               0               3
11 FAMILY PRACTICE..............           5,055               2               5               1               8
12 GASTROENTEROLOGY.............           1,779              -1               1               0               0
13 GENERAL PRACTICE.............             719               1               5               0               6
14 GENERAL SURGERY..............           2,213              -1               4               1               4
15 GERIATRICS...................             167               1               6               1               8
16 HAND SURGERY.................              89              -1               4               0               3
17 HEMATOLOGY/ONCOLOGY..........           1,888               0              -5              -1              -6
18 INFECTIOUS DISEASE...........             549              -1               4               1               3
19 INTERNAL MEDICINE............          10,061               1               4               1               6
20 INTERVENTIONAL PAIN                       352              -1               7               0               6
 MANAGEMENT.....................
21 INTERVENTIONAL RADIOLOGY.....             227               0             -10               0             -10
22 NEPHROLOGY...................           1,789               0               1               1               2
23 NEUROLOGY....................           1,417              -2               6               0               3
24 NEUROSURGERY.................             586              -1               3               1               2
25 NUCLEAR MEDICINE.............              72               0             -12              -2             -13
26 OBSTETRICS/GYNECOLOGY........             615               0               1               0               1
27 OPHTHALMOLOGY................           4,736               0              11               0              11
28 ORTHOPEDIC SURGERY...........           3,257               0               4               0               3
29 OTOLARNGOLOGY................             926              -1               3              -1               1
30 PATHOLOGY....................             985               0              -1               0               0
31 PEDIATRICS...................              64               1               4               0               4
32 PHYSICAL MEDICINE............             816               0               7               0               7
33 PLASTIC SURGERY..............             278              -1               5               1               5
34 PSYCHIATRY...................           1,071               0               2               1               3
35 PULMONARY DISEASE............           1,753              -1               3               1               3
36 RADIATION ONCOLOGY...........           1,799               0             -17              -1             -19
37 RADIOLOGY....................           5,254               0             -10              -1             -11
38 RHEUMATOLOGY.................             494               0               0               0              -1
39 THORACIC SURGERY.............             389              -1               0               3               2
40 UROLOGY......................           1,989               0              -6               0              -7
41 VASCULAR SURGERY.............             685              -1              -1               0              -1
42 AUDIOLOGIST..................              35               0              -4              -7             -10
43 CHIROPRACTOR***..............             700               0               4               1               5
44 CLINICAL PSYCHOLOGIST........             533               0              -7               0              -7
45 CLINICAL SOCIAL WORKER.......             353               0              -6               1              -6
46 NURSE ANESTHETIST............             772               0               2               0               2
47 NURSE PRACTITIONER...........           1,004               1               5               1               7
48 OPTOMETRY....................             834               1              11               0              12
49 ORAL/MAXILLOFACIAL SURGERY...              35              -1               3              -1               1
50 PHYSICAL/OCCUPATIONAL THERAPY           1,857               0              10               0              10
51 PHYSICIAN ASSISTANT..........             749               0               4               0               5
52 PODIATRY.....................           1,656               1               7              -1               6
53 DIAGNOSTIC TESTING FACILITY..           1,044               0             -19              -5             -24
54 INDEPENDENT LABORATORY.......             960               0              -4              -1              -5
55 PORTABLE X-RAY SUPPLIER......              85               0              -8              -2            -11
----------------------------------------------------------------------------------------------------------------
* Does not include the impact of the current law CY 2010 negative update. Rows may not sum to total due to
  rounding.
** Note: The law caps the MFS imaging payment amount at the comparable payment amount in the hospital outpatient
  payment system (OPPS cap). In the absence of the negative current law CY 2010 MFS update, the proposed PE
  change to the equipment utilization rate for expensive equipment from 50 percent to 90 percent would increase
  expenditures by approximately 1 percent due to a loss of savings from the OPPS cap.
*** Does not reflect the BN reduction in payments resulting from the chiropractic demonstration.


[[Page 33662]]

2. Resource-Based Work, PE, and MP RVUs Impacts
a. Work RVU Impacts
    The work RVU impacts are almost entirely attributable to the 
proposed changes for consultation services. As described earlier in 
this proposed rule, we are proposing to no longer recognize the BILLING 
CODEs for consultation services so we are budget neutrally eliminating 
the use of all consultation codes (except for telehealth) and have 
allocated the work RVUs that were allotted to these services to the 
work RVUs for new and established office visit services, initial 
hospital visits, and initial nursing facility visits to reflect this 
change.
b. PE RVUs Impacts
    The PE RVU impacts are primarily attributable to the proposed 
incorporation of PE data from the Physician Practice Information Survey 
(PPIS). For a discussion of the use of this updated survey data, see 
section II.A.2. of this proposed rule.
    For two specialties, IDTFs and Radiation Oncology, the impact of 
our proposed change in the utilization rate for expensive equipment is 
also significant. We estimate that for these two specialties, the 
utilization rate change will result in impacts of -2 percent and -5 
percent (respectively). These impacts are included in the -19 percent 
and -17 percent PE